Deal-maker

Arguably the most active buyer over the past year has been Addison, Tex.-based Behringer Harvard. Formed in 2001 by Robert Behringer, the company has about $10 billion in assets under management through its various non-traded REITs, private partnerships and other affiliates.

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The company has been taking advantage of weakness in the apartment market, buying recently constructed Class A apartment and condo product with more than 100 units in core locations and uncompleted busted condo properties, in some cases closing with all cash and placing debt with Fannie Mae and Freddie Mac after close of escrow.

“The market has been providing opportunities and we are looking at attractive investments with good value for the long term,” said Chief Administrative Officer Jason Mattox, who has worked for investment groups sponsored by Robert Behringer for more than 13 years.

According to Mattox, the company targets urban and often times transit-oriented multifamily assets with green attributes and luxurious amenities in areas boasting high income demographics. The company has been particularly active in California.

As of January 25, 2010, Behringer Harvard’s multifamily platform includes investments in 30 communities in 11 states with a total of 8,325 apartment homes. PGGM Private Real Estate Fund, an investment vehicle for Dutch pension funds, has co-invested with Behringer Harvard in 18 of those multifamily communities.

This aggressive buying campaign owes its success in part to the capital-raising capabilities and industry relationships formed through the years by the management team of Robert Aisner, president and co-chief operating officer, Mark Alfieri, executive VP and Robert Chapman, executive VP and co-chief operating officer, all of whom were former AMLI executives. Aisner joined Behringer Harvard in 2003; Alfieri and Chapman joined Behringer Harvard in 2006 and 2007 after Morgan Stanley acquired AMLI and privatized the former public REIT.

Behringer Harvard has raised capital in public and private offerings to fuel its multifamily acquisitions activity. PGGM, currently the second-largest pension fund in the Netherlands and 17th largest in the world, provided three tranches of co-investment capital beginning in May 2007 with a $100 million investment, another $100 million in 2008 and $100 million in January 2010.

Behringer Harvard closed on three communities in December 2009 and two in January 2010. The most recent is the $53 million purchase of the 24-story, 288-unit 4550 Cherry Creek that was completed in 2004 by The Hanover Company and sold in 2005 for $78 million to a pension fund advisor. The building is the tallest in the area between the metro’s two largest employment centers — Downtown Denver and the Denver Tech Center — and boasts an elegant porte-cochere entrance, top-floor penthouse suites and spectacular views of the Rocky Mountains. Ones, twos and threes range from 938 to 1,881 sq. ft. and feature 10-foot ceilings, crown molding, hardwood floors or Berber carpet and gourmet kitchens with granite counter tops.

Early in January, Behringer Harvard purchased the 277-unit Acacia on Santa Rosa Creek in Santa Rosa, the heart of California’s Sonoma Valley wine country, approximately 50 miles north of San Francisco, and the 288-unit 4550 Cherry Creek in Denver.

The $38.7 million transaction was the largest apartment sale in Sonoma County since October, when Abacus Capital paid Equity Residential $52 million for the 492- unit Lakeville Resort in Petaluma. The seller, Shea Properties, a division of home builder J.F. Shea Co. in Aliso Viejo, built the property in 2003 for an estimated
$44 million. Monthly rents for Acacia’s one-, two- and three-bedroom units range from $1,095 to more than $1,900.

In Q3 2009, average apartment rents increased for the first time in more than a year in Sonoma County, moving up slightly to $1,179 from $1,176 in Q2, according to apartment property tracking company RealFacts. Behringer Harvard contracts out to companies like Trammell Crow Residential and Alliance Residential for day-to-day on-site Management.