Albany College of Pharmacy Project bonds upgraded to 'BBB+'

--Risks for ACPHS include limited revenue diversity with a reliance on student generated revenues to fund operations and a moderate debt burden.

KEY RATING DRIVERS:

--Proactive enrollment management given significant reliance on student generated fees.

--Maintenance of operating surpluses and balance sheet resources at or above current levels.

SECURITY:

The bonds are secured by a pledge of gross revenues and a mortgage lien and security interest in the student center and classroom building.

CREDIT SUMMARY:

ACPHS was founded in 1881 and is the oldest pharmacy school in New York State. The College offers undergraduate programs in pharmacy, pharmaceutical sciences, health and human sciences and biomedical technology. The College also offers Master's degree programs in pharmacy administration, health outcomes research and pharmaceutical sciences.

ACPHS operating margins have been strongly positive for the past six fiscal years. The College has generated double digit margins since 2006 mainly due to increases in enrollments and tuition and fees. The operating margin of 15.2% in fiscal 2009, lower than 17.9% in fiscal 2008, was driven by rising expenses for salaries and student services.

ACPHS continues to be reliant on student generated fees, including auxiliary revenues which, for fiscal 2009, comprised 80.6% of unrestricted operating revenues. While enrollments have grown, the reliance on student fees requires the College to manage enrollments closely. Overall, enrollments grew an average of 6.3% from 2004-2009 while applications grew 4.6% from 2004-2009. In fall of 2009, ACPHS enrolled its first class at the Colchester Campus in VT, the only pharmacy school in the State. The VT campus, which has been well received, provides geographical diversity for ACPHS.

ACPHS has adequate and growing liquidity with available funds of $22.9 million, up from $20.7 million in FY08, covering pro forma debt of $29 million and total operating expenses of $36 million by 80% and 64%, respectively. The endowment fund is valued at $8.6 million; ACPHS has a 4% spending policy for the fund. Debt outstanding totaled $28.6 million at the end of fiscal 2009, of which 52% is variable rate. DS is fairly level at approximately $2 million, representing 4.8% of unrestricted operating revenues and is covered 5.3 times (x) by net income available for DS.

Applicable criteria available on Fitch's web site at 'www.fitchratings.com':

Rating Guidelines for Private Colleges and Universities, July 6, 2006.