According to a report in the Investment News, Behringer Harvard Holdings LLC, the real estate investment firm, is about to drop a bombshell on its clients: Behringer Harvard Strategic Opportunity Fund I is under water.
Launched in 2005, the Behringer Harvard Strategic Opportunity Fund I raised $65 million and invested in six properties, including a hotel on Wilshire Boulevard in Los Angeles and an office building in Amsterdam.
Like so many American homeowners who bought real estate at the top of the market in 2006 or 2007, the fund is underwater. Its debt apparently far outweighs the fund’s equity.
The Strategic Opportunity Fund I’s “liabilities are greater than its assets,” said Michael O’Hanlon, chief executive of the funds that comprise Behringer Harvard’s opportunity platform. The fund is negotiating with banks over one property, the hotel in Los Angeles, that is a “swing issue,” he said.
Behringer Harvard informed brokers last week of the fund’s problems and is preparing to inform investors by Friday.
This isn’t the first bombshell that Behringer Harvard has dropped on its investors.
Behringer Harvard Opportunity REIT I saw its estimated value decline 46% at the end of 2011 to $4.12 a share, from $7.66 a year earlier. In June, one property in that REIT went into bankruptcy protection.
Also as of Dec. 31, investors in the Behringer Harvard Short-Term Opportunity Fund I LLP, which had about $130 million in total assets, saw its valuation drop to 40 cents a share, down drastically from $6.48 a share as of Dec. 31, 2010.
The White Law Group continues to file FINRA arbitration claims against the financial professionals and broker-dealers that recommended Behringer Harvard investments to their clients.
Financial advisors and broker-dealers have a duty to their clients to perform the necessary due diligence on an investment before offering it for sale to their clients and to ensure that any investment recommendation that is made is suitable in light of the client’s age, investment experience, net worth, and investment objectives.
Given what is now known about many of the Behringer Harvard products, it is clear that the brokerage firms that sold these products failed to assess the risk and in many cases sold these investments to investors unsuitably.
If you invested in the Behringer Harvard Strategic Opportunity Fund I and would like to discuss your litigation options, please call the securities attorneys of The White Law Group at 312/238-9650 for a free consultation.
The White Law Group is a national securities fraud, securities arbitration, and investor protection law firm with offices in Chicago, Illinois and Boca Raton, Florida.
For more information on The White Law Group, visit http://www.whitesecuritieslaw.com.