Hines Global REIT Board Urges Rejection of MacKenzie Tender Offer
April 17, 2020
In a letter to stockholders on April 17, 2020, the Board of Directors of Hines Global REIT, Inc. urged stockholders to reject a tender offer by MacKenzie Realty Capital for the REIT’s common stock at $1.50 per share. Following is a portion of the letter to stockholders:
April 17, 2020
Dear Stockholder:
We have been advised that you will be receiving materials shortly (if you have not already received them) from MacKenzie Realty Capital, Inc. (the “Purchaser”) containing an unsolicited third-party tender offer to purchase up to an aggregate of 1,000,000 of the issued and outstanding shares of common stock (the “Shares”) of Hines Global REIT, Inc. (“Hines Global REIT” or the “Company”) for a price equal to $1.50 per Share, without interest, in cash (the “Tender Offer”). The Purchaser and the Tender Offer are not in any way affiliated with Hines Global REIT and our board of directors (the “Board”) unanimously recommends that you REJECT this Tender Offer.
Given the $1.50 per Share offer price, we believe that the Tender Offer represents an attempt by the Purchaser to exploit the current economic turmoil caused by the COVID-19 pandemic and purchase your Shares at a significant discount, resulting in a profit for the Purchaser at your expense if you participate in the Tender Offer.
Please note the following with respect to the Purchaser’s proposed offer price and what you are expected to receive from the Company pursuant to the Plan of Liquidation (defined below), if it is successfully completed as described.
• If you accept, you will receive significantly less per Share on your investment: The $1.50 per Share offer from the Purchaser is substantially lower than the remaining estimated liquidating distributions that we expect you would receive from the Company pursuant to the Plan of Liquidation and Dissolution (the “Plan of Liquidation”), if it is successfully completed. Our Board expects that we will pay additional liquidating distributions following the sale of the Company’s remaining assets and the payment of or provision for all of the Company’s outstanding liabilities. In April 2018, our Board estimated that, in addition to regular operating distributions paid to our stockholders, if we are able to successfully implement the Plan of Liquidation, then after the sale of all or substantially all of our assets and the payment of all of our outstanding liabilities, we would make total Capital Distributions (defined below) to our stockholders of approximately $10.00 to $11.00 per share of our common stock. To date, we have paid Capital Distributions to our stockholders of $4.00 per share of our common stock. While we have been actively marketing our remaining assets for disposition, the recent spread of the COVID-19 pandemic and its impact on the global economic environment has had, and is expected to continue to have, an adverse impact on overall market conditions and our disposition process. In light of various risks and uncertainties, including those related to the COVID-19 pandemic, there can be no assurances as to the timing of future liquidating distributions or that the aggregate liquidating distributions ultimately paid to our stockholders will be within the range originally estimated by our Board in April 2018. Nonetheless, we believe that liquidating distributions will be significantly higher than the $1.50 per share offered by the Purchaser.
• If you accept, you will not receive any additional liquidating distributions: The Tender Offer states that all distributions paid or payable to you after the expiration of the Tender Offer will belong to the Purchaser.
• The Tender Offer is substantially lower than the most recent valuation: The $1.50 per Share offer price is over 75% lower than the Company’s net asset value (“NAV”) per Share of $6.17 determined as of February 14, 2019. As we described in our recent letter to you, because commercial real estate values are difficult to discern at this time due to the market unrest, our Board has determined it would not be prudent to attempt to determine a new NAV per share at this time. Although the NAV per share of the Company’s common stock has not been recalculated since February 2019, and despite the recent economic turmoil caused by the COVID-19 pandemic, we believe the $1.50 offer price represents a significant discount to the aggregate amount of future liquidating distributions we expect to make to you through the completion of the liquidation. We do not believe that the NAV per share of the Company’s common stock has declined by more than $4.50 since February 2019, as the Purchaser would like you to believe. Furthermore, as stated by the Purchaser in the Tender Offer, the offer price is significantly lower than the most recently reported trading prices for shares of our common stock on the secondary market, including the price the Purchaser paid for our Shares during the last 60 days.
• The Purchaser is trying to profit from you: We believe the Purchaser is attempting to take advantage of the current economic turmoil at your expense. The Purchaser intends to make a profit for itself by holding onto the Shares until the Company is liquidated. If the liquidating distributions are paid to the Company’s stockholders as expected, the Purchaser will have made a huge profit at your expense.
Source: SEC
