The Bankrupt West Berkeley Hotel Finally Has a Buyer

A 113-room hotel at 920 University Avenue in West Berkeley is under contract for $14.5M, which works out to about $128,300 a room. The seller has owned the site since 1987. He defaulted on a $10.3M loan in February 2025, filed Chapter 11 in June, then watched four separate deals collapse, including an affordable housing conversion floated in March. The price he is finally getting is a third below what the building was worth in 2019. It is also the clearest read anybody has on what West Berkeley land is worth right now.

What is actually under contract

The asset is the University Inn and Suites Berkeley, 113 rooms on the block of University Avenue between Eighth and Ninth, a few hundred feet from the I-80 interchange and the Amtrak platform. Pradeep Khatri has owned it since 1987 and ran it under a La Quinta flag before rebranding to the independent name. The new owner puts it back to a La Quinta Inn by Wyndham, which tells you most of what there is to know about the business plan. Nobody is reinventing this thing.

The debt is a $10.3M loan held by Wilmington Trust. The borrower defaulted in February 2025 and filed Chapter 11 that June. The sale is the mechanism for stopping the foreclosure, which means it still has to clear a bankruptcy judge.

The number is $128,300 a room. The number next to it is $531,000.

A per-room price is how hotel people talk, and in this case it does more work than the headline figure.

$128,300 a room is not a distressed-Berkeley price. It is a distressed-corridor price. The comparison that makes it land is ten months old and about a mile and a half east, where UC picked up the Residence Inn in downtown Berkeley at roughly $531,000 a room in October 2025.

Same city. Same student demand. About four times the price per door. The difference is location and condition, and a new sign fixes neither. A hotel one block off the freeway on a six-lane arterial serves a different customer than one two blocks from campus, and the market has now priced that difference at roughly $400,000 a key.

Four deals collapsed, and one of them was housing

Here is the part that should interest anyone who follows Berkeley’s housing pipeline. Of the four deals that fell apart before this one, the March 2026 attempt was an affordable housing conversion.

The reporting does not say why it died, so I am not going to pretend to know. What is on the record is this: 113 rooms at $128,300 a door is close to the cheapest per-unit acquisition anyone will find inside Berkeley city limits, and it could not be converted.

Set that against what building costs. The Amoeba project up on Telegraph, which we covered earlier today, would add 68 apartments to a block where the land alone trades at a multiple of this. Conversion is supposed to be the cheap path. When the cheap path fails in an eighteen-month window, the sticking point is usually not the purchase price.

Motel conversions carry real operating problems: rooms with no kitchens, corridors never designed for permanent residence, seismic and accessibility work that gets triggered by a change of use, and an operating subsidy that has to come from somewhere after the acquisition is paid for. Those are the general obstacles, not a documented account of this specific deal. But they are the reason a cheap building is not automatically cheap housing, and they are worth naming because the alternative is pretending this was simply a missed opportunity.

The value did not drift down. It fell 45 percent.

The 2019 to 2021 leg is the pandemic, and every hotel in the country carries that scar. The 2021 to 2025 leg is the one worth noticing, because those are four years in which Berkeley’s housing market did not fall and this asset kept falling anyway.

Business travel to the West Berkeley corridor never came back at the volume the building was underwritten on, and a roadside inn on a wide arterial is the least defensible version of that bet. The 2026 uptick off the $12M mark is not a recovery. It is what a foreclosure calendar does to a price.

This is West Berkeley, not Southside, and our scores show the difference

Some of the coverage has put this hotel near campus. It is not. 920 University Avenue sits roughly a mile and a half west of Sather Gate, in West Berkeley, the flats running from San Pablo Avenue out to the bay. The name on the street is University. The neighborhood is not.

West Berkeley is a genuinely distinct place: the city’s old industrial spine, converted warehouses and maker shops, the Fourth Street retail strip, Aquatic Park, and a lot of frontage that is not housing at all. It scores 3.1 out of 5 overall, 17th of Berkeley’s 18 ranked neighborhoods.

People type is West Berkeley safe into a search box every week, so here is the straight answer from our data. West Berkeley scores 2.1 out of 5 on safety against a Berkeley citywide 3.4. On schools it is 3.8 against 3.9. On amenities it is 3.8 against 4.0, and its nearby merchants score of 4.8 is among the strongest in the city, which is what Fourth Street and San Pablo Avenue earn it.

So the neighborhood is not weak across the board. It is weak in one specific place. A wide flat grid beside a freeway, with heavy through traffic and long stretches of non-residential frontage, is the profile that usually produces that score, and it is the same profile that made this hotel what it was.

The median home in West Berkeley was $1.23M in August 2026, about 29 percent below Berkeley’s $1.73M. That discount and that safety score are the same fact seen twice, which is exactly why we think people should read the area before they read the address.

What to watch at 920 University Avenue

First, the court. The sale has to clear the bankruptcy, and until a judge signs off this is a contract rather than a closing. Four previous deals did not get that far.

Second, whether the flag change is the entire plan. A 113-room hotel that could not carry its debt service as an independent is not obviously a better business as a La Quinta. If it struggles again, the site comes back around, and the conversion math will look at least as good the second time as it did in March.

And third, the block itself. West Berkeley has the merchants, the transit and the price. What it does not have is the safety score, and a distressed hotel changing hands is a smaller lever on that than 113 units of anything permanent would have been. If you are looking at the Berkeley flats, the full Berkeley ranking puts those tradeoffs side by side, neighborhood by neighborhood.

Sources

• Kubera strikes $14.5MM deal to sell bankrupt University Inn in Berkeley, The Registry, September 14, 2026
• Berkeley hotel owner strikes $14.5M deal to escape foreclosure after four failed sales, Hoodline
• Berkeley hotel facing foreclosure strikes deal to sell, The Real Deal, August 27, 2026
• Neighborhood and city scores and median prices: houseberry.com, retrieved September 14, 2026