Longwood University, VA Rated 'BBB+'; 2018A-B Bonds Rated 'BBB-'; Outlook Stable

NEW YORK (S&P Global Ratings) Dec. 6, 2018--S&P Global Ratings assigned its 
'BBB+' issuer credit rating to Longwood University (LU), Va. In addition, S&P 
Global Ratings assigned its 'BBB-' long-term rating to Farmville Industrial 
Development Authority, Va.'s $123.71 million tax-exempt series 2018A and $6.06 
million taxable series 2018B educational facilities revenue and refunding 
bonds (Longwood University Student Housing Projects) issued for Longwood 
Housing Foundation LLC (LHF) whose sole member Longwood University Real Estate 
Foundation (LUREF) is an affiliate of LU. Also, S&P Global Ratings assigned 
its 'BBB-' rating to the issuer's $94.50 million series 2017 educational 
facilities revenue bonds issued for LHF. The outlook on all ratings is stable. 

"The issuer credit rating reflects our assessment of the university's strong 
enterprise profile characterized by favorable student quality, retention and 
graduation rates with relatively low tuition while full-time equivalent 
enrollment has exhibited some weakness, declining in each of the past three 
fall enrollment periods," said S&P Global Ratings credit analyst Ken Rodgers. 
We also assessed LU's financial profile as adequate with positive annual 
increases in net tuition revenue in most years and good revenue diversity 
while incurring financial operating deficits on a full-accrual basis and 
having only modest though adequate available resources. In addition, LU's debt 
is high, in our view, if indirect debt of its affiliated Longwood Housing 
Foundation is considered. 

"The ratings on LHF reflect its strong nexus, as well as that of its sole 
member LUREF, with Longwood University, the narrow primary security for the 
bonds that include the gross revenues of LHF's student housing and parking 
fees and a history of very strong occupancy of both university and LHF owned 
student housing," added Mr. Rodgers. "The university while not obligated with 
respect to the LHF bonds nevertheless supports LHF in a variety of ways, the 
most significant of which, in our view, is a first-fill requirement, subject 
to certain restrictions, that obligates the university to assign all students 
in need of housing to the project reaches 95% occupancy." 

The stable outlook reflects our expectation that Longwood University's and 
LHF's credit profile will strengthen somewhat with the completion of the 
renovation and improvement projects underway for student housing as enrollment 
(and occupancy) may have been adversely affected somewhat by the age and 
condition of the Curry and Frazer residence halls that were originally built 
in 1969 and 1970 with 400 beds each. In addition, we believe LU's financial 
operating losses should lessen in fiscal 2019 as management's initiatives to 
strengthen enrollment and improve the university's finances bear fruit. We 
also assume with respect to the rating on LHF that it will meet its projected 
95% occupancy target and satisfy all of its bond covenants. The outlook also 
assumes the university or LHF will issue no additional debt over the next two 
years.