Behringer Harvard Teams With PGGM on $300M Co-Investment Agreement

Behringer Harvard Multifamily REIT I has entered into a new $300 million arrangement with PGGM Private Real Estate Fund to co-invest in multi-family communities.
Mark Alfieri, of Behringer Harvard Multifamily REIT I

Mark Alfieri, of Behringer Harvard Multifamily REIT I

Behringer Harvard Multifamily REIT I, Inc., has entered into a new $300 million arrangement with PGGM Private Real Estate Fund to co-invest in multi-family communities.

Previously, the two have partnered with another $300 million for co-investment in three separate tranches of $100 million.

“First and foremost, to extend a relationship with an investor we have been dealing with since 2007 and have a lot of success with in previous investment programs, we are excited about this new increase in our PGGM co-investment platform,” Mark Alfieri, Behringer Harvard Multifamily REIT I’s president & COO, told Commercial Property Executive. “We are really looking forward to this new venture because the REIT is the general partner, instead of just the co-investment partner.”

From May of 2007 through the end of September 2013, PGGM has co-invested with the REIT in 28 multi-family communities with a total capitalized cost of approximately $1.6 billion.

“If you look back to 2008-2009, we were in a very unstable environment and most institutional capital was on the sidelines and I think both the REIT and PGGM saw an opportunity to jump in,” Alfieri added. “In fact, in 2009, we were the largest acquirer of multi-family(properties) in the U.S., at pricing as good as I’ve ever seen in the market. We were buying at huge discounts to previous values and even replacement cost and PGGM stood right alongside of us.”

 

With the new funding, the partnership plans to invest about $1.3 billion in equity and debt in apartment communities during the next several years, taking into account the equity provided by both partners and additional leverage.

“It’s a changing market, as it always is. We’ve gone from a market where there was no new supply and in the midst of a recession to an improving economy and new supply coming in,” Alfieri concluded “I think you have to be discriminating and make your choices moving forward. We’re very conscious of new supply coming in and are trying to make decisions where we can be most competitive, but we want to stick with development.”

According to Alfieri, PGGM’s decision to increase its investment in the REIT’s U.S. multi-family platform provides further recognition from a highly sophisticated institutional investor of the REIT’s investment strategy.

The REIT’s portfolio includes investments in 56 multi-family communities in 13 states comprising 15,861 apartment homes. PGGM, an investment vehicle for Dutch pension funds, currently manages approximately $210 billion in pension assets for more than 2.5 million pensioners.