Private college plans sale of Manhattan real estate to pay debt

Metropolitan College plans to sell its Lower Manhattan campus as it works through financial difficulties.

Bloomberg News

A struggling college in New York City is planning to sell its Manhattan campus to The City University of New York, providing a reprieve for its bondholders.

CUNY intends to purchase the real estate located in the Financial District from the Metropolitan College of New York for $40 million, according to a regulatory filing dated Aug. 26.

Proceeds of the sale, after closing costs, will be used to redeem a portion of Metropolitan College’s outstanding bonds and pay past debt service that was deferred, the filing says. The college has about $60 million of outstanding debt, according to data compiled by Bloomberg. The bonds were issued through the
Build NYC Resource Corporation as conduit.

The sale is a win for bondholders, who have seen debt sold by Metropolitan College slashed deep into junk by Fitch Ratings. The school’s municipal bonds were secured in part by a mortgage on the condominium units at 40 Rector Street, as well as college revenues, according to a 2024 report by the ratings company. Metropolitan College put the real estate on sale last year as part of a forbearance agreement with investors.

Real estate is a valuable asset for small colleges and when sold for a high value can help investors recoup their money if schools run into financial trouble.

CUNY wants to buy about 100,000 square feet in commercial condo units at the Manhattan property, said a letter of intent that was a part of the filing. The space is permitted to be used as classrooms and offices “typical for a college, university or graduate school,” the letter said.

A spokesperson for CUNY said that it identified the units as a temporary location for the Hunter-Bellevue School of Nursing as construction moves forward on a center that will bring together three of its schools into a single campus.

“Negotiations on a potential purchase remain ongoing,” the spokesperson said.

According to Metropolitan College’s website, the Manhattan space is home to its president’s office and offices of alumni relations and technology. The college, which has a Bronx campus, had about 480 total students as of the 2023-24 school year, according to New York State Education Department data.

The sale still needs approval from a variety of entities, including Metropolitan College bondholders and the school’s accreditor, the filing says.