UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number: 811-05291
College and University Facility Loan Trust One
----------------------------------------------
(Exact name of registrant as specified in charter)
c/o U.S. Bank One Federal Street Boston, MA 02110
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(Address of principal executive offices) (Zip code)
Diana J. Kenneally
U.S. Bank Corporate Trust Services
One Federal Street
Boston, MA 02110
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(Name and address of agent for service)
Registrant's telephone number, including area code: (617) 603-6406
Date of fiscal year end: November 30
Date of reporting period: December 1, 2003 - May 31, 2004
ITEM 1. REPORT TO STOCKHOLDERS.
College and University
Facility Loan Trust One
Financial Statements
Six Months Ended May 31, 2004
Accountants' Compilation Report
To the Owner Trustee of
College and University Facility
Loan Trust One
We have compiled the accompanying statement of assets and liabilities of College
and University Facility Loan Trust One (the "Trust"), including the schedule of
investments, as of May 31, 2004, and the related statements of operations, cash
flows, changes in net assets and financial highlights for the six months then
ended, in accordance with Statements on Standards for Accounting and Review
Services issued by the American Institute of Certified Public Accountants. The
financial information for the years ended November 30, 2003, 2002, 2001, 2000
and 1999, presented herein for comparative purposes, was audited by other
auditors, whose report thereon dated January 29, 2004 expressed an unqualified
opinion, except for the effect on the 2003 and 2002 financial statements of
accounting for investments under the amortized cost method of accounting as
described in Note 2 to the financial statements.
A compilation is limited to presenting in the form of financial statements
information that has been obtained from the books and records of the Trust. We
have not audited or reviewed the accompanying financial statements or
supplemental material and, accordingly, do not express an opinion or any other
form of assurance on them. However, we did become aware of a departure from
accounting principals generally accepted in the United States of America that is
described in the following paragraph.
As disclosed in Note 2 to the financial statements, the Trust is accounting for
its investments under the amortized cost method of accounting, adjusted by an
allowance for loan loss. Accounting principals generally accepted in the United
States of America require that the investments be accounted for under the fair
value method of accounting. Accounting for investments under the fair value
method of accounting, based upon the Trust's estimate of fair value as described
in Note 8, would result in an increase of approximately $14,529,000 in the
recorded value of the investments and an increase in unrealized appreciation of
approximately $14,529,000 as of May 31, 2004.
We are not independent with respect to College and University Facility Loan
Trust One.
/s/ BDO Seidman, LLP
July 15, 2004
College and University
Facility Loan Trust One
Statement of Assets and Liabilities
================================================================================
May 31, 2004
===========================================================================================
Assets:
Investments, at amortized cost, net of allowance for loan losses
of $860,000 (Notes 2, 6, 7 and 8, and Schedule of Investments) $43,679,478
Cash 48,205
Prepaid expenses 14,875
Interest receivable 643,032
Deferred bond issuance costs (Note 2) 316,811
- -------------------------------------------------------------------------------------------
Total assets 44,702,401
- -------------------------------------------------------------------------------------------
Liabilities:
Bonds payable (Notes 3 and 8) 30,626,793
Interest payable (Note 3) 1,615,563
Accrued expenses and other liabilities 215,048
Distributions payable to Class B certificateholders (Note 5) 1,294,367
- -------------------------------------------------------------------------------------------
Total liabilities 33,751,771
- -------------------------------------------------------------------------------------------
Net Assets:
Class B certificates, par value $1 - authorized, issued
and outstanding - 1,001,643 certificates (Note 5) 1,001,643
Distributions in excess of tax earnings (Notes 2 and 5) (911,765)
Additional paid-in capital (Note 2) 10,860,752
- -------------------------------------------------------------------------------------------
Total net assets $10,950,630
===========================================================================================
Net asset value per Class B certificate
(based on 1,001,643 certificates outstanding) $ 10.93
===========================================================================================
See accompanying accountants' compilation report
and notes to financial statements.
3
College and University
Facility Loan Trust One
Statement of Operations
================================================================================
Six months ended May 31, 2004
===========================================================================================
Investment income:
Interest income (Note 2) $ 3,138,211
- -------------------------------------------------------------------------------------------
Expenses:
Interest expense (Notes 2 and 3) 1,646,828
Servicer fees (Note 4) 17,370
Trustee fees (Note 4) 21,054
Other trust and bond administration expenses 210,357
- -------------------------------------------------------------------------------------------
Total expenses 1,895,609
- -------------------------------------------------------------------------------------------
Net investment income 1,242,602
Reduction of reserve for loan losses (Notes 2 and 6) 100,000
- -------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations $ 1,342,602
===========================================================================================
See accompanying accountants' compilation report
and notes to financial statements.
4
College and University
Facility Loan Trust One
Statement of Cash Flows
================================================================================
Six months ended May 31, 2004
===========================================================================================
Cash flows from operating activities:
Interest received $ 1,137,245
Interest paid (1,747,593)
Operating expenses paid (284,107)
- -------------------------------------------------------------------------------------------
Net cash used in operating activities (894,455)
- -------------------------------------------------------------------------------------------
Cash flows from investing activities:
Net decrease in funds held under investment agreements (611,820)
Principal payments on Loans 5,321,875
- -------------------------------------------------------------------------------------------
Net cash provided by investing activities 4,710,055
- -------------------------------------------------------------------------------------------
Cash flows from financing activities:
Principal repayments on Bonds (2,502,927)
Distributions to Class B certificateholders (1,056,296)
Advanced funds repaid to Servicer (381,903)
- -------------------------------------------------------------------------------------------
Net cash used in financing activities (3,941,126)
- -------------------------------------------------------------------------------------------
Net decrease in cash (125,526)
Cash, beginning of period 173,731
- -------------------------------------------------------------------------------------------
Cash, end of period $ 48,205
===========================================================================================
Reconciliation of net increase in net assets resulting from
operations to net cash used for operating activities:
Net increase in net assets resulting from operations $ 1,342,602
Reduction of reserve for loan losses (100,000)
Decrease in interest receivable 22,208
Increase in prepaid expenses (14,875)
Decrease in accrued expenses and other liabilities (20,451)
Decrease in Bond interest payable (132,030)
Amortization of deferred Bond issuance costs 31,265
Amortization of purchase discount on Loans (2,023,174)
- -------------------------------------------------------------------------------------------
Net cash used in operating activities $ (894,455)
===========================================================================================
See accompanying accountants' compilation report
and notes to financial statements.
5
College and University
Facility Loan Trust One
Statement of Changes in Net Assets
(Note 2(f))
================================================================================
For the
Six Months
Ended Year Ended
May 31, November 30,
2004 2003
================================================================================================================
(Unaudited) (Audited)
From operations:
Net investment income $ 1,242,602 $ 1,299,460
Reduction of reserve for loan losses 100,000 --
- ----------------------------------------------------------------------------------------------------------------
Net increase in net assets applicable to Class B
certificateholders resulting from operations 1,342,602 1,299,460
Capital certificate transactions:
Distributions to Class B certificateholders (Note 5) (1,294,367) (1,275,917)
- ----------------------------------------------------------------------------------------------------------------
Net increase in net assets 48,235 23,543
Net assets:
Beginning of period 10,902,395 10,878,852
- ----------------------------------------------------------------------------------------------------------------
End of period $10,950,630 $10,902,395
================================================================================================================
See accompanying accountants' compilation report
and notes to financial statements.
6
College and University
Facility Loan Trust One
Financial Highlights
(Notes 1 and 5)
================================================================================
For the
Six Months
Ended Years Ended November 30,
May 31, -------------------------------------------------------------------
2004 2003 2002 2001 2000 1999
=======================================================================================================================
(Unaudited) Audited
-------------------------------------------------------------------
Net asset value, beginning of period $10.88 $10.86 $11.11 $11.36 $11.17 $10.15
Net investment income 1.24 1.29 .78 .96 1.09 1.21
Reduction of reserve for loan losses .10 -- -- .16 -- --
Dividends to Class A Preferred
certificateholders:
From net investment income -- -- -- -- .04 (.05)
As tax return of capital -- -- -- -- (.06) (.14)
Distributions to Class B
certificateholders (1.29) (1.27) (1.03) (1.37) (.88) --
- -----------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $10.93 $10.88 $10.86 $11.11 $11.36 $11.17
=======================================================================================================================
Total investment return (a) N/A N/A N/A N/A N/A N/A
Net assets applicable to Class A
Preferred certificates,
end of period $ -- $ -- $ -- $ -- $ -- $ 327,709
=======================================================================================================================
Net assets applicable to Class B
certificates, end of period $10,950,630 $10,902,395 $10,878,852 $11,132,814 $11,379,460 $11,188,285
=======================================================================================================================
Ratios and Supplemental Data:
Ratio of operating expenses to
average net assets applicable to
Class B certificates 34.70%(b)(c) 37.84%(b) 41.40%(b) 45.48%(b) 50.42%(b) 59.53%(b)
Ratio of net investment income
to average net assets applicable
to Class B certificates 22.74%(c) 11.93% 7.11% 8.57% 9.71% 11.41%
Number of Class B certificates
outstanding, end of period 1,001,643 1,001,643 1,001,643 1,001,643 1,001,643 1,001,643
(a) The Trust's investments are recorded at amortized cost as discussed in Note
2. Accordingly, the financial statements do not reflect the market value of
such investments. For this reason, management believes that no meaningful
information can be provided regarding "Total Investment Return" and has not
included information under that heading. In addition, as the Trust's
investments are not traded, management believes that no meaningful
information can be provided regarding portfolio turnover.
(b) Excluding interest expense, the ratio of operating expenses to average net
assets applicable to Class B Certificates was 4.55%(c), 4.22%, 3.64%,
3.63%, 3.44% and 3.60% in 2004, 2003, 2002, 2001, 2000 and 1999,
respectively.
(c) Annualized.
See accompanying accountants' compilation report and notes to financial
statements.
7
College and University
Facility Loan Trust One
Notes to Financial Statements
================================================================================
1. Organization College and University Facility Loan Trust One (the Trust)
and Business was formed on September 17, 1987 as a business trust under
the laws of the Commonwealth of Massachusetts by a
declaration of trust by the Bank of Boston (the Owner
Trustee), succeeded by State Street Bank and Trust Company,
succeeded by US Bank (successor Owner Trustee), not in its
individual capacity but solely as Owner Trustee. The Trust
is registered under the Investment Company Act of 1940 (as
amended) as a diversified, closed-end, management investment
company.
The Trust was formed for the sole purpose of raising funds
through the issuance and sale of bonds (the Bonds). The
Trust commenced operations on September 29, 1987 (the
Closing Date) and issued Bonds in five tranches in the
aggregate principal amount of $126,995,000. The Bonds
constitute full recourse obligations of the Trust. The
collateral securing the Bonds consists primarily of a pool
of college and university facility loans (the Loans) to
various postsecondary educational institutions and funds
held under the indenture (the Indenture) and the investment
agreements. The Loans were originated by, or previously
assigned to, the United States Department of Education (ED)
under the College Housing Loan Program or the Academic
Facilities Loan Program. The Loans, which have been assigned
to J.P. Morgan Trust Company, National Association, as
successor in interest to Bank One Trust Company, NA,
formerly The First National Bank of Chicago (the Bond
Trustee), are secured by various types of collateral,
including mortgages on real estate, general recourse
obligations of the borrowers, pledges of securities and
pledges of revenues. As of the Closing Date, the Loans had a
weighted average stated interest rate of approximately 3.16%
and a weighted average remaining term to maturity of
approximately 19.4 years. Payments on the Loans are managed
by the Bond Trustee in various fund accounts and are
invested under investment agreements (see Note 2) as
specified in the Indenture.
See accompanying accountants' compilation report.
8
College and University
Facility Loan Trust One
Notes to Financial Statements
================================================================================
1. Organization All payments on the Loans and earnings under the investment
and Business agreements and any required transfers from the Expense,
(Continued) Reserve and Liquidity Funds are deposited to the credit of
the Revenue Fund held by the Bond Trustee, as defined
within, and in accordance with the Indenture. On each bond
payment date, amounts on deposit in the Revenue Fund are
applied in the following order of priority: to pay amounts
due on the Bonds, to pay administrative expenses not
previously paid from the Expense Fund, to fund the Expense
Fund to the Expense Fund Requirement, to fund the Reserve
Fund to the Maximum Reserve Requirement and to fund the
Liquidity Fund to the Liquidity Fund Requirement. Any funds
remaining in the Revenue Fund on such payment date are paid
to the Class B certificateholders, as discussed in Note 5.
On the Closing Date, certificates were issued by the Trust
to ED as partial payments for the Loans. In December 1989,
ED sold, through a private placement, all of its ownership
interest in the Trust.
2. Summary of (a) College and University Facility Loans
Significant
Accounting The Loans were purchased and recorded at a discount below
Policies par. Pursuant to a "no-action letter" that the Trust
received from the Securities and Exchange Commission, the
Loans, included in investments in the accompanying statement
of assets and liabilities, are being accounted for under the
amortized cost method of accounting. Under this method, the
difference between the cost of each Loan to the Trust and
the scheduled principal and interest payments is amortized,
assuming no prepayments of principal, and included in the
Trust's income by applying the Loan's effective interest
rate to the amortized cost of that Loan. When a Loan
prepays, the remaining discount is recognized as interest
income. The remaining balance of the purchase discount on
the Loans as of May 31, 2004 was approximately $16,617,000.
As a result of prepayments of Loans in the six months ended
May 31, 2004, additional interest income of approximately
$972,000 was recognized.
See accompanying accountants' compilation report.
9
College and University
Facility Loan Trust One
Notes to Financial Statements
================================================================================
2. Summary of (a) College and University Facility Loans
Significant
Accounting The Trust's policy is to discontinue the accrual of interest
Policies on Loans for which payment of principal or interest is 180
(Continued) days or more past due or for other such Loans (Continued) if
management believes the collection of interest and principal
is doubtful. When a Loan is placed on nonaccrual status, all
previously accrued but uncollected interest is reversed
against the current period's interest income. Subsequently,
interest income is generally recognized when received.
Payments are generally applied to interest first, with the
balance, if any, applied to principal. At May 31, 2004, one
Loan has been placed on nonaccrual status, as discussed in
Note 6.
Accounting principles generally accepted in the United
States of America (GAAP), requires that the Loans be
accounted for under the fair value method of accounting.
However, management believes that the amortized cost method
of accounting best serves the informational needs of the
users of the Trust's financial statements.
(b) Other Investments
Other investments, which are included in investments in the
accompanying statement of assets and liabilities, consist of
two unsecured investment agreements issued by the Federal
National Mortgage Association bearing fixed rates of
interest of 5% and 8%. These investments are carried at
amortized cost. These investment agreements terminate on the
earlier of December 1, 2014 or the date on which the Bonds
are paid-in-full.
GAAP requires that the investments be accounted for under
the fair value method of accounting. However, management
believes that the amortized cost method of accounting best
serves the informational needs of the users of the Trust's
financial statements.
See accompanying accountants' compilation report.
10
College and University
Facility Loan Trust One
Notes to Financial Statements
================================================================================
2. Summary of (c) Federal Income Taxes
Significant
Accounting It is the Trust's policy to comply with the requirements
Policies applicable to a regulated investment company under
(Continued) Subchapter M of the Internal Revenue Code of 1986, as
amended, and to distribute substantially all of its
investment company taxable income to its certificateholders
each year. Accordingly, no federal or state income tax
provision is required.
For tax purposes, the Loans were transferred to the Trust at
their face values. Accordingly, the accretion of the
purchase discount creates a permanent book-tax difference.
(d) Deferred Bond Issuance Costs
Deferred Bond issuance costs are being amortized using the
effective interest-rate method, assuming that all mandatory
semiannual payments will be made on the term bonds as
discussed in Note 3.
(e) Accounting for Impairment of a Loan and Allowance for
Loan Losses
The allowance for loan losses is based on the Trust's
evaluation of the level of the allowance required to reflect
the risks in the loan portfolio, based on circumstances and
conditions known or anticipated at each reporting date.
The methodology for assessing the appropriateness of the
allowance consists of a review of the following three key
elements:
(1) a valuation allowance for loans identified as impaired,
(2) a formula-based general allowance for the various loan
portfolio classifications, and
(3) an unallocated allowance.
A loan is impaired when, based on current information and
events, it is probable that the Trust will be unable to
collect all amounts due in accordance with the contractual
terms of the loan agreement. Loans identified as impaired
are further evaluated to determine the estimated extent of
impairment.
See accompanying accountants' compilation report.
11
College and University
Facility Loan Trust One
Notes to Financial Statements
================================================================================
2. Summary of (e) Accounting for Impairment of a Loan and Allowance for
Significant Loan Losses (Continued)
Accounting
Policies The formula-based general allowance is derived primarily
(Continued) from a risk-rating model that grades loans based on general
characteristics of credit quality and relative risk. As
credit quality for individual loans deteriorates, the risk
rating and the allowance allocation percentage increases.
The sum of these allocations comprise the Trust's
formula-based general allowance.
In addition to the valuation and formula-based general
allowance, there is an unallocated allowance. This element
recognizes the estimation risks associated with the
valuation and formula-based models. It is further adjusted
for qualitative factors including, among others, general
economic and business conditions, credit quality trends, and
specific industry conditions.
There are inherent uncertainties with respect to the final
outcome of loans and as such, actual losses may differ from
the amounts reflected in the financial statements.
(f) Presentation of Capital Distributions
Capital distributions are accounted for in accordance with
the American Institute of Certified Public Accountants
Statement of Position (SOP) 93-2, "Determination, Disclosure
and Financial Statement Presentation of Income, Capital Gain
and Return of Capital Distributions by Investment
Companies." SOP 93-2 requires the Trust to report
distributions that are in excess of tax-basis earnings and
profits as a tax return of capital and to present the
capital accounts on a basis that approximates the amounts
that are available for future distributions on a tax basis.
See accompanying accountants' compilation report.
12
College and University
Facility Loan Trust One
Notes to Financial Statements
================================================================================
2. Summary of (f) Presentation of Capital Distributions (Continued)
Significant
Accounting As of November 30, 2003, all tax earnings and profits have
Policies been distributed. Accordingly, all accumulated undistributed
(Continued) net investment income has been reclassified to paid-in
capital. This reclassification results from permanent book
and tax differences such as the receipt of tax-exempt
interest income on certain Loans, the related interest
expense on the Bonds, and the accretion of purchase discount
on the Loans. Amounts deducted for the loan loss reserve are
not currently deductible for tax purposes and have been
reclassified as an accumulated deficit. These
reclassifications had no impact on the net investment income
or net assets of the Trust.
The Trust expects to have a tax return of capital for the
fiscal year ending November 30, 2004; however, the amount
cannot be reasonably estimated at May 31, 2004.
(g) Use of Estimates
The preparation of financial statements in conformity with
accounting principles generally accepted in the United
States requires us to make estimates, judgments and
assumptions that affect the reported amounts of assets,
liabilities, revenues and expenses, and related disclosure
of contingent assets and liabilities at the date of the
financial statements and for the period then ended. On an
on-going basis, the Trust evaluates the estimates used,
including those related to the allowance for loan losses.
The Trust bases its estimates on historical experience,
actuarial estimates, current conditions and various other
assumptions that the Trust believes to be reasonable under
the circumstances. These estimates form the basis for making
judgments about the carrying values of assets and
liabilities and are not readily apparent from other sources.
These estimates are used to assist the Trust in the
identification and assessment of the accounting treatment
necessary with respect to commitments and contingencies.
Actual results may differ from these estimates under
different assumptions or conditions.
See accompanying accountants' compilation report.
13
College and University
Facility Loan Trust One
Notes to Financial Statements
================================================================================
2. Summary of The allowance for loan losses is a critical accounting
Significant policy that requires estimates and assumptions to be made in
Accounting the preparation of the Trust's financial statements. The
Policies allowance for loan losses is based on the Trust's evaluation
(Continued) of the level of the allowance required in relation to the
estimated loss exposure in the loan portfolio. The allowance
for loan losses is a significant estimate and is therefore
regularly evaluated for adequacy by taking into
consideration factors such as prior loan loss experience,
the character and size of the loan portfolio, business and
economic conditions and the Trust's estimation of future
losses. The use of different estimates or assumptions could
produce different provisions for loan losses. See Note 2(e)
for a detailed description of the Trust's estimation process
and methodology related to the allowance for loan losses.
3. Bonds The Bonds outstanding at May 31, 2004 consist of the
following:
Principal
Interest Stated Amount
Type Rate Maturity (000's)
======================================================================================
Term 10.55% December 1, 2014 $30,627
The Bonds are being redeemed, in part, on a pro rata basis
by application of mandatory semiannual payments. The
redemption price is equal to 100% of the principal amount to
be redeemed plus interest accrued to the redemption date.
Interest on the Bonds is payable semiannually.
On June 1, 2004, the Trust made the mandatory redemption of
$1,894,263 on the Bonds.
See accompanying accountants' compilation report.
14
College and University
Facility Loan Trust One
Notes to Financial Statements
================================================================================
3. Bonds The aggregate scheduled maturities of the Bonds, including
(Continued) the scheduled mandatory redemptions at May 31, 2004, are as
follows:
Amount
Fiscal Year (000's)
=====================================================================================
2004 $ 1,894
2005 4,091
2006 3,457
2007 3,218
2008 2,785
Thereafter 15,182
------------------------------------------------------------------------------------
Total $30,627
=====================================================================================
The Bonds are not subject to optional redemption by either
the Trust or the bondholders.
In the event the Trust realizes negative cash flows, various
reserve funds have been established and maintained such
that, on or before such bond payment date, such funds may be
used by the Bond Trustee to make any required payments on
the Bonds and to pay operating expenses of the Trust.
As required by the Indenture, the scheduled future cash
flows for Loans in Default are excluded from the calculation
of the Reserve Fund requirement. The impact of excluding
Loans in Default from the calculation increases the Reserve
Fund requirement. The cash flows from the June 1, 2004 Bond
Payment Date were sufficient to satisfy the maximum reserve
fund requirement of $8,701,981, as required by the
Indenture.
See accompanying accountants' compilation report.
15
College and University
Facility Loan Trust One
Notes to Financial Statements
================================================================================
4. Administrative (a) Servicer
Agreements
As compensation for the services provided under the
servicing agreement, GMAC Commercial Mortgage receives a
servicing fee. This fee is earned on each date of payment
for each Loan and is equal to 0.055 of 1% of the outstanding
principal balance of such Loan divided by the number of
payments of principal and interest in a calendar year. For
the six months ended May 31, 2004, this fee totaled $15,070.
GMAC Commercial Mortgage is reimbursed by the Trust for
out-of-pocket expenses incurred in connection with the
inspection of buildings and property used as collateral for
the loans. For the six months ended May 31, 2004,
out-of-pocket expenses totalled $2,300.
(b) Trustees
As compensation for services provided, the Owner and Bond
Trustees are entitled under the Declaration of Trust and the
Indenture to receive the following fees:
o The Owner Trustee, in its capacities as manager of the
Trust and as Owner Trustee, earned fees of $7,046 and
$7,830, respectively, for the six months ended May 31,
2004.
o The Bond Trustee is entitled to an annual fee equal to
0.025 of 1% of the aggregate outstanding principal of
the Bonds on the bond payment date immediately
preceding the date of payment of such fee. The Bond
Trustee is also reimbursed for out-of-pocket expenses
in an amount not to exceed 4% of the applicable annual
fee. In addition, the Bond Trustee is reimbursed for
other agreed-upon related expenses. For the six months
ended May 31, 2004, total Bond Trustee fees and
out-of-pocket expenses amounted to $6,178.
See accompanying accountants' compilation report.
16
College and University
Facility Loan Trust One
Notes to Financial Statements
================================================================================
5. Certificates Holders of each of the Class B certificates receive amounts
paid to the Owner Trustee pursuant to the Declaration of
Trust on a pro rata basis. On June 1, 2004, a distribution
of $1,294,367 was made to the Class B certificateholders.
This payment is reflected as a liability in the accompanying
statement of assets and liabilities.
While the Bonds are outstanding, distributions to the Class
B certificateholders are made on the second business day in
each June and December (the Distribution Date) and, after
the Bonds are paid in full, on the first business day of
each month. The certificateholders shall each be entitled to
one vote per certificate.
6. Allowance for An analysis of the allowance for loan losses for the six
Loan Losses months ended May 31, 2004 is summarized as follows:
Balance, beginning of year $ 960,000
Reduction in reserve for loan losses (100,000)
Charge-offs --
------------------------------------------------------------------------------------
Balance, end of year $ 860,000
====================================================================================
At May 31, 2004, there was one Loan in Default, with an
unpaid principal balance of approximately $2,871,000. The
recorded investment in that loan, approximately $459,000
with a related allowance for loan loss of $321,352, is
considered to be impaired.
The average recorded investment in the impaired loan during
the six months ended May 31, 2004 was approximately
$481,000. For the six months ended May 31, 2004, no interest
income was recognized on the impaired loan. See Note 2(e)
for a discussion of the Trust's impaired loan accounting
policy.
See accompanying accountants' compilation report.
17
College and University
Facility Loan Trust One
Notes to Financial Statements
================================================================================
7. Loans Scheduled principal and interest payments on the Loans as of
May 31, 2004, excluding payments for Loans in Default, as
defined in the Indenture, are as follows:
Principal Interest
Payments Payments Total
Fiscal year (000's) (000's) (000's)
====================================================================================
2004 $ 2,866 $ 642 $ 3,508
2005 4,700 1,165 5,865
2006 3,983 1,024 5,007
2007 3,645 901 4,546
2008 3,419 790 4,209
Thereafter 23,285 3,248 26,533
------------------------------------------------------------------------------------
Total $41,898 $7,770 $49,668
====================================================================================
Expected payments may differ from contractual payments
because borrowers may prepay or default on their
obligations. Accordingly, actual principal and interest
payments on the Loans may vary significantly from the
scheduled payments.
See accompanying accountants' compilation report.
18
College and University
Facility Loan Trust One
Notes to Financial Statements
================================================================================
7. Loans The following analysis summarizes the stratification of the
(Continued) Loan portfolio by type of collateral and institution as of
May 31, 2004:
Amortized
Number Cost
Type of Collateral of Loans (000's) %
====================================================================================
Loans secured by a
first mortgage 57 $14,825 52.7%
Loans not secured by
a first mortgage 37 13,326 47.3
------------------------------------------------------------------------------------
Total Loans 94 $28,151 100.0%
====================================================================================
Amortized
Number Cost
Type of Institution of Loans (000's) %
====================================================================================
Private 57 $13,756 48.9%
Public 37 14,395 51.1
------------------------------------------------------------------------------------
Total Loans 94 $28,151 100.0%
====================================================================================
The ability of a borrower to meet future debt service
payments on a Loan will depend on a number of factors
relevant to the financial condition of such borrower,
including, among others, the size and diversity of the
borrower's sources of revenues; enrollment trends;
reputation; management expertise; the availability and
restrictions on the use of endowments and other funds; the
quality and maintenance costs of the borrower's facilities
and, in the case of some Loans to public institutions which
are obligations of a state, the financial condition of the
relevant state or other governmental entity and its policies
with respect to education. The ability of a borrower to
maintain enrollment levels will depend on such factors as
tuition costs, geographical location, geographic diversity,
quality of the student body, quality of the faculty and
diversity of program offerings.
See accompanying accountants' compilation report.
19
College and University
Facility Loan Trust One
Notes to Financial Statements
================================================================================
7. Loans The collateral for Loans that are secured by a mortgage on
(Continued) real estate generally consists of special purpose
facilities, such as dormitories, dining halls and
gymnasiums, which are integral components of the overall
educational setting. As a result, in the event of borrower
default on a Loan, the Trust's ability to realize the
outstanding balance of the Loan through the sale of the
underlying collateral may be negatively impacted by the
special purpose nature and location of such collateral.
8. Fair Value Statement of Financial Accounting Standards No. 107,
of Financial "Disclosures about Fair Value of Financial Instruments,"
Instruments allows for the use of a wide range of valuation techniques;
therefore, it may be difficult to compare the Trust's fair
value information to public market information or to other
fair value information. Accordingly, the fair value
information presented below does not purport to represent,
and should not be construed to represent, the underlying
market value of the Trust's net assets or the amounts that
would result from the sale or settlement of the related
financial instruments. Further, as the assumptions inherent
in fair value estimates change, the fair value estimates
will change.
Current market prices are not available for most of the
Trust's financial instruments since an active market
generally does not exist for such instruments. In accordance
with the terms of the Indenture, the Trust is required to
hold all of the Loans to maturity and to use the cash flows
therefrom to retire the Bonds. Accordingly, the Trust has
estimated the fair values of its financial instruments using
a discounted cash flow methodology. This methodology is
similar to the approach used at the formation of the Trust
to determine the carrying amounts of these instruments for
financial reporting purposes. In applying the methodology,
the calculations have been adjusted for the change in the
relevant market rates of interest, the estimated duration of
the instruments and an internally developed credit risk
rating of the instruments. All calculations are based on the
scheduled principal and interest payments on the Loans
because the prepayment rate on these Loans is not subject to
estimate.
See accompanying accountants' compilation report.
20
College and University
Facility Loan Trust One
Notes to Financial Statements
================================================================================
8. Fair Value The estimated fair value of each category of the Trust's
of Financial financial instruments and the related book value presented
Instruments in the accompanying statement of assets and liabilities as
(Continued) of May 31, 2004 are as follows:
Amortized
Cost Fair Value
(000's) (000's)
====================================================================================
Loans $27,291* $40,034
Investment Agreements:
Revenue Fund 13,788 14,735
Liquidity Fund 2,600 3,439
------------------------------------------------------------------------------------
$43,679 $58,208
====================================================================================
Bonds $30,627 $37,691
====================================================================================
*Net of allowance for loan losses of $860,000.
See accompanying accountants' compilation report.
21
COLLEGE AND UNIVERSITY FACILITY LOAN TRUST ONE
----------------------------------------------
SCHEDULE OF INVESTMENTS
-----------------------
May 31, 2004
------------
(Dollar Amounts in Thousands)
Outstanding Stated Internal Amortized
Principal Interest Maturity Rate of Cost (Notes
Balance Description Rate % Date Return % (B) 1 and 2)
- ------------- ------------------------------------------- ---------- ---------- -------------- -------------
COLLEGE AND UNIVERSITY LOANS (62.5%)
---------- ALABAMA --------
$88 Birmingham-Southern College 3.00 10/01/2006 12.48 $79
272 Birmingham-Southern College 3.00 10/01/2010 12.47 202
10 Stillman College 3.00 02/01/2007 13.24 8
1,486 University of Alabama 3.00 05/01/2021 12.27 786
207 University of Montevallo 3.00 05/01/2023 12.30 103
---------- CALIFORNIA --------
603 Azusa Pacific University 3.00 04/01/2017 12.96 342
1,460 California State University 3.00 11/01/2012 10.57 1,079
60 Foothill College 3.00 10/01/2006 11.76 53
245 Monterey Peninsula College 3.00 10/01/2018 11.95 144
335 San Diego State University 3.00 11/01/2021 11.93 180
700 San Francisco State University 3.00 11/01/2021 11.93 377
73 Scripps College 3.00 10/01/2005 12.51 67
---------- FLORIDA --------
135 Florida Atlantic University 3.00 07/01/2006 11.85 118
17 Florida Institute of Technology 3.00 02/01/2006 13.17 15
113 University of Florida 3.00 01/01/2005 12.51 102
1,590 University of South Florida 3.00 07/01/2013 11.97 1,073
---------- HAWAII --------
400 University of Hawaii at Manoa 3.00 10/01/2006 11.76 352
---------- ILLINOIS --------
440 Concordia College 3.00 05/01/2011 12.64 320
---------- INDIANA --------
150 Anderson College 3.00 03/01/2010 13.02 110
390 Taylor University 3.00 10/01/2010 12.45 290
1,350 University of Notre Dame 3.00 04/01/2018 12.95 741
---------- IOWA --------
770 Drake University 3.00 10/01/2012 12.71 527
500 Iowa State University of Ames 3.00 07/01/2007 10.63 430
---------- KANSAS --------
210 Emporia State University 3.00 04/01/2009 12.33 164
42 Kansas Newman College 3.00 04/01/2006 13.10 36
---------- LOUISIANA --------
345 Grambling State University 3.00-3.75 10/01/2005 11.70 316
445 Xavier University 3.00 10/01/2017 12.54 255
---------- MARYLAND --------
1,050 Western Maryland College 3.00 11/01/2016 12.44 636
See accompanying accountants' compilation report
and notes to financial statements.
22
COLLEGE AND UNIVERSITY FACILITY LOAN TRUST ONE
----------------------------------------------
SCHEDULE OF INVESTMENTS
-----------------------
May 31, 2004
------------
(Dollar Amounts in Thousands)
(continued)
Outstanding Stated Internal Amortized
Principal Interest Maturity Rate of Cost (Notes
Balance Description Rate % Date Return % (B) 1 and 2)
- ------------- ------------------------------------------- ---------- ---------- -------------- -------------
---------- MASSACHUSETTS --------
$176 Atlantic Union College 3.00 05/01/2023 12.68 $86
752 Boston University 3.00 12/31/2022 11.87 388
269 Dean Junior College 3.00 04/01/2016 12.96 162
51 Hampshire College 3.00 11/01/2006 12.43 45
104 Springfield College 3.00 05/01/2011 12.59 76
86 Tufts University 3.625 10/01/2004 12.47 82
---------- MICHIGAN --------
1,020 Albion College 3.00 10/01/2015 12.51 632
290 Alma College 3.00 04/01/2010 11.87 219
2,871 Finlandia University (A) 3.00 08/01/2014 12.70 459
594 Michigan State University 3.00 05/01/2020 10.96 351
---------- MINNESOTA --------
1,020 Augsburg College 3.00 04/01/2016 12.95 597
445 College of St. Thomas 3.00 04/01/2017 12.95 253
---------- MISSISSIPPI --------
150 Jackson State University 3.00 01/01/2007 12.50 124
50 Mississippi Valley State 3.00 07/01/2008 11.89 41
108 Tougaloo College 3.00 06/01/2021 12.44 56
---------- MISSOURI --------
273 Missouri Southern State College 3.00 12/01/2008 10.56 219
164 Missouri Western State College 3.00 10/01/2008 11.77 134
190 Southeast Missouri State 3.50 04/01/2005 12.32 174
---------- NEBRASKA --------
97 University of Nebraska 3.00 07/01/2013 10.59 69
---------- NEW HAMPSHIRE --------
260 Daniel Webster College 3.00 04/01/2019 12.99 139
283 New England College 3.625 10/01/2013 12.37 197
795 New England College 3.00 04/01/2019 12.96 425
463 Rivier College 3.625 04/01/2014 12.78 304
---------- NEW JERSEY --------
94 Fairleigh Dickinson University 3.00 11/01/2020 12.09 51
222 Montclair State College 3.00 07/01/2008 11.32 181
---------- NEW YORK --------
177 Alfred University 3.00 11/01/2007 12.41 148
484 Long Island University 3.00 06/01/2016 12.34 293
203 Long Island University 3.75 10/01/2005 12.42 186
934 Sarah Lawrence College 3.00 11/01/2021 12.64 488
See accompanying accountants' compilation report
and notes to financial statements.
23
COLLEGE AND UNIVERSITY FACILITY LOAN TRUST ONE
----------------------------------------------
SCHEDULE OF INVESTMENTS
-----------------------
May 31, 2004
------------
(Dollar Amounts in Thousands)
(continued)
Outstanding Stated Internal Amortized
Principal Interest Maturity Rate of Cost (Notes
Balance Description Rate % Date Return % (B) 1 and 2)
- ------------- ------------------------------------------- ---------- ---------- -------------- -------------
---------- NORTH CAROLINA --------
$139 Appalachian State University 3.00-3.625 07/01/2004 11.80 $132
87 Montreat-Anderson College 3.00 12/01/2019 12.19 47
405 North Carolina State University 3.00 09/01/2006 8.02 374
1,075 University of North Carolina 3.00 01/01/2018 11.49 638
---------- OHIO --------
1,435 Case Western Reserve University 3.00 04/01/2016 10.54 944
650 Kent State University 3.00 12/01/2008 10.55 523
81 Riverside Hospital 3.00 04/01/2007 13.09 68
186 University of Steubenville 3.375 04/01/2012 12.88 128
250 University of Steubenville 3.00 04/01/2017 12.96 141
---------- PENNSYLVANIA --------
472 Carnegie - Mellon University 3.00 11/01/2017 10.45 306
540 Harcum Junior College 3.00 11/01/2015 12.44 338
310 Haverford College 3.625 11/01/2013 12.29 214
60 Susquehanna University 3.00 11/01/2006 12.44 53
310 Susquehanna University 3.625 11/01/2014 12.32 208
99 Swarthmore College 3.00 11/01/2013 12.30 65
358 Temple University 3.375 11/01/2014 11.99 245
---------- RHODE ISLAND --------
306 Community College of Rhode Island 3.00 04/01/2018 12.10 181
---------- SOUTH CAROLINA --------
34 Benedict College 3.00 11/01/2006 12.42 30
770 College of Charleston 3.00 07/01/2016 12.02 478
683 Morris College 3.00 11/01/2013 12.42 456
34 Black Hills State College 3.00 10/01/2005 11.76 31
46 Black Hills State College 3.00 10/01/2007 11.77 39
---------- TENNESSEE --------
111 Bryan College 3.00 02/01/2010 12.68 83
309 Vanderbilt University 3.00 08/01/2005 10.69 284
403 Vanderbilt University 3.00 06/30/2009 10.39 325
---------- TEXAS --------
438 Jarvis Christian College 3.00 04/01/2019 12.96 235
145 Laredo Junior College 3.00 08/01/2009 11.82 113
136 St. Edward's University 3.625 04/01/2013 12.80 92
105 Texas College 3.00 04/01/2007 13.09 87
473 Texas Tech University 3.625 03/01/2013 10.80 343
3,145 Texas Tech University 3.375-3.50 03/01/2012 10.83 2,335
See accompanying accountants' compilation report
and notes to financial statements.
24
COLLEGE AND UNIVERSITY FACILITY LOAN TRUST ONE
----------------------------------------------
SCHEDULE OF INVESTMENTS
-----------------------
May 31, 2004
------------
(Dollar Amounts in Thousands)
(continued)
Outstanding Stated Internal Amortized
Principal Interest Maturity Rate of Cost (Notes
Balance Description Rate % Date Return % (B) 1 and 2)
- ------------- ------------------------------------------- ---------- ---------- -------------- -------------
---------- VERMONT --------
$1,010 Middlebury College 3.00 04/01/2018 12.87 $604
80 St. Michael's College 3.00 04/01/2008 13.06 65
2,270 University of Vermont 3.00 10/01/2019 12.19 1,265
---------- VIRGINIA --------
1,525 Old Dominion University 3.00 06/01/2013 11.70 1,036
---------- WASHINGTON --------
80 Western Washington University 3.00 10/01/2007 11.16 69
---------- VIRGIN ISLANDS --------
97 College of the Virgin Islands 3.00 10/01/2004 11.83 92
- ------------- -----------
44,768 Total College and University Loans 28,151
- -------------
Allowance for Loan Losses 860
-----------
Net Loans of the Trust 27,291
-----------
INVESTMENT AGREEMENTS (37.5%)
2,600 FNMA #787 Liquidity Fund 8.00 12/01/2014 8.00 2,600
13,788 FNMA #786 Revenue Fund 5.00 12/01/2014 5.00 13,788
- ------------- -----------
16,388 Total Investment Agreements 16,388
- ------------- -----------
$61,156 Total Investments (100.0%) $43,679
============= ===========
(A) This institution has been placed on nonaccrual status as more fully
described in Notes 2(e) and 6.
(B) Represents the rate of return based on the contributed cost and the
amortization to maturity.
See accompanying accountants' compilation report
and notes to financial statements.
25
ITEM 2. CODE OF ETHICS
Not applicable to the registrant.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT
Not applicable to the registrant.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Not applicable at this time.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS
Not applicable to the registrant.
ITEM 6. SCHEDULE OF INVESTMENTS
Schedule is included as part of the report to shareholders filed under Item 1.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES
Not applicable to the registrant.
ITEM 8. PURCHASE OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS
Not applicable to the registrant.
ITEM 9. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable to the registrant.
ITEM 10. CONTROLS AND PROCEDURES
Not applicable to the registrant.
ITEM 11. EXHIBITS
The following exhibits are attached to this Form N-CSR:
(a)
(1) Code of ethics or amendments: not applicable to the registrant.
(2) Certification by the registrant's Owner Trustee, as required by Rule
30a-2(a) under the Investment Company Act of 1940, is attached.
(3) Written solicitation to purchase securities: not applicable to the
registrant.
(4) Annual Compliance Statement of the Servicer GMAC Commercial Mortgage
Corporation, is attached.
(5) Attestation Report of Independent Accountants, PricewaterhouseCoopers,
LLP.
(6) GMAC reports pursuant to section 1301, 1302, 1303, 1304, 1306, and
1307 of the servicer agreement.
(b) Certification by the registrant's Owner Trustee, as required by Rule
30a-2(b) under the Investment Company Act of 1940, is attached.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant): College and University Facility Loan Trust One
-------------------------------------
By: US Bank, not in its individual capacity, but solely as Owner Trustee
under a Declaration of Trust dated September 17, 1987 and Amended and
restated on September 29, 1987, and December 4, 1989.
By: /s/ Diana J. Kenneally
-------------------------------------
Assistant Vice President
Date: August 24, 2004
-------------------------------------
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By: US Bank, not in its individual capacity, but solely as Owner Trustee
under a Declaration of Trust dated September 17, 1987 and Amended and
restated on September 29, 1987, and December 4, 1989.
By: /s/ Diana J. Kenneally
-------------------------------------
Assistant Vice President
Date: August 24, 2004
-------------------------------------