College Seeks to Sell FiDi Campus
The Metropolitan College of New York (MCNY), which has been based at 60 West Street since 2016, is seeking to sell all or part of its Lower Manhattan campus in satisfaction of bond debt on which it has fallen into arrears.
These troubles surround a 2014 offering of $67.4 million in tax-free bonds, issued through the Build NYC Resource Corporation, an arm of the City’s Economic Development Corporation that floats debt on behalf of non-profits seeking to acquire New York real estate. These funds were used to purchase the sixth, seventh, and eighth floors of 40 Rector Street (as 60 West Street is also known), as well the ground-floor entrance space that faces West Street.
In early 2023, MCNY acknowledged that it was unable to keep up payments on this note. The college received a year’s deferral on debt service, while it sought to raise funds through a sale of the space it owns at 40 Rector Street. Of the $67 million that MCNY borrowed in 2014, less than 10 percent had been repaid as of the suspension in payments. The $62 million that is outstanding carries annual interest of more than $4 million. The next installment on this debt (a payment of approximately $1.7 million) was due on November 1, and MCNY was unable to pay. A few weeks before the missed payment, MCNY negotiated a further forbearance agreement, that allowed it to skip the November 1 payment.
In conference call with bondholders last August, MCNY president Dr. Joanne Passaro (who resigned in June of this year) said, “the college is experiencing declining enrollment that is not recovering as quickly as we expected from the pandemic,” adding that the school “has more space than it needs, taking into account our current and projected enrollment and the trend toward more online instruction for adult learners.” Anthony J. Cammarano, then MCNY’s interim chief financial officer (who departed this May), said that without agreement from bondholders to suspend debt service and without a sale of all or part of the school’s property at 40 Rector, “we project in the low scenario that our cash will be depleted by early 2025, and in the high scenario, that we make it through 2025 and into 2026.”
MCNY spokesperson Tina Georgiou responded to the Broadsheet’s request for comment with a statement that the college “owns campuses in Lower Manhattan and the south Bronx. The Manhattan campus is underutilized, and MCNY plans to sell part of that space. The College will also consider offers for its entire Manhattan campus. MCNY intends to consolidate operations on the remaining floors of its Manhattan campus, the Bronx campus, and elsewhere as needed based on the details of the sale.”
In related developments, the Fitch bond rating agency downgraded the 2014 MCNY debt issue to “C” in mid-October, meaning that “default appears imminent or inevitable” and then further revised its estimation of the bonds to “D” in November, after the skipped payment. According to Fitch, the “D” grade means “the bonds have defaulted.”