Rider University, a small college outside Trenton, New Jersey, is seeking additional funding to help relieve its ongoing liquidity crisis.
According to a bond filing on Friday, university officials have asked bondholders for permission to borrow against a mortgage on the school's main campus in Lawrenceville, New Jersey. If approved, it would give Rider University much-needed cash in the short term.
“In the spirit of good partnership with our current bondholders, we have consulted with them on this matter and understand that the majority of them intend to agree with the proposed amendments,” school spokeswoman Christine Brown said.
The proposal reflects the growing challenges that small schools are facing in making ends meet as they grapple with declining enrollment and rising costs — pressures that have forced colleges across the U.S. to close or merge and others to expand into new business areas like online education, adult education and real estate monetization.
Real estate is typically the largest asset a school owns. Rider University's main campus, for example, was valued at more than $230 million, according to Moody's Ratings. The university is proposing an amendment to its current loan and mortgage agreement that would allow it to borrow an additional $15 million in the amount of its mortgage security.
That figure could rise to $20 million if the school sells the Princeton campus property that was once home to the school's famous choir. Efforts to sell the property have been mired in litigation, but Brown said the school is working toward a settlement.
Selling a campus can be difficult because property values can fall when a school closes, and finding a buyer can take time. After Cazenovia College in upstate New York closed in mid-2023, the campus was leased to the state, which used the facility to train police cadets while it searched for a buyer. The campus was still for sale as of early July.
Additionally, the amendment would allow Rider to borrow $25 million subordinate to the mortgage. Using this new borrowing power could significantly increase the university's debt load: Rider currently has about $109 million in municipal bonds outstanding, according to data compiled by Bloomberg.
Moody's rates the existing bonds at Caa1, seven notches below investment grade. In a January report, the ratings agency cited persistent operating losses expected to last until at least 2025 and a “severe” liquidity shortage.
Rider's plan to return to a surplus includes several steps the school is taking to right-size its finances, ranging from improving student recruitment, retention and career readiness to instituting parking fees. During a conference call with bondholders in April, school leaders said the plan is on track, with applications and enrollment up from last year.
With assistance from Amanda Albright.
This article has been generated from an automated news agency feed without any modifications to the text.
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