Education gets money from real estate

Newsroom 19/09/2007 | 16:00

Foreign universities have a long history of getting the necessary financing from various private sources as the public funding is no longer enough. Real estate is also one of the main areas from which Western European and American universities get their funds. Some even have special real estate offices in charge of the university's land and building assets.
There are 56 public universities in Romania and most of them have assets which real estate developers would like to grab if a university investment decision were to happen. In Romania, the universities are autonomous, so they can use their assets and find financing sources themselves, apart from what they get from the state budget. Their assets, which often include buildings and research centers, are considered their private property and they receive all the profits from using them.

Agriculture studies university to get EUR 2 billion out of baneasa project
Despite the potential benefits, only a few universities have seized the opportunity and become involved in real estate projects involving some of their assets.
The Baneasa project is the best-known case of a university joining forces with a private developer. The University of Agricultural Studies and Veterinary Medicine in Bucharest (USAMVB) contributed a 230-hectare plot north of Bucharest to the Baneasa project, which is underway in the area. The university has received 49.88 percent of Baneasa Investments' shares.
Usually, in such partnerships, each of the partners receives a part of the profits. The university has opted for a yearly fixed sum of EUR 560,700 until the project returns the first profits. It has so far cashed in some EUR 3.3 million. In 2008, which will be the first profitable year for the project, the university will receive between EUR 3 and 4 million, their share of the profit, Baneasa representatives told BR. The University will own between EUR 1.5 and 2 billion when Baneasa project will be finalized.
The USAMVB plot was previously a loss-making research farm. which was losing some $200,000 per year.
The University of Agricultural Studies in Banat (USAB) has long been targeted by real estate developers interested in a 353-hectare plot on the outskirts of Timisoara. The property was owned by the state, but once shifted by government decision into the state's private property, the plots could have been given back to former owners.
Compania de Investitii Polus Transilvania, initially set up by developer TriGranit and now controlled by investment fund Immoeast, is building Plus Center shopping mall in Cluj-Napoca on a plot which used to belong to the University for Agricultural Studies and Veterinary Medicine in the city. The developer will pay the university some EUR 8 million, half in cash and the rest as share participation in the future mall. The partnership between the two parties comes after several years of fighting over the ownership rights for the 37-hectare plot. The investment in Polus Center, for which works have already started, was estimated at some EUR 140 million.

restitution issues may be
entrance gate to universities' land

The Universities for Agricultural Studies are actually the main target for real estate developers interested in entering similar schemes as they have large plots of land usually used for research activities. As research activities are not top of the list when it comes to investments and do not yield profits, sometimes even triggering losses, universities may decide to sell or use the land for partnerships. Such plots are among the only large-size ones left in many cities and are usually located at the outskirts of the city. Moreover, restitution cases often involve the universities' plots. An example is that of Alexandru Ioan Cuza University in Iasi, which owns the 100-hectare Botanical Garden in the city, which has received restitution requests for 20 hectares of the property.
The Romanian Academy is also looking to partner with a real estate developer and offer its plots as participation. The Academy has received 100 hectares of land from the 300 hectares it asked for in Constanta County and plans to develop real estate on the land. The academy is planning to form a partnership with private companies to pursue real estate developments. The profits coming of future real estate developments will go to fund scholarships and also to research and development centers.

Corina Saceanu

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