Alfieri’s “two cents” is something the entire Behringer Harvard team is familiar with. Though he is patient and thoughtful in comments and responses, his reputation unanimously across the firm is of a strong and consistent communicator whom some of his colleagues even call politely relentless. “He’s the first one to go around the table [and solicit opinions]; he’s awesome even at a company bowling event getting people motivated and handing out personal bottles of wine to everyone,” Mattox says. “The same skills that he used to become such a great deals guy are the ones that he uses to shape structure and process policy. A negotiation is never over with Mark. He wants to make sure it is as good as it possibly can be. Other people will move on; he keeps on [going] until he gets it right.”
From Buyer to Builder
Certainly what Alfieri has accomplished at Behringer Harvard in the past five years is laudable, but what comes next—running the multifamily portfolio just like a traded REIT with vertically integrated acquisition, operations, and development units—will define his role within the greater apartment industry.
It seems an odd time for creating that kind of a business model, particularly one that is fundamentally built on job growth and household creation, but it’s precisely that disruption in the economy and capital markets that Alfieri says has enabled Behringer Harvard to make its moves. “Growth is a great thing in any environment, but especially in an environment like we’d had for the past few years,” Alfieri says. “Everything that we have had to sell has been very positive: no legacy investments, no layoffs. We were growing from day one with me in a cubicle with a laptop to having more than 100 dedicated multifamily employees today.”
Alfieri says he’s used to getting strange looks when he talks about an acquisition strategy built around distress, but he insists there are plenty of discounted deals that have yet to clear the market, and continued volatility on Wall Street and in global economics could hasten the appearance of those deals.
“Our last three acquisitions were distressed acquisitions,” Alfieri says. “One was a foreclosure, a big condo deal in San Francisco that was foreclosed, and we bought it from the lender. The other two we bought out of a bankruptcy liquidating trust in Boston. So there are not as many of them, but we are targeting our core markets—Class A, East and West Coast, and finding the distress that is still out there in the market. I think we are still seeing it, and I think we’ll continue to see it over the next couple of years as these really high-end condo deals filter through the system. But I believe that if the stress that we are seeing in the capital markets right now continues for another couple of weeks, it’ll open up a whole new world of opportunity for us on the buy side.”
Still, the days of growing Behringer Harvard’s multifamily platform through successive one-off acquisitions might be coming to a close as market competition raises prices on assets and the firm stretches for scale. “We’ve seen several portfolio and platform opportunities over the past six months and continue to look at them,” Alfieri says. “From a strategic standpoint, [programmatic investments] are something we are going to consider very strongly as opposed to doing one-offs, which, in the current competitive environment, are much more difficult.”
