According to New York City property records filed on Wednesday, April 26th, Yeshiva University has refinanced five of its main properties in Manhattan using a $140 million mortgage from debt fund managers Silverpeak Argentic Real Estate Finance LLC and Citigroup’s Citi Real Estate Funding Inc. The structure of the refinancing involved placing the properties, located at 2495 and 2520 Amsterdam Avenue in Washington Heights (Pollack and Gottesman Library and Belfer Hall), and 215, 245 and 253 Lexington Avenue in Murray Hill, into a wholly university owned limited liability company called Y Properties Holdings LLC. The transfer was conducted as part of a sale and leaseback transaction in which the properties were leased back by Yeshiva University.
The new mortgage was used to redeem $175 million in taxable bonds held by UMB Bank, which the university had issued in August 2014. The remaining principal balance owing on the bonds was approximately $125 million.
The status of YU’s bonds was upgraded in February from a “negative” to “stable” B3 junk rating by Moody’s Investors Service, as reported in The YU Commentator. The credit rating referenced an increased and now “sufficient level of unrestricted liquidity” as a “stabilizing factor” during the transitional period of new university presidency, but also considered YU to be in “very weak fiscal and operational condition.”
The rating also accounted for “the likelihood of full recovery for bondholders from marketable real estate assets if the sale of those assets were to become necessary.” By refinancing the buildings through a loan to Y Properties and putting in place a lease in favor of Yeshiva University, the university is transferring some of its assets to Y Properties in title. However, as the sole member of Y Properties, YU will still retain them as assets to be used by the university.
“The University continues to evaluate ways to improve its operations,” said Mr. Avi Lauer, Vice President for Legal Affairs, Secretary and General Counsel. “In this case, we were able to refinance our long term debt at a more favorable interest rate, which will help the University reduce its annual debt costs.”
At President Richard Joel’s final Wilf Town Hall on March 29th, he stated that the university hopes to reduce its deficit to $27 million by the end of this year, and $17 million by the end of next year.