T
he Metropolitan College of New York is selling part of its Manhattan campus to avoid defaulting on a debt payment. As part of a deal with bondholders, the school will skip an $8 million payment due in November. Cushman & Wakefield has been hired as brokers to market and sell either a segment or the entire Financial District property at 40 Rector Street.

    The college owns three floors and part of the ground floor at this location, along with an office building near the World Trade Center and its Bronx campus. Metropolitan College listed part of the property in a forbearance agreement after breaking certain terms of its bonds. The school has $61 million in outstanding municipal bonds and has been severely downgraded by Fitch Ratings, which predicts "default of some kind appears likely."

    This is not the first time the college has used real estate to pay off creditors; it attempted to sell two floors of an office building at 60 West Street in 2023. The school had approximately 630 matriculating students in fall 2022, down from around 1,200 in 2012.

    Many smaller US schools are facing similar challenges due to low enrollment and struggling finances. Undergraduate enrollment has declined by 8.5% since 2010. High-value real estate holdings can provide a safety net for cash-strapped institutions, making them attractive investments for potential buyers.