OAKLAND — Holy Names University, a Catholic college in Oakland, has defaulted on the loan for its property, a fresh financial jolt for the 154-year-old school as it prepares to shut down later this year.
The school, nestled in the East Bay hills, is in default on a loan from lender Preston Hollow Community Capital, according to documents filed on Feb. 23 with the Alameda County Recorder’s Office.
The loan, issued in 2019, totals $49 million, the county property records show. Preston Hollow could attempt to seize the property through foreclosure on the financing package.
“Holy Names continues to struggle,” said Sam Singer, a spokesperson for the co-educational private university.
In December 2022, the university announced that it would close its doors in May 2023, after the current school year is complete.
“Holy Names University has struggled to remain open as it faced rising operational costs, declining enrollment, and an increased need for institutional aid,” the school stated in a post on its website. “Both COVID-19 and an economic downturn disproportionately impacted HNU students.”
In 1868, the school was established on the shores of Lake Merritt in Oakland as the Convent of Our Lady of the Sacred Heart. In 1957, the university moved to its current campus at 3500 Mountain Boulevard in the Oakland hills.
In recent months, Holy Names reached out to about 70 educational institutions to determine whether they were interested in taking over the university’s operations — and financial and debt obligations.
Ultimately, the school narrowed down the field of prospects to four likely candidates.
“None of them could take on the challenge,” Singer said.
The financial difficulties for Holy Names University extend well beyond the pressure to cope with the mortgage default on the school’s 56-acre site, according to Singer.
The campus, which is 65 years old, faces the cost of considerable deferred maintenance and regulatory compliance issues.
“The upgrades could cost more than $200 million,” Singer said. “That means someone would have to come up with about $250 million. No one that we contacted was able to make that pencil out.”
The university’s options have narrowed drastically, especially if another institution doesn’t emerge to take over the school’s operations.
“If another school or partner isn’t found, the property could be put up for sale to the highest bidder,” Singer said.
Preston Hollow Community Capital provided the financing to Holy Names University to help the college refinance prior debts, pay for the college’s recovery plan and bankroll improvements at the school, according to John Dinan, general counsel for Preston Hollow Community Capital.
“We are currently exploring next steps for the campus and still believe the highest and best use for the space is to operate as a world-class university,” Dinan said in comments emailed to this news organization. “We look forward to collaborating with the city of Oakland and community stakeholders to make this a reality.”
At least one other private university in the region has battled dire financial woes. In June 2022, Mills College, an Oakland education institution, was merged into a Boston-based university and was renamed Mills College at Northeastern University.
“Holy Names University ceasing operation following the spring semester is a wrenching decision informed by immutable financial realities,” Steven Borg, the chair of the university’s board of trustees, said in a prepared release in December when the shutdown was revealed. “The university recognizes this decision will impact far more than our students, staff, faculty, and alumni.”
Some of the school’s money woes appear to have materialized as a result of the university’s approach to financial aid for students.
“The majority of the school’s students are on generous financial aid scholarship packages,” Singer said. “The school has had a difficult time recruiting new students.”
The lack of students only intensified the school’s financial problems.
“Small universities need a lot of students and a lot of money to continue to survive,” Singer said. “You saw what happened with Mills College in Oakland. A similar situation is facing Holy Names.”
The college says that its primary objective at present is to serve its roughly 700 students and ensure they complete the current academic year before the doors close.
“Holy Names University is doing all it can to take care of the students and ensure that they complete the final semester,” Singer said. “The university continues to actively look for another university or educational institution to take over the campus.”
