**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

 

**FORM 10-Q**

 

**[Mark One]**

**x**                              QUARTERLY REPORT PURSUANT TO SECTION 13 OR15(d) OF THESECURITIES EXCHANGE ACT OF 1934

 

**For the quarterly periodended September 30, 2006**

 

**OR**

 

**o**                                 TRANSITIONREPORT PURSUANT TO SECTION 13 OR 15(d) OF THESECURITIES EXCHANGE ACT OF 1934

 

**For the transition periodfrom                       to                       **

 

**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 |   | (I.R.S. Employer     |
| or Organization)                               |   | 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) 655-1620

 

**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 befiled by Section 13 or 15(d) of the Securities Exchange Act of 1934 during thepreceding 12 months (or for such shorter period that the Registrant wasrequired to file such reports) and (2) has been subject to such filing requirementsfor the past 90 days. Yes x  No o

Indicate by check mark whether the Registrant is alarge accelerated filer, an accelerated filer, or a non-accelerated filer.

See definition of “accelerated filer and largeaccelerated filer” in Rule 12b-2 of the Exchange Act. (check one):
| Large accelerated filer o | Accelerated  filer o | Non-accelerated filer x |
|--------------------------------|---------------------------|------------------------------|

 

Indicate by check mark whether the Registrant is ashell company (as defined in Rule 12b-2 of the Exchange Act). Yes o  No x

Asof November 1, 2006, Behringer Harvard Opportunity REIT I, Inc. had 14,178,010****shares of common stock, $.0001 par value,outstanding.

 

 

----

**BEHRINGERHARVARD OPPORTUNITY REIT I, INC.**

**FORM10-Q**

**QuarterEnded September 30, 2006**

 
|               | ** ** | ** **                                                                                                                               | ** ** | **Page** | ** ** |
|---------------|------------|------------------------------------------------------------------------------------------------------------------------------------------|------------|----------|------------|
| ** **    | ** ** | **PART I**                                                                                                                               |       |     |       |
| ** **    | ** ** | **FINANCIAL  INFORMATION**                                                                                                               |       |     |       |
| **Item  1.**  | ** ** | **Financial  Statements (Unaudited).**                                                                                                   |       |     |       |
|          |       | Consolidated Balance Sheets as of September 30, 2006  and December 31, 2005                                                         |       | 3        |       |
|          |       | Consolidated Statements of Operations for the three  and nine months ended September 30, 2006 and 2005                              |       | 4        |       |
|          |       | Consolidated  Statements of Stockholders’ Equity for the year ended December 31, 2005 and  the nine months ended September 30, 2006 |       | 5        |       |
|          |       | Consolidated Statements of  Cash Flows for the nine months ended September 30, 2006 and 2005                                        |       | 6        |       |
|          |       | Notes to  Consolidated Financial Statements                                                                                              |       | 7        |       |
| **Item 2.**   | ** ** | **Management’s  Discussion and Analysis of Financial Condition and Results of Operations.**                                         |       | 17       |       |
| **Item 3.**   | ** ** | **Quantitative and Qualitative Disclosures About Market  Risk.**                                                                         |       | 23       |       |
| **Item 4.**   | ** ** | **Controls and Procedures.**                                                                                                             |       | 23       |       |
| ** **    |       | **PART  II**                                                                                                                             |       |     |       |
| ** **    |       | **OTHER INFORMATION**                                                                                                                    |       |     |       |
| **Item 1.**   | ** ** | **Legal  Proceedings.**                                                                                                                  |       | 24       |       |
| **Item  1A.** | ** ** | **Risk Factors.**                                                                                                                        |       | 24       |       |
| **Item 2.**   | ** ** | **Unregistered Sales of Equity Securities and Use of  Proceeds.**                                                                        |       | 24       |       |
| **Item 3.**   | ** ** | **Defaults Upon Senior Securities.**                                                                                                     |       | 25       |       |
| **Item 4.**   | ** ** | **Submission of Matters to a Vote of Security Holders.**                                                                                 |       | 25       |       |
| **Item  5.**  | ** ** | **Other Information.**                                                                                                                   |       | 25       |       |
| **Item  6.**  | ** ** | **Exhibits.**                                                                                                                            |       | 25       |       |
| **Signature** |       | 26                                                                                                                                       |       |

 

----

**PART I**

**FINANCIAL INFORMATION**

**Item 1.   FinancialStatements.**

**Behringer HarvardOpportunity REIT I, Inc.Consolidated Balance Sheets(Unaudited)**
| ** **                                                                                                                                                                                  | ** ** | **September 30,** | ** **  | **December 31,** | ** ** |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|------------------------|-------------|-----------------------|------------|
| ** **                                                                                                                                                                                  | ** ** | **2006**               | ** **  | **2005**              | ** ** |
| ** **                                                                                                                                                                                  | ** ** | ** **             | ** **  | ** **            | ** ** |
| **Assets**                                                                                                                                                                                  |       |                   |        |                  |       |
| **Real estate**                                                                                                                                                                             |       |                   |        |                  |       |
| Land                                                                                                                                                                                        |       | $                      | 3,451,715   |                  | $          | — |   |
| Buildings, net                                                                                                                                                                              |       | 30,848,877             |        | —                |       |
| Real estate under development                                                                                                                                                               |       | 17,379,912             |        | —                |       |
| **Total real estate**                                                                                                                                                                       |       | 51,680,504             |        | —                |       |
|                                                                                                                                                                                        |       |                   |        |                  |       |
| Cash and cash equivalents                                                                                                                                                                   |       | 86,179,385             |        | 18,560,885            |       |
| Restricted cash                                                                                                                                                                             |       | 1,992,215              |        | 460,470               |       |
| Accounts receivable                                                                                                                                                                         |       | 750,771                |        | —                |       |
| Prepaid expenses and other assets                                                                                                                                                           |       | 90,309                 |        | 85,977                |       |
| Escrow deposits                                                                                                                                                                             |       | 360,500                |        | —                |       |
| Deferred financing fees, net                                                                                                                                                                |       | 1,006,081              |        | —                |       |
| Lease intangibles, net                                                                                                                                                                      |       | 4,407,835              |        | —                |       |
| **Total  assets**                                                                                                                                                                           |       | $                      | 146,467,600 |                  | $          | 19,107,332 |   |
|                                                                                                                                                                                        |       |                   |        |                  |       |
| **Liabilities  and stockholders’ equity**                                                                                                                                              |       |                   |        |                  |       |
| **Liabilities**                                                                                                                                                                             |       |                   |        |                  |       |
| Mortgages payable                                                                                                                                                                           |       | $                      | 23,778,459  |                  | $          | — |   |
| Accounts payable                                                                                                                                                                            |       | 1,005,739              |        | —                |       |
| Payables to affiliates                                                                                                                                                                      |       | 2,550,135              |        | 2,158,017             |       |
| Acquired below-market leases, net                                                                                                                                                           |       | 2,062,410              |        | —                |       |
| Dividends payable                                                                                                                                                                           |       | 205,230                |        | —                |       |
| Accrued liabilities                                                                                                                                                                         |       | 992,382                |        | 88,673                |       |
| Subscriptions for common stock                                                                                                                                                              |       | 451,781                |        | 446,983               |       |
| **Total  liabilities**                                                                                                                                                                      |       | 31,046,136             |        | 2,693,673             |       |
|                                                                                                                                                                                        |       |                   |        |                  |       |
| **Commitments  and contingencies**                                                                                                                                                          |       |                   |        |                  |       |
|                                                                                                                                                                                        |       |                   |        |                  |       |
| **Minority  interest**                                                                                                                                                                      |       | 116,154                |        | —                |       |
|                                                                                                                                                                                        |       |                   |        |                  |       |
| **Stockholders’  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, 13,107,787 and 2,034,005 shares issued and  outstanding at September 30, 2006 and December 31, 2005, respectively |       | 1,311                  |        | 203                   |       |
| Additional paid-in capital                                                                                                                                                                  |       | 114,591,348            |        | 16,516,376            |       |
| Cumulative distributions and retained earnings  (deficit)                                                                                                                                   |       | 712,651                |        | (102,920              | )          |
| **Total  stockholders’ equity**                                                                                                                                                        |       | 115,305,310            |        | 16,413,659            |       |
| **Total liabilities and  stockholders’ equity**                                                                                                                                        |       | $                      | 146,467,600 |                  | $          | 19,107,332 |   |

 

*See Notes to Consolidated Financial Statements.*

3

----

**Behringer HarvardOpportunity REIT I, Inc.Consolidated Statements of Operations(Unaudited)**
| ** **                                | ** ** | **Three months**            | ** ** | **Three months**            | ** ** | **Nine months**             | ** ** | **Nine months**             | ** ** |
|-------------------------------------------|------------|----------------------------------|------------|----------------------------------|------------|----------------------------------|------------|----------------------------------|------------|
| ** **                                | ** ** | **ended**                        | ** ** | **ended**                        | ** ** | **ended**                        | ** ** | **ended**                        | ** ** |
| ** **                                | ** ** | **September 30, 2006** | ** ** | **September 30, 2005** | ** ** | **September 30, 2006** | ** ** | **September 30, 2005** | ** ** |
| ** **                                | ** ** | ** **                       | ** ** | ** **                       | ** ** | ** **                       | ** ** | ** **                       | ** ** |
| **Rental  revenue**                       |       | $                                | 1,316,884  |                             | $          | —                           |       | $                                | 1,791,128  |   | $ | — |   |
|                                      |       |                             |       |                             |       |                             |       |                             |       |
| **Expenses**                              |       |                             |       |                             |       |                             |       |                             |       |
| Property operating expenses               |       | 564,863                          |       | —                           |       | 700,505                          |       | —                           |       |
| Interest expense                          |       | 127,665                          |       | —                           |       | 127,665                          |       | —                           |       |
| Real estate taxes                         |       | 109,362                          |       | —                           |       | 190,878                          |       | —                           |       |
| Property management fees                  |       | 38,194                           |       | —                           |       | 57,841                           |       | —                           |       |
| Asset management fees                     |       | 65,416                           |       | —                           |       | 87,396                           |       | —                           |       |
| General and administrative                |       | 206,845                          |       | 2,478                            |       | 578,613                          |       | 11,457                           |       |
| Depreciation and amortization             |       | 403,056                          |       | —                           |       | 577,309                          |       | —                           |       |
| **Total  expenses**                       |       | 1,515,401                        |       | 2,478                            |       | 2,320,207                        |       | 11,457                           |       |
|                                      |       |                             |       |                             |       |                             |       |                             |       |
| Interest income                           |       | 885,094                          |       | 871                              |       | 1,786,905                        |       | 1,922                            |       |
| Minority  interest                        |       | 130,697                          |       | —                           |       | 130,697                          |       | —                           |       |
|                                      |       |                             |       |                             |       |                             |       |                             |       |
| **Net  income (loss)**                    |       | $                                | 817,274    |                             | $          | (1,607                           | )          | $                                | 1,388,523  |   | $ | (9,535 | ) |
|                                      |       |                             |       |                             |       |                             |       |                             |       |
| **Weighted  average shares outstanding:** |       |                             |       |                             |       |                             |       |                             |       |
| Basic                                     |       | 11,340,747                       |       | 21,739                           |       | 7,701,098                        |       | 21,739                           |       |
| Diluted                                   |       | 11,367,997                       |       | 21,739                           |       | 7,716,576                        |       | 21,739                           |       |
|                                      |       |                             |       |                             |       |                             |       |                             |       |
| **Earnings  (loss) per share:**           |       |                             |       |                             |       |                             |       |                             |       |
| Basic                                     |       | $                                | 0.07       |                             | $          | (0.07                            | )          | $                                | 0.18       |   | $ | (0.44 | ) |
| Diluted                                   |       | $                                | 0.07       |                             | $          | (0.07                            | )          | $                                | 0.18       |   | $ | (0.44 | ) |

 

*See Notes to Consolidated Financial Statements.*

4

----

**BehringerHarvard Opportunity REIT I, Inc.Consolidated Statements of Stockholders’ Equity(Unaudited)**
| ** **                                                     | ** ** | ** **                 | ** ** | ** **            | ** ** | ** **         | ** ** | ** **            | ** ** | ** **  | ** ** | **Cumulative**    | ** **  | ** **             | ** ** |
|----------------------------------------------------------------|------------|----------------------------|------------|-----------------------|------------|--------------------|------------|-----------------------|------------|-------------|------------|-------------------|-------------|------------------------|------------|
| ** **                                                     | ** ** | ** **                 | ** ** | ** **            | ** ** | ** **         | ** ** | ** **            | ** ** | ** **  | ** ** | **Distributions** | ** **  | ** **             | ** ** |
| ** **                                                     | ** ** | **Convertible Stock** | ** ** | **Common Stock** | ** ** | **Additional**     | ** ** | **and Retained** | ** ** | **Total**   | ** ** |
| ** **                                                     | ** ** | **Number of**         | ** ** | **Par**               | ** ** | **Number of** | ** ** | **Par**               | ** ** | **Paid-In** | ** ** | **Earnings**      | ** **  | **Stockholders’** | ** ** |
| ** **                                                     | ** ** | **Shares**                 | ** ** | **Value**             | ** ** | **Shares**         | ** ** | **Value**             | ** ** | **Capital** | ** ** | **(Deficit)**     | ** **  | **Equity**             | ** ** |
| Balance at January 1,  2005                                    |       | 1,000                      |       | $                     | —     |               | 21,739     |                  | $          | 2           |       | $                 | 200,998     |                   | $          | 313 |   | $ | 201,313 |   |
|                                                           |       |                       |       |                  |       |               |       |                  |       |        |       |              |        |                   |       |
| Issuance of common  stock, net                                 |       | —                     |       | —                |       | 2,012,266          |       | 201                   |       | 16,315,378  |       | —            |        | 16,315,579             |       |
|                                                           |       |                       |       |                  |       |               |       |                  |       |        |       |              |        |                   |       |
| Net loss                                                       |       | —                     |       | —                |       | —             |       | —                |       | —      |       | (103,233          | )           | (103,233               | )          |
|                                                           |       |                       |       |                  |       |               |       |                  |       |        |       |              |        |                   |       |
| Balance at December 31,  2005                                  |       | 1,000                      |       | —                |       | 2,034,005          |       | 203                   |       | 16,516,376  |       | (102,920          | )           | 16,413,659             |       |
|                                                           |       |                       |       |                  |       |               |       |                  |       |        |       |              |        |                   |       |
| Issuance of common  stock, net                                 |       | —                     |       | —                |       | 11,043,967         |       | 1,105                 |       | 97,794,319  |       | —            |        | 97,795,424             |       |
|                                                           |       |                       |       |                  |       |               |       |                  |       |        |       |              |        |                   |       |
| Distributions declared  on common stock                        |       | —                     |       | —                |       | —             |       | —                |       | —      |       | (572,952          | )           | (572,952               | )          |
|                                                           |       |                       |       |                  |       |               |       |                  |       |        |       |              |        |                   |       |
| Shares issued pursuant  to Distribution Reinvestment Plan, net |       | —                     |       | —                |       | 29,815             |       | 3                     |       | 280,653     |       | —            |        | 280,656                |       |
|                                                           |       |                       |       |                  |       |               |       |                  |       |        |       |              |        |                   |       |
| Net income                                                     |       | —                     |       | —                |       | —             |       | —                |       | —      |       | 1,388,523         |        | 1,388,523              |       |
|                                                           |       |                       |       |                  |       |               |       |                  |       |        |       |              |        |                   |       |
| Balance at September 30, 2006                                  |       | 1,000                      |       | $                     | —     |               | 13,107,787 |                  | $          | 1,311       |       | $                 | 114,591,348 |                   | $          | 712,651 |   | $ | 115,305,310 |   |

 

*See Notes to Consolidated FinancialStatements.*

5

----

**BehringerHarvard Opportunity REIT I, Inc.Consolidated Statements of Cash Flows(Unaudited)**
| ** **                                                                                                 | ** ** | **Nine months**             | ** ** | **Nine months**             | ** ** |
|------------------------------------------------------------------------------------------------------------|------------|----------------------------------|------------|----------------------------------|------------|
| ** **                                                                                                 | ** ** | **ended**                        | ** ** | **ended**                        | ** ** |
| ** **                                                                                                 | ** ** | **September 30, 2006** | ** ** | **September 30, 2005** | ** ** |
| **Cash flows from operating  activities:**                                                                 | ** ** | ** **                       | ** ** | ** **                       | ** ** |
| Net income  (loss)                                                                                         |       | $                                | 1,388,523  |                             | $          | (9,535 | ) |
| Adjustments to  reconcile net income (loss) to net cash flows provided by (used in) operating  activities: |       |                             |       |                             |       |
| Depreciation and  amortization                                                                             |       | 449,875                          |       | —                           |       |
| Amortization of  deferred financing fees                                                                   |       | 3,802                            |       | —                           |       |
| Minority  interest                                                                                         |       | (130,697                         | )          | —                           |       |
| Change in accounts  receivable                                                                             |       | (750,771                         | )          | —                           |       |
| Change in  prepaid expenses and other assets                                                               |       | 89,500                           |       | (1,321                           | )          |
| Change in  accounts payable                                                                                |       | 1,005,739                        |       | —                           |       |
| Change in  accrued liabilities                                                                             |       | 646,410                          |       | —                           |       |
| **Cash provided by (used in)  operating activities**                                                       |       | 2,702,381                        |       | (10,856                          | )          |
| ** **                                                                                                 |       |                             |       |                             |       |
| **Cash flows from investing  activities:**                                                                 | ** ** | ** **                       | ** ** | ** **                       | ** ** |
| Purchases of  real estate                                                                                  |       | (36,932,424                      | )          | —                           |       |
| Escrow deposits  on real estate to be acquired                                                             |       | (360,500                         | )          | —                           |       |
| Capital  expeditures of properties under development of consolidated borrowers                             |       | (17,379,912                      | )          | —                           |       |
| Change in  restricted cash                                                                                 |       | (1,540,434                       | )          | —                           |       |
| **Cash used in investing  activities**                                                                     |       | (56,213,270                      | )          | —                           |       |
|                                                                                                       |       |                             |       |                             |       |
| **Cash flows from financing  activities:**                                                                 | ** ** | ** **                       | ** ** | ** **                       | ** ** |
| Financing costs                                                                                            |       | (1,009,883                       | )          | —                           |       |
| Proceeds from  mortgage payable                                                                            |       | 18,000,000                       |       | —                           |       |
| Proceeds from  mortgages of consolidated borrowers                                                         |       | 5,778,459                        |       | —                           |       |
| Issuance of  common stock                                                                                  |       | 110,127,445                      |       | —                           |       |
| Offering costs                                                                                             |       | (12,332,021                      | )          | —                           |       |
| Distributions                                                                                              |       | (87,066                          | )          | —                           |       |
| Contributions  from minority interest holders                                                              |       | 246,851                          |       | —                           |       |
| Change in  subscriptions for common stock                                                                  |       | 4,798                            |       | —                           |       |
| Change in  subscription cash received                                                                      |       | 8,688                            |       | —                           |       |
| Change in  payables to affiliates                                                                          |       | 392,118                          |       | 15,000                           |       |
| **Cash provided by financing  activities**                                                                 |       | 121,129,389                      |       | 15,000                           |       |
| ** **                                                                                                 |       |                             |       |                             |       |
| Net change in  cash and cash equivalents                                                                   |       | 67,618,500                       |       | 4,144                            |       |
| Cash and cash  equivalents at beginning of period                                                          |       | 18,560,885                       |       | 201,313                          |       |
| Cash and cash  equivalents at end of period                                                                |       | $                                | 86,179,385 |                             | $          | 205,457 |   |
|                                                                                                       |       |                             |       |                             |       |
| **Supplemental disclosure:**                                                                               |       |                             |       |                             |       |
| Interest paid,  net of amounts capitalized                                                                 |       | $                                | 16,997     |                             | $          | — |   |
| **Non-cash financing activities:**                                                                         | ** ** | ** **                       | ** ** | ** **                       | ** ** |
| Common stock issued in  distribution reinvestment plan                                                     |       | $                                | 280,656    |                             | $          | — |   |

 

*See Notes to Consolidated FinancialStatements.*

6

----

**Behringer HarvardOpportunity REIT I, Inc.Notes to Consolidated Financial Statements(Unaudited)**

**1.         Organization**

Behringer HarvardOpportunity REIT I, Inc. (which may be referred to as the “Company,” “we,” “us,”or “our”) was organized in Maryland on November 23, 2004 and intends to qualifyas a real estate investment trust (“REIT”) for federal income taxpurposes.  We were formed primarily toinvest in and operate real estate or real estate related assets on anopportunistic basis.  We are currentlyoffering our common stock pursuant to a public offering that commenced onSeptember 20, 2005 (the “Offering”) and is described below.

We commenced our Offeringof shares of our common stock on September 20, 2005 and commenced operations onNovember 9, 2005 upon our acceptance of initial subscriptions for 441,204shares of common stock, which satisfied the minimum offering requirement of$2,000,000 established for the Offering.

Substantially allof our business is conducted through Behringer Harvard Opportunity OP I, LP, aTexas limited partnership organized in November 2004 (“Behringer Harvard OP”).  We own a 0.1% interest in Behringer HarvardOP as its sole general partner.  Theremaining 99.9% of Behringer Harvard OP is held as a limited partner’s interestby BHO Partners, LLC, a Delaware limited liability company, which is ourwholly-owned subsidiary.

Our advisor is BehringerHarvard Opportunity Advisors I LP (“Behringer Opportunity Advisors”), a Texaslimited partnership organized in 2004. Behringer Opportunity Advisors is our affiliate and is responsible formanaging our affairs on a day-to-day basis and for identifying and makingacquisitions and investments on our behalf.

**2.         Public Offering**

On September 20, 2005, we commenced a public offering of up to 40,000,000shares of common stock at a price of $10 per share pursuant to a RegistrationStatement on Form S-11 filed under the Securities Act of 1933, as amended (the “SecuritiesAct”).  The Registration Statement alsocovers the offering of up to 8,000,000 shares of common stock to be offered ata price of $9.50 per share pursuant to our distribution reinvestment plan (the “DRIP”).

Stockholders, after theirinitial purchase of shares, may elect to purchase additional shares of commonstock at regular intervals as part of our automatic purchase plan.

As of September 30, 2006,we had accepted subscriptions for 13,107,787 shares of our common stock,including 21,739 shares owned by Behringer Harvard Holdings, LLC (“BehringerHoldings”) and 29,815 shares through the DRIP. As of September 30, 2006, we had 1,000 shares of non-participating,non-voting convertible stock (“Convertible Stock”) issued and outstanding andno shares of preferred stock issued and outstanding.

We admit new stockholderspursuant to the Offering at least monthly. All subscription proceeds are held in a separate account until thesubscribing investors are admitted as stockholders.  Upon admission of new stockholders,subscription proceeds are transferred to operating cash and may be utilized asconsideration for investments and the payment or reimbursement of dealermanager fees, selling commissions, organization and offering expenses andoperating expenses.  Until required forsuch purposes, net offering proceeds are held in short-term, liquidinvestments.

We intend to use the proceeds from our Offering, after deductingoffering expenses, primarily to acquire commercial properties, such as officebuildings, shopping centers, business and industrial parks, manufacturingfacilities, apartment buildings, warehouse and distribution facilities, andmotel and hotel properties.

Our common stock is not currently listed on a national exchange.  Unless liquidated earlier, our managementanticipates listing the common stock on a national securities exchange or forquotation on the Nasdaq National Market System (or any successor market orexchange) or liquidating our real estate portfolio on or before the sixthanniversary of the termination of the Offering. Depending upon the then-prevailing market conditions, it is theintention of our management to consider beginning the process of listing orliquidating within three to six years after the termination of theOffering.  In the event that we do notobtain such listing prior to the sixth anniversary of the termination of theOffering, unless a majority of our board of directors and a majority of ourindependent directors extend such date, our charter requires us to begin thesale of our properties and liquidation of our assets.

**3.         Interim Unaudited Financial Information**

The accompanying consolidated financial statements should be read inconjunction with the consolidated financial statements and notes theretoincluded in our Annual Report on Form 10-K for the year ended December 31,2005, which was filed with the Securities and Exchange Commission (“SEC”).  Certain information and footnote disclosuresnormally included 

7

----

**Behringer HarvardOpportunity REIT I, Inc.Notes to Consolidated Financial Statements(Unaudited)**

in financial statements prepared in accordance withaccounting principles generally accepted in the United States of America (“GAAP”)have been condensed or omitted in this report on Form 10-Q pursuant to therules and regulations of the SEC.

The results for the interim periods shown in this report are notnecessarily indicative of future financial results.  The accompanying consolidated balance sheetand consolidated statement of stockholders’ equity as of September 30, 2006 andconsolidated statements of operations and cash flows for the periods endedSeptember 30, 2006 and 2005 have not been audited by our independent registeredpublic accounting firm.  In the opinionof management, the accompanying unaudited consolidated financial statementsinclude all adjustments necessary to present fairly our consolidated financialposition as of September 30, 2006 and December 31, 2005 and our consolidatedresults of operations and cash flows for the periods ended September 30, 2006and 2005.

**4.****                          Summaryof Significant Accounting Policies**

***Useof Estimates in the Preparation of Financial Statements***

The preparation offinancial statements in conformity with GAAP requires management to makeestimates and assumptions that affect the reported amounts of assets andliabilities and disclosure of contingent assets and liabilities at the date ofthe financial statements and the reported amounts of revenues and expensesduring the reporting period.  Theseestimates include such items as purchase price allocation for real estate acquisitions,impairment of long-lived assets, depreciation and amortization and allowancefor doubtful accounts.  Actual resultscould differ from those estimates.

***Principlesof Consolidation and Basis of Presentation***

Our consolidatedfinancial statements include our accounts and the accounts of oursubsidiaries.  All inter-companytransactions, balances and profits have been eliminated in consolidation.  Interests in entities acquired are evaluatedbased on Financial Accounting Standards Board Interpretation (“FIN”) No. 46R “Consolidationof Variable Interest Entities,” which requires the consolidation of variableinterest entities in which we are deemed to be the primary beneficiary.  If the interest in the entity is determinedto not be a variable interest entity under FIN No. 46R, then the entities areevaluated for consolidation under the American Institute of Certified PublicAccountants (“AICPA”) Statement of Position (“SOP”) 78-9, “Accounting forInvestments in Real Estate Ventures,” as amended by Emerging Issues Task Force(“EITF”) 04-5, “Investor’s Accounting for an Investment in a LimitedPartnership When the Investor Is the Sole General Partner and the LimitedPartners Have Certain Rights.”

***RealEstate***

Upon the acquisition ofreal estate properties, we allocate the purchase price of those properties tothe tangible assets acquired, consisting of land and buildings, and identifiedintangible assets based on their relative fair values in accordance withStatement of Financial Accounting Standards (“SFAS”) No. 141, “BusinessCombinations” and No. 142, “Goodwill and Other Intangible Assets.”  Identified intangible assets consist of thefair value of above-market and below-market leases, in-place leases and tenantrelationships.  Initial valuations aresubject to change until our information is finalized, which is no later than 12months from the acquisition date.

The fair value of thetangible assets acquired, consisting of land and buildings, is determined byvaluing the property as if it were vacant, and the “as-if-vacant” value is thenallocated to land and buildings.  Landvalues are derived from appraisals, and building values are calculated asreplacement cost less depreciation or management’s estimates of the relativefair value of these assets using discounted cash flow analyses or similar methods.  The value of the building is depreciated overthe estimated useful life of 25 years using the straight-line method.  Accumulated depreciation associated with thetangible assets of our wholly-owned properties was approximately $327,000 atSeptember 30, 2006.

We determine the value ofabove-market and below-market in-place leases for acquired properties based onthe present value (using an interest rate that reflects the risks associatedwith the leases acquired) of the difference between (1) the contractual amountsto be paid pursuant to the in-place leases and (2) management’s estimate ofcurrent market lease rates for the corresponding in-place leases, measured overa period equal to the remaining non-cancelable terms of the respectiveleases.  We record the fair value ofabove-market and below-market in-place leases as intangible assets orintangible liabilities, respectively, and amortize them as an adjustment torental income over the remaining non-cancelable terms of the respective leases.

The total value ofidentified real estate intangible assets acquired is further allocated toin-place lease values and tenant relationships based on management’s evaluationof the specific characteristics of each tenant’s lease and our overallrelationship with that respective tenant. The aggregate value for tenant improvements and leasing commissions isbased on 

8

----

**Behringer HarvardOpportunity REIT I, Inc.Notes to Consolidated Financial Statements(Unaudited)**

estimates of these costs incurred at inception of theacquired leases, amortized through the date of acquisition.  The aggregate value of in-place leasesacquired and tenant relationships is determined by applying a fair valuemodel.  The estimates of fair value ofin-place leases include an estimate of carrying costs during the expectedlease-up periods for the respective spaces considering current marketconditions.  In estimating the carryingcosts that would have otherwise been incurred had the leases not been in place,management includes such items as real estate taxes, insurance and otheroperating expenses, as well as lost rental revenue during the expected lease-upperiod based on current market conditions. The estimates of the fair value of tenant relationships also includecosts to execute similar leases, including leasing commissions, legal andtenant improvements, as well as an estimate of the likelihood of renewal asdetermined by management on a tenant-by-tenant basis.

We amortize the value ofin-place leases to expense over the initial term of the respective leases.  The value of tenant relationship intangiblesis amortized to expense over the initial term and any anticipated renewalperiods, but in no event does the amortization period for intangible assetsexceed the remaining depreciable life of the building.  Should a tenant terminate its lease, theunamortized portion of the in-place lease value and tenant relationshipintangibles would be charged to expense. The remaining estimated useful lives of our acquired lease intangiblesas of September 30, 2006 range from 2.9 years to 8.5 years.

Accumulated amortizationassociated with the acquired lease intangibles of our consolidated propertieswas approximately $123,000 at September 30, 2006.

Anticipated amortizationassociated with acquired lease intangibles for the period from October 1through December 31, 2006 and for each of the following four years endedDecember 31 is as follows:

|                                     | ** ** | **Lease**       | ** ** |
|-------------------------------------|------------|-----------------|------------|
| ** **                          | ** ** | **Intangibles** | ** ** |
| October 1, 2006 - December 31, 2006 |       | $               | 75,530     |   |
| 2007                                |       | 302,121         |       |
| 2008                                |       | 302,121         |       |
| 2009                                |       | 279,597         |       |
| 2010                                |       | 267,173         |       |
|                                     |            |                 |            |  |

 

As of September 30, 2006,accumulated depreciation and amortization related to wholly-owned real estateassets and related lease intangibles were as follows:

|                                      | ** ** | ** **            | ** ** | ** **   | ** ** | **Acquired**     | ** ** |
|--------------------------------------|------------|-----------------------|------------|--------------|------------|------------------|------------|
| ** **                           | ** ** | **Building and** | ** ** | **In-Place** | ** ** | **Below-Market** | ** ** |
| ** **                           | ** ** | **Improvements**      | ** ** | **Leases**   | ** ** | **Leases**       | ** ** |
| Cost                                 |       | $                     | 31,176,150 |         | $          | 4,657,871        |       | $ | (2,189,844 | ) |
| Less:  depreciation and amortization |       | (327,273              | )          | (250,036     | )          | 127,434          |       |
| Net                                  |       | $                     | 30,848,877 |         | $          | 4,407,835        |       | $ | (2,062,410 | ) |

 

***Cashand Cash Equivalents***

We consider investmentsin highly-liquid money market funds with original maturities of three months orless to be cash equivalents.  Thecarrying amount of cash and cash equivalents reported on the balance sheet approximatesfair value.

***Restricted Cash***

Restricted cash includessubscription proceeds that are held in a separate account until the subscribinginvestors are admitted as stockholders. We admit new stockholders at least monthly.  Upon acceptance of stockholders, subscriptionproceeds are transferred to operating cash and may be utilized as considerationfor investments and the payment or reimbursement of dealer manager fees,selling commissions, organization and offering expenses and operating expenses.  Restricted cash as of September 30, 2006 alsoincludes approximately $1.5 million held in an escrow account, as required byour lenders, for real estate taxes and other reserves for our consolidatedproperties.

***AccountsReceivable***

Accounts receivableprimarily consist of receivables from tenants related to our wholly-ownedproperties.  There was no allowance fordoubtful accounts as of September 30, 2006.

9

----

**Behringer HarvardOpportunity REIT I, Inc.Notes to Consolidated Financial Statements(Unaudited)**

***PrepaidExpenses and Other Assets***

Prepaid expenses andother assets includes prepaid insurance and real estate taxes of ourconsolidated properties.

***EscrowDeposits***

Escrow deposits includedeposits for the purchase of properties that we have contracted to acquire.

***Investment Impairments***

For real estate we whollyown, our management monitors events and changes in circumstances indicatingthat the carrying amounts of the real estate assets may not berecoverable.  When such events or changesin circumstances are present, we assess potential impairment by comparingestimated future undiscounted operating cash flows expected to be generatedover the life of the asset and from its eventual disposition to the carryingamount of the asset.  In the event that thecarrying amount exceeds the estimated future undiscounted operating cash flows,we recognize an impairment loss to adjust the carrying amount of the asset toestimated fair value.

For any real estate wemay own through an investment in a joint venture, tenant-in-common (“TIC”)interest or other similar investment structure, at each reporting datemanagement will compare the estimated fair value of our investment to thecarrying value.  An impairment chargewill be recorded to the extent the fair value of our investment is less thanthe carrying amount and the decline in value is determined to be other than atemporary decline.  There were noimpairment charges during the three and nine months ended September 30, 2006and 2005.

***Deferred Financing Fees***

Deferred financing feesare recorded at cost and are amortized using a straight-line method thatapproximates the effective interest method over the life of the relateddebt.  Accumulated amortization ofdeferred financing fees was approximately $4,000 as of September 30, 2006.

***RevenueRecognition***

We recognize rental income generated from leases onreal estate assets on the straight-line basis over the terms of the respectiveleases, including the effect of rent holidays, if any.  The total net increase to rental revenues dueto straight-line rent adjustments for the three months ended September 30, 2006was approximately $34,000.  The total netincrease to rental revenues due to straight-line rent adjustments for the ninemonths ended September 30, 2006 was approximately $49,000.  As discussed above, our rental revenue alsoincludes amortization of above- and below-market in-place leases.

***Organizational and Offering Costs***

Our advisor fundsorganization and offering costs on our behalf. We are required to reimburse our advisor for such organization andoffering costs up to 2% of the cumulative capital raised in the Offering.  Organization and offering costs include itemssuch as legal and accounting fees, marketing, promotional and printing costs.  All offering costs are recorded as an offsetto additional paid-in capital, and all organization costs are recorded as anexpense at the time we become liable for the payment of these amounts.

***Income Taxes***

We currently account forincome taxes in accordance with SFAS No. 109, Accounting for Income Taxes. Under the liability method of SFAS No. 109, deferred taxes aredetermined based on the differences between the financial statements and taxbases of assets and liabilities using enacted tax rates in effect in the yearsthe differences are expected to reverse.

Our management willevaluate plans to make an election to be taxed as a REIT under Sections 856through 860 of the Internal Revenue Code, effective for our taxable year endingDecember 31, 2006.  We believe that, commencingwith the taxable year for which such election is made, we will be organized andwill operate in such a manner as to qualify for taxation as a REIT under theInternal Revenue Code.  Therefore, taxexpense is not reflected in the statement of operations for the three and ninemonths ended September 30, 2006.

If we qualify fortaxation as a REIT, we generally will not be subject to federal corporateincome taxes on income that we distribute currently to our stockholders.

***Stock-BasedCompensation***

We have a stock-basedincentive award plan for our directors and consultants and employees, directorsand consultants of our affiliates.  Weaccount for this plan under the “modified prospective” method of SFAS No. 123R,“Share-

10

----

**Behringer HarvardOpportunity REIT I, Inc.Notes to Consolidated Financial Statements(Unaudited)**

Based Payment.” In the “modified prospective” method, compensation cost is recognizedfor all share-based payments granted after the effective date and for allunvested awards granted prior to the effective date.  In accordance with SFAS No. 123R, priorperiod amounts were not restated.  SFASNo. 123R also requires the tax benefits associated with these share-basedpayments to be classified as financing activities in the ConsolidatedStatements of Cash Flows, rather than as operating cash flows as required underprevious regulations.  For the ninemonths ended September 30, 2006, we had no significant compensation costrelated to this incentive award plan.

***Concentrationof Credit Risk***

At September 30, 2006, wehad cash and cash equivalents and restricted cash in excess of federallyinsured levels on deposit in four financial institutions.  We regularly monitor the financial stabilityof the financial institutions and believe that we are not exposed to anysignificant credit risk in cash and cash equivalents or restricted cash.

***Minority Interest***

We hold a primarybeneficiary interest as a lender in certain variable interest entities that ownreal estate properties and thus, consolidate the accounts with and into ouraccounts.  Minority interest representsthe non-controlling ownership interest’s proportionate share of the equity inreal estate properties consolidated under FIN No. 46R.  Income and losses are allocated to minorityinterest holders based on their ownership.

***Earningsper Share***

Earnings per share (“EPS”)are calculated based on the weighted average number of shares outstandingduring each period.  Diluted EPS includesthe effects of dilutive stock options and Convertible Stock outstanding duringeach period using the treasury stock method.

The following table sets forth the reconciliationbetween weighted average shares outstanding used for calculating basic anddiluted earnings per share for the three and nine months ended September 30,2006.  The weighted average shares outstandingused to calculate both basic and diluted loss per share were the same for thethree and nine months ended September 30, 2005, as the potential effect ofConvertible Stock would have been anti-dilutive.

|                                                         | ** ** | **Three months**            | ** ** | **Nine months**             | ** ** |
|---------------------------------------------------------|------------|----------------------------------|------------|----------------------------------|------------|
| ** **                                              | ** ** | **ended**                        | ** ** | **ended**                        | ** ** |
| ** **                                              | ** ** | **September 30, 2006** | ** ** | **September 30, 2006** | ** ** |
|                                                    |       |                             |       |                             |       |
| Weighted average  shares for basic earnings per share   |       | 11,340,747                       |       | 7,701,098                        |       |
| Effect of stock  options                                |       | 26,250                           |       | 14,478                           |       |
| Effect of  convertible stock                            |       | 1,000                            |       | 1,000                            |       |
| Weighted average shares  for diluted earnings per share |       | 11,367,997                       |       | 7,716,576                        |       |

 

***ReportableSegments***

SFAS No. 131, “Disclosures about Segments of an Enterpriseand Related Information,” establishes standards for reporting financialand descriptive information about an enterprise’s reportable segments.  Our current business consists only of owning,managing, operating, leasing, acquiring, developing, investing in and disposingof real estate assets.  Managementevaluates operating performance on an individual property level.  However, as each of our properties will havesimilar economic characteristics, our properties will be aggregated into onereportable segment.

**5.             Acquisitions**

On March 1, 2006, weacquired a two-story office building containing approximately 70,705 rentablesquare feet, located on approximately 6.14 acres of land in Minnetonka,Minnesota (the “Whitewater Property”). The contract purchase price of the Whitewater Property was approximately$9,000,000, excluding closing costs.  Weused proceeds from the Offering to pay the entire purchase price and allclosing costs of the acquisition.

On July 13, 2006, weacquired an eight-story office building containing approximately 226,338rentable square feet located on approximately 12.6 acres of land in Middleton,Massachusetts (the “Ferncroft Corporate Center”).  The contract purchase price of FerncroftCorporate Center, exclusive of closing costs and initial escrows, wasapproximately $27,000,000.  We usedproceeds from the Offering to pay the entire purchase price and all closingcosts of the acquisition.

11

----

**Behringer HarvardOpportunity REIT I, Inc.Notes to Consolidated Financial Statements(Unaudited)**

**6.             VariableInterest Entities**

During the three monthsended September 30, 2006, we agreed to provide secured mezzanine financing withan aggregate principal amount up to $22,679,561 to unaffiliated third-partyentities that own real estate under development  (the “Alexan Voss” and “Alexan Black Mountain”properties, respectively).  Theseentities also have secured construction loans with third-party lenders, with anaggregate principal amount up to $68,611,066. Our mezzanine loans are subordinate to the construction loans.  In addition, we have entered into optionagreements allowing us to purchase the ownership interests in Alexan Voss andAlexan Black Mountain after each project’s substantial completion.

The loans will financethe acquisition and development of apartment communities in Houston, Texas andHenderson, Nevada.  The Alexan Vossproject in Houston, Texas consists of two parcels of land for development,known as La Scala and Hart.  The ownersof Alexan Voss acquired the La Scala parcel on September 22, 2006 and the Hartparcel on October 5, 2006.  The owners ofthe Alexan Black Mountain project in Henderson, Nevada acquired land for developmenton September 29, 2006.  Theseacquisitions were financed primarily by the mezzanine and construction loans.

Based on our evaluation, we have determined that theseentities meet the criteria of variable interest entities under FIN No. 46R andthat we are the primary beneficiary of these variable interest entities.  Therefore, we have consolidated the entities,including the related real estate assets and third-party constructionfinancing.  As of September 30, 2006,there is $17,379,912 of real estate under development related to Alexan Vossand Alexan Black Mountain, which collateralizes the outstanding principalbalance of the construction loans of $5,778,459.  The third-party construction lenders have norecourse to the general credit of us as the primary beneficiary, but theirloans are guaranteed by the owners of the variable interest entities.  As of September 30, 2006, the outstandingprincipal balance under our mezzanine loans was $12,035,926, which is eliminated,along with accrued interest, upon consolidation.

**7.             CapitalizedCosts**

On September 22, 2006, weentered into mezzanine loan agreements with unaffiliated third-party entitiesfor the acquisition and development of the La Scala parcel of the Alexan Vossproject.  The site is being developed asa 154-unit apartment project in Houston, Texas. The first apartment units are projected to be completed in the firstquarter of 2008.  Certain developmentcosts associated with Alexan Voss have been capitalized on our balance sheet atSeptember 30, 2006.  For the nine monthsended September 30, 2006 we capitalized a total of approximately $7,779,000 incosts associated with the development of Alexan Voss.  Capitalized costs include interest, propertytaxes, insurance and construction costs. For the three and nine months ended September 30, 2006, we capitalized$14,388 in interest for Alexan Voss.

On September 29, 2006, weentered into mezzanine loan agreements with unaffiliated third-party entitiesfor the acquisition and development of Alexan Black Mountain.  The site is being developed as a 213-unitapartment project in Henderson, Nevada. The first apartment units are projected to be completed in late 2007.  Certain development costs associated withAlexan Black Mountain have been capitalized on our balance sheet at September30, 2006.  For the nine months endedSeptember 30, 2006 we capitalized a total of approximately $9,601,000 incosts associated with the development of Alexan Black Mountain.  Capitalized costs include interest, propertytaxes, insurance and construction costs. For the three and nine months ended September 30, 2006, we capitalized$3,430 in interest for Alexan Black Mountain.

# **8.             Mortgages Payable**

The following table sets forth our mortgages payable on wholly-ownedproperties and properties consolidated under FIN No. 46R at September 30, 2006:

|                             | ** ** | ** **                       | ** ** | **Fixed**    | ** ** | ** **   | ** ** |
|-----------------------------|------------|----------------------------------|------------|--------------|------------|--------------|------------|
| ** **                  | ** ** | **Balance as of**      | ** ** | **Interest** | ** ** | **Maturity** | ** ** |
| **Description**             | ** ** | **September 30, 2006** | ** ** | **Rate**     | ** ** | **Date**     | ** ** |
| Ferncroft  Corporate Center |       | $                                | 18,000,000 |         | 6.330%     |         | 9/1/2013   |   |
| Alexan Voss                 |       | 5,777,459                        |       | Prime(1)     |       | 3/22/2010    |       |
| Alexan Black  Mountain      |       | 1,000                            |       | Prime(1)     |       | 9/29/2009    |       |
|                        |       | $                                | 23,778,459 |         |       |         |       |   |

----

(1)       Prime rate at September 30, 2006 was8.25%.

As of September 30, 2006, we were in compliance with the debt covenantsunder our loan agreements.

12

----

**Behringer HarvardOpportunity REIT I, Inc.Notes to Consolidated Financial Statements(Unaudited)**

**9.             Stockholders’ Equity**

***Capitalization***

As ofSeptember 30, 2006, our authorized capital was 350,000,000 shares ofcommon stock, 50,000,000 shares of preferred stock and 1,000 shares ofConvertible Stock.  All shares of suchstock have a par value of $.0001 per share. As of September 30, 2006, we had issued 13,107,787 shares of ourcommon stock, including 21,739 shares owned by Behringer Holdings and 29,815shares through our DRIP.  As ofSeptember 30, 2006, we had 1,000 shares of our Convertible Stock issuedand outstanding and no shares of preferred stock issued and outstanding.

As of September30, 2006, we had options to purchase 26,250 shares of stock outstanding at aweighted average exercise price of $9.10. On November 23, 2004 (date of inception), we sold 1,000 shares ofConvertible Stock and 21,739 shares of common stock to Behringer Holdings for$201,000 in cash.  The shares ofConvertible Stock will be converted into shares of common stock if (1) theholders of the common stock have received distributions equal to the sum of theaggregate capital invested by such stockholders and a 10% cumulative,non-compounded, annual return on such capital contributions; or (2) the sharesof common stock are listed for trading on a national securities exchange or forquotation on the Nasdaq National Market System (or any successor market orexchange).  Conversion of the ConvertibleStock may be limited by our board of directors if it determines that fullconversion may jeopardize our qualification as a REIT.  The terms of the Convertible Stock providethat, generally, Behringer Holdings, as the holder of such shares, will receiveshares of common stock with an aggregate value equal to 15% of the amount bywhich (1) our enterprise value, including the total amount of distributionspaid to our stockholders, exceeds (2) the sum of the aggregate capital investedby our stockholders plus a 10% cumulative, non-compounded, annual return onsuch capital.  Our board of directors mayauthorize additional shares of capital stock and their characteristics withoutobtaining stockholder approval.

***ShareRedemption Program***

Our board of directors has authorized and adopted a share redemptionprogram that enables our stockholders to sell their shares to us in limitedcircumstances after they have held them for at least one year.  The purchase price for the redeemed shares isset forth in the prospectus for the Offering of our common stock.  Our board of directors reserves the right inits sole discretion at any time, and from time to time, to (1) waive theone-year holding period in the event of the death, disability or bankruptcy ofa stockholder or other exigent circumstances, (2) reject any request forredemption, (3) change the purchase price for redemptions, or (4) terminate,suspend or amend the share redemption program. Under the terms of the program, during any calendar year, we will notredeem in excess of 5% of the weighted average number of shares outstandingduring the prior calendar year.  Inaddition, our board of directors will determine whether we have sufficient cashfrom operations to repurchase shares, and such purchases will generally belimited to proceeds of our DRIP plus 1% of operating cash flow for the previousfiscal year.  As of September 30,2006, no shares had been redeemed.  Theprovisions of the share redemption program in no way limit our ability torepurchase shares from stockholders by any other legally available means forany reason that our board of directors, in its discretion, deems to be in ourbest interest.

***Incentive Award Plan***

The Behringer HarvardOpportunity REIT I, Inc. Amended and Restated 2004 Incentive Award Plan (“IncentiveAward Plan”) was approved by our board of directors on July 19, 2005 andby our stockholders on July 25, 2005, and provides for equity awards toour directors and consultants and employees, directors and consultants of ouraffiliates.  A total of 11,000,000 shareshave been authorized and reserved for issuance under our Incentive AwardPlan.  An option to acquire 1,250 shareswas awarded to an independent board member on February 17, 2006 when hewas elected to our board of directors. In addition, on that date, an option to acquire 5,000 shares of ourcommon stock was awarded to each of the other two independent board members. OnJune 29, 2006, an option to acquire an additional 5,000 shares of ourcommon stock was awarded to each of the three independent board members.  Options to purchase 26,250 shares of stockwere outstanding as of September 30, 2006 at a weighted average exercise priceof $9.10.

## ***Distributions***

We initiated the payment of monthly distributions in August 2006 in theamount of a 2% annualized rate of return, based on an investment in our commonstock of $10.00 per share and calculated on a daily record basis of $0.0005479per share.  Pursuant to our DRIP,stockholders may elect to reinvest any cash distribution in additional sharesof common stock.  We record alldistributions when declared, except that the stock issued through the DRIP isrecorded when the shares are actually issued.

The following are the distributions declared during the nine monthsended September 30, 2006:

13

----

**Behringer HarvardOpportunity REIT I, Inc.Notes to Consolidated Financial Statements(Unaudited)**

| 2006        | ** ** | **Total** | ** ** | **Cash** | ** ** | **DRIP** | ** ** |
|-------------|------------|-----------|------------|----------|------------|----------|------------|
| 1st Quarter |       | $         | —     |     | $          | —   |       | $ | — |   |
| 2nd Quarter |       | —    |       | —   |       | —   |       |
| 3rd Quarter |       | 572,952   |       | 131,669  |       | 441,283  |       |
| Total       |       | $         | 572,952    |     | $          | 131,669  |       | $ | 441,283 |   |

 

**10.      Related Party Arrangements**

Certain of our affiliatesreceive fees and compensation in connection with the Offering.  The following is a summary of the relatedparty fees and compensation we incurred during the nine months endedSeptember 30, 2006.  No such feeswere incurred in the nine months ended September 30, 2005.
| ** **                                                                           | ** ** | ** **   | ** ** | ** **               | ** ** | **Total**               | ** ** | ** **                   | ** ** | ** **   | ** ** |
|--------------------------------------------------------------------------------------|------------|--------------|------------|--------------------------|------------|-------------------------|------------|------------------------------|------------|--------------|------------|
| ** **                                                                           | ** ** | ** **   | ** ** | **Total reduction** | ** ** | **capitalized**         | ** ** | **Total**                    | ** ** | ** **   | ** ** |
| ** **                                                                           | ** ** | **Total**    | ** ** | **of additional**   | ** ** | **to deferred**    | ** ** | **capitalized**              | ** ** | **Total**    | ** ** |
| **For the nine months ended September 30, 2006**  | ** ** | **incurred** | ** ** | **paid-in capital** | ** ** | **financing fees** | ** ** | **to real estate** | ** ** | **expensed** | ** ** |
| Behringer  Securities, commissions and dealer manager fees                           |       | $            | 9,638,458  |                     | $          | 9,638,458               |       | $                            | —     |         | $          | — |   | $ | — |   |
|                                                                                 |       |         |       |                     |       |                    |       |                         |       |         |       |
| Behringer  Opportunity Advisors, reimbursement of organization and offering expenses |       | 2,241,110    |       | 2,229,720                |       | —                  |       | —                       |       | 11,390       |       |
|                                                                                 |       |         |       |                     |       |                    |       |                         |       |         |       |
| Behringer  Opportunity Advisors, acquisition, advisory fees and expenses             |       | 1,441,077    |       | —                   |       | —                  |       | 1,441,077                    |       | —       |       |
|                                                                                 |       |         |       |                     |       |                    |       |                         |       |         |       |
| HPT Management,  property management and leasing fees                                |       | 57,841       |       | —                   |       | —                  |       | —                       |       | 57,841       |       |
|                                                                                 |       |         |       |                     |       |                    |       |                         |       |         |       |
| Behringer  Opportunity Advisors, asset management fees                               |       | 87,396       |       | —                   |       | —                  |       | —                       |       | 87,396       |       |
|                                                                                 |       |         |       |                     |       |                    |       |                         |       |         |       |
| Behringer  Opportunity Advisors, debt financing fee                                  |       | 180,000      |       | —                   |       | 180,000                 |       | —                       |       | —       |       |
|                                                                                 |       |         |       |                     |       |                    |       |                         |       |         |       |
| Total                                                                                |       | $            | 13,645,882 |                     | $          | 11,868,178              |       | $                            | 180,000    |         | $          | 1,441,077 |   | $ | 156,627 |   |

 

BehringerSecurities LP (“Behringer Securities”), our affiliated dealer-manager for theOffering, receives commissions of up to 7% of gross offering proceeds beforereallowances of commissions earned by participating broker-dealers; providedthat Behringer Securities will receive 1% of the gross proceeds of purchasespursuant to our DRIP.  BehringerSecurities reallows 100% of the commissions earned to participatingbroker-dealers.  In addition, up to 2% ofgross proceeds before reallowance to participating broker-dealers will be paidto Behringer Securities as a dealer manager fee; provided that BehringerSecurities will not receive dealer manager fees pursuant to our DRIP.  Behringer Securities may reallow all or aportion of its dealer manager fees in an aggregate amount up to 2% of grossoffering proceeds to broker-dealers participating in the offering; provided,however, that Behringer Securities may reallow, in the aggregate, no more than1.5% of gross offering proceeds for marketing fees and expenses, conferencefees and non-itemized, non-invoiced due diligence efforts, and no more than0.5% of gross offering proceeds for actual out-of-pocket and bona fide,separately invoiced due diligence expenses incurred as fees, costs or other expensesfrom third parties.  In the nine monthsended September 30, 2006, Behringer Securities’ commissions and dealermanager fees totaled approximately $7,409,000 and $2,229,000, respectively andall were capitalized as offering costs in additional paid-in capital on ourbalance sheet.  In the nine months endedSeptember 30, 2005, there were no commissions and dealer manager fees paidto Behringer Securities, as the Offering did not commence untilSeptember 20, 2005 and the first acceptance of investor subscriptions didnot occur until November 9, 2005.

Behringer OpportunityAdvisors, or its affiliates, receives up to 2% of gross offering proceeds forreimbursement of organization and offering expenses incurred in connection withthe Offering.  As of September 30,2006, approximately $4,501,000 of organization and offering expenses had beenincurred by Behringer Opportunity Advisors on our behalf.  As of September 30, 2006, organizationand offering expenses reimbursable by us totaled approximately $4,501,000, includingapproximately $2,646,000 reimbursed and approximately $1,855,000 ofreimbursements payable. The $1,855,000 of offering costs payable as ofSeptember 30, 2006 is included in “Payables to affiliates” on our balancesheet.  Of the approximately $2,646,000of organization and offering expenses to be reimbursed by us throughSeptember 30, 2006, approximately $2,634,000 had been recorded as areduction of additional paid-in capital and approximately $12,000 had beenexpensed as organizational costs.  Forthe nine months ended September 30, 2006, approximately $2,241,000 oforganization and offering expenses were reimbursed by us, of whichapproximately $2,229,000 were recorded as a reduction of additional paid-incapital 

14

----

**Behringer HarvardOpportunity REIT I, Inc.Notes to Consolidated Financial Statements(Unaudited)**

and approximately $12,000 had been expensed asorganizational costs.  In the nine monthsended September 30, 2005, approximately $2,480,000 of organization andoffering expenses had been incurred by Behringer Opportunity Advisors on ourbehalf.  None of these costs had beenreimbursed by us as of September 30, 2005. Behringer Opportunity Advisors or its affiliates determines the amountof organization and offering expenses owed based on specific invoiceidentification as well as an allocation of costs to us and other BehringerHarvard programs, based on respective equity offering results of those entitiesin offering.

Our advisor or itsaffiliates will also receive acquisition and advisory fees of 2.5% of thecontract purchase price of each asset for the acquisition, development orconstruction of real property or, with respect to any mortgage loan, up to 2.5%of the funds advanced in respect of a loan. Our advisor or its affiliates also receives reimbursement of acquisitionexpenses up to 0.5% of the contract purchase price of each asset, or withrespect to a mortgage, up to 0.5% of the funds advanced.  Our advisor earned $1,200,898 in acquisitionand advisory fees and $240,179 in acquisition expense reimbursements for ourinvestments made during the nine months ended September 30, 2006.  We capitalized these fees as part of our realestate.

We pay our advisoror its affiliates a debt financing fee equal to 1% of the amount of any debtmade available to us.  We incurred$180,000 of such debt financing fees for the nine months ended September 30,2006.

We pay HPT ManagementServices LP (“HPT Management”), our property manager and an affiliate of ours,fees for the management and leasing of our properties, which may besubcontracted to unaffiliated third parties. Such fees are equal to 4.5% of gross revenues plus leasing commissionsbased upon the customary leasing commission applicable to the same geographiclocation of the respective property.  Inthe event that we contract directly with a non-affiliated third-party propertymanager in respect of a property, we will pay HPT Management an oversight feeequal to 1% of gross revenues of the property managed.  In no event will we pay both a propertymanagement fee and an oversight fee to HPT Management with respect to anyparticular property.  We incurred andexpensed such fees of $57,841 in the nine months ended September 30, 2006.

We pay our advisor anannual asset management fee of 0.75% of the aggregate asset value of acquiredreal estate.  The fee is payable monthlyin an amount equal to one-twelfth of 0.75% of the aggregate asset value as ofthe last day of the preceding month.  Forthe nine months ended September 30, 2006, we incurred and expensed $87,396of asset management fees.

BehringerOpportunity Advisors or its affiliates is paid a disposition fee if our advisorprovides a substantial amount of services, as determined by our independentdirectors, in connection with the sale of one or more properties.  In such event, we pay our advisor (1) in thecase of the sale of real property, the lesser of:  (A) one-half of the aggregate brokeragecommission paid (including the subordinate disposition fee) or if none is paid,the amount that customarily would be paid, or (B) 3% of the sales price of eachproperty sold, and (2) in the case of the sale of any asset other than realproperty, 3% of the sales price of such assets. This fee shall not be earned or paid unless and until the investors havereceived total distributions in an amount equal to or in excess of the sum ofthe aggregate capital contributions by investors plus a 10% cumulative,non-compounded, annual return on such capital contributions.  Subordinated disposition fees that are notpayable at the date of sale, because investors have not yet received theirrequired minimum distributions, will be deferred and paid at such time as thesesubordination conditions have been satisfied. In addition, after investors have received total distributions equal toor in excess of the sum of their aggregate capital contributions plus a 10%annual, cumulative, non-compounded return on such capital contributions, thenour advisor is entitled to receive an additional participation in net saleproceeds fee equal to 15% of remaining net sale proceeds less the amount thatour debt for borrowed money exceeds the aggregate book value of our remainingassets.  The subordinated participationin net sales proceeds will be reduced or eliminated upon the determination ofthe number of shares of common stock issuable upon conversion of ourConvertible Stock.

Upon listing ofour common stock for trading on a national securities exchange or for quotationon the Nasdaq National Market System (or any successor market or exchange), anincentive listing fee up to 15% of the amount by which the market value of ouroutstanding stock plus distributions paid by us prior to listing exceeds thesum of the aggregate capital contributions by investors plus a 10% annual,cumulative, non-compounded return on such capital contributions will be paid toour advisor.  The subordinated incentivelisting fee will be reduced or eliminated upon the determination of the numberof shares of common stock issuable upon conversion of our Convertible Stock.

In addition, upontermination of the advisory agreement with our advisor, we will pay our advisora performance fee of 15% of the amount by which (A) our appraised asset valueat the time of such termination less our indebtedness, plus cash and cashequivalents at the time of termination plus total distributions paid to ourstockholders through the termination date exceeds (B) the aggregate capitalcontributed by investors plus payment to the investors of a 10% annual,cumulative, non-compounded return on the capital contributed by investors.  No performance fee will be paid if we havealready paid or become

15

----

**Behringer HarvardOpportunity REIT I, Inc.Notes to Consolidated Financial Statements(Unaudited)**

obligated to pay our advisor an incentive listingfee.  The subordinated performance feewill be reduced or eliminated upon the determination of the number of shares ofcommon stock issuable upon conversion of our Convertible Stock.

We will reimburseour advisor or its affiliates for all expenses paid or incurred by them inconnection with the services they provide to us, subject to the limitation thatwe will not reimburse for any amount by which our advisor’s operating expenses(including the asset management fee) at the end of the four preceding fiscalquarters exceeds the greater of:  (1) 2%of our average invested assets or (2) 25% of our net income.

We will pay a developmentfee in an amount that is usual and customary for comparable services renderedto similar projects in the geographic market of the project; provided,however, we will not pay a development fee to an affiliate of our advisorif our advisor or any of its affiliates elects to receive an acquisitionand advisory fee based on the cost of such development.

We are dependent onBehringer Opportunity Advisors, Behringer Securities and HPT Management forcertain services that are essential to us, including the sale of shares of ourcommon stock, asset acquisition and disposition decisions, property managementand leasing services and other general administrative responsibilities.  In the event that these companies were unableto provide us with the respective services, we would be required to obtain suchservices from other sources.

# **11.          SubsequentEvents**

On October 5, 2006, the owners of the Alexan Vossproperty acquired the Hart parcel of land for development in Houston, Texas,using $1,823,226 and $4,471,195 of financing under our mezzanine loans andthird-party construction loans, respectively. We consolidate the Alexan Voss property and related construction loansthrough our mezzanine loan variable interest under FIN No. 46R.  See Note 6 — “Variable Interest Entities.”

We issued approximately 1,070,000 shares of our common stock betweenOctober 1, 2006 and November 1, 2006, resulting in gross proceeds tous of approximately $10,671,000.

# **12.          RecentlyAnnounced Accounting Pronouncements**

We adopted SFAS No. 123R,“Share-Based Payment,” a revision to SFAS No. 123 “Accounting for Stock-BasedCompensation,” on January 1, 2006.  Thestatement supersedes Accounting Principles Board (“APB”) Opinion No. 25, “Accountingfor Stock Issued to Employees” and its related implementation guidance.  This statement focuses primarily onaccounting for transactions in which an entity obtains employee services inshare-based payment transactions and requires the measurement and recognitionof the cost of the employee services received in exchange for an award ofequity instruments for goods or services. The adoption of this statement did not have a material effect on ourfinancial condition, results of operations, or liquidity.

We adopted SFASNo. 154, “Accounting Changes and Error Corrections,” a replacement of APBOpinion No. 20 and SFAS No. 3, on January 1, 2006.  The statement provides guidance on the accountingfor and reporting of accounting changes and error corrections. It establishes,unless impracticable, retrospective application as the required method forreporting a change in accounting principle in the absence of explicittransition requirements specific to the newly adopted accountingprinciple.  This statement is effectivefor accounting changes and corrections of errors made in fiscal years beginningafter December 15, 2005.  Theadoption of this statement did not have a material effect on our financialcondition, results of operations, or liquidity.

We adopted FASB StaffPosition (“FSP”) FIN 46R-6, “Determining the Variability to be Considered inApplying FASB Interpretation No. 46R,” on July 1, 2006.  FIN 46R-6 clarifies that the variability to beconsidered in applying FIN 46R shall be based on an analysis of the design ofthe variable interest entity.  Theadoption of this FSP did not have a material effect on our financial condition,results of operations, or liquidity.

In July 2006, the FASB issuedFIN 48, “Accounting for Uncertainty in Income Taxes, an interpretation of FASBStatement No. 109,” which clarifies the relevant criteria and approach for therecognition and measurement of uncertain tax positions.  FIN 48 will be effective beginning January 1,2007 and the adoption of FIN 48 is not expected to have a material effect onour financial condition, results of operations, or liquidity.

16

----

**Item 2.    Management’s Discussion and Analysis ofFinancial Condition and Results of Operations.**

The following discussion and analysis should be readin conjunction with the accompanying financial statements of the Company andthe notes thereto:

### **Forward-LookingStatements**

This section containsforward-looking statements, including discussion and analysis of the financialcondition of us and our subsidiaries, our anticipated capital expendituresrequired to complete projects, amounts of anticipated cash distributions to ourstockholders in the future and other matters. These forward-looking statements are not historical facts but are theintent, belief or current expectations of our management based on theirknowledge and understanding of our business and industry.  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 identifyforward-looking statements.  Thesestatements are not guarantees of future performance and are subject to risks,uncertainties and other factors, some of which are beyond our control, aredifficult to predict and could cause actual results to differ materially fromthose expressed or forecasted in the forward-looking statements.

### Forward-lookingstatements that were true at the time made may ultimately prove to be incorrector false.  We caution investors not toplace undue reliance on forward-looking statements, which reflect ourmanagement’s view only as of the date of this report on Form 10-Q.  We undertake no obligation to update orrevise forward-looking statements to reflect changed assumptions, theoccurrence of unanticipated events or changes to future operating results.  Factors that could cause actual results todiffer materially from any forward-looking statements made in the Form 10-Qinclude changes in general economic conditions, changes in real estateconditions, construction costs that may exceed estimates, construction delays,increases in interest rates, lease-up risks, inability to obtain new tenantsupon the expiration of existing leases, and the potential need to fund tenantimprovements or other capital expenditures out of operating cash flow.  The forward-looking statements should be readin light of the risk factors identified in the “Risk Factors” section of ourAnnual Report on Form 10-K for the year ended December 31, 2005, as filed withthe Securities and Exchange Commission.

### **CriticalAccounting Policies and Estimates**

Management’s discussionand analysis of financial condition and results of operations are based uponour consolidated financial statements, which have been prepared in accordancewith GAAP.  The preparation of thesefinancial statements requires our management to make estimates and assumptionsthat affect the reported amounts of assets, liabilities, revenues and expenses,and related disclosure of contingent assets and liabilities.  On a regular basis, we will evaluate theseestimates, including investment impairment. These estimates will be based on management’s historical industryexperience and on various other assumptions that are believed to be reasonableunder the circumstances.  Actual resultsmay differ from these estimates.  Ourmost sensitive estimates involve the allocation of the purchase price ofacquired properties and evaluating our real estate related investments forimpairment.

Below is a discussion of the accounting policies that we consider willbe critical in that they may require complex judgment in their application orrequire estimates about matters that are inherently uncertain.

***Real Estate***

We allocate the purchaseprice of acquired properties to the tangible assets acquired, consisting ofland and buildings, and identified intangible assets based on their relativefair values in accordance with SFAS No. 141, “Business Combinations” and No.142, “Goodwill and Other Intangible Assets.” Identified intangible assets consist of the fair value of above-marketand below-market leases, in-place leases, in-place tenant improvements andtenant relationships.  Initial valuationsare subject to change until our information is finalized, which is no laterthan 12 months from the acquisition date.

The fair value of thetangible assets to be acquired, consisting of land and buildings, is determinedby valuing the property as if it were vacant, and the “as-if-vacant” value isallocated to land and buildings.  Landvalues are derived from appraisals, and building values are calculated asreplacement cost less depreciation or management’s estimates of the relativefair value of these assets using discounted cash flow analyses or similarmethods.  The value of the building isdepreciated over the estimated useful life of 25 years using the straight-linemethod.

We determine the value ofabove-market and below-market in-place leases for acquired properties based onthe present value (using an interest rate that reflects the risks associatedwith the leases acquired) of the difference between (1) the contractual amountsto be paid pursuant to the in-place leases and (2) management’s estimate ofcurrent market lease rates for the corresponding in-place leases, measured overa period equal to the remaining non-cancelable terms of the 

17

----

respective leases. We record the fair value of above-market and below-market leases asintangible assets or intangible liabilities, respectively, and amortize them asan adjustment to rental income over the remaining non-cancelable terms of therespective leases.

The total value of identifiedreal estate intangible assets acquired is further allocated to in-place leasevalues and tenant relationships based on our evaluation of the specificcharacteristics of each tenant’s lease and our overall relationship with thatrespective tenant.  The aggregate valueof in-place leases acquired and tenant relationships is determined by applyinga fair value model.  The estimates offair value of in-place leases include an estimate of carrying costs during theexpected lease-up periods for the respective spaces considering current marketconditions.  In estimating the fair valueof in-place leases, we consider items such as real estate taxes, insurance andother operating expenses, as well as lost rental revenue during the expectedlease-up period and carrying costs that would have otherwise been incurred hadthe leases not been in place, including tenant improvements andcommissions.  The estimates of the fairvalue of tenant relationships also include costs to execute similar leases,including leasing commissions, legal costs and tenant improvements as well asan estimate of the likelihood of renewal as determined by management on atenant-by-tenant basis.

We amortize the value ofin-place leases to expense over the term of the respective leases.  The value of tenant relationship intangiblesis amortized to expense over the initial term and any anticipated renewalperiods, but in no event does the amortization period for intangible assetsexceed the remaining depreciable life of the building.  Should a tenant terminate its lease, theunamortized portion of the in-place lease value and tenant relationshipintangibles would be charged to expense.

***Investment Impairments***

For real estate we whollyown, we monitor events and changes in circumstances indicating that thecarrying amounts of the real estate assets may not be recoverable.  When such events or changes in circumstancesare present, we assess potential impairment by comparing estimated futureundiscounted operating cash flows expected to be generated over the life of theasset and from its eventual disposition to the carrying amount of theasset.  In the event that the carryingamount exceeds the estimated future undiscounted operating cash flows, werecognize an impairment loss to adjust the carrying amount of the asset toestimated fair value.

For any real estate wemay own through an investment in a joint venture, TIC interest or other similarinvestment structure, at each reporting date we will compare the estimated fairvalue of our investment to the carrying value. An impairment charge will be recorded to the extent the fair value ofour investment is less than the carrying amount and the decline in value isdetermined to be other than a temporary decline.  There were no impairment charges for the threeand nine months ended September 30, 2006 and 2005.

**Overview**

We were formed primarilyto invest in and operate real estate or real estate related assets on anopportunistic basis.  In particular, wefocus on acquiring properties with significant possibilities for short-termcapital appreciation, such as those requiring development, redevelopment orrepositioning or those located in markets with higher volatility, lowerbarriers to entry and high growth potential. We may acquire office, industrial, retail, hospitality, multi-family andother real properties, including existing or newly constructed properties orproperties under development or construction. Further, we may invest in real estate related securities, includingsecurities issued by other real estate companies, either for investment or inchange of control transactions completed on a negotiated basis orotherwise.  We also may invest incollateralized mortgage-backed securities, mortgage, bridge or mezzanine loansand Section 1031 TIC interests, or in entities that make investments similar tothe foregoing.

As of September 30, 2006,we owned two properties located in Minnetonka, Minnesota and Middleton,Massachusetts, respectively, and had invested in two properties underdevelopment as a mezzanine lender, which we consolidate under FIN No. 46R.

On September 20, 2005, our Registration Statement on Form S-11 (FileNo. 333-120847), covering the Offering of up to 40,000,000 shares of commonstock to be offered at a price of $10.00 per share was declared effective underthe Securities Act.  The Offering alsoincludes up to 8,000,000 shares of common stock at a price of $9.50 per sharepursuant to our DRIP.

On October 27, 2005, theconditions of our escrow agreement with Citibank Texas, N.A. were satisfied andas a result, operations commenced on November 9, 2005 upon our acceptance ofinitial subscriptions.  On November 9,2005, we received and accepted subscriptions for 441,204 shares of common stockfor gross offering proceeds of $4,408,510. As of September 30, 2006, we had accepted subscriptions for 13,107,787shares of our common stock, including 21,739 shares owned by Behringer Holdingsand 29,815 shares through the DRIP, for gross offering proceeds of$130,493,730.  As of 

18

----

September 30, 2006, we had no shares of preferredstock issued or outstanding and 1,000 shares of Convertible Stock issued andoutstanding.

**Results of Operations**

We commenced active operations when we made our first real estateacquisition on March 1, 2006 with the purchase of the Whitewater Property.  At September 30, 2006, we had acquired twowholly-owned properties and had invested in two properties under development asa mezzanine lender, which we consolidate under FIN No. 46R.  Accordingly, our results of operations for thethree and nine months ended September 30, 2006, as compared to the three andnine months ended September 30, 2005, reflect significant increases in mostcategories.

*Three months ended September 30, 2006 as comparedto three months ended September 30, 2005*

*Rental Revenue.*  Rental revenue was $1,316,884 for the threemonths ended September 30, 2006 and was comprised of revenue, includingadjustments for straight-line rent and amortization of below-market leases,from our wholly-owned properties.  Duringthe three months ended September 30, 2005, we did not own any real estate.  Management expects future increases in rentalrevenue as we continue to invest in additional real estate properties.

*Property Operating Expenses.*  Property operating expenses for the threemonths ended September 30, 2006 were $564,863 and was comprised of $434,212 ofoperating expenses from our wholly-owned properties and $130,651 from ourinvestments consolidated under FIN 46R. During the three months ended September 30, 2005, we did not own anyreal estate.  We expect increases inproperty operating expenses in the future as we purchase additional real estateproperties.

*Interest Expense.*  Interest expense for the three months endedSeptember 30, 2006 was $127,665 and was primarily comprised of interest expensefrom Ferncroft Corporate Center.  Duringthe three months ended September 30, 2005, we did not own any realestate.  We expect increases in interestexpense in the future as we purchase and invest in additional real estate properties.  For the three months ended September 30,2006, we capitalized interest costs of $14,388 for the Alexan Voss project and$3,430 for the Alexan Black Mountain project. Interest costs for the development of Alexan Voss and Alexan BlackMountain will continue to be capitalized until development is complete.

*Real Estate Taxes. *Real estate taxes for thethree months ended September 30, 2006 were $109,362 and were comprised of realestate taxes from our wholly-owned properties. During the three months ended September 30, 2005, we did not own anyreal estate.  We expect increases in realestate taxes in the future as we purchase additional real estate properties.

*Property Management Fees. *Property management feesfor the three months ended September 30, 2006 were $38,194 and were comprisedof property management fees from our wholly-owned properties.  During the three months ended September 30,2005, we did not own any real estate.  Weexpect increases in property management fees in the future as we invest inadditional real estate properties.

*Asset Management Fees.*Assetmanagement fees for the three months ended September 30, 2006 were $65,416 andwere comprised of asset management fees from our wholly-owned properties.  During the three months ended September 30,2005, we did not own any real estate.

*General and AdministrativeExpenses.*  General andadministrative expenses for the three months ended September 30, 2006 were$206,845, as compared to $2,478 for the three months ended September 30, 2005,and were comprised of corporate general and administrative expenses, includingdirectors’ and officers’ insurance premiums, auditing fees, legal fees andother administrative expenses.  Theincreased amount in 2006 was due to increased corporate activity in the currentfiscal period.

*Depreciation and AmortizationExpense. *Depreciationand amortization expense for the three months ended September 30, 2006 was$403,056 and was comprised of depreciation and amortization of our wholly-ownedproperties.  During the three monthsended September 30, 2005, we did not own any real estate.  We expect increases in depreciation andamortization expense in the future as we purchase additional real estateproperties.

*Interest Income*.  Interest income for the three months endedSeptember 30, 2006 was $885,094 and was comprised of interest income on fundson deposit, net of bank fees.  As weadmit new stockholders, subscription proceeds are released to us and may beutilized as consideration for investments in real properties and the payment orreimbursement of dealer manager fees, selling commissions, organization andoffering expenses and operating expenses. Until required for such purposes, net offering proceeds are held inshort-term, liquid investments and earn interest income.  During the three months endedSeptember 30, 2005, we earned $871 in interest income.  The increase in interest income in 2006 isdue to higher cash balances on deposit with banks as a result of increasedproceeds from investor subscriptions.

19

----

*Minority Interest. *Minority interest for thethree months ended September 30, 2006 was $130,697 and represents the netloss of the two variable interest entities that we consolidate under Fin No.46R.  During the three months endedSeptember 30, 2005, we had no investments with minority interest holders.

*Nine months ended September 30, 2006 as compared tonine months ended September 30, 2005*

*Rental Revenue.*  Rental revenue was $1,791,128 for the ninemonths ended September 30, 2006 and was comprised of revenue, includingadjustments for straight-line rent and amortization of below-market leases,from the Whitewater Property from date of acquisition, March 1, 2006, throughSeptember 30, 2006 and from Ferncroft Corporate Center from date of acquisition,July 13, 2006, through September 30, 2006. During the nine months ended September 30, 2005, we did not own anyreal estate.  Management expects futureincreases in rental revenue as we continue to invest in additional real estateproperties.

*Property Operating Expenses.*  Property operating expenses for the ninemonths ended September 30, 2006 were $700,505 and was comprised of operatingexpenses from our wholly-owned properties of $569,854 and $130,651 from our investmentsconsolidated under FIN 46R.  We expectincreases in property operating expenses in the future as we purchaseadditional real estate properties. During the nine months ended September 30, 2005, we did not own any realestate.

*Interest Expense.*  Interest expense for the nine months endedSeptember 30, 2006 was $127,665 and was primarily comprised of interest expensefrom Ferncroft Corporate Center.  Duringthe nine months ended September 30, 2005, we did not own any real estate.  We expect increases in interest expense inthe future as we purchase and invest in additional real estate properties.  For the nine months ended September 30, 2006,we capitalized interest costs of $14,388 for the Alexan Voss project and $3,430for the Alexan Black Mountain project. Interest costs for the development of Alexan Voss and Alexan BlackMountain will continue to be capitalized until development is complete.

*Real Estate Taxes. *Real estate taxes for thenine months ended September 30, 2006 were $190,878 and were comprised of realestate taxes from our wholly-owned properties. During the nine months ended September 30, 2005, we did not own any realestate.  We expect increases in realestate taxes in the future as we purchase additional real estate properties.

*Property Management Fees. *Property management feesfor the nine months ended September 30, 2006 were $57,841 and were comprised ofproperty management fees from our wholly-owned properties.  During the nine months ended September 30,2005, we did not own any real estate.  Weexpect increases in property management fees in the future as we invest inadditional real estate properties.

*Asset Management Fees. *Asset management fees forthe nine months ended September 30, 2006 were $87,396 and were comprised ofasset management fees from our wholly-owned properties.  During the nine months ended September 30,2005, we did not own any real estate.

*General and AdministrativeExpenses.* General andadministrative expenses for the nine months ended September 30, 2006 were$578,613, as compared to $11,457 for the nine months ended September 30, 2005,and were comprised of corporate general and administrative expenses, includingdirectors’ and officers’ insurance premiums, auditing fees, legal fees andother administrative expenses.  Theincreased amount in 2006 was due to increased corporate activity.

*Depreciation and AmortizationExpense. *Depreciationand amortization expense for the nine months ended September 30, 2006 was $577,309and was comprised of depreciation and amortization of our wholly-ownedproperties.  During the nine months endedSeptember 30, 2005, we did not own any real estate.  We expect increases in depreciation andamortization expense in the future as we purchase additional real estateproperties.

*Interest Income*.  Interest income for the nine months endedSeptember 30, 2006 was $1,786,905 and represented interest income on funds ondeposit, net of bank fees.  As we admitnew stockholders, subscription proceeds are released to us and may be utilizedas consideration for investments in real properties and the payment orreimbursement of dealer manager fees, selling commissions, organization andoffering expenses and operating expenses. Until required for such purposes, net offering proceeds are held inshort-term, liquid investments and earn interest income.  During the nine months endedSeptember 30, 2005, we earned $1,922 in interest income.  The increase in interest income in 2006 isdue to higher cash balances on deposit with banks as a result of increasedproceeds from investor subscriptions.

*Minority Interest. *Minority interest for thenine months ended September 30, 2006 was $130,697 and represents the netloss in the two variable interest entities that we consolidate under FIN No.46R.  During the nine months endedSeptember 30, 2005, we had no investments with minority interest holders.

20

----

**Cash Flow Analysis**

We commenced activeoperations when we made our first real estate acquisition on March 1, 2006 withthe purchase of the Whitewater Property. At September 30, 2006, we had acquired two wholly-owned properties andhad invested in two properties under development as a mezzanine lender, whichwe consolidate under FIN No. 46R. Accordingly, our results of cash flows for the nine months endedSeptember 30, 2006, as compared to the nine months ended September 30, 2005,reflect significant increases in most categories.

Cash flows provided byoperating activities for the nine months ended September 30, 2006 were$2,702,381 and were comprised primarily of net income of $1,388,523, changes inworking capital accounts of $990,878, and the adjustment for depreciation andamortization of $449,875.  During thenine months ended September 30, 2005, cash flows used in operating activitieswere $10,856 and were primarily comprised of the net loss of $9,535, and weresignificantly lower than the nine months ended September 30, 2006 due to thelack of real estate investments and less corporate activity.

Cash flows used ininvesting activities for the nine months ended September 30, 2006 were$56,213,270 and primarily represented real estate purchases totaling$36,932,424 and capital expenditures of properties under development of ourconsolidated borrowers of $17,379,912. During the nine months ended September 30, 2005, there were no cashflows from investing activities as we had not yet begun to invest.

Cash flows provided byfinancing activities for the nine months ended September 30, 2006 were$121,129,389 and were comprised primarily of funds received from the issuanceof stock, net of offering costs of $97,795,424, proceeds from the mortgagepayable of $18,000,000 and proceeds from mortgages of consolidated borrowers of$5,778,459.  During the nine months endedSeptember 30, 2005, cash flows provided by financing activities were $15,000and were comprised of the change in payables to affiliates.

**Liquidity and Capital Resources**

The amount of distributions payable to our stockholders will bedetermined by our board of directors and is dependent on a number of factors,including funds available for distribution, financial condition, capitalexpenditure requirements and annual distribution requirements needed to qualifyand maintain our status as a REIT under the Internal Revenue Code.  Operating cash flows are expected to increaseas properties are acquired in the development of our investment portfolio.

Our principal demands for funds will be for property acquisitions,either directly or through investment interests, for mortgage loan investments,for the payment of operating expenses and distributions, and for the payment ofinterest on our outstanding indebtedness and other investments.  Generally, cash needs for items other thanproperty acquisitions and mortgage loan investments will be met fromoperations, and cash needs for property acquisitions will be met from thepublic offering of our shares.  However,there may be a delay between the sale of our shares and our purchase ofproperties and mortgage loan investments, which could result in a delay in thebenefits to our stockholders, if any, of returns generated from ouroperations.  Our advisor evaluatespotential acquisitions of real estate and real estate related assets andengages in negotiations with sellers and borrowers on our behalf.  Investors should be aware that after a purchasecontract is executed that contains specific terms, the property will not bepurchased until the successful completion of due diligence and negotiation offinal binding agreements.  During thisperiod, we may decide to temporarily invest any unused proceeds from theOffering in certain investments that could yield lower returns than theproperties.  These lower returns mayaffect our ability to make distributions.

We borrowed $18,000,000under a loan agreement (the “Ferncroft Loan”) with Barclays Capital Real EstateInc.  The interest rate under the loan isfixed at 6.33% per annum and requires monthly payments of interest onlybeginning October 2006 through September 2011, with monthly payments of$111,767 required beginning October 2011 and continuing through September 2013and any remaining balance payable at the maturity date, September 1, 2013.  Ferncroft Corporate Center is held ascollateral for the Ferncroft Loan.  Prepaymentin whole (but not in part) is permitted from and after the twelfth monthlypayment date prior to the maturity date. As of September 30, 2006, our outstanding principal balance under theFerncroft Loan was approximately $18,000,000.

We agreed to provide mezzanine financing of up to$22,679,561 to unaffiliated third-party entities for the acquisition anddevelopment of real estate known as Alexan Voss and Alexan Black Mountain.  During the nine months endedSeptember 30, 2006, the unaffiliated third parties that own Alexan Vossand Alexan Black Mountain incurred approximately $17,380,000 in developmentcosts, of which we have funded $12,035,926 through our mezzanine loans.  The parties that own Alexan Voss and AlexanBlack Mountain intend to fund the remaining portion of the acquisition anddevelopment of Alexan Voss and Alexan Black Mountain through our mezzanineloans and third-party construction loans.

We expect to meet our future short-term operating liquidityrequirements through net cash provided by our current property operations andthe operations of properties to be acquired in the future.  Management also expects that our 

21

----

properties will generate sufficient cash flow to coveroperating expenses and the payment of a monthly distribution.  Other potential future sources of capitalinclude proceeds from secured or unsecured financings from banks or otherlenders, proceeds from the sale of properties and undistributed funds fromoperations.  If necessary, we may usefinancings or other sources of capital in the event of unforeseen significantcapital expenditures.

In accordance with theStatement of Policy Regarding Real Estate Investment Trusts published by theNorth American Securities Administrators Association, also known as the NASAAREIT Guidelines, our charter requires that we monitor our expenses on atrailing twelve month basis.  Our charterdefines the following terms and requires that our Total Operating Expenses (“TOE”)are deemed to be excessive if at the end of any quarter they exceed for theprior trailing twelve month period the greater of 2% of our Average InvestedAssets (“AIA”) or 25% of our Net Income (“NI”). For the trailing twelve months ended September 30, 2006, the firstyear of our operations, TOE of approximately $738,000 exceeded 25% of our NI (whichwas approximately $466,000) by approximately $272,000.  Our Board of Directors, including all of ourindependent directors, have reviewed this analysis and unanimously determinedthe excess to be justified considering the fact that we were in the developmentstage through February 2006 and our rate of acquisitions thereafter caused theexpenses incurred as a result of being a public company for audit and legalservices, director and officer liability insurance, fees for Board members inconnection with service on the Board and its committees and compliance with therequirements of the Sarbanes-Oxley Act of 2002 to be disproportionate to theCompany’s AIA and NI.

**Funds from Operations**

Funds from operations (“FFO”)is a non-GAAP financial measure that is widely recognized as a measure of REIToperating performance.  FFO is defined bythe National Association of Real Estate Investment Trusts as net income (loss),computed in accordance with GAAP excluding extraordinary items, as defined byGAAP, and gains (or losses) from sales of property, plus depreciation andamortization on real estate assets, and after adjustments for unconsolidatedpartnerships, joint ventures and subsidiaries. We believe that FFO is helpful to investors and our management as ameasure of operating performance because it excludes depreciation andamortization, gains and losses from property dispositions, and extraordinaryitems, and as a result, when compared year to year, reflects the impact onoperations from trends in occupancy rates, rental rates, operating costs,development activities, general and administrative expenses, and interestcosts, which is not immediately apparent from net income.  Historical cost accounting for real estateassets in accordance with GAAP implicitly assumes that the value of real estatediminishes predictably over time.  Sincereal estate values have historically risen or fallen with market conditions,many industry investors and analysts have considered the presentation ofoperating results for real estate companies that use historical cost accountingalone to be insufficient.  As a result,our management believes that the use of FFO, together with the required GAAPpresentations, provides a more complete understanding of our performance and amore informed and appropriate basis on which to make decisions involvingoperating, financing and investing activities. Factors that impact FFO include start-up costs, fixed costs, delay inbuying assets, lower yields on cash held in accounts pending investment, incomefrom portfolio properties and other portfolio assets, interest rates onacquisition financing and operating expenses. FFO should not be considered as an alternative to net income (loss) oras an indication of our liquidity, nor is it indicative of funds available tofund our cash needs, including our ability to make distributions.  Our calculation of FFO for the three and ninemonths ended September 30, 2006 is presented below:

|                                       | ** ** | **Three months**            | ** ** | **Nine months**             | ** ** |
|---------------------------------------|------------|----------------------------------|------------|----------------------------------|------------|
| ** **                            | ** ** | **ended**                        | ** ** | **ended**                        | ** ** |
| ** **                            | ** ** | **September 30, 2006** | ** ** | **September 30, 2006** | ** ** |
| ** **                            | ** ** | ** **                       | ** ** | ** **                       | ** ** |
| Net income                            |       | $                                | 817,274    |                             | $          | 1,388,523 |   |
| Preferred stock  dividends            |       | —                           |       | —                           |       |
| Net income  allocable to common stock |       | 817,274                          |       | 1,388,523                        |       |
|                                  |       |                             |       |                             |       |
| Real estate  depreciation             |       | 231,583                          |       | 327,273                          |       |
| Real estate  amortization             |       | 66,630                           |       | 122,602                          |       |
| Funds from  operations (FFO)          |       | $                                | 1,115,487  |                             | $          | 1,838,398 |   |
|                                  |       |                             |       |                             |       |
| GAAP weighted  average shares:        |       |                             |       |                             |       |
| Basic                                 |       | 11,340,747                       |       | 7,701,098                        |       |
| Diluted                               |       | 11,367,997                       |       | 7,716,576                        |       |

 

Provided below is additional information related toselected non-cash items included in net income above, which may be helpful inassessing our operating results.

22

----

·                  Straight-linerental revenue of approximately $34,000 was recognized for the three monthsended September 30, 2006 and approximately $49,000 was recognized for the ninemonths ended September 30, 2006.  During the three and nine months endedSeptember 30, 2005, we did not own any real estate.

In addition, cash flows generated from FFO may be usedto fund all or a portion of certain capitalizable items that are excluded fromFFO, such as capital expenditures and payments of principal on debt, eachof which may impact the amount of cash available for distribution to ourstockholders.

During the nine monthsended September 30, 2006, we declared and paid distributions from FFO andexpect to continue to do so in the near-term. Over the long-term, we expect that a greater percentage of ourdistributions will be from FFO (except to the extent of distributions from thesale of our assets).  However, given theuncertainty arising from numerous factors, including both the raising andplacing of capital in the current real estate environment, ultimate FFOperformance cannot be predicted with certainty. For example, if we are not able to timely invest net proceeds of ouroffering at favorable yields, future distributions declared and paid may exceedFFO.

**Contractual Obligations**

The following table summarizes our contractual obligations as ofSeptember 30, 2006:
| **Mortgages Payable** | ** ** | **Total** | ** ** | **2006** | ** ** | **2007**  | ** ** | **2008**  | ** ** | **2009**  | ** ** | **2010**  | ** ** | **Thereafter** | ** ** |
|----------------------------|------------|-----------|------------|----------|------------|-----------|------------|-----------|------------|-----------|------------|-----------|------------|----------------|------------|
| Principal                  |       | $         | 23,778,459 |     | $          | —    |       | $         | —     |      | $          | —    |       | $              | 727,736    |   | $ | 5,050,723 |   | $ | 18,000,000 |   |
| Interest                   |       | 9,612,604 |       | 434,061  |       | 1,638,569 |       | 1,643,058 |       | 1,615,687 |       | 1,265,700 |       | 3,015,529      |       |
| Total                      |       | $         | 33,391,063 |     | $          | 434,061   |       | $         | 1,638,569  |      | $          | 1,643,058 |       | $              | 2,343,423  |   | $ | 6,316,423 |   | $ | 21,015,529 |   |
|                       |       |      |       |     |       |      |       |      |       |      |       |      |       |           |       |

**Off-Balance Sheet Arrangements**

We have no off-balancesheet arrangements that are reasonably likely to have a current or futureeffect on our financial condition, changes in financial condition, revenues orexpenses, results of operations, liquidity, capital expenditures or capitalresources.

**Inflation**

The real estate market has not been affected significantly by inflationin the past several years due to the relatively low inflation rate.  However, we include, and intend to continueto include, provisions in the majority of our tenant leases that would protectus from the impact of inflation.  Theseprovisions include reimbursement billings for common area maintenance charges,real estate tax and insurance reimbursements on a per square foot basis, or insome cases, annual reimbursement of operating expenses above a certain persquare foot allowance.

**Item 3.    Quantitative and Qualitative DisclosuresAbout Market Risk.**

We will be exposed tointerest rate changes primarily as a result of long-term debt used to acquireproperties.  Our management’s objectiveswith regard to interest rate risk are to limit the impact of interest ratechanges on earnings and cash flows and to lower overall borrowing costs.  To achieve these objectives, we will borrowprimarily at fixed rates or variable rates with the lowest margins availableand in some cases, with the ability to convert variable rates to fixedrates.  With regard to variable ratefinancing, we will assess interest rate cash flow risk by continuallyidentifying and monitoring changes in interest rate exposures that mayadversely impact expected future cash flows and by evaluating hedgingopportunities.

We do not have anyforeign operations and thus we are not exposed to foreign currencyfluctuations.

**Item 4.    Controls and Procedures.**

As required by Rule 13a-15(b) and Rule 15d-15(b)under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), ourmanagement, including our Chief Executive Officer and Chief Financial Officer,evaluated, as of September 30, 2006, the effectiveness of our disclosurecontrols and procedures as defined in Exchange Act Rule 13a-15(e) and Rule15d-15(e).  Based on that evaluation, ourChief Executive Officer and Chief Financial Officer concluded that ourdisclosure controls and procedures, as of September 30, 2006, were effectivefor the purpose of ensuring that information required to be disclosed by us inthis report is recorded, processed, summarized and reported within the timeperiods specified by the rules and forms of the Exchange Act and is accumulatedand communicated to management, including the 

23

----

Chief Executive Officer and Chief Financial Officer,as appropriate to allow timely decisions regarding required disclosures.

We believe, however, that a controls system, no matterhow well designed and operated, can only provide reasonable assurance, notabsolute assurance, that the objectives of the controls system are met, and noevaluation of controls can provide absolute assurance, only reasonableassurance, that all control issues and instances of fraud or error, if any,within a company have been detected.

There have been no changes in internal controls overfinancial reporting (as defined in Rules 13a-15(f) and 15d-15(f) promulgatedunder the Exchange Act) that occurred during the quarter endedSeptember 30, 2006 that have materially affected, or are reasonably likelyto materially affect, our internal control over financial reporting.

**PART II**OTHER INFORMATION

### **Item 1.        LegalProceedings.**

We are not party to, and our property is not subject to, any materialpending legal proceedings.

### **Item 1A.     RiskFactors.**

There have been no material changes from the risk factors set forth inour Annual Report on Form 10-K for the year ended December 31, 2005.

### **Item 2.        UnregisteredSales of Equity Securities and Use of Proceeds.**

On September 20, 2005, wecommenced our Offering of up to 40,000,000 shares of common stock offered at aprice of $10 per share pursuant to a Registration Statement on Form S-11 filedunder the Securities Act.  TheRegistration Statement also covers the offering of up to 8,000,000 shares ofcommon stock at a price of $9.50 per share pursuant to our DRIP.  As of September 30, 2006, we had sold13,086,048 shares of our common stock on a best efforts basis pursuant to theOffering (declared effective September 20, 2005, SEC Registration No.333-120847) for aggregate gross offering proceeds of $130,493,730.

The above-stated numberof shares sold and the gross offering proceeds received from such sales doesnot include 21,739 shares of common stock purchased by Behringer Holdings in aprivate placement in 2004, prior to the commencement of the Offering.

From the commencement ofthe Offering through September 30, 2006, we incurred the following expenses inconnection with the issuance and distribution of the registered securitiespursuant to the Offering:

| Type of Expense         | ** ** | **Amount** | ** ** |
|-----------------------------------|------------|------------|------------|
|                              |       |       |       |
| Other expenses  to affiliates *   |       | $          | 15,916,831 |   |
| Other expenses  to non-affiliates |       | 196,631    |       |
|                              |       |       |       |
| Total expenses                    |       | $          | 16,113,462 |   |

----

* “Other expenses to affiliates” includes commissionsand dealer manager fees paid to Behringer Securities, our affiliate, whichreallowed all or a portion of the commissions and fees to soliciting dealers.

As of September 30, 2006,the net offering proceeds to us, after deducting the total expenses incurredand described above, were $114,380,268.

From the commencement ofthe Offering through September 30, 2006, we had used $20,626,990 of such netoffering proceeds to purchase real estate and $12,035,926 was invested throughmezzanine loans.  Of the amount used forthe purchase of real estate and invested through mezzanine loans, $1,441,077was paid to Behringer Opportunity Advisors, our affiliate, as acquisition andadvisory fees and acquisition expense reimbursement.

24

----

**Item 3.        DefaultsUpon Senior Securities.**

None.

### **Item4.        Submission of Matters to a Voteof Security Holders.**

No matters were submitted to a vote of security holders during thethree months ended September 30, 2006.

### **Item 5.        OtherInformation.**

None.

### **Item 6.        Exhibits.**

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

25

----

**SIGNATURE**

Pursuant to therequirements of the Securities Exchange Act of 1934, the registrant has dulycaused this report to be signed on its behalf by the undersigned thereunto dulyauthorized.
|                           | **Behringer Harvard Opportunity REIT  I, Inc.** |
|---------------------------|-------------------------------------------------|
|                      |                                            |
| Dated: November  13, 2006 | By:                                             |   | /s/ Gary S. Bresky |   |
|                      |                                            | Gary S. Bresky |
|                      |                                            | Chief Financial Officer  (Principal Financial Officer) |

 

26

----

**Index toExhibits**
| Exhibit Number | ** ** | **Description**                                                                                                                                                                                                                                                                                                                                                      |
|----------------|------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 3.1            |       | Articles of Amendment  and Restatement of the Registrant (previously filed in and incorporated by  reference to Pre-Effective Amendment No. 4 to Registrant’s Registration  Statement on Form S-11, Commission File No. 333-120847, filed on September  12, 2005)                                                                                               |
| 3.1(a)         |       | Articles of Amendment  to Articles of Amendment and Restatement of the Registrant (previously filed  in and incorporated by reference to Post-Effective Amendment No. 3 to  Registrant’s Registration Statement on Form S-11, Commission File No.  333-120847, filed on July 6, 2006)                                                                           |
| 3.2            |       | Bylaws of the  Registrant (previously filed in and incorporated by reference to Registrant’s  Registration Statement on Form S-11, Commission File No. 333-120847, filed on  November 30, 2004)                                                                                                                                                                 |
| 3.2(a)         |       | Amendment to Bylaws of  the Registrant (previously filed in and incorporated by reference to Form 8-K  filed on February 24, 2006)                                                                                                                                                                                                                                   |
| 4.1            |       | Form of Subscription  Agreement and Subscription Agreement Signature Page (included as Exhibit B to  prospectus)                                                                                                                                                                                                                                                     |
| 4.2            |       | Amended and Restated  Distribution Reinvestment Plan, effective as of April 5, 2006 (included as  Exhibit C to prospectus)                                                                                                                                                                                                                                           |
| 4.3            |       | Automatic Purchase Plan  (included as Exhibit D to prospectus)                                                                                                                                                                                                                                                                                                       |
| 10.10          |       | Purchase and Sale  Agreement between Middleton Investors, LLC and Harvard Property Trust, LLC  regarding the Ferncroft property (previously filed in and incorporated by  reference to Form 8-K filed on July 19, 2006)                                                                                                                                              |
| 10.11          |       | Assignment of Purchase  and Sale Agreement between Harvard Property Trust, LLC and Behringer Harvard  Opportunity OP I, LP regarding the Ferncroft property (previously filed in  and incorporated by reference to Post-Effective Amendment No. 1 to  Registrant’s Registration Statement on Form S-11, Commission File No.  333-120847, filed on June 1, 2006) |
| 10.12          |       | Loan Agreement between  Barclays Capital Real Estate Inc. and Behringer Harvard Ferncroft, LLC  (previously filed in and incorporated by reference to Form 8-K filed on  August 25, 2006)                                                                                                                                                                            |
| 10.13          |       | Promissory Note made  between Behringer Harvard Ferncroft, LLC and Barclays Capital Real Estate  Inc. (previously filed in and incorporated by reference to Form 8-K filed on  August 25, 2006)                                                                                                                                                                      |
| 10.14          |       | Mortgage, Assignment of  Rent and Leases, Security Agreement and Fixture Filing made by Behringer  Harvard Ferncroft, LLC and Barclays Capital Real Estate Inc. (previously  filed in and incorporated by reference to Form 8-K filed on August 25, 2006)                                                                                                            |
| 10.15          |       | Assignment of Leases  and Rents by Behringer Harvard Ferncroft, LLC, as borrower in favor of  Barclays Capital Real Estate Inc. (previously filed in and incorporated by  reference to Form 8-K filed on August 25, 2006)                                                                                                                                            |
| 10.16          |       | Guaranty agreement made  by Behringer Harvard Opportunity REIT I, Inc., as guarantor in favor of  Barclays Capital Real Estate Inc. (previously filed in and incorporated by  reference to Form 8-K filed on August 25, 2006)                                                                                                                                        |
| 10.17          |       | Senior Mezzanine Loan  Agreement between GC 128 Voss SM LLC and Behringer Harvard Alexan Voss, LLC  regarding the Alexan Voss mezzanine loans (previously filed in and  incorporated by reference to Form 8-K filed on September 28, 2006)                                                                                                                           |
| 10.18          |       | Junior Mezzanine Loan  Agreement between GC 129 Voss JM LLC and Behringer Harvard Alexan Voss, LLC  regarding the Alexan Voss mezzanine loans (previously filed in and  incorporated by reference to Form 8-K filed on September 28, 2006)                                                                                                                           |

 

----

 
| 10.19 |   | Senior Mezzanine Promissory Note made between  Behringer Harvard Alexan Voss, LLC and GC 128 Voss SM LLC regarding the  Alexan Voss mezzanine loans (previously filed in and incorporated by  reference to Form 8-K filed on September 28, 2006)                                                                                                   |
|-------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 10.20 |   | Junior Mezzanine  Promissory Note made between Behringer Harvard Alexan Voss, LLC and GC 129  Voss JM LLC regarding the Alexan Voss mezzanine loans (previously filed in  and incorporated by reference to Form 8-K filed on September 28, 2006)                                                                                                   |
| 10.21 |   | Senior Mezzanine Pledge  and Security Agreement made by Behringer Harvard Alexan Voss, LLC and GC 128  Voss SM LLC regarding the Alexan Voss mezzanine loans (previously filed in  and incorporated by reference to Form 8-K filed on September 28, 2006)                                                                                               |
| 10.22 |   | Junior Mezzanine Pledge  and Security Agreement made by Behringer Harvard Alexan Voss, LLC and GC 129  Voss JM LLC regarding the Alexan Voss mezzanine loans (previously filed in  and incorporated by reference to Form 8-K filed on September 28, 2006)                                                                                               |
| 10.23 |   | Senior Mezzanine  Completion Guaranty agreement made by CFP Residential L.P., Kenneth Valach,  J. Ronald Terwilliger and Brian Austin as guarantors in favor of Behringer  Harvard Alexan Voss, LLC regarding the Alexan Voss mezzanine loans  (previously filed in and incorporated by reference to Form 8-K filed on  September 28, 2006)        |
| 10.24 |   | Junior Mezzanine  Completion Guaranty agreement made by CFP Residential, L.P., Kenneth Valach,  J. Ronald Terwilliger and Brian Austin as guarantors in favor of Behringer  Harvard Alexan Voss, LLC regarding the Alexan Voss mezzanine loans  (previously filed in and incorporated by reference to Form 8-K filed on  September 28, 2006)       |
| 10.25 |   | Option Agreement  between Behringer Harvard Alexan Voss, LLC and GC 129 Voss JM LLC regarding  the Alexan Voss mezzanine loans (previously filed in and incorporated by  reference to Form 8-K filed on September 28, 2006)                                                                                                                             |
| 10.26 |   | Senior Mezzanine Loan  Agreement between SW 109 Wagon Wheel SM LLC and Behringer Harvard Alexan  Nevada, LLC regarding the Alexan Black Mountain mezzanine loans (previously  filed in and incorporated by reference to Form 8-K filed on October 5, 2006)                                                                                         |
| 10.27 |   | Junior Mezzanine Loan  Agreement between SW 108 Wagon Wheel JM LLC and Behringer Harvard Alexan  Nevada, LLC regarding the Alexan Black Mountain mezzanine loans (previously  filed in and incorporated by reference to Form 8-K filed on October 5, 2006)                                                                                         |
| 10.28 |   | Senior Mezzanine  Promissory Note made between Behringer Harvard Alexan Nevada, LLC and SW 109  Wagon Wheel SM LLC regarding the Alexan Black Mountain mezzanine loans  (previously filed in and incorporated by reference to Form 8-K filed on October 5,  2006)                                                                                  |
| 10.29 |   | Junior Mezzanine  Promissory Note made between Behringer Harvard Alexan Nevada, LLC and SW 108  Wagon Wheel JM LLC regarding the Alexan Black Mountain mezzanine loans  (previously filed in and incorporated by reference to Form 8-K filed on  October 5, 2006)                                                                                  |
| 10.30 |   | Senior Mezzanine Pledge  and Security Agreement made by Behringer Harvard Alexan Nevada, LLC and SW  109 Wagon Wheel SM LLC regarding the Alexan Black Mountain mezzanine loans  (previously filed in and incorporated by reference to Form 8-K filed on  October 5, 2006)                                                                         |
| 10.31 |   | Junior Mezzanine Pledge  and Security Agreement made by Behringer Harvard Alexan Nevada, LLC and SW  108 Wagon Wheel JM LLC regarding the Alexan Black Mountain mezzanine loans  (previously filed in and incorporated by reference to Form 8-K filed on  October 5, 2006)                                                                         |
| 10.32 |   | Senior Mezzanine  Completion Guaranty agreement made by CFP Residential L.P., Kenneth Valach,  J. Ronald Terwilliger and Bruce Hart as guarantors in favor of Behringer  Harvard Alexan Nevada, LLC regarding the Alexan Black Mountain mezzanine  loans (previously filed in and incorporated by reference to Form 8-K filed on  October 5, 2006) |

 

----

 
| 10.33 |   | Junior Mezzanine Completion Guaranty agreement made  by CFP Residential, L.P., Kenneth Valach, J. Ronald Terwilliger and Bruce  Hart as guarantors in favor of Behringer Harvard Alexan Nevada, LLC regarding  the Alexan Black Mountain mezzanine loans (previously filed in and  incorporated by reference to Form 8-K filed on October 5, 2006) |
|-------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 10.34 |   | Option Agreement  between Behringer Harvard Alexan Nevada, LLC and SW 108 Wagon Wheel JM LLC  regarding the Alexan Black Mountain mezzanine loans (previously filed in and  incorporated by reference to Form 8-K filed on October 5, 2006)                                                                                                        |
| 31.1  |   | Rule  13a-14(a)/15d-14(a) Certification                                                                                                                                                                                                                                                                                                                 |
| 31.2  |   | Rule  13a-14(a)/15d-14(a) Certification                                                                                                                                                                                                                                                                                                                 |
| 32.1* |   | Section 1350  Certifications                                                                                                                                                                                                                                                                                                                            |

----

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

----