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Just when supporters of St. Augustine’s University (SAU) were reeling from reports of a $7 million loan deal with a reportedly outrageous interest rate that could cost the historically Black institution much of its property, comes word of a lease agreement that could be the salvation SAU needs to satisfy its debts.
Just before the Thanksgiving holiday, SAU announced that it would lease some of the property it owns to 50 Plus 1 Sports, a Florida-based mixed use and sports venue development company, “to tackle its financial challenges head-on.”
50 Plus 1 Sports is a two-year-old South Florida company that reportedly requires at least half “minority and women participation” in its financed projects.
SAU signed a letter of intent with the company on November 17th.
According to audit documents from the St. Augustine’s University Real Estate Foundation, SAU will lease “certain real estate” to 50 Plus 1 Sports for 99 years, and split revenue from any joint projects. There’s a 65 percent - 35 percent arrangement for the first 15 years of the lease with 50 Plus 1 Sports taking a lion’s share of the revenues.
The land-lease deal is expected to raise $70 million for SAU, with 50 Plus 1 Sports paying SAU $60 million in just a few weeks, and then an additional $10 million by June 2025
“This agreement marks a pivotal moment for SAU as we embrace a bold vision for future growth,” SAU Board of Trustees Chairman Brian Boulware said in a news release. “We are excited to collaborate with 50 Plus 1 Sports, a proactive and dynamic partner, and it’s team of global investment partners, to deliver long-lasting benefits to our students, faculty, and the amazing Raleigh community.”
Boulware’s statement continued, “Together, we’re building a future that solidifies SAU’s role as a cornerstone of this city.”
The company expressed confidence in the SAU deal as well.
“We are absolutely thrilled to come to Raleigh and partner with Saint Augustine’s University, local developers, and community leaders in this incredible city,” said 50 Plus 1 Sports President and CEO Monti Valrie. “This collaboration underscores our commitment to creating projects that resonate with the community, enhance local opportunities, and establish meaningful relationships within the business ecosystem.”
There is still much not known about the SAU-50 Plus 1 Sports land-lease deal, and how it can specifically help SAU out of its mounting vendor debts, federal government tax liens, and lawsuits from former employees.
The school has already made drastic cuts to its staff, and reduced its student enrollment to just 200 students from a once healthy more than 1500.
The $7 million loan from a venture capital group in Durham was supposed to help alleviate some of the financial burden, until school supporters took a closer look at the terms.
Secured last May, the loan reportedly required SAU to pay a 24 percent interest rate and 2 percent loan management fee, in addition to a $75,000 “due diligence and documentation fee.”
As collateral, SAU had to put up its main Raleigh campus, and at least 40 other pieces of property on more than 11 acres around the SAU campus. If the school defaults on the loan, which comes due on June 30, 2025, those properties are forfeited to Gothic Ventures, the loan company.
SAU reportedly has the right to extend the maturity date of the loan until December 31, 2025, and can secure up to $30 million in total.
How the new 50 plus I Sports lease agreement now affects the Gothic Ventures loan, remains to be seen.
