Since then, PPGM has twice extended its co-investments for a total commitment of $300 million, and Behringer Harvard has shown no recalcitrance when it comes to placing those dollars alongside its own multifamily platform capital (boosted by a $150 million Freddie Mac credit line) to make mezzanine loans, provide development equity, and, of course, purchase Class A multifamily apartment real estate out of distress.
“One of the things that we are most proud of as a fund sponsor is the way we have adapted to the changing environment,” Alfieri says. “We first entered the market in 2007 at peak values with some mezzanine development deals that included an option to purchase, and in hindsight that worked out to be a great strategy, because when those assets were marked to market [after the crash], the prices had dropped dramatically. Then, at a time when everyone was on the sidelines, we said it’s time to jump in. We attacked and bought with vigor in 2009 and 2010 and felt like the pricing for the assets we purchased was a once-in-a-lifetime opportunity. That’s our strategy: We are trying to stay a step ahead of the markets, and we’re doing the same today.”
Any lingering expectations of a quick IPO or liquidation flip of apartment assets from the Behringer Harvard multifamily platform were quelled early this year when the firm announced it had wooed Daly over from Atlanta-based Place Properties to head up property operations for the entire apartment portfolio. Fee managers were given notice, and asset by asset, all units in Behringer Harvard’s multifamily portfolio have been integrated into an internal management and operations unit. “We are clearly in a different phase in the evolution of our fund,” Alfieri says. “We were all acquisitions for an extended period of time and utilized third-party managers out of convenience. It just didn’t make sense to make the up-front capital investment [in an operations platform] at first, and now we are transitioning into a total operational mode. I’ve been there before, with Revest; I have owned and built a property management company and understand the investment in both capital and time—it is a huge undertaking.”
LEADERSHIP LESSONS: Mark Alfieri
Age: 50
Title: Executive Vice President and COO
Favorite Quote: “Integrity is the essence of success.”
Best Business Decision: Getting into the multifamily business out of college.
Greatest Business Challenge: Building a sustainable multifamily platform in adverse economic conditions.
Leadership Philosophy: Lead by example with a hard work ethic, can-do attitude, and optimism.
Playing on his iPOD: Van Morrison, Kenny Chesney
Last Book Read: Outliers: The Story of Success, by Malcolm Gladwell
Particularly since Behringer Harvard intends to remain highly active in Class A multifamily investments while the property management arm develops. Like Aisner before him, Alfieri is now listening to the dealmaking prowess of an acquisitions team charged with looking for distressed properties, mezz and equity placement opportunities, and, increasingly, development deals with established multifamily builder outfits. “My day-to-day has dramatically changed. In the beginning, I was very involved in every deal and made every single call,” Alfieri says. “Very deliberately as a group, we hired very talented young acquisition associates who didn’t necessarily have a background in multifamily. Now, I sit next to all of the deal guys, and I can hear them on the phones all day long and then they hear me all day long after they get off the phone giving my two cents’ worth. So I’m still involved in that standpoint, and I am still involved in negotiations on every deal, but they’re seasoned now and make the calls and do the groundwork.”
