The seniors housing field just got more cramped. Dallas-based Behringer Harvard, which has interests in or manages more than $10 billion in commercial real estate assets, has entered seniors housing with its acquisition of San Sebastian, a vacant age-restricted condo project in Orange County, Calif.

The company plans to turn the 134-unit property into a rental apartment building for independent seniors. It acquired the asset through Behringer Harvard Multifamily REIT I in a joint venture with PGGM Private Real Estate Fund, an investment vehicle for large Dutch pension funds. The REIT has raised $440 million, about half of which comes from PGGM.

The credit crisis has slowed construction of multifamily housing, which will reduce the supply of seniors apartments, says Jason Mattox, chief administrative officer at Behringer Harvard. That trend should provide significant upside potential for the property.

Multifamily owners could become big investors in seniors housing because the sector is outperforming other commercial real estate property types.

The average monthly rent at independent living buildings is strong and rose 1.6% in the fourth quarter of 2009, according to the latest report from the National Investment Center for the Seniors Housing and Care Industry (NIC).

Greg Willett, vice president at M/PF Research in Carrollton, Texas, says that apartment owners are in a paralyzed market with few investment opportunities. “Apartment owners are investigating possibilities in niche sectors like seniors housing,” adds Willett.

San Sebastian is in Laguna Woods, about 35 miles southeast of Los Angeles. The project was the site of an administration building for Leisure World, a big retirement community. Newport Beach-based Robert Mayer Corp. developed the project. The builder was Standard Pacific Corp., based in Irvine.

Mayer sold the property to Standard Pacific for an undisclosed sum and the building was finished last year. Standard Pacific received city council approval to lease rather than sell units because of the housing downturn.

The county assessed San Sabastian in 2007 for $19.7 million after the preliminary site work was completed.

Behringer Harvard has been snapping up apartment properties and failed condo projects at low prices. Last September, it purchased the Gallery at NoHo Commons, an apartment complex in North Hollywood, for $96 million. Two years ago, the asset almost sold for $140 million.

Mattox says San Sabastian is well located near retail, restaurants, medical facilities and transportation. The property will not offer meal services.

The City of Laguna Woods specified that San Sebastian must remain age-restricted for 45 years. Residents must be 55 or older. Also, some units must provide affordable rents.

Rents for a one-bedroom affordable unit start at $1,267 per month. Two-bedroom market-rate units start at $2,415 per month.

Behringer Harvard is pursuing other seniors housing properties, confirms Mattox. “Seniors housing is an important prong in our approach.”