DALLAS-In a dual-pronged strategy, Behringer Harvard Funds is providing mezzanine financing to build a 155-unit complex in East Dallas with an eye on buying it after completion. The project, which involves a teardown, will cost roughly $50 million to bring on line.

The Plaza at Lovers Lane, planned for 6.33 acres at 6044 E. Lovers Lane, is the first fund-and-buy deal between Behringer Harvard and Houston-based Greystar Development & Construction although they've done business together in the past. It's also the third multifamily developer that the locally based investment group has aligned for a fund-and-buy pipeline that it's building to seed a specialty fund.

"We're building a platform with multifamily developers and we expect to be very active on the multifamily acquisition front," Jason Mattox, executive vice president of Behringer Harvard, tells GlobeSt.com. "We will continue to expand the stable of developers that we will work with." Other partners are Atlanta-based Trammell Crow Residential, Brookfield Real Estate Opportunity Fund of Toronto and Phoenix Property Co. of Dallas. And like its other JV buy-in pacts, the developer's affiliate management company will oversee the finished product.

Greystar Management Services, part of Dallas-based Greystar Real Estate Partners LP, currently manages the existing 184-unit Plaza at Lovers Lane, which is in the process of being vacated so the site can be scraped and rebuilt with a high-end gated development, according to Mattox. Greystar's merchant-build plan will replace traditional apartments with Georgetown-style townhouses, averaging 1,350 sf, at the corner of Lovers Lane and Skillman Avenue.

Construction on the 18-building replacement product, which will keep the Plaza at Lovers Lane name, is penciled to start in early 2008. The Lovers Lane-Skillman pocket is one of the city's most active redevelopment areas, with pre-1980s multifamily product being bought, razed and dirt reseeded with up-to-date space. The Behringer Harvard-Greystar team has yet to pick the architect, but the design will incorporate today's must-haves like a resort-style swimming pool, 42-inch upper cabinets, stainless steel appliances and outdoor fire pits.

In its past deals with Greystar Real Estate Partners, Behringer Harvard Strategic Opportunity Fund I LP bought the 172-unit Stone Creek Apartments at 2700 Trimmier Rd. near Fort Hood in Killeen in July 2005. The deal included an extra eight acres for a 128-unit second phase. Unlike the new deal, Mattox says Greystar will build the second phase, but has retained no partnership interest in Stone Creek.