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): | | August 8, 2016 |
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.
On August 8, 2016, each of HR Venture Properties I LLC, HR Parkland LLC, HR Thompson Bridge LLC and HR Heritage Station LLC, which are wholly-owned subsidiaries of Hines Real Estate Investment Trust, Inc. (“Hines REIT”) sold seven of the Grocery-Anchored Portfolio properties to New Market Properties, LLC (the “Purchaser”). The Grocery-Anchored Portfolio consists of eight grocery-anchored shopping centers located in four states primarily in the southeastern United States. The Purchaser is not affiliated with Hines REIT or its affiliates.
The sales price for the Grocery-Anchored Portfolio properties, exclusive of the shopping center called Champions Village located in Houston, Texas, was approximately $158.0 million in aggregate, prior to the deduction of transaction costs and certain other closing credits and any adjustments for prorations. The net proceeds received by Hines REIT from this sale were $147.2 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, 2016
Unaudited Pro Forma Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2016 and the Year Ended December 31, 2015
Notes to the Unaudited 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 11, 2016 | | 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 August 8, 2016, each of HR Venture Properties I LLC, HR Parkland LLC, HR Thompson Bridge LLC and HR Heritage Station LLC, which are wholly-owned subsidiaries of Hines Real Estate Investment Trust, Inc. (“Hines REIT”) sold seven of the Grocery-Anchored Portfolio properties to New Market Properties, LLC (the “Purchaser”). The Grocery-Anchored Portfolio consists of eight grocery-anchored shopping centers located in four states primarily in the southeastern United States. The sales price for seven of the Grocery-Anchored Portfolio properties, exclusive of the shopping center called Champions Village located in Houston, Texas (“Champions Village”) was approximately $158.0 million in aggregate, prior to the deduction of transaction costs and certain other closing credits and any adjustments for prorations. The net proceeds received from this sale were $147.2 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 seven of the Grocery-Anchored Portfolio properties, excluding Champions Village, 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, 2016
(In thousands)
The following unaudited Pro Forma Condensed Consolidated Balance Sheet is presented assuming the disposition of seven of the Grocery-Anchored Portfolio properties, excluding Champions Village, had occurred as of March 31, 2016. 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, 2016. This unaudited Pro Forma Condensed Consolidated Balance Sheet is not necessarily indicative of what our actual financial position would have been had we completed this transaction on March 31, 2016, nor does it purport to represent our future financial position.
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| | | As of March 31, 2016 (a) | | Adjustments for the
Grocery-Anchored Portfolio, exclusive of Champions Village | | | Adjustments for
JPMorgan Chase Tower | | | Pro Forma |
| ASSETS | | | | | | | | | | |
| Investment property, at cost: | | | | | | | | | | |
| Buildings and improvements, net | | $ | 1,252,530 |
| | $ | (66,586 | ) | | (b) | $ | (205,427 | ) | | (e) | $ | 980,517 |
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| Land | | 437,701 |
| | (45,350 | ) | | (b) | (8,768 | ) | | (e) | 383,583 |
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| Total investment property | | 1,690,231 |
| | (111,936 | ) | | | (214,195 | ) | | | 1,364,100 |
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| Investments in unconsolidated entities | | 97,249 |
| | — |
| | | — |
| | | 97,249 |
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| Cash and cash equivalents | | 49,610 |
| | 143,702 |
| | (c) | 211,765 |
| | (f) | 405,077 |
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| Restricted cash | | 1,281 |
| | — |
| | | — |
| | | 1,281 |
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| Distributions receivable | | 1,209 |
| | — |
| | | — |
| | | 1,209 |
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| Tenant and other receivables, net | | 43,982 |
| | (925 | ) | | (b) | (10,879 | ) | | (e) | 32,178 |
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| Intangible lease assets, net | | 115,196 |
| | (9,852 | ) | | (b) | (3,726 | ) | | (e) | 101,618 |
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| Deferred leasing costs, net | | 154,334 |
| | (3,286 | ) | | (b) | (46,059 | ) | | (e) | 104,989 |
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| Deferred financing costs, net | | 416 |
| | — |
| | (b) | — |
| | (e) | 416 |
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| Other assets | | 4,411 |
| | (38 | ) | | (b) | (166 | ) | | (e) | 4,207 |
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| TOTAL ASSETS | | $ | 2,157,919 |
| | $ | 17,665 |
| | | $ | (63,260 | ) | | | $ | 2,112,324 |
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| LIABILITIES AND EQUITY | | | | | | | | | |
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| Liabilities: | | | | | | | | | |
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| Accounts payable and accrued expenses | | $ | 56,125 |
| | $ | (2,555 | ) | | (b) | $ | (4,238 | ) | | (e) | $ | 49,332 |
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| Due to affiliates | | 4,572 |
| | — |
| | (b) | (8 | ) | | (e) | 4,564 |
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| Intangible lease liabilities, net | | 28,619 |
| | (11,849 | ) | | (b) | (2,406 | ) | | (e) | 14,364 |
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| Other liabilities | | 16,295 |
| | (573 | ) | | (b) | (981 | ) | | (e) | 14,741 |
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| Interest rate swap contracts | | 13,491 |
| | — |
| | | — |
| | | 13,491 |
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| Participation interest liability | | 130,386 |
| | — |
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| | | 130,386 |
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| Distributions payable | | 15,026 |
| | — |
| | | — |
| | | 15,026 |
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| Notes payable, net | | 836,583 |
| | (5,065 | ) | | (b) | (49,035 | ) | | (e) | 782,483 |
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| Total liabilities | | 1,101,097 |
| | (20,042 | ) | | | (56,668 | ) | | | 1,024,387 |
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| Commitments and contingencies | | — |
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| Equity: | | | | | | | | | |
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| Preferred shares | | — |
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| Common shares | | 223 |
| | — |
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| | | 223 |
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| Additional paid-in capital | | 2,099,093 |
| | — |
| | | — |
| | | 2,099,093 |
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| Accumulated distributions in excess of earnings | | (1,041,421 | ) | | 37,707 |
| | (d) | (6,592 | ) | | (g) | (1,010,306 | ) |
| Accumulated other comprehensive income (loss) | | (1,073 | ) | | — |
| | | — |
| | | (1,073 | ) |
| Total stockholders’ equity | | 1,056,822 |
| | 37,707 |
| | | (6,592 | ) | | | 1,087,937 |
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| Noncontrolling interests | | — |
| | — |
| | | — |
| | | — |
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| Total equity | | 1,056,822 |
| | 37,707 |
| | | (6,592 | ) | | | 1,087,937 |
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| TOTAL LIABILITIES AND EQUITY | | $ | 2,157,919 |
| | $ | 17,665 |
| | | $ | (63,260 | ) | | | $ | 2,112,324 |
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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, 2016
(In thousands, except per share amounts)
The following unaudited Pro Forma Condensed Consolidated Statement of Operations is presented assuming the disposition of seven of the Grocery-Anchored Portfolio properties, excluding Champions Village, had occurred as of January 1, 2015. 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, 2016. This unaudited Pro Forma Condensed Consolidated Statement of Operations is not necessarily indicative of what our actual results of operations would have been had we completed this transaction on January 1, 2015, nor does it purport to represent our future operations.
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| | | Three Months Ended March 31, 2016 (a) | | Adjustments for the Grocery-Anchored Portfolio, exclusive of Champions Village (b) | | Adjustments for JPMorgan Chase Tower (c) | | Pro Forma |
| Revenues: | | |
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| Rental revenue | | $ | 48,106 |
| | $ | (2,913 | ) | | $ | (6,060 | ) | | $ | 39,133 |
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| Other revenue | | 4,989 |
| | (47 | ) | | (856 | ) | | 4,086 |
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| Total revenues | | 53,095 |
| | (2,960 | ) | | (6,916 | ) | | 43,219 |
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| Expenses: | | | | | | | |
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| Property operating expenses | | 13,764 |
| | (346 | ) | | (2,334 | ) | | 11,084 |
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| Real property taxes | | 8,446 |
| | (320 | ) | | (1,627 | ) | | 6,499 |
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| Property management fees | | 1,385 |
| | (106 | ) | | (166 | ) | | 1,113 |
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| Depreciation and amortization | | 19,593 |
| | (846 | ) | | (2,115 | ) | | 16,632 |
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| Asset management and acquisition fees | | 8,419 |
| | — |
| | — |
| | 8,419 |
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| General and administrative | | 1,950 |
| | — |
| | (3 | ) | | 1,947 |
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| Total expenses | | 53,557 |
| | (1,618 | ) | | (6,245 | ) | | 45,694 |
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| Operating income (loss) | | (462 | ) | | (1,342 | ) | | (671 | ) | | (2,475 | ) |
| Other income (expenses): | | | | | | | |
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| Gain (loss) on derivative instruments, net | | 3,957 |
| | — |
| | — |
| | 3,957 |
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| Equity in earnings (losses) of unconsolidated entities, net | | 16,347 |
| | — |
| | — |
| | 16,347 |
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| Gain (loss) on sale of real estate investments | | 2 |
| | — |
| | — |
| | 2 |
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| Interest expense | | (8,639 | ) | | 51 |
| | 539 |
| | (8,049 | ) |
| Interest income | | 26 |
| | (1 | ) | | (2 | ) | | 23 |
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| Income (loss) from continuing operations before benefit (provision) for income taxes | | 11,231 |
| | (1,292 | ) | | (134 | ) | | 9,805 |
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| Benefit (provision) for income taxes | | (39 | ) | | 2 |
| | 25 |
| | (12 | ) |
| Income (loss) from continuing operations | | $ | 11,192 |
| | $ | (1,290 | ) | | $ | (109 | ) | | $ | 9,793 |
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| Income (loss) from continuing operations per common share | | $ | 0.05 |
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| | $ | 0.04 |
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| Weighted average number common shares outstanding | | 222,106 |
| | | | |
| | 222,106 |
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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, 2015
(In thousands, except per share amounts)
The following unaudited Pro Forma Condensed Consolidated Statement of Operations is presented assuming the disposition of seven of the Grocery-Anchored Portfolio properties, excluding Champions Village, had occurred as of January 1, 2015. 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, 2015. This unaudited Pro Forma Condensed Consolidated Statement of Operations is not necessarily indicative of what our actual results of operations would have been had we completed this transaction on January 1, 2015, nor does it purport to represent our future operations.
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| | | Year Ended December 31, 2015 (a) | | Adjustments for
the Grocery-Anchored Portfolio, exclusive of Champions Village (b) | | Adjustments for
JPMorgan Chase Tower
(c) | | Adjustments for 2555 Grand (d) | | Pro Forma |
| Revenues: | | |
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| Rental revenue | | $ | 198,684 |
| | $ | (11,738 | ) | | $ | (28,088 | ) | | $ | (9,945 | ) | | $ | 148,913 |
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| Other revenue | | 20,105 |
| | (253 | ) | | (3,696 | ) | | (546 | ) | | 15,610 |
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| Total revenues | | 218,789 |
| | (11,991 | ) | | (31,784 | ) |
| (10,491 | ) | | 164,523 |
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| Expenses: | | | | | | | | | |
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| Property operating expenses | | 59,996 |
| | (1,540 | ) | | (10,663 | ) | | (2,675 | ) | | 45,118 |
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| Real property taxes | | 30,931 |
| | (1,258 | ) | | (5,514 | ) | | (641 | ) | | 23,518 |
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| Property management fees | | 5,683 |
| | (382 | ) | | (849 | ) | | (242 | ) | | 4,210 |
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| Depreciation and amortization | | 87,923 |
| | (3,612 | ) | | (9,716 | ) | | (2,459 | ) | | 72,136 |
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| Acquisition related expense | | 505 |
| | — |
| | — |
| | — |
| | 505 |
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| Asset management and acquisition fees | | 36,576 |
| | — |
| | — |
| | — |
| | 36,576 |
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| General and administrative | | 6,635 |
| | — |
| | (3 | ) | | — |
| | 6,632 |
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| Impairment losses | | 19,663 |
| | — |
| | (11,865 | ) | | — |
| | 7,798 |
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| Total expenses | | 247,912 |
| | (6,792 | ) | | (38,610 | ) |
| (6,017 | ) | | 196,493 |
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| Operating income (loss) | | (29,123 | ) | | (5,199 | ) | | 6,826 |
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| (4,474 | ) | | (31,970 | ) |
| Other income (expenses): | | | | | | | | | |
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| Gain (loss) on derivative instruments, net | | 16,945 |
| | — |
| | — |
| | — |
| | 16,945 |
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| Equity in earnings (losses) of unconsolidated entities, net | | 43,267 |
| | — |
| | — |
| | — |
| | 43,267 |
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| Gain (loss) on sale of real estate investments | | 50,144 |
| | — |
| | — |
| | (20,747 | ) | | 29,397 |
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| Interest expense | | (37,684 | ) | | 215 |
| | 4,415 |
| | — |
| | (33,054 | ) |
| Interest income | | 46 |
| | (6 | ) | | (2 | ) | | (1 | ) | | 37 |
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| Income (loss) from continuing operations before benefit (provision) for income taxes | | 43,595 |
| | (4,990 | ) | | 11,239 |
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| (25,222 | ) | | 24,622 |
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| Benefit (provision) for income taxes | | (225 | ) | | 5 |
| | 186 |
| | — |
| | (34 | ) |
| Income (loss) from continuing operations | | $ | 43,370 |
| | $ | (4,985 | ) | | $ | 11,425 |
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| $ | (25,222 | ) | | $ | 24,588 |
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| Income (loss) from continuing operations per common share | | $ | 0.19 |
| | | | | | | | $ | 0.11 |
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| Weighted average number common shares outstanding | | 223,369 |
| | | | | | | | 223,369 |
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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, 2016
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| a. | Reflects the Company's historical condensed consolidated balance sheet as of March 31, 2016. |
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| b. | Reflects the Company's disposition of seven of the Grocery-Anchored Portfolio properties, exclusive of Champions Village. Amounts represent the adjustments necessary to remove the assets and liabilities associated with the Grocery-Anchored Portfolio, exclusive of Champions Village. |
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| c. | Reflects the proceeds received from the sale of seven of the Grocery-Anchored Portfolio properties, exclusive of Champions Village, less any cash on hand at the Grocery-Anchored Portfolio, exclusive of Champions Village, as of March 31, 2016. |
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| d. | Reflects the adjustments related to the disposition of seven of the Grocery-Anchored Portfolio properties, exclusive of Champions Village, and the gain on sale. |
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| e. | Reflects the Company's disposition of JPMorgan Chase Tower. Amounts represent the adjustments necessary to remove the assets and liabilities associated with JPMorgan Chase Tower. |
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| f. | Reflects the proceeds received from the sale of JPMorgan Chase Tower less any cash on hand at JPMorgan Chase Tower as of March 31, 2016. |
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| g. | Reflects the adjustments related to the disposition of JPMorgan Chase Tower and the gain on sale. |
Unaudited Pro Forma Condensed Consolidated Statement of Operations for the Three Months Ended March 31, 2016
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| a. | Reflects the Company's historical condensed consolidated statement of operations for the three months ended March 31, 2016. |
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| b. | Reflects the Company's disposition of seven of the Grocery-Anchored Portfolio properties, exclusive of Champions Village. Amounts represent the adjustments necessary to remove the historical revenues and expenses of the Grocery-Anchored Portfolio, exclusive of Champions Village, including property operating expenses, property taxes, management fees, depreciation and amortization, general and administrative expenses, interest expense and interest income associated with the Grocery-Anchored Portfolio, exclusive of Champions Village. Such adjustments exclude the effect of the gain on sale, as this represents a non-recurring transaction. |
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| c. | Reflects the Company's disposition of JPMorgan Chase Tower. Amounts represent the adjustments necessary to remove the historical revenues and expenses of JPMorgan Chase Tower, including property operating expenses, property taxes, management fees, depreciation and amortization, general and administrative expenses, interest expense and interest income associated with JPMorgan Chase Tower. 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, 2015
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| a. | Reflects the Company's historical condensed consolidated statement of operations for the year ended December 31, 2015. |
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| b. | Reflects the Company's disposition of seven of the Grocery-Anchored Portfolio properties, exclusive of Champions Village. Amounts represent the adjustments necessary to remove the historical revenues and expenses of the Grocery-Anchored Portfolio, exclusive of Champions Village, including property operating expenses, property taxes, management fees, depreciation and amortization, general and administrative expenses, interest expense and interest income associated with the Grocery-Anchored Portfolio, exclusive of Champions Village. Such adjustments exclude the effect of the gain on sale, as this represents a non-recurring transaction. |
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| c. | Reflects the Company's disposition of JPMorgan Chase Tower. Amounts represent the adjustments necessary to remove the historical revenues and expenses of JPMorgan Chase Tower, including property operating expenses, property taxes, management fees, depreciation and amortization, general and administrative expenses, interest expense, interest income and impairment losses associated with JPMorgan Chase Tower. Such adjustments exclude the effect of the gain on sale, as this represents a non-recurring transaction. |
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| d. | 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 and interest income associated with 2555 Grand. Such adjustments exclude the effect of the gain on sale, as this represents a non-recurring transaction. |
