UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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| Date of Report (Date of Earliest Event Reported): | | July 31, 2015 |
Hines Real Estate Investment Trust, Inc.
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(Exact name of registrant as specified in its charter)
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| Maryland | 000-50805 | 20-0138854 |
____________________ (State or other jurisdiction | _____________ (Commission | ______________ (I.R.S. Employer |
| of incorporation) | File Number) | Identification No.) |
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| 2800 Post Oak Blvd, Suite 5000, Houston, Texas | | 77056-6118 |
_________________________________ (Address of principal executive offices) | | ___________ (Zip Code) |
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| Registrant’s telephone number, including area code: | | (888) 220-6121 |
Not Applicable
______________________________________________
Former name or former address, if changed since last report
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 2.01 Completion of Acquisition or Disposition of Assets.
Hines REIT 2555 Grand LLC, a subsidiary of Hines REIT Properties, L.P. (the “Operating Partnership”), which is a subsidiary of Hines Real Estate Investment Trust, Inc. (“Hines REIT”), sold 2555 Grand on July 31, 2015 to Grand Boulevard Acquisition LLC (the “Purchaser”). 2555 Grand is an office building located in Kansas City, Missouri. The Purchaser is not affiliated with Hines REIT or its affiliates.
The net contract sale price for 2555 Grand was approximately $153.5 million, exclusive of transaction costs and closing prorations. The net proceeds received by Hines REIT from this sale were $151.6 million after transaction costs.
Item 9.01 Financial Statements and Exhibits.
(b) Pro Forma Financial Information. The following financial information is submitted at the end of this Current Report on Form 8-K and is filed herewith and incorporated herein by reference:
Hines Real Estate Investment Trust, Inc.
Unaudited Pro Forma Condensed Consolidated Balance Sheet as of March 31, 2015
Unaudited Pro Forma Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2015 and the Years Ended December 31, 2014, 2013 and 2012
Unaudited Notes to Pro Forma Condensed Consolidated Financial Statements
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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| | | HINES REAL ESTATE INVESTMENT TRUST, INC. |
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| August 5, 2015 | | By: | /s/ J. Shea Morgenroth | |
| | | | J. Shea Morgenroth | |
| | | | Chief Accounting Officer and Treasurer | |
Hines Real Estate Investment Trust, Inc.
Unaudited Pro Forma Condensed Consolidated Financial Statements
On July 31, 2015, a subsidiary of Hines Real Estate Investment Trust, Inc. (“Hines REIT”), sold 2555 Grand, an office building located in Kansas City, Missouri, to Grand Boulevard Acquisition LLC (the “Purchaser”). The net proceeds received from this sale were $151.6 million after transaction costs. The Purchaser is not affiliated with Hines REIT or its affiliates.
The following unaudited pro forma condensed consolidated financial information gives effect to the disposition of 2555 Grand, including the receipt of proceeds from the sale. In our opinion, all material adjustments necessary to reflect the effects of the above transaction have been made.
Hines Real Estate Investment Trust, Inc.
Unaudited Pro Forma Condensed Consolidated Balance Sheet
As of March 31, 2015
(In thousands)
The following unaudited Pro Forma Condensed Consolidated Balance Sheet is presented assuming the disposition of 2555 Grand had occurred as of March 31, 2015. This unaudited Pro Forma Condensed Consolidated Balance Sheet should be read in conjunction with our unaudited Pro Forma Condensed Consolidated Statements of Operations appearing herein and our historical financial statements and notes thereto as filed in our quarterly report on Form 10-Q for the three months ended March 31, 2015. This unaudited Pro Forma Condensed Consolidated Balance Sheet is not necessarily indicative of what the actual financial position would have been had we completed this transaction on March 31, 2015, nor does it purport to represent our future financial position.
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| | | As of March 31, 2015 (a) | | Adjustments for 2555 Grand | | | | Pro Forma |
| ASSETS | | | | | | | | |
| Investment property, at cost: | | | | | | | | |
| Buildings and improvements, net | | $ | 1,374,716 |
| | $ | (102,083 | ) | | (b) | | $ | 1,272,633 |
|
| Land | | 422,662 |
| | (1,194 | ) | | (b) | | 421,468 |
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| Total investment property | | 1,797,378 |
| | (103,277 | ) | | | | 1,694,101 |
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| | | | | | | | | |
| Investments in unconsolidated entities | | 164,079 |
| | — |
| | | | 164,079 |
|
| Cash and cash equivalents | | 51,737 |
| | (186 | ) | | (c) | | 51,551 |
|
| Restricted cash | | 2,344 |
| | — |
| | | | 2,344 |
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| Distributions receivable | | 56,788 |
| | — |
| | | | 56,788 |
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| Tenant and other receivables, net | | 46,932 |
| | (8,736 | ) | | (b) | | 38,196 |
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| Intangible lease assets, net | | 159,523 |
| | (17,463 | ) | | (b) | | 142,060 |
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| Deferred leasing costs, net | | 147,435 |
| | (14,442 | ) | | (b) | | 132,993 |
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| Deferred financing costs, net | | 3,118 |
| | — |
| | (b) | | 3,118 |
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| Other assets | | 3,735 |
| | (18 | ) | | (b) | | 3,717 |
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| TOTAL ASSETS | | $ | 2,433,069 |
| | $ | (144,122 | ) | | | | $ | 2,288,947 |
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| LIABILITIES AND EQUITY | | | | | | | | |
| Liabilities: | | | | | | | | |
| Accounts payable and accrued expenses | | $ | 75,052 |
| | $ | (11,583 | ) | | (b) | | $ | 63,469 |
|
| Due to affiliates | | 8,080 |
| | (965 | ) | | (b) | | 7,115 |
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| Intangible lease liabilities, net | | 30,281 |
| | — |
| | (b) | | 30,281 |
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| Other liabilities | | 15,371 |
| | (25 | ) | | (b) | | 15,346 |
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| Interest rate swap contracts | | 31,200 |
| | — |
| | | | 31,200 |
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| Participation interest liability | | 112,649 |
| | — |
| | | | 112,649 |
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| Distributions payable | | 15,004 |
| | — |
| | | | 15,004 |
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| Notes payable | | 1,025,362 |
| | — |
| | (b) | | 1,025,362 |
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| Total liabilities | | 1,312,999 |
| | (12,573 | ) | | | | 1,300,426 |
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| | | | | | | | | |
| Commitments and contingencies | | — |
| | — |
| | | | — |
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| | | | | | | | | |
| Equity: | | | | | | | | |
| Preferred shares | | — |
| | — |
| | | | — |
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| Common shares | | 224 |
| | — |
| | | | 224 |
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| Additional paid-in capital | | 1,055,911 |
| | — |
| | | | 1,055,911 |
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| Retained earnings (deficit) | | 64,936 |
| | (131,549 | ) | | (d) | | (66,613 | ) |
| Accumulated other comprehensive income (loss) | | (1,001 | ) | | — |
| | | | (1,001 | ) |
| Total stockholders’ equity | | 1,120,070 |
| | (131,549 | ) | | | | 988,521 |
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| Noncontrolling interests | | — |
| | — |
| | | | — |
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| Total equity | | 1,120,070 |
| | (131,549 | ) | | | | 988,521 |
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| TOTAL LIABILITIES AND EQUITY | | $ | 2,433,069 |
| | $ | (144,122 | ) | | | | $ | 2,288,947 |
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See notes to unaudited pro forma condensed consolidated financial statements.
Hines Real Estate Investment Trust, Inc.
Unaudited Pro Forma Condensed Consolidated Statement of Operations
For the Three Months Ended March 31, 2015
(In thousands, except per share amounts)
The following unaudited Pro Forma Condensed Consolidated Statement of Operations is presented assuming the disposition of 2555 Grand had occurred as of January 1, 2012. This unaudited Pro Forma Condensed Consolidated Statement of Operations should be read in conjunction with our unaudited Pro Forma Condensed Consolidated Balance Sheet and our historical financial statements and notes thereto as filed in our quarterly report on Form 10-Q for the three months ended March 31, 2015. This unaudited Pro Forma Condensed Consolidated Statement of Operations is not necessarily indicative of what the actual results of operations would have been had we completed this transaction on January 1, 2012, nor does it purport to represent our future operations.
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| | | Three Months Ended March 31, 2015 (a) | | Adjustments for 2555 Grand (b) | | Pro Forma |
| Revenues: | | |
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| Rental revenue | | $ | 51,826 |
| | $ | (4,170 | ) | | $ | 47,656 |
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| Other revenue | | 4,164 |
| | (233 | ) | | 3,931 |
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| Total revenues | | 55,990 |
| | (4,403 | ) | | 51,587 |
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| Expenses: | | | | | | |
| Property operating expenses | | 14,832 |
| | (1,120 | ) | | 13,712 |
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| Real property taxes | | 7,652 |
| | (299 | ) | | 7,353 |
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| Property management fees | | 1,487 |
| | (105 | ) | | 1,382 |
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| Depreciation and amortization | | 22,483 |
| | (1,054 | ) | | 21,429 |
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| Acquisition related expenses | | 56 |
| | — |
| | 56 |
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| Asset management and acquisition fees | | 8,681 |
| | — |
| | 8,681 |
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| General and administrative | | 1,350 |
| | — |
| | 1,350 |
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| Total expenses | | 56,541 |
| | (2,578 | ) | | 53,963 |
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| Operating income | | (551 | ) | | (1,825 | ) | | (2,376 | ) |
| Other income (expenses): | | | | | | |
| Gain (loss) on derivative instruments, net | | 3,193 |
| | — |
| | 3,193 |
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| Gain (loss) on sale or dissolution of unconsolidated joint venture | | — |
| | — |
| | — |
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| Equity in earnings (losses) of unconsolidated entities, net | | 33,199 |
| | — |
| | 33,199 |
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| Gain (loss) on sale of real estate investments | | 21,079 |
| | — |
| | 21,079 |
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| Interest expense | | (9,481 | ) | | — |
| | (9,481 | ) |
| Interest income | | 10 |
| | — |
| | 10 |
|
| Income (loss) from continuing operations before benefit (provision) for income taxes | | 47,449 |
| | (1,825 | ) | | 45,624 |
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| Benefit (provision) for income taxes | | (86 | ) | | — |
| | (86 | ) |
| Income (loss) from continuing operations | | $ | 47,363 |
| | $ | (1,825 | ) | | $ | 45,538 |
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| Income (loss) from continuing operations per common share | | $ | 0.21 |
| | | | $ | 0.20 |
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| Weighted average number common shares outstanding | | 224,260 |
| | | | 224,260 |
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See notes to unaudited pro forma condensed consolidated financial statements.
Hines Real Estate Investment Trust, Inc.
Unaudited Pro Forma Condensed Consolidated Statement of Operations
For the Year Ended December 31, 2014
(In thousands, except per share amounts)
The following unaudited Pro Forma Condensed Consolidated Statement of Operations is presented assuming the disposition of 2555 Grand had occurred as of January 1, 2012. This unaudited Pro Forma Condensed Consolidated Statement of Operations should be read in conjunction with our unaudited Pro Forma Condensed Consolidated Balance Sheet and our historical financial statements and notes thereto as filed in our annual report on Form 10-K for the year ended December 31, 2014. This unaudited Pro Forma Condensed Consolidated Statement of Operations is not necessarily indicative of what the actual results of operations would have been had we completed this transaction on January 1, 2012, nor does it purport to represent our future operations.
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| | | Year Ended December 31, 2014 (a) | | Adjustments for
2555 Grand
(b) | | Pro Forma |
| Revenues: | | |
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| Rental revenue | | $ | 219,435 |
| | $ | (18,414 | ) | | $ | 201,021 |
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| Other revenue | | 16,588 |
| | (941 | ) | | 15,647 |
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| Total revenues | | 236,023 |
| | (19,355 | ) | | 216,668 |
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| Expenses: | | | | | | |
| Property operating expenses | | 69,372 |
| | (4,676 | ) | | 64,696 |
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| Real property taxes | | 31,713 |
| | (1,153 | ) | | 30,560 |
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| Property management fees | | 5,943 |
| | (462 | ) | | 5,481 |
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| Depreciation and amortization | | 95,827 |
| | (4,528 | ) | | 91,299 |
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| Acquisition related expenses | | 375 |
| | — |
| | 375 |
|
| Asset management and acquisition fees | | 37,042 |
| | — |
| | 37,042 |
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| General and administrative | | 6,950 |
| | — |
| | 6,950 |
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| Impairment losses | | 3,314 |
| | — |
| | 3,314 |
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| Total expenses | | 250,536 |
| | (10,819 | ) | | 239,717 |
|
| Operating income (loss) | | (14,513 | ) | | (8,536 | ) | | (23,049 | ) |
| Other income (expenses): | | | | | | |
| Gain (loss) on derivative instruments, net | | 33,258 |
| | — |
| | 33,258 |
|
| Gain (loss) on settlement of derivative instruments | | (12,334 | ) | | — |
| | (12,334 | ) |
| Gain (loss) on sale or dissolution of unconsolidated joint venture | | 13,381 |
| | — |
| | 13,381 |
|
| Equity in earnings (losses) of unconsolidated entities, net | | 56,936 |
| | — |
| | 56,936 |
|
| Gain (loss) on sale of real estate investments | | 18,525 |
| | — |
| | 18,525 |
|
| Interest expense | | (47,352 | ) | | — |
| | (47,352 | ) |
| Interest income | | 655 |
| | — |
| | 655 |
|
| Income (loss) from continuing operations before benefit (provision) for income taxes | | 48,556 |
| | (8,536 | ) | | 40,020 |
|
| Benefit (provision) for income taxes | | (310 | ) | | — |
| | (310 | ) |
| Income (loss) from continuing operations | | $ | 48,246 |
| | $ | (8,536 | ) | | $ | 39,710 |
|
| Income (loss) from continuing operations per common share | | $ | 0.21 |
| | | | $ | 0.18 |
|
| Weighted average number common shares outstanding | | 226,412 |
| | | | 226,412 |
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See notes to unaudited pro forma condensed consolidated financial statements.
Hines Real Estate Investment Trust, Inc.
Unaudited Pro Forma Condensed Consolidated Statement of Operations
For the Year Ended December 31, 2013
(In thousands, except per share amounts)
The following unaudited Pro Forma Condensed Consolidated Statement of Operations is presented assuming the disposition of 2555 Grand had occurred as of January 1, 2012. This unaudited Pro Forma Condensed Consolidated Statement of Operations should be read in conjunction with our unaudited Pro Forma Condensed Consolidated Balance Sheet and our historical financial statements and notes thereto as filed in our annual report on Form 10-K for the year ended December 31, 2013. This unaudited Pro Forma Condensed Consolidated Statement of Operations is not necessarily indicative of what the actual results of operations would have been had we completed this transaction on January 1, 2012, nor does it purport to represent our future operations.
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| | | Year Ended December 31, 2013 (a) | | Adjustments for
2555 Grand
(b) | | Pro Forma |
| Revenues: | | |
| | | | |
|
| Rental revenue | | $ | 158,819 |
| | $ | (17,262 | ) | | $ | 141,557 |
|
| Other revenue | | 9,289 |
| | (942 | ) | | 8,347 |
|
| Total revenues | | 168,108 |
| | (18,204 | ) | | 149,904 |
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| Expenses: | | | | | | |
| Property operating expenses | | 54,429 |
| | (4,483 | ) | | 49,946 |
|
| Real property taxes | | 24,282 |
| | (178 | ) | | 24,104 |
|
| Property management fees | | 4,132 |
| | (426 | ) | | 3,706 |
|
| Depreciation and amortization | | 51,262 |
| | (4,528 | ) | | 46,734 |
|
| Acquisition related expenses | | 330 |
| | — |
| | 330 |
|
| Asset management and acquisition fees | | 27,970 |
| | — |
| | 27,970 |
|
| General and administrative | | 7,281 |
| | — |
| | 7,281 |
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| Impairment losses | | 33,878 |
| | — |
| | 33,878 |
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| Total expenses | | 203,564 |
| | (9,615 | ) | | 193,949 |
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| Operating income (loss) | | (35,456 | ) | | (8,589 | ) | | (44,045 | ) |
| Other income (expenses): | | | | | |
|
| Gain (loss) on derivative instruments, net | | 33,559 |
| | — |
| | 33,559 |
|
| Gain (loss) on settlement of derivative instruments | | (5,374 | ) | | — |
| | (5,374 | ) |
| Gain (loss) on sale or dissolution of unconsolidated joint venture | | 16,087 |
| | — |
| | 16,087 |
|
| Equity in earnings (losses) of unconsolidated entities, net | | 82,468 |
| | — |
| | 82,468 |
|
| Gain (loss) on sale of real estate investments | | — |
| | — |
| | — |
|
| Interest expense | | (47,453 | ) | | 2,373 |
| | (45,080 | ) |
| Interest income | | 779 |
| | — |
| | 779 |
|
| Income (loss) from continuing operations before benefit (provision) for income taxes | | 44,610 |
| | (6,216 | ) | | 38,394 |
|
| Benefit (provision) for income taxes | | (274 | ) | | — |
| | (274 | ) |
| Income (loss) from continuing operations | | $ | 44,336 |
| | $ | (6,216 | ) | | $ | 38,120 |
|
| Income (loss) from continuing operations per common share | | $ | 0.19 |
| | | | $ | 0.16 |
|
| Weighted average number common shares outstanding | | 231,551 |
| | | | 231,551 |
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See notes to unaudited pro forma condensed consolidated financial statements.
Hines Real Estate Investment Trust, Inc.
Unaudited Pro Forma Condensed Consolidated Statement of Operations
For the Year Ended December 31, 2012
(In thousands, except per share amounts)
The following unaudited Pro Forma Condensed Consolidated Statement of Operations is presented assuming the disposition of 2555 Grand had occurred as of January 1, 2012. This unaudited Pro Forma Condensed Consolidated Statement of Operations should be read in conjunction with our unaudited Pro Forma Condensed Consolidated Balance Sheet and our historical financial statements and notes thereto as filed in our annual report on Form 10-K for the year ended December 31, 2012. This unaudited Pro Forma Condensed Consolidated Statement of Operations is not necessarily indicative of what the actual results of operations would have been had we completed this transaction on January 1, 2012, nor does it purport to represent our future operations.
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| | | Year Ended December 31, 2012 (a) | | Adjustments for
2555 Grand
(b) | | Pro Forma |
| Revenues: | | |
| | | | |
|
| Rental revenue | | $ | 163,125 |
| | $ | (16,920 | ) | | $ | 146,205 |
|
| Other revenue | | 9,192 |
| | (954 | ) | | 8,238 |
|
| Total revenues | | 172,317 |
| | (17,874 | ) | | 154,443 |
|
| Expenses: | | | | | | |
| Property operating expenses | | 54,186 |
| | (4,454 | ) | | 49,732 |
|
| Real property taxes | | 22,246 |
| | (91 | ) | | 22,155 |
|
| Property management fees | | 3,865 |
| | (411 | ) | | 3,454 |
|
| Depreciation and amortization | | 55,042 |
| | (4,528 | ) | | 50,514 |
|
| Acquisition related expenses | | — |
| | — |
| | — |
|
| Asset management and acquisition fees | | 29,651 |
| | — |
| | 29,651 |
|
| General and administrative | | 6,874 |
| | — |
| | 6,874 |
|
| Impairment losses | | 53,483 |
| | — |
| | 53,483 |
|
| Total expenses | | 225,347 |
| | (9,484 | ) |
| 215,863 |
|
| Operating income (loss) | | (53,030 | ) | | (8,390 | ) | | (61,420 | ) |
| Other income (expenses): | | | | | | |
| Gain (loss) on derivative instruments, net | | 8,680 |
| | — |
| | 8,680 |
|
| Gain (loss) on settlement of derivative instruments | | — |
| | — |
| | — |
|
| Gain (loss) on sale or dissolution of unconsolidated joint venture | | — |
| | — |
| | — |
|
| Equity in earnings (losses) of unconsolidated entities, net | | 9,460 |
| | — |
| | 9,460 |
|
| Gain (loss) on sale of real estate investments | | — |
| | — |
| | — |
|
| Interest expense | | (55,987 | ) | | 4,730 |
| | (51,257 | ) |
| Interest income | | 736 |
| | (2 | ) | | 734 |
|
| Income (loss) from continuing operations before benefit (provision) for income taxes | | (90,141 | ) | | (3,662 | ) | | (93,803 | ) |
| Benefit (provision) for income taxes | | (257 | ) | | — |
| | (257 | ) |
| Income (loss) from continuing operations | | $ | (90,398 | ) | | $ | (3,662 | ) | | $ | (94,060 | ) |
| Income (loss) from continuing operations per common share | | $ | (0.39 | ) | | | | $ | (0.41 | ) |
| Weighted average number common shares outstanding | | 230,049 |
| | | | 230,049 |
|
See notes to unaudited pro forma condensed consolidated financial statements.
Hines Real Estate Investment Trust, Inc.
Unaudited Notes to Pro Forma Condensed Consolidated Financial Statements
Unaudited Pro Forma Condensed Consolidated Balance Sheet as of March 31, 2015
| |
| a. | Reflects the Company's historical condensed consolidated balance sheet as of March 31, 2015. |
| |
| b. | Reflects the Company's disposition of 2555 Grand. Amounts represent the adjustments necessary to remove the assets and liabilities associated with 2555 Grand. |
| |
| c. | Reflects the proceeds received from the sale of 2555 Grand less any cash on hand at 2555 Grand as of March 31, 2015. |
| |
| d. | Reflects the adjustments related to the disposition of 2555 Grand and the gain on sale. |
Unaudited Pro Forma Condensed Consolidated Statement of Operations for the Three Months Ended March 31, 2015
| |
| a. | Reflects the Company's historical condensed consolidated statement of operations for the three months ended March 31, 2015. |
| |
| b. | Reflects the Company's disposition of 2555 Grand. Amounts represent the adjustments necessary to remove the historical revenues and expenses of 2555 Grand, including property operating expenses, property taxes, management fees, depreciation and amortization, interest expense and interest income associated with 2555 Grand. Such adjustments exclude the effect of the gain on sale, as this represents a non-recurring transaction. |
Unaudited Pro Forma Condensed Consolidated Statement of Operations for the Year Ended December 31, 2014
| |
| a. | Reflects the Company's historical condensed consolidated statement of operations for the year ended December 31, 2014. |
| |
| b. | Reflects the Company's disposition of 2555 Grand. Amounts represent the adjustments necessary to remove the historical revenues and expenses of 2555 Grand, including property operating expenses, property taxes, management fees, depreciation and amortization, interest expense and interest income associated with 2555 Grand. Such adjustments exclude the effect of the gain on sale, as this represents a non-recurring transaction. |
Unaudited Pro Forma Condensed Consolidated Statement of Operations for the Year Ended December 31, 2013
| |
| a. | Reflects the Company's historical condensed consolidated statement of operations for the year ended December 31, 2013. |
| |
| b. | Reflects the Company's disposition of 2555 Grand. Amounts represent the adjustments necessary to remove the historical revenues and expenses of 2555 Grand, including property operating expenses, property taxes, management fees, depreciation and amortization, interest expense and interest income associated with 2555 Grand. Such adjustments exclude the effect of the gain on sale, as this represents a non-recurring transaction. |
Unaudited Pro Forma Condensed Consolidated Statement of Operations for the Year Ended December 31, 2012
| |
| a. | Reflects the Company's historical condensed consolidated statement of operations for the year ended December 31, 2012. |
| |
| b. | Reflects the Company's disposition of 2555 Grand. Amounts represent the adjustments necessary to remove the historical revenues and expenses of 2555 Grand, including property operating expenses, property taxes, management fees, depreciation and amortization, interest expense and interest income associated with 2555 Grand. Such adjustments exclude the effect of the gain on sale, as this represents a non-recurring transaction. |
