Another private college in New York is shutting its doors after struggling financially and said it won't make further interest payments to investors on its municipal bonds.
The College of Saint Rose, a private Roman Catholic school in Albany, said Friday it plans to close after this academic year. It was founded in 1920 as a women's college and still mostly serves female students.
"We are devastated that despite all our efforts we were unable to avoid closure," the chairman of the school's Board of Trustees Jeffrey Stone said in a statement. "Our goal now is to ease the transition for our students, faculty, and staff."
The closure comes as multiple colleges in northeastern U.S. states have announced plans to shut down in the past year as they struggled with declining enrollment caused by a shrinking pool of high school graduates and continued fallout from COVID. In New York, Medaille University, a nearly 150-year-old private university in Buffalo, closed in August after failing to sell itself to a nearby school. And Alliance University, a Christian college in Manhattan, closed earlier this year.
The college has $54 million of outstanding municipal-bond debt, most of which was sold just two years ago. As part of that 2021 sale, the school noted that it was hurt by the decline in high school graduates in the Northeast and less demand for its teaching programs.
On Friday, the school disclosed to investors that it "will not be funding further interest payments on the Bonds effective as of the January 1, 2024 interest payment date," according to a regulatory filing. The school will hold a call with investors next week.
The bond sale came during an era of low interest rates that let riskier issuers access ultra- low borrowing costs. The college's junk-rated bond sale priced to yield 3.23% in 30 years.
Invesco Ltd. and BlackRock Inc. are among the holders of the debt, according to data compiled by Bloomberg. As part of the protections given to investors on the school's 2021 bond sale, bondholders have a mortgage on certain campus property. The bond documents estimated that the mortgaged property was worth $78 million.
A spokesperson for BlackRock declined to comment, and a spokesperson for Invesco did not respond to a request for comment.
The 48-acre campus takes up much of the mostly residential Pine Hills neighborhood in Albany that includes "beautiful signature Victorian houses," according to bond documents. The closure will leave many buildings there vacant. It has more than 80 properties in Albany.
Bondholders' prospects for recovering their money often relies on the sale of its assets. But finding a buyer of a college campus can be tough given it's a unique type of real estate.
Options to help the school stay afloat were unsuccessful. The state couldn't step in with funding because there was no precedent in New York for such a step, said Alexander Flood, a spokesperson for Assembly member Patricia Fahy, who is part of a delegation of state lawmakers that represent the Albany and Troy areas.
