YU Not to Sell Properties Despite Financial Hardship
Despite a bout of financial turmoil, Yeshiva University will not sell any of its real estate, according to Robert Hershan, Managing Director of Alvarez & Marsal, the firm hired to find strategies to reduce expenses.
“There are no plans to sell any other real estate right now, other than what was sold almost a year ago last May, that was non-core residential real estate in Washington Heights,” Hershan told the Commentator in an interview.
In May of last year, YU sold ten buildings near its Washington Heights Wilf Campus for $72.5 million. As the University looks for ways to raise cash, an inquisitive glance was cast in the direction of YU’s large real estate portfolio.
Speculation often circulates that YU should sell its Israel Henry Beren Campus in Murray Hill and build a new campus for Stern College in Washington Heights. Higher administration have admitted that moving Stern to the Heights would save a minimum of $10 million a year. “Rumors are flying,” Hershan responded to the allegations.
However, Hershan affirmed, “There are certainly no plans to sell any of the Stern Campus that I'm aware of.” In fact, many of the YU Midtown buildings cannot be sold because they were collateralized as part of a restructuring that occurred last year. Additionally, President Richard Joel has often attested that such a move would destroy the very essence of the university.
According to its 2013 financial statements, Yeshiva University held upwards of, in book value, $650 million in land, buildings, and equipment; the market value of these properties, far exceeds that. YU has real estate in Manhattan, the Bronx, and Jerusalem. More recent and detailed statements about YU’s real estate are not yet available.
Hershan said he was working together with Rabbi Josh Joseph, YU Senior Vice President, on a number of initiatives, including reviewing YU’s space. “We’re looking at what the utilization of that space is,” Hershan explained, “to see what can be done to maximize efficiency of that space.”
March 5 marked the one-year anniversary of Moody’s downgrading YU’s credit rating from B3 to B1. In December 2014, the investors’ service outlook on YU remained negative because of “the risk of liquidity depletion.” The credit rating remained negative even though “significant real estate holdings in Manhattan and the Bronx” were considered. These properties “would provide for a full recovery for bondholders, should the University default. Moody’s cited as one of YU’s strengths that in the 2014 fiscal year, “Yeshiva monetized parts of its real estate holdings to generate liquidity,” referring to the sale of Washington Heights buildings mentioned above.
“An upgrade or stable outlook is unlikely in the near-term given the magnitude of financial challenges faced by the university,” Moody’s found. If the rating were to improve, it would likely result from a “substantial improvement in unrestricted liquidity through the monetization of real estate or sizeable gifts combined with execution of a fiscally sustainable business plan, without damaging the university’s market position.”