February 11, 2010 Dear Investor:
February
11, 2010
Dear
Investor:
The
limited partnership agreement of Behringer Harvard Mid-Term Value Enhancement
Fund I LP requires that beginning the fiscal year ended December 31, 2009, the
Fund’s general partners provide its limited partners annually an estimate of the
amount a holder of limited partnership units would receive if the Fund
properties were sold at their fair market values as of the close of the Fund’s
fiscal year, and the proceeds from the sale of the properties (without reduction
for selling expenses), together with other funds of the Fund, were distributed
in a liquidation of the Fund.
On
January 14, 2010, Xxxxxxxxx Harvard Advisors I LP, the Fund’s co-general
partner, adopted a new estimated value per limited partnership unit as of
December 31, 2009. As part of the general partner’s valuation
process, and as required by the Fund’s limited partnership agreement, the
general partner has obtained the opinion of an independent third party, Xxxxxx
X. Xxxxxxx & Co., Inc., that the estimated valuation is reasonable and was
prepared in accordance with appropriate methods for valuing real
estate. Xxxxxx X. Xxxxxxx & Co., founded in 1978, is a nationally
recognized investment banking firm specializing in real estate, REITs and direct
participation programs such as the Fund.
The new
estimated valuation per limited partnership unit as of December 31, 2009 is
$7.09. This new estimated valuation will be reflected on your
customer statement for the first quarter of 2010.
This
estimated value may not reflect the amount you would obtain if you were to sell
your units or if we liquidated our assets. For a detailed description
of the valuation methodologies used by the general partner and other limitations
related to the estimated valuation, please refer to the Current Report on Form
8-K filed by the Fund with the Securities and Exchange Commission on January 14,
2010. A copy of the Form 8-K is available without charge at the SEC’s
website, xxx.xxx.xxx, or at xxx.xxxxxxxxxxxxxxxx.xxx.
The
current downturn in the economy has had a negative effect on commercial property
values and has severely limited access to the capital markets. As a
result, this valuation generally represents asset values which we believe are
quite depressed. As contemplated by the Fund’s partnership agreement,
the general partner will update its estimated value per unit
annually.
Generally,
we do not anticipate selling the Fund’s assets unless we think it makes
sense for a particular asset, or until the economy has improved, and we have the
opportunity to realize additional value. For instance, as we have
mentioned to you in prior correspondence, we have had some interest from a
purchaser in our building in Hopkins, Minnesota. We have entered into
a purchase agreement for that building, and if this sale were to close, we
currently estimate that the return to the Fund would be approximately
break-even. The Xxxxxxx building has one tenant, Sungard Financial
Systems LLC, and SunGard’s lease has approximately 7 years remaining, with
SunGard being able to terminate the lease in approximately 5
years. Because of the decreasing term of the lease, management feels
that this offer should be accepted, rather than waiting and attempting to market
the building when the building’s sole tenant has a shorter lease, which
management feels would negatively affect the value of the
building. For more information on this potential sale, including
conditions for the sale to close, please refer to our Current Report on Form 8-K
that we filed with the SEC on February 9, 2010. A copy of the Form
8-K is available without charge at xxx.xxx.xxx or
xxx.xxxxxxxxxxxxxxxx.xxx.
In
addition, we are diligently working to renew current leases or secure new leases
with quality tenants to increase net operating income and the ultimate value of
our assets and to execute on other value creation strategies. We are
also trying to minimize expenses when possible. We will continue to
work to meet the intended timeframe for the Fund to liquidate by
2013.
We
appreciate your continued support in our efforts as we strive to continue to
perform in the current challenging market.
Very
truly yours,
Xxxxxx X.
Xxxxxx
President
and CEO
Behringer
Harvard Advisors I LP, Co-General Partner
Xxxxxx
Xxxxxxxxx
General
Partner and Chairman,
Behringer
Harvard Advisors I LP
Forward-looking
statements that were true at the time made may ultimately prove to be incorrect
or false. The Fund cautions investors not to place undue reliance on
forward-looking statements, which reflect the Fund’s management’s view only as
of the date of this letter. The Fund undertakes no obligation to
update or revise forward-looking statements to reflect changed assumptions,
the occurrence of unanticipated events or changes to future operating
results. Factors that could cause actual results to differ materially
from any forward-looking statements made in this letter include changes in
general economic conditions, changes in real estate conditions, construction
costs that may exceed estimates, construction delays, increases in interest
rates, lease-up risks, inability to obtain new tenants upon the expiration of
existing leases, and the potential need to fund tenant improvements or other
capital expenditures out of operating cash flow. The forward-looking
statements should be read in light of the risk factors identified in the “Risk
Factors” section of the Fund’s Annual Report on Form 10-K for the year ended
December 31, 2008, as filed with the SEC and the risks identified in Part II,
Item 1A of its subsequent quarterly reports on Form 10-Q as filed with the
SEC. The Fund’s filings are available free of charge at the SEC’s
website at xxx.xxx.xxx or at the website maintained for the Fund at
xxx.xxxxxxxxxxxxxxxx.xxx.
