UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
PURSUANT
TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
Date
of Report (Date of earliest event reported): January 14, 2011
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Behringer
Harvard Mid-Term Value Enhancement Fund I LP
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(Exact
Name of Registrant as Specified in Its
Charter)
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Texas
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000-51292
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71-0897613
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(State
or other jurisdiction of incorporation
or
organization)
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(Commission
File Number)
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(I.R.S.
Employer
Identification
No.)
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15601
Dallas Parkway, Suite 600, Addison, Texas
75001
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(Address
of principal executive offices)
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(Zip
Code)
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(866)
655-1610
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(Registrant’s
telephone number, including area code)
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None
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(Former
name or former address, if changed since last
report)
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Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
¨
Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
¨
Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
¨
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
¨
Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
Item
2.02 Results of
Operation and Financial Condition
The
information set forth in Item 7.01 of this Current Report on Form 8-K is hereby
incorporated by reference.
Item
7.01 Regulation
FD Disclosure.
ESTIMATED
VALUE PER LIMITED PARTNERSHIP UNIT
The
limited partnership agreement of Behringer Harvard Mid-Term Value Enhancement
Fund I LP (which may be referred to as the “Fund,” “we,” or “our”) requires
that the Fund’s general partners provide its limited partners annually an
estimate of value of the Fund’s limited partnership units. As of
December 31, 2009, Behringer Harvard Advisors I, LP, the Fund’s co-general
partner (the “General Partner”), estimated a value of $7.09 per limited
partnership unit. The estimated valuation was revised to $6.46 in May
2010 following the sale of the Hopkins Building and a special distribution of
$0.63 per unit to the Fund’s limited partners.
On
January 14, 2011, the General Partner adopted a new estimated value per limited
partnership unit as of December 31, 2010 of $5.05. As part of the
General Partner’s valuation process, and as required by the Fund’s limited
partnership agreement, the General Partner has obtained the opinion of an
independent third party, Robert A. Stanger & Co., Inc., that the estimated
valuation is reasonable and was prepared in accordance with appropriate methods
for valuing real estate. Robert A. Stanger & Co., founded in
1978, is a nationally recognized investment banking firm specializing in real
estate, REITs and direct participation programs such as the Fund.
As with
any valuation methodology, the General Partner’s methodology is based upon a
number of estimates and assumptions that may not be accurate or
complete. Different parties with different assumptions and estimates
could derive a different estimated value per unit, and these differences could
be significant. The estimated value per unit does not represent the
fair value according to generally accepted accounting principles (“GAAP”) of the
Fund’s assets less its liabilities, nor does it represent the amount the Fund’s
units would trade at on a national securities exchange.
Methodology
The
Fund’s objective in calculating an estimated value per unit is to arrive at a
value that is reasonable and supportable using what the General Partner deems to
be appropriate valuation methodologies, in accordance with the valuation
methodology required by the Fund’s limited partnership agreement. The
following is a summary of the valuation methodologies used by the General
Partner.
Investments in
Real Estate: The General Partner estimated the value of the Fund’s
investments in real estate for purposes of calculating an estimated value per
unit by using a 10-year discounted cash flow analysis. The General
Partner calculated the value of the Fund’s investments in real estate using
internally prepared cash flow estimates, terminal capitalization rates within
historical average ranges and discount rates that fall within ranges the General
Partner believes are used by similar investors. The capitalization
rate ranges and discount rate ranges were obtained from third-party service
providers and the capitalization rate ranges were gathered for specific metro
areas and applied on a property-by-property basis. The cash flow
estimates, capitalization rates and discount rates for each property were
selected by the real estate professionals at the General Partner based on their
expertise in managing commercial real estate.
2
The
General Partner believes that these valuation methodologies are among those that
are industry standard and acceptable valuation methodologies. The
estimated values for the Fund’s investments in real estate may not represent
current market values or fair values as determined in accordance with
GAAP. Real estate is currently carried at its amortized cost basis in
the Fund’s financial statements, subject to any adjustments applicable under
GAAP.
The
estimated value per unit of the Fund’s limited partnership units does not
reflect a liquidity discount for the fact that its units are not currently
traded on a national securities exchange or a discount for partnership overhead
and other costs that may be incurred, including any costs of any sale of the
Fund’s assets. Different parties using different assumptions and
estimates could derive a different estimated value per unit, and these
differences could be significant. The markets for real estate can
fluctuate and values are expected to change in the future.
Limitations
of Estimated Value Per Unit
The
estimated value per unit set forth above will first appear on the Fund’s
investor account statements for the fourth quarter of 2010. In
addition, as of January 15, 2011, the Fund will report this estimated value per
unit to fiduciaries of retirement plans preparing annual valuation statements
and input the estimated value in the data system used by the Fund that provides
information to its investors and to broker dealers who have customers who have
invested in the Fund’s units.
As with
any valuation methodology, the General Partner’s methodology is based upon a
number of estimates and assumptions that may not be accurate or complete.
Different parties with different assumptions and estimates could derive a
different estimated value per unit. Accordingly, with respect to the estimated
value per unit, the Fund can give no assurance that:
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·
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a
unit holder would be able to resell his or her units at this estimated
value;
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a
unit holder would ultimately realize distributions per unit equal to the
Fund’s estimated value per unit upon liquidation of the Fund’s assets and
settlement of its liabilities or a sale of the
Fund;
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·
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the
Fund’s units would trade at the estimated value per unit on a national
securities exchange; or
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·
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the
methodology used to estimate the Fund’s value per unit would be acceptable
to FINRA or under ERISA for compliance with their respective reporting
requirements.
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Further,
the estimated value per unit has been determined as of December 31,
2010. Because there are only four assets remaining in the Fund, a
change in circumstance in any single asset can have a material impact on the
valuation of the Fund. Since the last valuation of the Fund, the sole tenant
occupying all 73,349 square feet of the 2800 Mockingbird property in Dallas,
Texas chose to vacate the facility. The costs to pay expenses during
the time of vacancy and the costs to re-lease the property negatively affected
this year’s valuation. In addition, because of the reduction in rent received by
the Fund from the 2800 Mockingbird vacancy, the Fund also had to use more cash
on deposit, which also negatively affected the valuation. We continue
to work to re-lease or sell 2800 Mockingbird. On the other hand, we
are pleased to report we successfully secured the renewal of ASC, who renewed
its lease for an additional 11 years at the 28,800 square foot facility at 1401
Plano Parkway in Richardson, Texas. Tenant improvement work is
currently proceeding at the property and this asset will be marketed for sale
this year and the net proceeds distributed to the unit holders.
The value
of the Fund’s units will fluctuate over time in response to developments related
to individual assets in its portfolio and the management of those assets and in
response to the real estate and finance markets. As contemplated by
the Fund’s limited partnership agreement, the General Partner intends to update
its estimated value per unit annually but does not intend to make any attempt to
establish any estimated valuations of the Fund’s units in the
interim. There is no assurance as to the extent to which the current
estimated valuation should be relied upon for any purpose after its effective
date regardless that it may be published on any statement issued by the Fund or
otherwise.
3
As the
Fund continues its portfolio disposition phase and assets are sold, the number
of assets available to create usable cash flow declines. As a result,
the Fund’s general partners continue to evaluate various options, including cost
savings initiatives, distribution reduction, possible conversion to a
liquidating trust structure, or a more rapid execution of the disposition
phase. In the meantime, the Fund is diligently working to renew
current leases or secure new leases with quality tenants to increase net
operating income and the ultimate value of our assets and to execute on other
value creation strategies. We are also trying to minimize expenses
when possible.
FORWARD
LOOKING STATEMENTS
Forward-looking
statements that were true at the time made may ultimately prove to be incorrect
or false. The Fund cautions investors not to place undue reliance on
forward-looking statements, which reflect the Fund’s management’s view only as
of the date of this Report. The Fund undertakes no obligation to
update or revise forward-looking statements to reflect changed assumptions, the
occurrence of unanticipated events or changes to future operating
results. Factors that could cause actual results to differ materially
from any forward-looking statements made in this Report include changes in
general economic conditions, changes in real estate conditions, increases in
interest rates, lease-up risks, inability to obtain new tenants upon the
expiration of existing leases, and the potential need to fund tenant
improvements or other capital expenditures out of operating cash
flow. The forward-looking statements should be read in light of the
risk factors identified in the “Risk Factors” section of the Fund’s Annual
Report on Form 10-K for the year ended December 31, 2009, as filed with the SEC
and the risks identified in Part II, Item 1A of its subsequent quarterly
reports.
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SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, the Registrant has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.
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BEHRINGER
HARVARD MID-TERM VALUE
ENHANCEMENT
FUND I LP
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By:
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Behringer
Harvard Advisors I LP
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Co-General
Partner
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By:
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Harvard
Property Trust, LLC
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General
Partner
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Dated: January
14, 2011
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By:
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/s/
Gerald J. Reihsen, III
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Gerald
J. Reihsen, III
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Executive
Vice President –
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Corporate
Development & Legal
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and
Secretary
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