UC Investments Buys Campus-Adjacent Residence Inn Berkeley

The University of California system added another Bay Area property to its portfolio.

UC Investments bought the 331-key Residence Inn Berkeley hotel from Pyramid Global Hospitality in an all-cash deal for $175.8 million, the Mercury News reported. The hotel was appraised in 2023 at $218 million.

The price works out to $531,000 per key, which is a bargain to replacement value, Atlas Hospitality Group president Alan Reay told the outlet.

It would cost between $700,000 and $900,000 per key to build an equivalent hotel today, he said.

The hotel is in a key location in downtown Berkeley, at 2121 Center Street. The 16-story building is about a block away from the UC Berkeley campus. What the university system plans to do with the property hasn’t been disclosed, though it could be headed toward use as student housing in an effort to meet growing demand.

UC Investments managed a portfolio that was valued at more than $179.8 billion as of June, up 9.6 percent from $164 billion from the previous year. Its portfolio stands at about $190 billion, with the main components of the portfolio being retirement, endowment and cash assets.

In May, the University of California added land in the Peninsula to its portfolio with the purchase of nearly 100 acres from Notre Dame de Namur University. That included NDNU’s 46-acre campus in Belmont as well as the 50.5-acre Water Dog Lake preserve, which UC will lease out to NDNU and the city of Belmont.

UC Investments’ purchase of the Residence Inn Berkeley for a lower price comes as the Bay Area lodging market at large faces widespread financial woes, from loan defaults and lender seizures to foreclosure sales, bankruptcies and complete shutdowns.

Earlier this year, Kubera Hotel Properties, owner of the 113-room University Inn & Suites in Berkeley, received a notice of default after failing to pay back a $10.5 million JPMorgan Chase loan. The entity filed for bankruptcy the following month. Last month, Goldfin Ventures emerged as a buyer of the property for $17 million.

— Chris Malone Méndez