UNF avoids high-risk investments

Spinnaker

UNF’s financial investments are making positive ground and are well situated to weather the financial storm, members of the Board of Trustees said.

UNF had very little capital invested into Mortgage-backed Securities – high-risk sub-prime mortgages involved in the nation-wide bailout – which relieves the  portfolio of pressure other less diversified accounts
will face.

UNF had less than 2 percent invested in Lehman Brothers and AIG, according to the Treasurers’ Report for the 2007-2008 fiscal year.

Both companies were over-leveraged in the housing sector and recently experienced liquidity problems prompting Congress’ bailout package.

To further distance the university from high-risk investments, the Board of Trustees invested $20 million with the PFM Group, a portfolio management fund for governmental and non-profit organizations, and $20 million with the Royal Bank of Canada.

“We have a very conservative investment policy, and we diversified due to the market conditions,” UNF Treasurer Mike Neglia said.  “The two new market managers [RBC and PFM] adhered to our investment
policies.”

However, the Florida State Board of Administration – which UNF previously had a $7.3 million investment – did not fare as well.

The SBA is a constitutional entity of the state government that manages 34 investment funds, with an investment pool worth more than $163 billion, a sizable portion of which was invested in mortgage-backed securities, according to the group’s Web site.

Due to the SBA’s liquidity issues after the ensuing run on the bank, the institution froze UNF’s investment.

UNF has not lost any of its SBA investments and has actually recouped a majority of it, but the account still remains frozen at $2.2 million, said Shari Shuman, vice president of administration and affairs.

The board restructured several of its investment accounts, reducing the level of involvement in Evergreen and Sawgrass LP due to their investment level in mortgage-backed securities, Shuman said.

The university is also in a solid place concerning its housing and parking bonds, according to the Treasurers’ Report.

The $109.9 million housing bond for the new dorm facilities is locked in at a fixed interest rate, as is the $21.2 million student union bond. However, the $9.3 million parking bond is tied to a variable interest rate.

The parking bonds were issued in 1998 for the parking garages, and have substantially reduced in size over time.

The bonds were being marketed by Lehman Brothers until the investment bank went belly up and Barclays PLC purchased its assets.

“The issue is finding people to buy the bonds,” Shuman said. “Although, we are looking at other lending institutions [besides Barclays] to market the bonds.”

The only financial investment that did not make par was not officially tied with UNF, and was under the TSI/Foundation Accounting for the UNF Training & Services Institute, Inc., a law enforcement training entity.

The TFA invested $22,000 in Wachovia’s common fund,  and when the bank discontinued the fund the Training and Services Institute was only able to get back 34 percent of their initial investment.

E-mail James Cannon II at [email protected]