$129 020 000* $129,020,000* $129,020,000* $129 020 000* WBRP 3.2 - - PowerPoint PPT Presentation

$129 020 000* $129 020 000* $129,020,000* WBRP 3.2 Lease Revenue Bonds $104 565 000* Series 2015A (Tax-Exempt) $129,020,000* WBRP 3.2 Lease Revenue Bonds $104 565 000* Series 2015A (Tax-Exempt) $104,565,000 Series 2015A (Tax-Exempt) $24,455,000* Series 2015B (Taxable) $104,565,000 Series 2015A (Tax-Exempt) $24,455,000* Series 2015B (Taxable)

September 16, 2015 September 16, 2015

* Preliminary, subject to change.

Disclaimer

This Investor Presentation has been prepared for informational purposes only and for your sole and exclusive use in connection with the proposed transaction(s) referred to herein (the “Proposed Transaction”). This document is incomplete. Any offer of sale of any security may only be made pursuant to the relevant offering documentation and binding transaction documents and is subject to the detailed provisions, including risk considerations, contained therein. This Investor Presentation is not a part of any such offering documentation. You must independently determine, with your own advisors, the appropriateness for you of the securities before investing or

• transacting. Neither the University of Washington (the “University”), WBRP 3.2, nor the underwriters accept any liability whatsoever for any consequential losses arising

from the use of this document or reliance on the information contained herein. This Investor Presentation is provided as of September 16, 2015; if you are viewing the materials after this date, events may have occurred that have a material adverse effect on the financial information presented and neither the University, WBRP 3.2 nor the underwriters have undertaken any obligation to update this electronic Investor Presentation to incorporate such events. Neither the University, WBRP 3.2 nor the underwriters make any representation or warranty as to the (i) accuracy, adequacy or completeness of any information in this Investor Presentation or (ii) legal, tax or accounting treatment of any purchase of the securities offered in the Proposed Transaction by you or any other effects such purchase may have on you and your affiliates. Capitalized terms not defined within this Investor Presentation are defined within the Preliminary Official Statement. This Investor Presentation is confidential and is provided for your information and convenience only for use in connection with the Proposed Transaction. By accessing this presentation, you agree not to duplicate, copy, download, screen capture, electronically store or record this Investor Presentation, nor to produce, publish or distribute this Investor Presentation or the information contained herein in any form whatsoever. This document does not constitute nor does it form part of an offer to sell or purchase, or the solicitation of an offer to sell or purchase, any securities or an offer or recommendation to enter into any transaction described herein, nor does this document constitute an offer, commitment or obligation on the part of the University, WBRP 3 2 th d it f th i ffili t t id i d it fi i t i t th t ti Y ill b ibl f ki 3.2, the underwriters, or any of their affiliates to provide, issue, arrange or underwrite any financing or enter into any other transaction. You will be responsible for making your own independent investigation and appraisal of the risks, benefits, appropriateness and suitability to and for the Proposed Transaction and any other transactions contemplated by this document and neither the University, WBRP 3.2 nor the underwriters are making any recommendation (personal or otherwise) or giving any investment advice and will have no liability with respect thereto. This presentation may contain "forward‐looking" statements that involve risks, uncertainties and assumptions. If the risks or uncertainties ever materialize or the assumptions prove incorrect, the results may differ materially from those expressed or implied by such forward‐looking statements. Accordingly, we caution you not to l d li th t t t All t t t th th t t t f hi t i l f t ld b d d f d l ki All i i ti t j ti place undue reliance on these statements. All statements other than statements of historical fact could be deemed forward‐looking. All opinions, estimates, projections, forecasts and valuations are preliminary, indicative and are subject to change without notice. Neither the University, WBRP 3.2 nor the underwriters undertake any

• bligation, or guarantees its ability, to provide any additional information or to update any of the information or the conclusions contained herein or to correct any

inaccuracies which may become apparent. By viewing this Investor Presentation you acknowledge that you understand and agree to the provisions of this page.

2

Introduction t oduct o

The University’s website is: www.washington.edu* The Preliminary Official Statement can be found at: http://www.munios.com/id.aspx?i=FTWXS1ECmvY4 Please direct any questions you may have to: Bill Starkey, University of Washington (206) 616-5122 Dick King, Barclays (206) 344-5838 (206) 344 5838

* The University’s website is not part of this presentation (or part of the University’s disclosure), and investors should not rely on information presented in the University’s website in determining whether to purchase the Bonds. This inactive textual reference to the University’s website is not a hyperlink and does not incorporate the University’s website by reference.

3

The Bonds – Transaction Overview*

Financing Summary Amortization (000s)

Series 2015 Bonds

Issuer WBRP 3.2 Par Amo nt $129 020 000

2015A (Tax-Exempt) (Jan 1) 2015B (Taxable) (Mar 1)

2018 $ $ 24,455

Par Amount $129,020,000 Ratings Moody’s: Aa1 (stable) S&P: Applied for Security The Bonds are nonrecourse revenue obligations of WBRP 3.2 (the “Issuer”), a Washington nonprofit corporation acting on behalf of the University of Washington, payable solely from lease payments made by the University. The Issuer’s sole source of revenue to make debt service payments is Rent paid by the University under the Facilities Lease, which is payable solely from General Revenues of the University. “General Revenues” includes all non-appropriated income,

$ $ , 2019 3,175 2020 2,470 2021 2,585 2022 2,715 2023 2,855 2024 3,000 2025 3,145 2026 3 300

y pp p , revenues, and receipts of the University if and to the extent such funds are not restricted in their use by law, regulation or contract. The University’s obligation to pay Rent under the Facilities Lease is not subject to abatement or appropriation. Purpose Finance the design and construction of a biomedical research facility with associated clinical and administrative space; capitalize interest on the Bonds through March 1, 2018; and pay issuance costs. Structure Fixed rate tax-exempt Series 2015A and taxable Series 2015B bonds

2026 3,300 2027 3,465 2028 3,640 2029 3,825 2030 4,015 2031 3,805 2032 3,995 2033 4,200

Structure Fixed rate, tax exempt Series 2015A and taxable Series 2015B bonds Payment Dates Series 2015A principal due January 1 of each year; Series 2015B principal due March 1, 2018 Series 2015A interest paid semiannually on January 1 and July 1, beginning January 1, 2016 Series 2015B interest paid semiannually on March 1 and September 1, beginning March 1, 2016 Redemption Series 2015A will be callable July 1, 2025 at par; Series 2015B Bonds will be noncallable

K I f i

4,200 2034 2,520 2035 2,645 2036 2,780 2037 2,915 2038 3,065 2039 3,215 2040 3,375 2041

Pricing Date September 24, 2015 Closing Date October 7, 2015

Key Dates

Preliminary Official Statement

http://www.munios.com/id.aspx?i=FTWXS1ECmvY4

Senior Manager Co-Managers Barclays Citigroup; Wells Fargo Securities; Backstrom

Key Information

2041 3,545 2042 3,725 2043 3,910 2044 4,105 2045 4,310 2046 4,525 2047 4,750 2048 4,990

McCarley Berry & Co., LLS * Preliminary, subject to change.

4,990 $104,565 $24,455

4

The Project j

• Bond proceeds will fund part of a multi-phase development of a campus of

biomedical facilities leased by the University for use by its School of Medicine and related clinical entities (the “Project”)

• Phase I, Phase II and the first component of Phase 3 were completed on

time

• four research buildings and one administrative building totaling nearly

400 000 assignable square feet 400,000 assignable square feet

• all of the existing facilities are fully assigned, with approximately

1,000 University researchers and employees

• The Project will provide approximately 165,000 square feet of biomedical

research facilities, with three clinics and associated clinical research facilities

• Research at this site is expected to include new programs and the

expansion of existing programs including microbiology global health expansion of existing programs, including microbiology, global health, kidney research, immunology, biomedical informatics, neurosciences, protein design, gastrointestinal and behavioral assays

• In addition, the Project will include a primary care clinic, as well as a

diabetes clinic and an ophthalmology clinic focused on retinal diseases 5

Project Location j

UW Main Campus

3 Miles Away

Downtown Seattle

1.5 Miles Away

1 mi 1 km Map Scale

6

Financing Structure Overview g

• To fund the next phase of its biomedical research program, the University has contracted with

WBRP 3.2, a non-profit corporation that will issue lease revenue bonds on behalf of the University, and in the case of the tax-exempt Series 2015A Bonds, pursuant to Revenue Ruling 63-20 (as d d) amended)

• The University’s South Lake Union biomedical complex is associated with and geographically proximate to

the region’s biomedical research activities (e.g., the Fred Hutchinson Cancer Research Center and the Center for Infectious Disease Research)

WBRP 3 2 acting through its Development Manager City Investors LLC is obligated to construct

• WBRP 3.2, acting through its Development Manager, City Investors LLC, is obligated to construct

the Project under a Fixed Price contract, including all project costs

• Furthermore, the University has covenanted that if Project Costs exceed Project Funds, the University will

pay all costs to complete the Project as the same become due and payable

Th U i it ill l th P j t f WBRP 3 2 d th F iliti L h t

• The University will lease the Project from WBRP 3.2 under the Facilities Lease, whose term

extends 15 years beyond the 2048 final maturity of the Bonds

• The University is obligated to make Monthly Rent payments and a Lump-Sum Payment sufficient to cover debt

service on the Bonds commencing on March 1, 2018; these payments are subject to neither appropriation nor b t t th ti t WBRP 3 2’ li h t f P j t il t abatement, nor are they contingent upon WBRP 3.2’s accomplishment of any Project milestones

• The University is obligated to make its Rent payments from its General Revenues on an equal and ratable

basis with the University’s other outstanding and future General Revenue obligations 7

University (Lessee) Overview y ( )

• Founded in 1861, the University is a research university situated on a main campus in Seattle

and on two branch campuses in Tacoma and Bothell

• With over 50 000 students and approximately 40 000 employees the University is the largest of
• With over 50,000 students and approximately 40,000 employees, the University is the largest of

the six State four-year institutions of higher education in Washington

• Major facilities and activities of the University include the University Medical Center and a

significant focus on research

• The University’s total revenues were $5.8 billion* in FY 2014, with grants and contracts

awarded that year totaling $1.3 billion; General Revenues are a sub-component of total revenues

• The University is ranked number one among public universities in the receipt of federal funds for science

and engineering (and in each year since 1974 has been among the top five universities in the nation, both public and private, in federal research and training funds awarded)

• The University received $262 million from the State of Washington in the form of State
• perating appropriations in FY 2014, which is less than 5% of the University’s total revenues
• The University's total endowment as of June 30, 2015 was approximately $3.1 billion, up

approximately 6.8% from June 30, 2014

*Includes Northwest Hospital & Medical Center and Valley Medical Center.

8

General Revenues

• The table below summarizes the components of the revenue base for the University’s obligation to

make Rent payments under the Facilities Lease

Fiscal Year (thousands) Fiscal Year (thousands) General Revenue Components 2010 2011 2012 2013 2014 Student tuition and fees (less student activities fees, U-Pass fees, technology fees, Building Fees, and loan funds) $ 463,798 $ 525,085 $ 601,964 $ 711,056 $ 733,815 Grant and contract indirect costs 228,111 248,274 247,835 246,502 242,773 Invested funds distributions and net invested funds unrealized gains and losses* 49,118 34,372 51,861 16,340 39,742 Sales and services of education departments 166,810 165,475 185,521 198,320 212,592 963 261 1 085 871 1 125 187 1 194 740 1 332 929 Auxiliary systems and patient services** 963,261 1,085,871 1,125,187 1,194,740 1,332,929 Other operating revenues 55,133 74,478 62,444 90,040 87,782 Total General Revenues $ 1,926,231 $ 2,133,555 $ 2,274,812 $ 2,456,998 $ 2,644,633 General Revenue Balances

Note: Unaudited 2015 numbers are not yet available. * See notes to the “University of Washington Supplementary Information, June 30, 2014 and 2013” in Appendix B of the Preliminary Official Statement.

Accumulated General Revenue Balances $ 992,807 $ 1,189,010 $ 1,240,322 $ 1,459,610 $ 1,614,991

** Excludes revenues from Northwest Hospital & Medical Center and Valley Medical Center. See “UW Medicine – Components of UW Medicine” in the Preliminary Official Statement.

9

History of Strong Student Demand and Enrollment y g

• During the past five years ending FY

2014, undergraduate and total headcount enrollment has grown by

35,61 36,192 36,785 37,895 39,331

30,000 40,000

University-Wide Enrollment

10.4% and 9.5%, respectively, while graduate headcount enrollment has increased by 7.6%

• Applications for freshman admittance

5

2

5 12,389 12,574 12,782 13,177 13,333 1,936 1,979 1,999 2,000 2,006

10,000 20,000

have increased by 40% since Autumn Quarter 2010, with selectivity of 58% for Autumn Quarter 2014

• Average GPA for incoming freshmen in

FY10 FY11 FY12 FY13 FY14 Undergraduate Graduate Professional 40,000

University-Wide Freshmen Admissions

g g Fall 2014 was 3.7, and the average SAT score was 1200 (out of a perfect score of 1600 for Math and Reading Comprehension)

25,268 27,468 29,723 33,857 35,382 14,753 16,527 18,152 19,560 20,510 6 6 7 7

20,000 30,000

• Resident undergraduate tuition for Fall

2015 is $11,839 for the full academic year

6,122 6,546 6,931 7,233 7,429

10,000 FY10 FY11 FY12 FY13 FY14 Applied Accepted Enrolled

Source: The University

10

Applied Accepted Enrolled

University-Wide Revenues and Expenses

• The University maintains a diversified revenue structure
• In FY 2014, State operating and capital appropriation revenue was less than 5% of total

revenue

y p

P ti t

University-Wide Expenses, FY2014 (millions) Total Expenses: $5.2 billion

revenue

University-Wide Revenues, FY2014 (millions) Total Revenues: $5.8 billion

Patient Services, $1,960 Tuition and Fees, $839 Grants and Contracts, $1,327 Instruction, $1,037 Research, $766 Medical, $1,831 Other, $1,379 Academic S t Other $286 State Funding, $270 Support, $297 Depreciation, $308 Auxiliary, $286 Institutional Support, $224 Scholarship, $138 Other, $286

Source: The University’s 2014 financial statements Source: The University s 2014 financial statements Note: Northwest Hospital & Medical Center and Valley Medical Center revenue and expenses are included in these amounts. In addition, General Revenues are a sub-component of the total revenues shown here.

11

The University’s Track Record in Attracting Research is Strong

• The University has received over $1 billion of grant and contract awards for each of the past six

years

y g g

• Federal funding continues to be the largest source of grant and contract revenue

Grant and Contract Awards by Fiscal Year

(millions)

2011 2012 2013 2014 2015 Federal Grants and Contracts $ 1,245 $ 1,187 $ 981 $ 1,084 $ 1,037 Without ARRA(1) 1,087 1,180 972 1,083 1,036 Non-Federal Grants and

83%

Contracts 253 284 287 302 264 Total(2) $ 1,498 $ 1,471 $ 1,238 $ 1,386 $ 1,301 Total without Student Financial Aid $ 1,396 $ 1,364 $ 1,123 N/A(3) N/A(3)

83%

(1)

Federal grants and contracts excluding amounts awarded pursuant to the American Recovery and Reinvestment Act of 2009 (“ARRA”).

(2)

Totals subject to change per negotiations with sponsors after fiscal year end.

(3)

External financial aid grants to undergraduates were removed from totals starting in Fiscal Year 2014. Source: The University’s General Revenue Audit Supplement and internal records.

12

UW School of Medicine

• School of Medicine
• Founded in 1946, the School of Medicine (“SOM”) is recognized for training primary

care physicians and for advancing medical knowledge through scientific

• research. SOM has been ranked as the top primary-care medical school in the nation

and is second in the nation in research funding received from the National Institutes of Health

• Four Hospitals
• Two Academic Medical Centers
• Harborview* (413 beds) is designated as the State’s only Level 1 adult and pediatric

( ) g y p Trauma and Burn Center, and serves as the referral center for Washington, Wyoming, Alaska, Montana and Idaho (WWAMI)

• UW Medical Center (450 beds) serves as the quaternary care referral center for

cardiac, transplant, cancer and high risk OB/NICU for WWAMI

• Two Community Hospitals

y p

• Northwest Hospital & Medical Center (281 beds) and Valley Medical Center (321

beds)

• UW Physicians
• Practice group of more than 2,000 associated UW physicians and health professionals
• UW Neighborhood Clinics
• UW Neighborhood Clinics
• Ten primary care clinics and six urgent care clinics throughout the greater Seattle area
• Airlift Northwest
• Provides critical care air medical transport for patients throughout the WWAMI region
• Shared Ownership and Governance

p

• Children’s University Medical Group and Seattle Cancer Care Alliance

* Owned by King County and managed by University of Washington.

13

Tuition and State Appropriations pp p

• The State legislature reduced undergraduate resident tuition for both FY 2016 and FY 2017 and

provided increased State support

• The State has authority to set undergraduate resident tuition, while the University retains statutory authority

to set non-resident and graduate/professional tuition rates; beginning in 2017-18, the University may increase resident undergraduate tuition by no more than the average annual percentage growth rate in the median hourly wage for Washington for the previous 14 years

• For the 2015-17 biennium (which corresponds to the University’s FY 2016 and FY 2017), the Legislature

reduced resident undergraduate tuition by a cumulative 15% from Fall 2014 levels, and the Legislature largely offset the impact of this reduction with an increase in its appropriation to the University Expenditures of State Appropriations to the University, by Type

Fiscal Year (millions) 2010 2011 2012 2013 2014 2015 Operating Appropriations $ 303.5 $ 296.8 $ 218.3 $ 218.2 $ 262.1 $ 255.2 Capital Appropriations 32.4 37.3 6.1 47.1 7.7 20.8 Total Appropriations $ 335.9 $ 334.1 $ 224.4 $ 265.3 $ 269.8 $ 276.0

Source: The University’s General Revenue Audit Supplement

14

Consolidated Endowment Fund Market Value*

$2,833 $3,076

$3,000 $3,500

• For the ten years ending June 30, 2015, the

average annual return of the University’s Consolidated Endowment Fund (the “CEF”) was 7 5% Consolidated Endowment Fund Market Value (millions)

$1,830 $2,154 $2,111 $2,347 $2,833

$2,000 $2,500 $3,000

7.5%

• As of June 30, 2015, University Cash and Liquidity

Pools totaled $1.5 billion

• The University makes quarterly distributions to

programs equal to 4% of the 20-quarter rolling

$500 $1,000 $1,500

p g q q g average of the CEF’s market valuation

• In addition, the operating policy calls for an

administrative fee of 1% to support fundraising and stewardship activities (0.8%) and investment management (0 2%)

$0 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015

management (0.2%)

Source: The University’s General Revenue Audit Supplement, except for 2015 data, which are unaudited. * Inclusive of gifts, distributions and fees.

15

Summary & Conclusion Su a y & Co c us o

• The Project is a continuation of a multi-phase development of a biomedical

facilities campus incorporating clinics and clinical research

• The Facilities Lease between WBRP 3.2 and the University provides all of the

revenues WBRP 3 2 uses to pay debt service on the Bonds and is: revenues WBRP 3.2 uses to pay debt service on the Bonds and is:

• Not subject to appropriation or abatement in the event of damage or partial

condemnation

• A date-certain lease (no construction or completion risk for bondholders)
• The breadth of the General Revenues that secure the University’s obligation

under the Facilities Lease is significant, and total General Revenues have grown 37% from FY2010 to FY2014

• The University’s overall financial profile is strong:
• Grant and contract awards reached $1.3 billion* in FY 2015
• The Consolidated Endowment Fund balance as of June 30 2015 was
• The Consolidated Endowment Fund balance as of June 30, 2015 was

approximately $3.1 billion

• Cash and Liquidity Pools within the operating fund totaled a combined $1.5

billion as of June 30, 2015

• State operating and capital appropriations account for less than 5% of total

revenues

• Demand for enrollment at the University is strong, with freshman applications

having risen 40% from FY 2010 to FY 2014

• The University is a premier institution of higher learning in the Pacific Northwest,

with more than 50,000 students and 40,000 employees and an average incoming with more than 50,000 students and 40,000 employees and an average incoming freshman GPA of 3.7

*Preliminary; subject to change.

16

Q&A Contact Information Q& Co tact

• at o

Please direct any questions you may have to: Bill Starkey University of Washington (206) 616-5122 starkeyb@uw.edu starkeyb@uw.edu Dick King Barclays (206) 344 5838 (206) 344-5838 richard.b.king@barclays.com

In addition, the University prepares a Bondholder Report annually, which may be accessed through the University’s website (http://f2.washington.edu/treasury/alm)*.

* The University’s website is not part of this presentation (or part of the University’s disclosure), and investors should not rely on information

17

y p p ( p y ) y presented in the University’s website in determining whether to purchase the Bonds. This inactive textual reference to the University’s website is not a hyperlink and does not incorporate the University’s website by reference.