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Distressed Multifamily = Real Estate Gold

Distressed Multifamily = Real Estate Gold
Quasi-distressed opportunities lead the way for acquisitions in Behringer Harvard Multifamily REIT I. The unlisted REIT reigns as one of the largest multifamily buyers in the US. The fund has acquired a total of 30 properties—20 since June 2009.
Behringer Harvard's Mark Alfieri
Here's Behringer Harvard COO Mark Alfieri (no, it isn't Steve Carell but we're not the first to notice the resemblance). He tells our BisnowDallas reporter Tonie Auer the REIT is targeting busted condo deals and converting them to apartment properties. Mark says the focus is on the West Coast and Northeast (where about 80% of the capital has been invested) adding that young properties—with an average completion date of 2008— are on the REIT's radar.
Forty55 Lofts
Calling it real estate gold for apartments, the coup de gras for Mark was the acquisition of  Forty55 lofts in Marina del Ray (that's California, if the trees didn't give it away). The custom home-style condos feature granite, loft design and wood floors, and were priced from $900k to $1M. But the 2009 completion of the project was horrible timing that benefited Behringer Harvard. Mark says the REIT bought the empty property at a substantial discount to cost within a few weeks of first looking at it. Closing immediately, walls were put in the lofts to create bedrooms, and it was leased up at rents markedly higher than projected, he says. The most recent deal, Acappella, was closed four weeks ago outside San Francisco. The empty condo project had been tied up in a workout without having ever leased a unit, Mark says. Also recently acquired is Burnham Pointe, a 298-unit, 28-story former condo project in the South Loop.
Mark, along with SVP Peggy Daly and chief investment officer Bob Poynter
Mark, here with SVP Peggy Daly and CIO Bob Poynter, tells us the REIT is about halfway through completing its portfolio and is targeting between  50-70 assets. When the financial markets collapsed, Mark says that there were only a few institutional level investors buying in 2009. "These were some of the most amazing buys in my 23 years of doing this. We were buying at a fraction of cost in many places.” Wanna hear more? It's road trip time. Mark is speaking at our Multifamily Summit  on Sept. 24 at the Meyerson Symphony Center in Dallas. Pack a bag and sign up today.