Company: Behringer Harvard Funds
Title: President and Chief Operating Officer
Time in current role: Five years
Currently reading: “The Nine: Inside the Secret World of the Supreme Court” by Jeffrey Toobin
Patience paid off in 2007 for Bob Aisner, president and COO of Behringer Harvard Funds. In August, the company's REIT I fund agreed to pay $1.4 billion in cash and assumed debt for Toronto-based IPC US REIT, which owned 34 U.S. office properties. At $9.75 per share, the offer fell well below the $12 to $13 per share that Canadian REIT analysts originally expected the company to fetch in a sale.
Those analysts' predictions might have been more accurate had Behringer Harvard tendered its bid early in the year, when U.S. office properties were selling near peak prices. By waiting until August, the Addison, Texas-based company offered IPC US REIT shareholders a 4.3% premium on share prices at a time when the unfolding credit crunch was narrowing IPC's bargaining power. Shareholders voted overwhelmingly to approve the deal, which closed in December to nearly double the size of REIT I by adding 9.6 million sq. ft. of Class-A office space in the U.S.
Almost simultaneously, REIT 1 purchased 3.2 million sq. ft. of Chicago office space from Beacon Capital Partners for more then $832 million in cash and assumed debt. Together, the IPC and Beacon deals represent $2.2 billion in acquisitions Behringer Harvard closed in a 60-day period at what Aisner describes as attractive prices. That probably wouldn't have happened had the company deployed its capital earlier in the year, when competition was driving up prices. “We were able to sit and be patient with our money,” Aisner says.
Assumed debt enabled the company to complete the acquisitions without taking out new loans at a time when mortgage financing was onerous.
On the Beacon deal, Behringer Harvard assumed $509.1 million in debt at a weighted interest rate of 5.98%; the IPC acquisition brought in $823 million at an average rate of 5.65%. “Both Beacon and IPC had very attractive long-term debt in place, so as the capital markets by the end of 2007 had started to implode, we had no exposure,” Aisner says.
Teamwork and flat organizational structure aid company performance, he says. “If you hire good people, you want to listen to what they are saying,” he adds. “Everybody should have input on decisions, and once you get a consensus you move forward and don't look back.”
Jason Mattox, an executive vice president at Behringer Harvard, says Aisner's 30 years of commercial real estate experience helps make sense of the often conflicting flow of market information. “Bob can pretty easily cut through it and uncover what are the fundamental things that may truly impact us.”
Aisner's forthright approach contributes to his success, says Allan Sweet, his former boss and the president of AMLI Residential. “He's capable of entering into business relationships with a wide variety of people because they trust him,” Sweet says. “You don't have to worry about a hidden agenda with Bob.”
Aisner served AMLI in senior management positions from 1996 to 2003, and his experience with the public REIT helped convince Behringer Harvard leaders to make him the independent director of REIT I in June 2002. He joined the company as president and COO the following year. In fact, his multifamily expertise inspired Behringer Harvard to form an investment fund to focus on apartment projects.
Sweet, who still plays the occasional round of golf with Aisner, says he is not only patient in investing but also a dynamic leader. “We're at a point in the cycle where [interest] rates are falling, so patience is good, but there are points in the cycle where aggressiveness is good,” Sweet notes. “I'd say Bob can do both.”