2. The Non-Traded REIT

Company: Behringer Harvard

Relying exclusively on one-off transactions over portfolio or multi-property deals, Dallas-based Behringer Harvard’s non-traded, publicly-registered Multifamily REIT I has cranked out near-monthly apartment deals, with notable buys in California, Colorado, Texas, Virginia, and Oregon that highlighted a first half of 2010 that saw the firm pull in $320.6 million worth of multifamily product.

Most recently [as of press time], Behringer Harvard announced the August acquisition of Acapella Apartments, a 163-unit luxury mid-rise in San Bruno, Calif., located less than 1 mile from the San Bruno BART station that provides quick commuter rail access to downtown San Francisco just 10 miles to the north. “Acapella Apartments is a centrally located, newly constructed multifamily community with luxurious amenities,” Behringer Harvard Multifamily REIT I chief operating officer Mark Alfieri says of the deal. “The community’s transit-oriented location in one of America’s most desirable metropolitan areas also provides an excellent fit with our platform’s investment strategy.”

Indeed, Behringer Harvard has not wavered from its focus on recently completed and/or stabilized Class A luxury apartments in core, high-barrier-to-entry markets. And little is expected to change as the firm continues to deploy proceeds from the sale of its shares, coupled with capital commitments from the Dutch pension fund PGGM. In January 2010 alone, the firm acquired 699 units in Denver; Sonoma, Calif.; and Orange County, Calif. It also received a $100 million co-investment boost from PPGM, bringing the pension fund’s buy-in to a total of $300 million.

According to Jason Mattox, Behringer Harvard’s chief administrative officer, more institutional buyers are competing for luxury multifamily properties in what he calls “strong markets,” particularly those with notable improvements in occupancy levels. As a result, Behringer Harvard executives won’t be surprised to see continued cap rate compression in major markets—a trend that will likely further motivate sellers to start listing assets. “I expect that the best markets will just continue to get better and will stay attractive as we move through this recovery in the cycle,” Mattox says.

While Behringer Harvard has been aggressive enough to both win bids and complete off-market transactions, Mattox says the firm isn’t tipping its hand on additional deals in the works for 2010, particularly as competition for trophy assets appears to be on the increase. “We haven’t announced any acquisition goals for 2010,” Mattox says. “We continue to rely upon our strong relationships with owners to source attractive acquisition targets. As more competitors have entered the market, these relationships are becoming more important than ever.”