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Distressed Multifamily = Real Estate Gold

Dallas-Ft. Worth
Distressed Multifamily = Real Estate Gold
Behringer Harvard COO Mark Alfieri
Quasi-distressed opportunities lead the way for acquisitions in Behringer Harvard Multifamily REIT I, COO Mark Alfieri tells us. (No, it isn't Steve Carell, but we're not the first to notice the resemblance.) The 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—targeting busted condo deals to convert 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 big on Behringer Harvard's radar.
Forty55 lofts
Calling it real estate gold for apartments, the coup de gras for Mark was the acquisition of Forty55 lofts, above. The custom-home style condos feature granite, loft design and wood floors, priced from $900k to $1M. But the 2009 completion of the project was horrible timing that benefited Behringer Harvard, he says. 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 that were markedly higher than projected, he says. The most recent deal, Acappella, 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.
Mark Alfieri, Peggy Daly and Bob Poynter,
Mark, along with SVP Peggy Daly  and CIO Bob Poynter, tells us the REIT is about halfway through expanding its portfolio and is targeting between 50-70 total assets. He 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," he tells us. "We were buying at a fraction of the cost  in places like beautiful Marina Del Rey.” Wanna hear more? Listen to Mark speak at our Bisnow Multifamily SummitSept. 24 at the Meyerson Symphony Center. Register now.