ITT Tech Campuses Up for Sale in School's Bankruptcy

Some 30 parcels of owned real estate across the country being marketed

Parking spaces, and lots of them—that is the pitch from A&G Realty, the firm hired to sell campuses abandoned when  ITT Technical Institute shut down abruptly last month.

Thirty major parcels of owned real estate across the country were thrown on the market when the for-profit school operator closed its doors. Many have nearly double the amount of parking spaces found in most office parks, said Emilio Amendola, the A&G executive leading the sale.

That is an invitation to operators of call centers, which, like schools, need more parking slots than the average office park, he said. Community colleges and other schools have made inquiries already, and ITT Tech is being marketed for office and industrial uses as well, Mr. Amendola said.

ITT Tech’s parent, ITT Educational Services, is liquidating in a chapter 7 bankruptcy. But don’t look for fire sale prices, he said.

“We’re being given the time to market these in an appropriate fashion. We’re not giving them away; we’re selling them,” he said.

ITT designed and built smart, adaptable buildings, useful to schools, offices or industrial businesses, according to the broker. It also has some surprising sources of cash to fund a prolonged sale process, lawyers said at a bankruptcy court hearing. ITT Tech’s pension plans were over-funded by millions, for example.

Company leaders denied accusations that students were improperly lured into enrolling and taxpayers duped into supporting institutions that couldn’t deliver the good jobs they promised. ITT Tech leaders blame unfair treatment at the hands of the Department of Education, which cut off its access to taxpayer-backed loans, for a closure that set 40,000 students adrift for the fall semester, released 8,000 employees and stoked political and legal debates about for-profit education.

In the hard-cash world of bankruptcy, trusteeDeborah Caruso is charged with exploiting all sources of value in an effort to appease creditors. Real estate could be a major source of cash for creditors. Early estimates laid out in bankruptcy-court papers are that the real estate could bring as much as $100 million.

Experts say the prices ITT Tech’s campuses will bring depends on factors including location.

Two or three years ago, finding buyers for big suburban office or school campuses was a challenge, said Keith DeCoster, director of U.S. real estate analytics for commercial real estate advisory firm Savills Studley. Investors including foreign real-estate investment trusts and institutions were focusing on urban assets, chasing the long-term trend of millennials and retirees moving to the cities and employers following them.

That is still true in many areas, said  Suzanne Mulvee, director of research at  CoStar Group’s property division. ITT Tech was a creature of the suburbs, with a large concentration in California, Texas and Florida, according to an analysis of leased and owned locations performed by CoStar.

Over the last 18 months, however, suburban properties have made a comeback in some markets, particularly in the sunbelt states, Mr. DeCoster said. Call centers and customer support centers are possible tenants.

So are churches, which like big parking lots, and companies that offer speedy delivery, such as Amazon, which are attracted to property in the convenient “last mile” outside major cities, said Steven Bandolik,managing director of real estate services for Deloitte LLP.

Perhaps most importantly for ITT Tech and its creditors, the campuses are going up for sale in a market where there is money available for deals, Mr. Bandolik said. “There’s a lot of capital looking for transactions,” he said.

 

Peg Brickley
Reporter
Wall Street Journal
302-521-2266