Changing REIT Scene Seeds US-Euro Alliance

DALLAS-Behringer Harvard has lobbed a European offensive, mortared in new REIT legislation abroad, to get in on the ground floor of a projected surge in property values.

The Dallas-based investment group yesterday announced its alliance with HCI Capital AG of Hamburg as the inroad to markets in the UK, Germany and the Netherlands. "We believe the increased amount of capital resulting from the flood of new REIT legislation will drive property values in these countries," Jason Mattox, Behringer Harvard's executive vice president, tells GlobeSt.com. "And, we want to be positioned to take advantage of that."

Behringer Harvard and HCI have "no set parameters" for allocating funds to the targeted product types, according to Mattox. What is certain is they will be value-add purchases, the first time that HCI will veer from its core-asset focus into the arena. Behringer Harvard, though, has mastered the value-add market in the US and plans to transfer its capital and street-savvy buying techniques to the European front as the duo revs up a $1.3-billion shopping spree.

In yesterday's conference call, Oliver Georg, HCI's managing director, said his team had been searching for a local partner for US acquisitions. "Only now we are the local operating partner," he said.

Mattox explains the acquisition strategy--stand-alone JV partnerships--was picked to "create a platform that makes investment in assets a little easier. The deeds won't be cross-collateralized and aren't tied to a fund. "There is a great deal of flexibility on both sides," he says. "We believe we have the right partner for us as we both expand our platforms."

HCI was founded in 1985. Behringer Harvard emerged 2001 with the merger of veteran firms, Harvard Property Trust Inc. and Behringer Partners. Now, as he did then, Robert M. Behringer, chairman and CEO, fashioned the deal from a long-time business relationship. "I have known and admired HCI's leadership team for many years," he said during the call. "Our investment philosophy is similar and our experiences and ingenuity should be a benchmark for investing the world over."