Pace University, which was cut to junk in January, is set to sell as much as $110 million of debt this week to build dormitories and other facilities on its campus north of New York City.
The private school, founded in 1906, will issue tax-exempt bonds through the Westchester County Local Development Corp. as soon as tomorrow, data compiled by Bloomberg show. The sale includes $80 million of fixed-rate securities and $30 million of variable-rate debt, according to bond documents.
Standard & Poor’s lowered the university on Jan. 31 by one level to BB+, its top speculative-grade, partly because of the increase in debt. The school, located in Lower Manhattan and in Westchester, plans to combine its suburban operations into one campus. Proceeds will finance two residence halls and renovate others, while also paying for a student center and an athletic field house, all on its Pleasantville campus almost 30 miles north of Manhattan, bond documents show.
While the cut to junk means higher borrowing costs, merging the two Westchester sites will eliminate the four-mile (six-kilometer) commute between the locations and replace facilities built in the 1970s, Bob Almon, Pace’s chief financial officer, said in an interview.
“The student experience and student life would be better if we had all of the students living in one place,” Almon said.
Pace enrolled 12,624 full- and part-time students in the 2013-2014 academic year, down from 12,772 the year before, bond documents show. Full-time undergraduate tuition is $18,366, up 15 percent from four years ago.