PORTLAND, OR-Behringer Harvard has closed on its $65-million JV acquisition of the new Cyan residential tower in downtown Portland in a joint venture with Stichting Pensioenfonds Zorg en Welijn, a Netherlands-based social-work sector pension fund better known as PGGM. Developed by locally-based Gerding/Edlen, the 32-story, 352-unit property was as a luxury condominium development when it broke ground in 2007 but opened earlier this year as a rental property.

Cyan Apartments is located at 1420 SW 4th Ave., which is near Portland State University and Pettygrove Park at the south end of the Downtown core. Most of the units measure less than 600 square feet, which made it ideal for the conversion. Amenities include a business center, a fitness center and 5,700 square feet of retail space, and an anticipated LEED Gold rating from the US Green Building Council. Gerding Edlen publicly made the switch from condos to apartments in October 2008. It was the sixth condo project in Portland to switch to apartments since spring 2007.

With this latest acquisition, Behringer Harvard Multifamily REIT I has investments 5,289 units in 18 properties in 11 states. When Behringer put the property under contract in November, it did not disclose vacancy or rental rate data for the project, or its cap rate expectations. Upon closing this week, Behringer said the project is still in lease-up but did not divulge any additional details in that regard.

Behringer’s chief administrative officer Jason Mattox tells GlobeSt.com that he estimates replacement cost for the asset to be $400 per square foot. Gerding Edlen will be the fee manager for the new ownership, he added.

In an interview last month for GlobeSt.com’s Up Close feature, Mattox said Behringer is actively acquiring apartment properties because most real estate experts believe that the trend for home ownership is going to decline. He says that with owners grappling with their own issues, it’s relationships that are uncovering opportunities more so than typical listed deals.

“A variety of the incentives in the marketplace and the changed underwriting that’s impacting the lenders on single-family homes, I think will actually reduce the amount of home ownership,’ he said. “Couple that with actual, overall lack of construction in the multifamily sector, relatively speaking, and there’s a reasonable chance for a strong rebound.”

In January 2008, a little more than a year before the project was completed, the Cyan’s smallest unit, 541 square feet, was listed at $213,000, and 60% of the units were listed at less than $600,000, according to published reports.

Back in March, loft units were reportedly renting for $995 per month and one-bedroom units for $1,295. The price at the time included perks such as access to a community garden, an online concierge, a fleet of bicycles, as well as discounts on New Seasons grocery delivery and Zipcar memberships.

The official seller is 4th & Harrison Investors LLC, whose manager is 4th & Harrison Development LLC, which in turn is managed by Gerding Edlen managing partners Mark C. Edlen and Kelly T. Saito, according to the Oregon Secretary of State’s office. The official buyer is a 45-55 JV of Behringer Harvard Multifamily OP I LP and Behringer Harvard Master Partnership I LP, which is 99% owned by PGGM.

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