Behringer REIT Looking to Replace External Advisor
Behringer Harvard Opportunity REIT I Inc., a publicly registered non-traded real estate investment trust, is currently engaged in discussions to replace its current advisor with an affiliate of Lightstone Group, according to proxy materials filed with the Securities and Exchange Commission.
The special committee of the board is in talks with Lightstone, a sponsor of non-traded real estate investment trusts, to replace the REIT’s current external advisor, Behringer Harvard Opportunity Advisors I.
The REIT expects the terms of the advisory agreement with the Lightstone affiliate to be substantially similar to the one currently in effect. If a change in advisor is implemented, during the transition period, certain personnel of the current advisor who currently provide services to the company will continue to do so. Company president Tom Kennedy and chief financial officer Lisa Ross are expected to stay on board should the change occur.
Behringer Harvard Opportunity REIT investors will soon vote for the proposed plan of liquidation at the company’s upcoming annual meeting scheduled on January 23, 2017, as previously reported by The DI Wire.
The plan of liquidation, which was approved by the board in August 2016, would allow the REIT to sell its assets, pay its debts and distribute the net proceeds to stockholders. If the plan is approved by shareholders, the REIT expects to complete the asset dispositions within 24 months.
Behringer Harvard Opportunity REIT I, which experienced heavy losses following the Great Recession, raised $530 million in its primary offering. The company had an estimated net asset value of $8.17 per share in June 2009, which declined to $3.58 per share in late 2014. The company lost one asset to bankruptcy and another was foreclosed upon last year, according to Summit Investment Research.
Capright Property Advisors, an independent appraisal firm, estimates that if the liquidation plan is successfully implemented, the net proceeds could range between $1.75 and $2.01 per share. Shares were originally priced at $10.00 each.
Distributions from August 2006 through the last distribution in the fourth quarter of 2010 totaled $1.17 per share. If a stockholder owned their shares since the first distribution paid in August 2006, the total cumulative distribution could range between $2.92 and $3.18 per share.
The board and special committee believe that a liquidation would more likely provide stockholders with a greater return on their investment within a reasonable period than if a different alternative was implemented.
Behringer Harvard Opportunity REIT I went effective in September 2005 and closed in December 2007. The company suspended its distribution in March 2011 and oversees a portfolio of six properties.
