The University of California Buys the Ritz-Carlton Half Moon Bay

There is a longstanding joke that universities are really investment funds that happen to run an educational non-profit on the side.

It can sound like cynical hyperbole. But, the largest and most prestigious academic institutions — Harvard, Yale, the University of California, etc. — maintain sprawling, sophisticated asset portfolios that can surpass major Wall Street institutions. They own private equity stakes, venture capital allocations, timberland, life sciences developments, and all kinds of other exotic assets.

In practice, it makes large university endowments some of the most powerful and influential limited partners (LPs) in the global investment ecosystem. Their capital commitments determine which venture and private equity funds get raised, and their multi-decade investment horizons give them the license to make massive, illiquid bets that traditional asset managers cannot touch. Buying a $193 million oceanfront Ritz-Carlton might seem surreal for an institution of higher education, but for a sovereign-scale investment arm looking for direct real estate yield, it is just another transaction…