March 17, 2008
Merger or consolidation? NYU’s absorption of Brooklyn’s Polytech is about engineering--and land
Atlantic Yards PolyTech NYU Report
Norman Oder takes a detour from the Atlantic Yards beat to analyze the purchase of PolyTech by NYU, which has all the trappings of a major real estate deal.
They’ve called it a merger, an affiliation, a joining of two institutions. But the planned--and nearly consummated--deal between Polytechnic University, a small engineering school at Brooklyn’s MetroTech that draws mainly on local students, and New York University (NYU), the ever-growing, Greenwich Village-based university with international reach, looks like a consolidation.
Given that NYU would ultimately absorb Poly with no money down, but, among other benefits, offer a loan based on Poly’s real estate--a provision barely discussed publicly--it also has elements of a leveraged buyout.
What does it have to do with Atlantic Yards and MetroTech developer Bruce Ratner?
Poly has signed a letter of intent regarding its air rights with developer Forest City Ratner, its MetroTech neighbor, but has not begun new buildings.
The deal is a source of contention at Poly, while a blip on the radar screen at NYU
Whether the revenue from Poly's air rights would support the engineering school remains unclear. Should it do so, the deal looks better for Poly. If not, the larger school, which has faced little internal controversy over the consolidation decision, may have achieved an ever better deal. But the consolidation is about more than revenue, so, assuming it goes forward, it may take years to assess the true value of the deal.
Posted by lumi at March 17, 2008 4:50 AM