Investors in the Behringer Harvard Opportunity REIT I received some unpleasant news to start off the new year. In early January 2012 investors were informed that the value of the REIT’s shares had declined to $4.12 per share, a 46% decline from the $7.66 per share valuation listed at the end of 2010.
This news is of course wholly unsurprising given how the REIT is set up. Shares of Behringer Harvard Opportunity REIT were originally offered for $10.00 per share. But for every $10 share purchased, $1.93 was taken right off the top to pay commissions to brokers, broker dealers, and the REIT itself. So right off the bat, the net asset value of shares starts off 20% below the actual price at which they are purchased.
This of course isn’t the only problem REIT within the Behringer Harvard family. The problems with the Behringer Harvard REIT I are well-documented. Their newer offerings seem on a similar path as they continue to decline in net asset value while racking up additional debt.
Despite this clear pattern, the company recently released a statement saying “[t]he fact that Behringer Harvard REIT I and Behringer Harvard Opportunity REIT I have a 2011 estimated share valuation in a similar $4 range is purely coincidental.” Common sense would dictate otherwise. The entire Behringer Harvard family of REITs should be avoided at all costs.