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DALLAS-In an early close-out to a $960-million offering, Behringer Harvard REIT 1 Inc. has put an additional 250 million shares on the market to raise $2.47 billion for core real estate acquisitions in the US. The second follow-on offering's shelf life runs until Oct. 6, 2008.

Jason Mattox, executive vice president of the Dallas-based investment group, says the early close-out came to pass because the first follow-on, launched Feb. 19, 2005, was "nearing its maximum." He tells GlobeSt.com that the final tabulation is under way on the first follow-on sale, but the REIT needed another "best efforts offering" to keep up its buying momentum. "There are a number of markets that we're scouring for opportunities," he says, "and we hope to continue our active pipeline." If the REIT's past is any indication, it's a safe bet that there are acquisitions waiting to be inked in the near term.

"This equity is intended to pursue core real estate investments across the US," Mattox says. Offering proceeds will be used mostly to buy office properties, but the REIT's not precluded from venturing into other category types. Two hundred million shares are on the market at $10 apiece and 50 million shares are tagged at $9.50 each. The second follow-on sale got under way yesterday.

In the SEC filing, the REIT's team projects at least 88.3% of the total gross proceeds for the maximum offering will be invested in real estate properties, mortgage, bridge or mezzanine loans or other real estate-related securities investments. In its real estate purchases, the REIT's leverage has been averaging 60%.

Under the SEC registration, the REIT can extend the sale to Oct. 6, 2014. Though the timeline's always subject to change, the "liquidity event" will begin before 2013 and wrap up no later than 2017 with a listing on a national securities exchange or sale and distribution of proceeds.

Other noteworthy conditions are the latest follow-on includes a caveat about Texas' margin tax due to possible increased tax burdens and decreased proceeds for distribution. "It's a challenge. Certainly, a lot of companies, both inside and outside real estate, will be working to determine how their structures fit into the new legislation," Mattox says. He adds the margin tax isn't anticipated to impede the stock sale. "But as a responsible company, we feel it needs to be disclosed and discussed," he stresses.

Instant Insights /

Behringer-Harvard Opens $2B-Plus Offering

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