10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2016

Commission File Number: 000-51961

Behringer Harvard Opportunity REIT I, Inc.

(Exact Name of Registrant as Specified in Its Charter)

Maryland	20-1862323
(State or other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)

15601 Dallas Parkway, Suite 600, Addison, Texas 75001

(Address of Principal Executive Offices) (ZIP Code)

Registrant’s Telephone Number, Including Area Code:  (866) 655-3650

None

(Former name, former address and former fiscal year, if changed since last report)

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 ý   No o

Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). 

Yes ý  No o

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act:

Large accelerated filer o	Accelerated filer o
Non-accelerated filer x (Do not check if a smaller reporting company)	Smaller reporting company o

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). 

Yes o No ý

As of July 31, 2016, the Registrant had 56,500,472 shares of common stock outstanding.

BEHRINGER HARVARD OPPORTUNITY REIT I, INC.

FORM 10-Q

Quarter Ended June 30, 2016

		Page
PART I
FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)
	Condensed Consolidated Balance Sheets as of June 30, 2016 and December 31, 2015	3
	Condensed Consolidated Statements of Operations and Comprehensive Loss for the Three and Six Months Ended June 30, 2016 and 2015	4
	Condensed Consolidated Statements of Equity for the Six Months Ended June 30, 2016 and 2015	5
	Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2016 and 2015	6
	Notes to Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	26
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	38
Item 4.	Controls and Procedures	38
PART II
OTHER INFORMATION
Item 1.	Legal Proceedings	39
Item 1A.	Risk Factors	39
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	39
Item 3.	Defaults Upon Senior Securities	39
Item 4.	Mine Safety Disclosures	39
Item 5.	Other Information	39
Item 6.	Exhibits	39
Signature		40

2

PART I

FINANCIAL INFORMATION

Item 1. Financial Statements.

Behringer Harvard Opportunity REIT I, Inc.

Condensed Consolidated Balance Sheets

(in thousands, except share and per share amounts)

(unaudited)

	June 30, 2016			December 31, 2015
Assets
Real estate
Land and improvements, net	$	54,946		$	58,936
Buildings and improvements, net	155,735			132,670
Real estate under development	—			39,121
Total real estate	210,681			230,727
Assets associated with real estate held for sale	—			12,679
Condominium inventory	—			2,201
Cash and cash equivalents	26,129			20,746
Restricted cash	5,392			8,880
Accounts receivable, net	4,307			6,273
Prepaid expenses and other assets	1,371			2,015
Investments in unconsolidated joint ventures	14,121			13,953
Furniture, fixtures and equipment, net	3,826			2,719
Lease intangibles, net	1,270			2,248
Other intangibles, net	3,908			4,205
Total assets	$	271,005		$	306,646
Liabilities and Equity
Notes payable, net	$	142,879		$	154,460
Accounts payable	1,128			3,433
Payables to related parties	472			747
Acquired below-market leases, net	—			758
Accrued and other liabilities	24,102			25,606
Obligations associated with real estate held for sale	—			14,897
Total liabilities	168,581			199,901
Commitments and contingencies	—			—
Equity
Behringer Harvard Opportunity REIT I, Inc. Equity:
Preferred stock, $.0001 par value per share; 50,000,000 shares authorized, none outstanding	—			—
Convertible stock, $.0001 par value per share; 1,000 shares authorized, 1,000 shares issued and outstanding	—			—
Common stock, $.0001 par value per share; 350,000,000 shares authorized, and 56,500,472 shares issued and outstanding at June 30, 2016 and December 31, 2015	6			6
Additional paid-in capital	507,303			507,303
Accumulated distributions and net loss	(401,584		)	(397,259		)
Accumulated other comprehensive income (loss)	(3,988		)	(4,301		)
Total Behringer Harvard Opportunity REIT I, Inc. equity	101,737			105,749
Noncontrolling interest	687			996
Total equity	102,424			106,745
Total liabilities and equity	$	271,005		$	306,646

See Notes to Unaudited Condensed Consolidated Financial Statements.

3

Behringer Harvard Opportunity REIT I, Inc.

Condensed Consolidated Statements of Operations and Comprehensive Loss

(in thousands, except per share amounts)

(unaudited)

	Three months ended June 30,						Six months ended June 30,
	2016			2015			2016			2015
Revenues
Rental revenue	$	3,849		$	5,134		$	7,990		$	9,861
Hotel revenue	9,537			9,947			17,156			17,245
Condominium sale	—			—			2,271			—
Total revenues	13,386			15,081			27,417			27,106
Expenses
Property operating expenses	1,499			2,004			3,362			3,893
Hotel operating expenses	7,201			7,071			14,102			13,395
Bad debt expense (recovery)	40			(92		)	25			40
Cost of condominium sale	—			—			2,271			—
Condominium inventory impairment	—			616			—			616
Interest expense	2,234			2,051			5,088			4,149
Real estate taxes	1,000			1,062			2,015			1,660
Property management fees	351			530			782			942
Asset management fees	523			579			1,059			1,147
General and administrative	1,423			1,023			2,634			2,064
Depreciation and amortization	2,726			3,064			5,364			6,235
Total expenses	16,997			17,908			36,702			34,141
Interest income	1			5			2			10
Other expense, net	—			10			(15		)	(51		)
Gain on extinguishment of debt	1,624			—			1,624			—
Loss before gain on sale of real estate, income tax expense and equity in earnings (losses) of unconsolidated joint venture	(1,986		)	(2,812		)	(7,674		)	(7,076		)
Gain on sale of real estate	1,748			—			3,025			—
Income tax expense	(20		)	(34		)	(42		)	(70		)
Equity in earnings (losses) of unconsolidated joint venture	3			(88		)	57			(180		)
Net loss	(255		)	(2,934		)	(4,634		)	(7,326		)
Net loss attributable to the noncontrolling interest	170			92			309			189
Net loss attributable to common shareholders	$	(85	)	$	(2,842	)	$	(4,325	)	$	(7,137	)
Weighted average shares outstanding:
Basic and diluted	56,500			56,500			56,500			56,500
Basic and diluted loss per share	$	—		$	(0.05	)	$	(0.08	)	$	(0.13	)
Comprehensive income (loss)
Net loss	$	(255	)	$	(2,934	)	$	(4,634	)	$	(7,326	)
Other comprehensive income (loss):
Foreign currency translation gain (loss)	(398		)	412			313			(1,789		)
Total other comprehensive income (loss)	(398		)	412			313			(1,789		)
Comprehensive loss	(653		)	(2,522		)	(4,321		)	(9,115		)
Comprehensive loss attributable to the noncontrolling interest	170			92			309			189
Comprehensive loss attributable to common shareholders	$	(483	)	$	(2,430	)	$	(4,012	)	$	(8,926	)

See Notes to Unaudited Condensed Consolidated Financial Statements.

4

Behringer Harvard Opportunity REIT I, Inc.

Condensed Consolidated Statements of Equity

(in thousands, except share amounts)

(unaudited)

	Convertible Stock			Common Stock
	Number of Shares	Par Value		Number of Shares	Par Value		Additional Paid-In Capital		Accumulated Distributions and Net Loss			Accumulated Other Comprehensive Income (Loss)			Noncontrolling Interest			Total Equity
Balance at January 1, 2015	1,000	$	—	56,500,472	$	6	$	507,303	$	(372,071	)	$	(1,817	)	$	617		$	134,038
Net loss	—	—		—	—		—		(7,137		)	—			(189		)	(7,326		)
Contributions from noncontrolling interest	—	—		—	—		—		—			—			766			766
Other comprehensive loss:
Foreign currency translation loss	—	—		—	—		—		—			(1,789		)	—			(1,789		)
Balance at June 30, 2015	1,000	$	—	56,500,472	$	6	$	507,303	$	(379,208	)	$	(3,606	)	$	1,194		$	125,689
Balance at January 1, 2016	1,000	$	—	56,500,472	$	6	$	507,303	$	(397,259	)	$	(4,301	)	$	996		$	106,745
Net loss	—	—		—	—		—		(4,325		)	—			(309		)	(4,634		)
Other comprehensive income:
Foreign currency translation gain	—	—		—	—		—		—			313			—			313
Balance at June 30, 2016	1,000	$	—	56,500,472	$	6	$	507,303	$	(401,584	)	$	(3,988	)	$	687		$	102,424

See Notes to Unaudited Condensed Consolidated Financial Statements.

5

Behringer Harvard Opportunity REIT I, Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

	Six months ended June 30,
	2016			2015
Cash flows from operating activities:
Net loss	$	(4,634	)	$	(7,326	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	5,360			6,113
Amortization of deferred financing fees	323			333
Gain on extinguishment of debt	(1,624		)	—
Loss on retirement of asset	16			—
Gain on sale of real estate	(3,025		)	—
Condominium inventory impairment	—			616
Bad debt expense (recovery)	25			40
Equity in (earnings) losses of unconsolidated joint venture	(57		)	180
Change in operating assets and liabilities:
Accounts receivable	118			(392		)
Condominium inventory	2,201			5
Prepaid expenses and other assets	641			(287		)
Accounts payable	296			(27		)
Accrued and other liabilities	976			2,134
Payables to related parties	(274		)	(134		)
Lease intangibles	(154		)	(238		)
Cash provided by operating activities	188			1,017
Cash flows from investing activities:
Proceeds from sale of real estate	21,852			—
Additions of property and equipment	(8,953		)	(16,283		)
Change in restricted cash	3,040			(948		)
Distributions from unconsolidated joint venture	202			—
Cash provided by (used in) investing activities	16,141			(17,231		)
Cash flows from financing activities:
Proceeds from notes payable	7,996			4,154
Payments on notes payable	(18,942		)	(622		)
Contributions from noncontrolling interest holders	—			766
Cash provided by (used in) financing activities	(10,946		)	4,298
Net change in cash and cash equivalents	5,383			(11,916		)
Cash and cash equivalents at beginning of the year	20,746			35,015
Cash and cash equivalents at end of the period	$	26,129		$	23,099

See Notes to Unaudited Condensed Consolidated Financial Statements.

6

Behringer Harvard Opportunity REIT I, Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

1. Business

Behringer Harvard Opportunity REIT I, Inc. (which may be referred to as the “Company,” “we,” “us,” or “our”) was incorporated in November 2004 as a Maryland corporation and has elected to be taxed, and currently qualifies, as a real estate investment trust (“REIT”) for federal income tax purposes.

We operate commercial real estate and real estate-related assets located in and outside the United States. With our opportunistic and value-add investment strategy, we have focused generally on acquiring properties with significant possibilities for capital appreciation, such as those requiring development, redevelopment, or repositioning, or those located in markets and submarkets with higher volatility, lower barriers to entry, and high growth potential.  We have acquired a wide variety of properties, including office, retail, hospitality, recreation and leisure, multifamily, industrial, and other properties.  We have purchased existing and newly constructed properties and properties under development or construction.  As of June 30, 2016, we wholly owned two properties and consolidated three properties through investments in joint ventures on our condensed consolidated balance sheet.  In addition, we have a noncontrolling, unconsolidated ownership interest in a joint venture consisting of 18 properties that is accounted for using the equity method.  Our investment properties are located in Colorado, Missouri, Texas, the Commonwealth of The Bahamas, the Czech Republic, and Poland.

Substantially all of our business is conducted through Behringer Harvard Opportunity OP I, LP, a Texas limited partnership organized in November 2004 (the “Operating Partnership”), or its subsidiaries.  Our wholly owned subsidiary, BHO, Inc., a Delaware corporation, owns less than a 0.1% interest in the Operating Partnership as its sole general partner.  The remaining interest of the Operating Partnership is held as a limited partnership interest by our wholly owned subsidiary, BHO Business Trust, a Maryland business trust.

We have entered our disposition phase and are currently considering liquidity options for our stockholders. Therefore, we are not actively seeking to purchase additional properties. In February 2016, the special committee of the board of directors of the Company, composed of all of the Company’s independent directors, hired investment banking firm Robert W. Baird & Co., Inc. (“Baird”) to act as financial advisor to the Company in connection with its general financial strategy and planning and to assist the special committee in evaluating strategic alternatives available to the Company. The special committee and the board of directors may determine that it would be in the best interests of the Company and our stockholders to adopt a plan of liquidation that would involve the sale of the Company’s remaining assets. In the event of such a determination, the proposed plan of liquidation would be presented to the Company’s stockholders for approval.

We are externally managed and advised by Behringer Harvard Opportunity Advisors I, LLC (“Behringer Harvard Opportunity Advisors I” or the “Advisor”), a Texas limited liability company.  Behringer Harvard Opportunity Advisors I is responsible for managing our day-to-day affairs and for identifying and making acquisitions, dispositions, and investments on our behalf.

Presentation of Financial Statements

Our financial statements are presented on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business as we proceed through our disposition phase.  As is usual for opportunity-style real estate investment programs, we are structured as a finite-life entity, and have entered the final phase of operations.  This phase includes selling our assets, retiring our liabilities, and distributing net proceeds to stockholders.  We have experienced significant losses and may generate negative cash flows as mortgage note obligations and expenses exceed revenues.   If we are unable to sell a property when we determine to do so, it could have a significant adverse effect on our cash flows that are necessary to meet our mortgage obligations and our ability to satisfy our other liabilities in the normal course of business.

Our ability to continue as a going concern is dependent upon our ability to sell real estate investments, to pay down debt as it matures if extensions or new financings are unavailable, and our ability to fund ongoing costs of our Company, including our development and operating properties.

7

Behringer Harvard Opportunity REIT I, Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

2. Interim Unaudited Financial Information

The accompanying condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2015, which was filed with the Securities and Exchange Commission (“SEC”) on March 18, 2016.  Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted 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.

The results for the interim periods shown in this report are not necessarily indicative of future financial results.  The accompanying condensed consolidated balance sheet as of June 30, 2016, the condensed consolidated statements of operations and comprehensive loss for the three and six months ended June 30, 2016 and 2015, and the condensed consolidated statements of equity and cash flows for the six months ended June 30, 2016 and 2015 have not been audited by our independent registered public accounting firm.  In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all adjustments necessary to fairly present our condensed consolidated financial position as of June 30, 2016 and our condensed consolidated results of operations, equity, and cash flows for the periods ended June 30, 2016 and 2015.  Such adjustments are normal and recurring in nature.

As discussed in Note 6, Real Estate Investments, subheading Discontinued Operations, effective January 1, 2015, we adopted the Financial Accounting Standards Board (“FASB”) guidance that changes the criteria for reporting a discontinued operation. This adoption impacts the comparability of our financial statements as disposals of individual operating properties will generally no longer qualify as discontinued operations.

3. Summary of Significant Accounting Policies

Described below are certain of our significant accounting policies.  The disclosures regarding several of the policies have been condensed or omitted in accordance with interim reporting regulations specified by Form 10-Q.  Please see our Annual Report on Form 10-K for a complete listing of all of our significant accounting policies.

In the Notes to Condensed Consolidated Financial Statements, all dollar and share amounts in tabulation are in thousands of dollars and shares, respectively, unless otherwise noted.

Principles of Consolidation and Basis of Presentation

Our condensed consolidated financial statements include our accounts and the accounts of other subsidiaries over which we have control.  All inter-company transactions, balances, and profits have been eliminated in consolidation.  Interests in entities acquired will be evaluated based on applicable GAAP, which includes the requirement to consolidate entities deemed to be variable interest entities (“VIE”) in which we are the primary beneficiary.  If the interest in the entity is determined not to be a VIE, then the entity will be evaluated for consolidation based on legal form, economic substance, and the extent to which we have control and/or substantive participating rights under the respective ownership agreement. For entities in which we have less than a controlling interest or entities which we are not deemed to be the primary beneficiary, we account for the investment using the equity method of accounting.

There are judgments and estimates involved in determining if an entity in which we have made an investment is a VIE and, if so, whether we are the primary beneficiary.  The entity is evaluated to determine if it is a VIE by, among other things, calculating the percentage of equity being risked compared to the total equity of the entity.  Determining expected future losses involves assumptions of various possibilities of the results of future operations of the entity, assigning a probability to each possibility and using a discount rate to determine the net present value of those future losses.  A change in the judgments, assumptions, and estimates outlined above could result in consolidating an entity that should not be consolidated or accounting for an investment using the equity method that should in fact be consolidated, the effects of which could be material to our financial statements.

8

Behringer Harvard Opportunity REIT I, Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

Real Estate

We amortize the value of in-place leases, in-place tenant improvements and in-place leasing commissions to expense over the initial term of the respective leases.  In no event does the amortization period for intangible assets or liabilities exceed the remaining depreciable life of the building.  Should a tenant terminate its lease, the unamortized portion of the acquired lease intangibles related to that tenant would be charged to expense.  As of June 30, 2016, all of our lease intangibles were fully amortized.

The value of hotels and all other buildings is depreciated over the estimated useful lives of 39 years and 25 years, respectively, using the straight-line method. Accumulated depreciation and amortization related to our consolidated investments in real estate assets and intangibles were as follows (in thousands):

June 30, 2016	Buildings and Improvements			Land and Improvements			Lease Intangibles			Acquired Below-Market Leases		Other Intangibles
Cost	$	201,472		$	57,148		$	3,743		$	—	$	9,626
Less: depreciation and amortization	(45,737		)	(2,202		)	(2,473		)	—		(5,718		)
Net	$	155,735		$	54,946		$	1,270		$	—	$	3,908

December 31, 2015	Buildings and Improvements(1)			Land and Improvements(1)			Lease Intangibles(1)			Acquired Below-Market Leases			Other Intangibles
Cost	$	174,732		$	60,962		$	7,580		$	(3,311	)	$	9,626
Less: depreciation and amortization	(42,062		)	(2,026		)	(5,332		)	2,553			(5,421		)
Net	$	132,670		$	58,936		$	2,248		$	(758	)	$	4,205

______________________________________________

(1) Excludes Las Colinas Commons, which was classified as held for sale as of December 31, 2015. Net book values included in assets associated with real estate held for sale in the consolidated balance sheet were buildings and improvements of $8.3 million, land and improvements of $2.8 million, and lease intangibles of $0.7 million. See Note 7, Real Estate Held for Sale.

Real Estate Held for Sale and Discontinued Operations

We classify properties as held for sale when certain criteria are met in accordance with GAAP. At that time, we present the assets and obligations of the property held for sale separately in our condensed consolidated balance sheet and we cease recording depreciation and amortization expense related to that property. Properties held for sale are reported at the lower of their carrying amount or their estimated fair value, less estimated costs to sell. During the fourth quarter of 2015, we entered into a purchase and sale agreement for Las Colinas Commons, an office building located in Texas, and classified the investment as real estate held for sale in our condensed consolidated balance sheet at December 31, 2015. The sales transaction closed on February 2, 2016. We did not have any properties classified as held for sale at June 30, 2016.

Effective as of January 1, 2015, we adopted the revised guidance regarding discontinued operations. For sales of real estate or assets classified as held for sale after January 1, 2015, we will evaluate whether a disposal transaction meets the criteria of a strategic shift and will have a major effect on our operations and financial results to determine if the results of operations and gains on sale of real estate will be presented as part of our continuing operations or as discontinued operations in our consolidated statements of operations. If the disposal represents a strategic shift, it will be classified as discontinued operations for all periods presented; if not, it will be presented in continuing operations. Prior to the adoption, when we had no involvement after the sale of a real estate investment it was treated as a discontinued operation.

9

Behringer Harvard Opportunity REIT I, Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

Condominium Inventory

For condominium inventory, at each reporting date, management compares the estimated fair value less costs to sell to the carrying value.  An adjustment is recorded to the extent that the fair value less selling costs is less than the carrying value.  We determine the estimated fair value of condominiums based on comparable sales in the normal course of business under existing and anticipated market conditions.  This evaluation takes into consideration estimated future selling prices, costs incurred to date, estimated additional future costs, and management’s plans for the property. On February 22, 2016, we sold our one remaining condominium unit in inventory at Chase — The Private Residences for a sales price of $2.5 million, receiving net proceeds of $2.2 million after closing costs.

Accounts Receivable

Accounts receivable primarily consist of straight-line rental revenue receivables of $2.1 million and $4.2 million as of June 30, 2016 and December 31, 2015, respectively, and receivables from our hotel operators and tenants related to our other consolidated properties of $2.4 million as of June 30, 2016 and December 31, 2015.  The allowance for doubtful accounts was $0.1 million and $0.3 million as of June 30, 2016 and December 31, 2015, respectively.

Investment Impairment

For all of our real estate and real estate-related investments, we monitor events and changes in circumstances indicating that the carrying amounts of the real estate assets may not be recoverable. Examples of the types of events and circumstances that would cause management to assess our assets for potential impairment include, but are not limited to: a significant decrease in the market price of an asset; a significant change in the manner in which the asset is being used; an accumulation of costs in excess of the acquisition basis plus construction of the property; major vacancies and the resulting loss of revenues; natural disasters; a change in the projected holding period; legitimate purchase offers and changes in the global and local markets or economic conditions. Our assets may at times be concentrated in limited geographic locations and, to the extent that our portfolio is concentrated in limited geographic locations, downturns specifically related to such regions may result in tenants defaulting on their lease obligations at a portion of our properties within a short time period, which may result in asset impairments.

When such events or changes in circumstances are present, we assess 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. These projected cash flows are prepared internally by the Advisor and reflect in-place and projected leasing activity, market revenue and expense growth rates, market capitalization rates, discount rates, and changes in economic and other relevant conditions. The Company’s principal executive officer and principal financial officer review these projected cash flows to assure that the valuation is prepared using reasonable inputs and assumptions that are consistent with market data and with assumptions that would be used by a third-party market participant and assume the highest and best use of the investment. We consider trends, strategic decisions regarding future development plans, and other factors in our assessment of whether impairment conditions exist. In the event that the carrying amount exceeds the estimated future undiscounted operating cash flows, we recognize an impairment loss to adjust the carrying amount of the asset to estimated fair value. While we believe our estimates of future cash flows are reasonable, different assumptions regarding factors such as market rents, economic conditions, and occupancy rates could significantly affect these estimates.

In evaluating our investments for impairment, management may use appraisals and make estimates and assumptions, including, but not limited to, the projected date of disposition of the properties, the estimated future cash flows of the properties during our ownership, planned development and the projected sales price of each of the properties. A future change in these estimates and assumptions could result in understating or overstating the book value of our investments, which could be material to our financial statements. In addition, we may incur impairment charges on real estate assets classified as held for sale in the future if the carrying amount of the asset upon classification as held for sale exceeds the estimated fair value, less costs to sell.

We also evaluate our investment in an unconsolidated joint venture at each reporting date. If we believe there is an other than temporary decline in market value, we will record an impairment charge based on these evaluations. We assess potential impairment by comparing our portion of estimated future undiscounted operating cash flows expected to be generated by the joint venture over the life of the joint venture’s assets to the carrying amount of the joint venture. In the event that the carrying amount exceeds our portion of estimated future undiscounted operating cash flows, we recognize an impairment loss to adjust the carrying amount of the joint venture to its estimated fair value.

10

Behringer Harvard Opportunity REIT I, Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

The value of our properties held for development depends on market conditions, including estimates of the project start date, as well as estimates of future demand for the property type under development. We have analyzed trends and other information related to each potential development and incorporated this information, as well as our current outlook, into the assumptions we use in our impairment analyses. Due to the judgment and assumptions applied in the estimation process with respect to impairments, including the fact that limited market information regarding the value of comparable land exists at this time, it is possible actual results could differ substantially from those estimated.

During the year ended December 31, 2015, we recorded $12.3 million of non-cash impairment charges as a result of measurable decreases in the fair value of four of our investments. We recorded a non-cash impairment charge of $6.8 million during 2015 for our Frisco Square land based on an indication of a change in market conditions for land development. In estimating the fair value of the Frisco Square land, we considered market comparables as well as the time and costs to hold the land until developed. We also recorded non-cash impairment charges of $2.1 million for Northborough Tower and $2.7 million for our Northpoint Central office building during 2015. In estimating the fair value of both Northborough Tower and Northpoint Central, we considered offers received during the marketing process of the assets in the third quarter of 2015, market comparables and management’s internal discounted cash flow analysis prepared with the consideration of the market conditions in Houston where both buildings are located. In addition, we recorded a $0.7 million impairment for our one remaining condominium unit at Chase — The Private Residences during 2015. During the first quarter of 2016, we sold the condominium for a sales price of $2.5 million, receiving net proceeds of $2.2 million after closing costs. We did not record any non-cash impairment charges during the three and six months ended June 30, 2016.

We believe the carrying value of our operating real estate assets, our properties under development and our investment in an unconsolidated joint venture is currently recoverable. However, if market conditions worsen beyond our current expectations, or if our assumptions regarding expected future cash flows from the use and eventual disposition of our assets decrease or our expected hold periods decrease, or if changes in our development strategy significantly affect any key assumptions used in our fair value calculations, we may need to take additional charges in future periods for impairments related to existing assets. Any such non-cash charges would have an adverse effect on our consolidated financial position and results of operations.

Deferred Financing Fees

Deferred financing fees are recorded at cost and are amortized to interest expense using a straight-line method that approximates the effective interest method over the life of the related debt. Deferred financing fees, net of accumulated amortization, were $0.8 million and $1.2 million as of June 30, 2016 and December 31, 2015, respectively. The $1.2 million balance of deferred financing fees, net of accumulated amortization, as of December 31, 2015, was composed of $1.1 million related to notes payable and less than $0.1 million related to obligations associated with real estate held for sale. Accumulated amortization of deferred financing fees were $1.9 million and $1.8 million as of June 30, 2016 and December 31, 2015, respectively. In April 2015, the FASB issued an update (“ASU 2015-03”) to ASC Topic 835, Interest - Imputation of Interest, Simplifying the Presentation of Debt Issuance Costs. The adoption of ASU 2015-03, effective January 1, 2016, required companies to present debt issuance costs related to a recognized debt liability as a direct reduction from the carrying amount of the related debt liability, retrospectively. See New Accounting Pronouncements below for further details.

The adoption of the new standard resulted in the following reclassifications of unamortized deferred financing fees as of December 31, 2015 (in thousands):

Description	Originally Reported		Reclassification			Adjusted
Deferred financing fees, net	$	1,156	$	(1,156	)	$	—
Notes payable	155,547		(1,087		)	154,460
Obligations associated with real estate held for sale(1)	14,966		(69		)	14,897

______________________________

(1) Obligations associated with real estate held for sale, as adjusted, consisted of $14.8 million of notes payable, net of deferred financing fees of less than $0.1 million, and other liabilities totaling an aggregate of less than $0.1 million.

11

Behringer Harvard Opportunity REIT I, Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

Foreign Currency Translation

The functional currency for our international equity investment in Central Europe Joint Venture is the Euro. We use period-end exchange rates to translate balances of assets and liabilities while the statement of operations amounts are translated using the average exchange rate for the respective period. Gains and losses resulting from the change in exchange rates from period to period are reported separately as a component of other comprehensive income (loss) (“OCI”). Gains and losses resulting from foreign currency transactions are included in the condensed consolidated statements of operations and comprehensive income (loss). For the three and six months ended June 30, 2016, the foreign currency translation adjustment was a loss of $0.4 million and a gain of $0.3 million, respectively. For the three and six months ended June 30, 2015, the foreign currency translation adjustment was a gain of $0.4 million and a loss of $1.8 million, respectively.

When the Company ceases to have a controlling financial interest in a subsidiary or group of assets within a consolidated foreign entity and the sale or transfer results in the complete or substantially complete liquidation of the foreign entity, the cumulative translation adjustment (“CTA”) balance is required to be released into earnings. For sales of an equity method investment that is a foreign entity, a pro rata portion of CTA attributable to the investment would be recognized in earnings when the investment is sold. When an entity sells either a part or all of its investment in a consolidated foreign entity, CTA would be recognized in earnings only if the sale results in the parent no longer having a controlling financial interest in the foreign entity. On July 28, 2008, we invested in the Central Europe Joint Venture that owned 22 properties. Central Europe Joint Venture is our only foreign investment as of June 30, 2016. The joint venture sold one property in 2014 and three properties in 2015, and had 18 properties remaining as of June 30, 2016. We will recognize CTA upon the sale of all or substantially all of our investment in the Central Europe Joint Venture.

Use of Estimates in the Preparation of Financial Statements

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  These estimates include such items as impairment of long-lived assets, depreciation and amortization, allowance for doubtful accounts, and allowance for loan losses.  Actual results could differ from those estimates.

Subsequent Events

We have evaluated subsequent events for recognition or disclosure in our condensed consolidated financial statements.

New Accounting Pronouncements

In May 2014, the FASB issued an update (“ASU 2014-09”) to ASC Topic 606, Revenue from Contracts with Customers.  ASU 2014-09 outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most of the existing revenue recognition guidance.  ASU 2014-09 requires an entity to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services and also requires certain additional disclosures.  ASU 2014-09 is effective for public companies for interim and annual reporting periods beginning after December 15, 2017. In addition, early adoption will be permitted beginning after December 15, 2016, including interim reporting periods within those annual periods. Either full retrospective adoption or modified retrospective adoption is permitted. We are currently evaluating the impact of the adoption of ASU 2014-09 on our consolidated financial statements.

In April 2016, the FASB issued an update (“ASU 2016-10”) to ASC Topic 606, Revenue from Contracts with Customers, Identifying Performance Obligations and Licensing. The new guidance will require companies to apply a five-step model in accounting for revenue arising from contracts with customers, as well as enhance disclosures regarding revenue recognition. Lease contracts will be excluded from this revenue recognition criteria; however, the sale of real estate will be required to follow the new model. The new guidance is effective January 1, 2018, with early adoption permitted beginning January 1, 2017, and allows full or modified retrospective application. We are currently evaluating the impact of the adoption of ASU 2016-10 on our consolidated financial statements.

12

Behringer Harvard Opportunity REIT I, Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

In May 2016, the FASB issued an update (“ASU 2016-12”) to ASC Topic 606, Revenue from Contracts with Customers, Narrow-Scope Improvement and Practical Expedients.  The amendments in this update did not change the core principle of the guidance in ASC Topic 606. Rather, the amendments in this update affect only a narrow aspect of Topic 606 by adding improvements to reduce the diversity in practice at initial application and the cost and complexity of applying Topic 606 both at transition and an ongoing basis. The areas affected are as follows; assessing the collectability criteria, presentation of sales taxes and other similar taxes collected from customers, noncash consideration, contract modification and completed contracts at transition and technical correction as it relates to retrospective application and disclosure.  The new guidance is effective January 1, 2018, with early adoption permitted beginning January 1, 2017, and allows full or modified retrospective application.  We are currently evaluating the impact of the adoption of ASU 2016-12 on our consolidated financial statements.

In August 2014, the FASB issued an update (“ASU 2014-15”) to ASC Topic 205, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. ASU 2014-15 requires management’s assessment of a company’s ability to continue as a going concern and provide related footnote disclosures when conditions give rise to substantial doubt about a company’s ability to continue as a going concern within one year from the financial statement issuance date. ASU 2014-15 applies to all companies and is effective for the annual period ending after December 15, 2016, and all annual and interim periods thereafter. We do not believe the adoption of this guidance will have a material impact on our disclosures.

In February 2016, the FASB issued an update (“ASU 2016-02”) to ASC Topic 842, Leases. ASU 2016-02 supersedes the existing lease accounting model, and modifies both lessee and lessor accounting. The new guidance will require a lessee to reflect most operating lease arrangements on the balance sheet by recording a right-of-use asset and a lease liability that will initially be measured at the present value of lease payments. Among other changes, the new standard also modifies the definition of a lease, and requires expanded lease disclosures. The new standard will be effective January 1, 2019, with early adoption permitted. We are currently evaluating the impact of the adoption of ASU 2016-02 on our consolidated financial statements.

4. Assets and Liabilities Measured at Fair Value

Fair value measurements are determined based on the assumptions that market participants would use in pricing the asset or liability.  As a basis for considering market participant assumptions in fair value measurements, a fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within Levels 1 and 2 of the hierarchy) and the reporting entity’s own assumptions about market participant assumptions (unobservable inputs classified within Level 3 of the hierarchy) has been established.

Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets and liabilities that we have the ability to access.  Level 2 inputs are inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly.  Level 2 inputs may include quoted prices for similar assets and liabilities in active markets, as well as inputs that are observable for the asset or liability (other than quoted prices), such as interest rates, foreign exchange rates, and yield curves that are observable at commonly quoted intervals.  Level 3 inputs are unobservable inputs for the asset or liability that are typically based on an entity’s own assumptions, as there is little, if any, related market activity.  In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety.  Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability.

Recurring Fair Value Measurements

Historically, we have used interest rate caps to manage our interest rate risk.  The valuation of these instruments was determined using widely accepted valuation techniques, including discounted cash flow analysis on the expected cash flows of each derivative.  This analysis reflected the contractual terms of the derivatives, including the period to maturity, and used observable market-based inputs, including interest rate curves, implied volatilities, and foreign currency exchange rates.

As of June 30, 2016 and December 31, 2015, we had no derivatives.

Nonrecurring Fair Value Measurements

We did not record any non-cash impairment charges during the three and six months ended June 30, 2016.

During the year ended December 31, 2015, we recorded non-cash impairment charges totaling $12.3 million. We recorded $2.1 million and $2.7 million of non-cash impairment charges to reduce the carrying values of our Northborough Tower and

13

Behringer Harvard Opportunity REIT I, Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

Northpoint Central office buildings, respectively, to the estimated fair value. In estimating the fair value of both Northborough Tower and Northpoint Central, we considered offers received during the marketing process of the assets in the third quarter of 2015, market comparables and management’s internal discounted cash flow analysis prepared with the consideration of the market conditions in Houston where both buildings are located. In addition, we recorded a non-cash impairment charge of $6.8 million related to our Frisco Square land to reduce the carrying value to the estimated fair value based on an indication of a change in market conditions for land development. In estimating the fair value of the Frisco Square land, we considered market comparables as well as the time and costs to hold the land until developed. We also recorded a $0.7 million non-cash impairment charge to reduce the carrying value of our one remaining condominium at Chase — The Private Residences to current market price. We based the fair value on the current list price less concessions and closing costs totaling $0.2 million for a fair value of $2.2 million at December 31, 2015. We sold the condominium for a cash consideration of $2.5 million on February 22, 2016. The estimates are considered Level 3 under the fair value hierarchy described above.

The following fair value hierarchy tables present information about our assets measured at fair value on a nonrecurring basis during the year ended December 31, 2015 (in thousands):

For the year ended December 31, 2015	Level 1		Level 2		Level 3		Total Fair Value		Loss
Assets
Buildings and improvements, net(1)	$	—	$	—	$	29,500	$	29,500	$	(4,778	)
Land and improvements, net(2)	—		—		19,606		19,606		(6,762		)
Condominium inventory (one remaining finished unit)(3)	—		—		2,201		2,201		(761		)

________________________________

(1) In the third quarter of 2015, we recorded non-cash impairments of $2.1 million and $2.7 million associated with our Northborough Tower and Northpoint Central office buildings, respectively.

(2) In the third quarter of 2015, we recorded a $6.8 million non-cash impairment associated with our Frisco Square land.

(3) During 2015, we recorded a non-cash impairment of $0.7 million associated with our one remaining condominium unit at Chase — The Private Residences.

Quantitative Information about Level 3 Fair Value Measurements

Description	Fair Value for the year ended December 31, 2015 (in 000s)		Valuation Techniques	Unobservable Input	Range (Weighted Average)
Buildings and improvements, net(1)	$	29,500	Discounted cash flow	Discount rate Terminal capitalization rate Market rent growth Expense growth rate	7.75% - 11.50% 8.00% - 9.75% 0% - 3.00% 0% - 3.00%
Land and improvements, net(2)	19,606		Market comparable	Lot price Inflation rate Discount rate	$20 - $45 psf 0% - 3.00% 12.50% - 20.00%
Condominium inventory (one remaining finished unit)(3)	2,201		Market comparable	List price for unit; due to limited market comparables	$511 to $555  per square feet

______________________________

(1) In the third quarter of 2015, we recorded non-cash impairments of $2.1 million and $2.7 million associated with our Northborough Tower and Northpoint Central office buildings, respectively.

(2) In the third quarter of 2015, we recorded a $6.8 million non-cash impairment associated with our Frisco Square land.

(3) During 2015, we recorded a non-cash impairment of $0.7 million associated with our one remaining condominium unit at Chase — The Private Residences.

There were no transfers of assets or liabilities between the levels of the fair value hierarchy during the six months ended June 30, 2016 and the year ended December 31, 2015.

14

Behringer Harvard Opportunity REIT I, Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

5. Fair Value Measurement of Financial Instruments

We determined the following disclosure of estimated fair values using available market information and appropriate valuation methodologies. Considerable judgment is necessary to interpret market data and develop the related estimates of fair value. Accordingly, the estimates presented are not necessarily indicative of the amounts that could be realized upon disposition of the financial instruments. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts.

As of June 30, 2016 and December 31, 2015, management estimated that the carrying value of cash and cash equivalents, restricted cash, accounts receivable, accounts payable, accrued expenses, other liabilities, and payables/receivables from related parties were at amounts that reasonably approximated their fair value based on their highly liquid nature and/or short-term maturities. The fair values are based upon interest rates for mortgages with similar terms and remaining maturities that management believes we could obtain. The fair value of the notes payable is categorized as a Level 2 basis. The fair value is estimated using a discounted cash flow analysis valuation on the borrowing rates currently available for loans with similar terms and maturities. The fair value of the notes payable was determined by discounting the future contractual interest and principal payments by a market rate.

Carrying amounts of our notes payable and the related estimated fair value as of June 30, 2016 and December 31, 2015 are as follows (in thousands):

	June 30, 2016					December 31, 2015(1)
	Carrying Amount			Fair Value		Carrying Amount			Fair Value
Notes payable	$	143,633		$	143,629	$	155,547		$	155,610
Less: unamortized debt issuance costs	(754		)			(1,087		)
Notes payable, net	$	142,879				$	154,460

_________________________________

(1) Our debt secured by Las Colinas Commons, with a balance at December 31, 2015 of $14.8 million, net of deferred financing fees of $0.1 million is not included in the table, as the investment was classified as held for sale at December 31, 2015.

The fair value estimates presented herein are based on information available to our management as of June 30, 2016 and December 31, 2015. Although our management is not aware of any factors that would significantly affect the estimated fair value amounts, such amounts have not been comprehensively revalued for purposes of these condensed consolidated financial statements since those respective dates, and current estimates of fair value may differ significantly from the amounts presented herein.

15

Behringer Harvard Opportunity REIT I, Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

6. Real Estate Investments

As of June 30, 2016, we wholly owned two properties and consolidated three properties through investments in joint ventures on our condensed consolidated balance sheets.  In addition, we have a noncontrolling, unconsolidated ownership interest in a joint venture consisting of 18 properties that are accounted for using the equity method.  Capital contributions, distributions, and profits and losses of these properties are allocated in accordance with the terms of the applicable partnership agreement.

The following table presents certain information about our consolidated properties as of June 30, 2016:

Property Name	Location	Approximate Rentable Square Footage	Description	Ownership Interest	Year Acquired
Chase Park Plaza	St. Louis, Missouri	—	hotel and condominium development property	100%	2006
Frisco Square	Frisco, Texas	(1)	mixed-use development (multifamily, retail, office, restaurant and land)	(1)	2007
Northpoint Central	Houston, Texas	180,000	9-story office building	100%	2007
The Lodge & Spa at Cordillera	Edwards, Colorado	—	land, hotel and development property	94%	2007
Royal Island(2)	Commonwealth of Bahamas	—	land	87%	2012

_________________________________

(1) Our Frisco Square mixed-use development consists of 101,000 square feet of office space, 71,000 square feet of retail, a 41,500 square foot movie theater, 114 multifamily units, approximately 27 acres of land which we own 100%, and a 275-unit multifamily project which became fully developed in the first quarter of 2016 in which we own a 90% interest.

(2) Our initial investment in Royal Island was made in May 2007. We consolidated Royal Island as of June 6, 2012 when we obtained all of the outstanding shares of Royal Island (Australia) Pty Limited. A third party indirectly owns 12.71% of Royal Island.

Real Estate Development

The Ablon at Frisco Square

On August 26, 2014, we contributed 3.4 acres of land held by our Frisco Square mixed-use project to The Ablon at Frisco Square, LLC (“Ablon Frisco Square Venture”), a special purpose entity in which we own a 90% limited partnership interest. The venture was formed to construct a 275-unit multifamily project. Concurrently, with the land contribution, the joint venture closed on a $26.3 million construction loan. See Note 9, Notes Payable, for additional information. Construction on the development began on September 2, 2014. Total construction costs for the development were approximately $41.5 million. The project was completed and available for occupancy in the first quarter of 2016. As of June 30, 2016, the project was approximately 71% leased and 57% occupied.

Real Estate Asset Dispositions

Las Colinas Commons

On February 2, 2016, we sold Las Colinas Commons for a contract sales price of approximately $14.3 million, resulting in $14 million of cash proceeds after reduction for certain transaction costs. We recorded a gain on sale of real estate property of $1.3 million. Las Colinas Commons and Northpoint Central are both borrowers under a loan that matures in May 2017. Under the terms of the loan, the lender required a release price payment of $14.9 million to release the Las Colinas Commons property from the loan. A portion of the proceeds from the sale were used to pay off in full the existing indebtedness of approximately $11.3 million associated with the office building. The $3.6 million excess principal payment amount was used to reduce Northpoint Central’s loan balance. Las Colinas Commons was classified as held for sale on our consolidated balance sheet at December 31, 2015. The full release price was reclassified as a liability associated with our real estate held for sale as of December 31, 2015.

16

Behringer Harvard Opportunity REIT I, Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

Northborough Tower

The non-recourse loan for Northborough Tower matured on January 11, 2016 and we did not repay the debt. On May 9, 2016, we transferred the property to the lender via a deed-in-lieu of foreclosure. As a result of the transfer, we recorded a gain on extinguishment of debt of $1.6 million representing the difference between the debt extinguished of $16 million over the net book value of the assets and liabilities transferred to the lender of $14.4 million. During 2015, we recorded a non-cash impairment of $2.1 million for Northborough Tower. At the date of transfer, we assessed the carrying value of the assets and liabilities transferred to the lender and concluded that an additional impairment was not needed.

Frisco Square Land Sale

On May 24, 2016, we sold a 5.2 acre parcel of undeveloped land at Frisco Square for a contract sales price of approximately $8 million. We recorded a gain on sale of real estate property of $1.7 million.

Disposed Real Estate Reported in Continuing Operations

The Company does not view the 2016 disposals of Las Colinas Commons and Northborough Tower as a strategic shift. Therefore, the results of operations of these properties continues to be included in continuing operations within the condensed consolidated statements of operations prior to the dispositions.

The following table presents net income attributable to the Company for the three and six months ended June 30, 2016 and 2015 related to Las Colinas Commons and Northborough Tower. Net income for the three months ended June 30, 2016 includes the $1.6 million gain on extinguishment of debt of Northborough Tower. Net income for the six months ended June 30, 2016 includes the $1.3 million gain on sale of Las Colinas Commons and the $1.6 million gain on extinguishment of debt of Northborough Tower (in thousands):

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
Description	2016		2015		2016		2015
Net income attributable to the Company	$	1,859	$	227	$	2,666	$	453

Discontinued Operations

Effective January 1, 2015, we adopted the provisions of FASB guidance in ASU 2014-08, issued in April 2014, regarding the reporting of discontinued operations. As a result of this adoption, the results of operations and gain on sale of real estate from disposals from January 1, 2015 forward that do not meet the criteria of a strategic shift that has or will have a major effect on our operations and financial results will be presented as continuing operations in our consolidated statements of operations.

17

Behringer Harvard Opportunity REIT I, Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

Investment in Unconsolidated Joint Venture

The following table presents certain information about our unconsolidated investment as of June 30, 2016 and December 31, 2015 ($ in thousands):

	Ownership Interest		Carrying Value of Investment
Property Name			June 30, 2016		December 31, 2015
Central Europe Joint Venture	47.01	%	$	14,121	$	13,953

Our investment in the unconsolidated joint venture as of June 30, 2016 and December 31, 2015 consisted of our proportionate share of the combined assets and liabilities of our investment property, shown at 100%, as follows (in thousands):

	June 30, 2016		December 31, 2015
Real estate assets, net	$	59,309	$	59,415
Cash and cash equivalents	5,937		6,827
Other assets	1,423		1,441
Total assets	$	66,669	$	67,683
Notes payable	$	40,808	$	40,895
Other liabilities	1,818		2,526
Total liabilities	42,626		43,421
Equity	24,043		24,262
Total liabilities and equity	$	66,669	$	67,683

Our equity in earnings (losses) from our investment is our proportionate share of the combined earnings (losses) of our unconsolidated joint venture, shown at 100%, for the three and six months ended June 30, 2016 and 2015, as follows (in thousands):

	Three Months Ended June 30,					Six Months Ended June 30,
	2016		2015			2016		2015
Revenue	$	1,612	$	2,201		$	3,348	$	4,444
Operating expenses:
Operating expenses	532		520			1,036		1,029
Property taxes	52		64			100		132
Total operating expenses	584		584			1,136		1,161
Operating income	1,028		1,617			2,212		3,283
Non-operating expenses:
Depreciation and amortization	601		838			1,189		1,696
Interest and other, net	420		966			901		2,048
Gain on sale			—					(78		)
Total non-operating expenses	1,021		1,804			2,090		3,666
Net income (loss)	$	7	$	(187	)	$	122	$	(383	)
Equity in earnings (losses) of unconsolidated joint venture(1)	$	3	$	(88	)	$	57	$	(180	)

________________________________

(1) Company’s share of net income (loss).

18

Behringer Harvard Opportunity REIT I, Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

We will recognize CTA upon the sale of all or substantially all of the assets in our Central Europe Joint Venture, which is our only foreign investment. See Note 3, Summary of Significant Accounting Policies, Foreign Currency Translation.

We evaluate our investment in unconsolidated joint venture at each reporting date. If we believe there is an other than temporary decline in market value, we will record an impairment charge based on these evaluations. We assess potential impairment by comparing our portion of estimated future undiscounted operating cash flows expected to be generated by the joint venture over the life of the joint venture’s assets to the carrying amount of the joint venture. In the event that the carrying amount exceeds our portion of estimated future undiscounted operating cash flows, we recognize an impairment loss to adjust the carrying amount of the joint venture to its estimated fair value.

7. Real Estate Held for Sale

As of December 31, 2015, Las Colinas Commons was classified as real estate held for sale on our consolidated balance sheet. We did not have any real estate assets classified as held for sale at June 30, 2016.

In 2006, we acquired Las Colinas Commons, an office building located in the Dallas, Texas area. We entered into a purchase and sale agreement with an unaffiliated third party on December 18, 2015 with a contract sales price of $14.3 million. The sales transaction closed on February 2, 2016.

The major classes of assets and liabilities associated with our real estate held for sale as of December 31, 2015 were as follows (in thousands):

Description	Amount
Land and improvements, net	$	2,785
Building and improvements, net	8,362
Lease intangibles, net	668
Straight-line rent	864
Assets associated with real estate held for sale	12,679
Notes payable(1)	$	14,900
Deferred financing fees(2)	(69		)
Notes payable, net of deferred financing fees	14,831
Accrued and other liabilities	66
Obligations associated with real estate held for sale	$	14,897

_______________________________________________________________________________

(1) Las Colinas Commons and Northpoint Central are both borrowers under a loan that matures in May 2017. The Las Colinas Commons loan balance at December 31, 2015 was $11.3 million. Under the terms of the loan, the lender required a release price payment of $14.9 million to release the Las Colinas Commons property from the loan. The $3.6 million excess principal payment was used to reduce Northpoint Central’s loan balance. We reclassified the full release price as a liability associated with our real estate held for sale as of December 31, 2015.

(2) Effective January 1, 2016, we adopted ASU 2015-03, which requires companies to present debt issuance costs related to a recognized debt liability as a direct reduction from the carrying amount of the related debt liability. See Note 3, Summary of Significant Accounting Policies, under the caption New Accounting Pronouncements for further details.

19

Behringer Harvard Opportunity REIT I, Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

8. Variable Interest Entities

As discussed in Note 3, Summary of Significant Accounting Policies, effective January 1, 2016, we have adopted the guidance in ASU 2015-02. As a result, the Operating Partnership (see Note 1, Business) and each of our less than wholly-owned real estate partnerships (Behringer Harvard Cordillera, LLC, Behringer Harvard Residences at Cordillera, LLC and Behringer Harvard Royal Island Debt, LP) have been deemed to have the characteristics of a VIE. However, we were not required to consolidate any previously unconsolidated entities or deconsolidate any previously consolidated entities as a result of the change in classification. Accordingly, there has been no change to the amounts reported in our condensed consolidated balance sheets and statements of cash flows or amounts recognized in our condensed consolidated statements of operations.

Consolidated VIEs

We consolidate the Operating Partnership, Behringer Harvard Cordillera, LLC, Behringer Harvard Residences at Cordillera, LLC and Behringer Harvard Royal Island Debt, LP, which are variable interest entities, or VIEs, for which the Company is the primary beneficiary. Generally, a VIE is a legal entity in which the equity investors do not have the characteristics of a controlling financial interest or the equity investors lack sufficient equity at risk for the entity to finance its activities without additional subordinated financial support. A limited partnership is considered a VIE when the majority of the limited partners unrelated to the general partner possess neither the right to remove the general partner without cause, nor certain rights to participate in the decisions that most significantly affect the financial results of the partnership. In determining whether we are the primary beneficiary of a VIE, we consider qualitative and quantitative factors, including, but not limited to: which activities most significantly impact the VIE’s economic performance and which party controls such activities; the amount and characteristics of our investment; the obligation or likelihood for us or other investors to provide financial support; and the similarity with and significance to our business activities and the business activities of the other investors. Significant judgments related to these determinations include estimates about the current and future fair values and performance of real estate held by these VIEs and general market conditions.

20

Behringer Harvard Opportunity REIT I, Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

9. Notes Payable

The following table sets forth our notes payable on our consolidated properties at June 30, 2016 and December 31, 2015 (in thousands):

	Notes Payable as of
Description	June 30, 2016			December 31, 2015			Interest Rate	Maturity Date
Northborough Tower(1)	$	—		$	18,516		8.67%(1)	1/11/2016
Royal Island(2)	14,489			13,872			15.00%	10/10/2016
Northpoint Central(3)	11,235			11,720			5.15%	5/9/2017
Chase Park Plaza Hotel and Chase — The Private Residences	61,543			62,182			4.95%	8/11/2017
BHFS II, LLC	6,795			6,856			30-day LIBOR + 3%(4)	2/1/2018
BHFS III, LLC	6,099			6,154			30-day LIBOR + 3%(4)	2/1/2018
BHFS IV, LLC	12,671			12,783			30-day LIBOR + 3%(4)	2/1/2018
BHFS Theatre, LLC	4,743			4,785			30-day LIBOR + 3%(4)	2/1/2018
The Ablon at Frisco Square	26,058			18,679			30-day LIBOR + 2.5%(4)	8/26/2017
Total debt	143,633			155,547
Deferred financing fees(5)	(754		)	(1,087		)
Notes payable, net of deferred financing fees	142,879			154,460
Notes payable included with Obligations related to real estate held for sale:
Las Colinas Commons debt(3)	—			14,900			5.15%	5/9/2017
Deferred financing fees(5)	—			(69		)
Notes payable included with Obligations related to real estate held for sale, net of deferred financing fees:	—			14,831
Total notes payable obligations	$	142,879		$	169,291

_________________________________

(1) Due to the maturity default on our Northborough Tower debt, the stated interest rate of 5.67% was increased to the default interest rate of 8.67% effective January 12, 2016. The property was transferred to the lender via a deed-in-lieu of foreclosure on May 9, 2016.

(2) In January 2016, the lenders agreed to increase the amount available to draw on the loan to $14.4 million. In April 2016, the lenders agreed to increase the amount available to draw on the loan to $14.5 million.

(3) Las Colinas Commons and Northpoint Central are both borrowers under a loan that matures in May 2017. The Las Colinas Commons loan balance at December 31, 2015 was $11.3 million. Under the terms of the loan, the lender required a release price payment of $14.9 million to release the Las Colinas Commons property from the loan. The $3.6 million excess principal payment amount was used to reduce Northpoint Central’s loan balance. We reclassified the full release price as a liability associated with our real estate held for sale as of December 31, 2015.

(4) 30-day LIBOR was 0.47% at June 30, 2016.

(5) Effective January 1, 2016, we adopted ASU 2015-03, which requires companies to present debt issuance costs related to a recognized debt liability as a direct reduction from the carrying amount of the related debt liability. See Note 3, Summary of Significant Accounting Policies, under the caption New Accounting Pronouncements for further details.

Our notes payable balance, net of deferred financing fees of $0.8 million, was $142.9 million at June 30, 2016. Our notes payable balance at December 31, 2015, was $154.5 million, net of deferred financing fees of $1.1 million, and excluding $14.8 million of contractual obligations on real estate held for sale, net of deferred financing fees of less than $0.1 million at December 31, 2015, consisted of new financing and loan assumptions related to our consolidated property acquisitions.

Each of our notes payable is collateralized by one or more of our properties.  At June 30, 2016, our notes payable interest rates ranged from 3% to 15%, with a weighted average interest rate of approximately 5.3%.  Of our $142.9 million in notes payable at June 30, 2016, $56.4 million represented debt subject to variable interest rates.  At June 30, 2016, our notes payable had maturity dates that ranged from October 2016 to February 2018.  We have unconditionally guaranteed payment of the notes payable related to the four loan tranches associated with our Frisco Square investment (the “BHFS Loans”) up to $11.2 million.  The BHFS Loans had an outstanding balance at June 30, 2016 of $30.3 million.

21

Behringer Harvard Opportunity REIT I, Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

Las Colinas Commons and Northpoint Central are both borrowers under a loan that matures in May 2017. The Las Colinas Commons allocated loan balance at December 31, 2015 was $11.3 million. Under the terms of the loan, the lender required a release price payment of $14.9 million to release the Las Colinas Commons property from the loan. The $3.6 million excess principal payment amount was used to reduce Northpoint Central’s loan balance. The full release price was reclassified as a liability associated with our real estate held for sale as of December 31, 2015. We sold the Las Colinas Commons office buildings on February 2, 2016 and paid in full the existing indebtedness of the Las Colinas Commons loan of $11.3 million and paid $3.6 million to reduce Northpoint Central’s loan balance, which was $11.2 million as of June 30, 2016.

Ablon at Frisco Square Financing

On August 26, 2014, the Ablon Frisco Square Venture obtained a $26.3 million construction loan. The loan incurs interest at 30-day LIBOR plus 2.5% and has a three-year term with two12-month extensions available. Payments of interest-only are required during the initial three-year term. As of June 30, 2016, we had drawn approximately $26.1 million under the construction loan. The project was completed and available for occupancy in the first quarter of 2016. Our joint venture partner, or one of its affiliates, has provided the completion guaranty and any other carve-out guaranties for the construction loan.

Northborough Tower Debt

The non-recourse loan for our Northborough Tower office building matured on January 11, 2016 and we did not pay the outstanding principal balance, which constituted an event of default. Prior to the debt maturity we had actively marketed the property for sale, but did not receive any offers above the loan balance. In December 2015, the lender exercised its right to control the operating funds of the property, as the single tenant of building moved out during the third quarter of 2015. The tenant’s lease does not expire until April 2018, and the tenant continued to make its monthly rental payment. On February 5, 2016, we received a notice from the lender of their intent to increase the interest on the Northborough loan to the default interest rate of 8.67%, effective January 12, 2016, due to the maturity default. In February 2016, the lender applied $0.9 million of cash reserves held for tenant and capital improvements to the principal balance of the loan. The lender also applied $0.8 million of excess cash reserves to the principal balance of the loan. On March 15, 2016, we received a notice that Northborough Tower had been posted for foreclosure on April 5, 2016. The property was transferred to the lender via a deed-in-lieu of foreclosure on May 9, 2016. The outstanding principal balance at the time of the transfer to the lender was $15.9 million.

Chase Park Plaza Modification

On August 4, 2016, we modified the Chase Park Plaza loan to extend the completion date for the required room and common area renovations from August 10, 2016 to August 10, 2017. The Company previously provided a completion guarantee of $6.5 million for the required renovations and that guarantee was reaffirmed with the modification. If the renovation is not completed by August 10, 2017 the lender may require the Company to escrow 125% of the unspent funds related to the renovation.

The loan continues to bear interest at 4.95% and matures on August 11, 2017 with twoone-year extensions available. Under the modification, the property must have a debt service coverage ratio, as defined, of 1.35 to exercise the extension options. Under the modified loan, we are required to escrow $1.5 million with the lender for the estimated 2017 property tax increase due to the expirations of the 10-year property tax abatement program in December 2016.

The modification also requires the establishment of a $3.1 million escrow related to certain facade repairs and enhancements. The lender will disburse funds from the escrow monthly to pay the construction contract draws as the construction project is invoiced and completed. The Park Plaza Residential Association is responsible to reimburse 39.3% of the construction cost as invoiced. The project is expected to be completed in December 2017.

22

Behringer Harvard Opportunity REIT I, Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

The following table summarizes our aggregate contractual obligations for principal payments as of June 30, 2016 (in thousands):

Principal Payments Due:	Amount
July 1, 2016 - December 31, 2016	$	16,026
2017	98,151
2018	29,456
2019	—
2020	—
Total contractual obligations	143,633
Less: Deferred financing fees, net	(754		)
Notes payable, net	$	142,879

10. Commitments and Contingencies

Frisco Square

In connection with our investment in the Frisco Square property, we were initially responsible, through our wholly owned subsidiaries who hold title to the Frisco Square property, for half of the bond debt service related to the $12.5 million of bonds (the “Bond Obligation”) the City of Frisco issued to fund public improvements within the Frisco Square Management District (the “MMD”).  For each $1 million increase in assessed value for the real property within the MMD above $125 million, the Bond Obligation is reduced by 1.0% and will terminate at $225 million of real property values.  The total outstanding Bond Obligation at June 30, 2016 and December 31, 2015 was $4.2 million and $4.7 million, respectively. As of June 30, 2016, the value of the real property within the MMD is assessed at $174 million. Therefore, we are currently responsible for 27% of the bond debt service payments.

Although, as described above, we are ultimately responsible for 27% of the bond debt service payments, the Frisco Square Property Owner’s Association (the “POA”) has the authority to assess its members for various monetary obligations related to the Frisco Square development, including the Bond Obligation, based upon the value of the real property and real property improvements.  We are not the sole member of the POA.  For the year ended December 31, 2015, the annual bond debt service assessed by the POA is approximately $0.3 million. We estimate our annual pro rata share of the expense at less than $0.1 million. For the six months ended June 30, 2016, we expensed less than $0.1 million related to bond debt service, which is included in the accompanying condensed consolidated statements of operations and other comprehensive loss.

Under an amended development agreement with the City of Frisco, we were obligated to construct certain parking improvements (the “Parking Obligation”). The City of Frisco secured the Bond Obligation and the Parking Obligation by placing liens on the vacant land held by our indirect, wholly owned subsidiary, BHFS I, LLC. In the event we sold all or a part of the vacant land, 33% of the net sales proceeds were to be deposited into an escrow account (“City Escrow”) for the benefit of the City of Frisco to secure the Parking Obligation until the amount in the City Escrow account was $7 million. As of December 31, 2015 we had $1.4 million in the City Escrow from land sales. We completed the requirements of the Parking Obligation in February 2016 and the City of Frisco released the City Escrow of $1.4 million and the liens on the land on March 15, 2016 and March 17, 2016, respectively.

Under the Chase Park Plaza Hotel loan agreement, the Company provided a completion guarantee of $6.5 million for room renovations and other improvements to be finished by August 10, 2017. If the renovation is not completed by August 10, 2017 the lender may require the Company to escrow 125% of the unspent funds related to the renovation. In August 2016, as part of our Chase Park Plaza loan modification, we escrowed $3.1 million for a construction project and $1.5 million for 2017 real estate taxes.

11. Related Party Transactions

The Advisor and certain of its affiliates receive fees and compensation in connection with the acquisition, financing, management, and sale of our assets.

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Behringer Harvard Opportunity REIT I, Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

Since our inception, the Advisor or its predecessors have been responsible for managing our day-to-day affairs and for, among other things, identifying and making acquisitions and other investments on our behalf.  Our relationship with the Advisor, including the fees paid by us to the Advisor or the reimbursement of expenses by us for amounts paid, or incurred by the Advisor, on our behalf is governed by an advisory management agreement that has been in place since September 20, 2005 and amended at various times thereafter.  On May 31, 2016 we entered into the Fourth Amended and Restated Advisory Management Agreement (the “Fourth Advisory Agreement”) effective as of May 15, 2016.

The Fourth Advisory Agreement amended and restated the Third Amended and Restated Advisory Management Agreement (the “Third Advisory Agreement”), as amended by the First Amendment to Third Amended and Restated Advisory Management Agreement (the “First Amendment to Third Advisory Agreement”) to: (a) incorporate amendments made by the First Amendment to Third Advisory Agreement into the body of the agreement; (b) amend certain limitations on expense reimbursements to the Advisor; (c) amend the non-solicitation provision; and (d) extend the term of the agreement to May 15, 2017. In all other material respects, the terms of the agreement remain unchanged.

We pay the Advisor or its affiliates an asset management fee of 0.575% of the aggregate asset value of acquired real estate and real estate-related assets other than Royal Island. The fee is payable monthly in arrears in an amount equal to one-twelfth of 0.575% of the aggregate asset value as of the last day of the month.  For each of the three months ended June 30, 2016 and 2015, we incurred approximately $0.5 million and $0.6 million of asset management fees, respectively. For each of the six months ended June 30, 2016 and 2015, we incurred approximately $1 million and $1.1 million of asset management fees, respectively.

The Advisor, or its affiliates, receive acquisition and advisory fees of 2.5% of the contract purchase price of each asset for the acquisition, development or construction of real property or 2.5% of the funds advanced in respect of a loan investment.  For the three and six months ended June 30, 2016 and 2015, we incurred no acquisition and advisory fees.

The debt financing fee paid to the Advisor for a Loan (as defined in the agreement) will be 1% of the loan commitment amount.  Amounts due to the Advisor for a Revised Loan (as defined in the agreement) will be 40 basis points of the loan commitment amount for the first year of any extension (provided the extension is for at least 120 days), an additional 30 basis points for the second year of an extension, and another 30 basis points for the third year of an extension in each case, prorated for any extension period less than a full year.  The maximum debt financing fee for any extension of three or more years is 1% of the loan commitment amount. We did not incur any debt financing fees for the three and six months ended June 30, 2016 or 2015.

Subject to certain restrictions as described in the Fourth Advisory Agreement, we reimburse the Advisor or its affiliates for all expenses paid or incurred by them in connection with the services they provide to us, including direct expenses and the costs of salaries and benefits of persons employed by those entities and performing services for us, subject to the limitation that we will not reimburse for any amount by which our Advisor’s operating expenses (including the asset management fee) at the end of the four fiscal quarters immediately preceding the date reimbursement is sought exceeds the greater of (i) 2% of our average invested assets or (ii) 25% of our net income for that four quarter period other than any additions to reserves for depreciation, bad debts or other similar non-cash reserves and any gain from the sale of our assets for that period.  Notwithstanding the preceding sentence, we may reimburse the Advisor for expenses in excess of this limitation if a majority of our independent directors determines that such excess expenses are justified based on unusual and non-recurring factors.  In addition, pursuant to the Fourth Advisory Agreement, our obligation to reimburse the Advisor for certain costs incurred in connection with administrative services (i) during 2016 is limited to $1.66 million and (ii) during 2017 is limited to $1.66 million prorated for the number of days during 2017 for which the Advisor provides services to us pursuant to the Fourth Advisory Agreement. Pursuant to First Amendment to Third Advisory Agreement, our obligation to reimburse the Advisor for certain costs incurred in connection with administrative services during 2015 was limited to $1.7 million. We do not reimburse our Advisor for the salaries and benefits that our Advisor or its affiliates pay to our named executive officers.  For the three months ended June 30, 2016 and 2015, we incurred costs for administrative services of $0.2 million and $0.4 million, respectively. For the six months ended June 30, 2016 and 2015, we incurred costs for administrative services of $0.6 million.

Additionally, on May 31, 2016, the Company entered into the Third Amended and Restated Property Management and Leasing Agreement (“Third Property Management Agreement”) with the Operating Partnership. Behringer Harvard Opportunity Management Services, LLC, an affiliated Texas limited liability company (the “Manager”), Behringer Harvard Real Estate Services, LLC, an affiliated Texas limited liability company, and several affiliated special purpose entities formed to directly own the properties in which the Company has invested (collectively, “BH Property Management”).

24

Behringer Harvard Opportunity REIT I, Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

The Third Property Management Agreement amended and restated the Second Amended and Restated Property Management and Leasing Agreement (“Second Property Management Agreement”), as amended by the First Amendment to Second Amended and Restated Property Management and Leasing Agreement (the “First Amendment to Second Property Management Agreement”) to amend the non-solicitation provision and incorporate the amendments made by the First Amendment to Second Property Management Agreement into the body of the agreement. In all other material respects, the terms of the agreement remain unchanged.

We pay our property manager and affiliate of the Advisor, Behringer Harvard Opportunity Management Services, LLC or its affiliates (collectively, “BH Property Management”), fees for management, leasing, and maintenance supervision of our properties.  Such fees are equal to 4.5% of gross revenues plus leasing commissions based upon the customary leasing commission applicable to the same geographic location of the respective property.  We will pay BH Property Management an oversight fee equal to 0.5% of gross revenues of the property managed if we contract directly with a non-affiliated third-party property manager in respect of the property.  In no event will we pay both a property management fee and an oversight fee to BH Property Management with respect to any particular property.  If we own a property through a joint venture that does not pay BH Property Management directly for its services, we will pay BH Property Management a management fee or oversight fee, as applicable, based only on our economic interest in the property.  We incurred property management fees or oversight fees of approximately $0.1 million and $0.3 million during the three months ended June 30, 2016 and 2015, respectively. We incurred property management fees or oversight fees of approximately $0.3 million and $0.5 million during the six months ended June 30, 2016 and 2015, respectively.

At June 30, 2016 and December 31, 2015, we had a payable to our Advisor and its affiliates of $0.5 million and $0.8 million, respectively. These balances consist of accrued fees, including asset management fees, administrative service expenses, property management fees and other miscellaneous costs payable to the Advisor and BH Property Management.

We are dependent on the Advisors and BH Property Management for certain services that are essential to us, including asset disposition decisions, property management and leasing services, and other general administrative responsibilities.  If these companies are unable to provide us with the respective services, we would be required to obtain such services from other sources.

12. Supplemental Cash Flow Information

Supplemental cash flow information is summarized below:

	Six months ended June 30,
Description	2016		2015
Supplemental disclosure:
Interest paid, net of amounts capitalized	$	3,811	$	2,542
Income taxes paid, net of refunds	125		140
Non-cash investing and financing activities:
Property and equipment additions and purchases of real estate in accrued liabilities	169		2,479
Capital expenditures for real estate under development in accounts payable and accrued liabilities	—		3,140
Transfer from real estate under development to building and improvements	37,110		(2,611		)
Additions to land and land improvements reclassified from real estate under development	3,685		—
Additions to furniture, fixtures and equipment reclassified from real estate under development	1,101		—
Amortization of deferred financing fees in properties under development	10		44
Deed in lieu of foreclosure:
Real estate and lease intangibles	12,723		—
Note payable	15,853		—
Other assets and liabilities, net	1,506		—

25

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 condensed consolidated financial statements of the Company and the notes thereto:

Forward-Looking Statements

Certain statements in this Quarterly Report on Form 10-Q constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).  These forward-looking statements include discussion and analysis of the financial condition of Behringer Harvard Opportunity REIT I, Inc. and our subsidiaries (which may be referred to herein as the “Company,” “REIT,” “we,” “us,” or “our”), including our ability to rent space on favorable terms, to address our debt maturities and to fund our liquidity requirements, the value of our assets, our anticipated capital expenditures, the amount and timing of anticipated cash distributions to our stockholders, the estimated per share value of our common stock and other matters.  Words such as “may,” “anticipates,” “expects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “would,” “could,” “should” and variations of these words and similar expressions are intended to identify forward-looking statements.

These forward-looking statements are not historical facts but reflect the intent, belief or current expectations of our management based on their knowledge and understanding of the business and industry, the economy and other future conditions.  These statements are not guarantees of future performance, and we caution stockholders not to place undue reliance on forward-looking statements.  Actual results may differ materially from those expressed or forecasted in the forward-looking statements due to a variety of risks, uncertainties and other factors, including but not limited to the factors listed and described under Item 1A, “Risk Factors” in our Annual Report on Form 10-K filed with the SEC on March 18, 2016 and the factors described below:

• market and economic challenges experienced by the U.S. and global economies or real estate industry as a whole and the local economic conditions in the markets in which our properties are located;

• the availability of cash flow from operating activities for capital expenditures;

• conflicts of interest arising out of our relationships with our advisor and its affiliates;

• our ability to retain our executive officers and other key personnel of our advisor, our property manager and their affiliates;

• our level of debt and the terms and limitations imposed on us by our debt agreements;

• the availability of credit generally, and any failure to refinance or extend our debt as it comes due or a failure to satisfy the conditions and requirements of that debt;

• the need to invest additional equity in connection with debt financings as a result of reduced asset values and requirements to reduce overall leverage;

• future increases in interest rates;

• our ability to raise capital in the future by issuing additional equity or debt securities, selling our assets or otherwise;

• impairment charges;

• unfavorable changes in laws or regulations impacting our business or our assets; and

• factors that could affect our ability to qualify as a real estate investment trust.

Forward-looking statements in this Quarterly Report on Form 10-Q reflect our management’s view only as of the date of this Report, and may ultimately prove to be incorrect.  We undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results.  We intend for these forward-looking statements to be covered by the applicable safe harbor provisions created by Section 27A of the Securities Act and Section 21E of the Exchange Act.

Cautionary Note

The representations, warranties, and covenants made by us in any agreement filed as an exhibit to this report on Form 10-Q are made solely for the benefit of the parties to the agreement, including, in some cases, for the purpose of allocating risk among the parties to the agreement, and should not be deemed to be representations, warranties or covenants to or with any other parties.  Moreover, these representations, warranties or covenants should not be relied upon as accurately describing or reflecting the current state of our affairs. 

26

Executive Overview

We are a Maryland corporation that was formed in November 2004 to invest in and operate commercial real estate or real estate-related assets located in or outside the United States on an opportunistic and value-add basis.  We conduct substantially all of our business through our operating partnership and its subsidiaries. We are organized and qualify as a REIT for federal income tax purposes.

We are externally managed and advised by the Advisor, a Texas limited liability company formed in June 2007.  The Advisor is responsible for managing our day-to-day affairs and for identifying and making dispositions on our behalf.

As of June 30, 2016, we wholly owned two properties and consolidated three properties through investments in joint ventures, all of which were consolidated in our condensed consolidated financial statements.  In addition, we have a noncontrolling, unconsolidated ownership interest in a joint venture consisting of 18 properties that is accounted for using the equity method.  Our investment properties are located in Colorado, Missouri, Texas, the Commonwealth of The Bahamas, the Czech Republic, and Poland.

We have entered our disposition phase and are currently considering liquidity options for our stockholders. In February 2016, the special committee of our board of directors, composed of all of our independent directors, hired investment banking firm Baird to act as financial advisor to the Company in connection with its general financial strategy and planning and to assist the special committee in evaluating strategic alternatives available to the Company. The special committee and the board of directors may determine that it would be in the best interests of the Company and our stockholders to adopt a plan of liquidation that would involve the sale of the Company’s remaining assets. In the event of such a determination, the proposed plan of liquidation would be presented to the Company’s stockholders for approval.

Although the special committee has engaged Baird to assist us with the evaluation of strategic alternatives, we are not obligated to enter into any particular transaction. Further, although we have begun the process of exploring strategic alternatives, there is no specific date by which we must have a liquidity event, and there is no assurance that we will have a liquidity event in the near term or that, in the event of a transaction, the process will result in stockholder liquidity.

Liquidity and Capital Resources

LiquidityDemands

Our financial statements are presented on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business as we proceed through our disposition phase.  As is usual for opportunity-style real estate investment programs, we are structured as a finite-life entity, and have entered the final phase of operations.  This phase includes the selling of our assets, retiring our liabilities, and distributing net proceeds to stockholders.  It is possible that we will invest additional capital in some of our assets in order to position these assets for sale in the normal course of business. We have experienced significant losses and may generate negative cash flows as mortgage note obligations and expenses exceed revenues.  If we are unable to sell a property when we determine to do so as contemplated in our business plan, it could have a significant adverse effect on our cash flows that are necessary to meet our mortgage obligations and to satisfy our other liabilities in the normal course of business.

Our ability to continue as a going concern is, therefore, dependent upon our ability to sell real estate investments, to pay or retire debt as it matures if extensions or new financings are unavailable, and to fund certain ongoing costs of our Company, including our development and operating properties.  Our principal demands for funds for the next twelve months and beyond will be for the payment of costs associated with the lease-up of available space at our operating properties (including leasing commissions, tenant improvements, and capital improvements), certain ongoing costs at our development properties, Company operating expenses, and interest and principal on our outstanding indebtedness.  We expect to fund a portion of these demands by using cash flow from operations of our current investments and borrowings.  Additionally, we will use proceeds from our strategic asset sales.

We continually evaluate our liquidity and ability to fund future operations and debt obligations. Our cash balance at June 30, 2016 is $26.1 million. The next debt maturity for the Company is in October 2016 for Royal Island. We are in discussions with a purchaser to extend or reenter a purchase and sale agreement for Royal Island. We may be required to establish capital reserves from cash flow generated by operating properties or net sales proceeds from the sale of our properties. Capital reserves are typically utilized for non-operating expenses such as tenant improvements, leasing commissions and major capital expenditures. In August 2016, as part of our Chase Park Plaza loan modification, we escrowed $3.1 million for a construction project and $1.5 million for 2017 real estate taxes. See below, under the caption Loan Modifications, for further details.

In addition to our debt obligations, we consider lease expirations at our consolidated office properties and other factors in evaluating our liquidity. Operating leases for our office buildings representing 3.8% of annualized base rent and rentable square footage (effective annual rent per square foot of $27.07) will expire by the end of 2016.  In the normal course of

27

business, we are pursuing renewals, extensions and new leases.  If we are unable to renew or extend the expiring leases under similar terms or are unable to negotiate new leases, it would negatively impact our liquidity and consequently adversely affect our ability to fund our ongoing operations.  Further, it would adversely affect the value of the investment and reduce the proceeds we would receive upon the sale of the asset.

In addition, our portfolio is concentrated in certain geographic regions and industries, and downturns relating generally to those regions or industries may result in defaults by a number of tenants within a short time period.  Any defaults would negatively affect our liquidity and adversely affect our ability to fund our ongoing operations.  Further, it would adversely affect the value of the investment and reduce the proceeds we would receive upon the sale of the asset. In particular, the Northpoint Central office building is located in the Greenspoint submarket in Houston, Texas. Demand for commercial properties in this submarket is weak due to several large blocks of space that became available as large scale users have vacated the submarket and current volatility within the energy sector. With the uncertainty created from these relocations and the current volatility within the energy sector, and the limited number of office building transactions, it is difficult to underwrite commercial assets in this submarket. During the third quarter of 2015, we recorded a non-cash impairment charge for Northpoint Central. See Note 4, Assets and Liabilities Measured at Fair Value, for information on impairment charges recorded in the third quarter of 2015. For the six months ended June 30, 2016, excluding our disposed properties, Las Colinas Commons and Northborough Tower, 17% of our total revenues, without consideration of tenant contraction or termination rights, were derived from our office buildings, both of which are located in Texas. For the six months ended June 30, 2016, 15% and 66% of our total revenues, without consideration of tenant contraction or termination rights, were derived from our Frisco Square mixed-use development and Chase Park Plaza Hotel, respectively.

Strategic Asset Sales

As previously discussed, we are in our disposition phase and are currently considering liquidity options for our stockholders. The economic environment and limited availability of credit to buyers for opportunistic asset classes such as ours could delay or inhibit our ability to dispose of our properties in an orderly manner, or cause us to have to dispose of our properties for lower than anticipated sales prices. On June 23, 2016, the United Kingdom voted to exit the European Union (“Brexit”). Brexit is a major source of uncertainty that could cause a slowdown in economic activity across the European Union countries. This uncertainty could delay the disposition of our Central European properties or cause us to ultimately sell our assets for less than our current expected valuation. There can be no assurance that future dispositions will occur as planned or, if they occur, that they will help us to meet our liquidity demands.

On December 22, 2015, we entered into a purchase and sale agreement with the Behringer Harvard Royal Island Debt, LP lender for the sale of Royal Island. The contract sales price is $0.9 million in cash and discharge of all indebtedness under the loan. The loan balance and accrued interest at June 30, 2016 is $23.1 million. The sale was subject to approval by the Commonwealth of the Bahamas. The contract expired on April 30, 2016 as a result of the failure of the purchaser to obtain necessary governmental approvals. We are in discussions with the purchaser to extend or reenter a purchase and sale agreement upon substantially the same terms. On May 5, 2016, we entered into a purchase and sale agreement for The Lodge and Spa at Cordillera for a contract price of $10 million. The sale is subject to zoning amendments that may take six to nine months for the purchaser to obtain. In addition to the approvals noted above, these transactions are subject to review periods by the purchasers during which they may terminate without penalty. The purchase and sale agreements have provisions that allow for contract price adjustments upon certain conditions. There are no assurances that we will complete these transactions.

On February 2, 2016, we sold our Las Colinas Commons office buildings for a contract sales price of $14.3 million. On February 22, 2016, we sold our remaining condominium unit in inventory at Chase — The Private Residences for a sales price of $2.5 million, receiving net proceeds of $2.2 million after closing costs. On May 24, 2016, we sold a 5.2 acre parcel of undeveloped land at Frisco Square for a contract sales price of $8 million.

28

Debt Financings

One of our principal short-term and long-term liquidity requirements is the repayment of maturing debt.  The following table provides information with respect to the contractual maturities and scheduled principal repayments of our indebtedness as of June 30, 2016. Interest payments on variable rate debt are based on rates in effect as of June 30, 2016. The table does not represent any extension options (in thousands):

	Payments Due by Period
	July 1, 2016 to December 31, 2016		2017		2018		2019		2020		Total
Principal payments - fixed rate debt(1)	$	15,749	$	71,518	$	—	$	—	$	—	$	87,267
Interest payments - fixed rate debt	2,554		2,247		—		—		—		4,801
Principal payments - variable rate debt(1)	277		26,633		29,456		—		—		56,366
Interest payments - variable rate debt	911		1,621		176		—		—		2,708
Total	$	19,491	$	102,019	$	29,632	$	—	$	—	$	151,142

________________________________

(1) Does not include $0.8 million of unamortized deferred financing fees as of June 30, 2016. Effective January 1, 2016, we adopted ASU 2015-03, which requires companies to present debt issuance costs related to a recognized debt liability as a direct reduction from the carrying amount of the related debt liability. See Note 3, Summary of Significant Accounting Policies, under the caption New Accounting Pronouncements for further details.

Our non-recourse debt secured by Northborough Tower matured on January 11, 2016. The property was transferred to the lender via a deed-in-lieu of foreclosure on May 9, 2016. The principal balance of the debt at the transfer was $15.9 million.

Our loan agreements stipulate that we comply with certain reporting and financial covenants.  These covenants include, among other things, maintaining minimum debt service coverage ratios, loan to value ratios and liquidity.  As of June 30, 2016, we believe we were in compliance with the debt covenants under our loan agreements.

We currently expect to use funds generated by our operating properties, additional borrowings, and proceeds from the disposition of properties to continue making our scheduled debt service payments until the maturity dates of the loans are extended or the loans are refinanced or completely paid off.  However, there is no guarantee that we will be able to refinance our borrowings with more or less favorable terms or extend the maturity dates of such loans.  To the extent we are unable to reach agreeable terms with respect to extensions or refinancings, we may not have the cash necessary to repay our debt as it matures, which could result in an event of default that could allow lenders to foreclose on the property in satisfaction of the debt, seek repayment of the full amount of the debt outstanding from us or pursue other remedies.

Each of our loans is secured by one or more of our properties. At June 30, 2016, interest rates on our notes payable ranged from 3.0% to 15%, with a weighted average interest rate of approximately 5.3%. Generally, our notes payable mature at approximately two to nine years from origination and require payments of interest-only for approximately two to five years, with all principal and interest due at maturity. Notes payable associated with our Frisco Square and Northpoint Central investments require monthly payments of principal and interest. At June 30, 2016, our notes payable had maturity dates that ranged from October 2016 to February 2018.

Our ability to fund our liquidity requirements is expected to come from cash and cash equivalents (which total $26.1 million on our condensed consolidated balance sheet as of June 30, 2016), operating cash flow from properties, new borrowings and proceeds from the disposition of our properties. As necessary, we may seek alternative sources of financing, including using the proceeds from the sale of our properties to achieve our investment objectives.

As of June 30, 2016, restricted cash on the condensed consolidated balance sheet of $5.4 million included amounts set aside related to certain operating properties for tenant improvements and commission reserves, tax reserves, maintenance and capital expenditures reserves, and other amounts as may be required by our lenders.

As the overall cost of borrowing increases, either by increases in the index rates or by increases in lender spreads, we will need to factor such increases into the economics of our property developments. This may result in our investment operations generating lower overall economic returns and a reduced level of cash flow.

29

Loan Modifications

In February 2011, Behringer Harvard Royal Island Debt, LP secured a $10.4 million loan (the “Debt LP Loan”) for the purpose of preserving and protecting the collateral securing the Royal Island bridge loan. In February 2013 and June 2013, the lender agreed to increase the amount available to draw on the Debt LP Loan to $11.6 million and $12.4 million, respectively. Beginning in October 2013 through June 2014, the lender increased the availability of the Debt LP Loan each month by the amount of the monthly operating costs. The lender ceased funding the monthly operating costs in July 2014. On January 25, 2016, the lenders agreed to increase the amount of the loan by $0.6 million to $14.4 million to fund the estimated operating costs through the sale of the property. On April 30, 2016, the lenders agreed to increase the amount of the Debt LP Loan by an additional $0.1 million to $14.5 million to fund additional operating costs of the property as the purchaser awaits approval from the Commonwealth of the Bahamas to acquire the property.

On August 4, 2016, we modified the Chase Park Plaza loan to extend the completion date for the required room and common area renovations from August 10, 2016 to August 10, 2017. The Company previously provided a completion guarantee of $6.5 million for the required renovations and that guarantee was reaffirmed with the modification. The loan continues to bear interest at 4.95% and matures on August 11, 2017 with two one-year extensions available. Under the modification the property must have a debt service coverage ratio, as defined, of 1.35 to exercise the extension options. Under the modified loan, we are required to escrow $1.5 million with the lender for the estimated 2017 property tax increase due to the expiration of the 10-year property tax abatement program in December 2016.

The Chase Park Plaza loan modification also requires the establishment of a $3.1 million escrow related to certain facade repairs and enhancements. The lender will disburse funds from the escrow monthly to pay the construction contract draws as the construction repair project is invoiced and completed. The Park Plaza Residential Association is responsible to reimburse 39.3% of the construction cost as invoiced. The project is expected to be completed in December 2017.

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Results of Operations

As of June 30, 2016, we were invested in six assets, five of which were consolidated (two of those were wholly owned and three properties were consolidated through investments in joint ventures). In addition, we had an unconsolidated ownership interest in a joint venture consisting of 18 properties at June 30, 2016 that were accounted for using the equity method. Our investment properties are located in Colorado, Missouri, Texas, the Commonwealth of The Bahamas, the Czech Republic, and Poland.

As of June 30, 2015, we were invested in nine assets, seven of which were consolidated (four of those were wholly owned and three were properties consolidated through investments in joint ventures). In addition, we were the mezzanine lender for one multifamily property. We also had an unconsolidated ownership interest in a joint venture consisting of 20 properties at June 30, 2015 that were accounted for using the equity method. Our investment properties were located in Colorado, Missouri, Nevada, Texas, the Commonwealth of The Bahamas, the Czech Republic, Poland, and Slovakia.

Three months ended June 30, 2016 as compared to three months ended June 30, 2015

The following table provides summary information about our results of operations for the three months ended June 30, 2016 and 2015 ($ in thousands):

		2016		2015			$ Amount Change Incr/ (Decr)			Percentage Change Incr/(Decr)		$ Change due to Dispositions(1)		$ Change due to Asset Placed in Service(2)	$ Change due to Same Store(3)
Revenues
	Rental revenue	$	3,849	$	5,134		$	(1,285	)	(25.0	)%	(1,668	)	507	(124	)
	Hotel revenue	9,537		9,947			(410		)	(4.1	)%	—		—	(410	)
Total revenues		13,386		15,081			(1,695		)	(11.2	)%	(1,668	)	507	(534	)
Expenses
	Property operating expenses	1,499		2,004			(505		)	(25.2	)%	(460	)	271	(316	)
	Hotel operating expenses	7,201		7,071			130			1.8	%	—		—	130
	Bad debt expense (recovery)	40		(92		)	132			(143.5	)%	—		—	132
	Condominium inventory impairment	—		616			(616		)	(100.0	)%	—		—	(616	)
	Interest expense	2,234		2,051			183			8.9	%	(250	)	402	31
	Real estate taxes	1,000		1,062			(62		)	(5.8	)%	(259	)	196	1
	Property management fees	351		530			(179		)	(33.8	)%	(147	)	33	(65	)
	Asset management fees(4)	523		579			(56		)	(9.7	)%	—		27	(83	)
	General and administrative	1,423		1,023			400			39.1	%	—		—	400
	Depreciation and amortization	2,726		3,064			(338		)	(11.0	)%	(659	)	426	(105	)
Total expenses		$	16,997	$	17,908		$	(911	)	(5.1	)%	(1,775	)	1,355	(491	)
	Other Income, net	$	—	$	10		$	(10	)	(100.0	)%	—		—	(10	)
	Equity in earnings (losses) of unconsolidated joint venture	$	3	$	(88	)	$	91		(103.4	)%	—		—	91
	Gain on sale of real estate	$	1,748	$	—		$	1,748		100.0	%	—		—	1,748
	Gain on extinguishment of debt	$	1,624	$	—		$	1,624		100.0	%	1,624		—	—

______________________

(1) Represents the dollar amount increase (decrease) for the three months ended June 30, 2016 compared to the three months ended June 30, 2015 related to the 2016 dispositions of Las Colinas Commons and Northborough Tower.

(2) Represents the dollar amount increase for the three months ended June 30, 2016 compared to the three months ended June 30, 2015 related to The Ablon at Frisco Square, which began operations in February 2016.

(3) Represents the dollar amount increase (decrease) for the three months ended June 30, 2016 compared to the three months ended June 30, 2015 with respect to real estate and real estate-related investments owned by us during the entire periods presented (“Same Store”). Same Store for the periods ended June 30, 2016 and 2015 includes Chase Park Plaza, Frisco Square, Northpoint Central, The Lodge and Spa at Cordillera, and Royal Island.

(4) Asset management fees payable to the Advisor are an obligation of the Company, and as such, asset management fees associated with all investments owned during the period are classified in continuing operations. Therefore, the amounts above include asset management fees associated with any property owned during a particular period, including those related to our disposed properties.

31

Revenues.  Our total revenues decreased by $1.7 million to $13.4 million for the three months ended June 30, 2016 as compared to the same period in 2015, primarily due to the 2016 asset dispositions of Las Colinas Commons and Northborough Tower.

The change in revenues also included the following:

• Rental revenue decreased $1.3 million to $3.8 million for the second quarter of 2016 as compared to $5.1 million for the second quarter of 2015 primarily due to a decrease of $0.7 million in rental revenue for our Las Colinas Commons office buildings which were sold on February 2, 2016 and a decrease of $1 million in rental revenue for our Northborough Tower office building which was disposed on May 9, 2016. These decreases were partially offset by an increase of $0.5 million related to The Ablon at Frisco Square, which began operations in February 2016.

• Hotel revenue decreased $0.4 million to $9.5 million during the second quarter of 2016 primarily due to a $0.6 million decrease in banquet food and beverage revenue at Chase Park Plaza Hotel, which was offset by a $0.2 million increase for The Lodge & Spa at Cordillera due to a 30% increase in occupancy.

Property operating expenses.  Property operating expenses were approximately $1.5 million and $2 million for the three months ended June 30, 2016 and 2015, respectively, and were composed of operating expenses from our consolidated properties. The $0.5 million decrease was primarily due to the 2016 asset dispositions of Las Colinas Commons and Northborough Tower.

Hotel operating expenses.  Hotel operating expenses were approximately $7.2 million and $7.1 million for the three months ended June 30, 2016 and 2015, respectively, for an increase of approximately $0.1 million. Hotel operating expenses at Chase Park Plaza Hotel and The Lodge & Spa at Cordillera increased approximately $0.1 million for the three months ended June 30, 2016 compared to the same period in 2015. The increases in hotel operating expenses for both properties were primarily due to increases in food and beverage service expense.

Bad debt expense (recovery).  We had bad debt expenses of less than $0.1 million in the second quarter of 2016 compared to bad debt recoveries of less than $0.1 million in the second quarter of 2015.

Condominium inventory impairment. In the second quarter of 2015, we recorded an impairment of $0.6 million associated with our one remaining condominium unit at Chase — The Private Residences. This impairment was based on current market information and our decision to dispose of the asset in the nearer term. We sold the condominium unit during the first quarter of 2016.

Interest expense.  Interest expense for the three months ended June 30, 2016 and 2015 was approximately $2.2 million and $2 million, respectively. The increase of $0.2 million in interest expense was primarily due to a $0.4 million increase at The Ablon at Frisco Square related to the increase in LIBOR rate. This increase was partially offset by a $0.2 million decrease related to our asset dispositions in 2016.

Real estate taxes. Real estate taxes remained fairly constant at $1.0 million and $1.1 million for the three months ended June 30, 2016 and 2015, respectively.

Property management fees.  Property management fees remained fairly constant at $0.4 million and $0.5 million for the three months ended June 30, 2016 and 2015, respectively.

Asset management fees.  Asset management fees remained fairly constant at approximately $0.5 million and $0.6 million for the three months ended June 30, 2016 and 2015, respectively.

General and administrative expense.  General and administrative expense was $1.4 million and $1 million for the three months ended June 30, 2016 and 2015, respectively. The increase of approximately $0.4 million was primarily due to increases in expenses related to our asset valuation, legal, and audit fees.

Depreciation and amortization expense. Depreciation and amortization expense was $2.7 million and $3.1 million for the three months ended June 30, 2016 and 2015, respectively. The decrease of approximately $0.7 million for our disposed assets was partially offset by an increase of $0.4 million related to The Ablon at Frisco Square, which began operations in February 2016.

Equity in earnings (losses) of unconsolidated joint venture.  Equity in earnings (losses) of unconsolidated joint venture was a gain of less than $0.1 million and a loss of less than $0.1 million for the three months ended June 30, 2016 and 2015, respectively.

Gain on sale of real estate. We sold a 5.2 acre undeveloped land parcel at Frisco Square on May 24, 2016 and recorded a gain of $1.7 million. We had no sales of our consolidated properties during the three months ended June 30, 2015.

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Gain on extinguishment of debt. The non-recourse loan for Northborough Tower matured on January 11, 2016 and we did not repay the debt. We actively marketed the property for sale prior to the maturity, but we did not receive any offers above the loan balance. On May 9, 2016 we transferred the property to the lender via a deed-in-lieu of foreclosure. We recorded a gain on extinguishment of debt of $1.6 million. We did not have any extinguishment of debt during the three months ended June 30, 2015.

Six months ended June 30, 2016 as compared to six months ended June 30, 2015

The following table provides summary information about our results of operations for the six months ended June 30, 2016 and 2015 ($ in thousands):

		2016			2015			$ Amount Change Incr/ (Decr)			Percentage Change Incr/(Decr)		$ Change due to Dispositions(1)		$ Change due to Asset Placed in Service(2)	$ Change due to Same Store(3)
Revenues
	Rental revenue	$	7,990		$	9,861		$	(1,871	)	(19.0	)%	(2,205	)	615	(281	)
	Hotel revenue	17,156			17,245			(89		)	(0.5	)%	—		—	(89	)
	Condominium sale	2,271			—			2,271			100.0	%	—		—	2,271
Total revenues		27,417			27,106			311			1.1	%	(2,205	)	615	1,901
Expenses
	Property operating expenses	3,362			3,893			(531		)	(13.6	)%	(746	)	464	(249	)
	Hotel operating expenses	14,102			13,395			707			5.3	%	—		—	707
	Bad debt expense (recovery)	25			40			(15		)	(37.5	)%	—		—	(15	)
	Condominium inventory impairment	—			616			(616		)	(100.0	)%	—		—	(616	)
	Cost of condominium sales	2,271			—			2,271			100.0	%	—		—	2,271
	Interest expense	5,088			4,149			939			22.6	%	330		531	78
	Real estate taxes	2,015			1,660			355			21.4	%	21		303	31
	Property management fees	782			942			(160		)	(17.0	)%	(181	)	61	(40	)
	Asset management fees(4)	1,059			1,147			(88		)	(7.7	)%	—		36	(124	)
	General and administrative	2,634			2,064			570			27.6	%	—		—	570
	Depreciation and amortization	5,364			6,235			(871		)	(14.0	)%	(1,154	)	566	(283	)
Total expenses		36,702			34,141			2,561			7.5	%	(1,730	)	1,961	2,330
	Other Income, net	$	(15	)	$	(51	)	$	36		(70.6	)%	—		—	36
	Equity in earnings (losses) of unconsolidated joint venture	$	57		$	(180	)	$	237		(131.7	)%	—		—	237
	Gain on sale of real estate	$	3,025		$	—		$	3,025		100.0	%	1,277		—	1,748
	Gain on extinguishment of debt	$	1,624		$	—		$	1,624		100.0	%	1,624		—	—

______________________

(1) Represents the dollar amount increase (decrease) for the six months ended June 30, 2016 compared to the six months ended June 30, 2015 related to the 2016 dispositions of Las Colinas Commons and Northborough Tower.

(2) Represents the dollar amount increase for the six months ended June 30, 2016 compared to the six months ended June 30, 2015 related to The Ablon at Frisco Square, which began operations in February 2016.

(3) Represents the dollar amount increase (decrease) for the six months ended June 30, 2016 compared to the six months ended June 30, 2015 with respect to real estate and real estate-related investments owned by us during the entire periods presented (“Same Store”). Same Store for the periods ended June 30, 2016 and 2015 includes Chase Park Plaza, Frisco Square, Northpoint Central, The Lodge and Spa at Cordillera, and Royal Island.

(4) Asset management fees payable to the Advisor are an obligation of the Company, and as such, asset management fees associated with all investments owned during the period are classified in continuing operations. Therefore, the amounts above include asset management fees associated with any property owned during a particular period, including those related to our disposed properties.

33

Continuing Operations

Revenues.  Overall, our total revenues increased by approximately $0.3 million to $27.4 million for the six months ended June 30, 2016.  The change in revenues was primarily due to:

• Rental revenue decreased $1.9 million for the six months ended June 30, 2016 as compared to the same period of 2015. During the first six months of 2015, we received $0.4 million for the successful appeal of 2013 and 2014 real estate taxes for our Northborough Tower property. We reimbursed the funds to the tenant, which resulted in a decrease in rental revenue of $0.4 million. (The receipt of the $0.4 million resulted in a credit to real estate tax expense. See “Real estate taxes” below.) In addition, we had a decrease in rental revenue of $2.2 million during the second quarter of 2016 as a result of our 2016 asset dispositions. These decreases in rental revenue were partially offset by a $0.6 million increase in rental revenue at The Ablon at Frisco Square, which began operations in February 2016.

• Hotel revenue remained fairly constant for the six months ended June 30, 2016. Hotel revenue for Chase Park Plaza Hotel decreased approximately $0.4 million primarily due to a decrease in banquet food and beverage revenue. Hotel revenue at The Lodge & Spa at Cordillera increased $0.3 million in the six months ended June 30, 2016 as compared to the same period of 2015 due primarily to a 25% increase in occupancy.

Property operating expenses.  Property operating expenses were approximately $3.4 million for the six months ended June 30, 2016 as compared to $3.9 million for the six months ended June 30, 2015. The $0.5 million decrease was due to a decrease of approximately $0.7 million related to our disposed assets and a decrease of $0.3 million at Frisco Square, which were partially offset by an increase of $0.5 million related to The Ablon at Frisco Square, which began operations in February 2016.

Hotel operating expenses.  Hotel operating expenses were approximately $14.1 million for the six months ended June 30, 2016 compared to approximately $13.4 million for the six months ended June 30, 2015, for an increase of $0.7 million. Hotel operating expenses at our Chase Park Plaza Hotel increased $0.6 million, primarily due to an increase in food and beverage service expense. Hotel operating expenses at The Lodge & Spa at Cordillera increased by less than $0.1 million period-over-period.

Bad debt expense.  Bad debt expense was less than $0.1 million for the six months ended June 30, 2016 and 2015, each.

Condominium inventory impairment. During the six months ended June 30, 2015, we recorded an impairment of $0.6 million associated with our one remaining condominium unit at Chase — The Private Residences. This impairment was based on current market information and our decision to dispose of the asset in the nearer term. We sold the condominium unit during the first quarter of 2016.

Interest expense.  Interest expense was approximately $5.1 million and $4.1 million for the six months ended June 30, 2016 and 2015, respectively. The increase of $1.0 million in interest expense was primarily due to payment of $0.5 million yield maintenance on the Las Colinas Commons debt, which was paid off in full on February 2, 2016 when the property was sold. In addition, there was a $0.5 million increase at The Ablon at Frisco Square due to increases in the debt balance and the LIBOR rate.

Real estate taxes. Real estate taxes were approximately $2.0 million and $1.6 million for the six months ended June 30, 2016 and 2015, respectively. The $0.4 million increase was primarily due to The Ablon at Frisco Square, which began operations in February 2016.

Property management fees.  Property management fees remained fairly constant at $0.8 million and $0.9 million for the six months ended June 30, 2016 and 2015, respectively.

Asset management fees.  Asset management fees remained constant at $1.1 million for the six months ended June 30, 2016 and 2015.

General and administrative expense.  General and administrative expense was $2.6 million for the six months ended June 30, 2016, an increase of $0.6 million compared to the expense for the same period in 2015. The increase of approximately $0.6 million was primarily due to expenses related to our asset valuation, legal, and audit fees.

Depreciation and amortization expense. Depreciation and amortization expense was $5.4 million and $6.2 million for the six months ended June 30, 2016 and 2015, respectively. The decrease of approximately $1.2 million related to our disposed assets and was partially offset by an increase of $0.6 million related to The Ablon at Frisco Square, which began operations in February 2016.

34

Equity in earnings (losses) of unconsolidated joint venture.  Equity in earnings (losses) of unconsolidated joint venture was a gain of less than $0.1 million for the six months ended June 30, 2016 compared to a loss of $0.2 million for the six months ended June 30, 2015.

Gain on sale of real estate. We sold our Las Colinas Commons office building complex on February 2, 2016 and recorded a gain of $1.3 million. We sold a 5.2 acre undeveloped land parcel at Frisco Square on May 24, 2016 and recorded a gain of $1.7 million. We had no sales of our consolidated properties during the six months ended June 30, 2015.

Gain on extinguishment of debt. The non-recourse loan for Northborough Tower matured on January 11, 2016 and we did not repay the debt. We actively marketed the property for sale prior to the maturity, but we did not receive any offers above the loan balance. On May 9, 2016 we transferred the property to the lender via a deed-in-lieu of foreclosure. We recorded a gain on extinguishment of debt of $1.6 million. We did not have any extinguishment of debt during the six months ended June 30, 2015.

Cash Flow Analysis

During the six months ended June 30, 2016, net cash provided by operating activities was $0.2 million compared to net cash provided by operating activities of $1 million for the same period in 2015. The primary reason for the decrease in cash flow from operating activities was the change in working capital, including the timing of receipts on accounts receivable and payments of accrued liabilities.

Net cash provided by investing activities for the six months ended June 30, 2016 was $16.1 million compared to net cash used in investing activities of $17.2 million for the six months ended June 30, 2015. The difference is primarily due to $21.9 million of proceeds from the dispositions of Las Colinas Commons, Northborough Tower, and our Frisco Square land during the first six months of 2016. In addition, there was an approximate $9 million decrease in cash spent for capital improvements related to The Ablon at Frisco Square during the six months ended June 30, 2016 as compared to the six months ended June 30, 2015. The Ablon at Frisco Square began operations in February 2016.

Net cash used in financing activities for the six months ended June 30, 2016 was approximately $10.9 million compared to net cash provided by financing activities of $4.3 million for the six months ended June 30, 2015. During the six months ended June 30, 2016, we paid off the existing indebtedness totaling approximately $11.3 million associated with the Las Colinas Commons investment and a $3.6 million excess principal payment to reduce Northpoint Central’s loan balance with proceeds from the sale of the Las Colinas Commons asset. Under the terms of the loan, the lender required a release price payment of $14.9 million to release the Las Colinas Commons property from the loan. This was partially offset by draws of $7.4 million under the Ablon Frisco Square Venture construction loan during the six months ended June 30, 2016.

35

Funds from Operations

Funds from operations (“FFO”) is a non-GAAP financial measure that is widely recognized as a measure of REIT operating performance. We use FFO as defined by the National Association of Real Estate Investment Trusts (“NAREIT”) in the April 2002 “White Paper of Funds From Operations” which is net income (loss), computed in accordance with GAAP, excluding extraordinary items, as defined by GAAP, and gains (or losses) from sales of property and impairments of depreciable real estate (including impairments of investments in unconsolidated joint ventures and partnerships which resulted from measurable decreases in the fair value of the depreciable real estate held by the joint venture or partnership), plus depreciation and amortization on real estate assets, and after adjustments for unconsolidated partnerships, joint ventures, subsidiaries, and noncontrolling interests as one measure to evaluate our operating performance.

Historical cost accounting for real estate assets in accordance with GAAP implicitly assumes that the value of real estate diminishes predictably over time. Since real estate values have historically risen or fallen with market conditions, many industry investors and analysts have considered the presentation of operating results for real estate companies that use historical cost accounting alone to be insufficient. As a result, our management believes that the use of FFO, together with the required GAAP presentations, provides a more complete understanding of our performance.

We believe that FFO is helpful to investors and our management as a measure of operating performance because it excludes depreciation and amortization, gains and losses from property dispositions, impairments of depreciable assets, and extraordinary items, and as a result, when compared year to year, reflects the impact on operations from trends in occupancy rates, rental rates, operating costs, development activities, general and administrative expenses, and interest costs, which is not immediately apparent from net income.

FFO should not be considered as an alternative to net loss, as an indication of our liquidity, nor as an indication of funds available to fund our cash needs, including our ability to make distributions and should be reviewed in connection with other GAAP measurements. Additionally, the exclusion of impairments limits the usefulness of FFO as a historical operating performance measure since an impairment charge indicates that operating performance has been permanently affected. FFO is not a useful measure in evaluating net asset value because impairments are taken into account in determining net asset value but not in determining FFO. Our FFO, as presented, may not be comparable to amounts calculated by other REITs that do not define these terms in accordance with the current NAREIT definition or that interpret the definition differently.

Our calculation of FFO for the three and six months ended June 30, 2016 and 2015 is presented below (shares and $ in thousands, except per share amounts):

	Three Months Ended June 30,												Six Months Ended June 30,
Description	2016			Per Share			2015			Per Share			2016			Per Share			2015			Per Share
Net loss attributable to common shareholders	$	(85	)	$	—		$	(2,842	)	$	(0.05	)	$	(4,325	)	$	(0.08	)	$	(7,137	)	$	(0.13	)
Adjustments for:
Impairment charge(1)	—			—			616			0.01			—			—			616			0.01
Real estate depreciation and amortization(2)	2,997			0.05			3,475			0.06			5,928			0.10			7,069			0.13
Gain on asset sales	(1,748		)	(0.03		)	—			—			(3,025		)	(0.05		)	(36		)	—
Funds from operations (FFO) attributable to common shareholders	$	1,164		$	0.02		$	1,249		$	0.02		$	(1,422	)	$	(0.03	)	$	512		$	0.01
GAAP weighted average shares:
Basic and diluted				56,500						56,500						56,500						56,500

 _________________________________

(1) Includes impairment of our investments which resulted from a measurable decrease in the fair value of the depreciable real estate held by the joint venture or partnership. In the second quarter of 2015, we recorded a $0.6 million impairment for our one remaining condominium unit at Chase — The Private Residences.

(2)    Includes our consolidated depreciation and amortization expense, as well as our pro rata share of those unconsolidated investments which we account for under the equity method of accounting and the noncontrolling interest adjustment for the third-party partners’ share.

Cash flows generated from FFO may be used to fund all or a portion of certain capitalizable items that are excluded from FFO, such as capital expenditures and payments of principal on debt, each of which may impact the amount of cash available for future distributions to our stockholders.

36

Distributions

Distributions are authorized at the discretion of our board of directors based on its analysis of our forthcoming cash needs, earnings, cash flow, anticipated cash flow, capital expenditure requirements, cash on hand, general financial condition and other factors that our board deems relevant. The board’s decision will be influenced, in substantial part, by its obligation to ensure that we maintain our status as a REIT. In connection with entering our disposition phase, on March 28, 2011, our board of directors discontinued regular quarterly distributions. Any future distributions will be based on available cash after weighing operational needs.

Historically, distributions paid to stockholders have been funded through various sources, including cash flow from operating activities, proceeds raised as part of our initial public offering, reinvestment through our distribution reinvestment plan and/or additional borrowings. We had no distributions during the six months ended June 30, 2016 and 2015.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements that are reasonably likely to have a current or future material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources. 

Critical Accounting Policies and Estimates

Management’s discussion and analysis of financial condition and results of operations is based upon our condensed consolidated financial statements, which have been prepared in accordance with GAAP.  The preparation of these financial statements requires our 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.  We evaluate these estimates, including investment impairment, on a regular basis.  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.

Our critical accounting policies and estimates have not changed significantly from the discussion found in the Management Discussion and Analysis and Results of Operations in our Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 18, 2016.

37

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Interest Rate Risk

We may be exposed to interest rate changes, primarily as a result of long-term variable rate debt used to acquire properties and make loans and other permitted investments.  Our management’s objectives, with regard to interest rate risks, are to limit the impact of interest rate changes on earnings and cash flows and to lower overall borrowing costs.  To achieve these objectives, we will borrow primarily at fixed rates or variable rates with the lowest margins available and in some cases, with the ability to convert variable rates to fixed rates.  With regard to variable rate financing, we will assess interest rate cash flow risk by continually identifying and monitoring changes in interest rate exposures that may adversely impact expected future cash flows and by evaluating hedging opportunities.  We may enter into derivative financial instruments such as options, forwards, interest rate swaps, caps, or floors to mitigate our interest rate risk on a related financial instrument or to effectively lock the interest rate portion of our variable rate debt.  Of our $142.9 million in notes payable, at June 30, 2016, $56.4 million represented debt subject to variable interest rates.  If our variable interest rates increased 100 basis points, we estimate that total annual interest cost, including interest expensed and interest capitalized, would increase by $0.6 million.

Foreign Currency Exchange Risk

At June 30, 2016, we own an approximate 47% interest in a joint venture consisting of 18 properties in the Czech Republic and Poland that holds $5.9 million in local currency-denominated accounts at European financial institutions.  As the cash is held in the same currency as the real estate assets and related loans, we believe that we are not materially exposed to any significant foreign currency fluctuations related to these accounts as it relates to ongoing property operations.  Additionally, we hold $1.1 million in a Euro-denominated account in a United States financial institution.  Material movements in the exchange rate of Euros could materially impact distributions from our foreign investments.

Inflation

The real estate market has not been affected significantly by inflation in the past several years due to the relatively low inflation rate. However, we include provisions in the majority of our tenant leases that would protect us from the impact of inflation. These provisions include 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.

Item 4.Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

As required by Rule 13a-15(b) and Rule 15d-15(b) under the Exchange Act, our management, including our Principal Executive Officer and Principal Financial Officer, evaluated, as of June 30, 2016, the effectiveness of our disclosure controls and procedures as defined in Exchange Act Rule 13a-15(e) and Rule 15d-15(e) using the criteria established in Internal Control - New Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on that evaluation, our Principal Executive Officer and Principal Financial Officer concluded that our disclosure controls and procedures were effective as of June 30, 2016, to provide reasonable assurance that information required to be disclosed by us in this report is recorded, processed, summarized and reported within the time periods specified by the rules and forms of the Exchange Act and is accumulated and communicated to our management, including our Principal Executive Officer and Principal Financial Officer, as appropriate to allow timely decisions regarding required disclosures.

We believe, however, that a controls system, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the controls system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud or error, if any, within a company have been detected.

Changes in Internal Control over Financial Reporting

There has been no change in internal control over financial reporting that occurred during the quarter ended June 30, 2016 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

38

PART II

OTHER INFORMATION 

Item 1. Legal Proceedings.

We are not party to, and none of our properties are subject to, any material pending legal proceedings.

Item 1A. Risk Factors.

Please see the risk factors discussed in Item 1A of Part I of our Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 18, 2016. The following risk factor supplements these previously disclosed risk factors under the same heading in our Annual Report on Form 10-K.

The vote by the United Kingdom to leave the European Union could adversely affect us

On June 23, 2016, the United Kingdom voted to exit the European Union (“Brexit”). Brexit could adversely affect European or worldwide economic or market conditions and could contribute to instability in global financial markets. This uncertainty could delay the disposition of our Central European properties or cause us to ultimately sell such assets for less than their current expected valuation.

Item 2.Unregistered Sales of Equity Securities and Use of Proceeds

Unregistered Sales of Common Stock

During the period covered by this quarterly report, we did not sell any equity securities that were not registered under the Securities Act of 1933, as amended.

Share Redemption Program

In February 2006, our board of directors authorized a share redemption program for stockholders who held their shares for more than one year.  Under the program, our board reserved the right in its sole discretion at any time, and from time to time, to (1) waive the one-year holding period in the event of the death, disability or bankruptcy of a stockholder or other exigent circumstances, (2) reject any request for redemption, (3) change the purchase price for redemptions, or (4) terminate, suspend or amend the share redemption program.

Our board of directors has not considered requests for redemptions (“Ordinary Redemptions”) for reasons other than in the event of death, disability or need for long-term care since March 2009 when the board determined not to accept, and to suspend until further notice, Ordinary Redemptions.

In January 2011, the board completely suspended the redemption program and has not considered any redemption requests since 2010.  Therefore, we did not redeem any shares of our common stock during the six months ended June 30, 2016.

We have not presented information regarding submitted and unfulfilled redemptions as our share redemption program has been completely suspended since the first quarter of 2011 and we believe many stockholders who may otherwise desire to have their shares redeemed have not submitted a request due to the program’s suspension.

 Any redemption requests submitted while the program is suspended will be returned to investors and must be resubmitted upon resumption of the share redemption program.  As we have entered our disposition phase, we do not expect to resume our share redemption program; however, if the share redemption program is resumed, we will give all stockholders notice that we are resuming redemptions, so that all stockholders will have an equal opportunity to submit shares for redemption.  Upon resumption of the program, any redemption requests will be honored pro rata among all requests received based on funds available and will not be honored on a first come, first served basis.

Item 3. Defaults Upon Senior Securities.

None.

Item 4.Mine Safety Disclosures.

None.

Item 5. Other Information.

None.

Item 6. Exhibits.

The exhibits filed in response to Item 601 of Regulation S-K are listed on the Exhibit Index attached hereto.

39

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 Opportunity REIT I, Inc.
Dated:	August 10, 2016	By:	/s/ LISA ROSS
			Lisa Ross
			Chief Financial Officer
			Principal Financial Officer

40

Index to Exhibits

Exhibit Number	Description
3.1	Second Articles of Amendment and Restatement of the Registrant (previously filed in and incorporated by reference to Form 8-K, filed on July 29, 2008)
3.2	Certificate of Correction to Second Articles of Amendment and Restatement of the Registrant (previously filed in and incorporated by reference to Form 8-K, filed on June 9, 2011)
3.3	Amended and Restated Bylaws of the Registrant (previously filed in and incorporated by reference to Form 8-K, filed on March 11, 2010)
3.4	First Amendment to the Amended and Restated Bylaws of the Registrant (previously filed and incorporated by reference to Form 8-K, filed on January 24, 2012)
10.1	Fourth Amended and Restated Advisory Management Agreement between Behringer Harvard Opportunity REIT I, Inc. and Behringer Harvard Opportunity Advisors I, LLC dated May 31, 2016 (previously filed in and incorporated by reference to Form 8-K, filed on May 31, 2016)
10.2	Third Amended and Restated Property Management and Leasing Agreement by and among Behringer Harvard Opportunity REIT I, Inc., Behringer Harvard Opportunity OP I, LP, Behringer Harvard Opportunity Management Services, LLC, Behringer Harvard Real Estate Services, LLC and several affiliated special purpose entities dated May 31, 2016 (previously filed in and incorporated by reference to Form 8-K, filed on May 31, 2016)
31.1*	Rule 13a-14(a)/15d-14(a) Certification
31.2*	Rule 13a-14(a)/15d-14(a) Certification
32.1*(1)	Section 1350 Certification
32.2*(1)	Section 1350 Certification
101*	The following financial statements from the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2016 filed on August 10, 2016, formatted in XBRL: (i) Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Operations and Comprehensive Loss, (iii) Condensed Consolidated Statements of Equity, (iv) Condensed Consolidated Statements of Cash Flows and (v) the Notes to Condensed Consolidated Financial Statements.

_____________________________________________

*filed herewith

(1) In accordance with Item 601(b)(32) of Regulation S-K, this Exhibit is not deemed “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of that section.  Such certifications will not be deemed incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent that the registrant specifically incorporates it by reference.

41

EX-31.1

Exhibit 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

I, Thomas P. Kennedy, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Behringer Harvard Opportunity REIT I, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated this 11th day of May, 2016.
	/s/ THOMAS P. KENNEDY
	Thomas P. Kennedy
	President
	Principal Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

I, Lisa Ross, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Behringer Harvard Opportunity REIT I, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated this 11th day of May, 2016.
	/s/ LISA ROSS
	Lisa Ross
	Chief Financial Officer
	Principal Financial Officer

EX-32.1

Exhibit 32.1

SECTION 1350 CERTIFICATION

This Certificate is being delivered pursuant to the requirements of Section 1350 of Chapter 63 (Mail Fraud) of Title 18 (Crimes and Criminal Procedures) of the United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

The undersigned, who is the President of Behringer Harvard Opportunity REIT I, Inc. (the “Company”), hereby certifies to his knowledge:

The Quarterly Report on Form 10-Q of the Company (the “Report”), which accompanies this Certificate, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and all information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated this 11th day of May, 2016.

/s/ THOMAS P. KENNEDY    

Thomas P. Kennedy

President

A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act of 2002 has been provided to the registrant and will be retained by the registrant and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

Exhibit 32.2

SECTION 1350 CERTIFICATION

This Certificate is being delivered pursuant to the requirements of Section 1350 of Chapter 63 (Mail Fraud) of Title 18 (Crimes and Criminal Procedures) of the United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

The undersigned, who is the Chief Financial Officer of Behringer Harvard Opportunity REIT I, Inc. (the “Company”), hereby certifies to her knowledge:

The Quarterly Report on Form 10-Q of the Company (the “Report”), which accompanies this Certificate, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and all information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated this 11th day of May, 2016.

/s/ LISA ROSS            

Lisa Ross

Chief Financial Officer

A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act of 2002 has been provided to the registrant and will be retained by the registrant and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Document and Entity Information	6 Months Ended
	Jun. 30, 2016 shares
Document and Entity Information
Entity Registrant Name	Behringer Harvard Opportunity REIT I, Inc.
Entity Central Index Key	0001308711
Document Type	10-Q
Document Period End Date	Jun. 30, 2016
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Non-accelerated Filer
Entity Common Stock, Shares Outstanding	56,500,472
Document Fiscal Year Focus	2016
Document Fiscal Period Focus	Q2

XML

Condensed Consolidated Balance Sheets - USD ($)	Jun. 30, 2016	Dec. 31, 2015
Real estate
Land and improvements, net	$ 54,946,000	$ 58,936,000
Buildings and improvements, net	155,735,000	132,670,000
Real estate under development	0	39,121,000
Total real estate	210,681,000	230,727,000
Real Estate Held-for-sale	0	12,679,000
Condominium inventory	0	2,201,000
Cash and cash equivalents	26,129,000	20,746,000
Restricted cash	5,392,000	8,880,000
Accounts receivable, net	4,307,000	6,273,000
Prepaid expenses and other assets	1,371,000	2,015,000
Investments in unconsolidated joint ventures	14,121,000	13,953,000
Furniture, fixtures and equipment, net	3,826,000	2,719,000
Lease intangibles, net	1,270,000	2,248,000
Other intangibles, net	3,908,000	4,205,000
Total assets	271,005,000	306,646,000
Liabilities and Equity
Notes payable, net	142,879,000	154,460,000
Accounts payable	1,128,000	3,433,000
Payables to related parties	472,000	747,000
Acquired below-market leases, net	0	758,000
Accrued and other liabilities	24,102,000	25,606,000
Real Estate Liabilities Associated with Assets Held for Development and Sale	0	14,897,000
Total liabilities	168,581,000	199,901,000
Commitments and contingencies	0	0
Behringer Harvard Opportunity REIT I, Inc. Equity:
Preferred stock, $.0001 par value per share; 50,000,000 shares authorized, none outstanding	0	0
Convertible stock, $.0001 par value per share; 1,000 shares authorized, 1,000 shares issued and outstanding	0	0
Common stock, $.0001 par value per share; 350,000,000 shares authorized, and 56,500,472 shares issued and outstanding at June 30, 2016 and December 31, 2015	6,000	6,000
Additional paid-in capital	507,303,000	507,303,000
Accumulated distributions and net loss	(401,584,000)	(397,259,000)
Accumulated other comprehensive income (loss)	(3,988,000)	(4,301,000)
Total Behringer Harvard Opportunity REIT I, Inc. equity	101,737,000	105,749,000
Noncontrolling interest	687,000	996,000
Total equity	102,424,000	106,745,000
Total liabilities and equity	$ 271,005,000	$ 306,646,000

XML

Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Jun. 30, 2016	Dec. 31, 2015
Statement of Financial Position [Abstract]
Preferred stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Preferred stock, shares authorized	50,000,000	50,000,000
Preferred stock, shares outstanding	0	0
Convertible stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Convertible stock, shares authorized	1,000	1,000
Convertible stock, shares issued	1,000	1,000
Convertible stock, shares outstanding	1,000	1,000
Common stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Common stock, shares authorized	350,000,000	350,000,000
Common stock, shares issued	56,500,472	56,500,472
Common stock, stares outstanding	56,500,472	56,500,472

XML

Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Revenues
Rental revenue	$ 3,849	$ 5,134	$ 7,990	$ 9,861
Hotel revenue	9,537	9,947	17,156	17,245
Sales of Real Estate	0	0	2,271	0
Total revenues	13,386	15,081	27,417	27,106
Expenses
Property operating expenses	1,499	2,004	3,362	3,893
Hotel operating expenses	7,201	7,071	14,102	13,395
Bad debt expense (recovery)	40	92	(25)	(40)
Cost of Real Estate Sales	0	0	2,271	0
Impairment of Real Estate	0	616	0	616
Interest expense	2,234	2,051	5,088	4,149
Real estate taxes	1,000	1,062	2,015	1,660
Property management fees	351	530	782	942
Asset management fees	523	579	1,059	1,147
General and administrative	1,423	1,023	2,634	2,064
Depreciation and amortization	2,726	3,064	5,364	6,235
Total expenses	16,997	17,908	36,702	34,141
Interest income	1	5	2	10
Other expense, net	0	10	(15)	(51)
Gains (Losses) on Extinguishment of Debt from Continuing Operations	1,624	0	1,624	0
Loss before gain on sale of real estate, income tax expense and equity in earnings (losses) of unconsolidated joint venture	(1,986)	(2,812)	(7,674)	(7,076)
Gain on sale of real estate	1,748	0	3,025	0
Income tax expense	(20)	(34)	(42)	(70)
Equity in earnings (losses) of unconsolidated joint venture	3	(88)	57	(180)
Net loss	(255)	(2,934)	(4,634)	(7,326)
Net loss attributable to the noncontrolling interest	170	92	309	189
Net loss attributable to common shareholders	$ (85)	$ (2,842)	$ (4,325)	$ (7,137)
Weighted average shares outstanding:
Basic and diluted (in shares)	56,500	56,500	56,500	56,500
Basic and diluted loss per share (in dollars per share)	$ 0.00	$ (0.05)	$ (0.08)	$ (0.13)
Comprehensive income (loss)
Net loss	$ (255)	$ (2,934)	$ (4,634)	$ (7,326)
Other comprehensive income (loss):
Foreign currency translation gain (loss)	(398)	412	313	(1,789)
Total other comprehensive income (loss)	(398)	412	313	(1,789)
Comprehensive loss	(653)	(2,522)	(4,321)	(9,115)
Comprehensive loss attributable to the noncontrolling interest	170	92	309	189
Comprehensive loss attributable to common shareholders	$ (483)	$ (2,430)	$ (4,012)	$ (8,926)

XML

Condensed Consolidated Statements of Equity - USD ($) $ in Thousands	Total	Common Stock	Additional Paid-In Capital	Accumulated Distributions and Net Loss	Accumulated Other Comprehensive Income (Loss)	Noncontrolling Interest [Member]	Convertible Stock
Balance (in shares) at Dec. 31, 2014		56,500,472					1,000
Balance at Dec. 31, 2014	$ 134,038	$ 6	$ 507,303	$ (372,071)	$ (1,817)	$ 617
Increase (Decrease) in Stockholders' Equity
Net loss	(7,326)			(7,137)		(189)
Contributions from noncontrolling interest	766					766
Other comprehensive income:
Foreign currency translation gain (loss)	(1,789)				(1,789)
Balance (in shares) at Jun. 30, 2015		56,500,472					1,000
Balance at Jun. 30, 2015	125,689	$ 6	507,303	(379,208)	(3,606)	1,194
Balance (in shares) at Dec. 31, 2015		56,500,472					1,000
Balance at Dec. 31, 2015	106,745	$ 6	507,303	(397,259)	(4,301)	996
Increase (Decrease) in Stockholders' Equity
Net loss	(4,634)			(4,325)		(309)
Other comprehensive income:
Foreign currency translation gain (loss)	313				313
Balance (in shares) at Jun. 30, 2016		56,500,472					1,000
Balance at Jun. 30, 2016	$ 102,424	$ 6	$ 507,303	$ (401,584)	$ (3,988)	$ 687

XML

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
Cash flows from operating activities:
Net loss	$ 4,634	$ 7,326
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	5,360	6,113
Amortization of deferred financing fees	323	333
Gain (Loss) on Extinguishment of Debt	(1,624)	0
Gains (Losses) on Extinguishment of Debt	(16)	0
Bad debt expense (recovery)	(25)	(40)
Gain on sale of real estate	(3,025)	0
Impairment of Real Estate	0	616
Equity in (earnings) losses of unconsolidated joint venture	(57)	180
Change in operating assets and liabilities:
Accounts receivable	118	(392)
Prepaid expenses and other assets	641	(287)
Condominium inventory	2,201	5
Accounts payable	296	(27)
Accrued and other liabilities	976	2,134
Payables to related parties	(274)	(134)
Lease intangibles	(154)	(238)
Cash provided by operating activities	188	1,017
Cash flows from investing activities:
Proceeds from sale of real estate	21,852	0
Additions of property and equipment	(8,953)	(16,283)
Change in restricted cash	3,040	(948)
Proceeds from Distributions Received from Real Estate Partnerships	202	0
Cash provided by (used in) investing activities	16,141	(17,231)
Cash flows from financing activities:
Proceeds from notes payable	7,996	4,154
Payments on notes payable	(18,942)	(622)
Contributions from noncontrolling interest holders	0	766
Cash provided by (used in) financing activities	(10,946)	4,298
Net change in cash and cash equivalents	5,383	(11,916)
Cash and cash equivalents at beginning of the year	20,746	35,015
Cash and cash equivalents at end of the period	$ 26,129	$ 23,099

XML

Business

6 Months Ended

Jun. 30, 2016

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Business

Business

Behringer Harvard Opportunity REIT I, Inc. (which may be referred to as the “Company,” “we,” “us,” or “our”) was incorporated in November 2004 as a Maryland corporation and has elected to be taxed, and currently qualifies, as a real estate investment trust (“REIT”) for federal income tax purposes.

We operate commercial real estate and real estate-related assets located in and outside the United States. With our opportunistic and value-add investment strategy, we have focused generally on acquiring properties with significant possibilities for capital appreciation, such as those requiring development, redevelopment, or repositioning, or those located in markets and submarkets with higher volatility, lower barriers to entry, and high growth potential.  We have acquired a wide variety of properties, including office, retail, hospitality, recreation and leisure, multifamily, industrial, and other properties.  We have purchased existing and newly constructed properties and properties under development or construction.  As of June 30, 2016, we wholly owned two properties and consolidated three properties through investments in joint ventures on our condensed consolidated balance sheet.  In addition, we have a noncontrolling, unconsolidated ownership interest in a joint venture consisting of 18 properties that is accounted for using the equity method.  Our investment properties are located in Colorado, Missouri, Texas, the Commonwealth of The Bahamas, the Czech Republic, and Poland.

Substantially all of our business is conducted through Behringer Harvard Opportunity OP I, LP, a Texas limited partnership organized in November 2004 (the “Operating Partnership”), or its subsidiaries.  Our wholly owned subsidiary, BHO, Inc., a Delaware corporation, owns less than a 0.1% interest in the Operating Partnership as its sole general partner.  The remaining interest of the Operating Partnership is held as a limited partnership interest by our wholly owned subsidiary, BHO Business Trust, a Maryland business trust.

We have entered our disposition phase and are currently considering liquidity options for our stockholders. Therefore, we are not actively seeking to purchase additional properties. In February 2016, the special committee of the board of directors of the Company, composed of all of the Company’s independent directors, hired investment banking firm Robert W. Baird & Co., Inc. (“Baird”) to act as financial advisor to the Company in connection with its general financial strategy and planning and to assist the special committee in evaluating strategic alternatives available to the Company. The special committee and the board of directors may determine that it would be in the best interests of the Company and our stockholders to adopt a plan of liquidation that would involve the sale of the Company’s remaining assets. In the event of such a determination, the proposed plan of liquidation would be presented to the Company’s stockholders for approval.

We are externally managed and advised by Behringer Harvard Opportunity Advisors I, LLC (“Behringer Harvard Opportunity Advisors I” or the “Advisor”), a Texas limited liability company.  Behringer Harvard Opportunity Advisors I is responsible for managing our day-to-day affairs and for identifying and making acquisitions, dispositions, and investments on our behalf.

Presentation of Financial Statements

Our financial statements are presented on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business as we proceed through our disposition phase.  As is usual for opportunity-style real estate investment programs, we are structured as a finite-life entity, and have entered the final phase of operations.  This phase includes selling our assets, retiring our liabilities, and distributing net proceeds to stockholders.  We have experienced significant losses and may generate negative cash flows as mortgage note obligations and expenses exceed revenues.   If we are unable to sell a property when we determine to do so, it could have a significant adverse effect on our cash flows that are necessary to meet our mortgage obligations and our ability to satisfy our other liabilities in the normal course of business.

Our ability to continue as a going concern is dependent upon our ability to sell real estate investments, to pay down debt as it matures if extensions or new financings are unavailable, and our ability to fund ongoing costs of our Company, including our development and operating properties.

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Interim Unaudited Financial Information

6 Months Ended

Jun. 30, 2016

Interim Unaudited Financial Information

Interim Unaudited Financial Information

Interim Unaudited Financial Information

The accompanying condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2015, which was filed with the Securities and Exchange Commission (“SEC”) on March 18, 2016.  Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted 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.

The results for the interim periods shown in this report are not necessarily indicative of future financial results.  The accompanying condensed consolidated balance sheet as of June 30, 2016, the condensed consolidated statements of operations and comprehensive loss for the three and six months ended June 30, 2016 and 2015, and the condensed consolidated statements of equity and cash flows for the six months ended June 30, 2016 and 2015 have not been audited by our independent registered public accounting firm.  In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all adjustments necessary to fairly present our condensed consolidated financial position as of June 30, 2016 and our condensed consolidated results of operations, equity, and cash flows for the periods ended June 30, 2016 and 2015.  Such adjustments are normal and recurring in nature.

As discussed in Note 6, Real Estate Investments, subheading Discontinued Operations, effective January 1, 2015, we adopted the Financial Accounting Standards Board (“FASB”) guidance that changes the criteria for reporting a discontinued operation. This adoption impacts the comparability of our financial statements as disposals of individual operating properties will generally no longer qualify as discontinued operations.

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Assets and Liabilities Measured at Fair Value Assets and Liabilities Measured at Fair Value

6 Months Ended

Jun. 30, 2016

Fair Value Disclosures [Abstract]

Assets and Liabilities Measured at Fair Value Disclosure [Text Block]

Assets and Liabilities Measured at Fair Value

Fair value measurements are determined based on the assumptions that market participants would use in pricing the asset or liability.  As a basis for considering market participant assumptions in fair value measurements, a fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within Levels 1 and 2 of the hierarchy) and the reporting entity’s own assumptions about market participant assumptions (unobservable inputs classified within Level 3 of the hierarchy) has been established.

Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets and liabilities that we have the ability to access.  Level 2 inputs are inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly.  Level 2 inputs may include quoted prices for similar assets and liabilities in active markets, as well as inputs that are observable for the asset or liability (other than quoted prices), such as interest rates, foreign exchange rates, and yield curves that are observable at commonly quoted intervals.  Level 3 inputs are unobservable inputs for the asset or liability that are typically based on an entity’s own assumptions, as there is little, if any, related market activity.  In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety.  Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability.

Recurring Fair Value Measurements

Historically, we have used interest rate caps to manage our interest rate risk.  The valuation of these instruments was determined using widely accepted valuation techniques, including discounted cash flow analysis on the expected cash flows of each derivative.  This analysis reflected the contractual terms of the derivatives, including the period to maturity, and used observable market-based inputs, including interest rate curves, implied volatilities, and foreign currency exchange rates.

As of June 30, 2016 and December 31, 2015, we had no derivatives.

Nonrecurring Fair Value Measurements

We did not record any non-cash impairment charges during the three and six months ended June 30, 2016.

During the year ended December 31, 2015, we recorded non-cash impairment charges totaling $12.3 million. We recorded $2.1 million and $2.7 million of non-cash impairment charges to reduce the carrying values of our Northborough Tower and Northpoint Central office buildings, respectively, to the estimated fair value. In estimating the fair value of both Northborough Tower and Northpoint Central, we considered offers received during the marketing process of the assets in the third quarter of 2015, market comparables and management’s internal discounted cash flow analysis prepared with the consideration of the market conditions in Houston where both buildings are located. In addition, we recorded a non-cash impairment charge of $6.8 million related to our Frisco Square land to reduce the carrying value to the estimated fair value based on an indication of a change in market conditions for land development. In estimating the fair value of the Frisco Square land, we considered market comparables as well as the time and costs to hold the land until developed. We also recorded a $0.7 million non-cash impairment charge to reduce the carrying value of our one remaining condominium at Chase — The Private Residences to current market price. We based the fair value on the current list price less concessions and closing costs totaling $0.2 million for a fair value of $2.2 million at December 31, 2015. We sold the condominium for a cash consideration of $2.5 million on February 22, 2016. The estimates are considered Level 3 under the fair value hierarchy described above.

The following fair value hierarchy tables present information about our assets measured at fair value on a nonrecurring basis during the year ended December 31, 2015 (in thousands):

For the year ended December 31, 2015	Level 1		Level 2		Level 3		Total Fair Value		Loss
Assets
Buildings and improvements, net(1)	$	—	$	—	$	29,500	$	29,500	$	(4,778	)
Land and improvements, net(2)	—		—		19,606		19,606		(6,762		)
Condominium inventory (one remaining finished unit)(3)	—		—		2,201		2,201		(761		)

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(1) In the third quarter of 2015, we recorded non-cash impairments of $2.1 million and $2.7 million associated with our Northborough Tower and Northpoint Central office buildings, respectively.

(2) In the third quarter of 2015, we recorded a $6.8 million non-cash impairment associated with our Frisco Square land.

(3) During 2015, we recorded a non-cash impairment of $0.7 million associated with our one remaining condominium unit at Chase — The Private Residences.

Quantitative Information about Level 3 Fair Value Measurements

Description	Fair Value for the year ended December 31, 2015 (in 000s)		Valuation Techniques	Unobservable Input	Range (Weighted Average)
Buildings and improvements, net(1)	$	29,500	Discounted cash flow	Discount rate Terminal capitalization rate Market rent growth Expense growth rate	7.75% - 11.50% 8.00% - 9.75% 0% - 3.00% 0% - 3.00%
Land and improvements, net(2)	19,606		Market comparable	Lot price Inflation rate Discount rate	$20 - $45 psf 0% - 3.00% 12.50% - 20.00%
Condominium inventory (one remaining finished unit)(3)	2,201		Market comparable	List price for unit; due to limited market comparables	$511 to $555  per square feet

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(1) In the third quarter of 2015, we recorded non-cash impairments of $2.1 million and $2.7 million associated with our Northborough Tower and Northpoint Central office buildings, respectively.

(2) In the third quarter of 2015, we recorded a $6.8 million non-cash impairment associated with our Frisco Square land.

(3) During 2015, we recorded a non-cash impairment of $0.7 million associated with our one remaining condominium unit at Chase — The Private Residences.

There were no transfers of assets or liabilities between the levels of the fair value hierarchy during the six months ended June 30, 2016 and the year ended December 31, 2015.

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Fair Value Measurement of Financial Instruments

6 Months Ended

Jun. 30, 2016

Fair Value Disclosures [Abstract]

Fair Value Measurement of Financial Instruments

Fair Value Measurement of Financial Instruments

We determined the following disclosure of estimated fair values using available market information and appropriate valuation methodologies. Considerable judgment is necessary to interpret market data and develop the related estimates of fair value. Accordingly, the estimates presented are not necessarily indicative of the amounts that could be realized upon disposition of the financial instruments. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts.

As of June 30, 2016 and December 31, 2015, management estimated that the carrying value of cash and cash equivalents, restricted cash, accounts receivable, accounts payable, accrued expenses, other liabilities, and payables/receivables from related parties were at amounts that reasonably approximated their fair value based on their highly liquid nature and/or short-term maturities. The fair values are based upon interest rates for mortgages with similar terms and remaining maturities that management believes we could obtain. The fair value of the notes payable is categorized as a Level 2 basis. The fair value is estimated using a discounted cash flow analysis valuation on the borrowing rates currently available for loans with similar terms and maturities. The fair value of the notes payable was determined by discounting the future contractual interest and principal payments by a market rate.

Carrying amounts of our notes payable and the related estimated fair value as of June 30, 2016 and December 31, 2015 are as follows (in thousands):

	June 30, 2016					December 31, 2015(1)
	Carrying Amount			Fair Value		Carrying Amount			Fair Value
Notes payable	$	143,633		$	143,629	$	155,547		$	155,610
Less: unamortized debt issuance costs	(754		)			(1,087		)
Notes payable, net	$	142,879				$	154,460

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(1) Our debt secured by Las Colinas Commons, with a balance at December 31, 2015 of $14.8 million, net of deferred financing fees of $0.1 million is not included in the table, as the investment was classified as held for sale at December 31, 2015.

The fair value estimates presented herein are based on information available to our management as of June 30, 2016 and December 31, 2015. Although our management is not aware of any factors that would significantly affect the estimated fair value amounts, such amounts have not been comprehensively revalued for purposes of these condensed consolidated financial statements since those respective dates, and current estimates of fair value may differ significantly from the amounts presented herein.

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Real Estate Investments

6 Months Ended

Jun. 30, 2016

Real Estate [Abstract]

Real Estate Investments

Real Estate Investments

As of June 30, 2016, we wholly owned two properties and consolidated three properties through investments in joint ventures on our condensed consolidated balance sheets.  In addition, we have a noncontrolling, unconsolidated ownership interest in a joint venture consisting of 18 properties that are accounted for using the equity method.  Capital contributions, distributions, and profits and losses of these properties are allocated in accordance with the terms of the applicable partnership agreement.

The following table presents certain information about our consolidated properties as of June 30, 2016:

Property Name	Location	Approximate Rentable Square Footage	Description	Ownership Interest	Year Acquired
Chase Park Plaza	St. Louis, Missouri	—	hotel and condominium development property	100%	2006
Frisco Square	Frisco, Texas	(1)	mixed-use development (multifamily, retail, office, restaurant and land)	(1)	2007
Northpoint Central	Houston, Texas	180,000	9-story office building	100%	2007
The Lodge & Spa at Cordillera	Edwards, Colorado	—	land, hotel and development property	94%	2007
Royal Island(2)	Commonwealth of Bahamas	—	land	87%	2012

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(1) Our Frisco Square mixed-use development consists of 101,000 square feet of office space, 71,000 square feet of retail, a 41,500 square foot movie theater, 114 multifamily units, approximately 27 acres of land which we own 100%, and a 275-unit multifamily project which became fully developed in the first quarter of 2016 in which we own a 90% interest.

(2) Our initial investment in Royal Island was made in May 2007. We consolidated Royal Island as of June 6, 2012 when we obtained all of the outstanding shares of Royal Island (Australia) Pty Limited. A third party indirectly owns 12.71% of Royal Island.

Real Estate Development

The Ablon at Frisco Square

On August 26, 2014, we contributed 3.4 acres of land held by our Frisco Square mixed-use project to The Ablon at Frisco Square, LLC (“Ablon Frisco Square Venture”), a special purpose entity in which we own a 90% limited partnership interest. The venture was formed to construct a 275-unit multifamily project. Concurrently, with the land contribution, the joint venture closed on a $26.3 million construction loan. See Note 9, Notes Payable, for additional information. Construction on the development began on September 2, 2014. Total construction costs for the development were approximately $41.5 million. The project was completed and available for occupancy in the first quarter of 2016. As of June 30, 2016, the project was approximately 71% leased and 57% occupied.

Real Estate Asset Dispositions

Las Colinas Commons

On February 2, 2016, we sold Las Colinas Commons for a contract sales price of approximately $14.3 million, resulting in $14 million of cash proceeds after reduction for certain transaction costs. We recorded a gain on sale of real estate property of $1.3 million. Las Colinas Commons and Northpoint Central are both borrowers under a loan that matures in May 2017. Under the terms of the loan, the lender required a release price payment of $14.9 million to release the Las Colinas Commons property from the loan. A portion of the proceeds from the sale were used to pay off in full the existing indebtedness of approximately $11.3 million associated with the office building. The $3.6 million excess principal payment amount was used to reduce Northpoint Central’s loan balance. Las Colinas Commons was classified as held for sale on our consolidated balance sheet at December 31, 2015. The full release price was reclassified as a liability associated with our real estate held for sale as of December 31, 2015.

Northborough Tower

The non-recourse loan for Northborough Tower matured on January 11, 2016 and we did not repay the debt. On May 9, 2016, we transferred the property to the lender via a deed-in-lieu of foreclosure. As a result of the transfer, we recorded a gain on extinguishment of debt of $1.6 million representing the difference between the debt extinguished of $16 million over the net book value of the assets and liabilities transferred to the lender of $14.4 million. During 2015, we recorded a non-cash impairment of $2.1 million for Northborough Tower. At the date of transfer, we assessed the carrying value of the assets and liabilities transferred to the lender and concluded that an additional impairment was not needed.

Frisco Square Land Sale

On May 24, 2016, we sold a 5.2 acre parcel of undeveloped land at Frisco Square for a contract sales price of approximately $8 million. We recorded a gain on sale of real estate property of $1.7 million.

Disposed Real Estate Reported in Continuing Operations

The Company does not view the 2016 disposals of Las Colinas Commons and Northborough Tower as a strategic shift. Therefore, the results of operations of these properties continues to be included in continuing operations within the condensed consolidated statements of operations prior to the dispositions.

The following table presents net income attributable to the Company for the three and six months ended June 30, 2016 and 2015 related to Las Colinas Commons and Northborough Tower. Net income for the three months ended June 30, 2016 includes the $1.6 million gain on extinguishment of debt of Northborough Tower. Net income for the six months ended June 30, 2016 includes the $1.3 million gain on sale of Las Colinas Commons and the $1.6 million gain on extinguishment of debt of Northborough Tower (in thousands):

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
Description	2016		2015		2016		2015
Net income attributable to the Company	$	1,859	$	227	$	2,666	$	453

Discontinued Operations

Effective January 1, 2015, we adopted the provisions of FASB guidance in ASU 2014-08, issued in April 2014, regarding the reporting of discontinued operations. As a result of this adoption, the results of operations and gain on sale of real estate from disposals from January 1, 2015 forward that do not meet the criteria of a strategic shift that has or will have a major effect on our operations and financial results will be presented as continuing operations in our consolidated statements of operations.

Investment in Unconsolidated Joint Venture

The following table presents certain information about our unconsolidated investment as of June 30, 2016 and December 31, 2015 ($ in thousands):

	Ownership Interest		Carrying Value of Investment
Property Name			June 30, 2016		December 31, 2015
Central Europe Joint Venture	47.01	%	$	14,121	$	13,953

Our investment in the unconsolidated joint venture as of June 30, 2016 and December 31, 2015 consisted of our proportionate share of the combined assets and liabilities of our investment property, shown at 100%, as follows (in thousands):

	June 30, 2016		December 31, 2015
Real estate assets, net	$	59,309	$	59,415
Cash and cash equivalents	5,937		6,827
Other assets	1,423		1,441
Total assets	$	66,669	$	67,683
Notes payable	$	40,808	$	40,895
Other liabilities	1,818		2,526
Total liabilities	42,626		43,421
Equity	24,043		24,262
Total liabilities and equity	$	66,669	$	67,683

Our equity in earnings (losses) from our investment is our proportionate share of the combined earnings (losses) of our unconsolidated joint venture, shown at 100%, for the three and six months ended June 30, 2016 and 2015, as follows (in thousands):

	Three Months Ended June 30,					Six Months Ended June 30,
	2016		2015			2016		2015
Revenue	$	1,612	$	2,201		$	3,348	$	4,444
Operating expenses:
Operating expenses	532		520			1,036		1,029
Property taxes	52		64			100		132
Total operating expenses	584		584			1,136		1,161
Operating income	1,028		1,617			2,212		3,283
Non-operating expenses:
Depreciation and amortization	601		838			1,189		1,696
Interest and other, net	420		966			901		2,048
Gain on sale			—					(78		)
Total non-operating expenses	1,021		1,804			2,090		3,666
Net income (loss)	$	7	$	(187	)	$	122	$	(383	)
Equity in earnings (losses) of unconsolidated joint venture(1)	$	3	$	(88	)	$	57	$	(180	)

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(1) Company’s share of net income (loss).

We will recognize CTA upon the sale of all or substantially all of the assets in our Central Europe Joint Venture, which is our only foreign investment. See Note 3, Summary of Significant Accounting Policies, Foreign Currency Translation.

We evaluate our investment in unconsolidated joint venture at each reporting date. If we believe there is an other than temporary decline in market value, we will record an impairment charge based on these evaluations. We assess potential impairment by comparing our portion of estimated future undiscounted operating cash flows expected to be generated by the joint venture over the life of the joint venture’s assets to the carrying amount of the joint venture. In the event that the carrying amount exceeds our portion of estimated future undiscounted operating cash flows, we recognize an impairment loss to adjust the carrying amount of the joint venture to its estimated fair value.

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Real Estate Held for Sale

6 Months Ended

Jun. 30, 2016

Discontinued Operations and Real Estate Held for Sale

Discontinued Operations and Real Estate Held for Sale

Real Estate Held for Sale

As of December 31, 2015, Las Colinas Commons was classified as real estate held for sale on our consolidated balance sheet. We did not have any real estate assets classified as held for sale at June 30, 2016.

In 2006, we acquired Las Colinas Commons, an office building located in the Dallas, Texas area. We entered into a purchase and sale agreement with an unaffiliated third party on December 18, 2015 with a contract sales price of $14.3 million. The sales transaction closed on February 2, 2016.

The major classes of assets and liabilities associated with our real estate held for sale as of December 31, 2015 were as follows (in thousands):

Description	Amount
Land and improvements, net	$	2,785
Building and improvements, net	8,362
Lease intangibles, net	668
Straight-line rent	864
Assets associated with real estate held for sale	12,679
Notes payable(1)	$	14,900
Deferred financing fees(2)	(69		)
Notes payable, net of deferred financing fees	14,831
Accrued and other liabilities	66
Obligations associated with real estate held for sale	$	14,897

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(1) Las Colinas Commons and Northpoint Central are both borrowers under a loan that matures in May 2017. The Las Colinas Commons loan balance at December 31, 2015 was $11.3 million. Under the terms of the loan, the lender required a release price payment of $14.9 million to release the Las Colinas Commons property from the loan. The $3.6 million excess principal payment was used to reduce Northpoint Central’s loan balance. We reclassified the full release price as a liability associated with our real estate held for sale as of December 31, 2015.

(2) Effective January 1, 2016, we adopted ASU 2015-03, which requires companies to present debt issuance costs related to a recognized debt liability as a direct reduction from the carrying amount of the related debt liability. See Note 3, Summary of Significant Accounting Policies, under the caption New Accounting Pronouncements for further details.

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Variable Interest Entities

6 Months Ended

Jun. 30, 2016

Variable Interest Entities

Variable Interest Entity Disclosure [Text Block]

8. Variable Interest Entities

As discussed in Note 3, Summary of Significant Accounting Policies, effective January 1, 2016, we have adopted the guidance in ASU 2015-02. As a result, the Operating Partnership (see Note 1, Business) and each of our less than wholly-owned real estate partnerships (Behringer Harvard Cordillera, LLC, Behringer Harvard Residences at Cordillera, LLC and Behringer Harvard Royal Island Debt, LP) have been deemed to have the characteristics of a VIE. However, we were not required to consolidate any previously unconsolidated entities or deconsolidate any previously consolidated entities as a result of the change in classification. Accordingly, there has been no change to the amounts reported in our condensed consolidated balance sheets and statements of cash flows or amounts recognized in our condensed consolidated statements of operations.

Consolidated VIEs

We consolidate the Operating Partnership, Behringer Harvard Cordillera, LLC, Behringer Harvard Residences at Cordillera, LLC and Behringer Harvard Royal Island Debt, LP, which are variable interest entities, or VIEs, for which the Company is the primary beneficiary. Generally, a VIE is a legal entity in which the equity investors do not have the characteristics of a controlling financial interest or the equity investors lack sufficient equity at risk for the entity to finance its activities without additional subordinated financial support. A limited partnership is considered a VIE when the majority of the limited partners unrelated to the general partner possess neither the right to remove the general partner without cause, nor certain rights to participate in the decisions that most significantly affect the financial results of the partnership. In determining whether we are the primary beneficiary of a VIE, we consider qualitative and quantitative factors, including, but not limited to: which activities most significantly impact the VIE’s economic performance and which party controls such activities; the amount and characteristics of our investment; the obligation or likelihood for us or other investors to provide financial support; and the similarity with and significance to our business activities and the business activities of the other investors. Significant judgments related to these determinations include estimates about the current and future fair values and performance of real estate held by these VIEs and general market conditions.

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Notes Payable

6 Months Ended

Jun. 30, 2016

Debt Disclosure [Abstract]

Notes Payable

Notes Payable

The following table sets forth our notes payable on our consolidated properties at June 30, 2016 and December 31, 2015 (in thousands):

	Notes Payable as of
Description	June 30, 2016			December 31, 2015			Interest Rate	Maturity Date
Northborough Tower(1)	$	—		$	18,516		8.67%(1)	1/11/2016
Royal Island(2)	14,489			13,872			15.00%	10/10/2016
Northpoint Central(3)	11,235			11,720			5.15%	5/9/2017
Chase Park Plaza Hotel and Chase — The Private Residences	61,543			62,182			4.95%	8/11/2017
BHFS II, LLC	6,795			6,856			30-day LIBOR + 3%(4)	2/1/2018
BHFS III, LLC	6,099			6,154			30-day LIBOR + 3%(4)	2/1/2018
BHFS IV, LLC	12,671			12,783			30-day LIBOR + 3%(4)	2/1/2018
BHFS Theatre, LLC	4,743			4,785			30-day LIBOR + 3%(4)	2/1/2018
The Ablon at Frisco Square	26,058			18,679			30-day LIBOR + 2.5%(4)	8/26/2017
Total debt	143,633			155,547
Deferred financing fees(5)	(754		)	(1,087		)
Notes payable, net of deferred financing fees	142,879			154,460
Notes payable included with Obligations related to real estate held for sale:
Las Colinas Commons debt(3)	—			14,900			5.15%	5/9/2017
Deferred financing fees(5)	—			(69		)
Notes payable included with Obligations related to real estate held for sale, net of deferred financing fees:	—			14,831
Total notes payable obligations	$	142,879		$	169,291

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(1) Due to the maturity default on our Northborough Tower debt, the stated interest rate of 5.67% was increased to the default interest rate of 8.67% effective January 12, 2016. The property was transferred to the lender via a deed-in-lieu of foreclosure on May 9, 2016.

(2) In January 2016, the lenders agreed to increase the amount available to draw on the loan to $14.4 million. In April 2016, the lenders agreed to increase the amount available to draw on the loan to $14.5 million.

(3) Las Colinas Commons and Northpoint Central are both borrowers under a loan that matures in May 2017. The Las Colinas Commons loan balance at December 31, 2015 was $11.3 million. Under the terms of the loan, the lender required a release price payment of $14.9 million to release the Las Colinas Commons property from the loan. The $3.6 million excess principal payment amount was used to reduce Northpoint Central’s loan balance. We reclassified the full release price as a liability associated with our real estate held for sale as of December 31, 2015.

(4) 30-day LIBOR was 0.47% at June 30, 2016.

(5) Effective January 1, 2016, we adopted ASU 2015-03, which requires companies to present debt issuance costs related to a recognized debt liability as a direct reduction from the carrying amount of the related debt liability. See Note 3, Summary of Significant Accounting Policies, under the caption New Accounting Pronouncements for further details.

Our notes payable balance, net of deferred financing fees of $0.8 million, was $142.9 million at June 30, 2016. Our notes payable balance at December 31, 2015, was $154.5 million, net of deferred financing fees of $1.1 million, and excluding $14.8 million of contractual obligations on real estate held for sale, net of deferred financing fees of less than $0.1 million at December 31, 2015, consisted of new financing and loan assumptions related to our consolidated property acquisitions.

Each of our notes payable is collateralized by one or more of our properties.  At June 30, 2016, our notes payable interest rates ranged from 3% to 15%, with a weighted average interest rate of approximately 5.3%.  Of our $142.9 million in notes payable at June 30, 2016, $56.4 million represented debt subject to variable interest rates.  At June 30, 2016, our notes payable had maturity dates that ranged from October 2016 to February 2018.  We have unconditionally guaranteed payment of the notes payable related to the four loan tranches associated with our Frisco Square investment (the “BHFS Loans”) up to $11.2 million.  The BHFS Loans had an outstanding balance at June 30, 2016 of $30.3 million.

Las Colinas Commons and Northpoint Central are both borrowers under a loan that matures in May 2017. The Las Colinas Commons allocated loan balance at December 31, 2015 was $11.3 million. Under the terms of the loan, the lender required a release price payment of $14.9 million to release the Las Colinas Commons property from the loan. The $3.6 million excess principal payment amount was used to reduce Northpoint Central’s loan balance. The full release price was reclassified as a liability associated with our real estate held for sale as of December 31, 2015. We sold the Las Colinas Commons office buildings on February 2, 2016 and paid in full the existing indebtedness of the Las Colinas Commons loan of $11.3 million and paid $3.6 million to reduce Northpoint Central’s loan balance, which was $11.2 million as of June 30, 2016.

Ablon at Frisco Square Financing

On August 26, 2014, the Ablon Frisco Square Venture obtained a $26.3 million construction loan. The loan incurs interest at 30-day LIBOR plus 2.5% and has a three-year term with two12-month extensions available. Payments of interest-only are required during the initial three-year term. As of June 30, 2016, we had drawn approximately $26.1 million under the construction loan. The project was completed and available for occupancy in the first quarter of 2016. Our joint venture partner, or one of its affiliates, has provided the completion guaranty and any other carve-out guaranties for the construction loan.

Northborough Tower Debt

The non-recourse loan for our Northborough Tower office building matured on January 11, 2016 and we did not pay the outstanding principal balance, which constituted an event of default. Prior to the debt maturity we had actively marketed the property for sale, but did not receive any offers above the loan balance. In December 2015, the lender exercised its right to control the operating funds of the property, as the single tenant of building moved out during the third quarter of 2015. The tenant’s lease does not expire until April 2018, and the tenant continued to make its monthly rental payment. On February 5, 2016, we received a notice from the lender of their intent to increase the interest on the Northborough loan to the default interest rate of 8.67%, effective January 12, 2016, due to the maturity default. In February 2016, the lender applied $0.9 million of cash reserves held for tenant and capital improvements to the principal balance of the loan. The lender also applied $0.8 million of excess cash reserves to the principal balance of the loan. On March 15, 2016, we received a notice that Northborough Tower had been posted for foreclosure on April 5, 2016. The property was transferred to the lender via a deed-in-lieu of foreclosure on May 9, 2016. The outstanding principal balance at the time of the transfer to the lender was $15.9 million.

Chase Park Plaza Modification

On August 4, 2016, we modified the Chase Park Plaza loan to extend the completion date for the required room and common area renovations from August 10, 2016 to August 10, 2017. The Company previously provided a completion guarantee of $6.5 million for the required renovations and that guarantee was reaffirmed with the modification. If the renovation is not completed by August 10, 2017 the lender may require the Company to escrow 125% of the unspent funds related to the renovation.

The loan continues to bear interest at 4.95% and matures on August 11, 2017 with twoone-year extensions available. Under the modification, the property must have a debt service coverage ratio, as defined, of 1.35 to exercise the extension options. Under the modified loan, we are required to escrow $1.5 million with the lender for the estimated 2017 property tax increase due to the expirations of the 10-year property tax abatement program in December 2016.

The modification also requires the establishment of a $3.1 million escrow related to certain facade repairs and enhancements. The lender will disburse funds from the escrow monthly to pay the construction contract draws as the construction project is invoiced and completed. The Park Plaza Residential Association is responsible to reimburse 39.3% of the construction cost as invoiced. The project is expected to be completed in December 2017.

The following table summarizes our aggregate contractual obligations for principal payments as of June 30, 2016 (in thousands):

Principal Payments Due:	Amount
July 1, 2016 - December 31, 2016	$	16,026
2017	98,151
2018	29,456
2019	—
2020	—
Total contractual obligations	143,633
Less: Deferred financing fees, net	(754		)
Notes payable, net	$	142,879

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Related Party Transactions

6 Months Ended

Jun. 30, 2016

Related Party Transactions [Abstract]

Related Party Transactions

Related Party Transactions

The Advisor and certain of its affiliates receive fees and compensation in connection with the acquisition, financing, management, and sale of our assets.

Since our inception, the Advisor or its predecessors have been responsible for managing our day-to-day affairs and for, among other things, identifying and making acquisitions and other investments on our behalf.  Our relationship with the Advisor, including the fees paid by us to the Advisor or the reimbursement of expenses by us for amounts paid, or incurred by the Advisor, on our behalf is governed by an advisory management agreement that has been in place since September 20, 2005 and amended at various times thereafter.  On May 31, 2016 we entered into the Fourth Amended and Restated Advisory Management Agreement (the “Fourth Advisory Agreement”) effective as of May 15, 2016.

The Fourth Advisory Agreement amended and restated the Third Amended and Restated Advisory Management Agreement (the “Third Advisory Agreement”), as amended by the First Amendment to Third Amended and Restated Advisory Management Agreement (the “First Amendment to Third Advisory Agreement”) to: (a) incorporate amendments made by the First Amendment to Third Advisory Agreement into the body of the agreement; (b) amend certain limitations on expense reimbursements to the Advisor; (c) amend the non-solicitation provision; and (d) extend the term of the agreement to May 15, 2017. In all other material respects, the terms of the agreement remain unchanged.

We pay the Advisor or its affiliates an asset management fee of 0.575% of the aggregate asset value of acquired real estate and real estate-related assets other than Royal Island. The fee is payable monthly in arrears in an amount equal to one-twelfth of 0.575% of the aggregate asset value as of the last day of the month.  For each of the three months ended June 30, 2016 and 2015, we incurred approximately $0.5 million and $0.6 million of asset management fees, respectively. For each of the six months ended June 30, 2016 and 2015, we incurred approximately $1 million and $1.1 million of asset management fees, respectively.

The Advisor, or its affiliates, receive acquisition and advisory fees of 2.5% of the contract purchase price of each asset for the acquisition, development or construction of real property or 2.5% of the funds advanced in respect of a loan investment.  For the three and six months ended June 30, 2016 and 2015, we incurred no acquisition and advisory fees.

The debt financing fee paid to the Advisor for a Loan (as defined in the agreement) will be 1% of the loan commitment amount.  Amounts due to the Advisor for a Revised Loan (as defined in the agreement) will be 40 basis points of the loan commitment amount for the first year of any extension (provided the extension is for at least 120 days), an additional 30 basis points for the second year of an extension, and another 30 basis points for the third year of an extension in each case, prorated for any extension period less than a full year.  The maximum debt financing fee for any extension of three or more years is 1% of the loan commitment amount. We did not incur any debt financing fees for the three and six months ended June 30, 2016 or 2015.

Subject to certain restrictions as described in the Fourth Advisory Agreement, we reimburse the Advisor or its affiliates for all expenses paid or incurred by them in connection with the services they provide to us, including direct expenses and the costs of salaries and benefits of persons employed by those entities and performing services for us, subject to the limitation that we will not reimburse for any amount by which our Advisor’s operating expenses (including the asset management fee) at the end of the four fiscal quarters immediately preceding the date reimbursement is sought exceeds the greater of (i) 2% of our average invested assets or (ii) 25% of our net income for that four quarter period other than any additions to reserves for depreciation, bad debts or other similar non-cash reserves and any gain from the sale of our assets for that period.  Notwithstanding the preceding sentence, we may reimburse the Advisor for expenses in excess of this limitation if a majority of our independent directors determines that such excess expenses are justified based on unusual and non-recurring factors.  In addition, pursuant to the Fourth Advisory Agreement, our obligation to reimburse the Advisor for certain costs incurred in connection with administrative services (i) during 2016 is limited to $1.66 million and (ii) during 2017 is limited to $1.66 million prorated for the number of days during 2017 for which the Advisor provides services to us pursuant to the Fourth Advisory Agreement. Pursuant to First Amendment to Third Advisory Agreement, our obligation to reimburse the Advisor for certain costs incurred in connection with administrative services during 2015 was limited to $1.7 million. We do not reimburse our Advisor for the salaries and benefits that our Advisor or its affiliates pay to our named executive officers.  For the three months ended June 30, 2016 and 2015, we incurred costs for administrative services of $0.2 million and $0.4 million, respectively. For the six months ended June 30, 2016 and 2015, we incurred costs for administrative services of $0.6 million.

Additionally, on May 31, 2016, the Company entered into the Third Amended and Restated Property Management and Leasing Agreement (“Third Property Management Agreement”) with the Operating Partnership. Behringer Harvard Opportunity Management Services, LLC, an affiliated Texas limited liability company (the “Manager”), Behringer Harvard Real Estate Services, LLC, an affiliated Texas limited liability company, and several affiliated special purpose entities formed to directly own the properties in which the Company has invested (collectively, “BH Property Management”).

The Third Property Management Agreement amended and restated the Second Amended and Restated Property Management and Leasing Agreement (“Second Property Management Agreement”), as amended by the First Amendment to Second Amended and Restated Property Management and Leasing Agreement (the “First Amendment to Second Property Management Agreement”) to amend the non-solicitation provision and incorporate the amendments made by the First Amendment to Second Property Management Agreement into the body of the agreement. In all other material respects, the terms of the agreement remain unchanged.

We pay our property manager and affiliate of the Advisor, Behringer Harvard Opportunity Management Services, LLC or its affiliates (collectively, “BH Property Management”), fees for management, leasing, and maintenance supervision of our properties.  Such fees are equal to 4.5% of gross revenues plus leasing commissions based upon the customary leasing commission applicable to the same geographic location of the respective property.  We will pay BH Property Management an oversight fee equal to 0.5% of gross revenues of the property managed if we contract directly with a non-affiliated third-party property manager in respect of the property.  In no event will we pay both a property management fee and an oversight fee to BH Property Management with respect to any particular property.  If we own a property through a joint venture that does not pay BH Property Management directly for its services, we will pay BH Property Management a management fee or oversight fee, as applicable, based only on our economic interest in the property.  We incurred property management fees or oversight fees of approximately $0.1 million and $0.3 million during the three months ended June 30, 2016 and 2015, respectively. We incurred property management fees or oversight fees of approximately $0.3 million and $0.5 million during the six months ended June 30, 2016 and 2015, respectively.

At June 30, 2016 and December 31, 2015, we had a payable to our Advisor and its affiliates of $0.5 million and $0.8 million, respectively. These balances consist of accrued fees, including asset management fees, administrative service expenses, property management fees and other miscellaneous costs payable to the Advisor and BH Property Management.

We are dependent on the Advisors and BH Property Management for certain services that are essential to us, including asset disposition decisions, property management and leasing services, and other general administrative responsibilities.  If these companies are unable to provide us with the respective services, we would be required to obtain such services from other sources.

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Supplemental Cash Flow Information

6 Months Ended

Jun. 30, 2016

Supplemental Cash Flow Information [Abstract]

Supplemental Cash Flow Information

Supplemental Cash Flow Information

Supplemental cash flow information is summarized below:

	Six months ended June 30,
Description	2016		2015
Supplemental disclosure:
Interest paid, net of amounts capitalized	$	3,811	$	2,542
Income taxes paid, net of refunds	125		140
Non-cash investing and financing activities:
Property and equipment additions and purchases of real estate in accrued liabilities	169		2,479
Capital expenditures for real estate under development in accounts payable and accrued liabilities	—		3,140
Transfer from real estate under development to building and improvements	37,110		(2,611		)
Additions to land and land improvements reclassified from real estate under development	3,685		—
Additions to furniture, fixtures and equipment reclassified from real estate under development	1,101		—
Amortization of deferred financing fees in properties under development	10		44
Deed in lieu of foreclosure:
Real estate and lease intangibles	12,723		—
Note payable	15,853		—
Other assets and liabilities, net	1,506		—

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Summary of Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2016

Accounting Policies [Abstract]

Real Estate

Real Estate

We amortize the value of in-place leases, in-place tenant improvements and in-place leasing commissions to expense over the initial term of the respective leases.  In no event does the amortization period for intangible assets or liabilities exceed the remaining depreciable life of the building.  Should a tenant terminate its lease, the unamortized portion of the acquired lease intangibles related to that tenant would be charged to expense.  As of June 30, 2016, all of our lease intangibles were fully amortized.

Condominium Inventory

Condominium Inventory

For condominium inventory, at each reporting date, management compares the estimated fair value less costs to sell to the carrying value.  An adjustment is recorded to the extent that the fair value less selling costs is less than the carrying value.  We determine the estimated fair value of condominiums based on comparable sales in the normal course of business under existing and anticipated market conditions.  This evaluation takes into consideration estimated future selling prices, costs incurred to date, estimated additional future costs, and management’s plans for the property. On February 22, 2016, we sold our one remaining condominium unit in inventory at Chase — The Private Residences for a sales price of $2.5 million, receiving net proceeds of $2.2 million after closing costs.

Accounts Receivable

Accounts Receivable

Accounts receivable primarily consist of straight-line rental revenue receivables of $2.1 million and $4.2 million as of June 30, 2016 and December 31, 2015, respectively, and receivables from our hotel operators and tenants related to our other consolidated properties of $2.4 million as of June 30, 2016 and December 31, 2015.  The allowance for doubtful accounts was $0.1 million and $0.3 million as of June 30, 2016 and December 31, 201

Investment Impairment

Investment Impairment

For all of our real estate and real estate-related investments, we monitor events and changes in circumstances indicating that the carrying amounts of the real estate assets may not be recoverable. Examples of the types of events and circumstances that would cause management to assess our assets for potential impairment include, but are not limited to: a significant decrease in the market price of an asset; a significant change in the manner in which the asset is being used; an accumulation of costs in excess of the acquisition basis plus construction of the property; major vacancies and the resulting loss of revenues; natural disasters; a change in the projected holding period; legitimate purchase offers and changes in the global and local markets or economic conditions. Our assets may at times be concentrated in limited geographic locations and, to the extent that our portfolio is concentrated in limited geographic locations, downturns specifically related to such regions may result in tenants defaulting on their lease obligations at a portion of our properties within a short time period, which may result in asset impairments.

When such events or changes in circumstances are present, we assess 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. These projected cash flows are prepared internally by the Advisor and reflect in-place and projected leasing activity, market revenue and expense growth rates, market capitalization rates, discount rates, and changes in economic and other relevant conditions. The Company’s principal executive officer and principal financial officer review these projected cash flows to assure that the valuation is prepared using reasonable inputs and assumptions that are consistent with market data and with assumptions that would be used by a third-party market participant and assume the highest and best use of the investment. We consider trends, strategic decisions regarding future development plans, and other factors in our assessment of whether impairment conditions exist. In the event that the carrying amount exceeds the estimated future undiscounted operating cash flows, we recognize an impairment loss to adjust the carrying amount of the asset to estimated fair value. While we believe our estimates of future cash flows are reasonable, different assumptions regarding factors such as market rents, economic conditions, and occupancy rates could significantly affect these estimates.

In evaluating our investments for impairment, management may use appraisals and make estimates and assumptions, including, but not limited to, the projected date of disposition of the properties, the estimated future cash flows of the properties during our ownership, planned development and the projected sales price of each of the properties. A future change in these estimates and assumptions could result in understating or overstating the book value of our investments, which could be material to our financial statements. In addition, we may incur impairment charges on real estate assets classified as held for sale in the future if the carrying amount of the asset upon classification as held for sale exceeds the estimated fair value, less costs to sell.

We also evaluate our investment in an unconsolidated joint venture at each reporting date. If we believe there is an other than temporary decline in market value, we will record an impairment charge based on these evaluations. We assess potential impairment by comparing our portion of estimated future undiscounted operating cash flows expected to be generated by the joint venture over the life of the joint venture’s assets to the carrying amount of the joint venture. In the event that the carrying amount exceeds our portion of estimated future undiscounted operating cash flows, we recognize an impairment loss to adjust the carrying amount of the joint venture to its estimated fair value.

The value of our properties held for development depends on market conditions, including estimates of the project start date, as well as estimates of future demand for the property type under development. We have analyzed trends and other information related to each potential development and incorporated this information, as well as our current outlook, into the assumptions we use in our impairment analyses. Due to the judgment and assumptions applied in the estimation process with respect to impairments, including the fact that limited market information regarding the value of comparable land exists at this time, it is possible actual results could differ substantially from those estimated.

During the year ended December 31, 2015, we recorded $12.3 million of non-cash impairment charges as a result of measurable decreases in the fair value of four of our investments. We recorded a non-cash impairment charge of $6.8 million during 2015 for our Frisco Square land based on an indication of a change in market conditions for land development. In estimating the fair value of the Frisco Square land, we considered market comparables as well as the time and costs to hold the land until developed. We also recorded non-cash impairment charges of $2.1 million for Northborough Tower and $2.7 million for our Northpoint Central office building during 2015. In estimating the fair value of both Northborough Tower and Northpoint Central, we considered offers received during the marketing process of the assets in the third quarter of 2015, market comparables and management’s internal discounted cash flow analysis prepared with the consideration of the market conditions in Houston where both buildings are located. In addition, we recorded a $0.7 million impairment for our one remaining condominium unit at Chase — The Private Residences during 2015. During the first quarter of 2016, we sold the condominium for a sales price of $2.5 million, receiving net proceeds of $2.2 million after closing costs. We did not record any non-cash impairment charges during the three and six months ended June 30, 2016.

We believe the carrying value of our operating real estate assets, our properties under development and our investment in an unconsolidated joint venture is currently recoverable. However, if market conditions worsen beyond our current expectations, or if our assumptions regarding expected future cash flows from the use and eventual disposition of our assets decrease or our expected hold periods decrease, or if changes in our development strategy significantly affect any key assumptions used in our fair value calculations, we may need to take additional charges in future periods for impairments related to existing assets. Any such non-cash charges would have an adverse effect on our consolidated financial position and results of operations.

New Accounting Pronouncements

The adoption of the new standard resulted in the following reclassifications of unamortized deferred financing fees as of December 31, 2015 (in thousands):

Description	Originally Reported		Reclassification			Adjusted
Deferred financing fees, net	$	1,156	$	(1,156	)	$	—
Notes payable	155,547		(1,087		)	154,460
Obligations associated with real estate held for sale(1)	14,966		(69		)	14,897

New Accounting Pronouncements

In May 2014, the FASB issued an update (“ASU 2014-09”) to ASC Topic 606, Revenue from Contracts with Customers.  ASU 2014-09 outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most of the existing revenue recognition guidance.  ASU 2014-09 requires an entity to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services and also requires certain additional disclosures.  ASU 2014-09 is effective for public companies for interim and annual reporting periods beginning after December 15, 2017. In addition, early adoption will be permitted beginning after December 15, 2016, including interim reporting periods within those annual periods. Either full retrospective adoption or modified retrospective adoption is permitted. We are currently evaluating the impact of the adoption of ASU 2014-09 on our consolidated financial statements.

In April 2016, the FASB issued an update (“ASU 2016-10”) to ASC Topic 606, Revenue from Contracts with Customers, Identifying Performance Obligations and Licensing. The new guidance will require companies to apply a five-step model in accounting for revenue arising from contracts with customers, as well as enhance disclosures regarding revenue recognition. Lease contracts will be excluded from this revenue recognition criteria; however, the sale of real estate will be required to follow the new model. The new guidance is effective January 1, 2018, with early adoption permitted beginning January 1, 2017, and allows full or modified retrospective application. We are currently evaluating the impact of the adoption of ASU 2016-10 on our consolidated financial statements.

In May 2016, the FASB issued an update (“ASU 2016-12”) to ASC Topic 606, Revenue from Contracts with Customers, Narrow-Scope Improvement and Practical Expedients.  The amendments in this update did not change the core principle of the guidance in ASC Topic 606. Rather, the amendments in this update affect only a narrow aspect of Topic 606 by adding improvements to reduce the diversity in practice at initial application and the cost and complexity of applying Topic 606 both at transition and an ongoing basis. The areas affected are as follows; assessing the collectability criteria, presentation of sales taxes and other similar taxes collected from customers, noncash consideration, contract modification and completed contracts at transition and technical correction as it relates to retrospective application and disclosure.  The new guidance is effective January 1, 2018, with early adoption permitted beginning January 1, 2017, and allows full or modified retrospective application.  We are currently evaluating the impact of the adoption of ASU 2016-12 on our consolidated financial statements.

In August 2014, the FASB issued an update (“ASU 2014-15”) to ASC Topic 205, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. ASU 2014-15 requires management’s assessment of a company’s ability to continue as a going concern and provide related footnote disclosures when conditions give rise to substantial doubt about a company’s ability to continue as a going concern within one year from the financial statement issuance date. ASU 2014-15 applies to all companies and is effective for the annual period ending after December 15, 2016, and all annual and interim periods thereafter. We do not believe the adoption of this guidance will have a material impact on our disclosures.

In February 2016, the FASB issued an update (“ASU 2016-02”) to ASC Topic 842, Leases. ASU 2016-02 supersedes the existing lease accounting model, and modifies both lessee and lessor accounting. The new guidance will require a lessee to reflect most operating lease arrangements on the balance sheet by recording a right-of-use asset and a lease liability that will initially be measured at the present value of lease payments. Among other changes, the new standard also modifies the definition of a lease, and requires expanded lease disclosures. The new standard will be effective January 1, 2019, with early adoption permitted. We are currently evaluating the impact of the adoption of ASU 2016-02 on our consolidated financial statements.

Deferred Financing Fees

Deferred financing fees are recorded at cost and are amortized to interest expense using a straight-line method that approximates the effective interest method over the life of the related debt. Deferred financing fees, net of accumulated amortization, were $0.8 million and $1.2 million as of June 30, 2016 and December 31, 2015, respectively. The $1.2 million balance of deferred financing fees, net of accumulated amortization, as of December 31, 2015, was composed of $1.1 million related to notes payable and less than $0.1 million related to obligations associated with real estate held for sale. Accumulated amortization of deferred financing fees were $1.9 million and $1.8 million as of June 30, 2016 and December 31, 2015, respectively. In April 2015, the FASB issued an update (“ASU 2015-03”) to ASC Topic 835, Interest - Imputation of Interest, Simplifying the Presentation of Debt Issuance Costs. The adoption of ASU 2015-03, effective January 1, 2016, required companies to present debt issuance costs related to a recognized debt liability as a direct reduction from the carrying amount of the related debt liability, retrospectively. See New Accounting Pronouncements below for further details.

Foreign Currency Translation

Foreign Currency Translation

The functional currency for our international equity investment in Central Europe Joint Venture is the Euro. We use period-end exchange rates to translate balances of assets and liabilities while the statement of operations amounts are translated using the average exchange rate for the respective period. Gains and losses resulting from the change in exchange rates from period to period are reported separately as a component of other comprehensive income (loss) (“OCI”). Gains and losses resulting from foreign currency transactions are included in the condensed consolidated statements of operations and comprehensive income (loss). For the three and six months ended June 30, 2016, the foreign currency translation adjustment was a loss of $0.4 million and a gain of $0.3 million, respectively. For the three and six months ended June 30, 2015, the foreign currency translation adjustment was a gain of $0.4 million and a loss of $1.8 million, respectively.

When the Company ceases to have a controlling financial interest in a subsidiary or group of assets within a consolidated foreign entity and the sale or transfer results in the complete or substantially complete liquidation of the foreign entity, the cumulative translation adjustment (“CTA”) balance is required to be released into earnings. For sales of an equity method investment that is a foreign entity, a pro rata portion of CTA attributable to the investment would be recognized in earnings when the investment is sold. When an entity sells either a part or all of its investment in a consolidated foreign entity, CTA would be recognized in earnings only if the sale results in the parent no longer having a controlling financial interest in the foreign entity. On July 28, 2008, we invested in the Central Europe Joint Venture that owned 22 properties. Central Europe Joint Venture is our only foreign investment as of June 30, 2016. The joint venture sold one property in 2014 and three properties in 2015, and had 18 properties remaining as of June 30, 2016. We will recognize CTA upon the sale of all or substantially all of our investment in the Central Europe Joint Venture.

Use of Estimates in the Preparation of Financial Statements

Use of Estimates in the Preparation of Financial Statements

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  These estimates include such items as impairment of long-lived assets, depreciation and amortization, allowance for doubtful accounts, and allowance for loan losses.  Actual results could differ from those estimates.

Subsequent Events

Subsequent Events

We have evaluated subsequent events for recognition or disclosure in our condensed consolidated financial statements.

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

Described below are certain of our significant accounting policies.  The disclosures regarding several of the policies have been condensed or omitted in accordance with interim reporting regulations specified by Form 10-Q.  Please see our Annual Report on Form 10-K for a complete listing of all of our significant accounting policies.

In the Notes to Condensed Consolidated Financial Statements, all dollar and share amounts in tabulation are in thousands of dollars and shares, respectively, unless otherwise noted.

Principles of Consolidation and Basis of Presentation

Our condensed consolidated financial statements include our accounts and the accounts of other subsidiaries over which we have control.  All inter-company transactions, balances, and profits have been eliminated in consolidation.  Interests in entities acquired will be evaluated based on applicable GAAP, which includes the requirement to consolidate entities deemed to be variable interest entities (“VIE”) in which we are the primary beneficiary.  If the interest in the entity is determined not to be a VIE, then the entity will be evaluated for consolidation based on legal form, economic substance, and the extent to which we have control and/or substantive participating rights under the respective ownership agreement. For entities in which we have less than a controlling interest or entities which we are not deemed to be the primary beneficiary, we account for the investment using the equity method of accounting.

There are judgments and estimates involved in determining if an entity in which we have made an investment is a VIE and, if so, whether we are the primary beneficiary.  The entity is evaluated to determine if it is a VIE by, among other things, calculating the percentage of equity being risked compared to the total equity of the entity.  Determining expected future losses involves assumptions of various possibilities of the results of future operations of the entity, assigning a probability to each possibility and using a discount rate to determine the net present value of those future losses.  A change in the judgments, assumptions, and estimates outlined above could result in consolidating an entity that should not be consolidated or accounting for an investment using the equity method that should in fact be consolidated, the effects of which could be material to our financial statements.

Real Estate

We amortize the value of in-place leases, in-place tenant improvements and in-place leasing commissions to expense over the initial term of the respective leases.  In no event does the amortization period for intangible assets or liabilities exceed the remaining depreciable life of the building.  Should a tenant terminate its lease, the unamortized portion of the acquired lease intangibles related to that tenant would be charged to expense.  As of June 30, 2016, all of our lease intangibles were fully amortized.

The value of hotels and all other buildings is depreciated over the estimated useful lives of 39 years and 25 years, respectively, using the straight-line method. Accumulated depreciation and amortization related to our consolidated investments in real estate assets and intangibles were as follows (in thousands):

June 30, 2016	Buildings and Improvements			Land and Improvements			Lease Intangibles			Acquired Below-Market Leases		Other Intangibles
Cost	$	201,472		$	57,148		$	3,743		$	—	$	9,626
Less: depreciation and amortization	(45,737		)	(2,202		)	(2,473		)	—		(5,718		)
Net	$	155,735		$	54,946		$	1,270		$	—	$	3,908

December 31, 2015	Buildings and Improvements(1)			Land and Improvements(1)			Lease Intangibles(1)			Acquired Below-Market Leases			Other Intangibles
Cost	$	174,732		$	60,962		$	7,580		$	(3,311	)	$	9,626
Less: depreciation and amortization	(42,062		)	(2,026		)	(5,332		)	2,553			(5,421		)
Net	$	132,670		$	58,936		$	2,248		$	(758	)	$	4,205

______________________________________________

(1) Excludes Las Colinas Commons, which was classified as held for sale as of December 31, 2015. Net book values included in assets associated with real estate held for sale in the consolidated balance sheet were buildings and improvements of $8.3 million, land and improvements of $2.8 million, and lease intangibles of $0.7 million. See Note 7, Real Estate Held for Sale.

Real Estate Held for Sale and Discontinued Operations

We classify properties as held for sale when certain criteria are met in accordance with GAAP. At that time, we present the assets and obligations of the property held for sale separately in our condensed consolidated balance sheet and we cease recording depreciation and amortization expense related to that property. Properties held for sale are reported at the lower of their carrying amount or their estimated fair value, less estimated costs to sell. During the fourth quarter of 2015, we entered into a purchase and sale agreement for Las Colinas Commons, an office building located in Texas, and classified the investment as real estate held for sale in our condensed consolidated balance sheet at December 31, 2015. The sales transaction closed on February 2, 2016. We did not have any properties classified as held for sale at June 30, 2016.

Effective as of January 1, 2015, we adopted the revised guidance regarding discontinued operations. For sales of real estate or assets classified as held for sale after January 1, 2015, we will evaluate whether a disposal transaction meets the criteria of a strategic shift and will have a major effect on our operations and financial results to determine if the results of operations and gains on sale of real estate will be presented as part of our continuing operations or as discontinued operations in our consolidated statements of operations. If the disposal represents a strategic shift, it will be classified as discontinued operations for all periods presented; if not, it will be presented in continuing operations. Prior to the adoption, when we had no involvement after the sale of a real estate investment it was treated as a discontinued operation.

Condominium Inventory

For condominium inventory, at each reporting date, management compares the estimated fair value less costs to sell to the carrying value.  An adjustment is recorded to the extent that the fair value less selling costs is less than the carrying value.  We determine the estimated fair value of condominiums based on comparable sales in the normal course of business under existing and anticipated market conditions.  This evaluation takes into consideration estimated future selling prices, costs incurred to date, estimated additional future costs, and management’s plans for the property. On February 22, 2016, we sold our one remaining condominium unit in inventory at Chase — The Private Residences for a sales price of $2.5 million, receiving net proceeds of $2.2 million after closing costs.

Accounts Receivable

Accounts receivable primarily consist of straight-line rental revenue receivables of $2.1 million and $4.2 million as of June 30, 2016 and December 31, 2015, respectively, and receivables from our hotel operators and tenants related to our other consolidated properties of $2.4 million as of June 30, 2016 and December 31, 2015.  The allowance for doubtful accounts was $0.1 million and $0.3 million as of June 30, 2016 and December 31, 2015, respectively.

Investment Impairment

For all of our real estate and real estate-related investments, we monitor events and changes in circumstances indicating that the carrying amounts of the real estate assets may not be recoverable. Examples of the types of events and circumstances that would cause management to assess our assets for potential impairment include, but are not limited to: a significant decrease in the market price of an asset; a significant change in the manner in which the asset is being used; an accumulation of costs in excess of the acquisition basis plus construction of the property; major vacancies and the resulting loss of revenues; natural disasters; a change in the projected holding period; legitimate purchase offers and changes in the global and local markets or economic conditions. Our assets may at times be concentrated in limited geographic locations and, to the extent that our portfolio is concentrated in limited geographic locations, downturns specifically related to such regions may result in tenants defaulting on their lease obligations at a portion of our properties within a short time period, which may result in asset impairments.

When such events or changes in circumstances are present, we assess 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. These projected cash flows are prepared internally by the Advisor and reflect in-place and projected leasing activity, market revenue and expense growth rates, market capitalization rates, discount rates, and changes in economic and other relevant conditions. The Company’s principal executive officer and principal financial officer review these projected cash flows to assure that the valuation is prepared using reasonable inputs and assumptions that are consistent with market data and with assumptions that would be used by a third-party market participant and assume the highest and best use of the investment. We consider trends, strategic decisions regarding future development plans, and other factors in our assessment of whether impairment conditions exist. In the event that the carrying amount exceeds the estimated future undiscounted operating cash flows, we recognize an impairment loss to adjust the carrying amount of the asset to estimated fair value. While we believe our estimates of future cash flows are reasonable, different assumptions regarding factors such as market rents, economic conditions, and occupancy rates could significantly affect these estimates.

In evaluating our investments for impairment, management may use appraisals and make estimates and assumptions, including, but not limited to, the projected date of disposition of the properties, the estimated future cash flows of the properties during our ownership, planned development and the projected sales price of each of the properties. A future change in these estimates and assumptions could result in understating or overstating the book value of our investments, which could be material to our financial statements. In addition, we may incur impairment charges on real estate assets classified as held for sale in the future if the carrying amount of the asset upon classification as held for sale exceeds the estimated fair value, less costs to sell.

We also evaluate our investment in an unconsolidated joint venture at each reporting date. If we believe there is an other than temporary decline in market value, we will record an impairment charge based on these evaluations. We assess potential impairment by comparing our portion of estimated future undiscounted operating cash flows expected to be generated by the joint venture over the life of the joint venture’s assets to the carrying amount of the joint venture. In the event that the carrying amount exceeds our portion of estimated future undiscounted operating cash flows, we recognize an impairment loss to adjust the carrying amount of the joint venture to its estimated fair value.

The value of our properties held for development depends on market conditions, including estimates of the project start date, as well as estimates of future demand for the property type under development. We have analyzed trends and other information related to each potential development and incorporated this information, as well as our current outlook, into the assumptions we use in our impairment analyses. Due to the judgment and assumptions applied in the estimation process with respect to impairments, including the fact that limited market information regarding the value of comparable land exists at this time, it is possible actual results could differ substantially from those estimated.

During the year ended December 31, 2015, we recorded $12.3 million of non-cash impairment charges as a result of measurable decreases in the fair value of four of our investments. We recorded a non-cash impairment charge of $6.8 million during 2015 for our Frisco Square land based on an indication of a change in market conditions for land development. In estimating the fair value of the Frisco Square land, we considered market comparables as well as the time and costs to hold the land until developed. We also recorded non-cash impairment charges of $2.1 million for Northborough Tower and $2.7 million for our Northpoint Central office building during 2015. In estimating the fair value of both Northborough Tower and Northpoint Central, we considered offers received during the marketing process of the assets in the third quarter of 2015, market comparables and management’s internal discounted cash flow analysis prepared with the consideration of the market conditions in Houston where both buildings are located. In addition, we recorded a $0.7 million impairment for our one remaining condominium unit at Chase — The Private Residences during 2015. During the first quarter of 2016, we sold the condominium for a sales price of $2.5 million, receiving net proceeds of $2.2 million after closing costs. We did not record any non-cash impairment charges during the three and six months ended June 30, 2016.

We believe the carrying value of our operating real estate assets, our properties under development and our investment in an unconsolidated joint venture is currently recoverable. However, if market conditions worsen beyond our current expectations, or if our assumptions regarding expected future cash flows from the use and eventual disposition of our assets decrease or our expected hold periods decrease, or if changes in our development strategy significantly affect any key assumptions used in our fair value calculations, we may need to take additional charges in future periods for impairments related to existing assets. Any such non-cash charges would have an adverse effect on our consolidated financial position and results of operations.

Deferred Financing Fees

Deferred financing fees are recorded at cost and are amortized to interest expense using a straight-line method that approximates the effective interest method over the life of the related debt. Deferred financing fees, net of accumulated amortization, were $0.8 million and $1.2 million as of June 30, 2016 and December 31, 2015, respectively. The $1.2 million balance of deferred financing fees, net of accumulated amortization, as of December 31, 2015, was composed of $1.1 million related to notes payable and less than $0.1 million related to obligations associated with real estate held for sale. Accumulated amortization of deferred financing fees were $1.9 million and $1.8 million as of June 30, 2016 and December 31, 2015, respectively. In April 2015, the FASB issued an update (“ASU 2015-03”) to ASC Topic 835, Interest - Imputation of Interest, Simplifying the Presentation of Debt Issuance Costs. The adoption of ASU 2015-03, effective January 1, 2016, required companies to present debt issuance costs related to a recognized debt liability as a direct reduction from the carrying amount of the related debt liability, retrospectively. See New Accounting Pronouncements below for further details.

The adoption of the new standard resulted in the following reclassifications of unamortized deferred financing fees as of December 31, 2015 (in thousands):

Description	Originally Reported		Reclassification			Adjusted
Deferred financing fees, net	$	1,156	$	(1,156	)	$	—
Notes payable	155,547		(1,087		)	154,460
Obligations associated with real estate held for sale(1)	14,966		(69		)	14,897

______________________________

(1) Obligations associated with real estate held for sale, as adjusted, consisted of $14.8 million of notes payable, net of deferred financing fees of less than $0.1 million, and other liabilities totaling an aggregate of less than $0.1 million.

Foreign Currency Translation

The functional currency for our international equity investment in Central Europe Joint Venture is the Euro. We use period-end exchange rates to translate balances of assets and liabilities while the statement of operations amounts are translated using the average exchange rate for the respective period. Gains and losses resulting from the change in exchange rates from period to period are reported separately as a component of other comprehensive income (loss) (“OCI”). Gains and losses resulting from foreign currency transactions are included in the condensed consolidated statements of operations and comprehensive income (loss). For the three and six months ended June 30, 2016, the foreign currency translation adjustment was a loss of $0.4 million and a gain of $0.3 million, respectively. For the three and six months ended June 30, 2015, the foreign currency translation adjustment was a gain of $0.4 million and a loss of $1.8 million, respectively.

When the Company ceases to have a controlling financial interest in a subsidiary or group of assets within a consolidated foreign entity and the sale or transfer results in the complete or substantially complete liquidation of the foreign entity, the cumulative translation adjustment (“CTA”) balance is required to be released into earnings. For sales of an equity method investment that is a foreign entity, a pro rata portion of CTA attributable to the investment would be recognized in earnings when the investment is sold. When an entity sells either a part or all of its investment in a consolidated foreign entity, CTA would be recognized in earnings only if the sale results in the parent no longer having a controlling financial interest in the foreign entity. On July 28, 2008, we invested in the Central Europe Joint Venture that owned 22 properties. Central Europe Joint Venture is our only foreign investment as of June 30, 2016. The joint venture sold one property in 2014 and three properties in 2015, and had 18 properties remaining as of June 30, 2016. We will recognize CTA upon the sale of all or substantially all of our investment in the Central Europe Joint Venture.

Use of Estimates in the Preparation of Financial Statements

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  These estimates include such items as impairment of long-lived assets, depreciation and amortization, allowance for doubtful accounts, and allowance for loan losses.  Actual results could differ from those estimates.

Subsequent Events

We have evaluated subsequent events for recognition or disclosure in our condensed consolidated financial statements.

New Accounting Pronouncements

In May 2014, the FASB issued an update (“ASU 2014-09”) to ASC Topic 606, Revenue from Contracts with Customers.  ASU 2014-09 outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most of the existing revenue recognition guidance.  ASU 2014-09 requires an entity to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services and also requires certain additional disclosures.  ASU 2014-09 is effective for public companies for interim and annual reporting periods beginning after December 15, 2017. In addition, early adoption will be permitted beginning after December 15, 2016, including interim reporting periods within those annual periods. Either full retrospective adoption or modified retrospective adoption is permitted. We are currently evaluating the impact of the adoption of ASU 2014-09 on our consolidated financial statements.

In April 2016, the FASB issued an update (“ASU 2016-10”) to ASC Topic 606, Revenue from Contracts with Customers, Identifying Performance Obligations and Licensing. The new guidance will require companies to apply a five-step model in accounting for revenue arising from contracts with customers, as well as enhance disclosures regarding revenue recognition. Lease contracts will be excluded from this revenue recognition criteria; however, the sale of real estate will be required to follow the new model. The new guidance is effective January 1, 2018, with early adoption permitted beginning January 1, 2017, and allows full or modified retrospective application. We are currently evaluating the impact of the adoption of ASU 2016-10 on our consolidated financial statements.

In May 2016, the FASB issued an update (“ASU 2016-12”) to ASC Topic 606, Revenue from Contracts with Customers, Narrow-Scope Improvement and Practical Expedients.  The amendments in this update did not change the core principle of the guidance in ASC Topic 606. Rather, the amendments in this update affect only a narrow aspect of Topic 606 by adding improvements to reduce the diversity in practice at initial application and the cost and complexity of applying Topic 606 both at transition and an ongoing basis. The areas affected are as follows; assessing the collectability criteria, presentation of sales taxes and other similar taxes collected from customers, noncash consideration, contract modification and completed contracts at transition and technical correction as it relates to retrospective application and disclosure.  The new guidance is effective January 1, 2018, with early adoption permitted beginning January 1, 2017, and allows full or modified retrospective application.  We are currently evaluating the impact of the adoption of ASU 2016-12 on our consolidated financial statements.

In August 2014, the FASB issued an update (“ASU 2014-15”) to ASC Topic 205, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. ASU 2014-15 requires management’s assessment of a company’s ability to continue as a going concern and provide related footnote disclosures when conditions give rise to substantial doubt about a company’s ability to continue as a going concern within one year from the financial statement issuance date. ASU 2014-15 applies to all companies and is effective for the annual period ending after December 15, 2016, and all annual and interim periods thereafter. We do not believe the adoption of this guidance will have a material impact on our disclosures.

In February 2016, the FASB issued an update (“ASU 2016-02”) to ASC Topic 842, Leases. ASU 2016-02 supersedes the existing lease accounting model, and modifies both lessee and lessor accounting. The new guidance will require a lessee to reflect most operating lease arrangements on the balance sheet by recording a right-of-use asset and a lease liability that will initially be measured at the present value of lease payments. Among other changes, the new standard also modifies the definition of a lease, and requires expanded lease disclosures. The new standard will be effective January 1, 2019, with early adoption permitted. We are currently evaluating the impact of the adoption of ASU 2016-02 on our consolidated financial statements.

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Commitments and Contingencies (Policies)

6 Months Ended

Jun. 30, 2016

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies Disclosure [Text Block]

Commitments and Contingencies

Frisco Square

In connection with our investment in the Frisco Square property, we were initially responsible, through our wholly owned subsidiaries who hold title to the Frisco Square property, for half of the bond debt service related to the $12.5 million of bonds (the “Bond Obligation”) the City of Frisco issued to fund public improvements within the Frisco Square Management District (the “MMD”).  For each $1 million increase in assessed value for the real property within the MMD above $125 million, the Bond Obligation is reduced by 1.0% and will terminate at $225 million of real property values.  The total outstanding Bond Obligation at June 30, 2016 and December 31, 2015 was $4.2 million and $4.7 million, respectively. As of June 30, 2016, the value of the real property within the MMD is assessed at $174 million. Therefore, we are currently responsible for 27% of the bond debt service payments.

Although, as described above, we are ultimately responsible for 27% of the bond debt service payments, the Frisco Square Property Owner’s Association (the “POA”) has the authority to assess its members for various monetary obligations related to the Frisco Square development, including the Bond Obligation, based upon the value of the real property and real property improvements.  We are not the sole member of the POA.  For the year ended December 31, 2015, the annual bond debt service assessed by the POA is approximately $0.3 million. We estimate our annual pro rata share of the expense at less than $0.1 million. For the six months ended June 30, 2016, we expensed less than $0.1 million related to bond debt service, which is included in the accompanying condensed consolidated statements of operations and other comprehensive loss.

Under an amended development agreement with the City of Frisco, we were obligated to construct certain parking improvements (the “Parking Obligation”). The City of Frisco secured the Bond Obligation and the Parking Obligation by placing liens on the vacant land held by our indirect, wholly owned subsidiary, BHFS I, LLC. In the event we sold all or a part of the vacant land, 33% of the net sales proceeds were to be deposited into an escrow account (“City Escrow”) for the benefit of the City of Frisco to secure the Parking Obligation until the amount in the City Escrow account was $7 million. As of December 31, 2015 we had $1.4 million in the City Escrow from land sales. We completed the requirements of the Parking Obligation in February 2016 and the City of Frisco released the City Escrow of $1.4 million and the liens on the land on March 15, 2016 and March 17, 2016, respectively.

Under the Chase Park Plaza Hotel loan agreement, the Company provided a completion guarantee of $6.5 million for room renovations and other improvements to be finished by August 10, 2017. If the renovation is not completed by August 10, 2017 the lender may require the Company to escrow 125% of the unspent funds related to the renovation. In August 2016, as part of our Chase Park Plaza loan modification, we escrowed $3.1 million for a construction project and $1.5 million for 2017 real estate taxes.

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Summary of Significant Accounting Policies (Tables)

6 Months Ended

Jun. 30, 2016

Accounting Policies [Abstract]

Schedule of accumulated depreciation and amortization related to the consolidated investments in real estate assets and intangibles

Accumulated depreciation and amortization related to our consolidated investments in real estate assets and intangibles were as follows (in thousands):

June 30, 2016	Buildings and Improvements			Land and Improvements			Lease Intangibles			Acquired Below-Market Leases		Other Intangibles
Cost	$	201,472		$	57,148		$	3,743		$	—	$	9,626
Less: depreciation and amortization	(45,737		)	(2,202		)	(2,473		)	—		(5,718		)
Net	$	155,735		$	54,946		$	1,270		$	—	$	3,908

December 31, 2015	Buildings and Improvements(1)			Land and Improvements(1)			Lease Intangibles(1)			Acquired Below-Market Leases			Other Intangibles
Cost	$	174,732		$	60,962		$	7,580		$	(3,311	)	$	9,626
Less: depreciation and amortization	(42,062		)	(2,026		)	(5,332		)	2,553			(5,421		)
Net	$	132,670		$	58,936		$	2,248		$	(758	)	$	4,205

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Assets and Liabilities Measured at Fair Value Assets and Liabilities Measured at Fair Value (Tables)

6 Months Ended

Jun. 30, 2016

Fair Value Disclosures [Abstract]

Fair Value Measurements, Nonrecurring [Table Text Block]

The following fair value hierarchy tables present information about our assets measured at fair value on a nonrecurring basis during the year ended December 31, 2015 (in thousands):

For the year ended December 31, 2015	Level 1		Level 2		Level 3		Total Fair Value		Loss
Assets
Buildings and improvements, net(1)	$	—	$	—	$	29,500	$	29,500	$	(4,778	)
Land and improvements, net(2)	—		—		19,606		19,606		(6,762		)
Condominium inventory (one remaining finished unit)(3)	—		—		2,201		2,201		(761		)

________________________________

(1) In the third quarter of 2015, we recorded non-cash impairments of $2.1 million and $2.7 million associated with our Northborough Tower and Northpoint Central office buildings, respectively.

(2) In the third quarter of 2015, we recorded a $6.8 million non-cash impairment associated with our Frisco Square land.

(3) During 2015, we recorded a non-cash impairment of $0.7 million associated with our one remaining condominium unit at Chase — The Private Residences.

Fair Value, Assets and Liabilities Measured on Nonrecurring Basis, Valuation Techniques [Table Text Block]

Quantitative Information about Level 3 Fair Value Measurements

Description	Fair Value for the year ended December 31, 2015 (in 000s)		Valuation Techniques	Unobservable Input	Range (Weighted Average)
Buildings and improvements, net(1)	$	29,500	Discounted cash flow	Discount rate Terminal capitalization rate Market rent growth Expense growth rate	7.75% - 11.50% 8.00% - 9.75% 0% - 3.00% 0% - 3.00%
Land and improvements, net(2)	19,606		Market comparable	Lot price Inflation rate Discount rate	$20 - $45 psf 0% - 3.00% 12.50% - 20.00%
Condominium inventory (one remaining finished unit)(3)	2,201		Market comparable	List price for unit; due to limited market comparables	$511 to $555  per square feet

______________________________

(1) In the third quarter of 2015, we recorded non-cash impairments of $2.1 million and $2.7 million associated with our Northborough Tower and Northpoint Central office buildings, respectively.

(2) In the third quarter of 2015, we recorded a $6.8 million non-cash impairment associated with our Frisco Square land.

(3) During 2015, we recorded a non-cash impairment of $0.7 million associated with our one remaining condominium unit at Chase — The Private Residences.

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Real Estate Investments (Tables)

6 Months Ended

Jun. 30, 2016

Real Estate [Abstract]

Schedule of information about consolidated properties

The following table presents certain information about our consolidated properties as of June 30, 2016:

Property Name	Location	Approximate Rentable Square Footage	Description	Ownership Interest	Year Acquired
Chase Park Plaza	St. Louis, Missouri	—	hotel and condominium development property	100%	2006
Frisco Square	Frisco, Texas	(1)	mixed-use development (multifamily, retail, office, restaurant and land)	(1)	2007
Northpoint Central	Houston, Texas	180,000	9-story office building	100%	2007
The Lodge & Spa at Cordillera	Edwards, Colorado	—	land, hotel and development property	94%	2007
Royal Island(2)	Commonwealth of Bahamas	—	land	87%	2012

_________________________________

(1) Our Frisco Square mixed-use development consists of 101,000 square feet of office space, 71,000 square feet of retail, a 41,500 square foot movie theater, 114 multifamily units, approximately 27 acres of land which we own 100%, and a 275-unit multifamily project which became fully developed in the first quarter of 2016 in which we own a 90% interest.

(2) Our initial investment in Royal Island was made in May 2007. We consolidated Royal Island as of June 6, 2012 when we obtained all of the outstanding shares of Royal Island (Australia) Pty Limited. A third party indirectly owns 12.71% of Royal Island.

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Schedule of information about unconsolidated investments

Investment in Unconsolidated Joint Venture

The following table presents certain information about our unconsolidated investment as of June 30, 2016 and December 31, 2015 ($ in thousands):

	Ownership Interest		Carrying Value of Investment
Property Name			June 30, 2016		December 31, 2015
Central Europe Joint Venture	47.01	%	$	14,121	$	13,953

Schedule of proportionate share of combined assets and liabilities of investment properties

Our investment in the unconsolidated joint venture as of June 30, 2016 and December 31, 2015 consisted of our proportionate share of the combined assets and liabilities of our investment property, shown at 100%, as follows (in thousands):

	June 30, 2016		December 31, 2015
Real estate assets, net	$	59,309	$	59,415
Cash and cash equivalents	5,937		6,827
Other assets	1,423		1,441
Total assets	$	66,669	$	67,683
Notes payable	$	40,808	$	40,895
Other liabilities	1,818		2,526
Total liabilities	42,626		43,421
Equity	24,043		24,262
Total liabilities and equity	$	66,669	$	67,683

Schedule of proportionate share of combined losses of unconsolidated joint ventures

Our equity in earnings (losses) from our investment is our proportionate share of the combined earnings (losses) of our unconsolidated joint venture, shown at 100%, for the three and six months ended June 30, 2016 and 2015, as follows (in thousands):

	Three Months Ended June 30,					Six Months Ended June 30,
	2016		2015			2016		2015
Revenue	$	1,612	$	2,201		$	3,348	$	4,444
Operating expenses:
Operating expenses	532		520			1,036		1,029
Property taxes	52		64			100		132
Total operating expenses	584		584			1,136		1,161
Operating income	1,028		1,617			2,212		3,283
Non-operating expenses:
Depreciation and amortization	601		838			1,189		1,696
Interest and other, net	420		966			901		2,048
Gain on sale			—					(78		)
Total non-operating expenses	1,021		1,804			2,090		3,666
Net income (loss)	$	7	$	(187	)	$	122	$	(383	)
Equity in earnings (losses) of unconsolidated joint venture(1)	$	3	$	(88	)	$	57	$	(180	)

________________________________

(1) Company’s share of net income (loss).

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Real Estate Held for Sale (Tables)

6 Months Ended

Jun. 30, 2016

Discontinued Operations and Real Estate Held for Sale

Schedule of Regulatory Assets and Liabilities

The major classes of assets and liabilities associated with our real estate held for sale as of December 31, 2015 were as follows (in thousands):

Description	Amount
Land and improvements, net	$	2,785
Building and improvements, net	8,362
Lease intangibles, net	668
Straight-line rent	864
Assets associated with real estate held for sale	12,679
Notes payable(1)	$	14,900
Deferred financing fees(2)	(69		)
Notes payable, net of deferred financing fees	14,831
Accrued and other liabilities	66
Obligations associated with real estate held for sale	$	14,897

_______________________________________________________________________________

(1) Las Colinas Commons and Northpoint Central are both borrowers under a loan that matures in May 2017. The Las Colinas Commons loan balance at December 31, 2015 was $11.3 million. Under the terms of the loan, the lender required a release price payment of $14.9 million to release the Las Colinas Commons property from the loan. The $3.6 million excess principal payment was used to reduce Northpoint Central’s loan balance. We reclassified the full release price as a liability associated with our real estate held for sale as of December 31, 2015.

(2) Effective January 1, 2016, we adopted ASU 2015-03, which requires companies to present debt issuance costs related to a recognized debt liability as a direct reduction from the carrying amount of the related debt liability. See Note 3, Summary of Significant Accounting Policies, under the caption New Accounting Pronouncements for further details.

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Notes Payable (Tables)

6 Months Ended

Jun. 30, 2016

Debt Disclosure [Abstract]

Schedule of notes payable of the properties

The following table sets forth our notes payable on our consolidated properties at June 30, 2016 and December 31, 2015 (in thousands):

	Notes Payable as of
Description	June 30, 2016			December 31, 2015			Interest Rate	Maturity Date
Northborough Tower(1)	$	—		$	18,516		8.67%(1)	1/11/2016
Royal Island(2)	14,489			13,872			15.00%	10/10/2016
Northpoint Central(3)	11,235			11,720			5.15%	5/9/2017
Chase Park Plaza Hotel and Chase — The Private Residences	61,543			62,182			4.95%	8/11/2017
BHFS II, LLC	6,795			6,856			30-day LIBOR + 3%(4)	2/1/2018
BHFS III, LLC	6,099			6,154			30-day LIBOR + 3%(4)	2/1/2018
BHFS IV, LLC	12,671			12,783			30-day LIBOR + 3%(4)	2/1/2018
BHFS Theatre, LLC	4,743			4,785			30-day LIBOR + 3%(4)	2/1/2018
The Ablon at Frisco Square	26,058			18,679			30-day LIBOR + 2.5%(4)	8/26/2017
Total debt	143,633			155,547
Deferred financing fees(5)	(754		)	(1,087		)
Notes payable, net of deferred financing fees	142,879			154,460
Notes payable included with Obligations related to real estate held for sale:
Las Colinas Commons debt(3)	—			14,900			5.15%	5/9/2017
Deferred financing fees(5)	—			(69		)
Notes payable included with Obligations related to real estate held for sale, net of deferred financing fees:	—			14,831
Total notes payable obligations	$	142,879		$	169,291

_________________________________

(1) Due to the maturity default on our Northborough Tower debt, the stated interest rate of 5.67% was increased to the default interest rate of 8.67% effective January 12, 2016. The property was transferred to the lender via a deed-in-lieu of foreclosure on May 9, 2016.

(2) In January 2016, the lenders agreed to increase the amount available to draw on the loan to $14.4 million. In April 2016, the lenders agreed to increase the amount available to draw on the loan to $14.5 million.

(3) Las Colinas Commons and Northpoint Central are both borrowers under a loan that matures in May 2017. The Las Colinas Commons loan balance at December 31, 2015 was $11.3 million. Under the terms of the loan, the lender required a release price payment of $14.9 million to release the Las Colinas Commons property from the loan. The $3.6 million excess principal payment amount was used to reduce Northpoint Central’s loan balance. We reclassified the full release price as a liability associated with our real estate held for sale as of December 31, 2015.

(4) 30-day LIBOR was 0.47% at June 30, 2016.

(5) Effective January 1, 2016, we adopted ASU 2015-03, which requires companies to present debt issuance costs related to a recognized debt liability as a direct reduction from the carrying amount of the related debt liability. See Note 3, Summary of Significant Accounting Policies, under the caption New Accounting Pronouncements for further details.

Schedule of aggregate contractual obligations for principal

The following table summarizes our aggregate contractual obligations for principal payments as of June 30, 2016 (in thousands):

Principal Payments Due:	Amount
July 1, 2016 - December 31, 2016	$	16,026
2017	98,151
2018	29,456
2019	—
2020	—
Total contractual obligations	143,633
Less: Deferred financing fees, net	(754		)
Notes payable, net	$	142,879

XML

Supplemental Cash Flow Information (Tables)

6 Months Ended

Jun. 30, 2016

Supplemental Cash Flow Information [Abstract]

Schedule of supplemental cash flow information

Supplemental cash flow information is summarized below:

	Six months ended June 30,
Description	2016		2015
Supplemental disclosure:
Interest paid, net of amounts capitalized	$	3,811	$	2,542
Income taxes paid, net of refunds	125		140
Non-cash investing and financing activities:
Property and equipment additions and purchases of real estate in accrued liabilities	169		2,479
Capital expenditures for real estate under development in accounts payable and accrued liabilities	—		3,140
Transfer from real estate under development to building and improvements	37,110		(2,611		)
Additions to land and land improvements reclassified from real estate under development	3,685		—
Additions to furniture, fixtures and equipment reclassified from real estate under development	1,101		—
Amortization of deferred financing fees in properties under development	10		44
Deed in lieu of foreclosure:
Real estate and lease intangibles	12,723		—
Note payable	15,853		—
Other assets and liabilities, net	1,506		—

XML

Business (Details) - property	6 Months Ended
	Jun. 30, 2016	Jul. 28, 2008
Wholly owned properties
Real Estate Properties [Line Items]
Number of Real Estate Properties	2
Wholly owned properties | Equity Method Investments [Member] | Maximum | Noncontrolling Interest [Member]
Real Estate Properties [Line Items]
Ownership interest	0.10%
Consolidated properties
Real Estate Properties [Line Items]
Number of Real Estate Properties	3
Unconsolidated Properties | Equity Method Investments [Member] | Noncontrolling Interest [Member]
Real Estate Properties [Line Items]
Number of Real Estate Properties	18	22

XML

Summary of Significant Accounting Policies - Schedule of Accumulated Depreciation (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2016	Dec. 31, 2015
Real Estate
Total real estate	$ 210,681	$ 230,727
Lease intangibles, net	1,270	2,248
Other intangibles, net	3,908	4,205
Acquired below-market leases, net	0	(758)
Real Estate Held-for-sale	$ 0	12,679
Hotel [Member]
Real Estate
Finite-Lived Intangible Asset, Useful Life	39 years
Building [Member]
Real Estate
Finite-Lived Intangible Asset, Useful Life	25 years
Lease Intangibles
Real Estate
Cost	$ 3,743	7,580
Less: depreciation and amortization	(2,473)	(5,332)
Lease intangibles, net	1,270	2,248
Acquired Below-Market Leases
Real Estate
Cost	0	(3,311)
Less: depreciation and amortization	0	2,553
Acquired below-market leases, net	0	(758)
Other Intangible Assets [Member]
Real Estate
Cost	9,626	9,626
Less: depreciation and amortization	(5,718)	(5,421)
Other intangibles, net	3,908	4,205
Building and Building Improvements [Member]
Real Estate
Real Estate Investment Property, at Cost	201,472	174,732
Less: depreciation and amortization	(45,737)	(42,062)
Total real estate	155,735	132,670
Land and Land Improvements [Member]
Real Estate
Real Estate Investment Property, at Cost	57,148	60,962
Less: depreciation and amortization	(2,202)	(2,026)
Total real estate	$ 54,946	58,936
Las Colinas Commons [Member] | Building and Building Improvements [Member]
Real Estate
Real Estate Held-for-sale		8,300
Las Colinas Commons [Member] | Land and Land Improvements [Member]
Real Estate
Real Estate Held-for-sale		2,800
Las Colinas Commons [Member] | Other Intangible Assets [Member]
Real Estate
Real Estate Held-for-sale		$ 700

XML

Summary of Significant Accounting Policies Summary of Significant Accounting Policies - Condominium Inventory (Details) $ in Thousands		3 Months Ended			6 Months Ended
	Feb. 22, 2016 USD ($) condominium	Jun. 30, 2016 USD ($)	Mar. 31, 2016 USD ($)	Jun. 30, 2015 USD ($)	Jun. 30, 2016 USD ($)	Jun. 30, 2015 USD ($)
Real Estate Properties [Line Items]
Sales of Real Estate		$ 0		$ 0	$ 2,271	$ 0
Chase Park Plaza Plaza Hotel and Chase- Private Residences [Member]
Real Estate Properties [Line Items]
Sales of Real Estate	$ 2,500		$ 2,500
Proceeds from Sale of Real Estate	$ 2,200		$ 2,200
Chase Private Residences [Member]
Real Estate Properties [Line Items]
Number of units in multifamily project | condominium	1

XML

Summary of Significant Accounting Policies Summary of Significant Accounting Policies - Accounts Receivable (Details) - USD ($) $ in Millions	Jun. 30, 2016	Dec. 31, 2015
Accounting Policies [Abstract]
Straight Line Rental Revenue Receivables	$ 2.1	$ 4.2
Accounts Receivable from Hotel Operators and Tenants Related to Consolidated Properties	2.4	2.4
Allowance for Doubtful Accounts Receivable	$ 0.1	$ 0.3

XML

Summary of Significant Accounting Policies Summary of Significant Accounting Policies - Investment Impairment (Details) - USD ($) $ in Thousands		3 Months Ended				6 Months Ended		12 Months Ended
	Feb. 22, 2016	Jun. 30, 2016	Mar. 31, 2016	Sep. 30, 2015	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015	Dec. 31, 2015
Finite-Lived Intangible Assets [Line Items]
Impairment of Real Estate		$ 0			$ 616	$ 0	$ 616
Sales of Real Estate		$ 0			$ 0	2,271	$ 0
Fair Value, Measurements, Nonrecurring [Member]
Finite-Lived Intangible Assets [Line Items]
Impairment of Real Estate						$ 0		$ 12,300
Chase Private Residences [Member]
Finite-Lived Intangible Assets [Line Items]
Impairment of Real Estate								700
Chase Park Plaza Plaza Hotel and Chase- Private Residences [Member]
Finite-Lived Intangible Assets [Line Items]
Sales of Real Estate	$ 2,500		$ 2,500
Proceeds from Sale of Real Estate	$ 2,200		$ 2,200
Northborough Tower
Finite-Lived Intangible Assets [Line Items]
Impairment of Real Estate				$ 2,100				2,100
Northpoint Central [Member]
Finite-Lived Intangible Assets [Line Items]
Impairment of Real Estate				2,700				2,700
Land [Member] | Frisco Square [Member]
Finite-Lived Intangible Assets [Line Items]
Impairment of Real Estate				$ 6,800				$ 6,800

XML

Summary of Significant Accounting Policies - Deferred Financing Fees (Details) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Debt Issuance Costs, Net	$ 754	$ 1,087
Long-term Debt	142,879	154,460
Real Estate Liabilities Associated with Assets Held for Development and Sale	0	14,897
Accumulated Amortization, Debt Issuance Costs	1,900	1,800
Accounting Standards Update 2015-03 [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Debt Issuance Costs, Net	800	0
Long-term Debt		154,460
Real Estate Liabilities Associated with Assets Held for Development and Sale		14,897
Disposal Group, Held-for-sale, Not Discontinued Operations [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Disposal Group, Including Discontinued Operation, Notes Payable, Net	0	14,831
Disposal Group, Including Discontinued Operation, Debt Issuance Costs	$ 0	69
Disposal Group, Including Discontinued Operation, Other Liabilities		100
Scenario, Previously Reported [Member] | Accounting Standards Update 2015-03 [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Debt Issuance Costs, Net		1,156
Long-term Debt		155,547
Real Estate Liabilities Associated with Assets Held for Development and Sale		14,966
Restatement Adjustment [Member] | Accounting Standards Update 2015-03 [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Debt Issuance Costs, Net		(1,156)
Long-term Debt		(1,087)
Real Estate Liabilities Associated with Assets Held for Development and Sale		$ (69)

XML

Summary of Significant Accounting Policies Summary of Significant Accounting Policies - Foreign Currency Translation (Details) $ in Millions	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2016 USD ($) property	Jun. 30, 2015 USD ($)	Jun. 30, 2016 USD ($) property	Jun. 30, 2015 USD ($)	Dec. 31, 2015 property	Dec. 31, 2014 property	Jul. 28, 2008 property
Finite-Lived Intangible Assets [Line Items]
Foreign Currency Transaction Gain (Loss), before Tax | $	$ 0.4	$ (0.4)	$ (0.3)	$ 1.8
Equity Method Investments [Member] | Unconsolidated Properties | Noncontrolling Interest [Member]
Finite-Lived Intangible Assets [Line Items]
Number of Real Estate Properties	18		18				22
Number of Real Estate Investments - Sold/Disposed					3	1

XML

Assets and Liabilities Measured at Fair Value Nonrecurring Fair Value Measurements (Details) - USD ($) $ in Thousands		3 Months Ended				6 Months Ended		12 Months Ended
	Feb. 22, 2016	Jun. 30, 2016	Mar. 31, 2016	Sep. 30, 2015	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015	Dec. 31, 2015
Real Estate Properties [Line Items]
Impairment of Real Estate		$ 0			$ 616	$ 0	$ 616
Condominium inventory		0				0		$ 2,201
Sales of Real Estate		$ 0			$ 0	2,271	$ 0
Fair Value, Measurements, Nonrecurring [Member]
Real Estate Properties [Line Items]
Impairment of Real Estate						$ 0		12,300
Northborough Tower [Member]
Real Estate Properties [Line Items]
Impairment of Real Estate				$ 2,100				2,100
Northpoint Central [Member]
Real Estate Properties [Line Items]
Impairment of Real Estate				2,700				2,700
Chase Private Residences [Member]
Real Estate Properties [Line Items]
Impairment of Real Estate								700
Concessions and Closing Costs								200
Condominium inventory								2,200
Chase Park Plaza Plaza Hotel and Chase- Private Residences [Member]
Real Estate Properties [Line Items]
Sales of Real Estate	$ 2,500		$ 2,500
Frisco Square [Member] | Land [Member]
Real Estate Properties [Line Items]
Impairment of Real Estate				$ 6,800				$ 6,800

XML

Assets and Liabilities Measured at Fair Value Assets Measured at Fair Value on Nonrecurring Basis (Details) - Fair Value, Measurements, Nonrecurring [Member] $ in Thousands	Dec. 31, 2015 USD ($)
Investment Building and Building Improvements [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, Fair Value Disclosure, Nonrecurring	$ 29,500
Assets, Fair Value Disclosure, Accumulated Unrealized Gains (Losses)	(4,778)
Investment Building and Building Improvements [Member] | Fair Value, Inputs, Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, Fair Value Disclosure, Nonrecurring	0
Investment Building and Building Improvements [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, Fair Value Disclosure, Nonrecurring	0
Investment Building and Building Improvements [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, Fair Value Disclosure, Nonrecurring	29,500
Land and Land Improvements [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, Fair Value Disclosure, Nonrecurring	19,606
Assets, Fair Value Disclosure, Accumulated Unrealized Gains (Losses)	(6,762)
Land and Land Improvements [Member] | Fair Value, Inputs, Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, Fair Value Disclosure, Nonrecurring	0
Land and Land Improvements [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, Fair Value Disclosure, Nonrecurring	0
Land and Land Improvements [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, Fair Value Disclosure, Nonrecurring	19,606
Inventory, Real Estate [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, Fair Value Disclosure, Nonrecurring	2,201
Assets, Fair Value Disclosure, Accumulated Unrealized Gains (Losses)	(761)
Inventory, Real Estate [Member] | Fair Value, Inputs, Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, Fair Value Disclosure, Nonrecurring	0
Inventory, Real Estate [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, Fair Value Disclosure, Nonrecurring	0
Inventory, Real Estate [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, Fair Value Disclosure, Nonrecurring	$ 2,201

XML

Assets and Liabilities Measured at Fair Value Quantitative Information about Level 3 Fair Value Measurements (Details) - USD ($) $ in Thousands	3 Months Ended			6 Months Ended		12 Months Ended
	Jun. 30, 2016	Sep. 30, 2015	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015	Dec. 31, 2015
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Impairment of Real Estate	$ 0		$ 616	$ 0	$ 616
Fair Value, Measurements, Recurring [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Derivative Asset, Fair Value, Gross Asset						$ 0
Fair Value, Measurements, Nonrecurring [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Impairment of Real Estate				$ 0		12,300
Fair Value, Measurements, Nonrecurring [Member] | Investment Building and Building Improvements [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Assets, Fair Value Disclosure, Nonrecurring						29,500
Fair Value, Measurements, Nonrecurring [Member] | Investment Building and Building Improvements [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Assets, Fair Value Disclosure, Nonrecurring						29,500
Fair Value, Measurements, Nonrecurring [Member] | Investment Building and Building Improvements [Member] | Income Approach Valuation Technique [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Assets, Fair Value Disclosure, Nonrecurring						29,500
Fair Value, Measurements, Nonrecurring [Member] | Land and Land Improvements [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Assets, Fair Value Disclosure, Nonrecurring						19,606
Fair Value, Measurements, Nonrecurring [Member] | Land and Land Improvements [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Assets, Fair Value Disclosure, Nonrecurring						19,606
Fair Value, Measurements, Nonrecurring [Member] | Land and Land Improvements [Member] | Market Approach Valuation Technique [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Assets, Fair Value Disclosure, Nonrecurring						19,606
Fair Value, Measurements, Nonrecurring [Member] | Inventory, Real Estate [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Assets, Fair Value Disclosure, Nonrecurring						2,201
Fair Value, Measurements, Nonrecurring [Member] | Inventory, Real Estate [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Assets, Fair Value Disclosure, Nonrecurring						2,201
Fair Value, Measurements, Nonrecurring [Member] | Inventory, Real Estate [Member] | Market Approach Valuation Technique [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Assets, Fair Value Disclosure, Nonrecurring						2,201
Northborough Tower [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Impairment of Real Estate		$ 2,100				2,100
Northpoint Central [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Impairment of Real Estate		2,700				2,700
Chase Private Residences [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Impairment of Real Estate						700
Land [Member] | Frisco Square [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Impairment of Real Estate		$ 6,800				$ 6,800
Minimum [Member] | Fair Value, Measurements, Nonrecurring [Member] | Investment Building and Building Improvements [Member] | Income Approach Valuation Technique [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Fair Value Inputs, Discount Rate						7.75%
Fair Value Inputs, Cap Rate						8.00%
Fair Value Inputs, Long-term Revenue Growth Rate						0.00%
Fair Value Inputs, Expense Growth Rate						0.00%
Minimum [Member] | Fair Value, Measurements, Nonrecurring [Member] | Land and Land Improvements [Member] | Market Approach Valuation Technique [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Fair Value Inputs, Price Per Square Foot						20
Fair Value Inputs, Inflation Rate						0.00%
Fair Value Inputs, Discount Rate						12.50%
Minimum [Member] | Fair Value, Measurements, Nonrecurring [Member] | Inventory, Real Estate [Member] | Income Approach Valuation Technique [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Fair Value Inputs, Price Per Square Foot						511
Maximum [Member] | Fair Value, Measurements, Nonrecurring [Member] | Investment Building and Building Improvements [Member] | Income Approach Valuation Technique [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Fair Value Inputs, Discount Rate						11.50%
Fair Value Inputs, Cap Rate						9.75%
Fair Value Inputs, Long-term Revenue Growth Rate						3.00%
Fair Value Inputs, Expense Growth Rate						3.00%
Maximum [Member] | Fair Value, Measurements, Nonrecurring [Member] | Land and Land Improvements [Member] | Market Approach Valuation Technique [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Fair Value Inputs, Price Per Square Foot						45
Fair Value Inputs, Inflation Rate						3.00%
Fair Value Inputs, Discount Rate						20.00%
Maximum [Member] | Fair Value, Measurements, Nonrecurring [Member] | Inventory, Real Estate [Member] | Income Approach Valuation Technique [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Fair Value Inputs, Price Per Square Foot						555

XML

Fair Value Measurement of Financial Instruments (Details) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Long-term Debt, Net of Unamortized (Discount) Premium	$ 143,633	$ 155,547
Debt Issuance Costs, Net	(754)	(1,087)
Long-term Debt	142,879	154,460
Notes and Loans Payable Fair Value Disclosure	143,629	155,610
Disposal Group, Held-for-sale, Not Discontinued Operations [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Disposal Group, Including Discontinued Operation, Notes Payable, Net	0	14,831
Disposal Group, Including Discontinued Operation, Debt Issuance Costs	$ 0	$ 69

XML

Real Estate Investments (Details)		6 Months Ended
	Aug. 26, 2014 unit	Jun. 30, 2016 ft² a building property unit building_stories	Jul. 28, 2008 property
Wholly Owned Properties [Member]
Real Estate Properties [Line Items]
Number of Real Estate Properties | property		2
Consolidated properties
Real Estate Properties [Line Items]
Number of Real Estate Properties | property		3
The Ablon at Frisco Square
Real Estate Properties [Line Items]
Number of units in multifamily project | unit	275	275
Ownership interest, limited partnership investment	90.00%	90.00%
Chase Park Plaza Hotel
Real Estate Properties [Line Items]
Ownership Interest (as a percent)		100.00%
Frisco Square [Member]
Real Estate Properties [Line Items]
Ownership Interest (as a percent)		100.00%
Number of units in multifamily project | unit		114
Area of Land | a		27
Frisco Square [Member] | Office space
Real Estate Properties [Line Items]
Approximate rentable square footage		101,000
Frisco Square [Member] | Retail space
Real Estate Properties [Line Items]
Approximate rentable square footage		71,000
Frisco Square [Member] | Movie theater
Real Estate Properties [Line Items]
Approximate rentable square footage		41,500
Northpoint Central [Member]
Real Estate Properties [Line Items]
Approximate rentable square footage		180,000
Number of buildings | building		1
Number of stories | building_stories		9
Ownership Interest (as a percent)		100.00%
The Lodge & Spa at Cordillera
Real Estate Properties [Line Items]
Ownership Interest (as a percent)		94.00%
Royal Island [Member]
Real Estate Properties [Line Items]
Ownership Interest (as a percent)		87.00%
Ownership interest in the joint venture, non-controlling interest (as a percent)		12.71%
Equity Method Investments [Member] | Unconsolidated Properties | Noncontrolling Interest [Member]
Real Estate Properties [Line Items]
Number of Real Estate Properties | property		18	22

XML

Real Estate Investments Real Estate Investments - Real Estate Development (Details) $ in Millions		6 Months Ended
	Aug. 26, 2014 USD ($) a unit	Jun. 30, 2016 USD ($) a unit	May 24, 2016 a
Frisco Square [Member]
Real Estate Properties [Line Items]
Area of Land		27
Number of Units in Real Estate Property | unit		114
The Ablon at Frisco Square
Real Estate Properties [Line Items]
Area of Land, Contributed Real Estate	3.4
Ownership interest, limited partnership investment	90.00%	90.00%
Number of Units in Real Estate Property | unit	275	275
Real Estate Property, Estimated Gross Construction Costs | $		$ 41.5
Percentage of property leased		71.00%
Percentage of property occupied		57.00%
Construction Loans [Member] | The Ablon at Frisco Square
Real Estate Properties [Line Items]
Debt Instrument, Face Amount | $	$ 26.3
Land [Member] | Frisco Square [Member]
Real Estate Properties [Line Items]
Area of Land			5.2

XML

Real Estate Investments Real Estate Investments - Real Estate Asset Disposition (Details) - USD ($) $ in Thousands				3 Months Ended			6 Months Ended		12 Months Ended
	May 24, 2016	May 09, 2016	Feb. 02, 2016	Jun. 30, 2016	Sep. 30, 2015	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015	Dec. 31, 2015
Real Estate Properties [Line Items]
Gains (Losses) on Extinguishment of Debt from Continuing Operations				$ 1,624		$ 0	$ 1,624	$ 0
Extinguishment of Debt, Amount							16,000
Impairment of Real Estate				0		616	0	616
Sales of Real Estate				0		$ 0	2,271	0
Gain (Loss) on Sale of Properties							3,025	$ 0
Notes payable, net				142,879			142,879		$ 154,460
Frisco Square [Member]
Real Estate Properties [Line Items]
Land Sales	$ 8,000
Gain (Loss) on Sale of Properties	$ 1,700
Notes payable, net				30,300			30,300
Las Colinas Commons [Member]
Real Estate Properties [Line Items]
Sales of Real Estate			$ 14,300
Cash proceeds from sale			14,000
Gain (Loss) on Sale of Properties			1,300				1,300
Loans Payable									11,300
Notes payable, net									14,900
Notes and Loans Payable			11,300
Northpoint Central and Las Colinas Commons [Member]
Real Estate Properties [Line Items]
Notes and Loans Payable			14,900
Northpoint Central [Member]
Real Estate Properties [Line Items]
Impairment of Real Estate					$ 2,700				2,700
Notes payable, net				11,200			11,200
Notes and Loans Payable			$ 3,600
Northborough Tower [Member]
Real Estate Properties [Line Items]
Gains (Losses) on Extinguishment of Debt from Continuing Operations				$ 1,600			$ 1,600
Impairment of Real Estate					$ 2,100				$ 2,100
Assets Transfered in Satisfaction of Debt | Northborough Tower [Member]
Real Estate Properties [Line Items]
Book value of assets and liabilities transfered		14.4

XML

Real Estate Investments Real Estate Investments - Disposed RE Reported in Continuing Operated (Details) - USD ($) $ in Thousands		3 Months Ended		6 Months Ended
	Feb. 02, 2016	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Real Estate Properties [Line Items]
Sales of Real Estate		$ 0	$ 0	$ 2,271	$ 0
Gain (Loss) on Sale of Properties				3,025	0
Gains (Losses) on Extinguishment of Debt from Continuing Operations		1,624	0	1,624	0
Northborough Tower [Member]
Real Estate Properties [Line Items]
Gains (Losses) on Extinguishment of Debt from Continuing Operations		1,600		1,600
Las Colinas Commons [Member]
Real Estate Properties [Line Items]
Sales of Real Estate	$ 14,300
Gain (Loss) on Sale of Properties	$ 1,300			1,300
Income (Loss) from Individually Significant Component Disposed of or Held-for-sale, Excluding Discontinued Operations, before Income Tax		$ 1,859	$ 227	$ 2,666	$ 453

XML

Real Estate Investments - Unconsolidated Joint Venture (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015	Dec. 31, 2015	Dec. 31, 2014
Combined assets and liabilities of investment properties
Real estate assets, net	$ 210,681		$ 210,681		$ 230,727
Cash and cash equivalents	26,129	$ 23,099	26,129	$ 23,099	20,746	$ 35,015
Total assets	271,005		271,005		306,646
Notes payable, net	142,879		142,879		154,460
Total liabilities	168,581		168,581		199,901
Stockholders' Equity Attributable to Parent	101,737		101,737		105,749
Total liabilities and equity	271,005		271,005		306,646
Combined losses of investments
Revenue	13,386	15,081	27,417	27,106
Non-operating expenses:
Depreciation and amortization	2,726	3,064	5,364	6,235
Equity in earnings (losses) of unconsolidated joint ventures	3	(88)	57	(180)
Investments in unconsolidated joint ventures	14,121		14,121		13,953
Unconsolidated Joint Ventures [Member]
Combined assets and liabilities of investment properties
Real estate assets, net	59,309		59,309		59,415
Cash and cash equivalents	5,937		5,937		6,827
Other assets	1,423		1,423		1,441
Total assets	66,669		66,669		67,683
Notes payable, net	40,808		40,808		40,895
Other liabilities	1,818		1,818		2,526
Total liabilities	42,626		42,626		43,421
Stockholders' Equity Attributable to Parent	24,043		24,043		24,262
Total liabilities and equity	66,669		66,669		67,683
Combined losses of investments
Revenue	1,612	2,201	3,348	4,444
Operating expenses:
Operating expenses	532	520	1,036	1,029
Property taxes	52	64	100	132
Total operating expenses	584	584	1,136	1,161
Operating income	1,028	1,617	2,212	3,283
Non-operating expenses:
Depreciation and amortization	601	838	1,189	1,696
Interest and other, net	420	966	901	2,048
Gain on sale		0		(78)
Total non-operating expenses	1,021	1,804	2,090	3,666
Net Income (Loss) Attributable to Parent	7	(187)	122	(383)
Equity in earnings (losses) of unconsolidated joint ventures	$ 3	$ (88)	$ 57	$ (180)
Central Europe Joint Venture
Schedule of Equity Method Investments [Line Items]
Ownership interest percentage	47.01%		47.01%
Non-operating expenses:
Investments in unconsolidated joint ventures	$ 14,121		$ 14,121		$ 13,953

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Real Estate Held for Sale (Details) - USD ($) $ in Thousands		3 Months Ended		6 Months Ended		12 Months Ended
	Feb. 02, 2016	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015	Dec. 31, 2015
Real Estate Properties [Line Items]
Sales of Real Estate		$ 0	$ 0	$ 2,271	$ 0
Land and improvements, net		54,946		54,946		$ 58,936
Buildings and improvements, net		155,735		155,735		132,670
Lease intangibles, net		1,270		1,270		2,248
Real Estate Held-for-sale		0		0		12,679
Notes payable, net		142,879		142,879		154,460
Accrued and other liabilities		24,102		24,102		25,606
Real Estate Liabilities Associated with Assets Held for Development and Sale		0		0		14,897
Real Estate Held for Sale [Member]
Real Estate Properties [Line Items]
Land and improvements, net						2,785
Buildings and improvements, net						8,362
Lease intangibles, net						668
Straight-line rental revenue						864
Real Estate Held-for-sale						12,679
Disposal Group, Including Discontinued Operation, Notes Payable, Net						14,831
Accrued and other liabilities						66
Real Estate Liabilities Associated with Assets Held for Development and Sale						14,897
Disposal Group, Held-for-sale, Not Discontinued Operations [Member]
Real Estate Properties [Line Items]
Disposal Group, Including Discontinued Operation, Debt Issuance Costs		0		0		(69)
Disposal Group, Including Discontinued Operation, Notes Payable, Net		0		0		14,831
Las Colinas Commons [Member]
Real Estate Properties [Line Items]
Sales of Real Estate	$ 14,300
Notes payable, net						14,900
Loans Payable						11,300
Las Colinas Commons [Member] | Real Estate Held for Sale [Member]
Real Estate Properties [Line Items]
Notes payable, net						14,900
Northpoint Central [Member]
Real Estate Properties [Line Items]
Notes payable, net		$ 11,200		$ 11,200
Notes and Loans Payable						$ 3,600

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Notes Payable Notes Payable (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2016	Mar. 31, 2016	Jan. 12, 2016	Dec. 31, 2015
Debt Instrument [Line Items]
Debt Issuance Costs, Net	$ 754			$ 1,087
Long-term Debt	142,879			154,460
Disposal Group, Including Discontinued Operation, Notes Payable, Gross	$ 0			14,900
Debt, Weighted Average Interest Rate	5.30%
Long-term Debt, Percentage Bearing Variable Interest, Amount	$ 56,400
Notes payable, net	142,879			154,460
Long-term Debt, Net of Unamortized (Discount) Premium	143,633			155,547
Long Term Debt, Including Disposal Group	$ 142,879			169,291
Minimum [Member]
Debt Instrument [Line Items]
Debt Instrument, Interest Rate, Effective Percentage	3.00%
Maximum [Member]
Debt Instrument [Line Items]
Debt Instrument, Interest Rate, Effective Percentage	15.00%
Disposal Group, Held-for-sale, Not Discontinued Operations [Member]
Debt Instrument [Line Items]
Disposal Group, Including Discontinued Operation, Notes Payable, Net	$ 0			14,831
Disposal Group, Including Discontinued Operation, Debt Issuance Costs	0			69
Frisco Debtors Loans | Notes Payable [Member] | Maximum [Member]
Debt Instrument [Line Items]
Guarantor Obligations, Current Carrying Value	$ 11,200
Northborough Tower [Member]
Debt Instrument [Line Items]
Interest rate	8.67%
Northborough Tower [Member] | Notes Payable [Member]
Debt Instrument [Line Items]
Interest rate	5.67%		8.67%
Notes payable, net	$ 0			18,516
Royal Island [Member] | Notes Payable [Member]
Debt Instrument [Line Items]
Interest rate	15.00%
Notes payable, net	$ 14,489			13,872
Amount available to draw on loan	14,489	$ 14,429
Northpoint Central [Member]
Debt Instrument [Line Items]
Notes payable, net	$ 11,200
Notes and Loans Payable				3,600
Northpoint Central [Member] | Notes Payable [Member]
Debt Instrument [Line Items]
Interest rate	5.15%
Notes payable, net	$ 11,235			11,720
Chase Park Plaza Plaza Hotel and Chase- Private Residences [Member] | Notes Payable [Member]
Debt Instrument [Line Items]
Interest rate	4.95%
Notes payable, net	$ 61,543			62,182
Debt Instrument, Basis Spread on Variable Rate	4.95%
Debt Instrument, Description of Variable Rate Basis	30-day LIBOR
Frisco Square II LLC [Member] | Notes Payable [Member]
Debt Instrument [Line Items]
Notes payable, net	$ 6,795			6,856
Debt Instrument, Basis Spread on Variable Rate	3.00%
Debt Instrument, Description of Variable Rate Basis	30-day LIBOR
Frisco Square III LLC [Member] | Notes Payable [Member]
Debt Instrument [Line Items]
Notes payable, net	$ 6,099			6,154
Debt Instrument, Basis Spread on Variable Rate	3.00%
Debt Instrument, Description of Variable Rate Basis	30-day LIBOR
Frisco Square IV LLC [Member] | Notes Payable [Member]
Debt Instrument [Line Items]
Notes payable, net	$ 12,671			12,783
Debt Instrument, Basis Spread on Variable Rate	3.00%
Debt Instrument, Description of Variable Rate Basis	30-day LIBOR
Frisco Square Theater LLC [Member] | Notes Payable [Member]
Debt Instrument [Line Items]
Notes payable, net	$ 4,743			4,785
Debt Instrument, Basis Spread on Variable Rate	3.00%
Debt Instrument, Description of Variable Rate Basis	30-day LIBOR
The Ablon at Frisco Square | Notes Payable [Member]
Debt Instrument [Line Items]
Notes payable, net	$ 26,058			18,679
Debt Instrument, Basis Spread on Variable Rate	2.50%
Debt Instrument, Description of Variable Rate Basis	30-day LIBOR
Las Colinas Commons [Member]
Debt Instrument [Line Items]
Notes payable, net				14,900
Loans Payable				$ 11,300
Las Colinas Commons [Member] | Notes Payable [Member]
Debt Instrument [Line Items]
Interest rate	5.15%
Frisco Square [Member]
Debt Instrument [Line Items]
Notes payable, net	$ 30,300
London Interbank Offered Rate (LIBOR) [Member]
Debt Instrument [Line Items]
Debt Instrument, Variable Rate Basis, Term	30 days
London Interbank Offered Rate (LIBOR) [Member] | Frisco Square [Member]
Debt Instrument [Line Items]
Debt Instrument Reference Rate	0.46505%

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Notes Payable Notes Payable - Ablon at Frisco Square Financing (Details) $ in Millions		6 Months Ended
	Aug. 26, 2014 USD ($) extension	Jun. 30, 2016 USD ($)
Debt Instrument [Line Items]
Debt Instrument, Sinking Fund Payment		$ 26.1
Construction Loans [Member] | The Ablon at Frisco Square
Debt Instrument [Line Items]
Debt Instrument, Face Amount	$ 26.3
Debt Instrument, Term	3 years
Number of extension options | extension	2
Note payable, extension period	12 months
London Interbank Offered Rate (LIBOR) [Member]
Debt Instrument [Line Items]
Debt Instrument, Variable Rate Basis, Term		30 days
London Interbank Offered Rate (LIBOR) [Member] | Construction Loans [Member] | The Ablon at Frisco Square
Debt Instrument [Line Items]
Debt Instrument, Variable Rate Basis, Term	30 days
Loans Receivable, Basis Spread on Variable Rate	2.50%

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Notes Payable Notes Payable - Northborough Tower Debt (Details) - USD ($) $ in Millions	Jun. 30, 2016	May 09, 2016	Feb. 29, 2016	Jan. 12, 2016
Debt Instrument [Line Items]
Debt Instrument, Cash Reserves Applied to Principal Balance			$ 0.9
Debt Instrument, Excess Cash Reserves Applied to Principal Balance			$ 0.8
Northborough Tower [Member]
Debt Instrument [Line Items]
Interest rate	8.67%
Non-Recourse Debt		$ 15.9
Northborough Tower [Member] | Notes Payable [Member]
Debt Instrument [Line Items]
Interest rate	5.67%			8.67%

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Notes Payable Notes Payable - Chase Park Plaza Modification (Details) - Chase Park Plaza Plaza Hotel and Chase- Private Residences [Member] $ in Millions	6 Months Ended
	Jun. 30, 2016 USD ($) extension	Aug. 04, 2016 USD ($)
Debt Instrument [Line Items]
Completion guarantee	$ 6.5
Percentage of unspent funds required to be put in escrow if renovation is not completed by August 10, 2017	125.00%
Property tax abatement period	10 years
Subsequent Event [Member]
Debt Instrument [Line Items]
Property tax escrow		$ 1.5
Escrow related to certain facade repairs and enhancements		$ 3.1
Reimbursement commitment as a percentage of total construction cost invoiced		39.30%
Notes Payable [Member]
Debt Instrument [Line Items]
Interest rate	4.95%
Number of extension options | extension	2
Note payable, extension period	1 year
Debt service ratio required to exercise extensions	1.35

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Notes Payable Notes Payable - Future Principal Payments (Details) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Debt Instrument [Line Items]
July 1, 2016 - December 31, 2016	$ 16,026
2017	98,151
2018	29,456
2019	0
2020	0
Long-term Debt, Net of Unamortized (Discount) Premium	143,633	$ 155,547
Debt Issuance Costs, Net	754	1,087
Notes payable, net	142,879	$ 154,460
Real Estate [Member]
Debt Instrument [Line Items]
Notes payable, net	$ 142,879

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Commitments and Contingencies Commitments and Contingencies (Details) - USD ($) $ in Thousands	3 Months Ended	6 Months Ended		12 Months Ended
	Mar. 31, 2016	Jun. 30, 2016	Jun. 30, 2015	Dec. 31, 2015	Aug. 04, 2016
Commitments [Line Items]
Real Property Assessed Value Exceeding Threshold Limit		$ 1,000
Real Property Assessed Value Threshold Limit		$ 174,000
Percentage of Reduction in Bond Obligation for an Amount Exceeding Threshold Limit		1.00%
Real Property Value Limit for Termination of Debt		$ 225,000
Assessed Amount of Annual Debt Service		100
Release of escrow		$ 3,040	$ (948)
Frisco Square [Member]
Commitments [Line Items]
Sale Proceeds Placed in Escrow				$ 1,400
Release of escrow	$ 1,400
BHFS I, LLC (Land)
Commitments [Line Items]
Percentage of Net Sales Proceeds to be Deposited into Escrow Account		33.00%
Limit up to which Sales Proceeds will be Transferred to Escrow Accounts		$ 7,000
Chase Park Plaza Plaza Hotel and Chase- Private Residences [Member]
Commitments [Line Items]
Completion guarantee		$ 6,500
Percentage of unspent funds required to be put in escrow if renovation is not completed by August 10, 2017		125.00%
Chase Park Plaza Plaza Hotel and Chase- Private Residences [Member] | Subsequent Event [Member]
Commitments [Line Items]
Escrow related to certain facade repairs and enhancements					$ 3,100
Escrow Deposit					$ 1,500
Bonds
Commitments [Line Items]
Real Property Assessed Value Threshold Limit		$ 125,000
Percentage of Reduction in Bond Obligation for an Amount Exceeding Threshold Limit		27.00%
Long-term Debt, Gross		$ 4,200		4,700
Assessed Amount of Annual Debt Service				$ 300
Bonds | Frisco Square [Member]
Commitments [Line Items]
Assessed Amount of Annual Debt Service		100
City of Frisco | Bonds
Commitments [Line Items]
Proceeds from Issuance of Debt		$ 12,500

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Related Party Transactions (Details)	3 Months Ended		6 Months Ended
	Jun. 30, 2016 USD ($)	Jun. 30, 2015 USD ($)	Jun. 30, 2016 USD ($) fiscal_quarter	Jun. 30, 2015 USD ($)	Dec. 31, 2017 USD ($)	Dec. 31, 2016 USD ($)	Dec. 31, 2015 USD ($)
Related Party Transaction
Asset management fees	$ 523,000	$ 579,000	$ 1,059,000	$ 1,147,000
Number of fiscal quarters immediately preceding the date reimbursement is sought | fiscal_quarter			4
Administrative services cost incurred	1,423,000	1,023,000	$ 2,634,000	2,064,000
Property management fees	351,000	530,000	782,000	942,000
Payables to related parties	472,000		$ 472,000				$ 747,000
Behringer Harvard Opportunity Advisors I
Related Party Transaction
Asset management fee as a percentage of aggregate asset value of acquired real estate and real estate related assets			0.575%
Asset management fees	500,000	600,000	$ 1,000,000	1,100,000
Acquisition and advisory fees as a percentage of contract purchase price			2.50%
Acquisition and advisory fees as a percentage of funds advanced in respect of loan investment			2.50%
Acquisition Fees Related Party Costs	0.0	0	$ 0	0.0
Advisor's operating expenses as a percentage of average invested assets			2.00%
Advisor's operating expenses as percentage of net income other than any additions to non cash reserves and any gain from sale of assets			25.00%
Obligation to reimburse advisor							1,700,000
Administrative services cost incurred	200,000	400,000	$ 600,000	600,000
Property management fees	$ 100,000	$ 300,000	$ 300,000	$ 500,000
Behringer Harvard Opportunity Advisors I | Forecast | Maximum
Related Party Transaction
Obligation to reimburse advisor					$ 1,660,000	$ 1,660,000
Behringer Harvard Opportunity Advisors I | Advisory Agreement
Related Party Transaction
Related Party, Basis Points of Loan Commitment, Year One			40.00%
Basis points of loan commitment, year two			30.00%
Basis points of loan commitment, year three			30.00%
Behringer Harvard Opportunity Advisors I | Advisory Agreement | Extension of three or more years | Maximum
Related Party Transaction
Percentage of Commitment Amount	1.00%		1.00%
Amount due to advisor for revised loan as percentage of loan commitment amount	1.00%		1.00%
Behringer Harvard Opportunity Advisors I | Advisory Agreement | First year of any extension | Minimum
Related Party Transaction
Note payable, extension period			120 days
BH Property Management
Related Party Transaction
Advisor's and property management fee as a percentage of gross revenue			4.50%
Oversight fee as a percentage of gross revenues of the property managed	0.50%		0.50%
Advisor and its affiliates
Related Party Transaction
Payables to related parties	$ 500,000		$ 500,000				$ 800,000

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Supplemental Cash Flow Information (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
Supplemental disclosure:
Interest paid, net of amounts capitalized	$ 3,811	$ 2,542
Income Taxes Paid, Net	125	140
Non-cash investing and financing activities:
Property and equipment additions and purchases of real estate in accrued liabilities	169	2,479
Capital expenditures for real estate under development in accounts payable and accrued liabilities	0	3,140
Transfer from real estate under development to building and improvements	37,110	(2,611)
Additions to land and land improvements reclassified from real estate under development	3,685	0
Additions to furniture, fixtures and equipment reclassified from real estate under development	1,101	0
Amortization of deferred financing fees in properties under development	10	44
Northborough Tower [Member]
Non-cash investing and financing activities:
Real estate and lease intangibles	12,723	0
Note payable	15,853	0
Other assets and liabilities, net	$ 1,506	$ 0