Hines REIT Shareholders to Receive Final Liquidating Distribution
June 25, 2018 | James Sprow | Blue Vault
On June 22, 2018, Hine Real Estate Investment Trust, Inc. (“the Company”) distributed an email to financial advisers with clients that are stockholders of the Company, informing them of the Company’s expectations with respect to the final liquidating distribution. A court recently approved a proposed settlement of pending litigation and the Company is expected to wind up its operations and make a final liquidating distribution to shareholders of record as of March 2, 2018. The Company expects the amount of the distribution to be in the range of $0.05 to $0.07 per share, and that it would be paid on or around July 31, 2018.
Back in 2016, a purported class of stockholders filed a suit with claims against the Company, its advisor and its owners, as well as certain affiliated entities and members of the Company’s board of directors, alleging that the defendants breached their fiduciary duties related to certain payments to a participation interest (HALP Associates Limited Partnership). A preliminary settlement agreement required a gross settlement amount of $3.25 million, minus attorneys’ fees and expenses, to be received pro rata by stockholders of record as of March 2, 2018. A court scheduled a settlement hearing on June 6, 2018, to make a final determination whether the settlement should be approved by the court as fair, reasonable, adequate, and in the best interests of the Company as nominal defendant and of the class members. That settlement has now been approved.
The Plan of Complete Liquidation and Dissolution (“the Plan”) was effective on November 7, 2016. As disclosed when Hines REIT first announced the Plan, the REIT expected to pay aggregate liquidating distributions to its stockholders pursuant to the Plan in the range of $6.35 – $6.65 per share.
The Company declared an initial liquidating distribution of $6.20 per share to all stockholders of record as of December 7, 2016. In addition to this initial liquidating distribution pursuant to the Plan, Hines REIT previously paid special distributions to its stockholders and non-controlling interest holders totaling $1.01 per share from July 2011 through April 2013. Such special distributions were designated as a partial return of the stockholders’ invested capital.
With the payment of the final liquidating distribution, the REIT will have met the criteria used by Blue Vault when evaluating the performance of full-cycle nontraded REITs. Blue Vault will estimate the annualized rate of return to the Company’s initial shareholders as of the date of the final distribution, as well as estimated rates of return to shareholders who purchased shares at the midpoint of the Company’s public offering and in the last quarter of the offering. These estimated rates of return will be reported both without distribution reinvestment via the DRIP and with the assumption that all distributions were reinvested. Blue Vault’s Nontraded REIT Full-Cycle Performance Studies also feature custom benchmarks which match each nontraded REIT’s asset type, their portfolio’s geographic location and leverage to both traded REIT and institutional portfolio performance over matched holding periods.
Sources: SEC, Hines Securities 8-K, Blue Vault
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