Harvard's real estate portfolio currently includes $2 billion in current assets as well as $3 billion in future commitments. According to the 2009 HMC Endowment Report published in September, Harvard saw its real estate portfolio's value fall by over 50 percent in the fiscal year ending June 30, 2009.
The university is seeking to divest itself of some $500 million dollars from that portfolio. However, Harvard also has indicated that wants to maintain an ownership position of at least 51 percent in each of the real-estate partnerships. That may prove untenable to many.
Yesterday's WSJ report cited sources who stated that officials at Harvard have grown concerned over real estate and private equity holdings. These are difficult to sell and require future cash commitments from the university.
During the 2008 financial crisis, Harvard was forced to sell some of its more liquid assets to meet its financial obligations. Liquidity pressures are likely to persist, however.
Harvard's moves follow the lead of Stanford University, which in late 2009 said it was taking offers on all of its $5.5 billion in illiquid assets. Those include private equity, real estate and natural resources.
Written by Michael Santo