1384710--3/31/2009--BEHRINGER_HARVARD_MULTIFAMILY_REIT_I

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Risks Related to an Investment in Behringer Harvard Multifamily REIT I There is no public trading market for shares of our common stock; therefore, it will be difficult for you to sell your shares. If you are able to sell your shares, you may have to sell them at a substantial discount from the offering price. Both we and our advisor have limited operating histories. The prior performance of real estate investment programs sponsored by affiliates of our advisor or our Chairman of the Board, Robert M. Behringer, may not be an indication of our future results. We may suffer from delays in locating suitable investments, which could adversely affect the return on your investment Investors who invest in us at the beginning of our offering may realize a lower rate of return than later investors. Investors who invest later in this offering may realize a lower rate of return than investors who invest earlier in the offering to the extent we fund distributions from other than operating cash flow. We may have to make expedited decisions on whether to invest in certain properties or real estate-related assets, including prior to receipt of detailed information on the investment. Because this is a blind pool offering and we have not specified properties or real estate-related assets to acquire with a significant portion of the proceeds from this offering, you will not have the opportunity to evaluate our additional investments before we make them. If we are unable to raise substantial funds in this offering, we will be limited in the number and type of properties and real estate-related assets we may acquire and the return on your investment in us may fluctuate with the performance of the specific investments we acquire. If we lose or are unable to obtain key personnel, our ability to implement our investment strategies could be delayed or hindered If we internalize our management functions, your interest in us could be diluted, and we could incur other significant costs associated with being self-managed. If we pay distributions from sources other than our cash flow from operations, we will have fewer funds available to make investments and your overall return may be reduced. Our rights and the rights of our stockholders to recover claims against our independent directors are limited, which could reduce your and our recovery against them if they negligently cause us to incur losses. We have relatively less experience with respect to international investments as compared to domestic investments, which could adversely affect our return on international investments. Your investment may be subject to additional risks if we make international investments. If our sponsor, our advisor or its affiliates waive certain fees due to them, our results of operations and distributions may be artificially high. Risks Related to Conflicts of Interest Because a number of Behringer Harvard-sponsored real estate programs use investment strategies that are similar to ours, our advisor and its and our executive officers will face conflicts of interest relating to the purchase of properties and other real estate-related assets, and such conflicts may not be resolved in our favor. Behringer Harvard Multifamily Advisors I LP and its affiliates, including all of our executive officers and some of our directors will face conflicts of interest caused by their compensation arrangements with us, which could result in actions that are not in the long-term best interests of our stockholders. Our advisor will face conflicts of interest relating to joint ventures, tenant-in-common investments or other co-ownership arrangements that we enter with other Behringer Harvard-sponsored programs, which could result in a disproportionate benefit to another Behringer Harvard-sponsored program. The sponsor s master co-investment agreement, entered into by a subsidiary of our sponsor with a Dutch Pension Foundation and its affiliates ( PGGM ), requires it to offer PGGM a right of first refusal to co-invest with our sponsor or its affiliates in multifamily development projects that meet certain specified investment guidelines and fully constructed properties that have not yet reached a specific level of stabilization, a significant majority of the type of investments for which we intend to acquire. Our advisor s executive officers and key personnel and the executive officers and key personnel of Behringer Harvard-affiliated entities that conduct our day-to-day operations and this offering will face competing demands on their time, and this may cause our investment returns to suffer. Our officers face conflicts of interest related to the positions they hold with entities affiliated with our advisor, which could diminish the value of the services they provide to us. Your investment will be diluted upon conversion of the convertible stock. Because we rely on affiliates of Behringer Harvard Holdings for the provision of advisory, property management and dealer manager services, if Behringer Harvard Holdings is unable to meet its obligations we may be required to find alternative providers of these services, which could result in a significant and costly Risks Related to Our Business in General A limit on the number of shares a person may own may discourage a takeover. Our charter permits our board of directors to issue stock with terms that may subordinate the rights of the holders of our current common stock or discourage a third party from acquiring us. Maryland law prohibits certain business combinations, which may make it more difficult for us to be acquired. Maryland law also limits the ability of a third party to buy a large stake in us and exercise voting power in electing directors. Our charter includes an anti-takeover provision that may discourage a stockholder from launching a tender offer for our shares. Your investment return may be reduced if we are required to register as an investment company under the Investment Company Act. Rapid changes in the values of potential investments in CMBS or other real estate-related investments may make it more difficult for us to maintain our qualification as a REIT or exception from the Investment Company Act. Stockholders have limited control over changes in our policies and operations. Our board of directors may change our investment policies and objectives generally and at the individual investment level without stockholder approval, which could alter the nature of your investment. You may not be able to sell your shares under the share redemption program and, if you are able to sell your shares under the program, you may not be able to recover the amount of your investment in our shares. If you are able to resell your shares to us pursuant to our share redemption program, you will likely receive substantially less than the amount paid to acquire the shares from us or the fair market value of your shares, depending upon how long you owned the shares. We may not successfully implement our exit strategy, in which case you may have to hold your investment for an indefinite period. We may incur costs associated with changing our name if we are no longer permitted to use Behringer Harvard in our name. We established the offering price for the shares on an arbitrary basis; as a result, the offering price of the shares is not related to any independent valuation. Because the dealer manager is an affiliate of our advisor, investors will not have the benefit of an independent review of us or the prospectus, which are customarily performed in underwritten offerings. Your indirect interest in our operating partnership, Behringer Harvard Multifamily OP I, will be diluted if we or our operating partnership issues additional securities. Payment of fees to our advisor and its affiliates will reduce cash available to us for investment and payment of distributions. We may be restricted in our ability to replace our property manager under certain circumstances. Distributions may be paid from capital and there can be no assurance that we will be able to achieve expected cash flows necessary to continue to pay initially established distributions or maintain distributions at any particular level, or at all. Our revenue and net income may vary significantly from one period to another due to investments in opportunity-oriented properties and portfolio acquisitions, which could increase the variability of our cash available for distributions. Development projects in which we invest may not be completed successfully or on time, and guarantors of the projects may not have the financial resources to perform their obligations under the guaranties they provide. Our reliance on common developers/guarantors related to multiple development projects in which we may invest may materially adversely affect our operations should a developer/guarantor become unable to meet its obligations to us. As of December 31, 2008, our interests in three loans on three separate development projects with a common developer/guarantor totaled 28% of our total assets. Under certain circumstances, a subsidiary REIT may be required to sell its capital stock rather than its assets. Adverse economic conditions will negatively affect our returns and profitability. The failure of any bank in which we deposit our funds could reduce the amount of cash we have available to pay distributions and make additional investments. We and the other public Behringer Harvard-sponsored programs have experienced losses in the past, and we may continue experiencing similar losses in the future. We are uncertain of our sources for funding of future capital needs, which could adversely affect the value of our investments. To hedge against exchange rate and interest rate fluctuations, we may use derivative financial instruments that may be costly and ineffective and may reduce the overall returns on your investment. Complying with REIT requirements may limit our ability to hedge risk effectively. General Risks Related to Investments in Real Estate The recent market disruptions may adversely affect our operating results and financial condition. Capitalization rates in major U.S. markets for multifamily communities have risen and many economists predict they are likely to continue to rise during 2009. As a result, the value of investments we have made prior to 2009 may have declined in this environment. Increases in unemployment caused by a recessionary economy could adversely affect multifamily property occupancy and rental rates with high quality multifamily communities suffering even more severely. Current credit market disruptions and recent economic trends may increase the likelihood of a commercial developer defaulting on its obligations with respect to our or our unconsolidated joint ventures projects or becoming bankrupt or insolvent, which could adversely impact us and those projects. Recent disruptions in the financial markets could adversely affect the multifamily property sector s ability to obtain financing and credit enhancement from Fannie Mae and Freddie Mac, which could adversely impact us. Our operating results will be affected by economic and regulatory changes that have an adverse impact on the real estate market in general, and we cannot assure you that we will be profitable or that we will realize growth in the value of our real estate properties. If we have limited diversification of the geographic locations of our properties, our operating results will be affected by economic changes that have an adverse impact on the real estate market in those areas. Our failure to integrate acquired communities and new personnel could create inefficiencies and reduce the return of your investment. Short-term multifamily and apartment leases expose us to the effects of declining market rent, which could adversely impact our ability to make cash distributions to our stockholders. Any student-housing properties that we acquire will be subject to an annual leasing cycle, short lease-up period, seasonal cash flows, changing university admission and housing policies, and other risks inherent in the student-housing industry, any of which could have a negative impact on your investment. We may face significant competition from university-owned student housing and from other residential properties that are in close proximity to any student-housing properties we may acquire, which could have a negative impact on our results of operations. Properties that have significant vacancies could be difficult to sell, which could diminish the return on your investment. Many of our investments will be dependent on residents for revenue, and lease terminations could reduce our ability to make distributions to stockholders. We may be unable to secure funds for future capital improvements, which could adversely impact our ability to make cash distributions to our stockholders. We may be unable to sell a property or real estate-related asset if or when we decide to do so, which could adversely impact our ability to make cash distributions to our stockholders. Our co-venture partners, co-tenants or other partners in co-ownership arrangements could take actions that decrease the value of an investment to us and lower your overall return. Uninsured losses relating to real property or excessively expensive premiums for insurance coverage may adversely affect your returns. Our operating results may be negatively affected by potential development and construction delays and result in increased costs and risks, which could diminish the return on your investment. Our plan to reposition certain commercial properties through demolition, conversion and redevelopment into new multifamily communities may never commence after we make an investment in the property, be delayed or never reach completion, which could diminish the return on your investment. If we contract with Behringer Development Company LP or its affiliates for newly developed property, we cannot guarantee that any earnest money deposit we make to Behringer Development Company LP or its affiliates will be fully refunded. We will face competition from third parties, including other multifamily communities, which may limit our profitability and the return on your investment. In connection with the recent credit market disruptions and economic slowdown, we may face increased competition from single-family homes and condominiums for rent, which could limit our ability to retain residents, lease apartment units or increase or maintain rents. If PGGM does not honor its commitments, our portfolio may not be as diverse and our investments may suffer. A concentration of our investments in the multifamily sector may leave our profitability vulnerable to a downturn or slowdown in such sector. Failure to succeed in new markets or in new property classes may have adverse consequences on our performance. Acquiring or attempting to acquire multiple properties in a single transaction may adversely affect our operations. If we set aside insufficient capital reserves, we may be required to defer necessary capital improvements. The costs of compliance with environmental laws and other governmental laws and regulations may adversely affect our income and the cash available for any distributions. Discovery of previously undetected environmentally hazardous conditions may adversely affect our operating results. Our costs associated with and the risk of failing to comply with the Americans with Disabilities Act and the Fair Housing Act may affect cash available for distributions. By owning age-restricted communities, we may incur liability by failing to comply with the FHAA, the Housing for Older Persons Act or certain state regulations, which may affect cash available for distributions. If we sell properties by providing financing to purchasers, we will bear the risk of default by the purchaser. Risks Associated with Debt Financing We will incur mortgage indebtedness and other borrowings, which will increase our business risks. If mortgage debt is unavailable at reasonable rates, we may not be able to finance the multifamily communities, which could reduce the number of properties we can acquire and the amount of cash distributions we can make. Lenders may require us to enter into restrictive covenants relating to our operations, which could limit our ability to make distributions to our stockholders. Our ability to obtain financing on reasonable terms could be impacted by negative capital market conditions. Interest-only indebtedness may increase our risk of default and ultimately may reduce our funds available for distribution to our stockholders. Increases in interest rates could increase the amount of our debt payments and adversely affect our ability to make distributions to our stockholders. If we enter into financing arrangements involving balloon payment obligations, it may adversely affect our ability to make distributions. We have broad authority to incur debt, and high debt levels could hinder our ability to make distributions and could decrease the return on your investment and the value of your investment. Risks Related to Investments in Real Estate-Related Assets We have relatively less experience investing in mortgage, bridge, mezzanine or other loans as compared to investing directly in real property, which could adversely affect our return on loan investments. The bridge loans in which we may invest involve greater risks of loss than conventional mortgage loans. The mezzanine loans in which we invest involve greater risks of loss than senior loans secured by income-producing real properties. The construction loans in which we may invest involve greater risks of loss of investment and reduction of return than conventional mortgage loans. Our mortgage, bridge, mezzanine or other loans may be impacted by unfavorable real estate market conditions, which could decrease the value of our loan investments. Our mortgage, bridge, mezzanine or other loans will be subject to interest rate fluctuations, which could reduce our returns as compared to market interest rates. Delays in liquidating defaulted mortgage, bridge, mezzanine or other loans could reduce our investment returns. Returns on our mortgage, bridge, mezzanine or other loans may be limited by regulations. Foreclosures create additional ownership risks that could adversely impact our returns on loan investments. The liquidation of our assets may be delayed as a result of our investment in mortgage, bridge, mezzanine or other loans, which could delay distributions to our stockholders. Investments in real estate-related securities will be subject to specific risks relating to the particular issuer of the securities and may be subject to the general risks of investing in subordinated real estate securities, which may result in losses to us. Investments in real estate-related preferred equity securities involve a greater risk of loss than traditional debt financing. We may make investments in non-U.S. dollar denominated real property and real estate-related securities, which will be subject to currency rates exposure and the uncertainty of foreign laws and markets. We expect that a portion of any real estate-related securities investments we make will be illiquid and we may not be able to adjust our portfolio in response to changes in economic and other conditions. Interest rate and related risks may cause the value of our real estate-related securities to be reduced. We have relatively less experience investing in real estate-related securities than investing in real property as of December 31, 2008, which could adversely affect our return on such investments. We may acquire real estate-related securities through tender offers, which may require us to spend significant amounts of time and money that otherwise could be allocated to our operations. The CMBS in which we may invest are subject to all of the risks of the underlying mortgage loans and the risks of the securitization process. If we use leverage in connection with any potential investments in CMBS, the risk of loss associated with this type of investment will increase. We may have increased exposure to liabilities from litigation as a result of any participation by us in Section 1031 Tenant-in-Common transactions. We may have increased business and litigation risks as a result of any direct sales by us of tenant-in-common interests in Section 1031 Tenant-in-Common transactions. A portion of the properties we acquire may be in the form of tenant-in-common or other co-tenancy arrangements. We will be subject to risks associated with such co-tenancy arrangements that otherwise may not be present in non-co-tenancy real estate investments. Actions by a co-tenant might have the result of subjecting the property to liabilities in excess of those contemplated and may have the effect of reducing your returns. Our participation in Section 1031 TIC Transactions may limit our ability to borrow funds in the future, which could adversely affect the value of our investments. Our operating results will be negatively affected if our investments, including investments in tenant-in-common interests promoted by affiliates of our advisor, do not meet projected distribution levels. Failure to qualify as a REIT would adversely affect our operations and our ability to make distributions. Our investment strategy may cause us to incur penalty taxes, lose our REIT status, or own and sell properties through taxable REIT subsidiaries, each of which would diminish the return to our stockholders. Certain fees paid to us may affect our REIT status. Equity participation in mortgage, bridge, and mezzanine loans may result in taxable income and gains from these properties, which could adversely impact our REIT status. Recharacterization of the Section 1031 TIC Transactions may result in taxation of income from a prohibited transaction, which would diminish distributions to our stockholders. You may have current tax liability on distributions you elect to reinvest in our common stock. If our operating partnership fails to maintain its status as a partnership or other flow-through entity for tax purposes, its income may be subject to taxation, which would reduce the cash available to us for distribution to our stockholders. In certain circumstances, we may be subject to federal and state taxes on income as a REIT, which would reduce our cash available for distribution to our stockholders. We may be disqualified from treatment as a REIT if a joint venture entity elects to qualify as a REIT and is later disqualified from treatment as a REIT. A subsidiary REIT may become subject to state taxation. Non-U.S. income or other taxes, and a requirement to withhold any non-U.S. taxes, may apply, and, if so, the amount of net cash from operations payable to you will be reduced. Our foreign investments will be subject to changes in foreign tax or other laws, as well as to changes in U.S. tax laws, and such changes could negatively impact our returns from any particular investment. Legislative or regulatory action could adversely affect the returns to our investors. Risks Related to Investments by Tax-Exempt Entities and Benefit Plans Subject to ERISA If you fail to meet the fiduciary and other standards under ERISA or the Internal Revenue Code as a result of an investment in our stock, you could be subject to criminal and civil penalties.

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1384710--3/31/2009--BEHRINGER_HARVARD_MULTIFAMILY_REIT_I_INC