Hines Global REIT Shareholders Approve Liquidation
July 18, 2018 | Luke Schmidt | Blue Vault
At the annual meeting of stockholders held on July 17, 2018, stockholders of Hines Global REIT, Inc. (“the Company”) voted to approve the Company’s proposed plan of liquidation and dissolution pursuant to which the Company will sell all or substantially all of their assets and be dissolved. Approximately 93.2% of common stockholders voted to approve the plan of liquidation, with 3.1% voting against and 3.7% abstaining. The board of directors (“Board”) of the Company had previously approved the plan of liquidation on April 23, 2018. At that time, the Company expected that initial stockholders will have received aggregate distributions totaling $15.62-$16.62 per share upon successful execution of the plan.
In connection with the plan of liquidation, the Board has authorized the Company to declare and pay a monthly liquidating distribution on the Company’s common stock, in an amount per share equal to $0.0541667, to the Company’s stockholders of record at the close of business on July 31, 2018. This distribution will be designated by the Company as a return of a portion of the stockholders’ invested capital and will reduce their remaining investment in the Company.
The Board also voted to suspend indefinitely the distribution reinvestment plan (“DRIP”), effective as of August 31, 2018. As a result, any distributions paid after August 31, 2018 will be paid in cash. Additionally, the Board amended and restated the share redemption program (“SRP”) in order to eliminate the limitation stating that the funds available for redemptions in a particular month are limited to the funds received from the DRIP in the previous month. While the amended SRP eliminates the DRIP proceeds limitation, it continues to limit the number of shares that can be redeemed during any consecutive twelve-month period to no more than 5% of the number of shares of the Company’s common stock outstanding at the beginning of such twelve-month period. The amended SRP will become effective August 20, 2018.
Blue Vault’s Q1 2018 NTR Review reports that Hines Global REIT, Inc. issued shares at $10.00 per share in an offering that closed April 11, 2014. Cumulative capital raised during the offering (including DRIP) totaled approximately $2.7 billion. The Company currently pays distributions at an annualized rate of 6.50% based on the original offering price.
In December 2017, the Company declared a distribution of $1.05 per share to all stockholders of record as of December 30, 2017, which was paid in January 2018. This distribution was designated by the Company as a special distribution, thereby reducing the previous per share NAV from $10.03 to $8.98.
Depending on the timing of interim partial portfolio sales and when the final portfolio liquidation occurs, Blue Vault estimates that early investors who paid $10.00 per share in Q4 2009 and received all regular distributions as well as the $1.05 special distribution in January 2018 and receive the midpoint ($9.33) of the Board’s estimated liquidating value of $8.83 to $9.83 hypothetically at year-end 2018, should have an annualized average holding period rate of return of approximately 7.3%. Those investors who purchased shares nearer the end of the offering period will have an estimated annualized average rate of return that is above 7.3%. These estimated rates of return would be higher if liquidations occur earlier than year-end 2018 or are at a rate above the midpoint of the Board’s estimated range.
Sources: SEC, Blue Vault
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