Hines Global REIT Finalizes Liquidation
July 8, 2020 | James Sprow | Blue Vault
Hines Global REIT Inc. completed its liquidation by transferring its entire assets and liabilities to the newly created HGR Liquidating Trust in exchange for units of beneficial interest in the Maryland statutory trust equal to the number of its outstanding common shares June 30.
The company distributed the units pro rata to its shareholders such that one unit was distributed per common share, with the shareholders effectively becoming unit holders and beneficiaries of the trust. The trust’s board will determine the fair market value per unit as of June 30, for disclosure on or about July 15.
The portfolio has the seven assets listed below remaining. Each of these assets were in various phases of the marketing process as part of the Plan of Liquidation and Dissolution (“Plan of Liquidation”) adopted by HGR’s stockholders in July 2018, but given current events related to the Coronavirus (COVID-19) pandemic, the sales of those assets has been delayed. The REIT is still actively in discussions with potential buyers for certain of the assets and will continue its efforts to move those processes forward.
(1) Currently under contract for a sales price of $141.3 million.
When Hines Global REIT adopted its Plan of Liquidation in July 2018, it anticipated completing the sale of all of its assets within the 24-month period imposed by the Internal Revenue Service (“IRS”). While Hines Global REIT had been actively marketing the remaining assets for disposition, the sales of those assets have been delayed given the COVID-19 pandemic and its influence on the global economic environment.
Accordingly, Hines Global REIT formed the Trust and transferred its remaining assets and liabilities to the Trust on June 30, 2020 (the “Liquidation Date”).
The fair market value of a Unit will be determined by the Trust’s board of trustees as of June 30, 2020 and disclosed in a Current Report on Form 8-K on or about July 15, 2020. The fair market value as of June 30, 2020 will be the tax basis in each Unit.
The board of trustees of the Trust will decide whether and when to make cash distributions, based on the availability of funds, the amounts needed to pay the liabilities and expenses of the Trust, and any applicable restrictions under the debt agreements of the Trust.
The Trust is committed to executing the liquidation in as efficient a manner as possible, while also being mindful of its goal of enhancing value for its unitholders. The ultimate timing of a completion of the liquidation will be based, in part, on the state of the real estate and capital markets which will impact disposition valuations of the remaining assets. Accordingly, there can be no assurances as to the timing of the completion of the liquidation and the timing of final cash distribution payments.
According to Blue Vault’s Q1 2020 NTR Industry Review, the REIT’s assets had a book value of $1,665.1 million as of March 31, 2020. The most recent net asset value per share was $6.17 as of February 14, 2019. Through March 31, 2020, the REIT has paid $2.83 per share in liquidating distributions and is not currently paying regular quarterly distributions. The REIT’s debt rate was 13.3% based upon book values of assets and debt as of March 31, 2020.
Sources: SEC, Blue Vault
