A governmental entity sold $171 million in bonds to finance the construction of student housing at a campus of the University of Hawaii. The bonds were sold by the Wisconsin-based Public Finance Authority and loaned to the University of Hawaii at Mānoa (UH Mānoa).
The authority sold the bonds in two series. The Senior Series 2023A bonds, consisting of $158 million, mature between 2027 and 2063, yielding between 4.47% and 5.9%. The Subordinate Series 2023B bonds, consisting of $13 million, mature on July 1, 2063, yielding 6.92%. The securities received a rating of BBB- from S&P Global Ratings.
“Key credit factors include the project’s unique island location and competitive rental fees in a market with very expensive and limited housing, which should offset fill-up risk compared to other student housing projects,” S&P credit analyst Megan Kearns said in a press release.
The university will use the bond proceeds to finance the construction of a 558-bed graduate student residence hall. The securities will also fund the construction of a childcare facility and retail space.
UH Mānoa is the largest campus in the University of Hawaii system. Enrollment across the university system has declined by almost 10% over the past decade, but it has begun to increase again. “The overall enrollment decline was no surprise, but in spite of that challenge, UH performed well in many key areas,” according to the official statement accompanying the sale of the bonds.
UH Mānoa enrolled 15,793 students last year, including 3,500 graduate students, according to the bond documents. That marked a 1.1% increase in undergraduate enrollment over the year prior.
The bonds are special limited obligations of the Public Finance Authority, payable by the repayments on the loan to the university.
Raymond James & Associates, Inc served as underwriter on the issuance.