Business

9 Months Ended

Sep. 30, 2012

Business

Business

1.             Business

Organization

Behringer Harvard REIT I, Inc. was incorporated in June 2002 as a Maryland corporation and has elected to be taxed, and currently qualifies, as a real estate investment trust, or REIT, for federal income tax purposes.  We primarily own institutional quality real estate.  As of September 30, 2012, we owned interests in 52 properties located in 19 states and the District of Columbia.  Prior to August 31, 2012, we were externally managed and advised by Behringer Advisors, LLC (referred to herein as “Behringer Advisors”), a Texas limited liability company.  Behringer Advisors was responsible for managing our day-to-day affairs and for identifying and making acquisitions and dispositions of investments on our behalf.

On August 31, 2012, we entered into a series of agreements, and amendments to existing agreements and arrangements, with Behringer Advisors, HPT Management Services, LLC (“HPT Management”), Behringer Harvard Holdings, LLC (“BHH”), and Behringer Harvard REIT I Services Holdings, LLC (“Services Holdings”), a subsidiary of BHH.  BHH, through one or more of its subsidiaries, owns and controls Behringer Advisors and HPT Management.  As a result of the agreements and amendments, we now perform certain functions, including the advisory function, previously provided to us by Behringer Advisors.  In particular, we have hired personnel previously employed by affiliates of Behringer Advisors.  Also, effective as of August 31, 2012, we are no longer required to pay asset management fees, acquisition fees or debt financing fees to Behringer Advisors (except for acquisition and debt financing fees related to the previously committed development of Two BriarLake Plaza).  We continue to purchase on a transitional basis certain services, such as human resources, shareholder services and information technology, from Behringer Advisors.  HPT Management continues to manage our properties on substantially the same terms and conditions as our prior agreement with HPT Management; however, our agreement was amended to, among other things, provide us with the ability in the future to obtain the right to hire their employees providing property management functions on our behalf subject to certain conditions.

Substantially all of our business is conducted through Behringer Harvard Operating Partnership I LP (“Behringer OP”), a Texas limited partnership.  Our wholly-owned subsidiary, BHR, Inc., a Delaware corporation, is the sole general partner of Behringer OP.  Our direct and indirect wholly-owned subsidiaries, BHR Business Trust, a Maryland business trust, and BHR Partners, LLC, a Delaware limited liability company, are limited partners owning substantially all of Behringer OP.

Our common stock is not listed on a national securities exchange.  However, between 2013 and 2017, management anticipates either listing our common stock on a national securities exchange or commencing liquidation of our assets.  Our management continues to review various alternatives that may create future liquidity for our stockholders.  In the event we do not obtain listing of our common stock on or before February 2017, our charter requires us to liquidate our assets unless a majority of the board of directors extends such date.