$59,550,000 Refunding Limited Obligation Bonds, Series 2015 THE UNIVERSITY OF NORTH CAROLINA AT WILMINGTON STUDENT HOUSING PROJECTs

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1 NEW ISSUE Book-Entry Only RATING: Moody s: A2 (positive outlook) See RATING herein Dated: Date of Delivery $59,550,000 Refunding Limited Obligation Bonds, Series 2015 THE UNIVERSITY OF NORTH CAROLINA AT WILMINGTON STUDENT HOUSING PROJECTs Due: June 1, as shown on the inside cover The 2015 Bonds will be executed and delivered pursuant to an Indenture of Trust dated as of April 1, 2015 (the Indenture ), between UNCW Corporation (the Corporation ), a nonprofit corporation duly created and existing under the laws of the State of North Carolina and Branch Banking and Trust Company, as trustee (the Trustee ). Purpose: Security and Sources of Payment: The proceeds of the 2015 Bonds, together with other funds, will be used to (1) refund existing obligations issued to finance the cost of constructing, equipping and furnishing student housing facilities on the campus of The University of North Carolina at Wilmington (the University ) and (2) pay certain expenses incurred in connection with the execution and delivery of the 2015 Bonds. The Corporation leases the land on which the Projects (as described herein) were constructed from the State of North Carolina (the State ). The Corporation leases the Projects to the State pursuant to leases that require semiannual rental payments (the Base Rentals ). The Corporation and the University have entered into use agreements under which the University is obligated to pay the rental payments owed by the State in the form of Base Rentals. The Corporation will assign to the Trustee, for the benefit of the owners of the 2015 Bonds and any Additional Bonds (as described herein), substantially all of its rights under such agreements, including its right to receive the Base Rentals and all moneys and securities from time to time held by the Trustee in certain funds and accounts. The obligations of the Corporation will be secured by a leasehold deed of trust, granting a lien of record on the Mortgaged Property (as described herein). The principal and interest with respect to the 2015 Bonds are payable solely from amounts payable by the University under the Use Agreements and certain other limited amounts. The University s obligations under the Use Agreements are limited obligations of the University payable solely from (1) Net Project Revenues and (2) Dormitory, Dining and Parking Systems Revenues after payment of the University s General Revenue Debt, including General Revenue Debt issued after the date of this Official Statement, which may be issued without limit. The taxing power of the State is not pledged directly or indirectly to secure any money due to the owners of the 2015 Bonds. The University has no taxing power. See SECURITY AND SOURCES OF PAYMENT FOR THE 2015 Bonds for an explanation of defined terms and more information. Interest Payable: June 1 and December 1, beginning December 1, Denominations: Prepayment: Tax Treatment: $5,000 or integral multiples thereof. The 2015 Bonds are subject to optional, mandatory and extraordinary prepayment as described herein. In the opinion of Bond Counsel, under existing law, assuming compliance with the provisions of the Internal Revenue Code of 1986, as amended, the portion of the Base Rentals designated and paid as interest with respect to the 2015 Bonds (1) is excludable from gross income for federal income tax purposes, (2) is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations and (3) is exempt from State of North Carolina income taxation. Delivery Date: On or about May 12, Professionals: Parker Poe Adams & Bernstein LLP, Charlotte, North Carolina, Bond Counsel; Parker Poe Adams & Bernstein LLP, North Carolina, counsel to the Corporation; the Honorable Roy A. Cooper III, Attorney General for the State; John P. Scherer II, Esq., Interim General Counsel, for the University; Moore & Van Allen PLLC, Charlotte, North Carolina, counsel to the Underwriters; RBC Capital Markets, LLC, Philadelphia, Pennsylvania, is financial advisor to the University in connection with the execution and delivery of the 2015 Bonds. BofA Merrill Lynch April 23, 2015 Raymond James

2 MATURITY SCHEDULE $33,625,000 Serial 2015 Bonds Due June 1 Principal Amount Interest Rate Yield CUSIP T Due June 1 Principal Amount Interest Rate Yield CUSIP T 2016 $855, % 0.39% AA $2,560, % 2.60% AJ ,180, AB ,685, AK ,310, AC ,820, * AL ,505, AD ,960, AM ,725, AE ,045, * AN ,950, AF ,190, * AP ,045, AG ,360, AQ ,435, AH7 $4,715, % Term Bond due June 1, 2033 Yield 3.75% CUSIP TAT1 $6,160, % Term Bond due June 1, 2033 Yield 3.48% * CUSIP TAR5 $15,050, % Term Bond due June 1, 2037 Yield 3.61% * CUSIP TAS3 1 CUSIP is a registered trademark of the American Bankers Association. CUSIP Global Services is managed on behalf of the American Bankers Association by S&P Capital IQ. Copyright 2014 CUSIP Global Services. All rights reserved. CUSIP data herein is provided by S&P Capital IQ, a division of McGraw-Hill Financial, Inc. CUSIP data herein is provided for convenience of reference only. Neither the County, the Underwriters, the Trustee, nor their agents take responsibility for the accuracy of such data. * Priced at the stated yield to the June 1, 2025 optional prepayment date at a prepayment price of 100%.

3 REGARDING USE OF THIS OFFICIAL STATEMENT IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT TRANSACTIONS THAT STABILIZE OR MAINTAIN THE MARKET PRICE OF THE 2015 BONDS AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. No dealer, broker, salesman or other person has been authorized to give any information or to make any representation other than as contained in this Official Statement, and if given or made, such other information or representation must not be relied upon. This Official Statement does not constitute an offer to sell or the solicitation of any offer to buy, nor will there be any sale of the 2015 Bonds by any person in any jurisdiction in which it is not lawful for such person to make such offer, solicitation or sale. The information set forth herein has been obtained from the University and other sources that are deemed to be reliable, but is not guaranteed as to accuracy or completeness by the Underwriters and is not to be construed as a representation by the Underwriters. The electronic distribution of this Official Statement does not constitute an offer to sell or the solicitation of an offer to buy the 2015 Bonds described herein to the residents of any particular state and is not specifically directed to the residents of any particular state. The 2015 Bonds will not be offered or sold in any state unless and until they are either registered pursuant to the laws of such state, or qualified pursuant to an appropriate exemption from registration in such state. NEITHER THE 2015 BONDS NOR THE INDENTURE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION BY REASON OF THE PROVISIONS OF SECTION 3(a)(2) OF THE SECURITIES ACT OF 1933, AS AMENDED, AND SECTION 304(a)(4) OF THE TRUST INDENTURE ACT OF 1939, AS AMENDED. THE REGISTRATION OR QUALIFICATION OF THE 2015 BONDS AND THE INDENTURE IN ACCORDANCE WITH APPLICABLE PROVISIONS OF SECURITIES LAWS OF THE STATES IN WHICH THE 2015 BONDS AND THE INDENTURE HAVE BEEN REGISTERED OR QUALIFIED, AND THE EXEMPTION FROM REGISTRATION OR QUALIFICATION IN OTHER STATES, WILL NOT BE REGARDED AS A RECOMMENDATION THEREOF. CUSIP is a registered trademark of the American Bankers Association. CUSIP data herein is provided by Standard & Poor s CUSIP Capital IQ, a division of The McGraw-Hill Companies, Inc. IN MAKING AN INVESTMENT DECISION, INVESTORS MUST RELY ON THEIR OWN EXAMINATION OF THE TERMS OF THE OFFERING, INCLUDING THE MERITS AND RISKS INVOLVED. THESE SECURITIES HAVE NOT BEEN RECOMMENDED BY ANY FEDERAL OR STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY. FURTHERMORE, THE FOREGOING AUTHORITIES HAVE NOT CONFIRMED THE ACCURACY OR DETERMINED THE ADEQUACY OF THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. All quotations from and summaries and explanations of laws and documents herein do not purport to be complete, and reference is made to such laws and documents for full and complete statements of their provisions. Any statements made in this Official Statement involving estimates or matters of opinion, whether or not expressly so stated, are intended merely as estimates or opinions and not as representations of fact. The information and expressions of opinion herein are subject to change without notice, and neither the delivery of this Official Statement nor any sale of the 2015 Bonds will under any circumstances create any implication that there has been no change in the affairs of the University since the date hereof. The Underwriters have provided the following sentence for inclusion in this Official Statement. The Underwriters have reviewed the information in this Official Statement in accordance with, and as a part of, their respective responsibilities to investors under the federal securities laws as applied to the facts and circumstances of this transaction, but the Underwriters do not guarantee the accuracy or completeness of such information.

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5 Table of Contents Page INTRODUCTION... 1 The University... 3 Security and Sources of Payment... 3 The 2015 Bonds Certificates... 3 Book-Entry Only... 4 Tax Status... 4 Professionals... 4 Additional Information... 4 THE 2015 BONDS... 5 Authorization... 5 General... 5 Prepayment Provisions... 6 SECURITY AND SOURCES OF PAYMENT FOR THE 2015 BONDS Base Rentals and Additional Rentals Limited Obligation The Leases and the Use Agreements Rate Covenant Deed of Trust Indenture Enforceability Additional Bonds Additional Indebtedness THE LEASES AND THE USE AGREEMENTS General Purchase Option Assignment THE PLAN OF REFUNDING ESTIMATED SOURCES AND USES OF FUNDS PRINCIPAL AND INTEREST REQUIREMENTS THE CORPORATION THE UNIVERSITY OF NORTH CAROLINA AT WILMINGTON HOUSING SYSTEM DINING SYSTEM PARKING SYSTEM DEBT SERVICE COVERAGE CERTAIN RISKS OF OWNERS OF 2015 BONDS General Limited Obligation of the University Dormitory, Dining and Parking Systems Revenues No Reserve Fund Required Occupancy Levels and Rent and Expense Levels Competition Insurance and Legal Proceedings Government Regulation Environmental Risks Enforceability of Remedies Effect of Determination of Taxability Additional Bonds and Additional Indebtedness i

6 VERIFICATION LITIGATION AND RELATED MATTERS UNDERWRITING RATING LEGAL MATTERS TAX TREATMENT General Original Issue Premium Original Issue Discount CONTINUING DISCLOSURE FINANCIAL ADVISOR MISCELLANEOUS APPENDIX A APPENDIX B APPENDIX C APPENDIX D APPENDIX E The University of North Carolina at Wilmington Financial Statements Definitions of Certain Terms and Summaries of Principal Legal Documents Proposed Form of Opinion of Bond Counsel Book-Entry Only System ii

7 $59,550,000 THE UNIVERSITY OF NORTH CAROLINA AT WILMINGTON Refunding Limited Obligation Bonds (The University of North Carolina at Wilmington Student Housing Projects), Series 2015 INTRODUCTION The purpose of this Official Statement, which includes the Appendices hereto, is to provide certain information in connection with the execution, sale and delivery of the $59,550,000 aggregate principal amount of Refunding Limited Obligation Bonds (The University of North Carolina at Wilmington Student Housing Projects), Series 2015 (the 2015 Bonds ), which evidence proportionate undivided interests in rights to receive Revenues (as defined herein), including Base Rentals (as defined herein) pursuant to the Leases described below between the State of North Carolina (the State ) and UNCW Corporation, a North Carolina nonprofit corporation (the Corporation ). The 2015 Bonds will be executed and delivered pursuant to an Indenture of Trust dated as of April 1, 2015 (as supplemented, the Indenture ) between the Corporation and Branch Banking and Trust Company, as trustee (the Trustee ). Proceeds of the 2015 Bonds will be used to (1) refund the 2005 Certificates (as defined below) and the 2006 Certificates (as defined below) issued to finance the cost of the construction, equipping and furnishing of student housing facilities on the campus of The University of North Carolina at Wilmington (the University ) and (2) pay certain expenses incurred in connection with the execution and delivery of the 2015 Bonds. UNCW Corporation Housing I, LLC ( 2005 UNCW LLC ), a North Carolina limited liability company, the sole member of which is the Corporation, executed and delivered Certificates of Participation (The University of North Carolina at Wilmington Student Housing Project), Series 2005 (the 2005 Certificates ) under an Indenture of Trust dated as of April 1, 2005 (the 2005 Indenture ) between 2005 UNCW LLC and Branch Banking and Trust Company, as trustee, for the purpose of acquiring, constructing and equipping a 524-bed student housing project on the campus of the University, including the related parking and recreational facilities, known as Seahawk Village (the 2005 Project ) UNCW LLC entered into a Ground Lease Agreement dated April 6, 2005 (the 2005 Ground Lease ), with the State whereby 2005 UNCW LLC leased from the State for a term terminating in 2037 the approximately 12.7 acres on which the 2005 Project is located (the 2005 Project Site ) UNCW LLC then leased the 2005 Project to the State under a Lease Agreement dated as of April 1, 2005 (the 2005 Lease ), and entered into a Use Agreement dated as of April 1, 2005 (as amended, the 2005 Use Agreement ) with the University under which the University operates the 2005 Project as a part of its campus housing system to house students at the University. In order to further secure its obligations under the 2005 Indenture,

8 2005 UNCW LLC executed and delivered a Leasehold Deed of Trust, Security Agreement and Assignment of Rents and Leases (the 2005 Deed of Trust ) assigning its rights in the Mortgaged Property (as defined in the 2005 Deed of Trust), the 2005 Lease and the 2005 Ground Lease to the deed of trust trustee named therein. UNCW Corporation Housing II, LLC ( 2006 UNCW LLC ), a North Carolina limited liability company, the sole member of which is the Corporation, executed and delivered Certificates of Participation (The University of North Carolina at Wilmington Student Housing Project), Series 2006 (the 2006 Certificates ) under an Indenture of Trust dated as of May 1, 2006 (the 2006 Indenture ) between 2006 UNCW LLC and Branch Banking and Trust Company, as trustee, for the purpose of acquiring, constructing and equipping a 604-bed student housing project on the campus of the University, including the related parking, recreational and retail facilities, known as Seahawk Landing (the 2006 Project and together with the 2005 Project, the Projects ) UNCW LLC entered into a Ground Lease Agreement dated May 1, 2006 (the 2006 Ground Lease and together with the 2005 Ground Lease, the Ground Leases ), with the State for a term terminating in 2038 whereby 2006 UNCW LLC leased from the State the approximately 15 acres on which the 2006 Project is located (the 2006 Project Site and together with the 2005 Project Site, the Project Sites ) UNCW LLC then leased the 2006 Project to the State under a Lease Agreement dated as of May 3, 2006 (the 2006 Lease and together with the 2005 Lease, the Leases ), and entered into a Use Agreement dated as of May 1, 2006 (as amended, the 2006 Use Agreement and together with the 2005 Use Agreement, the Use Agreements ) with the University under which the University operates the 2006 Project as a part of its campus housing system to house students at the University. In order to further secure its obligations under the 2006 Indenture, 2006 UNCW LLC executed and delivered a Leasehold Deed of Trust, Security Agreement and Assignment of Rents and Leases (the 2006 Deed of Trust ) assigning its rights in the Mortgaged Property (as defined in the 2006 Deed of Trust), the 2006 Lease and the 2006 Ground Lease to the deed of trust trustee named therein. In connection with delivery of the 2015 Bonds, each of 2005 UNCW LLC and 2006 UNCW LLC will execute and deliver a Bill of Sale and Assignment Agreement transferring all of its rights, title and interest in all of its assets, including the 2005 Deed of Trust, the 2006 Deed of Trust, the Leases, the Ground Leases and the Use Agreements to the Corporation. Each of the 2005 Use Agreement and the 2006 Use Agreement will be amended by a First Amendment to Use Agreement dated as of April 1, 2015 between the Corporation and the University. The University s obligations under the Use Agreements, including its obligation to pay Base Rentals thereunder, which constitute the rental payments by the University for and in consideration of its rights to use the Projects, are limited obligations of the University payable solely from (1) Net Project Revenues and (2) Dormitory, Dining and Parking Systems Revenues after payment of the University s General Revenue Debt, which may be issued without limit. Capitalized terms used in this Official Statement, unless otherwise defined herein, have the meanings set out in Appendix C hereto. 2

9 This Introduction provides only certain limited information with respect to the contents of this Official Statement and is expressly qualified by the Official Statement as a whole. Prospective investors should review the full Official Statement and each of the documents summarized or described herein. This Official Statement speaks only as of its date, and the information contained herein is subject to change. The University The University is one of the constituent universities of the University of North Carolina. See Appendix A, THE UNIVERSITY OF NORTH CAROLINA AT WILMINGTON for certain information regarding the University. See Appendix B for the audited financial statements of the University for the fiscal year ended June 30, Security and Sources of Payment The 2015 Bonds evidence proportionate undivided interests in the right to receive certain Revenues, including the Base Rentals. The 2015 Bonds are payable solely from the Base Rentals and certain other moneys as provided in the Indenture. As security for its obligations represented by the 2015 Bonds, the Corporation will enter into a Leasehold Deed of Trust, Security Agreement and Assignment of Rents and Leases with the deed of trust trustee named therein dated as of April 1, 2015 (the Deed of Trust ), granting a lien of record on the Mortgaged Property, subject to certain permitted encumbrances. Pursuant to the Indenture, the Corporation will assign to the Trustee for the benefit of the Owners of the 2015 Bonds and any Additional Bonds (1) certain rights, title and interest of the Corporation in the Leases and the Use Agreements, including its right to receive the Base Rentals, (2) all rights, title and interest of the Corporation in the Deed of Trust and (3) amounts held by the Trustee under the Indenture in certain funds or accounts. Additional Bonds, which would have equal rights in the security available to the Owners of the 2015 Bonds may be executed and delivered in accordance with the provisions of the Indenture. See SECURITY AND SOURCES OF PAYMENT OF 2015 BONDS herein. The 2015 Bonds The 2015 Bonds will be dated the date of delivery thereof. Interest is payable on June 1 and December 1 of each year, beginning December 1, 2015, at the rates set forth on the inside cover page of this Official Statement. Principal is payable on June 1 in the years and in the amounts set forth on the inside cover page of this Official Statement Certificates The Corporation previously executed and delivered its Certificates of Participation (The University of North Carolina at Wilmington Student Housing Project), Series 2008 (the 2008 Certificates ), of which $58,995,000 remains outstanding. Proceeds of the 2008 Certificates were used to (1) construct and equip a student housing facility on the campus of the University known as Seahawk Crossing, which consists of approximately 662 beds and related parking, recreational and retail facilities, including a four-level parking facility with 1,000 spaces (the 2008 Project ), (2) purchase a debt service reserve surety bond for the benefit of the 2008 Certificates, (3) pay capitalized interest and (4) pay certain expenses incurred in connection with 3

10 the execution and delivery of the 2008 Certificates. The 2015 Bonds are secured separately from the 2008 Certificates but Dormitory, Dining and Parking Systems Revenues, while not pledged to secure the 2015 Bonds, constitute a common source of funds from which the University may draw, after payment of the University s General Revenue Debt, including any General Revenue Debt issued after the date of this Official Statement, to satisfy its obligation to pay (1) base rentals and additional rentals under the use agreement relating to the 2008 Project and (2) Base Rentals and Additional Rentals under the Use Agreements. See SECURITY AND SOURCES OF PAYMENT OF 2015 BONDS The Leases and the Use Agreements; Sources of Revenue. Book-Entry Only The 2015 Bonds will be delivered in book-entry form only, without physical delivery of certificates. Payments to beneficial owners of the 2015 Bonds will be made by the Trustee through The Depository Trust Company, New York, New York ( DTC ) and its participants. See THE 2015 BONDS--Book-Entry Only System herein. Tax Status In the opinion of Bond Counsel, under existing law, assuming compliance with the provisions of the Internal Revenue Code of 1986, as amended, the portion of the Base Rentals designated and paid as interest with respect to the 2015 Bonds (1) is excludable from gross income for federal income tax purposes, (2) is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations, and (3) is exempt from State of North Carolina income taxation. See TAX TREATMENT herein. Professionals Merrill Lynch, Pierce, Fenner & Smith Incorporated, Charlotte, North Carolina, and Raymond James & Associates, Inc., Memphis, Tennessee (together, the Underwriters ) are underwriting the 2015 Bonds. Branch Banking and Trust Company, Wilson, North Carolina, is serving as Trustee with respect to the 2015 Bonds. Parker Poe Adams & Bernstein LLP, Charlotte, North Carolina, is serving as Bond Counsel and counsel to the Corporation. John P. Scherer II, Esq., Interim General Counsel to the University, will be passing upon certain legal matters for the University. The Office of the Attorney General of the State of North Carolina will be passing upon certain legal matters for the State. Moore & Van Allen PLLC, Charlotte, North Carolina, is serving as counsel to the Underwriters. RBC Capital Markets, LLC, Philadelphia, Pennsylvania, is serving as Financial Advisor to the University in connection with the execution and delivery of the 2015 Bonds. Additional Information The University will undertake in the Use Agreements to provide continuing disclosure of certain annual financial information and operating data and material events regarding the Use Agreements, the Projects and the 2015 Bonds. See CONTINUING DISCLOSURE herein. 4

11 This Official Statement and the Appendices hereto contain brief descriptions of, among other matters, the Projects, the 2015 Bonds, the Indenture, the Leases, the Use Agreements, the Ground Leases and the Deed of Trust. Such descriptions do not purport to be comprehensive or definitive. All references herein to the Indenture, the Leases, the Ground Leases, the Use Agreements and the Deed of Trust are qualified in their entirety by reference to such documents, and references herein to the 2015 Bonds are qualified in their entirety to the forms thereof included in the Indenture. See CERTAIN RISKS OF OWNERS OF 2015 BONDS herein for a discussion of certain risk factors that should be considered in connection with an investment in the 2015 Bonds. Each investor should consider the risks involved to determine the suitability of investing in the 2015 Bonds. Definitions of certain terms relating to the 2015 Bonds and summaries of certain documents relating to the 2015 Bonds are set forth in Appendix C attached hereto. The proposed form of opinion of Bond Counsel is attached hereto as Appendix D. Authorization THE 2015 BONDS The 2015 Bonds will be executed and delivered pursuant to the Indenture. The 2015 Bonds evidence proportionate undivided interests in the right to receive certain Revenues, including Base Rentals. The 2015 Bonds are payable solely from the Base Rentals and certain other moneys as provided in the Indenture. The execution and delivery of the Leases and the Use Agreements have been authorized and approved, and the Indenture has been approved by the University by resolutions adopted by its Board of Trustees. The execution and delivery of the Ground Leases, the Leases, the Use Agreements, the Deed of Trust, the Indenture and the 2015 Bonds, as applicable, have been authorized and approved by the Corporation by resolutions adopted by the Board of Directors of the Corporation. The execution and delivery of the Ground Leases, the Leases and the Use Agreements have been authorized and approved by resolutions of the Board of Governors of the University of North Carolina (the Board ) and the Council of State of North Carolina. General Payment Terms. The 2015 Bonds will be dated the date on which the 2015 Bonds are delivered to the original purchaser or purchasers thereof. Interest with respect to the 2015 Bonds is payable on each June 1 and December 1, beginning December 1, 2015, at the rates set forth on the inside cover page of this Official Statement (calculated on the basis of a 360-day year consisting of twelve 30-day months). Principal with respect to the 2015 Bonds is payable on June 1 in the years and amounts set forth on the inside cover page of this Official Statement. Payments will be effected through DTC. See Appendix E hereto. Registration and Exchange. So long as DTC or its nominee is the registered owner of the 2015 Bonds, transfers and exchanges of beneficial ownership interests in the 2015 Bonds will be available only through Direct Participants and Indirect Participants. See Appendix E hereto. 5

12 The Indenture describes the provisions for transfer and exchange applicable if a book-entry system is no longer in effect. These provisions generally provide that the transfer of the 2015 Bonds is registrable by the Owners thereof, and the 2015 Bonds may be exchanged for an equal aggregate, unprepaid principal amount of 2015 Bonds of denominations of $5,000 or any integral multiple thereof and of the same maturity and interest rate, only upon presentation and surrender of the 2015 Bonds to the Trustee at the designated corporate trust office of the Trustee together with an executed instrument of transfer in connection with any transfer. The Trustee may require the person requesting any transfer or exchange to reimburse it for any tax or other governmental charge required to be paid with respect to such registration or exchange. Book-Entry Only System. The 2015 Bonds will be delivered as fully registered certificates in book-entry-only form without physical delivery of certificates to the beneficial owners of the 2015 Bonds. The Trustee will make payments of principal and interest with respect to the 2015 Bonds to The Depository Trust Company, New York, New York ( DTC ), which will in turn remit such payments to DTC participants for subsequent distribution to the beneficial owners of the 2015 Bonds. See Appendix E hereto for a further description of DTC and the book-entry-only system for the 2015 Bonds. Prepayment Provisions Optional Prepayment. The 2015 Bonds maturing on or before June 1, 2025 are not subject to optional call and prepayment before maturity. The 2015 Bonds maturing on or after June 1, 2026 may be prepaid before maturity at the option of the University, from any funds which may be available for such purpose either in whole or in part on any date on or after June 1, 2025, at the prepayment price equal to 100% of the principal amount of the 2015 Bonds to be so prepaid, plus accrued interest thereon to the date set for prepayment. Extraordinary Prepayment. The 2015 Bonds are subject to prepayment prior to their respective maturity dates in whole on any date, or in part on any Interest Payment Date, from Net Proceeds transferred to the Trustee as provided in the Indenture, at a prepayment price equal to 100% of the principal amount of the 2015 Bonds to be prepaid, plus accrued interest to the date fixed for prepayment and without premium. If Net Proceeds are insufficient to pay in full the cost of any repair, restoration, modification, improvement or replacement of the Projects as required under the Indenture, the University is obligated under the Use Agreements to (1) complete the work and pay any cost in excess of the amount of the Net Proceeds or (2) cause the Net Proceeds, together with other available funds if Net Proceeds are insufficient, to be applied to the payment of the Purchase Option Price (described under the heading THE LEASES AND THE USE AGREEMENTS Purchase Option below) or if the Net Proceeds relate only to a portion of the Projects, cause the Net Proceeds to be applied to the prepayment of a corresponding portion of the 2015 Bonds. See THE INDENTURE Extraordinary Prepayment and THE USE AGREEMENTS Insufficiency of Net Proceeds in Appendix C hereto. 6

13 Mandatory Sinking Fund Prepayment. The 2015 Bonds maturing on June 1, 2033 in the principal amount of $4,715,000 (the First 2033 Term Bonds ), are subject to mandatory sinking fund prepayment by lot from the principal components of the Base Rentals required to be paid by the University pursuant to the Use Agreements with respect to each such prepayment date, at a prepayment price equal to the principal amount thereof to be prepaid, together with accrued interest thereon, to the date fixed for prepayment, without premium, on June 1 of the years and in the amounts as follows: YEAR PRINCIPAL AMOUNT * Maturity 2031 $1,515, ,575, * 1,625,000 The 2015 Bonds maturing on June 1, 2033 in the principal amount of $6,160,000 (the Second 2033 Term Bonds ), are subject to mandatory sinking fund prepayment by lot from the principal components of the Base Rentals required to be paid by the University pursuant to the Use Agreements with respect to each such prepayment date, at a prepayment price equal to the principal amount thereof to be prepaid, together with accrued interest thereon, to the date fixed for prepayment, without premium, on June 1 of the years and in the amounts as follows: YEAR PRINCIPAL AMOUNT * Maturity 2031 $1,955, ,050, * 2,155,000 The 2015 Bonds maturing on June 1, 2037 (the 2037 Term Bonds, and together with the First 2033 Term Bonds and the Second 2033 Term Bonds, the Term Bonds ), are subject to mandatory sinking fund prepayment by lot from the principal components of the Base Rentals required to be paid by the University pursuant to the Use Agreements with respect to each such prepayment date, at a prepayment price equal to the principal amount thereof to be prepaid, together with accrued interest thereon, to the date fixed for prepayment, without premium, on June 1 of the years and in the amounts as follows: 7

14 YEAR PRINCIPAL AMOUNT * Maturity 2034 $3,945, ,145, ,345, * 2,615,000 At its option, to be exercised on or before the 45 th day next preceding any mandatory prepayment date, the University may (1) deliver to the Trustee for cancellation Term Bonds or portions thereof in any aggregate principal amount desired, or (2) receive a credit in respect of its mandatory prepayment obligation for any Term Bonds which before such date have been purchased or prepaid (otherwise than through mandatory prepayment) and canceled by the Trustee and not theretofore applied as a credit against any mandatory prepayment obligation. Each such Term Bond or portion thereof so delivered or previously purchased or prepaid and canceled by the Trustee shall be credited by the Trustee at 100% of the principal amount thereof against the Base Rental obligation corresponding to such mandatory prepayment date, and the principal amount of Term Bonds to be prepaid on such date shall be accordingly reduced. To the extent that the aggregate principal amount of such Term Bonds or portions thereof exceeds the Base Rental obligation on such mandatory prepayment date, any excess over such amount shall be credited against such future Base Rental obligations, and in such amounts as directed by the University, and the related principal amount of Term Bonds shall be accordingly reduced. The Base Rentals in the Use Agreement will be modified correspondingly to reflect any prepayment described in this paragraph. General Prepayment Provisions. If called for prepayment in part, the 2015 Bonds to be prepaid shall be prepaid in such order as the University shall select and within the same maturity as selected by DTC pursuant to its rules and procedures or, if the book-entry system with respect to the 2015 Bonds is discontinued, by lot within a maturity in such manner as the Trustee in its discretion may determine. If prepaid in part, the 2015 Bonds may be prepaid only in multiples of $5,000. At the direction of a UNCW Representative, the Trustee shall give notice of prepayment identifying the 2015 Bonds or portions thereof to be prepaid in writing not less than 30 days nor more than 60 days before the date fixed for prepayment by first-class mail, postage prepaid (or in the case of notice to DTC in such other manners as required or permitted by DTC s rules and procedures) (1) to DTC or its nominee or to the then existing securities depositories, or (2) if DTC or its nominee or another securities depository is no longer the Owner of the 2015 Bonds, to the then-registered Owners of the 2015 Bonds to be prepaid at their addresses appearing on the registration books maintained by the Trustee, and (3) to at least two of the then existing national information services. Notwithstanding the foregoing, (1) if notice is given by the Trustee, the failure to receive an appropriate notice shall not affect the validity of the proceedings for such prepayment, (2) the failure to give any such notice or any defect therein shall not affect the validity of the 8

15 proceedings for the prepayment of the 2015 Bonds or portions thereof with respect to which notice was correctly given, and (3) the failure to give any such notice to the parties described in clause (3) in the preceding paragraph, or any defect therein, shall not affect the validity of any proceedings for the prepayment of the 2015 Bonds. Notice of prepayment shall specify, as applicable, (1) that the 2015 Bonds or a designated portion thereof are to be prepaid, (2) the CUSIP numbers of the 2015 Bond or 2015 Bonds to be prepaid (unless all the 2015 Bonds are being prepaid), (3) the prepayment date, (4) the prepayment price, (5) the prepayment agent s name and address, (6) the date of original execution and delivery of the 2015 Bonds, (7) the interest rate with respect to the 2015 Bond to be prepaid, (8) the maturity date of the 2015 Bond to be prepaid and (9) if a prepayment in part, called amounts for prepaid 2015 Bonds. The actual receipt by any Bondowner of notice of prepayment is not a condition precedent to prepayment, and failure to receive notice does not affect the validity of the proceedings for the prepayment of the 2015 Bonds or the cessation of interest on the prepayment date. If at the time of mailing of notice of prepayment there is not on deposit with the Trustee moneys sufficient to prepay the 2015 Bonds called for prepayment, such notice may state that it is conditional on the deposit of the prepayment moneys with the Trustee on the date of prepayment as set forth in the notice. Any notice, once given, may be withdrawn by notice delivered in the same manner as the notice of prepayment was given, on receipt by the Trustee of written instructions from the University with respect to such withdrawal. Before the date fixed for prepayment, funds will be deposited with the Trustee to pay the 2015 Bonds or portions thereof called for prepayment, together with accrued interest to the prepayment date. Upon the giving of notice and the deposit of such funds for prepayment pursuant to the Indenture, interest with respect to the 2015 Bonds or portions thereof so called for prepayment will no longer accrue after the date fixed for prepayment. The 2015 Bonds or portions thereof called for prepayment will be due and payable on the prepayment date at the prepayment price, together with accrued interest thereon to the prepayment date. If any required notice of prepayment has been given and moneys sufficient to pay the prepayment price, together with accrued interest thereon to the prepayment date, have been deposited with the Trustee, the 2015 Bonds or portions thereof so called for prepayment will cease to be entitled to any benefit or security under the Indenture, and the Owners of such 2015 Bonds will have no rights in respect of such 2015 Bonds or portions thereof so called for prepayment except to receive payment of the prepayment price and accrued interest to the prepayment date from such funds held by the Trustee. Upon surrender and cancellation of any 2015 Bonds called for prepayment in part only, a new 2015 Bond or new 2015 Bonds of the same maturity and interest rate and of authorized denominations, in an aggregate principal amount equal to the unprepaid portion thereof, will be executed on behalf of the Corporation and authenticated and delivered by the Trustee. If an Event of Default has occurred and is continuing under the Indenture, there will be no prepayment of less than all of the 2015 Bonds Outstanding. 9

16 SECURITY AND SOURCES OF PAYMENT FOR THE 2015 BONDS The 2015 Bonds evidence proportionate undivided interests in the rights to receive certain Revenues. Revenues are defined in the Indenture to mean (1) all Net Proceeds not applied to the replacement of the Projects; (2) all Base Rentals; (3) certain Additional Rentals payable to the Trustee; and (4) all investment income on all funds and accounts created under the Indenture (other than the Rebate Fund and the Acquisition and Construction Fund). Notwithstanding the foregoing, the Owner of each 2015 Bond is not entitled to receive more than the amount of principal and interest represented by such 2015 Bond. Base Rentals and Additional Rentals Under the Leases, the State is required to pay certain rental payments. Pursuant to the Use Agreements, the University has agreed to pay the rental payments owed by the State under the Leases through the payment of Base Rentals directly to the Trustee. Base Rentals are defined as payments by the University under the Use Agreements, which constitute the rental payments payable by the University for and in consideration of the right to use, and the option to purchase, the Projects. The Base Rentals to be paid by the University are calculated to be sufficient to provide for the payment of the principal (whether at maturity, by prepayment or otherwise) and interest with respect to the 2015 Bonds as the same become due and payable. In addition, the University has agreed to pay as Additional Rentals to such persons as are entitled thereto, (1) the reasonable and customary expenses and fees of the Trustee, (2) to the extent permitted by law, any expenses of the Corporation or the Trustee in defending an action or proceeding in connection with the Projects, the Leases or the Use Agreements, (3) any taxes or any other expenses, including, but not limited to, licenses, permits, state and local sales and use or ownership taxes or property taxes which the Corporation or the Trustee is expressly required to pay as a result of the Leases or the Use Agreements (together with interest that may accrue thereon in the event that the University fails to pay the same), (4) any amounts required under the Indenture for deposit in the Rebate Fund and (5) any other amounts payable by the Corporation under the Lease or Indenture. Limited Obligation The obligation of the University to pay the Base Rentals and Additional Rentals required under the Use Agreements is absolute and unconditional, regardless of whether the Projects are available for use, but the obligation to pay the Base Rentals and Additional Rentals required under the Use Agreements constitutes a limited obligation of the University, payable solely from (1) Net Project Revenues and (2) Dormitory, Dining and Parking Systems Revenues after payment of the University s General Revenue Debt, which may be issued without limit. See THE LEASES AND THE USE AGREEMENTS herein. Base Rental and Additional Rental payments are to be made without abatement, deduction or setoff, except that the payment of Additional Rentals, other than certain amounts to be deposited in the Rebate Fund, may be abated through Force Majeure. Project Net Revenues, Dormitory, Dining and Parking Systems Revenues are not pledged as security for the 2015 Bonds but constitute the limited sources of payment thereof. 10

17 The 2015 Bonds and any other payments required by the Indenture are not a debt of the Corporation, the University, the State or any political subdivision thereof. The 2015 Bonds do not constitute an indebtedness of the University, the State or any political subdivision thereof within the meaning of any constitutional or statutory debt limitation of the laws of the State. Neither the faith and credit nor the taxing power of the State or any political subdivision thereof is pledged to such payment. No recourse under or upon any covenant or agreement of the Indenture, or of any 2015 Bonds, or for any claim based thereon or otherwise in respect thereof, shall be had against any past, present or future incorporator, officer or member of the governing body of the Corporation, the University, or of any successor, either directly or through the State, whether by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise; it being expressly understood that no personal liability whatever shall attach to, or is or shall be incurred by, any incorporator, officer or member of the governing body of the Corporation, the University or any successor of either of them, because of the execution and delivery of the 2015 Bonds, or under or by reason of the covenants or agreements contained in the Indenture or in any 2015 Bonds or implied there from. The Leases and the Use Agreements Under the Use Agreements, the University agrees to pay the rental payments required under the Leases to the Corporation through the payment to the Trustee of Base Rentals, which will be calculated to be sufficient to pay principal and interest with respect to the 2015 Bonds. Payments of Base Rentals pursuant to the Use Agreements are payable solely from Dormitory, Dining and Parking Systems Revenues after payment of the University s General Revenue Debt, which may be issued without. See THE LEASES AND THE USE AGREEMENTS herein. Dormitory, Dining and Parking Systems Revenues means all money received by the Board or UNC Wilmington in connection with or as a result of its ownership and operation of the Dormitory, Dining and Parking Systems Dormitory, Dining and Parking Systems which means the residence halls, dining facilities, parking lots and parking facilities on the UNC Wilmington campus, including the 2005 Project, the 2006 Project and the housing facilities financed with the 2008 Certificates. General Revenue Debt means bonds, notes or other obligations issued under Chapter 116D of the North Carolina General Statutes which are payable on a parity basis from Available Funds. See Appendix C hereto for more detailed definitions of the foregoing terms. The Corporation previously executed and delivered the 2008 Certificates. The 2015 Bonds are secured separately from the 2008 Certificates but Dormitory, Dining and Parking Systems Revenues, while not pledged to secure the 2015 Bonds, constitute a common source of funds from which the University may draw, after payment of the University s General Revenue Debt, including any General Revenue Debt issued after the date of this Official Statement, to satisfy its obligation to pay (1) base rentals and additional rentals under the use agreement relating to the 2008 Certificates and (2) Base Rentals and Additional Rentals under the Use Agreements. 11

18 Rate Covenant Under the terms of each Use Agreement, the Board of Governors and the University will at all times fix, charge and collect fees, rents and charges for the use of and for the services furnished by the Dormitory, Dining and Parking Systems, and from time to time and as often as it shall appear necessary it will revise such fees, rents and charges, so that Dormitory, Dining and Parking Systems Revenues will be sufficient in each Fiscal Year to equal an amount necessary to produce a Debt Service Coverage Ratio equal to at least Debt Service Coverage Ratio means, for each Fiscal Year, (1) Dormitory, Dining and Parking Systems Revenues in such Fiscal Year, divided by (2)(A) the Principal and Interest Requirements on the Bonds due and payable in such Fiscal Year plus (B) the Principal and Interest Requirements of General Revenue Debt issued to finance or refinance improvements to the Dormitory, Dining and Parking Systems due and payable in such Fiscal Year plus (C) the Principal and Interest Requirements on all other outstanding indebtedness issued for the benefit of the Dormitory, Dining and Parking Systems or payable from Dormitory, Dining and Parking Systems Revenues due and payable in such Fiscal Year. Deed of Trust Simultaneously with the initial execution and delivery of the 2015 Bonds, the Corporation will execute and deliver to the deed of trust trustee, the Deed of Trust granting a lien of record on the Mortgaged Property for the benefit of the Trustee, subject to certain permitted encumbrances as set forth in the Use Agreements and the Deed of Trust. The Mortgaged Property includes: (1) the Corporation s leasehold estate and occupancy rights in and to the real property described in the Deed of Trust, consisting of the Project Sites, and all easements, rights, and appurtenances, thereto (the Project Sites ); (2) all of the right, title and interest of the Corporation in and to the Projects and (a) all buildings and other improvements and additions thereto now erected or hereafter constructed or placed upon the Project Sites or any part thereof (collectively, the Project Buildings ); (b) to the extent permitted by law, the name or names, if any, as may now or hereafter be used for each of the Project Buildings, and the goodwill associated therewith; and (c) all machinery, devices, fixtures, apparatus, interior improvements, appurtenances, building materials and equipment of every kind and nature whatsoever now or hereafter attached to or placed in or upon the Projects or the Project Buildings, or any part thereof, or used or procured for use in connection with the operation of the Project Sites or any business conducted thereon (except for fixtures and personal property that are at any time the property of residents, tenants or other users or occupants of part or all of the Mortgaged Property (the Residents ) (collectively, the Equipment ); (3) all right, title, and interest of the Corporation in and to all furniture, furnishings, decorations, chattels and other personal property now or hereafter in, on or at 12

19 the Project Sites (except for fixtures and personal property that are at any time the property of Residents) (collectively, the Furnishings ); (4) all right, title and interest of the Grantor in and to all Revenues, subject to the further provisions of the Deed of Trust, the Leases, the Use Agreements and the Indenture; (5) all right, title and interest of the Corporation in, to and under the Use Agreements (except as to the Corporation s rights to indemnity and payments of attorneys fees and expenses under the Use Agreements and the Corporation s rights under the Use Agreements to receive notices, reports and other information and to inspect the Projects and the respective records), including without limitation, all Base Rentals and Additional Rentals and proceeds and payments received or receivable by the Corporation under the Use Agreements, and the present, continuing and exclusive right to make claim for, collect and receive any of the rents, revenues and receipts and other sums of money payable or receivable thereunder, whether payable as rents or otherwise, the exclusive right to bring actions and proceedings thereunder or for the enforcement thereof and to receive all proceeds (including real property) acquired by the Corporation or the deed of trust trustee as a result of any such actions or proceedings, the exclusive right to grant consents, approvals and waivers and enter into amendments and to do any and all things which the Corporation is or may become entitled to do under the Use Agreements, provided that the assignment by the Corporation of its rights under the Use Agreements shall not impair or diminish any obligation of the Corporation under the provisions of the Use Agreements; (6) all right, title and interest of the Corporation in, to and under the Leases (except as to the Corporation s rights under the Leases to receive notices, reports and other information and to inspect the Projects and the respective records), including without limitation, all rent thereunder, and proceeds and payments received or receivable by the Corporation under the Leases, and the present, continuing and exclusive right to make claim for, collect and receive any of the rents, revenues and receipts and other sums of money payable or receivable thereunder, whether payable as rents or otherwise, the exclusive right to bring actions and proceedings thereunder or for the enforcement thereof and to receive all proceeds (including real property) acquired by the Corporation or the deed of trust trustee as a result of any such actions or proceedings, the exclusive right to grant consents, approvals and waivers and enter into amendments and to do any and all things which the Corporation is or may become entitled to do under the Leases, provided that the assignment by the Corporation of its rights under the Use Agreements shall not impair or diminish any obligation of the Corporation under the provisions of the Leases; (7) all of the rents, issues, benefits and profits of the Mortgaged Property, including all leases, subleases, occupancy agreements, licenses, franchises and appurtenances now or hereafter entered into covering any part of the Mortgaged Property, including all interest of the Corporation as landlord in and to any of the same, all of which are assigned to the deed of trust trustee, subject, however, to the right of the Corporation to receive and use the same; and 13

20 (8) all water, water rights, mineral rights, ditches, ditch rights, reservoirs and reservoir rights appurtenant to, located on or used in connection with the Projects, the Project Sites, whether existing now or hereafter acquired. The Deed of Trust will be recorded in the office of the Register of Deeds of New Hanover County, North Carolina. In the event of an Event of Default, the Trustee will have the right to foreclose on the Corporation s interest in the Mortgaged Property pursuant to the terms of the Deed of Trust and to collect all rents and profits payable under the Leases directly under the Deed of Trust. With the prior written consent of the Trustee, upon and subject to satisfaction by the Corporation of certain conditions precedent set forth in the Deed of Trust, the Trustee agrees to release from the lien and security interest of the Deed of Trust any portion of the Undeveloped Land Area. See THE DEED OF TRUST in Appendix C hereto. Because of certain risks associated with pledging and granting a security interest in collateral and realizing value upon disposition of collateral of the nature described above and because the Ground Leases limit the use of the Project Sites to University student housing and may be terminated under certain circumstance provided for therein prior to the final maturity of the 2015 Bonds, potential investors should not rely upon such collateral as providing security for the 2015 Bonds, but instead should rely upon the obligation of the University to pay Base Rentals under the Use Agreements. See CERTAIN RISKS OF OWNERS OF 2015 BONDS Enforceability of Remedies herein. Indenture Pursuant to the Indenture, the Corporation will assign to the Trustee for the benefit of the Owners of the 2015 Bonds and any Additional Bonds executed and delivered pursuant to the Indenture the Trust Estate, including (1) all rights, title and interest of the Corporation in the Revenues, the Leases and the Use Agreements (except for certain reserved rights), including its right to receive the Base Rentals under the Use Agreements and (2) all money and securities from time to time held in trust by the Trustee under the Indenture in any fund or account (other than the Rebate Fund). Enforceability None of the Leases, the Use Agreements nor the 2015 Bonds constitutes a pledge of the faith and credit of the State or the University within the meaning of any constitutional debt limitation. The taxing power of the State is not pledged directly or indirectly to secure any money due the owners of the 2015 Bonds pursuant to the Leases or the Use Agreements. The remedies afforded to the Trustee and the owners of the 2015 Bonds upon a default by the University under the Leases are limited to those specified in the Leases and the Indenture, including exercising the rights of the beneficiary under the Deed of Trust and the rights of the Trustee to the funds held under the Indenture. 14

21 The 2015 Bonds will not constitute a debt or general obligation of the Corporation and will not give the Owners of the 2015 Bonds any recourse to the assets of the Corporation, but will be payable solely from amounts payable by the University under the Use Agreements, from amounts realized on the foreclosure on the Corporation s interest in the Mortgaged Property pursuant to the Deed of Trust and from funds held in certain funds and accounts under the Indenture for such purpose. The Indenture, the Leases, the Use Agreements, the Ground Leases and the Deed of Trust are subject to bankruptcy, insolvency, fraudulent conveyance and other related laws affecting the enforcement of creditors rights generally and, to the extent that certain remedies under such instruments require, or may require, enforcement by a court, to such principles of equity as the court having jurisdiction may impose. See THE USE AGREEMENTS Remedies on Default in Appendix C hereto for a more complete description of the rights and powers of the Trustee upon the occurrence of an event of default under the Use Agreements. Additional Bonds The Corporation may execute and deliver Additional Bonds under the Indenture (a) to refund all or any principal amount of Outstanding Bonds if (1) the aggregate debt service on the Bonds being refunded after the execution and delivery of the refunding Bonds will decrease as a result of such refunding and (2) the debt service payments on the refunding Bonds in any Fiscal Year will not be greater than the debt service payments that would otherwise have been payable on the refunded Bonds in the same Fiscal Year or (b) to refund the base rentals payable by UNCW with respect to the 2008 Project if the tests in clause (a) are met when measured against the then-existing base rentals for the 2008 Project. Otherwise, the Corporation may not execute and deliver Additional Bonds under the Indenture or issue any other additional indebtedness for Project Improvements unless the additional indebtedness set forth in the Use Agreements and described below under Additional Indebtedness is met and Base Rentals are increased in an amount sufficient to pay principal and interest with respect to all Bonds Outstanding or to be Outstanding. To the extent permitted under the Indenture, Additional Bonds will be executed and delivered without notice to, or the consent of, the Owners of the 2015 Bonds or any Additional Bonds then Outstanding under the Indenture. The 2015 Bonds are payable on a parity with any Additional Bonds hereafter executed and delivered pursuant to the Indenture. The Base Rentals (as the Base Rentals may be modified in connection with the execution and delivery of Additional Bonds under the Indenture) will be deposited by the Trustee in the Bond Fund held by the Trustee. Money in the Bond Fund will be withdrawn and used to pay the principal and interest with respect to the 2015 Bonds and any Additional Bonds executed and delivered under the Indenture as the same become due and payable. If on any date the money on deposit in the Bond Fund are insufficient to pay all of the principal and interest with respect to the 2015 Bonds or any Additional Bonds executed and delivered under the Indenture which are due and payable on such date, such money will be used to pay such principal and interest with respect to the 2015 Bonds and any such Additional Bonds entitled to receive principal or interest with respect to such date in the manner provided in the Indenture. See THE INDENTURE Application of Moneys in Appendix C hereto. 15

22 Additional Indebtedness Under the Use Agreements, the Board of Governors and the University have agreed not to issue additional indebtedness secured by Dormitory, Dining and Parking Systems Revenues. In addition, the Board of Governors and the University have agreed not to issue or cause to be issued indebtedness of any kind, except General Revenue Debt (which may be issued without limit), that is payable from Dormitory, Dining and Parking Systems Revenues or Project Revenues unless: General (1) The Finance Vice Chancellor certifies that the Debt Service Coverage Ratio for the immediately preceding Fiscal Year for which audited financial statements are available equals an amount sufficient to produce a Debt Service Coverage Ratio at least equal to 1.10, computed using the maximum annual debt service on all indebtedness outstanding during such Fiscal Year and on the proposed indebtedness; OR (2) (A) An Independent Consultant furnishes a detailed report that includes an opinion that the Dormitory, Dining and Parking Systems Revenues and Project Revenues expected to be produced by the existing Dormitory, Dining and Parking Systems and the proposed project being financed with the proposed indebtedness plus the Net Project Revenues will equal an amount sufficient to produce a Debt Service Coverage Ratio at least equal to 1.10 during the first full Fiscal Year after the proposed project is acquired or completed, computed using the maximum annual debt service for all indebtedness to be outstanding during such Fiscal Year, including the proposed indebtedness. The Independent Consultant must use reasonable assumptions when determining its opinion, including occupancy levels for the new project and the Dormitory, Dining and Parking Systems as a whole, rental rates for the project and the Dormitory, Dining and Parking Systems as a whole, insurance expenses and regularly scheduled repair and maintenance AND (B) The Debt Service Coverage Ratio for the immediately preceding Fiscal Year for which audited financial statements are available equals at least 1.10, computed using the maximum annual debt service for all indebtedness outstanding during such Fiscal Year. THE LEASES AND THE USE AGREEMENTS Under the Leases, the State is obligated to pay to the Corporation semiannual rental payments. Under the Use Agreements, the University agrees to pay the rental payments owed by the State under the Leases, by agreeing to pay to the Trustee, as assignee of the Corporation under the Indenture, on or before the 25th day of each May and November, beginning November 25, 2015, Base Rentals in an amount calculated to be sufficient to pay principal and interest with respect to the 2015 Bonds. The University also agrees to pay as Additional Rentals (1) the reasonable and customary expenses and fees of the Trustee, (2) to the extent permitted by law, any expenses of the Corporation or the Trustee in defending an action or proceeding in connection with the Projects, the Leases or the Use Agreements, (3) any taxes or any other 16

23 expenses, including, but not limited to, licenses, permits, state and local sales and use or ownership taxes or property taxes which the Corporation or the Trustee is expressly required to pay as a result of the Leases or the Use Agreements (together with interest that may accrue thereon in the event that the University fails to pay the same), (4) any amounts required under the Indenture for deposit in the Rebate Fund and (5) any other amounts payable by the Corporation under the Lease or Indenture. During the term of the Use Agreements, the University is responsible for the operation and maintenance of the Projects. The Use Agreements provide that, under the circumstances described therein, the University will have the option to terminate such Use Agreements and purchase the Projects. See -Purchase Option below. Each Use Agreement is incorporated by reference in the respective Lease. See THE USE AGREEMENTS in Appendix C hereto. The continuation of the Leases for the full term set forth therein, or any extension or renewal thereof, is dependent upon and subject to the availability of Net Project Revenues, Dormitory, Dining and Parking Systems Revenues. No assurance can be given that the Leases will not be terminated before the end of its stated term if such funds are not available. The Use Agreements will remain in effect as long as the 2015 Bonds are outstanding, notwithstanding the termination, expiration or a determination of invalidity or illegality of the Leases. Purchase Option Under each Use Agreement, the University is granted the option to prepay Base Rentals in whole in connection with the payment of the Purchase Option Price as permitted in the Use Agreement. Purchase Option Price is defined in each Use Agreement as the amount payable, at the option of the University, for the purpose of terminating the Use Agreement and purchasing the 2005 Project or 2006 Project, as the case may be, which amount will equal $1.00 plus the amount then necessary to pay or defease the principal of all Bonds remaining outstanding and interest accrued or to accrue to the applicable prepayment or maturity date, plus all unpaid fees or expenses payable to the Trustee and the Corporation. See THE 2015 BONDS Prepayment Provisions and THE INDENTURE Defeasance in Appendix C. The University will notify the Corporation and the Trustee of the University s intention to exercise this option, on or before the 45th day before making the payment and give the Trustee written instructions with respect to corresponding prepayment of the Bonds. Pursuant to the Leases, any exercise of such option requires the prior consent of the North Carolina Department of Administration s State Property Office and the Council of State. Upon receiving such consent, the Corporation will then transfer and convey the 2005 Project or the 2006 Project, as the case may be, to the State in the manner provided for in the Use Agreements. Assignment The Corporation has assigned substantially all of its rights under the Leases and the Use Agreements to the Trustee as part of the Trust Estate. See THE INDENTURE in Appendix C hereto. 17

24 THE PLAN OF REFUNDING Before delivery of the 2015 Bonds, the University will call the 2005 Certificates maturing on or after June 1, 2015 for prepayment on June 1, A portion of the proceeds of the sale of the 2015 Bonds will be deposited in the 2005 Certificate Prepayment Account of the Certificate Fund and used to prepay the Refunded 2005 Certificates at a price of par plus accrued interest. On or before the delivery date for the 2015 Bonds, the University will deposit other funds in the Certificate Fund to pay the 2005 Certificates maturing on June 1, 2015 and interest due on June 1, A portion of the proceeds of the 2015 Bonds will be applied to the purchase of Federal Securities to be held by Branch Banking and Trust Company as escrow agent (the Escrow Agent ) under an Escrow Agreement dated as of April 1, 2015 between the University and the Escrow Agent. The Federal Securities will mature at such times and in such amounts, and will bear interest payable at such times and in such amounts, so that sufficient money will be available to pay when due principal and interest with respect to the 2006 Certificates to June 1, 2016, at which time the 2006 Certificates maturing on and after June 1, 2017 will be prepaid at a prepayment price equal to 100% of the principal amount of the 2006 Certificates plus accrued interest to the prepayment date. In the Escrow Agreement, the University will irrevocably direct the Trustee to call the 2006 Certificates maturing on and after June 1, 2017 for prepayment on June 1, Amounts on deposit under the Escrow Agreement will not secure the 2015 Bonds. ESTIMATED SOURCES AND USES OF FUNDS The schedule below contains the estimated sources and uses of funds with respect to the sale of the 2015 Bonds (exclusive of investment earnings) and the prepayment of the 2005 Certificates and the 2006 Certificates: Sources: Par Amount of the 2015 Bonds Plus Net Original Issue Premium University Contribution 1 Total $ 59,550,000 6,372,195 2,411,806 $ 68,334,001 Uses: Prepayment of 2005 Certificates $ 28,036,169 Deposit to the Escrow Fund for Prepayment of 2006 Certificates 39,856,236 Cost of Issuance 2 441,596 Total $ 68,334,001 1 Represents moneys on hand for payment on June 1, 2015 of principal and interest with respect to the 2005 Certificates and the 2006 Certificates. 2 Includes Underwriters discount, legal fees, rating agency fees, fees and expenses of the Trustee, the Verification Agent, the financial advisor and other miscellaneous fees and expenses. 18

25 PRINCIPAL AND INTEREST REQUIREMENTS The following table sets forth for each Fiscal Year of the University ending June 30 the amount of principal (whether at maturity or pursuant to mandatory sinking fund prepayment) and interest required to be paid with respect to the 2008 Certificates and the 2015 Bonds. Fiscal Year Ending June 30 Principal Component 2015 Bonds Interest Component 2015 Bonds Total Debt Service 2015 Bonds Debt Service on 2008 Certificates 1 Total $3,352,288 $3,352, $ 855,000 $2,833,894 $3,688,894 3,595,725 7,284, ,180,000 2,666,175 3,846,175 3,577,125 7,423, ,310,000 2,630,775 3,940,775 3,802,925 7,743, ,505,000 2,578,375 4,083,375 4,220,538 8,303, ,725,000 2,533,225 4,258,225 4,402,338 8,660, ,950,000 2,464,225 4,414,225 4,397,056 8,811, ,045,000 2,366,725 4,411,725 4,396,519 8,808, ,435,000 2,264,475 4,699,475 4,402,769 9,102, ,560,000 2,142,725 4,702,725 4,398,769 9,101, ,685,000 2,014,725 4,699,725 4,395,669 9,095, ,820,000 1,880,475 4,700,475 4,400,450 9,100, ,960,000 1,739,475 4,699,475 4,400,144 9,099, ,045,000 1,650,675 4,695,675 4,399,750 9,095, ,190,000 1,498,425 4,688,425 4,399,250 9,087, ,360,000 1,338,925 4,698,925 4,402,250 9,101, ,470,000 1,225,525 4,695,525 4,398,250 9,093, ,625,000 1,074,750 4,699,750 4,397,250 9,097, ,780, ,125 4,697,125 4,398,750 9,095, ,945, ,500 4,697,500 4,395,575 9,093, ,145, ,250 4,700,250 4,400,038 9,100, ,345, ,000 4,693,000 4,396,425 9,089, ,615, ,750 2,745,750 4,399,738 7,145, ,394,263 4,394,263 Total $59,550,000 $37,607,194 $97,157,194 $102,123,854 $199,281,048 1 The 2008 Certificates are secured separately from the 2015 Bonds but share a common source of funds, Dormitory, Dining and Parking Systems Revenues. See SECURITY AND SOURCES OF PAYMENT FOR THE 2015 BONDS The Leases and the Use Agreements herein. For a discussion of other outstanding long-term liabilities of the University, see the Statement of Net Assets and Note 7 in the University s audited financial statements for the fiscal year ended June 30, 2014, which are attached hereto as Appendix B hereto. 19

26 THE CORPORATION The Corporation is a nonprofit corporation whose purpose, as stated in its articles of incorporation, is to enhance the University s educational mission, including, without limitation, assisting with the acquisition of capital assets for the University. THE UNIVERSITY OF NORTH CAROLINA AT WILMINGTON The University is a constituent institution of The University of North Carolina (the System ). Although the Board of Governors (the Board ) of the System has responsibility for the basic policies of the System as a whole, the University has its own administrative structure and maintains a separate Board of Trustees that serves as advisor to the Board on matters pertaining to the University. The System is composed of the following institutions: the University, The University of North Carolina at Asheville, The University of North Carolina at Chapel Hill, The University of North Carolina at Charlotte, The University of North Carolina at Greensboro, The University of North Carolina at Pembroke, Appalachian State University, East Carolina University, Elizabeth City State University, Fayetteville State University, North Carolina Central University, North Carolina Agricultural and Technical State University, The University of North Carolina School of the Arts, North Carolina State University, Winston-Salem State University, the North Carolina School of Science and Mathematics and Western Carolina University. THE UNIVERSITY S OBLIGATIONS UNDER THE USE AGREEMENTS, INCLUDING ITS OBLIGATION TO PAY BASE RENTALS THEREUNDER, ARE NOT PAYABLE FROM THE GENERAL REVENUES OF THE UNIVERSITY. RATHER, THE UNIVERSITY S OBLIGATIONS UNDER THE USE AGREEMENTS, INCLUDING ITS OBLIGATION TO PAY BASE RENTALS, ARE LIMITED OBLIGATIONS OF THE UNIVERSITY, PAYABLE SOLELY FROM (1) NET PROJECT REVENUES AND (2) DORMITORY, DINING AND PARKING SYSTEMS REVENUES AFTER PAYMENT OF THE UNIVERSITY S GENERAL REVENUE DEBT, WHICH MAY BE ISSUED WITHOUT LIMIT. See Appendix A hereto for additional information respecting the University. 20

27 HOUSING SYSTEM The University has residence hall facilities for approximately 4,241 students in eight modern, conveniently located residence halls, 26 apartment buildings, and 11 suite-style buildings. All rooms are air-conditioned and furnished. Ethernet computer networking, which allows student computers to access university software, has been installed in all residential facilities. Details of the various residences are as follows: PROJECT FACILITIES THE PROJECTS COMPLETED/ RENOVATED BEDS STYLE Seahawk Village Apartment Seahawk Landing Apartment The average rent per semester for the Projects based on single occupancy is $3,116. THE PROJECT 2008 PROJECT FACILITIES COMPLETED/ RENOVATED BEDS STYLE Seahawk Crossing Suite The average rent per semester for the 2008 Project based on single occupancy is $3,156. NON- PROJECT FACILITIES OTHER HOUSING SYSTEM FACILITIES COMPLETED/ RENOVATED BEDS STYLE University Apartments Apartment University Suites 1989 / Suite Belk Hall 1976 / (2015 planned) 192 Suite Graham / Hewlett Hall / / (2015 planned) 384 Suite Cornerstone Hall Community Galloway Hall Community Honors Hall Community International Hall Community Schwartz Hall Suite The average rent per semester for the non-project facilities based on double occupancy is $2,

28 STYLE BED DISTRIBUTION BY STYLE NUMBER OF BEDS PERCENT OF TOTAL Community % Suite 1,858 44% Apartment 1,527 36% The Fall occupancy rate for the University s housing, including the Projects and the 2008 Project, over the last five academic years and the current academic year is shown in the following table: FALL OCCUPANCY RATES Projects and 2008 Project Number Available of Permanent Occupied Occupancy Beds Beds Rate Available Permanent Beds Other University Housing (Non-Project Facilities) Number of Occupied Beds Occupancy Rate Year ,783 1,773 99% 2,360 2, % ,783 1,758 99% 2,360 2, % ,783 1,768 99% 2,360 2, % ,783 1,727 97% 2,360 2, % ,783 1,750 98% 2,360 2, % DINING SYSTEM UNCW offers 15 on-campus dining locations including Wagoner Dining Hall, national franchises, convenience stores and coffee shops. Catering services are also offered for special events. In fiscal year 2014, 92.5% of dining revenue was derived from student meal plans and pre-purchased student food dollars that may be spent at any campus dining location. Traditional housing students are required to purchase meal plans. Commuter students and students who live in non-traditional housing including the Projects and the 2008 Project (Seahawk Village, Seahawk Landing, and Seahawk Crossing) are not required to purchase meal plans. Traditional housing students may purchase plans for 10 meals per week, 14 meals per week or 140 meals per semester. Each plan includes an allowance of food dollars that may be spent at any campus dining location. Commuter and non-traditional students have additional meal plan options available for purchase. 22

29 Set forth below are the revenues and numbers of student meal plans sold in each of these categories for the academic years STUDENT MEAL PLAN REVENUE* Traditional Students (Mandatory Plans) Non-Traditional & Commuter Students Total Student Meal Plan Revenue $8,933,405 $9,167,625 $9,178,279 $9,457,484 2,544,575 2,936,925 3,277,675 4,095,975 $11,477,980 $12,104,550 $12,455,954 $13,553,459 * Includes food dollars associated with pre-purchased meal plans. NUMBER OF STUDENT MEAL PLANS SOLD Traditional Students (Mandatory Plans) Non-Traditional & Commuter Students Total Student Meal Plans Sold ,050 6,099 5,841 5,858 4,612 5,345 5,004 6,889 10,662 11,444 10,845 12,747 PARKING SYSTEM The University operates the Parking System for the benefit of students, faculty, staff and visitors. The Parking System consists of a variety of parking facilities, including designated areas restricted by permit for use by students, faculty, staff and metered or cashier-controlled surface lots. As of January 1, 2015, there were 8,328 parking spaces in 91 designated areas or zones on the University campus. The University sells parking permits to students, faculty and staff. Although there are a variety of rates, the primary categories of current rates are (1) resident students, (2) commuter students and (3) faculty/staff. Faculty and staff also have the option to pay an additional amount for a reserved space. Set forth below are the numbers of permits sold in each of these categories for the fall semester, , and the corresponding rates in effect for those academic years. ANNUAL PARKING RATES Resident Students $ $ $ $ $ Commuter Students $ $ $ $ $ Faculty/Staff $ $ $ $ $

30 NUMBER OF PARKING PERMITS (FALL SEMESTER) Resident Students 3,200 3,075 2,892 2,910 2,931 Commuter Students 5,017 5,117 5,017 4,913 4,556 Faculty/Staff 2,225 2,145 2,215 2,332 2,329 The number of permits excludes those sold to visitors, temporary personnel, night students, and summer school students. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 24

31 DEBT SERVICE COVERAGE DEBT SERVICE COVERAGE PROJECTS AND DORMITORY, DINING AND PARKING SYSTEMS Fiscal Year Projects Total Project Revenues $6,492,247 $6,782,991 $6,981,519 $7,314,906 $7,797,217 Total Operating Expenses 2,282,907 2,833,028 1,935,497 2,728,093 2,555,679 Net Project Revenues $4,209,340 $3,949,963 $5,046,022 $4,586,813 $5,241,538 Base Rentals $3,493,963 $3,599,963 $3,697,363 $3,883,997 1 $3,865, Project Total 2008 Project (Housing) Revenues $3,910,191 $3,885,278 $3,982,213 $4,250,700 $4,375,150 Parking System Revenues 2,967,869 2,953,365 3,496,523 3,336,764 3,489, Project (Housing) Operating Expenses 1,867,225 1,490,508 1,243,050 1,207,029 1,264,120 Net 2008 Project (Housing) & Parking System Revenues 5,010,835 5,348,135 6,235,686 6,380,435 6,600,822 Parking System Debt Service Base Rentals (2008 Certificates) $2,264, ,933,457 3,224,975 2,913, ,361,665 Debt Service Coverage x 1.82x 1.93x 2.19x 1.96x Dormitory System (other than the Projects and 2008 Project) and Dining System Total Revenues $22,681,794 $24,381,656 $25,592,015 $26,797,509 $27,718,503 Total Expenses 19,044,475 21,110,325 21,300,542 22,250,672 22,793,298 Net Revenues $3,637,319 $3,271,331 $4,291,473 $4,546,837 $4,925,205 Projects, 2008 Project and Dormitory, Dining and Parking Systems Total Revenues $36,052,101 $38,003,290 $40,052,270 $41,699,879 $43,380,662 Total Expenses 3 23,194,607 25,433,861 24,479,089 26,185,794 26,613,097 Net Revenues $12,857,494 $12,569,429 $15,573,181 $15,514,085 $16,767,565 Base Rentals & Debt Service 4 $5,758,425 $6,533,420 $6,922,338 $6,797,755 $7,226,999 Net Debt Service Coverage Ratio x 1.92x 2.25x 2.28x 2.32x Debt Service Coverage Ratio x 5.82x 5.79x 6.13x 6.00x 1 Capitalized interest and remaining construction funds were utilized to make portions of the debt service. 2 The use agreement for the 2008 Certificates does not include a debt service coverage ratio at the project level. The ratio is provided for informational purposes. 3 Excludes Parking System expenses. 4 Includes Base Rentals on the Projects and the 2008 Project and enterprise debt of the Dormitory, Dining and Parking Systems. No general revenue debt allocated to the Dormitory, Dining and Parking Systems is included. 5 The Net Debt Service Coverage Ratio takes into account expenses of the Projects, the 2008 Project and the Dormitory and Dining Systems. There is no covenant in the Use Agreements measuring the Net Debt Service Coverage Ratio. 6 Under the Use Agreements, the Board and the University are required to maintain a Debt Service Coverage Ratio based on the gross revenues of the Dormitory, Dining and Parking Systems equal to at least See SECURITY AND SOURCES OF PAYMENT FOR THE 2015 BONDS The Rate Covenant herein. The University is not required to pay expenses of the Dormitory, Dining and Parking Systems from Dormitory, Dining and Parking Systems Revenue. Source: The University of North Carolina at Wilmington 25

32 The preceding table reflects Dormitory, Dining and Parking Systems Revenues, which are a source of payment of Base Rentals. If Net Project Revenues are insufficient to cover Base Rentals and the University must use Dormitory, Dining and Parking Systems Revenues to pay Base Rentals and does not use other University funds to pay operating expenses of the Dormitory, Dining and Parking Systems, this would likely have a negative effect on operations of the Dormitory, Dining and Parking Systems and therefore negatively affect future Dormitory, Dining and Parking Systems Revenues. Dormitory, Dining and Parking Systems Revenues are not pledged as security for the 2015 Bonds but constitute the limited sources of payment thereof. Dormitory, Dining and Parking Systems Revenues are available to pay debt service on the 2015 Bonds only after payment of debt service on General Revenue Debt, which may be issued without limit. General CERTAIN RISKS OF OWNERS OF 2015 BONDS The 2015 Bonds involve risks. Each investor should consider the risks involved to determine the suitability of investing in the 2015 Bonds. Summarized below are certain risks that could adversely affect the operation of the Projects or the 2015 Bonds which should be considered by prospective investors. The following discussion is not intended to be exhaustive, but includes certain major factors which should be considered. Limited Obligation of the University If the Base Rentals to be paid by the University are insufficient to pay the principal and interest with respect to the 2015 Bonds, as the same become due or, if any other event of default occurs under the Indenture, the Trustee may accelerate the Bonds and all unpaid principal amounts due by the University under the Use Agreements and foreclose on the Corporation s interest in the Mortgaged Property under the Deed of Trust. THE TAXING POWER OF THE STATE IS NOT AND MAY NOT BE PLEDGED DIRECTLY OR INDIRECTLY OR CONTINGENTLY TO SECURE ANY MONEY DUE UNDER THE USE AGREEMENTS. THE REMEDIES AFFORDED TO THE TRUSTEE AND THE OWNERS OF THE 2015 BONDS UPON A DEFAULT BY THE UNIVERSITY UNDER THE USE AGREEMENTS ARE LIMITED TO THOSE OF A SECURED PARTY UNDER THE LAWS OF THE STATE, INCLUDING FORECLOSING ON THE CORPORATION S INTEREST IN THE MORTGAGED PROPERTY COVERED BY THE DEED OF TRUST. THERE CAN BE NO ASSURANCE THAT THE MONEY AVAILABLE IN THE FUNDS AND ACCOUNTS HELD BY THE TRUSTEE AND THE PROCEEDS OF ANY SUCH FORECLOSURE WILL BE SUFFICIENT TO PROVIDE FOR THE PAYMENT OF THE PRINCIPAL AND INTEREST WITH RESPECT TO THE 2015 BONDS. 26

33 Dormitory, Dining and Parking Systems Revenues No representation or assurances can be made that revenues will be generated from the operation of the Projects, the Dormitory, Dining and Parking Systems in amounts sufficient to pay maturing principal and interest with respect to the 2015 Bonds. Future economic and other conditions, including demand for services offered by the Projects and the Dormitory, Dining and Parking Systems and the ability of the residents and parking permit holders of the Dormitory, Dining and Parking Systems to meet their financial obligations, increased costs, litigation, competition, lower than anticipated revenues, higher than anticipated operating expenses, changes in governmental regulation, loss of state property tax exemption, changes in demographic trends, other student housing facilities, changes in the student housing industry and general economic conditions may adversely affect revenues and, consequently, payment of principal and interest. Factors such as increasing maintenance fees which could affect occupancy and differences in interest rates from those expected are examples of items to which the forecasts are highly sensitive. If Dormitory, Dining and Parking Systems Revenues after payment of General Revenue Debt (which may be issued without limit) are not sufficient to cover Base Rentals, an Event of Default will occur under the Indenture. Upon an Event of Default, the 2015 Bonds may be paid before maturity or applicable prepayment dates and a loss of principal may result. The ability of the Dormitory, Dining and Parking Systems Revenues to generate revenues and their overall financial condition may be adversely affected by a wide variety of future events and conditions including (1) a decline in the enrollment of the University, (2) increased competition from other schools, (3) loss by the University of accreditation, or (4) failure by the University to meet applicable federal guidelines or some other event which results in students being ineligible for federal financial aid. No Reserve Fund There is no reserve fund for the benefit of the 2015 Bonds. Required Occupancy Levels and Rent and Expense Levels In order for the University to generate Dormitory, Dining and Parking Systems Revenues sufficient to enable it to provide funds to make payments at the times required under the Use Agreements and the Indenture, the Projects and the other housing facilities at the University must meet certain occupancy levels and achieve certain rent and expense levels and the dining and parking facilities at the University must achieve certain revenue and expense levels. There can be no assurance that the University s Dormitory, Dining and Parking System will be able to meet and maintain such required occupancy and rent and expense levels or such revenue and expense levels. 27

34 Competition Both of the Projects are located in Wilmington, North Carolina. The occupancy rates for the Projects may be adversely affected by regional and local economic conditions, competitive conditions, applicable local laws and regulations, and general real estate market conditions, including the supply and proximity of apartment communities in such area. Competing operators may offer newer or different projects or services and may thereby attract current or potential residents of the Projects. The Projects are located in an area where other competitive facilities exist. Additional competitive facilities may be constructed in the future. Insurance and Legal Proceedings The University is required by the Use Agreements to maintain, or cause to be maintained, insurance on the Dormitory, Dining and Parking Systems. There can be no assurance that any current or future claims will be covered by or will not exceed applicable insurance coverage. A claim against the University not covered by, or in excess of, the University s insurance could have a material adverse effect upon the Projects. Government Regulation The housing industry is significantly regulated by the federal and local government. Regulations and conditions affecting the acquisition, development and ownership of residential real estate, including local zoning and land use issues, environmental regulations, the Americans with Disabilities Act, the Fair Housing Amendments Act of 1988 and general conditions in the multi-family residential real estate market, could increase the operating expenses of the Projects or could otherwise have a material adverse effect on the financial condition of the Projects or the results of its operations. Environmental Risks The Corporation is not aware of any enforcement actions currently in process with respect to any releases of pollutants or contaminants at the sites of the Projects. However, there can be no assurance that an enforcement action or actions will not be instituted under applicable statutes at a future date. In the event such enforcement actions were initiated, the Corporation or the State could be liable for the costs of removing or otherwise treating pollutants or contaminants located at the site. Furthermore, in determining whether to exercise any foreclosure rights with respect to the Projects under the Indenture or the Deed of Trust, the Trustee and the Owners of the 2015 Bonds would need to take into account the potential liability of any owner of the Projects, including an owner by foreclosure, for clean-up costs with respect to such pollutants and contaminants. Enforceability of Remedies The Projects are specifically designed as student housing facilities and may not be suitable for other uses. Furthermore, the Projects are located on land that is owned by the State and must be operated as student housing facilities or another governmental purpose to maintain the tax-exempt status of the 2015 Bonds. The number of entities that could be expected to purchase the Projects is therefore limited, and thus the ability of the Trustee to realize funds from 28

35 the sale or lease of such interest upon an Event of Default may be limited. Such value may be also limited by actual or alleged rights of residents. Any foreclosure proceeding may be subject to substantial delays. The ability of the Trustee to receive funds sufficient to pay the 2015 Bonds from any sale or foreclosure of the Projects may be limited by a number of factors, including the limited operational use of the Projects as student housing facilities and the fact the interest with respect to 2015 Bonds may become subject to federal income taxation if the Projects are not operated as student housing facilities or for another governmental purpose. The practical realization of value upon any Event of Default under the Indenture, the Deed of Trust, the Use Agreements or the Leases will depend upon the exercise of various remedies specified therein. These and other remedies may, in many respects, require judicial actions, which are often subject to discretion and delay. Under existing law (including, particularly, federal bankruptcy law), the remedies specified by the Indenture, the Deed of Trust, the Use Agreements or the Leases may not be readily available or may be limited. A court may decide not to order the specific performance of the covenants contained in the Indenture, the Deed of Trust, the Use Agreements or the Leases. The various legal opinions to be delivered concurrently with the delivery of the 2015 Bonds will be qualified as to the enforceability of the various legal instruments by limitations imposed by state and federal laws, rulings, and decisions affecting remedies, including judicial discretion in the application of the principles of equity, and by bankruptcy, reorganization, or other laws affecting the enforcement of creditors rights generally. Effect of Determination of Taxability The Corporation and the University will covenant not to take any action that would cause the 2015 Bonds to be arbitrage bonds or that would otherwise adversely affect the federal income tax status of interest with respect to the 2015 Bonds. The Corporation and the University have also made representations with respect to certain matters within their knowledge which have been relied on by Bond Counsel and which Bond Counsel has not independently verified. Failure to comply with such covenants could cause interest with respect to 2015 Bonds to become subject to federal income taxation retroactively from their date of execution and delivery. It is possible that a period of time may elapse between the occurrence of the event which causes interest to become taxable and the determination that such an event has occurred. In such a case, interest previously paid with respect to the 2015 Bonds could become retroactively taxable from the date of their initial execution and delivery. There is no provision for early prepayment, acceleration of the indebtedness evidenced by the 2015 Bonds or for payment of additional interest if interest with respect to the 2015 Bonds becomes included in gross income for federal income tax purposes. See TAX TREATMENT herein. Additional Bonds and Additional Indebtedness The Corporation has the right to execute and deliver Additional Bonds as described above under SECURITY AND SOURCES OF PAYMENT OF 2015 BONDS Additional Bonds. The Board and the University have agreed not to issue or cause to be issued indebtedness of any kind, except General Revenue Debt (which may be issued without limit), 29

36 that is payable from Dormitory, Dining and Parking Systems Revenues unless the conditions described under that caption are satisfied. See also THE INDENTURE in Appendix C hereto. Unless issued to refund existing indebtedness, such Additional Bonds and additional indebtedness would dilute the security or sources of payment for the 2015 Bonds. However, the University has no plans to cause Additional Bonds to be executed and delivered by the Corporation unless a refunding of the 2008 Certificates can achieve significant savings in Base Rentals. VERIFICATION The accuracy of (1) the mathematical computations of the adequacy of the maturing principal and interest with respect to the Federal Securities deposited in the Escrow Fund to pay, together with any uninvested cash held in the Escrow Fund, when due, principal and interest with respect to the 2006 Certificates and (2) the mathematical computations supporting the conclusion that the 2015 Bonds are not arbitrage bonds under the Code will be verified by Bingham Arbitrage Rebate Services. Such verification will be based, among other things, on mathematical computations supplied by the Underwriters. Bond Counsel will rely on such verification in rendering its opinion as to the exclusion of interest with respect to the 2015 Bonds from gross income of the recipients thereof for purposes of federal income taxation. LITIGATION AND RELATED MATTERS There is no action, suit, proceeding, inquiry or investigation at law or in equity or before any court, public board or body pending or, to the knowledge of the Corporation or the University, threatened (or any meritorious basis for such an action, suit, proceeding, inquiry or investigation) at the date of this Official Statement to restrain or enjoin the execution, delivery or sale of the 2015 Bonds or any proceedings of the Corporation or the University taken with respect thereto, or wherein an unfavorable decision, ruling or finding (1) would adversely affect the transactions contemplated by this Official Statement or the validity or enforceability of the 2015 Bonds, the Indenture, the Use Agreements, the Deed of Trust, the Ground Leases, the Leases any other agreement or instrument which is used or contemplated for use in the consummation of the transactions contemplated by this Official Statement or (2) would materially adversely affect the financial condition or operations of the Dormitory, Dining and Parking Systems. There is no litigation now pending or threatened against the Corporation or the University, of which the Corporation or the University has knowledge, which in any manner questions the right of the Corporation or the University to enter into or perform their obligations under the 2015 Bonds, the Indenture, the Deed of Trust, the Use Agreements or the Leases. UNDERWRITING Subject to the terms and conditions of a Bond Purchase Agreement dated April 23, 2015, the Corporation has agreed to sell to the Underwriters, and the Underwriters have agreed to purchase from the Corporation, the 2015 Bonds at a purchase price of $65,750, (equal to the par amount of the 2015 Bonds, plus net original issue premium of $6,372,195.00, less an Underwriters discount of $171,662.50). The Underwriters are committed to take and pay for all of the 2015 Bonds if any are taken. The Underwriters may offer and sell the 2015 Bonds to certain dealers (including dealers depositing the 2015 Bonds into investment trusts) and others at 30

37 prices different from the initial public offering prices stated on the inside cover page hereof. The public offering prices may be changed from time to time by the Underwriters. The Underwriters intend to offer the 2015 Bonds to the public initially at the offering prices set forth on the cover page of this Official Statement, which offering prices may subsequently be changed from time to time by the Underwriters without any requirement of prior notice. The Underwriters may offer and sell the 2015 Bonds to certain dealers (including dealers depositing 2015 Bonds into investment trusts) at prices lower than the public offering prices set forth on the inside cover page of this Official Statement. The Underwriters and their respective affiliates are full service financial institutions engaged in various activities, which may include sales and trading, commercial and investment banking, advisory, investment management, investment research, principal investment, hedging, market making, brokerage and other financial and non-financial activities and services. Under certain circumstances, the Underwriters and their respective affiliates may have certain creditor and/or other rights against the Corporation or the University and their respective affiliates in connection with such activities. In the various course of their various business activities, the Underwriters and their respective affiliates, officers, directors and employees may purchase, sell or hold a broad array of investments and actively trade securities, derivatives, loans, commodities, currencies, credit default swaps and other financial instruments for their own account and for the accounts of their customers, and such investment and trading activities may involve or relate to assets, securities and/or instruments of the Corporation or the University (directly, as collateral securing other obligations or otherwise) and/or persons and entities with relationships with the Corporation or the University. The Underwriters and their respective affiliates may also communicate independent investment recommendations, market color or trading ideas and/or publish or express independent research views in respect of such assets, securities or instruments and may at any time hold, or recommend to clients that they should acquire, long and/or short positions in such assets, securities and instruments. RATING Moody s Investors Service ( Moody s ) has assigned a rating of A2 (positive outlook) to the 2015 Bonds. Such rating reflects only the views of Moody s at the time the ratings were given, and none of the University, the Corporation or the Underwriters makes any representations as to the appropriateness of such ratings. The 2015 Bonds are secured separately from the 2008 Certificates but Dormitory, Dining and Parking Systems Revenues, while not pledged to secure the 2015 Bonds, constitute a common source of funds for payment of principal of and interest with respect to the 2015 Bonds and 2008 Certificates, after payment of the University s General Revenue Debt, including any General Revenue Debt issued after the date of this Official Statement. Standard & Poor s Ratings Services, a Standard & Poor s Financial Services LLC business ( S&P ), has assigned an underlying rating (uninsured) of A to the 2008 Certificates. S&P was not asked to assign a rating on the 2015 Bonds. 31

38 Ratings are not recommendations to buy, sell or hold the 2015 Bonds and should be evaluated independently. There is no assurance that the rating will not be withdrawn or revised downward by Moody s. Any such action may have an adverse effect on the market price of the 2015 Bonds. None of the University, the Corporation or the Underwriters has undertaken any responsibility after the execution and delivery of the 2015 Bonds to assure maintenance of the ratings or to oppose any such revision or withdrawal. LEGAL MATTERS Certain legal matters pertaining to the Corporation and its authorization, execution and delivery of the 2015 Bonds are subject to the approving opinion of Parker Poe Adams & Bernstein LLP, the proposed form of which is included as Appendix D hereto. Certain legal matters will be passed upon for the Corporation by Parker Poe Adams & Bernstein LLP, North Carolina, counsel to the Corporation, for the University by John P. Scherer, II, Esq., Interim General Counsel for the University, for the State by the Office of the Attorney General of the State of North Carolina, and for the Underwriters by Moore & Van Allen PLLC, Charlotte, North Carolina, counsel to the Underwriters. General TAX TREATMENT On the date of execution and delivery of the 2015 Bonds, Parker Poe Adams & Bernstein LLP, Charlotte, North Carolina ( Bond Counsel ), will render an opinion that, under existing law and assuming compliance by the University and the Corporation with certain provisions of the Internal Revenue Code of 1986, as amended (the Code ), the portion of the Base Rentals designated and paid as interest on the 2015 Bonds is excludable from gross income for federal income tax purposes and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations. The portion of the Base Rentals designated and paid as interest on the 2015 Bonds will be taken into account in determining adjusted current earnings of certain corporations (as defined for federal income tax purposes), and such corporations are required to include in the calculation of federal alternative minimum taxable income 75% of the excess of such corporation s adjusted current earnings over its federal alternative minimum taxable income (determined without regard to this adjustment and prior to reduction for certain net operating losses). The Code imposes various restrictions, conditions and requirements relating to the exclusion of interest on obligations, such as the portion of the Base Rentals designated and paid as interest on the 2015 Bonds, from gross income for federal income tax purposes, including, but not limited to, the requirement that the University rebate certain excess earnings on proceeds and amounts treated as proceeds of the 2015 Bonds to the United States Treasury, restrictions on the investment of such proceeds and other amounts, and restrictions on the ownership and use of the facilities financed or refinanced with proceeds of the 2015 Bonds. The foregoing is not intended to be an exhaustive listing of the post-issuance tax compliance requirements of the Code, but is illustrative of the requirements that must be satisfied by the University and the Corporation subsequent to issuance of the 2015 Bonds to maintain the excludability of the portion of the Base 32

39 Rentals designated and paid as interest on the 2015 Bonds from gross income for federal income tax purposes. Bond Counsel s opinions are given in reliance on certifications by representatives of the University and the Corporation as to certain facts material to the opinion and the requirements of the Code. The Corporation has covenanted in the Indenture, and the University has covenanted in the Use Agreements, to comply with all requirements of the Code that must be satisfied subsequent to the issuance of the 2015 Bonds in order that the portion of the Base Rentals designated and paid as interest on the 2015 Bonds be, or continue to be, excludable from gross income for federal income tax purposes. The opinions of Bond Counsel assume compliance by the University and the Corporation with such covenants, and Bond Counsel has not been retained to monitor compliance by the University and the Corporation with such covenants subsequent to the date of issuance of the 2015 Bonds. Failure to comply with certain of such requirements may cause the portion of the Base Rentals designated and paid as interest on the 2015 Bonds to be included in gross income for federal income tax purposes retroactive to the date of issuance of the 2015 Bonds. No other opinion is expressed by Bond Counsel regarding the federal tax consequences of the ownership of or the receipt or accrual of the portion of the Base Rentals designated and paid as interest with respect to the 2015 Bonds. If the portion of the Base Rentals designated and paid as interest on the 2015 Bonds subsequently becomes included in gross income for federal income tax purposes due to a failure by the University or the Corporation to comply with any requirements described above, neither the University nor the Corporation is required to prepay the 2015 Bonds or to pay any additional interest or penalty. The Internal Revenue Service has established an ongoing program to audit tax-exempt obligations to determine whether interest on such obligations is includible in gross income for federal income tax purposes. Bond Counsel cannot predict whether the Internal Revenue Service will commence an audit of the 2015 Bonds. Prospective purchasers and owners of the 2015 Bonds are advised that, if the Internal Revenue Service does audit the 2015 Bonds, under current Internal Revenue Service procedures, at least during the early stages of an audit, the Internal Revenue Service will treat the University as the taxpayer, and the owners of the 2015 Bonds may have limited rights, if any, to participate in such audit. The commencement of an audit could adversely affect the market value and liquidity of the 2015 Bonds until the audit is concluded, regardless of the ultimate outcome. Prospective purchasers of the 2015 Bonds should be aware that ownership of the 2015 Bonds and the accrual or receipt of the portion of the Base Rentals designated and paid as interest on the 2015 Bonds may result in collateral federal income tax consequences to certain taxpayers, including, without limitation, financial institutions, property or casualty insurance companies, individual recipients of Social Security or Railroad Retirement benefits, certain Subchapter S Corporations with excess net passive income, foreign corporations subject to the branch profits tax, life insurance companies and taxpayers who may be deemed to have incurred or continued indebtedness to purchase or carry the 2015 Bonds. Bond Counsel does not express any opinion as to any such collateral tax consequences. Prospective purchasers of the 2015 Bonds should consult their own tax advisors as to the collateral tax consequences. 33

40 Proposed legislation is considered from time to time by the United States Congress that, if enacted, would affect the tax consequences of owning the 2015 Bonds. Accordingly, prospective purchasers of the 2015 Bonds should be aware that future legislation may have an adverse effect on the tax consequences of owning the 2015 Bonds. No assurance can be given that any future legislation, or clarifications or amendments to the Code, if enacted into law, will not contain provisions which could cause the portion of the Base Rentals designated and paid as interest on the 2015 Bonds to be subject directly or indirectly to federal or State of North Carolina income taxation, adversely affect the market price or marketability of the 2015 Bonds or otherwise prevent the owners of the 2015 Bonds from realizing the full current benefit of the status of the portion of the Base Rentals designated and paid as interest on the 2015 Bonds. Bond Counsel is further of the opinion that, under existing law, the portion of the Base Rentals designated and paid as interest on the 2015 Bonds is exempt from State of North Carolina income taxation. Bond Counsel s opinions are based on existing law, which is subject to change. Such opinions are further based on factual representations made to Bond Counsel as of the date thereof. Bond Counsel assumes no duty to update or supplement its opinions to reflect any facts or circumstances that may thereafter come to Bond Counsel s attention, or to reflect any changes in law that may thereafter occur or become effective. Moreover, Bond Counsel s opinions are not a guarantee of a particular result, and are not binding on the Internal Revenue Service or the courts; rather, such opinions represent Bond Counsel s professional judgment based on Bond Counsel s review of existing law, and in reliance on the representations and covenants that Bond Counsel deem relevant to such opinions. Bond Counsel s opinions express the professional judgment of the attorneys rendering the opinions regarding the legal issues expressly addressed therein. By rendering its opinion, Bond Counsel does not become an insurer or guarantor of the result indicated by that expression of professional judgment, of the transaction on which the opinion is rendered, or of the future performance of the University and the Corporation, nor does the rendering of such opinion guarantee the outcome of any legal dispute that may arise out of the transaction. Original Issue Premium The 2015 Bonds maturing on June 1, 2016 through June 1, 2026, inclusive, June 1, 2028, June 1, 2029, June 1, 2033 in the principal amount of $6,160,000 and June 1, 2037 (collectively, the Premium Bonds ), are being sold at initial offering prices which are in excess of the principal amount payable at maturity. The difference between (a) the initial offering prices to the public (excluding bond houses and brokers) at which a substantial amount of the Premium Bonds is sold and (b) the principal amount payable at maturity of such Premium Bonds constitutes original issue premium, which original issue premium is not deductible for federal income tax purposes. In the case of an owner of a Premium Bond, however, the amount of the original issue premium which is treated as having accrued over the term of such Premium Bond is reduced from the owner s cost basis of such Premium Bond in determining, for federal income tax purposes, the taxable gain or loss upon the sale, prepayment or other disposition of such Premium Bond (whether upon its sale, prepayment or payment at maturity). Owners of Premium Bonds should consult their tax advisors with respect to the determination, for federal income tax 34

41 purposes, of the adjusted basis of such Premium Bonds upon any sale or disposition and with respect to any state or local tax consequences of owning a Premium Bond. Original Issue Discount The 2015 Bonds maturing on June 1, 2027, June 1, 2030 and June 1, 2033 in the principal amount of $4,715,000 (the OID Bonds ), are being sold at initial offering prices which are less than the principal amount payable at maturity. Under the Code, the difference between (a) the initial offering prices to the public (excluding bond houses and brokers) at which a substantial amount of each maturity of the OID Bonds is sold and (b) the principal amount payable at maturity of such OID Bonds, constitutes original issue discount treated as interest which will be excluded from the gross income of the owners of such OID Bonds for federal income tax purposes. In the case of an owner of the OID Bond, the amount of original issue discount on such OID Bond is treated as having accrued daily over the term of such OID Bond on the basis of a constant yield compounded at the end of each accrual period and is added to the owner s cost basis of such OID Bond in determining, for federal income tax purposes, the gain or loss upon the sale, prepayment or other disposition of such OID Bond (including its sale, prepayment or payment at maturity). Amounts received upon the sale, prepayment or other disposition of an OID Bond which are attributable to accrued original issue discount on such OID Bonds will be treated as interest exempt from gross income, rather than as a taxable gain, for federal income tax purposes, and will not be a specific item of tax preference for purposes of the federal alternative minimum tax imposed on corporations and individuals. However, it should be noted that with respect to certain corporations (as defined for federal income tax purposes), a portion of the original issue discount that accrues to such corporate owners of OID Bonds in each year may be taken into account in determining the adjusted current earnings for the purpose of computing the federal alternative minimum tax imposed on such corporations and may result in other collateral federal income tax consequences for certain taxpayers in the year of accrual. Consequently, corporate owners of a OID Bond should be aware that the accrual of original issue discount on any OID Bond in each year may result in a federal alternative minimum tax liability or other collateral federal income tax consequences, even though such corporate owners may not have received any cash payments attributable to such original issue discount in such year. Original issue discount is treated as compounding semiannually (which yield is based on the initial public offering price of such OID Bond) at a rate determined by reference to the yield to maturity of each individual OID Bond. The amount treated as original issue discount on a OID Bond for a particular semiannual accrual period is equal to (a) the product of (i) the yield to maturity for such OID Bond (determined by compounding at the close of each accrual period) and (ii) the amount which would have been the tax basis of such OID Bond at the beginning of the particular accrual period if held by the original purchaser, less (b) the amount of interest payable on such OID Bond during the particular accrual period. The tax basis is determined by adding to the initial public offering price on such OID Bond the sum of the amounts which have been treated as original issue discount for such purposes during all prior accrual periods. If an OID Bond is sold between semiannual compounding dates, original issue discount which would have accrued for that semiannual compounding period for federal income tax purposes is to be apportioned in equal amounts among the days in such compounding period. 35

42 The Code contains additional provisions relating to the accrual of original issue discount in the case of owners of OID Bonds who subsequently purchase OID Bonds after the initial offering or at a price difference from the initial offering price during the initial offering of the 2015 Bonds. Owners of OID Bonds should consult their own tax advisors with respect to the precise determination for federal and state income tax purposes of the amount of original issue discount accrued upon the sale, prepayment or other disposition of an OID Bond as of any date and with respect to other federal, state and local tax consequences of owning and disposing of an OID Bond. It is possible that under the applicable provisions governing the determination of state or local taxes, accrued original issue discount on an OID Bond may be deemed to be received in the year of accrual even though there will not be a corresponding cash payment attributable to such original issue discount until a later year. CONTINUING DISCLOSURE The University has agreed, in accordance with Rule 15c2-12 (the Rule ) promulgated by the Securities and Exchange Commission (the SEC ) and for the benefit of the Owners and the Beneficial Owners of the 2015 Bonds, to provide as follows: (a) by not later than seven months after the end of each Fiscal Year, beginning with the Fiscal Year ending June 30, 2015, to the Municipal Rulemaking Securities Board (the MSRB ), the audited financial statements of the University for the preceding Fiscal Year, if available, prepared in accordance with the laws of the State applicable to the Board and its constituent institutions, or if such audited financial statements are not then available, unaudited financial statements of the University for such Fiscal Year to be replaced subsequently by audited financial statements of the University to be delivered within 15 days after such audited financial statements become available for distribution; (b) by not later than seven months after the end of each Fiscal Year, beginning with the Fiscal Year ending June 30, 2015, to the MSRB, the financial and statistical data as of a date not earlier than the end of the preceding Fiscal Year (which data shall be prepared at least annually and shall specify the date as to which such information was prepared) in the table under the heading DEBT SERVICE COVERAGE and in the tables under the heading ENROLLMENT in Appendix A hereto on a historical basis for that Fiscal Year; (c) in a timely manner not in excess of 10 Business Days after the occurrence of the event, to the MSRB, notice of any of the following events with respect to the 2015 Bonds: (1) principal and interest payment delinquencies; (2) non-payment related defaults, if material; (3) unscheduled draws on the debt service reserves reflecting financial difficulties; (4) unscheduled draws on any credit enhancements reflecting financial difficulties; 36

43 (5) substitution of any credit or liquidity providers, or their failure to perform; (6) adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB) or other material events affecting the tax status of the 2015 Bonds; (7) modification of the rights of the Beneficial Owners of the 2015 Bonds, if material; (8) call of any of the 2015 Bonds, if material, and tender offers; (9) defeasance of any of the 2015 Bonds; (10) release, substitution or sale of any property securing repayment of the 2015 Bonds, if material; (11) rating changes; (12) bankruptcy, insolvency, receivership or similar event of the University; (13) the consummation of a merger, consolidation, or acquisition involving the University or the sale of all or substantially all of the assets of the obligated person, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to such actions, other than pursuant to its terms, if material; and (14) appointment of a successor or additional trustee or the change of name of a trustee, if material; and (d) in a timely manner, to the MSRB, notice of a failure of the University to provide required annual financial information described in (a) or (b) above on or before the date specified. The University has agreed to provide all documents described above in an electronic format as prescribed by the MSRB and accompanied by identifying information as prescribed by the MSRB. The University has agreed that the undertaking described under the heading CONTINUING DISCLOSURE herein is intended to be for the benefit of the Owners and the Beneficial Owners of the 2015 Bonds and is enforceable by any of them, including an action for specific performance, but a failure to comply will not be an event of default under the Use Agreement and will not result in acceleration of the payment of the 2015 Bonds. An action must be instituted, had and maintained in the manner provided in the Use Agreement for the benefit of all of the Beneficial Owners of the 2015 Bonds. The University may modify from time to time, consistent with the Rule, the information provided to the extent necessary or appropriate in the judgment of the University, but: 37

44 (1) any such modification may only be made in connection with a change in circumstances that arises from a change in legal requirements, change in law or change in the identity, nature or status of the University; (2) the information to be provided, as modified, must have been in compliance with the requirements of the Rule as of the date of the Official Statement, after taking into account any amendments or interpretations of the Rule as well as any changes in circumstances; (3) any such modification must not materially impair the interest of the Owners or the Beneficial Owners, as determined by Bond Counsel or by the approving vote of the Owners of a majority in principal amount of the 2015 Bonds pursuant to the Indenture. Any annual financial information containing modified operating data or financial information will explain, in narrative form, the reasons for the modification and the impact of the change in the type of operating data or financial information being provided. The University may discharge its undertaking described above by transmitting the documents or notices referred to above in a manner subsequently authorized or required by Securities and Exchange Commission in lieu of the manner described above. The University did not file its audited financial statements for the fiscal year ended June 30, 2010 on a timely basis. Additionally, the University failed to attach its audited financial statements for such fiscal year to the CUSIP for The University of North Carolina System Pool Revenue Bonds, Series 2005A. For the 2010, 2011 and 2012 fiscal years, certain information regarding the Available Funds of the University was not filed on a timely basis. With respect to the 2005 Certificates, the 2006 Certificates and the 2008 Certificates, the University did not file certain information, including information relating to the coverage of debt service, in the format required in its continued disclosure undertaking and, the information filed, was not filed on a timely basis for the 2010 and 2011 fiscal years. In addition, since 2008, the rating agencies have periodically downgraded the claims-paying ability of municipal bond insurers several times without giving notice of such downgrades to the University. The University learned of some downgrades through general media sources and, when it did so, filed the appropriate material event notice related to such ratings; however, in certain instances the University either was unaware of a downgrade or did not learn of a downgrade in order to file a notice in a timely fashion. Except as described in this paragraph, during the past five years the University has complied with its previous undertakings in all material respects. The University has since filed all omitted information and has implemented procedures to ensure future compliance. FINANCIAL ADVISOR RBC Capital Markets, LLC has served as financial advisor (the Financial Advisor ) to the University with respect to the sale of the 2015 Bonds. The Financial Advisor s fee for services rendered with respect to the sale of the 2015 Bonds is contingent on the issuance and delivery of the 2015 Bonds. The Financial Advisor may also receive a fee for conducting a competitive bidding process regarding the investment of certain proceeds of the 2015 Bonds. 38

45 The Financial Advisor is not obligated to undertake, and has not undertaken, either to make an independent verification of or to assume responsibility for the accuracy, completeness, or fairness of the information contained in this Official Statement and the appendices thereto. MISCELLANEOUS The Underwriter has furnished the information contained in this Official Statement under the heading UNDERWRITING and have furnished the information with respect to the public offering prices of the 2015 Bonds contained on the inside cover page of this Official Statement. Parker Poe Adams & Bernstein LLP serves as Bond Counsel for the Corporation and the University and, from time to time, as counsel to the Corporation, and Moore & Van Allen PLLC, counsel to the Underwriters, have represented the Underwriters as counsel in other financing transactions. None of the Corporation, the University or the Underwriters has conditioned the future employment of any of these firms in connection with any proposed financing issues for the Corporation, the University or for the Underwriters on the successful execution and delivery of the 2015 Bonds. Any statements made in this Official Statement involving estimates or matters of opinion, whether or not so expressly stated, are set forth as such and not as representations of fact, and no representation is made that any of the estimates or matters of opinion will be realized. Neither this Official Statement nor any statement which may have been made orally or in writing is to be construed as a contract with the Owners of the 2015 Bonds. The Corporation and the University have duly authorized the use and delivery of this Official Statement in connection with the offering of the 2015 Bonds. 39

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47 APPENDIX A THE UNIVERSITY OF NORTH CAROLINA AT WILMINGTON

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49 APPENDIX A THE UNIVERSITY OF NORTH CAROLINA AT WILMINGTON GENERAL The University of North Carolina at Wilmington (the University or UNCW ) was founded in 1947 as a two-year institution called Wilmington College. It became a four-year institution in 1963, merged into the University of North Carolina in 1969 and became a constituent institution of the University of North Carolina in The University is located in Wilmington, North Carolina in the southeastern region of North Carolina, four miles from the Cape Fear River and five miles west of Wrightsville Beach and the Atlantic Ocean. The University offers 53 undergraduate degree programs, 27 master s degree programs and two doctoral degrees in marine biology and educational leadership and administration. It is comprised of five separate degree-granting schools, colleges and divisions: (1) the College of Arts and Sciences; (2) the Cameron School of Business; (3) the College of Health and Human Services; (4) the Watson College of Education; and (5) the Graduate School. GOVERNANCE Like other constituent institutions, UNCW is governed by the UNC Board of Governors and has its own Board of Trustees. The Board of Trustees is dedicated to promoting the sound development of the University and helping it to serve the people of the State of North Carolina in a way that will complement the activities of the other institutions in the UNC system. The Board of Trustees is composed of 13 members. Eight members are selected by the Board of Governors, four are appointed by the Governor, and the Student Government Association President serves as an ex officio member. All appointed Trustees serve staggered four-year terms. The following lists the current members of the Board of Trustees, their principal residence and their current occupations. NAME/BOARD POSITION Mr. Dennis P. Burgard Mr. Kenneth R. Cameron, Jr. Mrs. Wilma W. Daniels Board Secretary Mr. Michael R. Drummond Mr. H. Carlton Fisher Vice Chair A-1 EMPLOYMENT/CITY CHOICE Jacksonville Realty and DSKT Real Estate Investments Jacksonville, NC Donnelly F. Cameron Co. Charlotte, NC Daniels Development, LLC and William Hooper Apartments Wilmington, NC Packrite LLC High Point, NC Coastal Realty Co. Wilmington, NC

50 NAME/BOARD POSITION EMPLOYMENT/CITY Mrs. Gidget Kidd Mr. Henry L. Hal Kitchin, Jr. Mr. C. Phillip Marion, Jr. Mr. Ronald B. McNeill Mrs. Wendy F. Murphy Mr. Michael B. Shivar Board Chair Mr. Maurice R. Smith Ms. Tobi S. Polland Community Volunteer Asheboro, NC McGuireWoods LLP Wilmington, NC BB&T Company Whiteville, NC Liberty Healthcare Group, LLC Wilmington, NC Community Volunteer Wallace, NC Kinston Insurance Service Agency Kinston, NC Local Government Federal Credit Union Raleigh, NC President, Student Government Association Wilmington, NC UNIVERSITY ADMINISTRATION The following table sets forth the names and positions of the principal executive officers of the University as well as the dates their service began. A statement of the background of each follows. NAME POSITION SINCE William A. Sederburg, Ph.D. Chancellor (interim basis) 2014 Jose V. Zito Sartarelli, Ph.D. Chancellor-Elect Denise A. Battles, Ph.D. Provost and Vice Chancellor for Academic Affairs 2012 Patricia L. Leonard Vice Chancellor for Student Affairs 1996 Eddie Stuart Vice Chancellor for Advancement 2013 Rick N. Whitfield, Ed.D. Vice Chancellor for Business Affairs 2014 Chancellor Gary L. Miller resigned from UNCW effective July 31, 2014 to become chancellor at the University of Wisconsin Green Bay. UNC President Tom Ross named William A. Sederburg to serve as Chancellor on an interim basis while a search was conducted for the next chancellor. On April 10, 2015, the UNC Board of Governors elected Jose V. Sartarelli to take office on July 1, Background statements on both the Chancellor and Chancellor-Elect are below. A-2

51 Dr. William A. Sederburg, Chancellor. Dr. Sederburg was named chancellor of the University in June of 2014, and will serve in this interim role until June 30, Dr. Sederburg received his bachelor s degree from Mankato State University and later earned master s and doctoral degrees in Political Science from Michigan State University. In 1978, Dr. Sederburg was elected to the Michigan State Senate, serving in the legislature until From 1994 to 2003, Dr. Sederburg served as President of Ferris State University in Michigan from 1994 to 2003 and President of Utah Valley State College from 2003 to From 2008 to 2012, Dr. Sederburg served as Commissioner of the Utah System of Higher Education, which includes eight degree-granting two- and four-year public institutions and enrolls 173,000 students. After retiring as Commissioner, Dr. Sederburg was named a Senior Scholar with the American Association of State Colleges and Universities. In that role, he currently chairs a national task force focused on making higher education a state policy priority. Dr. Jose V. "Zito" Sartarelli, Chancellor-Elect. Dr. Sartarelli was named Chancellor-Elect on April 10, 2015 and will take office on July 1, Dr. Sartarelli currently serves as chief global officer and dean of the College of Business and Economics at West Virginia University ( WVU ). He has been the Milan Puskar Dean of the College of Business and Economics at WVU since 2010 and was named the university s first chief global officer in A native of Brazil, Dr. Sartarelli received a bachelor of Business Administration in Marketing (1973) from the São Paulo School of Business Administration (Fundação Getulio Vargas) in São Paulo, Brazil. He then attended Michigan State University as a Fulbright Scholar, earning a master s degree in Business Administration in Marketing (1975) and a doctorate in Business Administration (1979). Before transitioning into higher education, Dr. Sartarelli spent three decades in marketing and management for the international pharmaceutical industry. He began his career with Eli Lilly and Co. ( ), where he held senior positions with increasing levels of responsibility for company operations in the United States, Latin America, and Asia-Pacific. Dr. Sartarelli joined Bristol-Myers Squibb Co. in 1997 as senior vice president of franchise management, business analysis and planning and was later named president of two international medicines groups ( ). From , Dr. Sartarelli worked for Johnson & Johnson as pharmaceutical group chairman for Asia-Pacific, Japan and Latin America. Upon leaving the company in 2010, he became a dean at WVU. Dr. Denise A. Battles, Provost and Vice Chancellor for Academic Affairs. Dr. Battles became Provost and Vice Chancellor for Academic Affairs in Dr. Battles received her Baccalaureate degree in Geology from Colgate University and a Ph.D. in Geology from the University of California Los Angeles. Provost Battles began her academic career at Georgia Southern University. In 2005, she became the first (founding) Dean of the College of Natural and Health Sciences at the University of Northern Colorado, a position she held until her UNCW appointment. In addition to her administrative appointment, Dr. Battles holds faculty status in UNCW s Department of Geography and Geology. Dr. Battles has accepted the position of President of the State University of New York Geneseo and will begin her duties there in July Dr. Marilyn Sheerer has been named Interim Provost of UNCW and will assume this role upon Provost Battles departure. Dr. Sheerer was Provost of East Carolina University from 2007 until August Prior to that, she was dean of the Eastern Carolina University College of Education for eight years. Before serving in that role, she was a department chair at Edinboro University of Pennsylvania and Northern Illinois University. She holds a bachelor s degree from Bloomsburg State College in Pennsylvania, a master s degree from Syracuse University and a Ph.D. from Ohio University. A-3

52 Ms. Patricia L. Leonard, Vice Chancellor for Student Affairs. Ms. Leonard became Vice Chancellor for Student Affairs in Prior to becoming Vice Chancellor, Ms. Leonard served the University as Dean of Students. She holds a Bachelor of Arts degree with double majors in Social Work and Secondary Education from Misericordia University, a Master of Art degree in College Student Personnel Administration from Michigan State University, with additional certifications in the Harvard Institute for Higher Education and the Summer Institute for Women in Higher Education at Bryn Mawr College. Prior to her appointment with the University, she held positions at Miami University of Ohio and The University of North Carolina at Charlotte. Mr. Eddie Stuart, Vice Chancellor for Advancement. Mr. Stuart was named Vice Chancellor for Advancement in Prior to this role, he served as Assistant Vice Chancellor for Advancement from 2009 to 2013, where he led UNCW s philanthropic major gifts program including major gifts, parent giving, corporate and foundation giving and planned giving. Prior to this position, Mr. Stuart was UNCW s Senior Director of Development. Mr. Stuart graduated from Elon University with a Bachelor of Arts degree in Corporate Communications and a minor in Business Administration. He received his Master of Public Administration from UNCW in Dr. Rick N. Whitfield, Vice Chancellor for Business Affairs. Dr. Whitfield is the University s chief financial and administrative officer, responsible for the University s fiscal management, facilities development and operation, human resources, information technology, public safety, business systems development, business continuity, and auxiliary services. Prior to his appointment in 2014, Dr. Whitfield served as the University s Associate Vice Chancellor for Business Affairs - Finance from 2010 to Prior to joining UNCW, he served as Executive Vice President at Pace University, where he was the chief financial and administrative officer. Dr. Whitfield s previous experience also includes financial leadership roles at the University of Pennsylvania and its health system and Vanderbilt University and its medical center. Dr. Whitfield is a Certified Public Accountant and holds an Ed.D. in Higher Education Leadership from the University of Pennsylvania, a master s degree in Business Administration from Vanderbilt, and a bachelor s degree in Accounting from Austin Peay State University. FACULTY In the academic year, UNCW employed 997 full- and part-time instructional faculty. Of the full-time faculty, 57.8% are tenured and 86.4% hold a doctorate, first professional or other terminal degree in their respective fields. The student to faculty ratio is 17.2 to 1. ACCREDITATION The University is accredited by the Southern Association of Colleges and Schools Commission on Colleges to award bachelor s, master s and doctoral degrees. ENROLLMENT APPLICATION, ACCEPTANCE AND ENROLLMENT INFORMATION A-4 ACCEPTANCE RATE ENROLLMENT RATE ACADEMIC YEAR APPLICATIONS ACCEPTANCES ENROLLED ,759 5, % 1, % ,339 5, % 1, % ,184 6, % 2, % ,838 6, % 1, % ,523 6, % 2, %

53 HEADCOUNT, FALL SEMESTER Undergraduate 11,743 11,902 12,348 12,428 12,952 Graduate 1,328 1,243 1,385 1,509 1,618 Total 13,071 13,145 13,733 13,937 14,570 FULL TIME EQUIVALENTS, FALL SEMESTER Undergraduate 11,520 11,690 12,218 12,303 12,377 Graduate ,003 1,239 Total 12,389 12,496 13,112 13,306 13,616 AVERAGE ENROLLED FRESHMEN SAT SCORES ACADEMIC YEAR CRITICAL READING MATH WRITING TOTAL , , , , ,758 TUITION AND FEES Following are the annual tuition and mandatory fees for the past four academic years and for the current academic year: Undergraduate In State $ 5,415 $ 5,274 $ 6,199 $ 6,343 $ 6,392 Out of State 16,514 17,095 18,301 18,480 20,420 Graduate In State 5,971 6,120 6,336 6,480 6,529 Out of State 16,897 17,758 18,237 18,415 18,464 AUDITED FINANCIAL STATEMENTS UNCW adheres to financial reporting as prescribed by the American Council of Education, the National Association of College and University Business Officers, the American Institute of Certified Public Accountants, the Governmental Accounting Standards Board, the North Carolina Office of the State Controller and the North Carolina Office of the State Auditor. Funds held by UNCW are subject to audit by the North Carolina Office of the State Auditor. The audited financial statements of the University for the fiscal year ended June 30, 2014 are included as Appendix B hereto. A-5

54 SUMMARY FINANCIAL INFORMATION CONDENSED STATEMENT OF NET POSITION AT JUNE (Restated) (Restated) 2014 ASSETS Current Assets: Cash and Cash Equivalents $65,015,830 $65,347,125 $74,411,120 $82,182,448 $100,713,018 Restricted Cash and Cash Equivalents 19,004,819 24,042,407 21,871,785 16,166,802 14,401,915 Receivables, Net 4,115,903 4,586,704 3,861,541 3,852,024 3,444,957 Due from State of NC Component Units 389, , ,154 75,681 Inventories 340, , , , ,022 Prepaid Items 6,941 Notes Receivable, Net 1,121,112 1,049, , , ,764 Total Current Assets 89,987,511 95,702, ,201, ,188, ,562,617 Noncurrent Assets: Restricted Cash and Cash Equivalents 45,643,123 50,821,943 31,577,332 16,150,045 14,600,171 Receivables, Net 381, , , , ,572 Prepaid Items 1,195 Restricted Due to Primary Government 370, ,432 Endowment Investments 44,645,280 57,827,677 60,749,814 70,350,026 80,159,221 Other Investments 682, ,596 Deferred Charges 986,786 1,180,403 3,538,509 Notes Receivable, Net 5,460,449 5,318,991 5,653,449 5,458,733 3,944,465 Capital Assets - Nondepreciable 42,004,392 35,348,096 66,501,850 41,449,627 12,579,558 Capital Assets - Depreciable 383,631, ,750, ,198, ,132, ,507,167 Total Noncurrent Assets 523,806, ,113, ,354, ,658, ,003,349 Total Assets 613,794, ,816, ,556, ,847, ,565,966 DEFERRED OUTFLOWS OF RESOURCES Deferred Loss on Refunding ,369,732 2,174,373 LIABILITIES Current Liabilities: Accounts Payable and Accrued Liabilities 5,113,186 9,836,745 10,837,251 4,661,785 3,541,055 Deposits Payable 1,197 5,921 Due to Primary Government 1,230,190 1,178,439 1,278,984 1,365,193 Unearned Revenue 4,288,645 4,343,537 4,391,126 4,642,332 5,288,211 Interest Payable 1,924,295 2,358,805 2,087,037 2,044,448 2,133,921 Long-Term Liabilities - Current Portion 8,542,776 10,217,886 6,254,632 6,674,900 7,033,768 Total Current Liabilities 21,099,092 27,935,412 24,850,227 18,023,465 19,368,069 Noncurrent Liabilities: Accounts Payable and Accrued Liabilities 411 6, ,000 Funds Held for Others 3,743,831 4,146,033 7,519,167 2,276, ,607 U.S. Government Grants Refundable 4,480,073 4,426,296 4,392,778 4,356,005 4,325,528 Long-Term Liabilities 233,431, ,324, ,097, ,195, ,776,131 Total Noncurrent Liabilities 241,655, ,896, ,009, ,835, ,223,266 Total Liabilities 262,754, ,832, ,859, ,858, ,591,335 DEFERRED INFLOWS OF RESOURCES Deferred Gain on Refunding NET POSITION Net Investment in Capital Assets 229,927, ,002, ,350, ,003, ,491,504 Restricted Nonexpendable 45,056,161 55,771,543 58,539,760 43,670,715 45,850,210 Restricted Expendable 22,801,543 15,518,651 13,841,797 27,596,752 38,085,095 Unrestricted 53,254,086 52,691,496 59,963,981 83,087, ,722,195 Net Position June ,039, ,983, ,696, ,358, ,149,004 Net Position Adjustment (1,559,342) Restated Net Position $351,039,403 $370,983,978 $398,136,954 $426,358,185 $445,149,004 For more detailed information, see Appendix B hereto. A-6

55 STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION FOR THE FISCAL YEARS ENDED JUNE 30 REVENUES Operating Revenues: (Restated) 2013 (Restated) 2014 Student Tuition & Fees, Net $71,613,363 $80,606,602 $86,526,202 $93,042,367 $96,421,397 Federal Grants & Contracts 15,641,403 14,570,287 12,144,343 8,496,278 5,769,590 State & Local Grants & Contracts 1,377,277 1,290,821 1,035,091 1,323,221 1,006,363 Nongovernmental Grants & Contracts 1,540,777 1,232, , ,739 1,104,249 Sales & Services, Net 37,764,423 39,431,360 41,194,644 44,252,719 47,969,874 Interest Earnings on Loans 91,788 69,153 73,678 41,108 6,100 Other Operating Revenues 1,679,846 2,826,885 3,886,788 6,201,708 5,810,080 Total Operating Revenues 129,708, ,027, ,652, ,041, ,087,653 EXPENSES Operating Expenses: Salaries & Benefits 145,706, ,677, ,205, ,785, ,921,608 Supplies & Materials 18,883,395 15,699,970 18,267,194 21,320,365 19,863,947 Services 44,058,570 48,694,722 46,134,350 50,215,453 50,936,497 Scholarships & Fellowships 15,695,692 17,177,308 16,526,443 17,661,241 18,327,034 Utilities 8,667,368 7,547,034 6,770,663 7,344,665 7,783,473 Depreciation 13,612,147 13,811,118 14,120,071 14,585,939 16,194,951 Total Operating Expenses 246,623, ,607, ,024, ,913, ,027,510 Operating Loss (116,914,972) (114,579,957) (106,371,452) (113,872,417) (114,939,857) NONOPERATING REVENUES (EXPENSES) State Appropriations 90,220,051 89,349,941 91,313,397 96,878,528 97,601,950 State Aid - Federal Recovery Funds 7,228,518 7,536,901 Noncapital Grants - Student Financial Aid 21,800,790 25,079,443 22,728,974 24,323,132 23,359,488 Noncapital Gifts, Net 2,750,983 2,917,139 4,893,475 3,178,336 3,339,055 Investment Income, Net 4,378,042 8,710,806 2,862,924 8,560,744 10,842,857 Interest and Fees on Debt (6,491,363) (11,654,036) (11,917,022) (10,889,530) (11,482,010) Federal Interest Subsidy on Debt 678, , , ,120 Other Nonoperating Revenues (Expenses) (735,635) (46,388) (3,443) 213,938 (9,157) Net Nonoperating Revenues 119,151, ,572, ,638, ,887, ,474,303 Income Before Other Revenues 2,236,414 7,992,542 4,267,016 9,014,677 9,534,446 Capital Appropriations 3,146,783 Capital Grants 2,778,761 7,759,598 21,726,855 17,457,010 2,173,028 Capital Gifts 27,133 Additions to Endowments 2,085,107 4,192,435 2,718,447 1,749,544 3,936,562 Increase in Net Position $7,127,415 $19,944,575 $28,712,318 $28,221,231 $18,790,819 Net Position July 1 343,911, ,039, ,983, ,136, ,358,185 Change in Net Position 7,127,415 19,944,575 28,712,318 28,221,231 18,790,819 Net Position June ,039, ,983, ,696, ,358, ,149,004 Net Position Adjustment (1,559,342) Restated Net Position June 30 $351,039,403 $370,983,978 $398,136,954 $426,358,185 $445,149,004 For more detailed information, see Appendix B hereto. A-7

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57 APPENDIX B FINANCIAL STATEMENTS The University has not requested nor obtained consent of its auditor to the inclusion of these financial statements in this Official Statement. The auditor did not participate in the preparation of this Official Statement.

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59 UNIVERSITY OF NORTH CAROLINA WILMINGTON MANAGEMENT S DISCUSSION AND ANALYSIS Financial Analysis The University of North Carolina Wilmington (University) provides the following Management s Discussion and Analysis (MD&A) as an overview of the financial activities for the fiscal year ended June 30, The MD&A identifies significant transactions that have financial impact and highlights favorable and unfavorable trends. Comparative data for the previous year is presented to provide a better understanding of the financial information. Using the Financial Statements The University s financial report includes three basic comprehensive financial statements that depict the financial activity and fiscal condition of the University for the current year: the Statement of Net Position; the Statement of Revenues, Expenses, and Changes in Net Position; and the Statement of Cash Flows. These financial statements are prepared in accordance with Government Accounting Standards Board (GASB) principles. The accrual basis of accounting has been used to prepare the statements. This method of accounting requires that revenues and assets be recognized when the service is provided. Expenses and liabilities are recognized when others provide services, regardless of when cash is exchanged. The Statement of Net Position includes all University assets and liabilities. The University s net position (the monetary difference between total assets and total liabilities) is one indicator of the University s financial viability. Over time, changes in net position provide information on the improvement or erosion of the University s financial condition when considered with non-financial facts such as enrollment levels and the condition of facilities. The Statement of Revenues, Expenses, and Changes in Net Position presents the revenues earned and expenses incurred during the fiscal year. Financial activities are reported as either operating or nonoperating. GASB Statement No. 35 classifies state appropriations and gifts as nonoperating revenues. With state appropriations and gifts being classified as nonoperating revenues, most public institutions will report an operating deficit. As of July 1, 2013, the University blended the component units, UNCW Corporation II (Corporation II) and UNCW Research Foundation (Research Foundation), which were previously reported as related parties. The University's net position increased $135,907 as a result of this change. An important factor to consider when evaluating the financial viability of the University is the ability to meet financial obligations as they mature. The Statement of Cash Flows presents information that allows the reader to evaluate the University s ability to meet its financial obligations on a current basis. Financial Highlights For the fiscal year ended June 30, 2014, the North Carolina General Assembly (General Assembly) imposed a permanent budget reduction of $218 thousand, however, the University B-1

60 MANAGEMENT S DISCUSSION AND ANALYSIS (CONTINUED) did receive state appropriations funding for enrollment growth of $4.8 million, operations funding for new buildings of $347 thousand, and need-based student financial aid of $800 thousand as part of the campus-initiated tuition increases. In addition, the University received funding of $200 thousand for a predictive analytics request as part of the President s Strategic Initiatives Allocation from the General Assembly and the Board of Governors five year strategic plan ( ). The University-led predictive analytics project includes design and construction of a predictive model that supports strategic planning and management activities in a scalable form adaptable for use by other UNC campuses. Subsequent to receiving the predictive analytics funding the State called for a one-time reversion of expenditures for the entire UNC system. The University reversion allotment of $1.3 million included the predictive analytics funding of $200 thousand. State Appropriations & State Aid, Tuition & Fees and State Appropriations & State Aid per FTE $10,000 $ Millions ,998 7, , , , ,080 7, , ,522 7,445 $9,000 $8,000 $7,000 $6,000 $5,000 $4, $3, $2,000 State Appropriations & State Aid Tuition & Fees State Appropriations & State Aid/FTE While tuition and fee revenue has continued to rise over the last ten years, state appropriations and state aid have held relatively steady the last five years. With student enrollment steadily increasing each year, state appropriation and state aid per student full-time equivalent have decreased as appropriations have not increased at the same rate. During the fiscal year ended June 30, 2014, the State did not appropriate salary increases for University employees but did allocate five days of bonus leave that had to be taken by June 30, The University s endowment fund investment rate of return of 14.6% exceeded the fund s primary return objective of 6.6% for the fiscal year ended June 30, The endowment has been successful in achieving its long-term objective with a ten year annualized return of 8.8% B-2

61 MANAGEMENT S DISCUSSION AND ANALYSIS (CONTINUED) and an annualized return since inception of 7.8%. Both returns surpass the long-term objective of 4.5% plus inflation. This ten year annualized return ranks in the top quartile of the BNY Mellon Endowment and Foundation Universe and, more importantly, exceeds the return objective of the endowment by 2.0%. Endowment investments total net position increased 15% during to $85.3 million at June 30, The endowment received additions of $4.1 million, primarily from new gifts of $3.9 million. The endowment s net earnings, after investment expenses and administrative fees, approximated $9.7 million. Scholarships and university programs received $2.3 million from those earnings. 90 Market Value Endowment Assets $ Millions Year During this fiscal year, the endowment purchased real estate property from The Foundation of UNCW, Inc. for $2.0 million with unrestricted quasi endowment funds. The property is used for student parking for the University. Construction in progress decreased $30.4 million when the Center for Marine Science MARBIONC facility (MARBIONC) received a certificate of occupancy and was put into service in November Statement of Net Position The Statement of Net Position presents the assets (current and noncurrent), deferred outflows, liabilities (current and noncurrent), deferred inflows, and net position (total assets plus deferred outflows minus total liabilities and deferred inflows) of the University. This statement provides a fiscal snapshot of the University s financial position as of June 30, The data provides readers of this statement information on assets available to continue B-3

62 MANAGEMENT S DISCUSSION AND ANALYSIS (CONTINUED) operations; amounts due to vendors, investors, and lending institutions; and the assets available for expenditure by the University. Condensed Statement of Net Position June 30, as Indicated (Restated) % Change Change Assets Current Assets $ 119,562,617 $ 103,188,733 $ 16,373, % Noncurrent Assets 98,916,624 92,076,524 6,840, % Capital Assets, Net 488,086, ,581,996 (11,495,271) -2.3% Total Assets 706,565, ,847,253 11,718, % Deferred Outflows of Resources Deferred Loss on Refunding 2,174,373 2,369,732 (195,359) -8.2% Liabilities Current Liabilities 19,368,069 18,023,465 1,344, % Noncurrent Liabilities 244,223, ,835,335 (8,612,069) -3.4% Total Liabilities 263,591, ,858,800 (7,267,465) -2.7% Deferred Inflows of Resources Deferred Gain on Refunding % Net Position Net Investment in Capital Assets 260,491, ,003,692 (11,512,188) -4.2% Restricted Nonexpendable 45,850,210 43,670,715 2,179, % Restricted Expendable 38,085,095 27,596,752 10,488, % Unrestricted 100,722,195 83,087,026 17,635, % Total Net Position $ 445,149,004 $ 426,358,185 $ 18,790, % On June 30, 2014, total University assets were $706.6 million. The largest asset categories were the University s cash and cash equivalents of $129.7 million, endowment investments of $80.2 million, and capital assets, net, of $488.1 million. Carryforwards of $9.6 million were the largest driver in the 15.9% increase in current assets. The Office of Housing and Residence Life s increase to unrestricted net position of $6.7 million was the biggest contributor to the $17.6 million change in unrestricted net position. The $11.5 million decrease in capital assets, net, and net investment in capital assets, was the result of increased depreciation on newly capitalized buildings, including MARBIONC, and significantly less spending on large capital projects. B-4

63 MANAGEMENT S DISCUSSION AND ANALYSIS (CONTINUED) Statement of Revenues, Expenses, and Changes in Net Position Changes in total net position as presented on the Statement of Net Position section are based on the activity reported in the Statement of Revenues, Expenses, and Changes in Net Position. The purpose of this statement is to present the revenues received by the institution, both operating and nonoperating, and the expenses paid by the institution, both operating and nonoperating, as well as any other revenues, expenses, gains and losses received or expended by the University. Operating revenues are received for providing goods and services to the various customers and constituencies of the University. Operating expenses are used to acquire or produce the goods and services provided in return for the operating revenues, and to carry out the mission of the University. Nonoperating revenues are revenues received for which goods and services are not provided; e.g., state appropriations, noncapital gifts and grants, and investment income. Nonoperating expenses include interest and fees on debt, loss on sale of assets, and other miscellaneous expenses; i.e., expenses not involved in the normal operations of the University. B-5