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Bloomberg: Northern Illinois University Borrows After Enrollment Gain
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DiehardHuskie Offline
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Bloomberg: Northern Illinois University Borrows After Enrollment Gain
Northern Illinois University sold about $99 million of federally tax-exempt, insured bonds on Tuesday to purchase two residence halls after the school’s enrollment gained slightly, reversing more than a decade of declines with a focus on recruiting more minority students.

https://www.bloomberg.com/news/articles/...ium=social
04-27-2021 06:53 PM
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pvk75 Offline
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RE: Bloomberg: Northern Illinois University Borrows After Enrollment Gain
I hope this is successful, but this bothers me (from the above story) ...
"(John) Ceffalio (senior municipal research analyst for CreditSights Inc.) cautioned that funds backing the bonds include gross revenues from facilities such as the student center and sports facilities; tuition also backs the bonds after paying operations and maintenance of the university."
Still, I most always wish NIU the best when it takes a chance at being better.
04-28-2021 02:20 AM
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HuskieJ Offline
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RE: Bloomberg: Northern Illinois University Borrows After Enrollment Gain
(04-28-2021 02:20 AM)pvk75 Wrote:  I hope this is successful, but this bothers me (from the above story) ...
"(John) Ceffalio (senior municipal research analyst for CreditSights Inc.) cautioned that funds backing the bonds include gross revenues from facilities such as the student center and sports facilities; tuition also backs the bonds after paying operations and maintenance of the university."
Still, I most always wish NIU the best when it takes a chance at being better.

This is confusing. Does it mean they will purchase New Hall, which now being leased? The article mentions 2, but I can not come up with another one. I hope it means they will demolish Lincoln, since it is not being used. They could put another modern New Hall II right there.
04-28-2021 07:26 AM
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numbersdontlie Offline
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RE: Bloomberg: Northern Illinois University Borrows After Enrollment Gain
Looks like its going to save money in the long term:

Quote:the sale will result in savings of about $77 million by reducing payments the university was making for the residence halls at higher interest rates.
04-28-2021 09:41 AM
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HuskieJ Offline
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RE: Bloomberg: Northern Illinois University Borrows After Enrollment Gain
Looks like they will purchase the lease on the New Hall. Hope the other funds bulldozes Lincoln.
04-28-2021 10:26 AM
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HuskieJ Offline
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RE: Bloomberg: Northern Illinois University Borrows After Enrollment Gain
Correction for my error New Hall is two separate dorms, so that is why the article states 2.
04-28-2021 10:28 AM
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pvk75 Offline
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RE: Bloomberg: Northern Illinois University Borrows After Enrollment Gain
" ... funds backing the bonds include gross revenues from facilities such as the student center and sports facilities ..."

This should bother some of us sports fans. Last year, student recreation was moved under athletics in a consolidation. And as for "gross revenues," what gross revenues?

Still, the potential savings is huge. If NIU planned on spending that $77 million, that potentially frees up that spending for other things. Unless I read this wrong, which is entirely possible.
04-28-2021 06:30 PM
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Big Red Offline
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RE: Bloomberg: Northern Illinois University Borrows After Enrollment Gain
(04-28-2021 06:30 PM)pvk75 Wrote:  " ... funds backing the bonds include gross revenues from facilities such as the student center and sports facilities ..."

This should bother some of us sports fans. Last year, student recreation was moved under athletics in a consolidation. And as for "gross revenues," what gross revenues?

Still, the potential savings is huge. If NIU planned on spending that $77 million, that potentially frees up that spending for other things. Unless I read this wrong, which is entirely possible.

I read that $77M in savings as in over the length of the debt payback (ie, interest paid). It's like if you make a bunch of double payments on your mortgage or transfer credit card debt to another card with much lower API. You end up saving money over the life of it because you pay it off faster or at a lower interest rate.

In other words, I'm not reading that as them saving $77M for this year. It's spread out over a number of years (maybe decades).

But I really don't know much about this stuff so I very well could be wrong as well.
04-28-2021 07:29 PM
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NIU75 Offline
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RE: Bloomberg: Northern Illinois University Borrows After Enrollment Gain
Why is it so hard for NIU to send out a press release to keep us inform? Here we are all guessing what two dorms and where the funding saving going. Bang the drum with good news. So much for NIU being transparent. Sounds like the STF playbook.
04-28-2021 07:47 PM
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thxjoenovak Offline
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RE: Bloomberg: Northern Illinois University Borrows After Enrollment Gain
(04-28-2021 10:28 AM)HuskieJ Wrote:  Correction for my error New Hall is two separate dorms, so that is why the article states 2.

You’re forgiven. News to me. So is it New Halls or New Hall 1 and New Hall 2? 05-duck

Sorry....I just find it sad that there still isn’t a “name” after what?....7 years?

Are they just waiting for someone to donate 6 figures? Or is it 7?
04-28-2021 08:30 PM
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NIU2007 Offline
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RE: Bloomberg: Northern Illinois University Borrows After Enrollment Gain
Per the last Board of Trustees Meeting

SERIES 2011 CHF BOND REFINANCING WITH SERIES 2021 AFS BONDS
Background on 2011 CHF financing
In 2011, in order to accelerate the construction of new residence hall facilities on campus, Northern Illinois University collaborated with Collegiate Housing Foundation (“CHF”) to privately finance and construct New Hall, and then leased it back to the University through the bonds maturity in fiscal year 2044. As part of this private, tax-exempt financing, a similar private financing completed with CHF in 2006 for the Northern View Apartments was also refinanced at that time. An amount of $121.9M is currently outstanding on these Series 2011 tax-exempt CHF Bonds (the “2011 CHF Bonds”) for which CHF is the underlying Obligor.
The University’s lease payments to CHF are used to:
a) pay debt pay service on the 2011CHF Bonds;
b) make required repair and replacement fund contributions; and c) pay CHF-related fees.
The Series 2011 CHF Bonds’ Management Agreement also requires the University to make additional payments if occupancy in the two residence halls falls below 95%, or if there is a revenue shortfall to meet debt service coverage requirements.
In such a case, NIU must support the project by providing the revenue shortfall needed to meet the debt service coverage obligations. In 2020, owing to lower occupancy due to the COVID-19 Pandemic and refunds provided to students, NIU provided support to the project in an amount of approximately $2.2M, on top of its usual payments to support bond debt service. This extra support allowed the project to meet its 1.2X debt service coverage ratio requirement for FY20.
Overview of the Refinancing Opportunity
While both New Hall and the Northern View Apartments are owned by CHF, NIU manages both facilities. The bond documents allow for the University to purchase the facilities by paying off the outstanding tax-exempt 2011 CHF Bonds and paying any accrued management fees. For NIU, the first opportunity to close such a refinancing, and simultaneously effect the purchase of the buildings and expansion of the Auxiliary Facilities System (AFS) will be on or after July 1, 2021.
The rate on the 2011 CHF Bonds for NIU’s project is very high at 6.86%, about 4% higher than the rate on NIU’s Series 2020 AFS bonds. As a result, NIU has been considering a refinancing of this debt through its AFS for some time. With the debt markets improving since the beginning of the pandemic, NIU is now poised to move forward with this refinancing (the “Series 2021 AFS Bonds”).
In addition to a reduction in payments owing to a lower rate (see “Potential Savings from a Refinancing” section below), the Series 2021 AFS Bonds refinancing will provide a number of operational flexibilities and economic efficiencies. These include the ability for NIU to set its own room rates for the two residence halls and avoid restrictive occupancy and “first fill” requirements, as well as cumbersome site-specific profitability requirements. NIU will also avoid duplicative and costly budgeting, audit and rating agency processes and fees.
Financing Climate (Ratings, Bond Insurance and General Rate Movements)
NIU’s Moody’s rating on its AFS bonds has been at “Ba2” (stable) since May 2019 and was re- affirmed in February of 2020. Moody’s has consistently said that it views the University’s
NIU Board of Trustees -25- March 18, 2021

commitments to the 2011 CHF Bonds as significant, and therefore already views those bonds as “on balance sheet” when it evaluates NIU’s creditworthiness. As a result, the University and its advisors do not expect the refinancing of this debt into the AFS system, in and of itself, to lower the Moody’s AFS rating.
The University’s Series 2020 AFS bonds carried bond insurance, which allowed NIU to refinance prior debt at low rates. However, it is unlikely that bond insurance will be available for the proposed Series 2021 AFS financing, at least not at this time. After extensive conversations with the Series 2020 bond insurer, Build America Mutual (“BAM”), the company indicated that it is unwilling to consider any commitment until mid-to-late Fall of 2021. BAM also noted that it would have a limit of about $40M on the amount of insurance it could offer, owing to the high level of NIU’s debt that it already insures. This would only cover 35% - 40% of the proposed Series 2021 AFS Bonds, if that commitment were ultimately made at all.
Between late 2020 and early February 2021, the market for uninsured higher education and other municipal credits has improved considerably, making savings from the refinancing of the 2011 CHF Bonds attractive. With rates historically low due to federal support of bond markets, more investors have been searching for higher yield investments, and have bid down the rates on debt for such issuers.
Guiding Principles of the Refinancing
University leadership has adopted the following guiding principles for this refinancing:
• The Series 2021 AFS Bonds will not include any monies for new projects;
• The new debt payments will not extend beyond FY44, the fiscal year of the final maturity
date of the Series 2011 CHF Bonds; and
• The refinancing will be structured to maximize savings in FY22-FY24 to mitigate
budgetary impact of closing the structural budget gap.
Bond Underwriter “Pricing Proposal” RFP Process
On January 12, 2021, the University and its long-time financial advisor, Longhouse Capital Advisors, sent out a “Pricing RFP” to the five members of NIU’s underwriting pool, which was established in late 2019. The University received five responses from pool members on January 28th. All underwriters provided estimated rates and fees for the refinancing, and all re-affirmed their business enterprise program (“BEP”) commitments. Based on the proposal content, Piper Sandler was selected as senior managing underwriter for the refinancing and Wells Fargo was selected as co-managing underwriter. BEP partner firms Backstrom McCarley Berry & Co., Estrada Hinojosa; and Siebert Williams Shank will also serve as co-managing underwriters.
Potential Savings from a Refinancing
Savings estimates from the underwriters’ Pricing RFP responses showed a minimum total savings over the life of the refinanced bonds of approximately $37.7M. Final savings will be subject to changes in rates and in the University’s underlying AFS rating, among other factors, and could be higher or lower than this estimate.
Next Steps: General Financing Assumptions / Unwinding of the CHF Agreements
The Plan of Finance that was provided to underwriters in the Pricing RFP assumed a fixed rate, uninsured AFS financing with a final maturity in FY44. The bonds are assumed to have no Debt Service Reserve Fund, although one could be included if it is found to significantly lower NIU’s overall rate. The bonds could price as early as April or May of 2021, with a closing in early July of 2021.
In parallel to the Series 2021 AFS Bonds financing process, the University plans to work with
NIU Board of Trustees -26- March 18, 2021

CHF to unwind the Series 2011 CHF Bonds’ lease and management agreements. NIU has already had an initial meeting with CHF to set out milestones for that process, and the organization has expressed its willingness to work to meet the University’s refinancing timeline.
University leadership will present an update at the Board of Trustees meeting scheduled for March 18, 2021.
04-28-2021 10:04 PM
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pvk75 Offline
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RE: Bloomberg: Northern Illinois University Borrows After Enrollment Gain
Thanks.
04-29-2021 06:26 AM
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pvk75 Offline
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RE: Bloomberg: Northern Illinois University Borrows After Enrollment Gain
I don't know the results, but here's the recommendation from 2/18/2021 BofT meeting to sell the Hoffman Estates campus ...

"SURPLUS REAL ESTATE PROPERTY DETERMINATION
HOFFMAN ESTATES CAMPUS
Summary: Although it has served NIU well over its 27 years as university property, operations at the Hoffman Estates campus have been deemed unsustainable due to changing university needs, budget constraints, a years-long decline in revenue-generating business, and continuing uncertainty due to the pandemic. Event operations were discontinued in the facility as of November 2020.

The facility is now considered surplus to the university mission requirements. Once approved as surplus, the university will engage a real estate broker to assist in marketing and potential sale transaction for the property. Background: Since the Illinois Property Control Act (30ILCS 605/) allows public universities to sell surplus real estate and use the proceeds to address deferred maintenance and emergency repairs of institution property, selling the property may be in the university’s best interest at this time.

The existing property located at 5555 Trillium Boulevard in Hoffman Estates was built in 1992 and consists of approximately 49,840 square feet of space including classrooms, lecture hall and various associated administrative and support spaces. Funding: Revenue generating – Resulting net sale proceeds to be deposited in account conforming to the Property Control Act.

Recommendation: The University recommends that the Finance, Audit, Compliance, Facilities and Operations Committee endorse this request and asks that the President forward it by means of the President’s Report to the Board of Trustees for approval at its meeting on March 18, 2021. Updates will be provided to the Board as appropriate, and subsequent approval for actual sale of the property will be requested from the Board prior to proceeding with such a transaction."
(This post was last modified: 04-29-2021 12:22 PM by pvk75.)
04-29-2021 06:49 AM
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HuskieJ Offline
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RE: Bloomberg: Northern Illinois University Borrows After Enrollment Gain
That really sucks. Years ago that site was full of classes. Guess it is not needed in the era of advanced remote learning.
04-29-2021 08:13 AM
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epasnoopy Offline
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RE: Bloomberg: Northern Illinois University Borrows After Enrollment Gain
How much money can you get for a remote site campus built for education? I'm gonna guess anyone that buys the property is going to have to pay to repurpose the facility to meet their needs and want to pay less for the property.
04-29-2021 05:56 PM
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NIU007 Offline
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RE: Bloomberg: Northern Illinois University Borrows After Enrollment Gain
(04-28-2021 08:30 PM)thxjoenovak Wrote:  
(04-28-2021 10:28 AM)HuskieJ Wrote:  Correction for my error New Hall is two separate dorms, so that is why the article states 2.

You’re forgiven. News to me. So is it New Halls or New Hall 1 and New Hall 2? 05-duck

Sorry....I just find it sad that there still isn’t a “name” after what?....7 years?

Are they just waiting for someone to donate 6 figures? Or is it 7?

"The Ricardo Patton dorm". 05-duck
04-29-2021 10:03 PM
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HawaiiToNIU Offline
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RE: Bloomberg: Northern Illinois University Borrows After Enrollment Gain
(04-29-2021 10:03 PM)NIU007 Wrote:  
(04-28-2021 08:30 PM)thxjoenovak Wrote:  
(04-28-2021 10:28 AM)HuskieJ Wrote:  Correction for my error New Hall is two separate dorms, so that is why the article states 2.

You’re forgiven. News to me. So is it New Halls or New Hall 1 and New Hall 2? 05-duck

Sorry....I just find it sad that there still isn’t a “name” after what?....7 years?

Are they just waiting for someone to donate 6 figures? Or is it 7?

"The Ricardo Patton dorm". 05-duck

Well, whether you liked him or not. It only seems fitting to name the dorm after Obama. As every other dorm on campus is named after an Illinois politician.
04-30-2021 06:35 AM
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pvk75 Offline
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RE: Bloomberg: Northern Illinois University Borrows After Enrollment Gain
(04-29-2021 05:56 PM)epasnoopy Wrote:  How much money can you get for a remote site campus built for education? I'm gonna guess anyone that buys the property is going to have to pay to repurpose the facility to meet their needs and want to pay less for the property.

Who doesn't want to pay less? I did an aerial map look at it and the area, and IMO the reason for its decline is mainly the Sears 2018 bankruptcy (just to the north is the huge regional Sears complex). However, the development has 1 1/2 nearby interchanges with I-90, it's a straight shot east to O'Hare, Schaumburg is nearby, the development includes the NOW Arena (home, Windy City Bulls, Chicago Bulls affiliate), and it's basically an office building. Architecture is pretty impressive, and there's a ton of parking. Anyone who buys anything is going to convert to their uses, but classrooms are easy to convert to office and even lab space. Probably, somebody buys it for lease-convert, perhaps for multiple tenants. Cheaper than new construction. Also, depending on market conditions, NIU does not have to sell right this minute.
04-30-2021 07:37 AM
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Teamduh Offline
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Bloomberg: Northern Illinois University Borrows After Enrollment Gain
Northern View Apartments. Didn't even know that area existed.

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04-30-2021 09:05 PM
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klake87 Offline
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RE: Bloomberg: Northern Illinois University Borrows After Enrollment Gain
(04-30-2021 07:37 AM)pvk75 Wrote:  
(04-29-2021 05:56 PM)epasnoopy Wrote:  How much money can you get for a remote site campus built for education? I'm gonna guess anyone that buys the property is going to have to pay to repurpose the facility to meet their needs and want to pay less for the property.

Who doesn't want to pay less? I did an aerial map look at it and the area, and IMO the reason for its decline is mainly the Sears 2018 bankruptcy (just to the north is the huge regional Sears complex). However, the development has 1 1/2 nearby interchanges with I-90, it's a straight shot east to O'Hare, Schaumburg is nearby, the development includes the NOW Arena (home, Windy City Bulls, Chicago Bulls affiliate), and it's basically an office building. Architecture is pretty impressive, and there's a ton of parking. Anyone who buys anything is going to convert to their uses, but classrooms are easy to convert to office and even lab space. Probably, somebody buys it for lease-convert, perhaps for multiple tenants. Cheaper than new construction. Also, depending on market conditions, NIU does not have to sell right this minute.

Great NW location. Easy access to 90. It 59 and Higgins there. Shopping restaurants.
05-04-2021 11:22 AM
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