Behringer Harvard REIT I, Inc. recently issued its latest Form 10-Q quarterly report which is now publicly available through the SEC’s website. The report seems to indicate that the condition of the nontraded REIT is not on a fast track to recovery, but instead continues to struggle to improve the REITs overall position and may be in for a continued decline in value. The estimated value of shares in Behringer Harvard REIT I is already down to $4.25 from an initial par value of $10.00.
Concerned and dissatisfied investors who have suffered losses due to their investment in Behringer Harvard REIT I may have the ability to pursue the money they have lost through FINRA arbitration. Financial professionals and brokerage firms have a fiduciary duty to perform due diligence on any investment and to insure that an investment is appropriate in light of the investor’s age, investment experience, and investment objectives.
The White Law Group is representing many investors who have invested in Behringer Harvard REIT I and other non-traded REIT investments. The firm has found that in many cases investors were not adequately informed of the illiquidity challenges of non-traded REITs, firms didn’t do the proper due diligence on the investments, and further that brokers often represented nontraded REIT investments as safe.
In the overview portion of the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section of Behringer Harvard REIT I, Inc.’s recently quarterly report there are some sobering statements for investors.
With regards to “cash conservation” the report states that “Given the approximate $62.8 million of commitments we have for future tenant improvements and leasing commissions as of September 30, 2011, we expect our cash and restricted cash to decline in future quarters, excluding cash increases due to strategic asset sales and draws under our new credit facility. “ They further say that in an attempt to “conserve cash” they have “ reduced distributions, limited share redemptions, re-bid vendor contracts, continued to protest our real estate taxes on an annual basis, and structured leases to conserve capital.”
The report also notes that they continue to have issues leasing properties and negotiating with lessees in a difficult economic environment. It states that they “continue to experience an increased level of concessions required to acquire a new tenant, including free rent, tenant improvement allowances, lower rental rates, or other financial incentives. Also, a number of current tenants are leveraging the current economic environment to negotiate lease renewals or extensions with similar increased concessions.” In light of this situation they indicate that “if these trends continue, we expect the decline in our property net operating income to continue.”
As a result of a difficult real estate market and fiscal challenges facing the Behringer Harvard REIT I, Inc. the report indicates they are implementing a variety of strategies to try to stabilize and rebuild the REIT including strategic defaults. Behringer Harvard REIT I, Inc.’s report does state that “If market conditions improve or stabilize, and we are successful with our efforts to increase occupancy along with effective rental rates, refinance or restructure our debt, and pursue strategic opportunities, we believe we can achieve three important objectives for our stockholders: (1) increase our estimated value per share; (2) increase distributable cash flow; and (3) provide liquidity to our stockholders.” However, details of the report seem to indicate that the REIT continues to struggle and that investors have cause to be concerned about the future value of their investments.
If you have invested in and are concerned about your investment in Behringer Harvard REIT I and would like to speak to a securities attorney about your potential to recover losses please call our Chicago office at 312-238-9650.
The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois and Boca Raton, Florida.
For more information on The White Law Group, please visit our website at https://www.whitesecuritieslaw.com.