A Texas-based commercial real estate investment company says it is on the prowl for additional apartments in the San Francisco Bay Area following its early September acquisition of a Dublin apartment complex for nearly $80 million.
The buy was Behringer Harvard’s first-ever apartment acquisition in the region, though it has acquired office properties on behalf of other funds beginning in late 2006. It acquired Dublin’s 390-unit Waterford Place for its Multifamily REIT, a publicly registered, non-listed real estate investment trust. The transaction included a combination of debt and equity.
“We are now looking for and seeking additional apartment purchases in the region. We would like to add additional assets to our portfolio from this part of the country,” said Mark Alfieri, chief operating officer for the multifamily REIT. The company will focus on assets in the San Francisco area and the East Bay, he said.
“We think that the property will be a good fit for our portfolio. It’s well-located and is adjacent to public transportation, employment, shopping and entertainment. The demographics are very strong,” Alfieri said.
Including this investment, the portfolio of Behringer Harvard Multifamily REIT I Inc. includes 12 multifamily communities that represent more than 3,630 multifamily units in eight states.
This is the third investment in the San Francisco Bay Area for Behringer Harvard Holdings LLC, the parent company of Behringer Harvard, which manages multiple real estate investment vehicles each specializing in a different asset type and risk profile.
The company acquired a nearly 100,000 square-foot office building in Los Altos in November 2006 for Behringer Harvard REIT I, and the Santa Clara Tech Center at 700, 750 and 800 Central Expressway in May 2007. The 456,000 square-foot Santa Clara property sold for $70 million, according to published reports, and includes a redevelopment opportunity for a data center. It was acquired by Behringer Harvard Opportunity REIT I Inc.
The Waterford Place purchase was made on behalf of a joint venture between the multifamily REIT and the PGGM Private Real Estate Fund, a real estate investment vehicle for large Dutch pension funds. Total equity in the deal was $19.2 million. Behringer Harvard put in 55 percent of the equity and PGGM 45 percent.
The new owners also assumed two mortgage loans with an aggregate face amount of $65.2 million. Both loans mature in May 2013 but have an automatic one-year extension. The two loans are fixed-rate mortgages; the first has an annual rate of 4.67 percent and the second an annual rate of 5.45 percent.
Behringer Harvard sees Waterford Place as a core asset. The complex was 97 percent occupied at purchase and is four years old; the new owners do not plan immediate improvements. The seller was Shea Properties, which is headquartered in Aliso Viejo, Cal., and is the corporate owner of Shea Homes.
Behringer Harvard and PGGM have invested together since 2007. The Dutch pension fund made an initial $100 million investment in the relationship. In January 2008 it invested an additional $100 million and may commit another $100 million going forward.
The investment strategy for the apartment REIT focuses on established and well-occupied complexes, garden-style, mid-rise and high-rise, located in major metropolitan areas and other growth markets. Some of the other markets that it has invested in so far include Washington, D.C., Las Vegas, Florida, Dallas, Houston and Denver.