Harvard University is selling part of its $5 billion real estate portfolio as it seeks better investment opportunities. The sale signifies Harvard's latest effort to reduce its exposure to the troubled property market, The Wall Street Journal reported Feb. 17.

The $5 billion portfolio is part of the university’s $26 billion endowment, According to sources, the endowment intends to sell only up to $500 million in assets and future commitments. In addition, Harvard has indicated that it intends to maintain an ownership position of at least 51 percent in each of the real estate partnerships, a requirement that may deter potential buyers, the Journal reported.

According to several secondary-market buyers and intermediary firms familiar with the offering, Harvard began marketing a portfolio of stakes in November in more than 30 real estate funds, ranging in size from $50 million to $500 million through Credit Suisse Group, the Journal reported.

Several of Harvard’s investment funds were launched around the top of the market. As such, they have been hit hard in the downturn. On top of that, industry experts say that generally, property funds have been offered for as much as 80 percent below net asset value, and investment managers continue to mark down the value of the commercial real estate they own, the Journal reported. Needless to say, Harvard faces a challenging environment for selling real estate.

At a recent endowment conference, Jane Mendillo, head of the company that manages the endowment, said that Harvard has used some of the proceeds from its sales to build a cash reserve of about 2 percent of the portfolio, compared to a negative 5 percent cash position in the recent past. The university also borrowed $1.5 billion in taxable debt in December 2008, the Journal reported.