From the Financial Times: The University of Chicago, renowned for producing world-leading research in economics and finance, is selling a prized research centre as it struggles with heavy debt and lacklustre endowment returns. Proceeds from the $375mn sale of the Center for Research in Security Prices — founded in 1960 by two UChicago professors — would be added to the university’s endowment and invested to boost returns, a spokesman said... “The fact that they have to sell a celebrated part of the university now is very telling of how poor their fiscal situation is,” said Hunter Lewis, co-founder of Cambridge Associates.
UChicago’s strains came after its $10bn endowment — a critical source of revenue — delivered an annualised return of 6.7 per cent over the 10 years to 2024, among the weakest performances of any major US university. The private university has taken a more conservative investment approach than many peers, with greater exposure to fixed income and less to equities since the global financial crisis in 2008...
An aggressive borrowing spree to expand its research capacity also weighed on the university’s financial health. UChicago’s outstanding debt, measured by notes and bonds payable, climbed by about two-thirds in the decade ending 2024, to $6.1bn, as it poured resources into new fields such as molecular engineering and quantum science...
Federal funding cuts have exacerbated the university’s financial situation. Since President Trump took office, federal agencies have rescinded about 65 grants awarded to University of Chicago faculty. The immediate impact on fiscal year 2025 revenue was projected at $10 million to $15 million, with the longer-term shortfall potentially exceeding $40 million beginning in 2026. “The profound federal policy changes of the last eight months have created multiple and significant new uncertainties and strong downward pressure on our finances,” said UChicago president Paul Alivisatos in a message to faculty last month...
Full story at https://www.ft.com/content/4501240f-58b7-4433-9a3f-77eff18d0898.
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