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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[MARK ONE]
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2004
OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ____________ TO ____________
COMMISSION FILE NUMBER: 333-100126 (1933 ACT)
BEHRINGER HARVARD MID-TERM VALUE ENHANCEMENT FUND I LP
(Exact Name of Registrant as Specified in Its Charter)
TEXAS 71-0897613
(State or other jurisdiction of incorporation (I.R.S. Employer
or organization) Identification No.)
1323 NORTH STEMMONS FREEWAY, SUITE 211, DALLAS, TEXAS 75207
(Address of principal executive offices)
(Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (866) 655-1610
Indicate by check mark whether the Registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days. Yes |X| No |_|
Indicate by check mark whether the Registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). Yes |_| No |X|
================================================================================
BEHRINGER HARVARD MID-TERM VALUE ENHANCEMENT FUND I LP
FORM 10-Q
QUARTER ENDED JUNE 30, 2004
PART I
FINANCIAL INFORMATION
PAGE
ITEM 1. FINANCIAL STATEMENTS.
Consolidated Balance Sheets as of June 30, 2004 and December 31, 2003.................3
Consolidated Statements of Operations for the three and six months ended
June 30, 2004 and June 30, 2003....................................................4
Consolidated Statements of Cash Flows for the six months ended
June 30, 2004 and June 30, 2003....................................................5
Notes to Consolidated Financial Statements............................................6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS................................................................13
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK...........................18
ITEM 4. CONTROLS AND PROCEDURES..............................................................18
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS....................................................................19
ITEM 2. CHANGES IN SECURITIES, USE OF PROCEEDS AND ISSUER PURCHASES OF EQUITY
SECURITIES...........................................................................19
ITEM 3. DEFAULTS UPON SENIOR SECURITIES......................................................19
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS..................................19
ITEM 5. OTHER INFORMATION....................................................................19
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.....................................................19
SIGNATURE.......................................................................................21
2
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
BEHRINGER HARVARD MID-TERM VALUE ENHANCEMENT FUND I LP
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
JUNE 30, DECEMBER 31,
2004 2003
------------------- -------------------
ASSETS
REAL ESTATE
Land $ 2,786,232 $ -
Buildings, net 5,466,588 -
Real estate intangibles, net 692,902 -
------------------- -------------------
TOTAL REAL ESTATE 8,945,722 -
Cash and cash equivalents 642,005 1,986,114
Restricted cash 1,354,895 75,132
Accounts receivable 33,837 -
Prepaid expenses and other assets 61,280 31,590
------------------- -------------------
TOTAL ASSETS $ 11,037,739 $ 2,092,836
=================== ===================
LIABILITIES AND PARTNERS' CAPITAL
LIABILITIES
Accounts payable $ 15 $ 7,584
Payables to affiliates 266,390 85,521
Distributions payable 49,024 -
Accrued liabilities 162,630 68,752
Subscriptions for limited partnership units 1,355,142 75,132
------------------- -------------------
TOTAL LIABILITIES 1,833,201 236,989
COMMITMENTS AND CONTINGENCIES
PARTNERS' CAPITAL
Limited partners, 44,000,000 units authorized;
1,082,557 units and 223,345 units issued
and outstanding at June 30, 2004 and
December 31, 2003, respectively 9,204,067 1,855,373
General partners 471 474
------------------- -------------------
TOTAL PARTNERS' CAPITAL 9,204,538 1,855,847
------------------- -------------------
TOTAL LIABILITIES AND PARTNERS' CAPITAL $ 11,037,739 $ 2,092,836
=================== ===================
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
3
BEHRINGER HARVARD MID-TERM VALUE ENHANCEMENT FUND I LP
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
THREE MONTHS THREE MONTHS SIX MONTHS SIX MONTHS
ENDED ENDED ENDED ENDED
JUNE 30, 2004 JUNE 30, 2003 JUNE 30, 2004 JUNE 30, 2003
--------------- --------------- --------------- ---------------
REVENUE
Rental revenue $ 111,895 $ - $ 129,805 $ -
--------------- --------------- --------------- ---------------
TOTAL REVENUES 111,895 - 129,805 -
EXPENSES
Property operating expenses 16,678 - 16,845 -
Real estate taxes 21,810 - 25,386 -
Property and asset management fees 6,037 - 7,150 -
General and administrative 63,444 - 113,859 -
Depreciation and amortization 26,728 - 31,162 -
--------------- --------------- --------------- ---------------
TOTAL EXPENSES 134,697 - 194,402 -
OTHER INCOME 7,583 - 11,948 -
--------------- --------------- --------------- ---------------
NET LOSS $ (15,219) $ - $ (52,649) $ -
=============== =============== =============== ===============
ALLOCATION OF NET LOSS:
Net loss allocated to general partners $ 2 $ - $ (3) $ -
=============== =============== =============== ===============
Net loss allocated to limited partners $ (15,221) $ - $ (52,646) $ -
=============== =============== =============== ===============
WEIGHTED AVERAGE NUMBER OF LIMITED
PARTNERSHIP UNITS OUTSTANDING 759,096 - 542,603 -
=============== =============== =============== ===============
NET LOSS PER LIMITED PARTNERSHIP UNIT $ (0.02) $ - $ (0.10) $ -
=============== =============== =============== ===============
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
4
BEHRINGER HARVARD MID-TERM VALUE ENHANCEMENT FUND I LP
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
SIX MONTHS SIX MONTHS
ENDED ENDED
JUNE 30, 2004 JUNE 30, 2003
-------------------------- ----------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (52,649) $ -
Adjustments to reconcile net loss to
net cash flows used in operating activities
Depreciation and amortization 26,832 -
Change in accounts receivable (33,837) -
Change in prepaid expenses and other assets (12,893) -
Change in accounts payable (7,569) -
Change in accrued liabilities 20,433 -
-------------------------- ----------------------------
CASH USED IN OPERATING ACTIVITIES (59,683) -
-------------------------- ----------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of real estate (8,915,906) -
-------------------------- ----------------------------
CASH USED IN INVESTING ACTIVITIES (8,915,906) -
-------------------------- ----------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Limited partners' contributions 8,514,607 -
Offering costs (1,005,516) -
Distributions (58,727) -
Change in limited partners' subscriptions 1,280,010 262,929
Change in restricted cash (1,279,763) (262,929)
Change in payables to affiliates 180,869 -
-------------------------- ----------------------------
CASH PROVIDED BY FINANCING ACTIVITIES 7,631,480 -
-------------------------- ----------------------------
Net change in cash and cash equivalents (1,344,109) -
Cash and cash equivalents at beginning of period 1,986,114 600
-------------------------- ----------------------------
Cash and cash equivalents at end of period $ 642,005 $ 600
========================== ============================
NON-CASH FINANCING ACTIVITIES:
Limited partnership units issued under distribution
reinvestment plan $ 58,907 $ -
Distributions payable in limited partnership units
under distribution reinvestment plan $ 24,047 $ -
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
5
BEHRINGER HARVARD MID-TERM VALUE ENHANCEMENT FUND I LP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. ORGANIZATION
Behringer Harvard Mid-Term Value Enhancement Fund I LP (the
"Partnership") is a limited partnership formed in Texas on July 30, 2002. The
general partners of the Partnership are Behringer Harvard Advisors I LP and
Robert M. Behringer (the "General Partners"). The Partnership was funded through
capital contributions from its General Partners and initial limited partner on
September 20, 2002 (date of inception) and is currently offering its limited
partnership units pursuant to the public offering which commenced on February
19, 2003 ("the Offering") and is described below. The Partnership intends to use
the proceeds from the Offering, after deducting offering expenses, primarily to
acquire institutional quality office and office service center properties, in
highly desirable locations in markets with barriers to entry and limited
potential for new development.
An advisory board has been established to provide the General Partners
with advice and guidance with respect to (i) the identification of assets for
acquisition; (ii) general economic and market conditions, general business
principles, specific business principles relating to the Partnership's business
plan; (iii) inroads to establishing beneficial strategic partners, customers,
and suppliers; (iv) opportunities within and related to the industry; and (v)
other assistance as may be determined by the General Partners or their
representatives from time to time. The Partnership's Partnership Agreement (the
"Partnership Agreement") provides that it will continue in existence until the
earlier of December 31, 2022 or termination of the Partnership by written
consent of all the Partners.
The Partnership was in the development stage through March 11, 2004. On
March 12, 2004, the Partnership commenced operations with its acquisition of a
property in Hopkins, Minnesota, a suburb of Minneapolis, Minnesota.
2. PUBLIC OFFERING
On February 19, 2003, the Partnership commenced the Offering of up to
40,000,000 units of limited partnership interest to be offered at a price of $10
per unit pursuant to a Registration Statement on Form S-11 filed under the
Securities Act of 1933. The Registration Statement also covers up to 4,000,000
units available pursuant to the Partnership's distribution reinvestment plan at
$10 per unit.
On December 22, 2003, the Partnership satisfied the minimum offering
requirement of $2,000,000 established for its Offering and accepted
subscriptions for 202,781 partnership units, from which gross proceeds of
$2,023,365 were distributed to the Partnership. In addition, special escrow
accounts were established for subscriptions from residents of New York, Nebraska
and Pennsylvania. The minimum offering requirement of $2,500,000 for the New
York escrow account was satisfied on January 26, 2004 and the Partnership
accepted subscriptions from the New York residents on February 1, 2004. All
additional subscription proceeds are held in escrow until investors are admitted
as limited partners. The Partnership admits new investors at least monthly. At
that time, subscription proceeds are released to the Partnership from escrow and
utilized as consideration for investments and the payment or reimbursement of
dealer manager fees, selling commissions, organization and offering expenses and
operating expenses. Until required for such purposes, net offering proceeds are
held in short-term, liquid investments.
As of June 30, 2004, the Partnership had accepted subscriptions for
1,082,557 limited partnership units.
3. INTERIM UNAUDITED FINANCIAL INFORMATION
The accompanying consolidated financial statements should be read in
conjunction with the financial statements and notes thereto included in the
Partnership's Annual Report on Form 10-K for the year ended December 31, 2003,
which was filed with the Securities and Exchange Commission ("SEC"). Certain
information and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles in the
United States of America ("GAAP"), have been condensed or omitted in this report
on Form 10-Q pursuant to the rules and regulations of the SEC. In the opinion of
6
management, the disclosures contained in this report are adequate to make the
information presented not misleading.
The results for the interim periods shown in this report are not
necessarily indicative of future financial results. The accompanying
consolidated financial statements of the Partnership have not been audited by
independent accountants. In the opinion of management, the accompanying
unaudited consolidated financial statements include all adjustments (of a normal
recurring nature) necessary to present fairly the financial position of the
Partnership as of June 30, 2004 and December 31, 2003 and the consolidated
results of its operations and cash flows for the periods ended June 30, 2004 and
2003.
Amounts in previous periods have been reclassified to conform to current
period presentation.
4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect (i) the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and (ii) the reported
amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates.
PRINCIPLES OF CONSOLIDATION AND BASIS OF PRESENTATION
The consolidated financial statements include the accounts of the
Partnership and its subsidiaries. All intercompany transactions, balances and
profits have been eliminated in consolidation.
CASH AND CASH EQUIVALENTS
The Partnership considers investments in highly-liquid money market
funds with original maturities of three months or less to be cash equivalents.
The carrying amount of cash and cash equivalents reported on the balance sheet
approximates fair value.
RESTRICTED CASH
Subscription proceeds are held in escrow until investors are admitted as
limited partners. The Partnership admits new limited partners at least monthly.
Upon acceptance of limited partners, which generally occurs monthly, limited
partnership units are issued and subscription proceeds are released to the
Partnership from escrow.
INVESTMENT IMPAIRMENT
For real estate directly owned by the Partnership, management monitors
events and changes in circumstances indicating that the carrying amounts of the
real estate assets may not be recoverable. When such events or changes in
circumstances are present, the Partnership assesses potential impairment by
comparing estimated future undiscounted operating cash flows expected to be
generated over the life of the asset and from its eventual disposition, to the
carrying amount of the asset. In the event that the carrying amount exceeds the
estimated future undiscounted operating cash flows, the Partnership recognizes
an impairment loss to adjust the carrying amount of the asset to estimated fair
value.
PURCHASE PRICE ALLOCATIONS
Upon the acquisition of real estate properties, the Partnership
allocates the purchase price of those properties to the tangible assets
acquired, consisting of land and buildings, and identified intangible assets.
Identified intangible assets consist of the fair value of above-market and
below-market leases, in-place leases, in-place tenant improvements and tenant
relationships.
The fair value of the tangible assets acquired, consisting of land and
buildings, is determined by valuing the property as if it were vacant, and the
"as-if-vacant" value is then allocated to land and buildings. Land values are
derived from appraisals, and building values are calculated as replacement cost
less depreciation or
7
management's estimates of the relative fair value of these assets using
discounted cash flow analyses or similar methods. The value of the building is
depreciated over the estimated useful life of 25 years using the straight-line
method.
The Partnership determines the value of above-market and below-market
in-place leases for acquired properties based on the present value (using an
interest rate which reflects the risks associated with the leases acquired) of
the difference between (i) the contractual amounts to be paid pursuant to the
in-place leases and (ii) management's estimate of current market lease rates for
the corresponding in-place leases, measured over a period equal to the remaining
non-cancelable terms of the respective leases. The fair value of above-market
and below-market leases are recorded by the Partnership as intangible assets and
amortized as an adjustment to rental income over the remaining non-cancelable
terms of the respective leases.
The total value of identified real estate intangible assets acquired are
further allocated to in-place lease values, in-place tenant improvements,
in-place leasing commissions and tenant relationships based on management's
evaluation of the specific characteristics of each tenant's lease and the
Partnership's overall relationship with that respective tenant. The aggregate
value for tenant improvements and leasing commissions are based on estimates of
these costs incurred at inception of the acquired leases, amortized through the
date of acquisition. The aggregate value of in-place leases acquired and tenant
relationships is determined by applying a fair value model. The estimates of
fair value of in-place leases includes an estimate of carrying costs during the
expected lease-up periods for the respective spaces considering current market
conditions and the costs to execute similar leases. In estimating the carrying
costs that would have otherwise been incurred had the leases not been in place,
management includes such items as real estate taxes, insurance and other
operating expenses as well as lost rental revenue during the expected lease-up
period based on current market conditions. The estimates of fair value of tenant
relationships also include costs to execute similar leases including leasing
commissions, legal and tenant improvements as well as an estimate of the
likelihood of renewal as determined by management on a tenant-by-tenant basis.
The Partnership amortizes the value of in-place leases and in-place
tenant improvements to expense over the initial term of the respective leases.
The value of tenant relationship intangibles are amortized to expense over the
initial term and any anticipated renewal periods, but in no event does the
amortization period for intangible assets exceed the remaining depreciable life
of the building. Should a tenant terminate its lease, the unamortized portion of
the related real estate intangibles would be charged to expense.
REVENUE RECOGNITION
The Partnership recognizes rental income generated from all leases on
real estate assets in which it has an ownership interest, either directly or
through investments in joint ventures, on a straight-line basis over the terms
of the respective leases. Some leases contain provisions for the tenant's
payment of additional rent after certain tenant sales revenue thresholds are
met. Such contingent rent is recognized as revenue after the related revenue
threshold is met.
DEFERRED OFFERING COSTS
The General Partners fund all of the organization and offering costs on
the Partnership's behalf and are reimbursed for such organization and offering
costs up to 2.5% of the cumulative capital raised by the Partnership in its
current public offering. Organization and offering costs include items such as
legal and accounting fees, marketing, promotional and printing costs, and
specifically exclude selling commissions and dealer manager fees. The
Partnership is required to repay the General Partners at an amount equal to the
lesser of 2.5% of the cumulative capital raised or actual costs incurred by
third parties less previous reimbursements paid to the General Partners. All
offering costs are recorded as an offset to partners' capital, and all
organization costs are recorded as an expense at the time the Partnership
becomes liable for the payment of these amounts.
8
CASH FLOW DISTRIBUTIONS
Net cash distributions, as defined in the Partnership Agreement, are to
be distributed to the partners as follows:
a) To the limited partners, on a per unit basis, until each of such
limited partners has received distributions of net cash from
operations with respect to such fiscal year, or applicable
portion thereof, equal to eight percent (8.0%) per annum of
their net capital contribution;
b) Then to the limited partners, on a per unit basis, until each
limited partner has received or has been deemed to have received
one hundred percent (100.0%) of their net capital contribution;
and
c) Thereafter, eighty-five percent (85.0%) to the limited partners,
on a per unit basis, and fifteen percent (15.0%) to the General
Partners.
Other limitations of allocated or received distributions are defined
within the Partnership Agreement.
INCOME (LOSS) ALLOCATIONS
Net income for each applicable accounting period is allocated to the
Partners as follows:
a) To the Partners to the extent of and in proportion to
allocations of net loss as noted below; and
b) Then, so as to cause the capital accounts of all Partners to
permit liquidating distributions to be made in the same manner
and priority as set forth in the Partnership Agreement with
respect to net cash distributions.
Net loss for each applicable accounting period is allocated to the
Partners as follows:
a) To the Partners having positive balances in their capital
accounts (in proportion to the aggregate positive balances in
all capital accounts) in an amount not to exceed such positive
balance as of the last day of the fiscal year; and
b) Then, eighty-five percent (85.0%) to the limited partners and
fifteen percent (15.0%) to the General Partners.
The Partnership distributes to its General Partners a share of net cash
from operations, a 15% distribution after the limited partners have received
distributions equal to their net capital contributions plus an 8.0% annual
cumulative (noncompounded) return on their net capital contributions; provided,
however, that in no event will the General Partners receive more than 10.0% of
cash available for distribution.
INCOME TAXES
The Partnership is not a taxpaying entity and, accordingly, records no
income taxes. The Partners are individually responsible for reporting their
share of the Partnership's taxable income or loss on their income tax returns.
Certain transactions of the Partnership may be subject to accounting
methods for income tax purposes, which differ from the accounting methods used
in preparing these financial statements in accordance with generally accepted
accounting principles. Accordingly, the net income or loss of the Partnership
and the resulting balances in the Partners' capital accounts reported for income
tax purposes may differ from the balances reported for those same items in the
accompanying financial statements.
CONCENTRATION OF CREDIT RISK
At June 30, 2004, the Partnership had cash and cash equivalents and
restricted cash on deposit in two financial institutions in excess of federally
insured levels. The Partnership regularly monitors the financial stability of
these financial institutions and believes that it is not exposed to any
significant credit risk.
9
5. REAL ESTATE
ACQUISITION
On March 12, 2004, the Partnership acquired a one-story office building
containing approximately 29,660 rentable square feet, located on approximately
2.5 acres of land (the "Hopkins Property"). The Hopkins Property is located in
Hopkins, Minnesota, a suburb of Minneapolis, Minnesota. The purchase price of
the Hopkins Property was $2,925,000 plus closing costs of $144,925, less
liabilities assumed of $13,548. The Partnership used proceeds from its public
offering to pay the entire purchase price and all closing costs of the
acquisition. The Hopkins Property is held by Behringer Harvard Hopkins, LLC, a
wholly-owned subsidiary of the Partnership. The purchase price has been
allocated to the assets acquired and liabilities assumed as follows:
Estimated
Useful
Description Allocation Life
--------------------------- --------------------- ------------
Land $ 786,232 -
Building 2,225,359 25 years
Real estate intangibles 54,334 7.5 years
Prepaid insurance 4,000 -
Prepaid rent (13,548) -
---------------------
Total $ 3,056,377 -
=====================
On June 28, 2004, the Partnership acquired a two-story office building
containing approximately 79,049 rentable square feet, located on approximately
5.1 acres of land (the "Northpoint Property"). The Northpoint Property is
located in Dallas, Texas. The purchase price of the Northpoint Property was
$5,900,000, excluding closing costs. The Partnership used proceeds from its
public offering to pay the entire purchase price and all closing costs of the
acquisition. The Northpoint Property is held by Behringer Harvard Northpoint I
LP, in which Behringer Harvard Northpoint I GP, LLC, a wholly-owned subsidiary
of the Partnership, is the general partner and the Partnership is the limited
partner. The purchase price has been allocated to the assets acquired and
liabilities assumed as follows:
Estimated
Useful
Description Allocation Life
--------------------------- --------------------- ------------
Land $ 2,000,000 -
Building 3,230,449 25 years
Real estate intangibles 639,314 3.9 years
Prepaid expenses 12,797 -
Accrued liabilities (59,897) -
---------------------
$ 5,822,663
=====================
PRO FORMA RESULTS OF OPERATIONS
The following summary presents the results of operations for the three
and six months ended June 30, 2004 and 2003, on an unaudited pro forma basis, as
if the acquisitions of the Hopkins Property and Northpoint Property had occurred
as of January 1 of the respective years. The pro forma results are for
illustrative purposes
10
only and do not purport to be indicative of the actual results that would have
occurred had the transactions been consummated as of January 1, 2003, nor are
they indicative of results of operations that may occur in the future.
Three months Six months
ended June 30, ended June 30,
--------------------------------- ---------------------------------
2004 2003 2004 2003
-------------- --------------- --------------- ---------------
Total revenues $ 364,908 $ 389,026 $ 724,784 $ 778,053
Total expenses (324,130) (259,527) (630,077) (519,055)
Other income 7,583 - 11,948 -
-------------- --------------- --------------- ---------------
Net income (loss) $ 48,361 $ 129,499 $ 106,655 $ 259,998
============== =============== =============== ===============
6. PARTNERS' CAPITAL
The Partnership initiated the declaration of monthly distributions in
March 2004 in the amount of a 6% annualized rate of return, based on an
investment in the Partnership's limited partnership unit of $10 per unit. The
Partnership has a distribution reinvestment plan ("DRIP") whereby unit holders
may elect to receive additional limited partnership units in lieu of a cash
distribution. The Partnership records all distributions when declared, except
that the units issued through the DRIP are recorded when the units are actually
issued. The following are the distributions and the DRIP units issued during the
six months ended June 30, 2004.
Distributions
Declared -------------------------------------------------------------- DRIP
in 2004 Total Cash DRIP Units
- ----------------- ------------------ ------------------ ------------------ -----------------
1st Quarter $ 52,414 $ 27,645 $ 24,769 -
2nd Quarter 114,244 56,059 58,185 5,891
------------------ ------------------ ------------------ -----------------
$ 166,658 $ 83,704 $ 82,954 5,891
================== ================== ================== =================
In July 2004, the Partnership issued 2,405 limited partnership units
valued at $24,047 to participants in the DRIP in lieu of cash distributions
declared for June 2004.
7. RELATED PARTY ARRANGEMENTS
The General Partners and certain of their affiliates receive fees and
compensation in connection with the Offering and in the acquisition, management
and sale of the assets of the Partnership.
Behringer Securities LP ("Behringer Securities"), the Partnership's
affiliated dealer manager, receives commissions of up to 7.0% of gross offering
proceeds before reallowance of commissions earned by participating
broker-dealers. In addition, up to 2.5% of gross proceeds before reallowance to
participating broker-dealers is paid to Behringer Securities as a dealer manager
fee; except that this dealer manager fee is reduced to 1.0% of the gross
proceeds of purchases made pursuant to the Partnership's distribution
reinvestment plan. Behringer Securities reallows all of its commissions of up to
7.0% of gross offering proceeds to participating broker-dealers and may reallow
a portion of its dealer manager fee of up to 1.5% of the gross offering proceeds
to be paid to such participating broker-dealers as marketing fees, including
bona fide conference fees incurred, and due diligence expense reimbursement.
During the six months ended June 30, 2004, Behringer Securities'
11
commissions and dealer manager fees totaled $582,544 and $213,454, respectively
and were capitalized as offering costs in "Partners' capital" on the
Partnership's balance sheet.
Behringer Advisors I, a general partner of and advisor to the
Partnership, or Behringer Advisors I's affiliates receive up to 2.5% of gross
offering proceeds for reimbursement of organization and offering expenses. As of
June 30, 2004, $1,917,915 of organization and offering expenses had been
incurred by Behringer Advisors I on behalf of the Partnership, of which $268,468
had been reimbursed by the Partnership and the balance of $1,649,447 will be
reimbursed at a rate of 2.5% of future equity raised. Of the $268,468 of
organization and offering costs reimbursed by the Partnership as of June 30,
2004, $263,531 had been capitalized as offering costs in "Partners' capital" on
the Partnership's balance sheet and $4,937 had been expensed as organizational
costs. For the six months ended June 30, 2004, $212,865 of organization and
offering expenses were reimbursed by the Company, of which $208,951 was
capitalized as offering costs in "Partners' capital" and $3,914 was expensed as
organizational costs. Behringer Advisors I or its affiliates determine the
amount of organization and offering expenses owed, based on specific invoice
identification as well as an allocation of costs to the Partnership, Behringer
Harvard Short-Term Opportunity Fund I LP and Behringer Harvard REIT I, Inc.,
affiliates of the Partnership, based on anticipated respective equity offering
sizes of those entities. Behringer Advisors I or its affiliates receive
acquisition and advisory fees of up to 3.0% of the contract purchase price of
each asset for the acquisition, development or construction of real property or,
with respect to any mortgage loan, up to 3.0% of the funds advanced for the
making or purchase of a mortgage loan. Behringer Advisors I or its affiliates
also receive up to 0.5% of the contract purchase price of the assets acquired by
the Partnership for reimbursement of expenses related to making investments.
During the six months ended June 30, 2004, Behringer Advisors I acquisition and
advisory fees totaled $264,750 and $44,125 reimbursement for related expenses.
For the management and leasing of its properties, the Partnership pays
HPT Management, its property manager, property management and leasing fees equal
to the lesser of: (A) the amounts charged by unaffiliated persons rendering
comparable services in the same geographic area or (B)(1) for commercial
properties that are not leased on a long-term net lease basis, 4.0% of gross
revenues, plus separate leasing fees of up to 1.5% of gross revenues based upon
the customary leasing fees applicable to the geographic location of the
properties, and (2) in the case of commercial properties that are leased on a
long-term (10 or more years) net lease basis, 1.0% of gross revenues plus a
one-time initial leasing fee of 3.0% of gross revenues payable over the first
five years of the lease term. The Partnership reimburses the costs and expenses
incurred by HPT Management on the Partnership's behalf, including the wages and
salaries and other employee-related expenses of all on-site employees of HPT
Management who are engaged in the operation, management, maintenance and leasing
or access control of Partnership properties, including taxes, insurance and
benefits relating to such employees, and legal, travel and other out-of-pocket
expenses that are directly related to the management of specific properties.
During the six months ended June 30, 2004 the Partnership incurred $2,679 in
property management fees payable to HPT Management.
The Partnership pays Behringer Advisors I or its affiliates an annual
advisor asset management fee of 0.5% of the aggregate asset value of the
Partnership's assets. Any portion of the asset management fee may be deferred
and paid in a subsequent year. During the six months ended June 30, 2004, the
Partnership incurred $4,471 of asset management fees.
In connection with the sale of the properties of the Partnership, the
Partnership will pay to the General Partners or their affiliates a real estate
commission in an amount not exceeding the lesser of: (A) 50.0% of the
reasonable, customary and competitive real estate brokerage commissions
customarily paid for the sale of a comparable property in light of the size,
type and location of the property, or (B) 3.0% of the gross sales price of each
property, subordinated to distributions to Limited Partners from the sale
proceeds of an amount which, together with prior distributions to the Limited
Partners, will equal (1) 100.0% of their capital contributions plus (2) a 8.0%
annual cumulative (noncompounded) return of their net capital contributions.
Subordinated real estate commissions that are not payable at the date of sale,
because Limited Partners have not yet received their required minimum
distributions, will be deferred and paid at such time as these subordination
conditions have been satisfied. In addition, after the limited partners have
received a return of their net capital contributions and a 8.0%
12
annual cumulative (noncompounded) return on their net capital contributions,
then the General Partners are entitled to receive 15.0% of the remaining
residual proceeds available for distribution (a subordinated participation in
net sale proceeds and distributions); provided, however, that in no event will
the General Partners receive in the aggregate more than 15.0% of sale proceeds
remaining after the limited partners have received a return of their net capital
contributions.
The Partnership is dependent on Behringer Advisors I, Behringer
Securities and HPT Management for certain services that are essential to the
Partnership, including the sale of the Partnership's shares of limited
partnership units, asset acquisition and disposition decisions, property
management and leasing services and other general administrative
responsibilities. In the event that these companies were unable to provide the
respective services to the Partnership, the Partnership would be required to
obtain such services from other sources.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
The following discussion and analysis should be read in conjunction with
the accompanying financial statements of the Partnership and the notes thereto:
FORWARD-LOOKING STATEMENTS
This section of the quarterly report contains forward-looking
statements, including discussion and analysis of the Partnership's financial
condition, anticipated capital expenditures required to complete projects,
amounts of anticipated cash distributions to the Partnership's limited partners
in the future and other matters. These forward-looking statements are not
historical facts but are the intent, belief or current expectations of the
Partnership's management based on their knowledge and understanding of the
business and industry. Words such as "anticipates", "expects", "intends",
"plans", "believes", "seeks", "estimates" and variations of these words and
similar expressions are intended to identify forward-looking statements. These
statements are not guarantees of the future performance and are subject to
risks, uncertainties and other factors, some of which are beyond the
Partnership's control, are difficult to predict and could cause actual results
to differ materially from those expressed or forecasted in the forward-looking
statements.
Forward-looking statements that were true at the time made may
ultimately prove to be incorrect or false. You are cautioned to not place undue
reliance on forward-looking statements, which reflect the Partnership's
management's view only as of the date of this Form 10-Q. The Partnership
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 Form 10-Q include
changes in general economic conditions, changes in real estate conditions,
construction costs that may exceed estimates, construction delays, 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 these factors and the
factors identified in the "Risk Factors" section of the Partnership's
Registration Statement on Form S-11, as filed with the Securities and Exchange
Commission.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
Management's discussion and analysis of financial condition and results
of operations are based upon the Partnership's consolidated financial
statements, which have been prepared in accordance with accounting principles
generally accepted in the United States of America. The preparation of these
financial statements requires the Partnership's management to make estimates and
assumptions that affect the reported amounts of assets, liabilities, revenues
and expenses, and related disclosure of contingent assets and liabilities. On a
regular basis, the Partnership evaluates these estimates, including investment
impairment. These estimates are based on management's historical industry
experience and on various other assumptions that are believed to be reasonable
under the circumstances. Actual results may differ from these estimates. The
Partnership's most sensitive estimates involve the allocation of the purchase
price of acquired properties and evaluating its real estate related investments
for impairment.
13
INVESTMENT IMPAIRMENTS
For real estate directly owned by the Partnership, management monitors
events and changes in circumstance indicating that the carrying amounts of the
real estate assets may not be recoverable. When such events or changes in
circumstances are present, the Partnership assesses potential impairment by
comparing estimated future undiscounted operating cash flows expected to be
generated over the life of the asset and from its eventual disposition, to the
carrying amount of the asset. In the event that the carrying amount exceeds the
estimated future undiscounted operating cash flows, the Partnership recognizes
an impairment loss to adjust the carrying amount of the asset to estimated fair
value.
PURCHASE PRICE ALLOCATION
Upon the acquisition of real estate properties, the Partnership
allocates the purchase price of those properties to the tangible assets
acquired, consisting of land and buildings, and identified intangible assets.
Identified intangible assets consist of the fair value of above-market and
below-market leases, in-place leases, in-place tenant improvements and tenant
relationships.
The fair value of the tangible assets acquired, consisting of land and
buildings, is determined by valuing the property as if it were vacant, and the
"as-if-vacant" value is then allocated to land and buildings. Land values are
derived from appraisals, and building values are calculated as replacement cost
less depreciation or management's estimates of the relative fair value of these
assets using discounted cash flow analyses or similar methods. The value of the
building is depreciated over the estimated useful life of 25 years using the
straight-line method.
The Partnership determines the value of above-market and below-market
in-place leases for acquired properties based on the present value (using an
interest rate that reflects the risks associated with the leases acquired) of
the difference between (i) the contractual amounts to be paid pursuant to the
in-place leases and (ii) management's estimate of current market lease rates for
the corresponding in-place leases, measured over a period equal to the remaining
non-cancelable terms of the respective leases. The fair value of above-market
and below-market leases are recorded by the Partnership as intangible assets and
amortized as an adjustment to rental income over the remaining non-cancelable
terms of the respective leases.
The total value of identified real estate intangible assets acquired are
further allocated to in-place lease values, in-place tenant improvements,
in-place leasing commissions and tenant relationships based on management's
evaluation of the specific characteristics of each tenant's lease and the
Partnership's overall relationship with that respective tenant. The aggregate
value for tenant improvements and leasing commissions are based on estimates of
these costs incurred at inception of the acquired leases, amortized through the
date of acquisition. The aggregate value of in-place leases acquired and tenant
relationships is determined by applying a fair value model. The estimates of
fair value of in-place leases includes an estimate of carrying costs during the
expected lease-up periods for the respective spaces considering current market
conditions and the costs to execute similar leases. In estimating the carrying
costs that would have otherwise been incurred had the leases not been in place,
management includes such items as real estate taxes, insurance and other
operating expenses as well as lost rental revenue during the expected lease-up
period based on current market conditions. The estimates of fair value of tenant
relationships also include costs to execute similar leases including leasing
commissions, legal and tenant improvements as well as an estimate of the
likelihood of renewal as determined by management on a tenant-by-tenant basis.
The Partnership amortizes the value of in-place leases and in-place
tenant improvements to expense over the initial term of the respective leases.
The value of tenant relationship intangibles are amortized to expense over the
initial term and any anticipated renewal periods, but in no event does the
amortization period for intangible assets exceed the remaining depreciable life
of the building. Should a tenant terminate its lease, the unamortized portion of
the related real estate intangibles would be charged to expense.
14
RESULTS OF OPERATIONS
The Partnership commenced active operations when it made its first real
estate acquisition on March 12, 2004 with the purchase of a property in a suburb
of Minneapolis, Minnesota (the "Hopkins Property"). As a result, the
Partnership's results of operations for the three and six month periods ended
June 30, 2004 are not comparable to the results of operations for the three and
six month periods ended June 30, 2003.
COMPARISON OF THE THREE MONTHS ENDED JUNE 30, 2004 TO THE THREE MONTHS ENDED
JUNE 30, 2003
Rental revenue for the three months ended June 30, 2004 was $111,895 and
was comprised of revenue, including adjustments for straight line rent and
amortization of below market leases, from the Hopkins Property. During the three
months ended June 30, 2003, the Partnership did not own any real estate. With
the acquisition of the Northpoint Property on June 28, 2004 and anticipated
future acquisitions, management believes there will be future increases in
rental revenue.
Property operating expenses for the three months ended June 30, 2004
were $16,678 and were comprised of operating expenses from the Hopkins Property.
During the three months ended June 30, 2003, the Partnership did not own any
real estate. With the acquisition of the Northpoint Property on June 28, 2004
and anticipated future acquisitions, management believes there will be future
increases in property operating expenses.
Real estate taxes for the three months ended June 30, 2004 were $21,810
and were comprised of real estate taxes from the Hopkins Property. During the
three months ended June 30, 2003, the Partnership did not own any real estate.
With the acquisition of the Northpoint Property on June 28, 2004 and anticipated
future acquisitions, management believes there will be future increases in real
estate taxes.
Property and asset management fees for the three months ended June 30,
2004 were $6,037 and were comprised of property and asset management fees from
the Hopkins Property. During the three months ended June 30, 2003, the
Partnership did not own any real estate. With the acquisition of the Northpoint
Property on June 28, 2004 and anticipated future acquisitions, management
believes there will be future increases in property and asset management fees.
General and administrative expenses for the three months ended June 30,
2004 were $63,444 and were comprised of general and administrative expenses from
the Hopkins Property and corporate general and administrative expenses,
including directors' and officers' insurance premiums, organizational expenses,
transfer agent fees, auditing fees and other administrative expenses. During the
three months ended June 30, 2003, the Partnership did not own any real estate
and there was a lack of corporate activity. With the acquisition of the
Northpoint Property on June 28, 2004, anticipated future acquisitions and
continued growth in the number of limited partners, management believes there
will be future increases in general and administrative expenses.
Depreciation and amortization expense for the three months ended June
30, 2004 was $26,728 and was comprised of depreciation and amortization of the
Hopkins Property. During the three months ended June 30, 2003, the Partnership
did not own any real estate. With the acquisition of the Northpoint Property on
June 28, 2004, and anticipated future acquisitions, management believes there
will be future increases in depreciation and amortization expense.
Other income for the three months ended June 30, 2004 was $7,583 and was
comprised primarily of interest income associated with funds on deposit with
banks. As the Partnership admits new unit holders, subscription proceeds are
released to the Partnership from escrow and may be utilized as consideration for
investments and the payment or reimbursement of dealer manager fees, selling
commissions, organization and offering expenses and operating expenses. Until
required for such purposes, net offering proceeds are held in short-term liquid
investments and earn interest income. During the three months ended June 30,
2003, the Partnership had lower cash balances on deposit with banks.
15
COMPARISON OF THE SIX MONTHS ENDED JUNE 30, 2004 TO THE SIX MONTHS ENDED JUNE
30, 2003
Rental revenue for the six months ended June 30, 2004 was $129,805 and
was comprised of revenue, including adjustments for straight line rent and
amortization of below market leases, from the Hopkins Property from date of
acquisition, March 12, 2004, through June 30, 2004. During the six months ended
June 30, 2003, the Partnership did not own any real estate. With the acquisition
of the Northpoint Property on June 28, 2004 and anticipated future acquisitions,
management believes there will be future increases in rental revenue.
Property operating expenses for the six months ended June 30, 2004 were
$16,845 and were comprised of operating expenses from the Hopkins Property from
date of acquisition, March 12, 2004, through June 30, 2004. During the six
months ended June 30, 2003, the Partnership did not own any real estate. With
the acquisition of the Northpoint Property on June 28, 2004 and anticipated
future acquisitions, management believes there will be future increases in
property operating expenses.
Real estate taxes for the six months ended June 30, 2004 were $25,386
and were comprised of real estate taxes from the Hopkins Property from date of
acquisition, March 12, 2004, through June 30, 2004. During the six months ended
June 30, 2003, the Partnership did not own any real estate. With the acquisition
of the Northpoint Property on June 28, 2004 and anticipated future acquisitions,
management believes there will be future increases in real estate taxes.
Property and asset management fees for the six months ended June 30,
2004 were $7,150 and were comprised of property and asset management fees from
the Hopkins Property from date of acquisition, March 12, 2004, through June 30,
2004. During the six months ended June 30, 2003, the Partnership did not own any
real estate. With the acquisition of the Northpoint Property on June 28, 2004
and anticipated future acquisitions, management believes there will be future
increases in property and asset management fees.
General and administrative expenses for the six months ended June 30,
2004 were $113,859 and were comprised of general and administrative expenses
from the Hopkins Property from date of acquisition, March 12, 2004, through June
30, 2004, and corporate general and administrative expenses, including
directors' and officers' insurance premiums, organizational expenses, transfer
agent fees, auditing fees and other administrative expenses. During the six
months ended June 30, 2003, the Partnership did not own any real estate and
there was a lack of corporate activity. With the acquisition of the Northpoint
Property on June 28, 2004, anticipated future acquisitions and future growth in
the number of limited partners, management believes there will be future
increases in general and administrative expenses.
Depreciation and amortization expense for the six months ended June 30,
2004 was $31,162 and was comprised of depreciation and amortization of the
Hopkins Property from date of acquisition, March 12, 2004, through June 30,
2004. During the six months ended June 30, 2003, the Partnership did not own any
real estate. With the acquisition of the Northpoint Property on June 28, 2004
and anticipated future acquisitions, management believes there will be
significant increases in depreciation and amortization expense.
Other income for the six months ended June 30, 2004 was $11,948 and was
comprised primarily of interest income associated with funds on deposit with
banks. As the Partnership admits new unit holders, subscription proceeds are
released to the Partnership from escrow and may be utilized as consideration for
investments and the payment or reimbursement of dealer manager fees, selling
commissions, organization and offering expenses and operating expenses. Until
required for such purposes, net offering proceeds are held in short-term liquid
investments and earn interest income. During the six months ended June 30, 2003,
the Partnership had lower cash balances on deposit with banks.
CASH FLOW ANALYSIS
The Partnership commenced active operations when it made its first real
estate acquisition on March 12, 2004 with the purchase of the Hopkins Property.
As a result, the Partnership's cash flows for the six months ended June 30, 2004
are not comparable to the cash flows for the six months ended June 30, 2003.
16
Cash flows from operating activities for the six months ended June 30,
2004 were $(59,683) and were primarily comprised of the net loss of $(52,649)
and changes in working capital accounts of $(33,866) and depreciation and
amortization of $26,832. There were no cash flows from operating activities for
the six months ended June 30, 2003 due to the lack of real estate investments
and corporate activity.
Cash flows from investing activities for the six months ended June 30,
2004 were $(8,915,906) and were comprised of the Partnership's acquisitions of
the Hopkins Property and the Northpoint Property. During the six months ended
June 30, 2003, the Partnership had not purchased any real estate investments.
Cash flows from financing activities for the six months ended June 30,
2004 were $7,631,480 and were comprised primarily of funds received from the
issuance of limited partnership units. During the six months ended June 30,
2003, the Partnership had not accepted any subscriptions for limited partnership
units.
LIQUIDITY AND CAPITAL RESOURCES
The Partnership's principal demands for funds will continue to be for
property acquisitions, either directly or through investment interests, for the
payment of operating expenses and distributions, and for the payment of interest
on the Partnership's outstanding indebtedness and other investments. Generally,
cash needs for items other than property acquisitions are expected to be met
from operations, and cash needs for property acquisitions are expected be met
from the net proceeds of the Offering. However, there may be a delay between the
sale of the Partnership's units and its purchase of properties, which could
result in a delay in the benefits to its limited partners, if any, of returns
generated from the Partnership's operations. The Partnership expects that at
least 84.2% of the money that limited partners invest in the Offering will be
used to buy real estate or make other investments and approximately 0.8% of the
gross proceeds of the offering will be set aside as initial working capital
reserves for such properties. The remaining 15.0% will be used to pay expenses
and fees for selling commissions and dealer manager fees, organization and
offering expenses, acquisition and advisory fees and acquisition expenses. The
General Partners will evaluate potential property acquisitions and will engage
in negotiations with sellers on the Partnership's behalf. Investors should be
aware that after a contract for the purchase of a property is executed, the
property generally will not be purchased until the successful completion of due
diligence. During this period, the Partnership may decide to temporarily invest
any unused proceeds from the Offering in investments that could yield lower
returns than the properties. These lower returns may affect the Partnership's
ability to make distributions.
The timing and amount of cash to be distributed to the Partnership's
limited partners will be determined by the General Partners and will be
dependent on a number of factors, including funds available for payment of
distributions, financial condition and capital expenditures.
The Partnership expects to meet its future short-term operating
liquidity requirements through net cash provided by the operations of properties
to be acquired in the future. Management also expects that the Partnership's
properties will generate sufficient cash flow to cover operating expenses and
the payment of a monthly distribution. Other potential future sources of capital
include proceeds from secured or unsecured financings from banks or other
lenders, proceeds from the sale of properties and undistributed funds from
operations. If necessary, the Partnership may use financings or other sources of
capital in the event of unforeseen significant capital expenditures.
INFLATION
The real estate market has not been affected significantly by inflation
in the past several years due to the relatively low inflation rate. The majority
of the Partnership's leases contain inflation protection provisions applicable
to reimbursement billings for common area maintenance charges, real estate tax
and insurance reimbursements on a per square foot basis, or in some cases,
annual reimbursement of operating expenses above a certain per square foot
allowance.
17
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
The Partnership has limited exposure to financial market risks,
including changes in interest rates and other relevant market prices. The
Partnership has no investments that would be affected by an increase or decrease
in interest rates. The Partnership does not have any foreign operations and thus
is not exposed to foreign currency fluctuations.
ITEM 4. CONTROLS AND PROCEDURES.
Within the 90-day period prior to the filing of this report, the
management of Behringer Advisors I evaluated, with the participation of its
chief executive officer and chief financial officer, the effectiveness of the
Partnership's disclosure controls and procedures as of June 30, 2004. Based on
that evaluation, the chief executive officer and chief financial officer of
Behringer Advisors I have concluded that the Partnership's disclosure controls
and procedures were effective as of the end of the period covered by this
report. To these officers' knowledge, there were no significant changes in the
Partnership's internal controls or in other factors that could significantly
affect these controls subsequent to the date of their evaluation.
18
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
No events occurred during the quarter covered by this report that would
require a response to this item.
ITEM 2. CHANGES IN SECURITIES, USE OF PROCEEDS AND ISSUER PURCHASES OF
EQUITY SECURITIES.
As of June 30, 2004, the Partnership had sold 1,082,557 of limited
partnership units pursuant to the Offering for gross proceeds of $10,797,629.
Through June 30, 2004, the Partnership incurred the following expenses
in connection with the issuance and distribution of the registered securities
pursuant to the Offering:
TYPE OF EXPENSE AMOUNT
---------------------------------------- ---------------------
Other expenses to affiliates $ 1,267,077
Other expenses to non-affiliates 8,604
---------------------
Total expenses $ 1,275,681
=====================
The net offering proceeds to the Partnership, after deducting the total
expenses paid and accrued described above, are $9,521,948.
Other expenses to affiliates above include commissions and dealer
manager fees paid to Behringer Securities LP, an affiliate of the Partnership,
which reallowed all or a portion of the commissions and fees to soliciting
dealers.
Through June 30, 2004, the Partnership had used $8,915,906 of such net
offering proceeds to purchase the Hopkins Property and the Northpoint Property.
Of the amount used for the purchase of the Hopkins Property and the Northpoint
Property, $308,875 was paid to Behringer Advisors I, an affiliate of the
Partnership, as acquisition and advisory fees and acquisition expense
reimbursement.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
No events occurred during the quarter covered by this report that would
require a response to this item.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No events occurred during the quarter covered by this report that would
require a response to this item.
ITEM 5. OTHER INFORMATION.
No events occurred during the quarter covered by this report that would
require a response to this item.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
a) Exhibits
Exhibit 31.1 - Certification of Principal Executive Officer
pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002
Exhibit 31.2 - Certification of Principal Financial Officer
pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002
Exhibit 32.1 - Certificate of Chief Executive and Financial
Officers
19
b) Reports on Form 8-K
The Partnership filed the following Current Report on Form 8-K
during the second quarter of 2004:
1. On May 26, 2004, the Partnership filed Amendment No. 1
to the Current Report on Form 8-K reporting the
acquisition of the Hopkins Property. This amendment
contained the required financial statements relating to
the acquisition by the Partnership of the Hopkins
Property.
20
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.
Behringer Harvard Mid-Term Value
Enhancement Fund I LP
By: Behringer Harvard Advisors I LP
Co-General Partner
Dated: August 16, 2004 By: /s/ Gary S. Bresky
-------------------------------
Gary S. Bresky
Chief Financial Officer and
Treasurer
21
INDEX TO EXHIBITS
EXHIBIT NUMBER DESCRIPTION
- -------------- -----------
31.1 Certification of Principal Executive Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
31.2 Certification of Principal Financial Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
32.1 Certificate of Chief Executive and Financial Officers
22