Financing

Figure 111 details the current and projected external debt of the University, which is within financial metric ranges of the University’s current credit rating. The 2022-23 Fiscal Framework Update continues with the holistic approach to Brock’s capital financing strategy that allows for decisions to be made in support of strategic priorities in a fiscally sustainable manner. Maintaining the University’s credit rating at A (high) or better is a strategic priority that remains in the Fiscal Framework. The impact on the University’s credit rating will be considered for any new debt and will be supported by a complete repayment plan, including Board-approved assumptions for sinking fund strategies if required.

DBRS Morningstar maintained Brock’s credit rating on March 2, 2023, with the Issuer Rating and Senior Unsecured Debentures rating of “A (high)”, with a trend of “Stable”. The continued trend of “Stable” reflects DBRS Morningstar's positive outlook regarding Brock’s financial sustainability and is the result of the prudent fiscal measures taken across the University throughout the year. DBRS Morningstar continues to expect the University to post balanced operating results, or better, on a consolidated basis.

Brock’s debt repayment strategy is on track thanks to the successes in navigating the global pandemic and maintaining balanced operating results throughout. Brock secured additional debt financing of $15.5 million on June 27, 2022 to fund the acquisition of 3401 Schmon Parkway from Enbridge Inc. The loan includes a fixed interest rate of 3.91 per cent through an interest rate swap agreement, locked in for 5 years, amortizing over a fifteen-year period. The acquired property is 8.16 acres of land, with an 86,591 square foot commercial building on the site. The strategic acquisition was made to address the growing space requirements of the University with usage being determined through a renewed space master planning process underway. Brock also repaid the remaining $20.6 million balance outstanding on the loan for the Roy and Lois Cairns Health and Bioscience Research Complex which matured on July 4, 2022. There also remains $14.4-million excess capital from the 2020 Series B Debenture for a loan renewal with Scotiabank due June 2024. These funds will remain invested until 2024, at which time the loan will be repaid unless approval is obtained for a major capital investment to support our strategic priorities before that time.

(1) Fiscal full-time enrolment (FFTE). For a definition, refer to page 88. Note: April 30, 2022 FFTE figures have been updated and decreased by 91 as they had to be resubmitted to the Ministry following an enrolment audit. Forecasted FFTEs beyond 2022 have not been updated from the 2022-23 Fiscal Framework.

The existing sinking fund for the Series A Debenture issued in 2005 continues to grow ahead of schedule due to strong investment returns. The existing sinking fund requires operating budget contributions to begin in 2024-25 and accelerating in 2028-29 with the debt cost for the Sunlife Residence Loan being repurposed into the sinking fund when it is fully repaid.

Brock’s debt strategy is supported by Figure 112, which compares Brock’s key debt metrics to that of other universities in our comprehensive category as well as the Council of Ontario Universities' (COU) minimum recommended thresholds. Appendix F provides full definitions for each financial health metric.

The following details a high-level explanation of our debt metrics.

• The first two ratios describe how Brock utilizes a greater proportion of its annual operating expense to fund debt obligations.

• The interest coverage ratio measures the ability to fund interest charges from cash generated through operations. It remains above the guidance of 2.00 set by the Board of Trustees and above the ratio of 2.50 considered to be the standard by DBRS Morningstar for Brock’s current credit rating of A high.

• The viability ratio is essentially how much of the institution’s debt could be paid off with expendable resources. The average institution in our category could pay all its debt with expendable resources, whereas Brock can only pay off 39 per cent and is therefore vulnerable to unplanned events.

(1) Calculated using financial information from 13 comprehensive universities.

(2) Certain 2021 metrics have been updated due to revisions in certain universities' financial statements.