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Rating Action:

Moody's assigns Aa3 to Georgia Tech Facilities Revenue Bonds, Series 2019 projects at Georgia Institute of Technology and affirms Aa3 and A2 ratings; outlook revised to stable from positive

14 Mar 2019

New York, March 14, 2019 -- Moody's Investors Service has assigned a Aa3 rating to Georgia Tech Facilities, Inc.'s proposed $98.6 million Georgia Tech Facilities Revenue Bonds, Series 2019 (fixed rate, maturing 2052). The bonds will be issued through the Development Authority of Fulton County, GA. Concurrently, we have affirmed the Aa3 ratings on several series of revenue bonds supported by rental agreements with the University System of Georgia on behalf of Georgia Institute of Technology. The outlook on the various Georgia Institute of Technology lease-rental bonds has been revised to stable from positive. We have also affirmed the A2 ratings on Georgia Advanced Technology Ventures, Inc. (GATV) Revenue Bonds (GATV Georgia Tech ATDC Project) Series 2014A and Revenue Bonds (GATV Georgia Tech ATDC Project) Taxable Series 2014B. GATV's outlook is stable.


The Aa3 rating reflects the strength of the expected source of repayment, an annually renewable lease agreement with the Board of Regents of the University System of Georgia (USG), along with the general obligation of Georgia Tech Facilities, Inc., a nonprofit that supports constructing and financing buildings for Georgia Institute of Technology (Georgia Tech). The rating also incorporates the fundamental credit strength of Georgia Tech, for which the facilities are constructed. Georgia Tech's excellent brand and reputation as a globally prominent technological research university, demonstrated by impressive student demand and significant research activity underpin its credit quality. Sound operating and financial performance reflect strong fiscal and strategic oversight and diverse revenue streams. Increasing support from the Aaa-rated State of Georgia also aids credit quality. Georgia Tech benefits from substantial total wealth in fiscal 2018 total cash and investment of $2.2 billion. The rating also incorporates the strong oversight and strategic support of the Board of Regents of the University System of Georgia.

Offsetting credit factors include Georgia Tech's limited unrestricted liquidity due to state restrictions and complex organizational and debt structure, with several affiliated organizations playing key strategic roles. An increasing net pension liability along with other benefit costs add to ongoing expense pressure. The ratings also incorporate construction, renewal and abatement risks related to the terms of the USG rental agreements.

The revision of the outlook to stable from positive for Georgia Tech's various lease-rental bonds incorporates the university's limited gains in unrestricted liquidity compared to revenue and expense growth. While Georgia Tech continues to invest in strategic growth and state law discourages it from carrying large cash balances in its primary operating funds, its monthly days cash on hand will remain well below Aa-rated peers.

The A2 rating for GATV's debt also incorporate its strategic and long standing relationship with the Georgia Institute of Technology, operating exclusively to support the Institute's mission critical areas of education, scientific research, and economic development. Other strengths include shared governance with Georgia Tech and the real estate value of its assets. However, while Georgia Tech leases some space in GATV's financed facilities, it does not have a direct lease obligation to cover the full amount of annual debt service. Other unique credit challenges related to the TUFF ATDC revenue bonds include limited liquidity, very high financial leverage, and risks associated with reliance on sub rental income.


The stable outlook for Georgia Institute of Technology incorporates expectations of continued student market and sponsored research strength. The outlook also depends on sound operating performance and general stability of financial reserves combined with manageable future borrowing plans. The stable outlook for the GATV bonds reflects expectations of Georgia Tech's ongoing support for GATV and its role in supporting the university's broad economic development and research activities.


For Georgia Tech's various lease rental obligations:

- Substantial increase in unrestricted liquidity and spendable cash and investments relative to operating expenses

- Ongoing gains in total cash and investments


- Material increase in independent financial strength or lower reliance on rental income from unaffiliated third parties


For Georgia Tech's various lease rental obligations:

- Deterioration in operating performance or material reduction in liquidity

- Marked reduction in state support

- Any indication of a lack of willingness of management to renew leases


- Any evidence of deterioration of relationship with Georgia Tech or Georgia Tech's strategic interest or willingness to support GATV

- Heightened risk with various lease and sub-lease agreements, or inability to generate sufficient income to cover debt service requirements


The Georgia Tech Facilities, Inc. (GTFI) bonds are secured by a general obligation of GTFI, with payments to be made from annually renewable lease agreements with the Board of Regents, the legal parent entity of all public universities in Georgia. GTFI has assigned its interest in the rental agreement to the trustee. The Board of Regents' obligation to make rental payments is an unsecured general obligation of the board, payable from all unrestricted revenue sources. The lease revenue bonds are subject to appropriation and abatement risk. Favorably, the bonds are secured by a leasehold interest in the financed property.

Georgia Tech's Public Private Venture (PPV) capital lease obligations are secured by rental revenue paid by the Board of Regents under the terms of annually renewable rental agreements on behalf of the various colleges and universities.

The Board of Regents' obligation for the student center and related projects does not commence until construction of each of the phases is completed and the certificates of occupancy are issued for the facilities. The rating incorporates construction risk, which has been partially mitigated for this project through several strategies. These strategies include, but are not limited to, a guaranteed maximum price contract, six months of capitalized interest beyond the anticipated completion date, and a sound process for review and selection of contractors.

In addition to assessing the relative essentiality of each financed project to the system, Moody's considers the system's reliance on the Public Private Venture (PPV) program. The system currently has over $3 billion of PPV-related lease revenue bonds. While the system has no legal obligation to renew any rental agreement, it has clear strategic interests in stewarding the PPV program. Our ratings incorporate the assumption that the system will take extraordinary steps to renew rental agreements, including agreements for projects whose fundamental business conditions may be weak and require additional support.

The Series 2014A and Series 2014B bonds are secured by GATV's obligation to pay the Rental Agreement payments, which is a general obligation of GATV. Under the separate Indentures of Trust, TUFF ATDC LLC grants the trustee an interest in the leasehold or fee interest associated with the related real property. Bondholders also have a security interest in the financed facility through a first mortgage and deed on the project. There is no debt service reserve fund. However, the bonds are secured by a $4.8 million letter of credit (LOC) with Bank of America, N.A. The LOC is held by the Trustee and guaranteed by the Georgia Tech Foundation, Inc. (Aa1 stable). The LOC is annually renewable, currently expiring in June 2019.


The proceeds of the bonds will be used to fund a portion of the costs of the roughly $110 million project which will include a new student center, exhibition hall, dining and related facilities on the Georgia Tech campus. The project will be constructed in two phases with six months of capitalized interest beyond the expected completion date for each phase.


The University System of Georgia is an organizational unit of the State of Georgia. The USG includes 26 public colleges and universities and is the dominant provider of higher education in the state. In the fall of 2018, the system enrolled over 288,000 full-time equivalent (FTE) students.

The Georgia Institute of Technology, part of the University System of Georgia, is a public technological research university founded in 1885. The main campus is located in Atlanta and it has other instructional sites, including a growing on-line presence. Georgia Tech enrolls over 26,000 FTE students and has sizeable operating revenue of $1.7 billion in fiscal 2018.

Georgia Tech relies on several affiliated organizations to fulfill its mission. The majority of GT's PPV rental agreement debt has been issued through Georgia Tech Facilities, Inc. GTFI's main focus has been developing facilities for Georgia Tech's primary Atlanta campus. Since 1985 it has developed over 4 million square feet of space on the campus.

Georgia Advanced Technology Ventures, Inc. is an affiliated not-for-profit corporation of the Georgia Institute of Technology, exclusively supporting the Institute. GATV provides support for technology transfer, commercialization, and relevant real estate development to foster education, scientific research, and economic development on GT's behalf. GATV is a cooperative organization of the Board of Regents of the University System of Georgia and is a discretely presented affiliated organization in the system's annual financial statements.


The principal methodology used in these ratings was Higher Education published in December 2017. Please see the Rating Methodologies page on for a copy of this methodology


For ratings issued on a program, series or category/class of debt, this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on

Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.

Please see for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

Please see the ratings tab on the issuer/entity page on for additional regulatory disclosures for each credit rating.

Dennis Gephardt
Lead Analyst
Higher Education
Moody's Investors Service, Inc.
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Susan Fitzgerald
Additional Contact
Higher Education
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653

Releasing Office:
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