The University of California has expanded its property holdings in the Bay Area with the acquisition of the Residence Inn Berkeley hotel for $175.8 million. The purchase, made by UC Investments in an all-cash deal, adds a 331-room property to the university system’s portfolio. The transaction was first reported by the Mercury News.
Located at 2121 Center Street in downtown Berkeley, the 16-story hotel is just a block from the UC Berkeley campus. The property was appraised at $218 million in 2023. The purchase price comes out to about $531,000 per room.
Alan Reay, president of Atlas Hospitality Group, told the Mercury News that this price represents a significant discount compared to current construction costs. “It would cost between $700,000 and $900,000 per key to build an equivalent hotel today,” Reay said.
UC Investments manages a portfolio valued at approximately $190 billion, with assets primarily in retirement, endowment, and cash. The value of its portfolio increased by 9.6 percent from the previous year.
The university system has not disclosed specific plans for the newly acquired hotel, but it may be used to help address student housing needs as demand grows.
Earlier this year, UC also purchased nearly 100 acres of land from Notre Dame de Namur University on the Peninsula, including a 46-acre campus in Belmont and the Water Dog Lake preserve. The preserve will be leased back to NDNU and the city of Belmont.
The purchase comes at a time when the Bay Area hotel market is experiencing financial challenges such as loan defaults, lender seizures, foreclosures, bankruptcies, and closures. In one recent case, Kubera Hotel Properties defaulted on a $10.5 million loan tied to the University Inn & Suites in Berkeley and subsequently filed for bankruptcy. Goldfin Ventures later acquired that property for $17 million.
