Will Behringer Harvard REITs Ever Make Money?

Will Behringer Harvard ever cover its dividends???

Will Behringer Harvard REITs Ever Make Money?

Postby REIT Wrecks » Mon May 02, 2011 12:54 am

Behringer Harvard Opportunity REIT I, was officially selling "value creation" when it launched in 2006, but that's certainly not what investors got. In 2010, the REIT's book value dropped to an estimated $5.50 per share, which is about half what investors originally paid.

Behringer Harvard Opportunity REIT I is not the only Behringer Harvard REIT that has run up on the rocks. In January 2011, Behringer Harvard announced a revised estimated share value of $4.55 per share for another REIT - Behringer Harvard REIT I. This was a 30 cent increase from the $4.25 estimated valuation offered by Behringer Harvard on May 18th 2010, but still less than half of the roughly $10 per share that investors paid.

Similarly, Behringer Harvard Mid-Term Value Enhancement Fund I, another Behringer Harvard non-traded REIT, recently reset the value of its common shares to $6.46, even less than the $7.09 valuation estimate made in December 2009, and well below the $10 paid by its investors.

Meanwhile, Behinger Harvard REIT management was busy giving properties back to the bank and restructuring mortgage loans. Foreclosure actions initiated in 2010 included One Financial Plaza in Minneapolis, which Behringer Harvard bought for $57.1 million (it's now 60% leased and estimated to be worth about $20 million), Ferncroft Corporate Center in Middleton, Massachusetts, the Aston Kauai Beach hotel (now known as the Courtyard by Marriott at Coconut Beach), and the Paces West office complex located in the Buckhead section of Atlanta. Behringer Harvard bought the Paces West property in 2006 for $104 million, or about $176/sf. The two-building property was recently only 82% occupied.

At the same time, Behringer Harvard's Multifamily REIT I was maniacally trying to buy its way out of a highly-leveraged mess that management began cooking up in 2006. Despite a frantic buying spree in 2009 and 2010, when prices were theoretically more favorable, Behringer Harvard Multi-Family REIT I is still unable to produce even a penny of positive cash flow, or positive funds from operations. Nevertheless, the REIT's board approved a 6% "dividend" to investors in 2010. This translated into an estimated payout ratio of over 600% (as a percentage of FFO), which Behringer Harvard funded by borrowing even more money from shareholders and banks. You can read more about Behringer Harvard's toxic distribution policy here.

In fact, not one of the Behringer Harvard's non-traded REITs managed to produce positive funds from operations in 2010, and only one of them, Behringer Harvard Opportunity REIT I, even had positive cash flow. All of them experienced full year declines in book value vs. Q1 2010.

Despite these thoroughly pitiful results, Behringer Harvard is ready to try again with a new REIT! This new REIT will be called "Behringer Harvard Multi-Family REIT II". BH will probably manage to get this REIT onto the platform of a few desperate independent broker dealers by paying them key money a low to mid-six figure "due diligence fee." Then, Behringer Harvard will use their fictitious 6% dividend and a 7% commission to entice the independent financial advisors who work at these bucket shops to sell this brand new pile of turd to clients who don't know any better.

Given Behringer Harvard's track record with non-traded REITs, and the number of new entrants now competing for shelf space, how can any broker dealer greed justify selling another Behringer Harvard REIT? If you're a financial advisor, doesn't selling a new Behringer Harvard REIT border on the criminally insane? If you're an investor, how can you expect anything different?

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Re: Will Behringer Harvard REITs Ever Make Money?

Postby exdy » Sat Oct 22, 2011 9:43 am

great info i will recommend this thread to my colleague

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Re: Will Behringer Harvard REITs Ever Make Money?

Postby jms5125 » Sun Oct 23, 2011 8:18 am

I too was upset when my small collection of REIT's took a dump during the banking fiasco only months after I had first bought them. I was attracted to them because they paid monthly dividends and this was to bolster my meager retirement check. Even though they have dropped on average 50% since my purchase, they still pay dividends, even though they were cut soon after the drop and so I'm hanging on. As you know, the market goes up and down through one crisis after another, and even though the real estate market is currently in the pits, eventually it will come back, it just depends on how long you can wait. I wish I had more cash, I'd purchase even more shares of the REIT's I own at a 50% discount. Only one has held up and actually risen during the realty crisis, Realty Income, ( symbol O ).

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Re: Will Behringer Harvard REITs Ever Make Money?

Postby jad420 » Wed Dec 07, 2011 12:01 am

In Real Estate the market may go up or down because of the crisis going on. it may be having a hard time now, but it will come back you just have 2 hold on and wait.

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Re: Will Behringer Harvard REITs Ever Make Money?

Postby Bmef41 » Wed Dec 07, 2011 9:11 am

REITWRECKS, I own the MultiFam and am curious whether I should redeem now while it's still relatively available OR ride it out???

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Re: Will Behringer Harvard REITs Ever Make Money?

Postby crabsofsteel » Mon Feb 06, 2012 3:12 pm

from CRE Direct:

Affiliates of Behringer Harvard Opportunity REIT I Inc. have defaulted on a $44.1 million loan secured by the Frisco Square mixed-use development in the Dallas suburb of Frisco, Texas.

The Dallas REIT, whose shares do not trade on any exchange, had acquired a 70 percent stake in the complex in 2007 from Fairway Equities, also of Dallas, which retained a 30 percent interest. The property was designed to hold 43,500 square feet of offices, 114 apartment units and 57,000 sf of restaurant and other retail space.

Whoops!

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Re: Will Behringer Harvard REITs Ever Make Money?

Postby crabsofsteel » Tue May 15, 2012 1:47 pm

from r/e alert:

Behringer Harvard is weighing offers for its $2.8 billion-asset apartment REIT, which owns or has stakes in 35 properties.
The Addison, Texas, investment manager hired J.P. Morgan late last year to advise it on its strategic options for Behringer Harvard Multifamily REIT 1. The options range from investing the REIT’s remaining capital to selling the company.
J.P. Morgan took initial offers in the past two weeks, but there is no guarantee that Behringer will proceed with a sale. Market pros said Behringer prefers to sell the public nontraded REIT intact, including its management and operational infrastructure, but would consider a sale of the 9,629-unit portfolio alone if offers for the REIT were unacceptable. A sale of the company or its portfolio would be one of the largest apartment transactions in years.

whoops again!

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Re: Will Behringer Harvard REITs Ever Make Money?

Postby crabsofsteel » Tue Jun 19, 2012 5:52 am

Behringer Affiliates Throw Dallas-Area Project into Bankruptcy


June 14, 2012

Commercial Real Estate Direct --

The owners of a suburban Dallas mixed-use development, all affiliates of Behringer Harvard Opportunity REIT I Inc., have filed for Chapter 11 bankruptcy reorganization, after failing to

/index.php?option=com_content&task=view&id=74995&Itemid=128

restructure debt against the property.

The $43.6 million of debt was comprised of five loan tranches secured by several parcels in Frisco Square, about 30 miles north of Dallas in Frisco, Texas. The loans carried rates pegged to Libor plus 350-450 basis points.

Additionally, the default of the loan triggered the default of a $4.6 million loan backed by one of the parcels.

The debt initially matured in July 2011, but received an extension to January 2012. The REIT was required to reduce the loan's balance to $44.1 million when it was extended. The debt was provided by a group of banks that include Bank of America, Comerica Bank, First National Bank of Omaha, Neb., and Compass Bank.

Behringer's interests in the project include three office buildings containing a total of 103,120 square feet that are 86.9 percent leased; six retail buildings that hold a total of 110,395 sf and are 85.2 percent leased; and two multifamily buildings containing a total of 114 units that are 94.7 percent leased.

The entire Frisco Square development includes entitlements to develop about 2.5 million sf of office, retail, restaurant, multifamily, hotel, municipal, entertainment and medical-office space.

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