University of California buys Ritz-Carlton hotel for $193 million: Other US universities with high-value properties

The University of California’s investment arm has purchased the Ritz-Carlton Hotel in Half Moon Bay for $193 million. This marks a addition in the trend of major real estate acquisition by a US higher education institutions. The purchase was confirmed by the San Mateo County Assessor’s Office after the sale was completed in recent days, according to Coastside News.The Ritz-Carlton Half Moon Bay property, which was reportedly purchased by the University of California. (The Ritz-Carlton)University officials have not publicly revealed their plans for the luxury coastal property or explained how it will be managed. The acquisition comes after the Half Moon Bay City Council rejected a request from the hotel’s previous owner, Strategic Hotels and Resorts or a related entity, for relief from a $2.1 million overdue hotel occupancy tax bill.The UC deal has brought attention on universities expanding beyond traditional campuses and investing in commercial real estate. Institutions across the US have purchased hotels, corporate headquarters, industrial sites and undeveloped land as long-term assets.Also read: US Marine charged with aggravated manslaughter after mother, child killed in Virginia I-95 DUI crashUniversities turn to real estate as long-term investmentsThe University of California’s latest purchase follows a broader pattern among universities that have acquired large properties to support future growth or strengthen their financial portfolios.In 2010, NBC News reported that several colleges and universities were buying large parcels of land and buildings during a weak real estate market. Institutions viewed discounted properties as opportunities for future expansion.According to the report, the University of Dayton had acquired the former headquarters of technology company NCR Corp. for $18 million in 2009. The 115-acre property included a 415,000-square-foot building that the university planned to use for academic facilities, an alumni centre and various other purposes.The university had earlier purchased 50 acres from NCR for $25 million. Officials said the later purchase provided additional space at a lower cost than building new facilities.Similarly, the University of Delaware also purchased a former Chrysler auto plant in Newark, Delaware, for $24 million. The 272-acre site was expected to support future research and development projects. It has now been transformed into the Science, Technology and Advanced Research (STAR) Campus.Columbia University followed a similar strategy in New York City. The university acquired more than 17 acres on Manhattan’s Upper West Side between 2002 and 2009. It later began a multibillion-dollar expansion project featuring housing, laboratories and public spaces.“You want to give future generations the ability to create their own university,” Columbia President Lee Bollinger had said while discussing the expansion plans.Also read: Stephen Miller named White House chief of staff: A look at his controversial remarksDo University property investments carry risks?While real estate can provide universities with valuable assets, experts have warned that such purchases also create financial risks.According to NBC News, academic research analyst Jane Wellman said universities must consider long-term maintenance costs and changing enrollment patterns before making major property investments."You're going to have to keep raising money and getting more money every year just to keep the hamster running in the cage," she had said then. "They're perpetuating a very expensive cost structure, and I don't think every school can maintain that."“People who just lost their shirts in the last real estate crash know the risk of real estate as an investment portfolio,” Wellman said.Real estate analyst Dan Fasulo also said universities benefited from lower property prices during economic downturns. However, he cautioned that investments in less desirable locations could become difficult to sell if institutions face financial pressure.