Behringer Harvard Opportunity REIT I,Inc. (OTCMKTS:BHOR) Files An 8-K Entry into a Material Definitive Agreement

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Behringer Harvard Opportunity REIT I,Inc. (OTCMKTS:BHOR) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01. Entry into a Material Definitive Agreement.

On February 10, 2017, Behringer Harvard Opportunity REIT I, Inc. (the “Company”) terminated its relationship with its external advisor and property manager, each affiliates of Stratera Holdings, LLC (f/k/a Behringer Harvard Holdings, LLC) (“Stratera”), and engaged affiliates of the Lightstone Group (“Lightstone”) to act as its new external advisor and property manager to the agreements described below. Information about Lightstone is included under Item 8.01 below.

Termination of Behringer Advisory Agreement

The Company entered into the Termination of Advisory Management Agreement (the “Advisory Termination Agreement”) with Behringer Harvard Opportunity Advisors I, LLC (the “Behringer Advisor”), and (solely with respect to certain sections) Stratera. The Advisory Termination Agreement, among other things, terminated the Fourth Amended and Restated Advisory Management Agreement between the Company and the Behringer Advisor entered into on May 31, 2016 (the “Behringer Advisory Agreement”) as of the close of business on February 10, 2017.

The Advisory Termination Agreement also provides that the Company and its affiliates are permitted to continue use of the name “Behringer Harvard” until dissolution of the Company and the Company will maintain the coverage provided to the Behringer Advisor under its current directors’ and officers’ liability insurance policies until the termination of the policies. Finally, the Advisory Termination Agreement also provides that Stratera and its subsidiaries, including the Behringer Advisor, agree not to sue the Company for claims arising under or to the Behringer Advisory Agreement, except with respect to third-party claims. In addition, any rights of the Behringer Advisor to indemnification from the Company with respect to third-party claims are preserved.

Termination of Behringer Management Agreement

The Company, Behringer Harvard Opportunity OP I, LP (the “Operating Partnership”), and several special purpose entities formed to directly own the properties in which the Company has invested (each individually an “SPE” and collectively, the “SPEs”), entered into the Termination of Property Management and Leasing Agreement (the “Property Management Termination Agreement”) with Behringer Harvard Opportunity Management Services, LLC, and Behringer Harvard Real Estate Services, LLC (collectively, the “Behringer Manager”), and (solely with respect to certain sections) Stratera.

The Property Management Termination Agreement, among other things, terminated the Amended and Restated Property Management and Leasing Agreement between the Company, the Operating Partnership, the SPEs, and the Manager dated as of May 31, 2016 (the “Behringer Management Agreement”) as of the close of business on February 10, 2017 with respect to the Company, the Operating Partnership, and those SPEs that own properties that do not require consent by a lender to change the property manager. For SPEs that own properties that secure loans that require lender consent to change the property manager (the “Lender SPEs”), the termination of the Behringer Management Agreement will occur for each Lender SPE as of the close of business on the date following receipt of any required lender consent.

The Property Management Termination Agreement also provides that Stratera and its subsidiaries, including the Behringer Manager, agree not to sue the Company for claims arising under or to the Behringer Management Agreement, except with respect to third-party claims and certain other limited exceptions. In addition, any rights of the Behringer Manager to indemnification from the Company with respect to third-party claims are preserved.

Entry into Lightstone Advisory Agreement

The Company and the Operating Partnership entered into an Advisory Management Agreement (the “Lighstone Advisory Agreement”) with LSG-BH I Advisor LLC (the “Lightstone Advisor”) to which the Lightstone Advisor agreed to provide advisory services to the Company.

The Lightstone Advisory Agreement is substantially similar to the Behringer Advisory Agreement except for the changes described below and certain other immaterial changes. The parties have agreed to review the limits on expense reimbursements upon the following events: (i) a sale of Chase Park Plaza (ii) a sale of Frisco Square, and (iii) relief from certain SEC reporting obligations; provided that if none of these events have occurred by August 1, 2017, the parties will review the expense limits by September 1, 2017 and negotiate in good faith to reduce the limits as appropriate. The term of the Lightstone Advisory Agreement is one year, but may be renewed for successive one-year terms upon the mutual consent of parties to the agreement.

In addition, the Lightstone Advisor and its affiliates, and the directors, officers, employees, partners, members, stockholders, other equity holders, agents and representatives of the Lightstone Advisor and its affiliates, are entitled to indemnification from the Company except for acts or omissions constituting bad faith, willful misconduct, gross negligence, or reckless disregard of their duties under the Lightstone Advisory Agreement. Also, the Company agreed to indemnify the Lightstone Advisor for any losses incurred by the Lightstone Advisor due to any matter, act, or omission that occurred before February 10, 2017. Finally, the Lightstone Advisor agreed to indemnify the Company from losses incurred as a result of the Lightstone Advisor’s bad faith, fraud, misfeasance, willful misconduct, gross negligence or reckless disregard of its duties under the Lightstone Advisory Agreement.

Entry into Lightstone Property Management Agreement

The Company, the Operating Partnership, and the SPEs entered into the Property Management and Leasing Agreement (the “Lightstone Property Management Agreement”) with LSG-BH I Property Manager LLC (the “Lightstone Manager”). Under the Lightstone Property Management Agreement, the Lightstone Manager agreed to provide property management and leasing services to the Company, the Operating Partnership, and the SPEs. The Lightstone Property Management Agreement is effective immediately for the Company, the Operating Partnership, and all SPEs other than the Lender SPEs. For the Lender SPEs, the Lightstone Property Management Agreement will be effective for each Lender SPE as of the date following receipt or waiver of any required lender consent.

The Lightstone Property Management Agreement is substantially similar to the terminated Behringer Management Agreement except for the changes described below and certain immaterial changes. The term of the agreement is five years, subject to successive five-year renewal periods unless notice of termination is provided on or before 90 days prior to the expiration date. Under the Lightstone Property Management Agreement, the Manager must use commercially reasonable efforts to perform its duties.

In addition, the Lightstone Manager and its affiliates, and the directors, officers, employees, managers, stockholders, agents and representatives of the Lightstone Manager and its affiliates, are entitled to indemnification and in certain places the standard for indemnification has been reduced from misconduct and negligence to willful misconduct and gross negligence. In addition, the Company agreed to indemnify the Lightstone Manager for any losses incurred by the Lightstone Manager for any matter, act, or omission that occurred before February 10, 2017. Finally, the Lightstone Manager agreed to indemnify the Company from losses incurred due to the Lightstone Manager’s willful misconduct, gross negligence or unlawful acts.

Item 1.02 Termination of a Material Definitive Agreement

The information in this Report set forth under Item 1.01 regarding the termination of the Behringer Advisory Agreement and the Behringer Management Agreement is incorporated by reference.

Item 8.01 Other Events.

Lightstone, which is majority-owned and controlled by David Lichtenstein, is one of the largest private residential and commercial real estate owners and operators in the United States today. As of February 15, 2017, Lightstone directly or indirectly advises or has equity interest in a diversified portfolio of over 120 properties containing approximately 10,000 multifamily units, 0.3 million square feet of office space, 1.5 million square feet of industrial space, 31 hotels and 4.6 million square feet of retail space. These residential, office, industrial, hospitality and retail properties are located in 26 states. Lightstone is based in New York and supported by a regional office in New Jersey. Lightstone employs approximately 397 staff and professionals. Lightstone has experience in the areas of investment selection, underwriting, due diligence, development, portfolio management, asset management, property management, leasing, disposition, finance, accounting and investor relations. In addition, Lightstone, along with its affiliates, has been one of the largest developers of outlet shopping centers in the United States over the last 10 years, having owned, managed and developed 25 outlet centers totaling more than 8.0 million leasable square feet, and is an active residential developer in New York City.


Behringer Harvard Opportunity REIT I, Inc. (OTCMKTS:BHOR) Recent Trading Information

Behringer Harvard Opportunity REIT I, Inc. (OTCMKTS:BHOR) closed its last trading session 00.00 at 1.30 with 7,900 shares trading hands.