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The Metropolitan College of New York needs to save itself financially. But first it needs bondholders’ help, Bloomberg News reported. The college, located in New York City’s Financial District with about 1,500 students, wants to pause debt payments for about five years as it works to sell two floors of the office building that houses its main campus, according to a regulatory filing this month. Such a sale would leave it with about one and a half floors. The campus is close to the World Trade Center and is “underutilized” after enrollment dropped, the college told bondholders earlier this month. Metropolitan College tends to focus on older students and was hit hard by the pandemic, it said. It has less than half the number of students it had in 2014. Across the U.S., institutions of higher learning have been cutting back or shutting down altogether after enrollment dropped over the last three years. More pressure is coming as a dropoff in births after the financial crisis is expected to translate to a decline in graduating high school seniors starting in the 2025-2026 academic year. A third of US universities face an “unsustainable financial future,” Bain & Co. consultants said in a 2022 report. Metropolitan College says it faces extra pressure because more than 70% of its students are women balancing work and family, and more than 80% are economically disadvantaged. Its students were more likely to face challenges like job loss and the death of a loved one during the pandemic, the college said in its filing.

Retailers are on track to open 1,000 net new stores in the U.S. this year as retail availability hits record lows, in fresh signs of the sector’s resilience despite turmoil in commercial real estate, the Wall Street Journal reported. Landlords say demand for retail space has remained robust this year, defying inflation pressures, high interest rates and liquidations including Bed Bath & Beyond and Christmas Tree Shops. Retail’s strength is largely the result of a sharp drop in retail construction since the 2008-09 financial crisis, which allowed the oversupplied sector to digest its existing real estate. Retailers, meanwhile, started using online sales data and analytics technology to pinpoint locations for successful stores. Also, predictions that internet sales would wipe out physical retail failed to materialize. Digitally native companies are opening bricks-and-mortar locations after reaching the limits of online customer acquisition. Shoppers flocked back to stores and restaurants as pandemic restrictions eased. As of mid-August, retailers had announced plans to open nearly 4,500 new locations while shutting about 3,500, according to advisory and research firm Coresight Research. Nationwide, the rate of available retail space fell to 4.8% in the second quarter, the lowest level in the 18 years the data has been tracked by real-estate-services firm CBRE.

The nation’s largest hospital landlord said an unusual transaction that provided crucial financial support for one of its biggest tenants was a done deal. It wasn’t. The deal was good news for both companies, and for communities across the country concerned that their local hospitals could go broke, the Wall Street Journal reported. The landlord, Medical Properties Trust announced the transaction in May. When it reported quarterly results on Aug. 8, it said the arrangement boosted its own revenue. But a California state regulator on July 20 ordered that the transaction between MPT and Prospect Medical Holdings be put on hold, according to the order that the regulator sent to Prospect. MPT didn’t disclose the regulator’s order when it reported second-quarter results, or in its quarterly report filed the next day with the Securities and Exchange Commission. MPT played a crucial role in private-equity firms’ push into healthcare facilities. It used cheap, plentiful financing to buy more than 400 hospitals, in some cases enriching private-equity firms that sold to MPT at high prices and paid themselves large dividends. Now some of the deals have soured. Hospital chains that are MPT’s tenants have closed facilities and cut services, reducing healthcare options in some communities.

China Evergrande, which is the world's most heavily indebted property developer and became the poster child for China's property crisis, yesterday filed for chapter 15 protection from creditors in a U.S. bankruptcy court, Reuters reported. An affiliate, Tianji Holdings, also sought chapter 15 protection yesterday in Manhattan bankruptcy court. Evergrande's filing comes amid growing fears that problems in China's property sector could spread to other parts of the country's economy as growth slows. Since the sector's debt crisis unfolded in mid-2021, companies accounting for 40% of Chinese home sales have defaulted. The health of Country Garden (2007.HK), China's largest privately run developer, is also worrying investors after the company missed some interest payments this month. Evergrande recently had $330 billion of liabilities. A late 2021 default triggered a string of defaults at other builders, resulting in thousands of unfinished homes across China. In a filing in the Manhattan bankruptcy court, Evergrande said it was seeking recognition of restructuring talks under way in Hong Kong, the Cayman Islands and the British Virgin Islands. Evergrande has said creditors may be able to vote this month on a restructuring, with possible approval by Hong Kong and British Virgin Islands courts in the first week of September. The company proposed scheduling a chapter 15 recognition hearing for Sept. 20.

The main lender of the Banyan Cay hotel, residential and golf project in West Palm Beach wants to be declared the winning bidder for the 200-acre property in bankruptcy court, the South Florida Business Journal reported. Denver-based Westside Investment Partners won the bankruptcy auction for the property with a $102.1 million bid in June. However, it wasn’t able to complete the transaction and the deal fell through in July. The bidding procedures recognized Westside as the stalking-horse bidder and the main lender as the backup bidder, based on its credit bid. On Aug. 9, the main lender, U.S. Real Estate Credit Holdings, in care of El Segundo, California-based Calmwater Capital, filed a motion to amend the sale order so it is declared the winner of the auction based on its $96.9 million credit bid. There were no other bids at the auction, according to court documents. “The debtors’ sale process failed,” U.S. Real Estate stated in its motion. “The debtors now lack funding to insure, maintain and otherwise preserve the collateral [property], pay employees and fund operations. Lender has offered to fund operations and agreed-upon professional fees related to closing to preserve what value is left in the property, have an orderly transition of the property to lender, allow ongoing vendors to be paid, and to otherwise do the things the debtors have been unable, or unwilling, to do to prevent further diminution in value and harm to the property.” U.S. Real Estate said that the debtor, Banyan Cay Resort & Golf LLC, should cease marketing the property for sale and complete the auction process with its credit bid as the winning bid. It seeks to close on or before Aug. 31.

WeWork has sounded the alarm on its ability to stay in business, prompting speculation around the future of the troubled workspace-sharing company, the Associated Press reported. Last week, WeWork warned there was “substantial doubt” about the New York-based company's “ability to continue as a going concern” — which is accounting-speak for having the resources needed to operate and stay in business. WeWork pointed to increased member churn, financial losses and the company's need for cash, among other factors, over the next year. This isn't the first time the future of WeWork has been uncertain. The company went public in October 2021 after a spectacular collapse during its first attempt to do so two years earlier — which led to the ouster of its CEO and co-founder, Adam Neumann. WeWork was valued at $47 billion at one point, before investors started to drop off due to Neumann’s erratic behavior and exorbitant spending. WeWork has made notable efforts to turn the company around since Neumann's departure, with executives pointing to improvements in annual revenue, significant cuts in operating costs and other growth opportunities as workplaces emerge from the COVID-19 pandemic. Still, experts say the risk of bankruptcy is on the table — bringing in questions around implications for the already-weakening world of office real estate.

The landlord of Chicago’s historic Clark Adams Building has filed for chapter 11 protection over a $29 million mortgage on the property, with the team that plans to redevelop it working to take ownership, The Real Deal reported. A venture led by local investor Musa Tadros submitted a bankruptcy petition in the federal Northern District of Illinois court on July 31, claiming that the entity that owns 105 West Adams Street has assets of less than $50,000, records show. The $178 million proposal from Chicago-based developers Celadon Partners and Blackwood Group would convert the Clark Adams Building’s upper floors, which are vacant office space, into 247 apartments, 185 of them affordable housing. Tadros has owned the building’s upper floors since at least 2006; the third through 10th floors are occupied by a Blackstone-owned Club Quarters business hotel, which is a distressed property itself and could be set up for a change in ownership after a recent transaction of mezzanine debt tied to the lodging portion of the tower. In 2020, lender First Midwest Bank filed a $23 million foreclosure suit against the Tadros-led venture that owns the office portion of the property, according to previously published reports. The property’s receiver put the more than 30 floors of the building Tadros owns up for sale in May 2022, but it hasn’t traded. A judgment of foreclosure was entered in the foreclosure case with First Midwest in December, online court docket records show, but it’s unclear when a lender-controlled sale may take place.

Local leaders are trying anything they can to keep San Francisco’s struggling downtown core afloat, including paying retired, unarmed police to keep an eye out for trouble, the Wall Street Journal reported. Homelessness, drug use, and nonviolent crimes like shoplifting and car thefts are commonplace in many parts of the neighborhood. Downtown San Francisco thrived during the 2010s in large part because of the growth of the tech industry. But those employees easily transitioned to remote work during the pandemic and the majority never came back to the office full time. Under pressure to cut costs last year, tech giants like Meta Platforms and Salesforce laid off workers and cut their real estate footprints in the city. Floors of many downtown office towers now sit empty. Those changes have collided with a series of intertwined problems that have been festering in San Francisco for years, including high housing costs, street homelessness, rampant property crime, the fentanyl crisis and a precipitous drop in public transit ridership since the pandemic. Downtown San Francisco now trails nearly every other major urban center in economic health. Its 25.7% office vacancy rate is close to 10 percentage points higher than the U.S. vacancy rate of 16.4%, according to commercial real-estate firm Colliers International. Ridership to downtown on Bay Area Rapid Transit trains is one-third its 2019 level. Retailers like Nordstrom and Banana Republic have announced in the past few months that they are closing their downtown San Francisco stores. The owner of the city’s biggest mall, located downtown, is handing it back to the lender rather than continue to make debt payments. Other parts of San Francisco are recovering faster from the pandemic downturn, with full restaurants and crowded stores. But downtown has long been the economic engine of this city of 808,000, generating three quarters of the local gross domestic product.

Goldman Sachs shareholders cannot go forward with a class action alleging the bank misled investors about its business practices ahead of the subprime mortgage crisis, a U.S. appeals court ruled yesterday, Reuters reported. The U.S. Court of Appeals for the Second Circuit ruled in three pension funds' long-running case accusing the bank of unlawfully hiding conflicts of interest when creating risky subprime securities, costing investors more than $13 billion. The court said that the bank's statements about its ability to prevent conflicts of interest were not closely linked to Goldman being fined by U.S. authorities in 2010 over marketing materials for a subprime investment product, and therefore did not affect the stock price. The Arkansas Teacher Retirement System and others that purchased Goldman shares between February 2007 and June 2010 accused the company and three former executives of securities fraud. The investors said that the bank's fraudulent statements kept its stock price artificially high. The plaintiffs said that when they bought Goldman shares they relied upon the bank's statements about its ethical principles and internal controls against conflicts of interest, and its pledge that its "clients' interests always come first." Goldman argued that these "aspirational" statements were too vague and general to have had any impact on the stock price.