CASE STUDIES

PROPERTY

Dowling College was a private college located in Suffolk County, Long Island, NY, that consisted of two campuses. The Oakdale Campus was situated on 25 acres on the south shore in the town of Islip. It consisted of over 250,000 square feet of buildings, including one of the historic Vanderbilt mansions. The Brookhaven Campus consisted of 103 acres in the central Long Island town of Shirley, New York. This campus included a 230-bed dormitory, 65,000-square-foot aviation building, and three athletic fields with substantially improved land.

SITUATION

Our team and A&G Realty Partners were contacted by the Board of Trustees to provide Real Estate Advisory Services and to evaluate disposition options in order to maximize recovery and meet its debt obligations. Following several years of declining enrollment and a heavy debt load, Dowling College was in a financial crisis, which forced the Board of Trustees to close the school following the 2016 academic year.

The college had $54 million’ worth of secured bond issues, which were cross-collateralized between both campuses with two main bond beneficiaries. In addition, there was $2 million’ worth of unsecured debt. Other issues included deferred maintenance, securing of student records, and preservation of the collateral once the campuses were closed, among many more.

STRATEGY

Our team and A&G Realty Partners met extensively with the Board of Trustees, the Treasurer, Chief Restructuring Officer, bond insurers, attorneys, unsecured creditors, the alumni group, and local municipalities in order to formulate and execute a marketing disposition strategy to maximize recovery.

After inspection of the properties, review of the due diligence and debt structure, and meeting with the town of Islip planning commissioners, we recommended utilizing a parts-against-the-whole marketing strategy for the college’s assets. Our analysis supported that the value of the college’s assets was far greater by selling the individual assets as compared to selling Dowling College as a single parcel or operating entity.

Specifically, we recommended that the Oakdale and Brookhaven Campuses be offered separately. 

OAKDALE CAMPUS

Given the extensive carry costs and after meeting with the town to evaluate the speed and willingness to rezone the property to provide additional density in prospect interest, we went immediately to market with the Oakdale Campus offering on an as-is-where-is basis.

BROOKHAVEN CAMPUS—PLANNED UNIT DEVELOPMENT

After meeting with the town planning commissioner, we determined that the value of the asset would be greatly enhanced by taking the time to obtain a preliminary approval for a mixed-use development, which would include apartments, for-sale residential, office, retail, and senior housing. We worked directly with the Board of Trustees to develop a master plan that would unleash the value of the asset. We met with the lenders, the Board of Trustees, as well as the court and other state officials to obtain the time and funding required to maximize value instead of moving to a fast liquidation.

MARKETING

We separately executed local, regional, national, and international marketing programs for each one of the assets. Our programs generated interest from large national and regional residential and commercial developers, and foreign and local institutions, seeking to operate the campuses as educational facilities, as well as a variety of other users. Our extensive eight-week marketing programs generated a level of interest not possible through a conventional sales process.

RESULTS

Our team sold the Oakdale campus in 2017 for a record $26.5 million. The principals involved, including the Board of Directors and Creditors, were expecting only approximately $10 million. The Brookhaven campus sold in 2018 for $14.1 million to a local developer who plans to create an industrial/manufacturing campus with the intent of bringing jobs to the area.

The two parcels demanded both investor-developer and College end users. In the case of the Oakdale sale, the end users outbid the investors and drove the pricing to the record amount achieved.