"MOODY'S DOWNGRADES UNIVERSITY OF MIAMI'S DEBT RATING TO A3 FROM A2; OUTLOOK IS
STABLE AT THE LOWER RATING LEVEL

RATING ACTION IMPACTS $789 MILLION OF RATED DEBT

University of Miami, FL
Miami-Dade Cnty Educational Fac. Auth., FL
Higher Education
Florida

NEW YORK, April 19, 2010 -- Moody's Investors Service has downgraded
University of Miami's (UM) municipal scale rating to A3 from A2 on tax-exempt
bonds issued by the Miami-Dade County Educational Facilities Authority as well
as taxable bonds (see Rated Debt section below). Moody's has also changed the
global scale rating on UM's taxable bonds (Series 2007C and Series 2008B) to
A3 from A1. The outlook on all of UM's debt remains stable at the lower rating
level. The University had $789 million of rated debt outstanding in FY 2009.
The rating action reflects unrestricted liquidity providing a thin cushion for
expanded expense base with the addition of a hospital during FY 2008 and high
amount of outstanding debt, large defined benefit pension plan which is even
more underfunded due to recent investment losses, and weakening of
consolidated operating performance, with significant exposure to healthcare
operations.

LEGAL SECURITY: Unsecured general obligation.

DEBT-RELATED DERIVATIVES: The University has entered into a forward starting
swap with a $20 million notional amount related to its notes and mortgages.
The swap becomes effective in December 2010. As of May 31, 2009, the market
valuation of the swap was negative $1.9 million for the University.

CHALLENGES

*Investment losses sustained during FY 2009 resulted in a significant decline
in the University's unrestricted liquidity and caused the defined benefit
pension plan ($627.9 million projected benefit obligation as of 5/31/09) to be
increasingly underfunded (although pension plan investment return was 17.1%
for the first 9 months FY 2010). This tightening of liquidity is a primary
driver for the rating downgrade, with unrestricted financial resources
providing a thin cushion for the University's large expense base ($2.1 billion
of expenses in FY 2009) and high amount of outstanding debt ($864 million as
of November 30, 2009). Expendable financial resources in FY 2009 would cover
debt 0.2 times and operations 0.1 times. In FY 2009, the University had $357
million of unrestricted investments which could be liquidated within a one
month timeframe (although unrestricted financial resources are much lower at
$69.9 million, partly due to unfunded pension liability which is described in
more detail below). This unrestricted monthly liquidity would cover a thin 64
days of cash expenses. Further, we note that the State of Florida has not yet
adopted UPMIFA (Uniform Prudent Management of Institutional Funds Act) unlike
most states. The adoption of UPMIFA could result in investment gains currently
classified as unrestricted being reclassified to the temporarily restricted
net asset category.

*The University's consolidated operating performance has tightened and
exposure to healthcare-related operations has increased with the hospital
acquisition in FY 2008. Nearly half of the University's revenue is now derived
from patient care, including the operation of 3 hospitals and a large faculty
practice plan, with over 900 employed physicians. In FY 2009, UM generated a
1.2% operating deficit after achieving much stronger margins in earlier years.
In FY 2009, the University generated a 6% operating cash flow margin and 1.5
times debt service coverage, compared to a 12.8% cash flow margin and 2.9
times debt service coverage in FY 2006. As described below, the University
acquired a hospital in FY 2008 from a for-profit hospital chain. The initial
years of operating University of Miami Hospital (UMH) have required working
capital support from the University, with cumulative deficits of $19.6 million
from acquisition projected through May 2010. However, UMH and UMHC (the
University's cancer hospital and clinics) combined generated $243.8 million of
net income during that timeframe, with management explaining that performance
at UMH is largely due to the decisions not to relocate major clinical activity
from UMHC to UMH. We expect that ongoing improvement of UMH operations will
require a significant amount of board and management oversight. The
consolidated performance of the three hospitals during the first half of FY
2010 is approximately $4.5 million better than budget, and UMH's standalone
performance has improved during FY 2010 compared to 2009 by approximately $4.5
million. UM has focused heavily on expense containment across the board,
including elimination of staff positions, and management reports that medical
malpractice expenses, which had been highly variable in the past, are now more
predictable.

*The University's net assets are depressed by a large underfunded defined
benefit pension plan, which was closed to new participants in 2007 but still
had a sizeable projected benefit obligation of $627.9 million in FY 2009. The
plan's assets experienced a 17% investment loss in FY 2009, resulting in the
plan being underfunded by $252 million as of May 31, 2009. A small proportion
of higher education institutions have defined benefit pension plans, with most
pension plans structured as defined contribution plans. The University's
required contribution to the plan has increased ($40 million contribution
required in FY 2010), and in November 2009 the University borrowed $20 million
of taxable bank debt to make a contribution to the plan. Although the
University has closed the plan to new participants, this liability is still
large with potential volatility in required annual contributions creating a
credit challenge.

*UM maintains an affiliation agreement with Jackson Memorial Hospital (JMH), a
large urban safety net hospital in Miami which serves as a teaching hospital
for UM's Miller School of Medicine. UM physicians had approximately 35,000
admissions at JMH in 2009. JMH (not rated by Moody's) is owned by Miami Dade
County and governed by Public Health Trust Board (appointed by County
Commissioners). JMH is currently experiencing significant credit challenges of
its own and we will continue to monitor any potential financial implications
on UM. UM's management reports that payments from JMH for services provided by
UMH physicians at JMH comprise approximately 5% of UM's operating revenue.
Further, the University currently has an outstanding $52 million receivable
from JMH.

STRENGTHS

*UM maintains a healthy student market position and research profile as an
urban comprehensive university and South Florida academic medical center and
healthcare provider, including the three hospitals, large faculty practice
plan, and multiple ambulatory care centers. In fall 2009, the University
enrolled 14,855 full-time equivalent students and generated a high net tuition
per student of $25,162, with a 4% undergraduate tuition increase planned for
fall 2010. Freshmen selectivity and matriculation have weakened slightly in
recent years as the University competes with both lower-priced state public
universities as well as other private universities nationally. In fall 2009,
UM accepted 44% of freshmen applicants and 21% of those accepted chose to
enroll (compared to 38% selectivity and 27% matriculation in fall 2007).
Approximately two-thirds of the student body is undergraduate, with a sizeable
graduate and professional population including medical, business, and law
schools.

*The majority of University of Miami's debt is fixed-rate (all debt except for
operating line of credit which has a $100 million authorization although no
amounts currently outstanding under the line). Further, the University has
only one small interest rate swap outstanding. In addition to the University's
relatively conservative debt structure, with minimal exposure to variable
interest rates or swaps, UM has not invested heavily in asset classes with
limited liquidity. As of 5/31/09, the University reports that nearly 60% of
all cash and investments at that time could be liquidated within one month and
an additional 32% could be liquidated within a one year timeframe. Given the
University's sizeable healthcare base and resulting potentially more volatile
operations, we believe that the University's modest exposure to highly
illiquid asset classes is a credit strength. Endowment spending represents a
very small piece of the University's revenue base, less than 3% in FY 2009.

*UM continues to demonstrate very strong fundraising success, even
post-completion of a $1.4 billion comprehensive capital campaign which
concluded in December 2007. During FY 2007 through 2009, annual gift revenue
averaged $112 million, and management reports that cash gifts received during
FY 2010 are up 6.9% over FY 2009 at this point in time.

*Management reports a slowdown in capital investment, with plans for
additional student housing cancelled and a new student center currently
deferred. UM is still evaluating the possibility of constructing an ambulatory
care center and an academic building used jointly by the law and business
schools. We will evaluate the credit impact of these proposed projects when
project scope, financing, and proposed means for covering increased debt
service are finalized.

OUTLOOK:

The stable outlook is based on our expectation that UM will continue
to re-grow its financial resource base through positive investment performance
during FY 2010, strong fundraising, and improving operations at UMH, including
a plan to repay the University for working capital support drawn on during the
past few years.

What could change the rating--UP

Significant growth of unrestricted liquidity coupled with improved
operating cash flow and maintenance of strong student market and research
positions

What could change the rating--DOWN

Significant additional borrowing absent growth of financial resources and cash
flow to cover new debt service; material reduction in liquidity or cash flow
levels

KEY INDICATORS (fall 2009 enrollment data; first figure reflects FY 2009
audited financial data as of May 31, 2009 and second figure, if presented,
reflects management-reported unaudited financial data for the first six months
of FY 2010 as of November 30, 2009)

Total full-time equivalent (FTE) enrollment: 14,855 FTE

Freshmen Selectivity: 44%

Matriculation: 21%

Total Financial Resources: $578 million; $706 million

Direct Debt: $921.3 million; $864.4 million

Average Annual Gift Revenue: $112 million

Expendable Financial Resources-to-Direct Debt: 0.24 times; 0.4 times

Expendable Financial Resources-to-Operations: 0.1 times; 0.2 times

Operating Margin: -1.2%; 4.1%

Reliance on Student Charges: 22%; 24%

Reliance on Patient Care Revenue (including faculty practice plan and revenue
from hospitals): 47%; 49%

RATED DEBT:

Series 2007A and B Bonds: A3 municipal scale rating, certain maturities
insured by Ambac (Ambac's financial strength rating is Caa2 on watchlist for
possible upgrade)

Series 2007C and 2008B Bonds (taxable): A3 municipal scale rating; A3 global
scale rating

Series 2008A: A3 municipal scale rating

CONTACTS:

University of Miami: John Shipley, Treasurer, 305-284-6297 or Joseph Natoli,
Chief Financial Officer 305-284-6100

The municipal rating assigned to University of Miami was issued on
Moody's municipal rating scale. Moody's has announced its plans to
recalibrate all U.S. municipal ratings to its global scale and therefore, upon
implementation of the methodology published in conjunction with
this initiative, the rating will be recalibrated to a global scale
rating comparable to other credits with a similar risk profile.
Market participants should not view the recalibration of municipal ratings
as rating upgrades, but rather as a recalibration of the ratings to a
different rating scale. This recalibration does not reflect an improvement in
credit quality or a change in our credit opinion for rated municipal debt
issuers. For further details regarding the recalibration please visit
www.moodys.com/gsr.

The principal methodology used in rating University of Miami was
Moody's Private College and University Rating Methodology, which can be found
at www.moodys.com in the Rating Methodologies sub-directory under the Research
& Ratings tab. Other methodologies and factors that may have been considered
in the process of rating this issuer can also be found in the Rating
Methodologies sub-directory on Moody's website.

The last rating action was on March 21, 2008 when the University's ratings and
outlook were affirmed.


ANALYSTS:
Kimberly S. Tuby, Analyst, Public Finance Group, Moody's Investors Service
Roger Goodman, Backup Analyst, Public Finance Group, Moody's Investors Service


CONTACTS:
Journalists: (212) 553-0376
Research Clients: (212) 553-1653



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