Dive Brief:
- The Metropolitan College of New York is planning to sell some of its Manhattan campus as part of an agreement struck with bondholders that will let the institution delay a $1.7 million bond payment due in November, according to a regulatory filing last week.
- The private nonprofit owns three floors, a ground floor lobby and additional office space in a building near Wall Street. MCNY used $67.4 million raised from bonds issued in 2014 to purchase and renovate the Manhattan space.
- According to the regulatory filing, MCNY has enlisted Cushman & Wakefield as a real estate broker to sell the Manhattan campus “either in whole or in part.” The broker lists two floors of the Manhattan building for sale on its website, though it says the seller will consider offers for the entire space.
Dive Insight:
MCNY primarily caters to adult students — typically considered ages 25 and older — and offers associate, bachelor’s and master’s programs. Along with the Manhattan location, MCNY also has a campus in the Bronx.
The institution is one of many small, tuition-dependent colleges that have struggled to recover from the coronavirus pandemic. MCNY’s enrollment cratered during the health crisis, declining from 980 students in fall 2019 to 632 students just three years later.
In turn, the college’s net tuition plummeted. MCNY brought in $13.4 million in net tuition and fees in fiscal year 2022, down 43.1% from three years prior. However, the institution’s overall revenue declined only 7% over that time to $25.4 million in 2022, thanks in part to government grants.
In the 2021 and 2022 fiscal years, the college received nearly $13 million in federal pandemic relief. And its fiscal year 2022 audit noted the college expected to receive roughly $2.3 million more in pandemic-related refundable tax credits.
College officials have been in talks with the bond trustee, U.S. Bank National Association, since August 2023 about striking a forbearance agreement, according to a recent report from Fitch Ratings. The two entered talks because MCNY has failed to meet certain bond requirements and expected to be unable to make the November principal payment, according to the regulatory filing.
Under the agreement, MCNY will continue to make interest payments on the bonds but will skip the November principal payment. Additionally, a $3 million second mortgage on the institution’s Bronx campus “will be added as security for bondholders,” according to Fitch Ratings.
The college and U.S. Bank will determine a new date for the overdue principal payment by the end of the one-year forbearance period next October.
MCNY isn’t alone. A rising number of colleges have been breaching their bond and loan covenants, according to a recent report from S&P Global Ratings.
Officials at MCNY did not immediately respond to a request for comment Monday.
The broker’s listing for the two floors for sale note that they include 59 offices, 16 classrooms, 12 restrooms, four conference rooms, two computer labs, information technology and server rooms, a library and a student lounge.
