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Large accelerated filer o | Accelerated filer o | Non-accelerated filer þ | Smaller reporting company o |
Proposed Maximum | Proposed Maximum | Amount of | ||||||||||
Title of Each Class of | Amount to be | Offering Price | Aggregate | Registration | ||||||||
Securities to be Registered | Registered(1) | per Security | Offering Price(1) | Fee | ||||||||
Common Stock, par value $.001 per share | 300,000,000 | $10.00 | $3,000,000,000 | $117,900(2) | ||||||||
Distribution Reinvestment Plan, Common Stock, par value $.001 per share | 52,631,579 | $9.50 | $500,000,000 | $19,650(2) | ||||||||
(1) | Includes 300,000,000 shares of the Registrant’s common stock as may be sold, from time to time, by the Registrant to investors at $10.00 per share and 52,631,579 shares of the Registrant’s common stock as may be issued, from time to time, pursuant to the Registrant’s distribution reinvestment plan at $9.50 per share, with an aggregate public offering price not to exceed $3,500,000,000. The Registrant reserves the right to reallocate the shares of common stock being offered between the primary offering and the distribution reinvestment plan. Estimated solely for the purpose of determining the registration fee pursuant to Rule 457(o) under the Securities Act of 1933, as amended. | |
(2) | Previously paid with initial filing on January 15, 2009. |
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The information in this prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. |
• | We have no prior operating history or established financing sources, and the prior performance of other Hines affiliated entities may not be a good measure of our future results; therefore, there is no assurance we will be able to achieve our investment objectives; | |
• | There is no public market for our common shares; therefore, it will be difficult for you to sell your shares and, if you are able to sell your shares, you will likely sell them at a substantial discount; | |
• | This is a fixed price offering, and the offering price of our common shares was not established on an independent basis, therefore, the fixed offering price will not accurately represent the value of our assets, as it was arbitrarily determined, and the actual value of your investment may be substantially less; | |
• | This is a “blind pool” offering where we have not identified any specific assets to acquire or investments to make with the proceeds of this offering; therefore, you will not have the opportunity to evaluate the investments we will make prior to purchasing shares of our common stock; | |
• | This is a best efforts offering and as such, the risk that we will not be able to accomplish our business objectives and that the poor performance of a single investment will materially adversely affect our overall investment performance, will increase if only a small number of shares are purchased in the offering; | |
• | The availability and timing of distributions we may pay is uncertain and cannot be assured; | |
• | Some or all of our distributions may be paid from sources such as cash advances by our Advisor, cash resulting from a waiver or deferral of fees, borrowings and/or proceeds from this offering. If we pay distributions from sources other than our cash flow from operations, we will have less funds available for the acquisition of properties, and your overall return may be reduced; | |
• | There are restrictions and limitations on your ability to have all or any portion of your shares of our common stock redeemed under our share redemption program and, if you are able to have your shares redeemed, it may be at a price that is less than the price you paid for the shares and the then-current market value of the shares; | |
• | Due to the risks involved in the ownership of real estate investments, there is no guarantee of any return on your investment in Hines Global REIT, Inc., which we refer to as Hines Global, and you may lose some or all of your investment; | |
• | International investment risks, including the burden of complying with a wide variety of foreign laws and the uncertainty of such laws, the tax treatment of transaction structures, political and economic instability, foreign currency fluctuations, and inflation and governmental measures to curb inflation may adversely affect our operations and our ability to make distributions; and | |
• | We rely on affiliates of Hines for our day-to-day operations and the selection of real estate investments. We pay substantial fees and other payments to these affiliates for these services. These affiliates are subject to conflicts of interest as a result of this and other relationships they have with us and other investment vehicles sponsored by Hines. We also compete with affiliates of Hines for tenants and investment opportunities, and some of those affiliates will have priority with respect to certain investment opportunities. |
Price to the Public(1) | Selling Commission | Dealer Manager Fee | Proceeds to Us(2) | |||||||||||||
Primary Offering Per Share | $ | 10.00 | $ | .75 | $ | .25 | $ | 9.00 | ||||||||
Minimum Offering | $ | 2,000,000 | $ | 150,000 | $ | 50,000 | $ | 1,800,000 | ||||||||
Maximum Offering | $ | 3,000,000,000 | $ | 225,000,000 | $ | 75,000,000 | $ | 2,700,000,000 | ||||||||
Distribution Reinvestment Plan | $ | 9.50 | $ | — | $ | — | $ | 9.50 | ||||||||
Total Maximum for Distribution Reinvestment Plan | $ | 500,000,000 | $ | — | $ | — | $ | 500,000,000 | ||||||||
Total Maximum Offering (Primary and Distribution Reinvestment Plan) | $ | 3,500,000,000 | $ | 225,000,000 | $ | 75,000,000 | $ | 3,200,000,000 |
(1) | Assumes we will sell $3,000,000,000 in the primary offering and $500,000,000 in our distribution reinvestment plan. | |
(2) | Proceeds are calculated before deducting issuer costs other than selling commissions and the dealer manager fee. These issuer costs are expected to consist of, among others, expenses of our organization, actual legal, bona fide out-of-pocket itemized due diligence expenses, accounting, printing, filing fees, transfer agent costs, postage, escrow fees, data processing fees, advertising and sales literature and other offering-related expenses. |
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• | a minimum annual gross income of at least $70,000 and a minimum net worth (excluding the value of the purchaser’s home, home furnishings and automobiles) of at least $70,000; or | |
• | a minimum net worth (excluding the value of the purchaser’s home, home furnishings and automobiles) of at least $250,000. |
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• | a pension, profit-sharing, retirement or other employee benefit plan that satisfies the requirements for qualification under Section 401(a), 414(d) or 414(e) of the Internal Revenue Code of 1986, as amended (the “Code”); | |
• | a pension, profit-sharing, retirement or other employee benefit plan that meets the requirements of Section 457 of the Code; | |
• | trusts that are otherwise exempt under Section 501(a) of the Code; | |
• | a voluntary employees’ beneficiary association under Section 501(c)(9) of the Code; or | |
• | an IRA that meets the requirements of Section 408 or Section 408A of the Code. |
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Q: | What is Hines Global REIT, Inc. or Hines Global? | |
A: | Hines Global REIT, Inc., which we refer to as Hines Global, is a recently-formed Maryland corporation. We currently have no real estate assets. We intend to invest in a diversified portfolio of quality commercial real estate properties and other real estate investments throughout the United States and internationally. | |
Q: | What is a real estate investment trust, or REIT? | |
A: | In general, a REIT is an entity that: | |
• combines the capital of many investors to acquire or provide financing for a diversified portfolio of real estate investments under professional management; | ||
• is able to qualify as a “real estate investment trust” for U.S. federal income tax purposes and is therefore generally not subject to federal corporate income taxes on its net income that is distributed, which substantially eliminates the “double taxation” treatment (i.e., taxation at both the corporate and stockholder levels) that generally results from investments in a corporation; and | ||
• pays distributions to investors of at least 90% of its annual ordinary taxable income. | ||
In this prospectus, we refer to an entity that qualifies as a real estate investment trust for U.S. federal income tax purposes as a “REIT.” Hines Global is not currently qualified as a REIT. However, we intend to qualify as a REIT for U.S. federal income tax purposes commencing with our taxable year ending December 31, 2009. | ||
Q: | Who is Hines? | |
A: | Hines Interests Limited Partnership, which we refer to as Hines, is our sponsor. Hines is a fully integrated global real estate investment and management firm and, with its predecessor, has been investing in real estate and providing acquisition, development, financing, property management, leasing and disposition services for over 50 years. Hines provides investment management services to numerous investors and partners including pension plans, domestic and foreign institutional investors, high net worth individuals and retail investors. Hines is owned and controlled by Gerald D. Hines and his son Jeffrey C. Hines. As of December 31, 2008, Hines and its affiliates had ownership interests in a real estate portfolio of over 238 projects, valued at approximately $25.8 billion. Please see “Management — The Hines Organization” for more information regarding Hines. | |
Q: | What competitive advantages does Hines Global achieve through its relationship with Hines and its affiliates? | |
A: | We believe our relationship with Hines and its affiliates provides us the following benefits: | |
• Global Presence — Our relationship with Hines and its affiliates as our sponsor and advisor allows us to have access to an organization that has extraordinary depth and breadth around the world with, as of December 31, 2008, approximately 3,750 employees (including approximately 1,300 employees outside of the United States) located in 68 cities across the United States and 16 foreign countries. This provides us a significant competitive advantage in drawing upon the experiences resulting from the vast and varied real estate cycles and strategies that varied economies and markets experience. |
• Hines’ international tenant base, which as of December 31, 2008 consists of more than 4,000 national and multinational corporate tenants; |
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• Extensive international financial relationships providing access to a broad base of buyers, sellers and debt financing sources; | ||
• Awareness of and access to new state-of-the-art building technologies as new experiences are gained on the projects which Hines has under development or management anywhere in the world; and | ||
• International “institutional” best practices on a global scale: |
– Operating partner transparency; | ||
– Accounting standards; | ||
– Construction techniques; | ||
– Property management services; and | ||
– Sustainability leadership. |
• Local Market Expertise — Hines’ global platform is built from the ground up based on Hines’ philosophy that real estate is essentially a local business. Hines provides us access to a team of real estate professionals who live and work in individual major markets around the world. These regional and local teams are fully integrated to provide a full range of real estate investment and management services including sourcing investment opportunities, acquisitions, development, re-development, financing, property management, leasing, asset management, disposition, accounting and financial reporting. | ||
• Centralized Resources — Hines’ headquarters in Houston, Texas provides the regional and local teams with, as of December 31, 2008, a group of approximately 425 personnel who specialize in areas such as capital markets, corporate finance, construction, engineering, operations, marketing, human resources, cash management, risk management, tax and internal audit. These experienced personnel provide a repository of knowledge, experience and expertise and an important control point for preserving performance standards and maintaining operating consistency for the entire organization. | ||
• Tenure of Personnel — Hines has one of the most experienced executive management teams in the real estate industry with, as of December 31, 2008, an average tenure within the organization of 29 years. This executive team provides stability to the organization and provides experience which it has gained through numerous real estate cycles during such time frame. This impressive record of tenure is attributable to a professional culture of quality and integrity and long-term compensation plans that align personal wealth creation with real estate and investor performance and value creation. | ||
• Long-Term Track Record — Hines has more than 50 years of experience in creating and successfully managing capital and real estate investments for numerous third-party investors. As stated above, as of December 31, 2008, Hines and its affiliates had approximately 3,750 employees (including approximately 1,300 employees outside of the United States) located in regional and local offices in 68 cities in the United States and in 16 foreign countries around the world. Since its inception in 1957, Hines, its predecessor and their respective affiliates have acquired or developed 867 real estate projects representing more than 274 million square feet. | ||
Please see “Risk Factors — Risks Related to Potential Conflicts of Interest” and “Conflicts of Interest” for a discussion of certain risks and potential disadvantages of our relationship with Hines. | ||
Q: | How will you structure the ownership and operation of your assets? | |
A: | We plan to own substantially all of our assets and conduct our operations through an operating partnership called Hines Global REIT Properties LP. We are the sole general partner of Hines Global REIT Properties LP. Because we plan to conduct substantially all of our operations through an operating partnership, we are organized as an “UPREIT.” To avoid confusion, in this prospectus: | |
• we refer to Hines Global REIT Properties LP as the “Operating Partnership” and partnership interests and special partnership interests in the Operating Partnership, respectively, as “OP Units” and “Special OP Units;” |
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• the use of “we,” “our,” “us” or similar pronouns in this prospectus refers to Hines Global REIT, Inc. and its direct and indirect wholly owned subsidiaries which includes the Operating Partnership, as required by the context in which such term is used. |
Q: | Who will choose which real estate investments you will invest in? | |
A: | Hines Global REIT Advisors LP will make recommendations for all of our investment decisions, which are subject to the approval of our board of directors. In this prospectus, we refer to Hines Global REIT Advisors LP as our “Advisor.” | |
Q: | What fees and expense reimbursements will we pay to our Advisor, Hines and other affiliates of Hines in connection with your operations? | |
A: | We pay fees to our Advisor, Hines and other affiliates of Hines for services relating to, among other things, this offering, acquisitions and dispositions of real estate investments, our financings, the conduct of our day-to-day activities and the management of our real estate investments, which could be increased or decreased during or after this offering. Please see “Management Compensation, Expense Reimbursements and Operating Partnership OP Units and Special OP Units” for an explanation of the fees and expense reimbursements we will pay to our Advisor, Hines and other affiliates of Hines in connection with our operations. Entities in which we may invest may pay Hines and/or its affiliates fees or other compensation in connection with the real estate investments of such entities. | |
Q: | What investment or ownership interests will Hines or any of its affiliates have in us? | |
A: | Hines or its affiliates have the following investments and ownership interests in us: | |
• an investment of $10,000 in shares of our common stock by Hines Global REIT Investor Limited Partnership, an affiliate of Hines; | ||
• an investment of $190,000 in limited partner interests of the Operating Partnership by Hines Global REIT Associates Limited Partnership, an affiliate of Hines; | ||
• an interest in the Operating Partnership, denominated as Special OP Units, by Hines Global REIT Associates Limited Partnership with economic terms as more particularly described in “The Operating Partnership — Special OP Units;” and | ||
• Hines or its affiliates may also elect to receive certain fees, such as acquisition, debt financing, asset management and disposition fees, in OP Units rather than cash. Please see “Management Compensation, Expense Reimbursements and Operating Partnership OP Units and Special OP Units” for a description of the fees which may be paid with OP Units. | ||
Q: | What is Hines Global’s term and the timing of a Liquidity Event? |
A: | Subject to then existing market conditions, we expect to consider alternatives for providing liquidity to our stockholders beginning eight to ten years following the commencement of this offering. While we expect to seek a Liquidity Event in this timeframe, there can be no assurance that a suitable transaction will be available or that market conditions for a transaction will be favorable during that timeframe. Our board of directors has the sole discretion to consider a Liquidity Event at any time if it determines such event to be in our best interests. Hines Global does not have a stated term, as we believe setting finite dates for possible, but uncertain future liquidity events may result in actions that are not necessarily in the best interest or within the expectations of our stockholders. A “Liquidity Event” could consist of a sale of our assets, our sale or merger, a listing of our shares on a national securities exchange or a similar transaction. |
Q: | Why should I invest in real estate investments? | |
A: | Allocating some portion of your investment portfolio to real estate investments may provide you with portfolio diversification, reduction of overall risk, a hedge against inflation, and attractive risk-adjusted returns. For these reasons, real estate has been embraced as a major asset class for purposes of asset allocations within |
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investment portfolios. According to the 2008 Plan Sponsor Survey of U.S. pension investors prepared by Institutional Real Estate, Inc. and Kingsley Associates, the target allocation to real estate increased from 8.0% for 2005 to 9.6% for 2008. According to the same report, institutional investors also allocate their real estate investments across the core, value-add and opportunistic categories, and across multiple property types both domestic and international. Although institutional investors can invest directly in real estate investments and on substantially different terms than individual investors, we believe that individual investors can also benefit by adding a real estate component to their investment portfolios. You and your financial advisor, investment advisor or financial planner should determine whether investing in real estate would benefit your investment portfolio. Please see “Risk Factors — Risks Related to Real Estate — A continued economic slowdown or rise in interest rates or other unfavorable changes in economic conditions in the markets in which we operate could adversely impact our business, results of operations, cash flows and financial condition and our ability to make distributions to you and the value of your investment” for a discussion of the current economic slowdown and disruptions in the capital and credit markets. | ||
Q: | What are your investment objectives? | |
A: | Our primary investment objectives are to: | |
• preserve invested capital; | ||
• invest in a diversified portfolio of quality commercial real estate properties and other real estate investments; | ||
• pay regular cash distributions; | ||
• achieve attractive total returns upon the ultimate sale of our investments or occurrence of another Liquidity Event; and | ||
• remain qualified as a real estate investment trust, or “REIT,” for federal income tax purposes. | ||
Q: | How would you describe your real estate property acquisition and operations process? | |
A: | We expect to buy real estate with part of the proceeds of this offering that we believe have some of the following attributes: | |
• Preferred Location. We believe that location often has the single greatest impact on an asset’s long-term income-producing potential and value and that assets located in the preferred submarkets in metropolitan areas and situated at preferred locations within such submarkets have the potential to achieve attractive total returns. | ||
• Premium Buildings. We will seek to acquire assets that generally have design and physical attributes (e.g., quality construction and materials, systems, floorplates, etc.) that are more attractive to a user than those of inferior properties. | ||
• Quality Tenancy. We will seek to acquire assets that typically attract tenants with better credit who require larger blocks of space because these larger tenants generally require longer term leases in order to accommodate their current and future space needs without undergoing disruptive and costly relocations. | ||
We believe that following an acquisition, the additional component of proactive property management and leasing is a critical element necessary to achieve attractive investment returns for investors. Actively anticipating and quickly responding to tenant needs are examples of areas where proactive property management may make the difference in a tenant’s occupancy experience, increasing its desire to remain a tenant and thereby providing a higher tenant retention rate, which may result in better financial performance of the property. | ||
Q: | Do you currently own any investments? | |
A: | No. | |
Q: | What kind of offering is this? | |
A: | Through our Dealer Manager we are offering a minimum of $2,000,000 of common shares and a maximum of $3,000,000,000 of common shares to the public in a primary offering on a “best efforts” basis at |
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$10.00 per share. We are also offering up to $500,000,000 of common shares to be issued pursuant to our distribution reinvestment plan at $9.50 per share to those stockholders who elect to participate in such plan as described in this prospectus. We reserve the right to reallocate the shares of common stock being offered between the primary offering and the distribution reinvestment plan. We refer to our shares of common stock, par value $0.001 per share, as our “common shares” or “shares” in this prospectus. | ||
Q: | How does a “best efforts” offering work? | |
A: | When shares are offered to the public on a “best efforts” basis, no underwriter, broker dealer or other person has a firm commitment or obligation to purchase any of the shares. Therefore, we cannot guarantee that any minimum number of shares will be sold. Prior to selling a minimum offering of $2,000,000 in common shares, which we refer to as the minimum offering amount, to at least 100 subscribers, we will place all proceeds raised from this offering in an interest bearing escrow account. If we do not sell the minimum offering amount to 100 subscribers before , 2010 (one year after the effective date), which we refer to as the minimum offering requirements, we will terminate the offering and stop selling shares and the escrow agent will promptly return your funds with any interest earned thereon. In the event we satisfy the minimum offering requirements, all interest will be paid to us and you will not receive any credit in the form of additional common shares or otherwise for such interest. | |
Q: | Who can buy shares? | |
A: | Generally, you may purchase shares if you have either: | |
• a minimum net worth (not including home, furnishings and personal automobiles) of at least $70,000 and a minimum annual gross income of at least $70,000; or | ||
• a minimum net worth (not including home, furnishings and personal automobiles) of at least $250,000. | ||
However, these minimum levels may vary from state to state, so you should carefully read the suitability requirements explained in the “Suitability Standards” section of this prospectus. | ||
Q: | How do I subscribe for shares? | |
A: | If you choose to purchase common shares in this offering, you will need to contact your registered broker dealer or investment advisor and fill out a subscription agreement like the one attached to this prospectus as Appendix B for a certain investment amount and pay for the shares at the time you subscribe. | |
Q: | Is there any minimum required investment? | |
A: | Yes. You must initially invest at least $2,500, which will equal 250 shares, assuming no discounts apply. Thereafter, subject to restrictions imposed by state law, you may purchase additional shares in whole or fractional share increments subject to a minimum for each additional purchase of $50. You should carefully read the minimum investment requirements explained in the “Suitability Standards” section of this prospectus. | |
Q: | Are distributions I receive taxable? | |
A: | Yes and no. Generally, distributions that you receive will be considered ordinary income to the extent of our current or accumulated earnings and profits. In addition, because depreciation expense reduces earnings and profits but does not reduce cash available for the payment of distributions, and because we initially expect such depreciation expense to exceed our non-deductible expenditures, we expect a portion of your distributions will be considered returns of capital for tax purposes. These amounts will not be subject to tax immediately to the extent of your basis in your shares but will instead reduce the tax basis of your investment. To the extent these amounts exceed your basis in your shares, they will be treated as having been paid in exchange for shares. This in effect defers a portion of your tax until your shares are sold or we are liquidated, at which time you will generally be taxed at capital gains rates (assuming you have held your shares for at least one year). However, because each investor’s tax implications are different, we suggest you consult with your tax advisor. You and your tax advisor should also review the section of this prospectus entitled “Material Tax Considerations.” |
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Q: | What will you do with the proceeds from your primary offering? | |
A: | If we sell all the shares offered in our primary offering, we expect to use approximately 89.2% of the gross proceeds to make real estate investments and to pay acquisition fees and expenses related to those investments. We will use the remaining approximately 10.8% of the gross proceeds to pay sales commissions, dealer manager fees and issuer costs. | |
Q: | How long will this offering last? | |
A: | We currently expect that this offering will terminate on , 2011 (two years after the effective date of this prospectus). If the minimum offering of $2,000,000 of common shares is not sold to at least 100 subscribers by , 2010 (one year after the effective date of this prospectus), we will terminate this offering and we will promptly return to you your funds, along with any interest earned thereon. We have no right to extend the period in which the minimum offering requirements must be met. Once the minimum offering requirements have been met, however, we reserve the right to extend this offering at any time. In addition, we reserve the right to terminate this offering for any other reason at any time. | |
Q: | Will I be notified of how my investment is doing? | |
A: | Yes, you will be provided with periodic updates on the performance of your investment, including: | |
• distribution statements; | ||
• periodic prospectus supplements during the offering; | ||
• an annual report; | ||
• an annual IRS Form 1099-DIV, if required; and | ||
• three quarterly financial reports. | ||
We will provide this information to you via one or more of the following methods: | ||
• U.S. mail or other courier; | ||
• electronic delivery; or | ||
• posting on our web site, located at www.hinesrei.com/global/investorrelations, along with any required notice. | ||
Q: | When will I get my detailed tax information? | |
A: | Generally, we expect that we will send you your Form 1099-DIV tax information for each year by January 31 of the following year. | |
Q: | Who is your transfer agent? | |
A: | Our transfer agent is DST Systems, Inc. | |
Q: | Who can help answer my questions? | |
A: | If you have more questions about this offering or if you would like additional copies of this prospectus, you should contact your registered selling representative or: | |
Hines Real Estate Investments, Inc. 2800 Post Oak Boulevard, Suite 4700 Houston, Texas 77056-6118 Telephone: (888) 446-3773 | ||
If you have questions regarding our assets and operations, you should contact us at: | ||
Hines Global REIT, Inc. 2800 Post Oak Boulevard, Suite 5000 Houston, Texas 77056-6118 Telephone: (888) 220-6121 Web site: www.hinesrei.com/global/investorrelations |
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Estimated Maximum | ||||
(Based on | ||||
$3,000,000,000 in | ||||
Type and Recipient | Description and Method of Computation | Shares)(1) | ||
Organization and Offering Activities(2) | ||||
Selling Commissions — our Dealer Manager | Up to 7.5% of gross offering proceeds from our primary offering, excluding proceeds from our distribution reinvestment plan; up to 7.0% of gross offering proceeds from our primary offering may be reallowed to participating broker dealers. | $225,000,000(3) | ||
Dealer Manager Fee — our Dealer Manager | Up to 2.5% of gross offering proceeds from our primary offering excluding proceeds from our distribution reinvestment plan; up to 1.5% of gross offering proceeds from our primary offering may be reallowed to selected participating broker dealers as a marketing fee.(5) | $75,000,000(4) | ||
Reimbursement of Issuer Costs — our Advisor | We will reimburse our Advisor for any issuer costs that they pay on our behalf. Included in such amount is 0.25% of the gross offering proceeds as reimbursement to our Dealer Manager and participating broker dealers for bona fide out-of-pocket, itemized and detailed due diligence expenses incurred by these entities. | $24,393,400 | ||
Investment Activities(6) | ||||
Acquisition Fee — our Advisor | 2.0% of (i) the purchase price of real estate investments acquired, including any debt attributable to such investments or the principal amounts of any loans originated directly by us, or (ii) when we make an investment indirectly through another entity, such investment’s pro rata share of the gross asset value of real estate investments held by that entity.(7)(8) | $52,227,580(9) | ||
Acquisition Expenses — our Advisor | Reimbursement of acquisition expenses in connection with the purchase of real estate investments.(7) | Not determinable at this time | ||
Debt Financing Fee — our Advisor | 1.0% of the amount of any debt financing obtained or assumed by us or made available to us or our pro rata share of any debt financing obtained or assumed by or made available to any of our joint ventures. In no event will the debt financing fee be paid more than once in respect of the same debt. | Not determinable at this time(9)(10) | ||
Development Fee — Hines or its Affiliates | We will pay a development fee in an amount that is usual and customary for comparable services rendered to similar projects in the geographic area of the project.(12) | Not determinable at this time(11) | ||
Operational Activities(6) | ||||
Asset Management Fee — our Advisor | 0.125% per month of the net equity we have invested in real estate investments at the end of each month. | Not determinable at this time(9)(13) |
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Estimated Maximum | ||||
(Based on | ||||
$3,000,000,000 in | ||||
Type and Recipient | Description and Method of Computation | Shares)(1) | ||
Administrative Expense Reimbursements — our Advisor | Reimbursement of actual expenses incurred by our Advisor in connection with our administration on an ongoing basis.(14) | Not determinable at this time | ||
Property Management Fee — Hines or its Affiliates | Customary property management fees if Hines or an affiliate is our property manager. Such fees will be paid in an amount that is usual and customary in that geographic area for that type of property.(12)(15) | Not determinable at this time | ||
Leasing Fee — Hines or its Affiliates | Customary leasing fees if Hines or an affiliate is our primary leasing agent. Such fees will be paid in an amount that is usual and customary in that geographic area for that type of property.(12)(15) | Not determinable at this time | ||
Tenant Construction Management Fees — Hines or its Affiliates | Amount payable by the tenant under its lease or, if payable by the landlord, direct costs incurred by Hines or an affiliate if the related services are provided by off-site employees.(16) | Not determinable at this time | ||
Re-development Construction Management Fees — Hines or its Affiliates | Customary re-development construction management fees if Hines or its affiliates provide such services. Such fees will be paid in an amount that is usual and customary in the geographic area for that type of property.(12) | Not determinable at this time | ||
Expense Reimbursements — Hines or its Affiliates | Reimbursement of actual expenses incurred in connection with the management and operation of our properties.(17) | Not determinable at this time | ||
Disposition Fee — our Advisor | 1.0% of (i) the sales price of any real estate investments sold, held directly by us, or (ii) when we hold investments indirectly through another entity, our pro rata share of the sales price of the real estate investment sold by that entity.(18) | Not determinable at this time(9) | ||
Special OP Units — Hines Global REIT Associates Limited Partnership | The holder of the Special OP Units in the Operating Partnership will be entitled to receive distributions from the Operating Partnership in an amount equal to 15% of distributions, including from sales of real estate investments, refinancings and other sources, but only after our stockholders have received (or are deemed to have received), in the aggregate, cumulative distributions equal to their invested capital plus an 8.0% cumulative, non-compounded annual pre-tax return on such invested capital. The Special OP Units may be converted into OP Units that, at the election of the holder, will be repurchased for cash (or, in the case of (iii) below, a promissory note) or our shares, following: (i) the listing of our common stock on a national securities exchange, or (ii) a merger, consolidation or sale of substantially all of our assets or any similar transaction or any transaction pursuant to which a majority of our board of directors then in office are replaced or removed or (iii) the occurrence of certain events that result in the termination or non-renewal of our Advisory Agreement. | Not determinable at this time |
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Estimated Maximum | ||||
(Based on | ||||
$3,000,000,000 in | ||||
Type and Recipient | Description and Method of Computation | Shares)(1) | ||
Disposition and Liquidation(6) | ||||
Disposition Fee — our Advisor | 1.0% of (i) the sales price of any real estate investments sold, held directly by us, or (ii) when we hold investments indirectly through another entity, our pro rata share of the sales price of the real estate investment sold by that entity.(18) | Not determinable at this time(9) | ||
Special OP Units — Hines Global REIT Associates Limited Partnership | The holder of the Special OP Units in the Operating Partnership will be entitled to receive distributions from the Operating Partnership in an amount equal to 15% of distributions, including from sales of real estate investments, refinancings and other sources, but only after our stockholders have received (or are deemed to have received), in the aggregate, cumulative distributions equal to their invested capital plus an 8.0% cumulative, non-compounded annual pre-tax return on such invested capital. The Special OP Units may be converted into OP Units that, at the election of the holder, will be repurchased for cash (or, in the case of (iii) below, a promissory note) or our shares, following: (i) the listing of our common stock on a national securities exchange, (ii) a merger, consolidation or a sale of substantially all of our assets or any similar transaction or any transaction pursuant to which a majority of our board of directors then in office are replaced or removed or (iii) the occurrence of certain events that result in the termination or non-renewal of our Advisory Agreement. | Not determinable at this time |
(1) | Unless otherwise indicated, assumes we sell the maximum of $3,000,000,000 in shares in our primary offering and excludes the sale of any shares under our distribution reinvestment plan, which may be used for redemptions or other purposes. To the extent such proceeds are invested in real estate investments, certain fees will be increased but, except as set forth herein, the amounts are not determinable at this time. | |
(2) | The total compensation related to our organization and offering activities, which includes selling commissions, the dealer manager fee and issuer costs will not exceed 15% of the gross offering proceeds. | |
We expect to pay the following issuer costs in connection with the primary offering: |
Securities Act registration fees | $ | 117,900 | ||
FINRA filing fee | $ | 75,500 | ||
Blue sky qualification fees and expenses | $ | 500,000 | ||
Printing and mailing expenses | $ | 6,000,000 | ||
Legal fees and expenses | $ | 4,000,000 | ||
Accounting fees and expenses | $ | 1,000,000 | ||
Advertising and sales literature | $ | 1,200,000 | ||
Transfer agent fees | $ | 3,750,000 | ||
Bank and other administrative expenses | $ | 250,000 | ||
Due diligence expense reimbursements | $ | 7,500,000 | * | |
$ | 24,393,400 | |||
* | This amount reflects the expected amount of bona fide out-of-pocket, itemized and detailed due diligence expenses, but we are permitted to pay up to 0.5% of the gross offering proceeds for such expenses. |
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(3) | Commissions may be reduced for volume or other discounts or waived as further described in the “Plan of Distribution” section of this prospectus; however, for purposes of calculating the estimated maximum selling commissions in this table, we have not assumed any such discounts or waivers. Further, our Dealer Manager will not receive selling commissions for shares issued pursuant to our distribution reinvestment plan. | |
(4) | The dealer manager fees may be waived as further described in the “Plan of Distribution” section of this prospectus; however, for purposes of calculating the estimated maximum dealer manager fees in this table, we have not assumed any such waivers. Further, our Dealer Manager will not receive the dealer manager fee for shares issued pursuant to our distribution reinvestment plan. | |
(5) | In addition, out of its dealer manager fee, the Dealer Manager may reimburse participating broker dealers for distribution and marketing-related costs and expenses, such as costs associated with attending or sponsoring conferences, technology costs and other marketing costs and expenses in an amount up to 1.0% of gross offering proceeds from our primary offering. | |
(6) | For a discussion of the expenses which may be reimbursed please see “Management — Our Advisor and Our Advisory Agreement — Compensation.” | |
(7) | The acquisition fees and acquisition expenses incurred in connection with the purchase of real estate investments will not exceed an amount equal to 6.0% of the contract purchase price of the investment. However, a majority of our directors (including a majority of our independent directors) not otherwise interested in the transaction may approve such fees and expenses in excess of this limit if they determine the transaction to be commercially competitive, fair and reasonable to us. Tenant construction management fees and re-development construction management fees will be included in the definition of acquisition fees or acquisition expenses for this purpose to the extent that they are paid in connection with the acquisition, development or redevelopment of a property. If any such fees are paid in connection with a portion of a leased property at the request of a tenant or in conjunction with a new lease or lease renewal, such fees will be treated as ongoing operating costs of the property, similar to leasing commissions. | |
(8) | For purposes of calculating the estimated maximum acquisition fees in this table, we have assumed that we will not use debt when making real estate investments. In the event we raise the maximum $3,000,000,000 pursuant to our primary offering and all of our real estate investments are 50% leveraged at the time we acquire them, the total acquisition fees payable will be $103,930,532. To the extent we use distribution reinvestment plan proceeds for acquisitions, rather than redemptions, our Advisor will also receive an acquisition fee for any such real estate investments. Accordingly, in the event we raise the maximum $3,000,000,000 pursuant to our primary offering and the maximum $500,000,000 pursuant to our distribution reinvestment plan, and we use all such proceeds for acquisitions (and all of our real estate investments are 50% leveraged at the time we acquire them), the total acquisition fees payable will be $123,361,905. Some of these fees may be payable out of the proceeds of such borrowings. | |
(9) | In the sole discretion of our Advisor, these fees are payable, in whole or in part, in cash or OP Units. For the purposes of the payment of these fees, each OP Unit will be valued at the per share offering price of our common stock in our most recent public offering minus the maximum selling commissions and dealer manager fee being allowed in such offering, to account for the fact that no selling commissions or dealer manager fees will be paid in connection with any such issuances (at the current offering price, each such OP Unit would be issued at $9.00 per share). Each OP Unit will be convertible into one share of our common stock. | |
(10) | Actual amounts are dependent upon the amount of any debt incurred in connection with our acquisitions and otherwise and therefore cannot be determined at the present time. In the event we raise the maximum $3,000,000,000 pursuant to our primary offering and all of our real estate investments are 50% leveraged, the total debt financing fees payable will be $26,756,066. If, in addition, we raise a maximum of $500,000,000 pursuant to our distribution reinvestment plan and we use all such proceeds for acquisitions, rather than redemptions (and all of our real estate investments are 50% leveraged at the time we acquire them) the total debt financing fees payable will be $31,756,006. |
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(11) | Actual amounts are dependent upon usual and customary development fees for specific projects and therefore the amount cannot be determined at the present time. | |
(12) | Such fees must be approved by a majority of our independent directors as being fair and reasonable and on terms and conditions not less favorable than those available from unaffiliated third parties. | |
(13) | The asset management fee equals 1.5% on an annual basis. However, because this fee is calculated monthly, and the net equity we have invested in real estate investments may change on a monthly basis, we cannot accurately determine or calculate the amount of this fee on an annual basis. | |
(14) | Our Advisor will reimburse us for any amounts by which operating expenses exceed the greater of (i) 2.0% of our invested assets or (ii) 25% of our net income, unless our independent directors determine that such excess was justified. To the extent operating expenses exceed these limitations, they may not be deferred and paid in subsequent periods. Operating expenses include generally all expenses paid or incurred by us as determined by accounting principles generally accepted in the United States, or U.S. GAAP, except certain expenses identified in our charter, which we refer to in this prospectus as our articles. The expenses identified by our articles as excluded from operating expenses include: (i) expenses of raising capital such as organization and offering costs, legal, audit, accounting, tax services, costs related to compliance with the Sarbanes-Oxley Act of 2002, underwriting, brokerage, listing, registration and other fees, printing and such other expenses and taxes incurred in connection with the issuance, distribution, transfer, registration and stock exchange listing of our shares; (ii) interest payments, taxes and non-cash expenditures such as depreciation, amortization and bad debt reserves; (iii) incentive fees; (iv) distributions made with respect to interests in the Operating Partnership and (v) all fees and expenses associated or paid in connection with the acquisition, disposition, management and ownership of assets (such as real estate commissions, disposition fees, acquisition and debt financing fees and expenses, costs of foreclosure, insurance premiums, legal services, maintenance, repair or improvement of property, etc.). Please see “Management — Our Advisor and our Advisory Agreement — Reimbursements by our Advisor” for a detailed description of these expenses. | |
(15) | Property management fees and leasing fees for international acquisitions may differ from our domestic property management fees and leasing fees due to differences in international markets, but in all events the fees shall be paid in compliance with our articles, and fees paid to Hines and its affiliates shall be approved by a majority of our independent directors. | |
(16) | These fees relate to construction management services for improvements and build-out to tenant space. | |
(17) | Included in reimbursement of actual expenses incurred by Hines or its affiliates are the costs of personnel and overhead expenses related to such personnel, to the extent to which such costs and expenses relate to or support the performance of their duties. Periodically, Hines or an affiliate may be retained to provide ancillary services for a property which are not covered by a property management agreement and are generally provided by third parties. These services are provided at market terms and are generally not material to the management of the property. |
(18) | Such fee will only be paid if our Advisor or its affiliates provide a substantial amount of services, as determined by our independent directors, in connection with the sale. In no event will the fee, when added to the fees paid to unaffiliated parties in such capacity, exceed the lesser of a reasonable and customary commission or an amount equal to 6% of the sales price of such assets. |
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• | the sale of our common shares, | |
• | obtaining debt financing, | |
• | negotiating or obtaining the necessary purchase documentation, | |
• | locating suitable investments or | |
• | other factors. |
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• | the amount of the cash available for distribution; | |
• | the impact of such distribution on other partners of the Operating Partnership; | |
• | the Operating Partnership’s financial condition; | |
• | the Operating Partnership’s capital expenditure requirements and reserves therefor; and | |
• | the annual distribution requirements contained in the Code necessary to qualify and maintain our qualification as a REIT. |
• | the possibility that our partners or co-investors might become insolvent or bankrupt; | |
• | that such partners or co-investors might have economic or other business interests or goals that are inconsistent with our business interests or goals, including inconsistent goals relating to the sale of properties or other investments held in the joint venture or the timing of the termination and liquidation of the venture; | |
• | the possibility that we may incur liabilities as the result of actions taken by our partners or co-investors; or | |
• | that such partners or co-investors may be in controlling positions and/or be in a position to take actions contrary to our instructions or requests or contrary to our policies or objectives, including our policy with respect to qualifying and maintaining our qualification as a REIT. |
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• | changes in the general economic climate; | |
• | changes in local conditions such as an oversupply of space or reduction in demand for real estate; | |
• | changes in interest rates and the availability of financing; | |
• | changes in property level operating expenses due to inflation or otherwise; and | |
• | changes in laws and governmental regulations, including those governing real estate usage, zoning and taxes. |
• | the investments will fail to perform in accordance with our expectations because of conditions or liabilities we did not know about at the time of acquisition, and | |
• | our projections or estimates with respect to the performance of the investments, the costs of operating or improving the properties or the effect of the economy or capital markets on the investments will prove inaccurate. |
• | Local conditions, such as an oversupply of the types of properties we invest in or a reduction in demand for such properties in the area and | |
• | Increased operating costs, if these costs cannot be passed through to tenants. |
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• | conditions in financial markets and general economic conditions; | |
• | terrorist attacks and international instability; | |
• | natural disasters and acts of God; | |
• | over-building; | |
• | adverse national, state or local changes in applicable tax, environmental or zoning laws; and | |
• | a taking of any of the properties which we own or in which we otherwise have interests by eminent domain. |
• | purchase additional real estate investments; | |
• | repay debt; | |
• | buy out interests of any co-venturers or other partners in any joint venture in which we are a party; | |
• | purchase shares under our share redemption program; | |
• | create working capital reserves; or | |
• | make repairs, maintenance, tenant improvements or other capital improvements or expenditures to our other properties. |
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• | Long periods of time may elapse between the commencement and the completion of our projects; | |
• | Our original estimates may not be accurate and our actual construction and development costs may exceed those estimates; | |
• | The developer/builder may be prohibited from indexing costs to inflation indices prevailing in the industry, or from indexing receivables; | |
• | The level of interest of potential tenants for a recently launched development may be low; | |
• | Construction materials and equipment may be unavailable or cost more than expected due to changes in supply and demand; | |
• | Construction and sales may not be completed on time, resulting in a cost increase; |
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• | We may not be able to acquire or we may pay too much for the land we acquire for new developments or properties; | |
• | Labor may be in limited availability; and | |
• | Changes in tax, real estate and zoning laws may be unfavorable to us. |
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• | the burden of complying with a wide variety of foreign laws; | |
• | changing governmental rules and policies, including changes in land use and zoning laws, more stringent environmental laws or changes in such laws; | |
• | existing or new laws relating to the foreign ownership of real property or loans and laws restricting the ability of foreign persons or companies to remove profits earned from activities within the country to the person’s or company’s country of origin; | |
• | the potential for expropriation; | |
• | possible currency transfer restrictions; | |
• | imposition of adverse or confiscatory taxes; | |
• | changes in real estate and other tax rates and changes in other operating expenses in particular countries; | |
• | possible challenges to the anticipated tax treatment of the structures that allow us to acquire and hold investments; | |
• | adverse market conditions caused by terrorism, civil unrest and changes in national or local governmental or economic conditions; | |
• | the willingness of domestic or foreign lenders to make loans in certain countries and changes in the availability, cost and terms of loan funds resulting from varying national economic policies; | |
• | general political and economic instability in certain regions; | |
• | the potential difficulty of enforcing obligations in other countries; and | |
• | Hines’ limited experience and expertise in foreign countries relative to its experience and expertise in the United States. |
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• | sell shares in this offering or sell additional shares in the future, including those issued pursuant to our distribution reinvestment plan; | |
• | sell securities that are convertible into shares, such as OP Units; | |
• | at the option of our Advisor, issue OP Units to pay for certain fees; | |
• | issue OP Units or common shares to our Advisor or affiliates in exchange for advances or deferrals of fees; | |
• | issue shares in a private offering; or | |
• | issue shares to sellers of properties acquired by us in connection with an exchange of partnership units from the Operating Partnership. |
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• | a merger, tender offer or proxy contest; | |
• | the assumption of control by a holder of a large block of our securities; and/or | |
• | the removal of incumbent management. |
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• | any person who beneficially owns 10% or more of the voting power of our outstanding voting shares (an “interested stockholder”); | |
• | any of our affiliates or associates who, at any time within the two-year period prior to the date in question, was the beneficial owner of 10% or more of the voting power of our then outstanding shares (also an “interested stockholder”); or | |
• | an affiliate of an interested stockholder. |
• | limitations on the capital structure of the entity; |
• | restrictions on certain investments; |
• | prohibitions on transactions with affiliated entities; and |
• | public reporting disclosures, record keeping, voting procedures, proxy disclosure and similar corporate governance rules and regulations. |
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• | the issuer issues securities the payment of which depends primarily on the cash flow from “eligible assets”; |
• | the securities sold are fixed income securities rated investment grade by at least one rating agency (fixed income securities which are unrated or rated below investment grade may be sold to institutional accredited investors and any securities may be sold to “qualified institutional buyers” and to persons involved in the organization or operation of the issuer); |
• | the issuer acquires and disposes of eligible assets (1) only in accordance with the agreements pursuant to which the securities are issued, (2) so that the acquisition or disposition does not result in a downgrading of the issuer’s fixed income securities and (3) the eligible assets are not acquired or |
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disposed of for the primary purpose of recognizing gains or decreasing losses resulting from market value changes; and |
• | unless the issuer is issuing only commercial paper, the issuer appoints an independent trustee, takes reasonable steps to transfer to the trustee an ownership or perfected security interest in the eligible assets, and meets rating agency requirements for commingling of cash flows. |
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• | the allocation of new investments among us and other entities operated by Hines; | |
• | the allocation of time and resources among us and other entities operated by Hines; | |
• | the timing and terms of the investment in or sale of an asset; | |
• | investments with Hines and affiliates of Hines; | |
• | the compensation paid to our Advisor; and | |
• | our relationship with Hines in the management of our properties. |
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• | we would not be allowed to deduct our distributions to our stockholders when computing our taxable income; | |
• | we would be subject to federal income tax (including any applicable alternative minimum tax) on our taxable income at regular corporate rates; | |
• | we would be disqualified from being taxed as a REIT for the four taxable years following the year during which qualification was lost, unless entitled to relief under certain statutory provisions; | |
• | our cash available for distribution would be reduced and we would have less cash to distribute to our stockholders; and | |
• | we might be required to borrow additional funds or sell some of our assets in order to pay corporate tax obligations we may incur as a result of our disqualification. |
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• | part of the income and gain recognized by certain qualified employee pension trusts with respect to our common shares may be treated as unrelated business taxable income if our stock is predominately held by qualified employee pension trusts, we are required to rely on a special look through rule for purposes of meeting one of the REIT stock ownership tests, and we are not operated in such a manner as to otherwise avoid treatment of such income or gain as unrelated business taxable income; | |
• | part of the income and gain recognized by a tax exempt investor with respect to our common shares would constitute unrelated business taxable income if such investor incurs debt in order to acquire the common shares; and | |
• | part or all of the income or gain recognized with respect to our common shares by social clubs, voluntary employee benefit associations, supplemental unemployment benefit trusts and qualified group legal services plans which are exempt from federal income taxation under Sections 501(c)(7), (9), (17), or (20) of the Code may be treated as unrelated business taxable income. |
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• | Your investment is consistent with your fiduciary obligations under ERISA and the Code; | |
• | Your investment is made in accordance with the documents and instruments governing your plan or IRA, including your plan’s investment policy; | |
• | Your investment satisfies the prudence and diversification requirements of Sections 404(a)(1)(B) and 404(a)(1)(C) of ERISA; | |
• | Your investment will not impair the liquidity of the plan or IRA; | |
• | Your investment will not produce “unrelated business taxable income” for the plan or IRA; | |
• | You will be able to value the assets of the plan annually in accordance with ERISA requirements; and | |
• | Your investment will not constitute a prohibited transaction under Section 406 of ERISA or Section 4975 of the Code. |
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• | the minimum $2,000,000 in common stock pursuant to this primary offering but issue no shares under our distribution reinvestment plan; and | |
• | the maximum $3,000,000,000 in common stock pursuant to this primary offering but issue no shares under our distribution reinvestment plan. |
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Maximum Offering | ||||||||||||||||
Minimum Offering | $3,000,000,000 in Shares(2) | |||||||||||||||
$2,000,000 in Shares(1) | Amount | Percentage | ||||||||||||||
GROSS PROCEEDS | $ | 2,000,000 | 100 | % | $ | 3,000,000,000 | 100 | % | ||||||||
Less Expenses: | ||||||||||||||||
Selling Commissions(3) | $ | 150,000 | 7.5 | % | $ | 225,000,000 | 7.5 | % | ||||||||
Dealer Manager Fees(4) | $ | 50,000 | 2.5 | % | $ | 75,000,000 | 2.5 | % | ||||||||
Issuer Costs(5) | $ | 100,000 | 5.0 | % | $ | 24,393,400 | 0.8 | % | ||||||||
Total Expenses | $ | 300,000 | 15.0 | % | $ | 324,393,400 | 10.8 | % | ||||||||
NET PROCEEDS AVAILABLE FOR INVESTMENT | $ | 1,700,000 | 85.0 | % | $ | 2,675,606,600 | 89.2 | % | ||||||||
Less: | ||||||||||||||||
Acquisition Fees on Investments(6)(7) | $ | 33,176 | 1.7 | % | $ | 52,227,580 | 1.7 | % | ||||||||
Acquisition Expenses(7)(8) | $ | 8,000 | 0.4 | % | $ | 12,000,000 | 0.4 | % | ||||||||
Working Capital Reserve | $ | — | — | % | $ | — | — | % | ||||||||
REMAINING PROCEEDS AVAILABLE FOR INVESTMENT | $ | 1,658,824 | 82.9 | % | $ | 2,611,379,020 | 87.0 | % | ||||||||
(1) | Assumes we sell the minimum of $2,000,000 in common shares in our primary offering but issue no shares in our distribution reinvestment plan and that no discounts or waivers of fees described under the “Plan of Distribution” section of this prospectus are applicable. | |
(2) | Assumes we sell the maximum $3,000,000,000 in our common shares in our primary offering but issue no shares under our distribution reinvestment plan and that no discounts or waivers of fees described under the “Plan of Distribution” section of this prospectus are applicable. | |
(3) | We will pay our Dealer Manager selling commissions of up to 7.5% of the gross offering proceeds raised in our primary offering for sales of our common shares and up to 7.0% of the gross offering proceeds raised in our primary offering may be reallowed to participating broker dealers. We will not pay selling commissions for shares issued pursuant to our distribution reinvestment plan and certain other purchases as described in the “Plan of Distribution” section of this prospectus. | |
(4) | We will pay our Dealer Manager a dealer manager fee of up to 2.5% of the gross offering proceeds raised in our primary offering for sales of our common shares, and up to 1.5% of the gross offering proceeds raised in our primary offering may be reallowed to participating broker dealers as marketing fees; and up to an additional 1.0% of the gross offering proceeds raised in our primary offering may be paid out of the dealer manager fee as reimbursements for distribution and marketing-related costs and expenses of participating broker dealers, such as fees and costs associated with conferences sponsored by participating broker dealers. We will not pay the dealer manager fee for shares issued pursuant to our distribution reinvestment plan and certain other purchases as described in the “Plan of Distribution” section of this prospectus. | |
(5) | In addition to paying selling commissions and the dealer manager fee we will pay the issuer costs incurred by us directly or indirectly through our Advisor and its affiliates, which expenses are expected to consist of, among other costs, expenses of our organization, actual legal, accounting, bona fide out-of-pocket itemized and detailed due diligence costs, printing, filing fees, transfer agent costs, postage, escrow fees, data processing fees, advertising and sales literature and other offering-related costs. | |
(6) | We will pay an acquisition fee of 2.0%, payable in cash or OP Units, of (i) the purchase price of real estate investments acquired or originated directly by us, including any debt attributable to such |
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investments, and (ii) when we make an investment indirectly through another entity, such investment’s pro rata share of the gross asset value of real estate related investments held by that entity. For purposes of this table we have assumed that we will not use debt when making real estate investments and will pay all acquisition fees in cash. In the event we raise the maximum $3,000,000,000 pursuant to our primary offering, pay all acquisition fees in cash, and all of our real estate investments are 50% leveraged at the time we acquire them, the total acquisition fees payable will be $103,930,532 or approximately 3.5% of gross proceeds. Some of these fees may be payable out of the proceeds of such borrowings. | ||
(7) | The acquisition fees and acquisition expenses incurred in connection with the purchase of real estate investments will not exceed an amount equal to 6.0% of the contract purchase price of the investment. However, a majority of our directors (including a majority of our independent directors) not otherwise interested in the transaction may approve such fees and expenses in excess of this limit if they determine the transaction to be commercially competitive, fair and reasonable to us. | |
(8) | Acquisition expenses were estimated by us for illustrative purposes, based on the prior experience of Hines, and may include customary third-party acquisition costs which are typically included in the gross purchase price of the real estate investments we acquire or are paid by us in connection with such acquisitions. These third-party acquisition costs include legal, accounting, consulting, travel, appraisals, engineering, due diligence, option payments, title insurance and other costs and expenses relating to potential acquisitions regardless of whether the property is actually acquired. The actual amount of acquisition expenses cannot be determined at the present time and will depend on numerous factors, including the type and jurisdiction of the real estate investment acquired, the legal structure of the transaction in which the real estate investment is acquired, the aggregate purchase price paid to acquire the real estate investment, and the number of real estate investments acquired. |
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Name | Age | Position and Office with Hines Global | ||||
Jeffrey C. Hines | 53 | Director and Chairman of the board of directors | ||||
C. Hastings Johnson | 60 | Director | ||||
Charles M. Baughn | 54 | Director | ||||
Jack L. Farley | 45 | Independent Director | ||||
Thomas L. Mitchell | 49 | Independent Director | ||||
John S. Moody | 60 | Independent Director | ||||
Peter Shaper | 43 | Independent Director | ||||
Charles N. Hazen | 48 | President and Chief Executive Officer | ||||
Sherri W. Schugart | 43 | Chief Financial Officer | ||||
Edmund A. Donaldson | 39 | Chief Investment Officer | ||||
Frank R. Apollo | 42 | Senior Vice President — Finance; Treasurer and Secretary | ||||
Kevin L. McMeans | 44 | Asset Management Officer | ||||
Ryan T. Sims | 37 | Chief Accounting Officer |
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• | ownership of an interest in Hines, our Advisor or their affiliates other than Hines Global or any other affiliate with securities registered under the Exchange Act; | |
• | employment by Hines or our Advisor or their affiliates; | |
• | service as an officer, trust manager or director of Hines or our Advisor or their affiliates other than as a director of Hines Global or any other affiliate with securities registered under the Exchange Act; | |
• | performance of services for us, other than as a director, or any of its affiliates with securities registered under the Exchange Act; | |
• | service as a director, trust manager or trustee of more than three real estate investment trusts advised by our Advisor or organized by Hines; or | |
• | maintenance of a material business or professional relationship with Hines, our Advisor or any of their affiliates. |
• | the director was employed by us or Hines within the last three years; | |
• | an immediate family member of the director was employed by us or Hines as an executive officer within the last three years; | |
• | the director, or an immediate family member of the director, received more than $120,000 during any 12-month period within the last three years in direct compensation from us or Hines, other than director and committee fees and pension or other forms of deferred compensation for prior service (provided such compensation is not contingent in any way on continued service); | |
• | the director is a current partner or employee of a firm that is our or Hines’ internal or external auditor, the director has an immediate family member who is a current partner of such a firm, the director has an immediate family member who is a current employee of such a firm and personally works on our or Hines’ audit, or the director or an immediate family member was within the last three years a partner or employee of such a firm and personally worked on our or Hines’ audit within that time; | |
• | the director or an immediate family member is, or has been with the last three years, employed as an executive officer of another company where any of our or Hines’ present executive officers at the same time serves or served on that company’s compensation committee; or | |
• | the director was an executive officer or an employee (or an immediate family member of the director was an executive officer) of a company that makes payments to, or receives payments from, us or Hines for property or services in an amount which, in any of the last three fiscal years, exceeded the greater of $1,000,000 or 2% of such other company’s consolidated gross revenues. |
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• | our net assets and net income; | |
• | the amount of the fees paid to our Advisor in relation to the size, composition and performance of our investments; | |
• | the success of our Advisor in generating appropriate investment opportunities; | |
• | rates charged to other REITs, especially REITs of similar structure and other investors by advisors performing similar services; | |
• | additional revenues realized by our Advisor and its affiliates through their relationship with us, whether we pay them or they are paid by others with whom we do business; | |
• | the quality and extent of service and advice furnished by our Advisor; | |
• | the performance of our investment portfolio; | |
• | the quality of our portfolio relative to the investments generated by our Advisor for its own account; and | |
• | other factors related to managing a public company, such as stockholder services and support, compliance with securities laws, including Sarbanes-Oxley and other factors typical of a public company. |
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• | assists our board of directors in identifying individuals qualified to become members of our board of directors; |
• | recommends candidates to our board of directors to fill vacancies on the board; |
• | recommends committee assignments for directors to the full board; |
• | periodically assesses the performance of our board of directors; |
• | reviews and recommends appropriate corporate governance policies and procedures to our board of directors; and |
• | reviews and monitors our Code of Business Conduct and Ethics for Senior Officers and Directors, and any other corporate governance policies and procedures we may have from time to time. |
• | $7,500 to the Chairperson of our conflicts committee; | |
• | $6,000 to the Chairperson of our audit committee; | |
• | $3,000 to the Chairperson of our compensation committee; and | |
• | $3,000 to the Chairperson of our nominating and corporate governance committee. |
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• | an act or omission of the director or officer was material to the cause of action adjudicated in the proceeding, and was committed in bad faith or was the result of active and deliberate dishonesty; | |
• | the director or officer actually received an improper personal benefit in money, property or services; or | |
• | with respect to any criminal proceeding, the director or officer had reasonable cause to believe his act or omission was unlawful. |
• | the indemnified person determined, in good faith, that the course of conduct which caused the loss or liability was in our best interests; | |
• | the indemnified person was acting on our behalf or performing services for us; | |
• | in the case of non-independent directors, the liability or loss was not the result of negligence or misconduct by the party seeking indemnification; | |
• | in the case of independent directors, the liability or loss was not the result of gross negligence or willful misconduct by the party seeking indemnification; and | |
• | the indemnification or agreement to hold harmless is recoverable only out of our net assets and not from our stockholders. |
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• | there has been a successful adjudication on the merits of each count involving alleged securities law violations; | |
• | such claims have been dismissed with prejudice on the merits by a court of competent jurisdiction; or | |
• | a court of competent jurisdiction approves a settlement of the claims against the indemnitee and finds that indemnification of the settlement and the related costs should be made, and the court considering the request for indemnification has been advised of the position of the Securities and Exchange Commission and of the published position of any state securities regulatory authority in which the securities were offered or sold as to indemnification for violations of securities laws. |
• | the legal action relates to acts or omissions with respect to the performance of duties or services on our behalf; | |
• | the legal action is initiated by a third party who is not a stockholder or the legal action is initiated by a stockholder acting in his or her capacity as such and a court of competent jurisdiction specifically approves such advancement; | |
• | the party seeking advancement provides us with written affirmation of his or her good faith belief that he or she has met the standard of conduct necessary for indemnification according to our articles; and | |
• | the party seeking advancement provides us with written affirmation of his or her good faith belief that he or she has met the standard of conduct necessary for indemnification and undertakes to repay the advanced funds to us, together with the applicable legal rate of interest thereon, in cases in which such party is found not to be entitled to indemnification. |
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Name | Age | Position and Office with the General Partner of our Advisor | ||||
Jeffrey C. Hines | 53 | Chairman of the Managers | ||||
C. Hastings Johnson | 60 | Manager | ||||
Charles M. Baughn | 54 | Manager | ||||
Charles N. Hazen | 48 | President and Chief Executive Officer | ||||
Sherri W. Schugart | 43 | Chief Financial Officer | ||||
Edmund A. Donaldson | 39 | Chief Investment Officer | ||||
Frank R. Apollo | 42 | Senior Vice President — Finance; Treasurer and Secretary | ||||
Kevin L. McMeans | 44 | Asset Management Officer | ||||
Ryan T. Sims | 37 | Chief Accounting Officer |
• | the development of this offering, including the determination of its specific terms; | |
• | along with our Dealer Manager, the approval of the participating broker dealers and negotiation of the related selling agreements; | |
• | preparation and approval of all marketing materials to be used by our Dealer Manager or others relating to this offering; | |
• | coordination of the due diligence process relating to participating broker dealers and their review of any prospectuses and our other offering documents; | |
• | creation and implementation of various technology and electronic communications related to this offering; | |
• | along with our Dealer Manager, the negotiation and coordination with our transfer agent of the receipt, collection, processing and acceptance of subscription agreements, commissions, and other administrative support functions; and | |
• | all other services related to this offering, whether performed and incurred by our Advisor or its affiliates. |
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• | serve as our investment and financial advisor and obtain certain market research and economic and statistical data in connection with our real estate investments and investment objectives and policies; | |
• | subject to our investment objectives and policies: (i) locate, analyze and select potential investments; (ii) structure and negotiate the terms and conditions of real estate investments; and (iii) acquire real estate investments on our behalf; | |
• | oversee the due diligence process; | |
• | prepare reports regarding prospective investments which include recommendations and supporting documentation necessary for our board of directors to evaluate the proposed investments; | |
• | obtain reports (which may be prepared by our Advisor or its affiliates), where appropriate, concerning the value of our contemplated investments; and | |
• | negotiate and execute approved investments and other transactions. |
• | investigate, select, and, on our behalf, engage and conduct business with such persons as our Advisor deems necessary to the proper performance of its obligations under our Advisory Agreement, including but not limited to consultants, accountants, technical advisors, attorneys, brokers, underwriters, corporate fiduciaries, escrow agents, depositaries, custodians, agents for collection, insurers, insurance agents, developers, construction companies and any and all persons acting in any other capacity deemed by our Advisor necessary or desirable for the performance of any of the services under our Advisory Agreement; | |
• | monitor applicable markets and obtain reports (which may be prepared by our Advisor or its affiliates) where appropriate, concerning the value of our investments; | |
• | monitor and evaluate the performance of our investments, provide daily management services and perform and supervise the various management and operational functions related to our investments; | |
• | coordinate with any property manager; | |
• | coordinate and manage relationships between us and any joint venture partners; and | |
• | provide financial and operational planning services and investment portfolio management functions. |
• | manage and perform the various administrative functions necessary for our day-to-day operations; | |
• | from time-to-time, or at any time reasonably requested by the directors, make reports to the directors on our Advisor’s performance of services to us under our Advisory Agreement; | |
• | coordinate with our independent accountants and auditors to prepare and deliver to our audit committee an annual report covering our Advisor’s compliance with certain aspects of our Advisory Agreement; | |
• | provide or arrange for administrative services and items, legal and other services, office space, office furnishings, personnel and other overhead items necessary and incidental to our business and operations; | |
• | provide financial and operational planning services and portfolio management functions; | |
• | maintain accounting data and any other information concerning our activities as shall be required to prepare and to file all periodic financial reports and returns required to be filed with the Securities and Exchange Commission and any other regulatory agency, including annual financial statements; | |
• | maintain all of our appropriate books and records; |
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• | oversee tax and compliance services and risk management services and coordinate with appropriate third parties, including independent accountants and other consultants, on related tax matters; | |
• | supervise the performance of such ministerial and administrative functions as may be necessary in connection with our daily operations; | |
• | provide us with all necessary cash management services; | |
• | manage and coordinate with the transfer agent the distribution process and payments to stockholders; | |
• | consult with the officers and board of directors and assist in evaluating and obtaining adequate insurance coverage based upon risk management determinations; | |
• | provide the officers and directors with timely updates related to the overall regulatory environment affecting us, as well as managing compliance with such matters, including but not limited to compliance with the Sarbanes-Oxley Act of 2002; | |
• | consult with the officers and board of directors relating to the corporate governance structure and appropriate policies and procedures related thereto; and | |
• | oversee all reporting, record keeping, internal controls and similar matters in a manner to allow us to comply with applicable law including the Sarbanes-Oxley Act. |
• | manage communications with our stockholders, including answering phone calls, preparing and sending written and electronic reports and other communications; and | |
• | establish technology infrastructure to assist in providing stockholder support and service. |
• | identify and evaluate potential financing and refinancing sources, engaging a third-party broker if necessary; | |
• | negotiate terms, arrange and execute financing agreements; | |
• | manage relationships between us and our lenders; and | |
• | monitor and oversee the service of our debt facilities and other financings. |
• | consult with the board of directors and provide assistance with the evaluation and approval of potential asset dispositions, sales or Liquidity Events; and | |
• | structure and negotiate the terms and conditions of transactions pursuant to which real estate investments may be sold. |
• | immediately by us (i) in the event our Advisor commits fraud, criminal conduct, willful misconduct or negligently breaches its fiduciary duty to us, (ii) upon the bankruptcy of our Advisor or its involvement in similar insolvency proceedings or (iii) in the event of a material breach of our Advisory Agreement by our Advisor, which remains uncured after 10 days’ written notice; |
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• | without cause by a majority of our independent directors or by our Advisor upon 60 days’ written notice; or | |
• | immediately by our Advisor upon our bankruptcy or involvement in similar insolvency proceedings or any material breach of our Advisory Agreement by us, which remains uncured after 10 days’ written notice. |
• | all organization and offering costs, including expenses of our organization, actual legal, accounting, bona fide out-of-pocket itemized due diligence expenses, printing, filing fees, transfer agent costs, postage, escrow fees, data processing fees, advertising and sales literature and other offering related expenses; | |
• | acquisition expenses incurred in connection with the selection and acquisition of assets, including such expenses incurred related to assets pursued or considered but not ultimately acquired by us; | |
• | expenses incurred in connection with our obtaining debt financing; | |
• | the actual out-of-pocket cost of goods and services used by us and obtained from entities not affiliated with our Advisor, including brokerage fees paid in connection with the purchase and sale of our assets; | |
• | taxes and assessments on income or assets and taxes as an expense of doing business and any other taxes otherwise imposed on us and our business or income; | |
• | out-of-pocket costs associated with insurance required in connection with our business or by our officers and directors; |
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• | all out-of-pocket expenses in connection with payments to our board of directors and meetings of our board of directors and stockholders; | |
• | personnel and related employment direct costs and overhead of our Advisor and its affiliates in performing stockholder services for existing stockholders such as (1) managing communications with stockholders, including answering phone calls, preparing and sending written and electronic reports and other communications, and (2) establishing reasonable technology infrastructure to assist in providing stockholder support and service; | |
• | out-of-pocket expenses of maintaining communications with stockholders, including the cost of preparation, printing, and mailing annual reports and other stockholder reports, proxy statements and other reports required by governmental entities; | |
• | third-party audit, accounting and legal fees, tax services, fees related to compliance with the Sarbanes-Oxley Act of 2002 and other fees for professional services relating to our operations and all such fees incurred at the request of, or on behalf of, our independent directors or any committee of our board of directors; | |
• | personnel and related employment direct costs and overhead of our Advisor and its affiliates in connection with providing professional services for us in-house, including legal services, tax services, internal audit services, technology related services and services in connection with compliance with Sarbanes-Oxley Act of 2002; | |
• | out-of-pocket costs incurred by us in complying with all applicable laws, regulation and ordinances; | |
• | expenses incurred in connection with disposition services; and | |
• | all other out-of-pocket costs necessary for our operation and the assets incurred by our Advisor in performing its duties under our Advisory Agreement. |
• | expenses of raising capital such as organization and offering costs, legal, audit, accounting, tax services, costs related to compliance with Sarbanes Oxley Act of 2002, underwriting, brokerage, listing, registration and other fees, printing and other such expenses and taxes incurred in connection with the issuance, distribution, transfer, registration and stock exchange listing of our shares; |
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• | interest payments, taxes and non-cash expenditures such as depreciation, amortization and bad debt reserves; | |
• | incentive fees; | |
• | distributions made with respect to interests in the Operating Partnership; and | |
• | all fees and expenses associated or paid in connection with the acquisition, disposition, management and ownership of assets (such as real estate commissions, disposition fees, acquisition and debt financing fees and expenses, costs of foreclosure, insurance premiums, legal services, maintenance, repair or improvement of property, etc.). |
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Number of | ||||||||||
Years with | ||||||||||
Name | Age | Hines | Position | |||||||
Gerald D. Hines | 83 | 52 | Chairman of the Board | |||||||
Jeffrey C. Hines | 53 | 27 | President and Chief Executive Officer | |||||||
C. Hastings Johnson | 60 | 31 | Vice Chairman and Chief Financial Officer | |||||||
Charles M. Baughn | 54 | 24 | Executive Vice President and CEO — Capital Markets Group | |||||||
James C. Buie, Jr. | 56 | 28 | Executive Vice President and CEO — West Region and Asia Pacific | |||||||
Kenneth W. Hubbard | 66 | 35 | Executive Vice President and CEO — East Region | |||||||
Christopher D. Hughes | 47 | 22 | Executive Vice President and CEO — East Region | |||||||
E. Staman Ogilvie | 59 | 35 | Executive Vice President and CEO — Eurasia Region | |||||||
C. Kevin Shannahan | 53 | 26 | Executive Vice President and CEO — Midwest, Southeast Region and South America | |||||||
Mark A. Cover | 49 | 25 | Executive Vice President and CEO — Southwest Region and Mexico/Central America | |||||||
Michael J.G. Topham | 61 | 33 | Executive Vice President and CEO — Hines Europe and Middle East/North Africa |
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Number of | (As of December 31, 2008) | |||||||
Title | Employees | Average Tenure (Years) | ||||||
Executive Vice President | 8 | 29 | ||||||
Senior Vice President | 47 | 21 | ||||||
Vice President | 146 | 14 | ||||||
Manager | 1196 | 6 |
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• | Tenant relations; | |
• | Energy management; | |
• | Preventive maintenance; | |
• | Security; | |
• | Vendor contracting; | |
• | Parking management; | |
• | Marketing plans; | |
• | Broker relations; | |
• | Tenant prospecting; and | |
• | Lease negotiation. |
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• | manage, operate and maintain each premises in a manner normally associated with the management and operation of a quality building; | |
• | prepare and submit to us a proposed operating budget, capital budget, marketing program and leasing guidelines for each property for the management, leasing, and operation of each property for the forthcoming calendar year; | |
• | collect all rents and other charges; | |
• | perform construction management services in connection with the construction of leasehold improvements or redevelopment; | |
• | be primarily responsible for the leasing activities of each property or supervise any third party we retain directly to provide such leasing activities; and | |
• | enter into various agreements with sub-contractors for the operational activities of each property. |
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Name | Age | Position and Office with our Dealer Manager | ||||
Charles M. Baughn | 54 | Director and Chief Executive Officer | ||||
Charles N. Hazen | 48 | Director | ||||
Christopher D. Hughes | 47 | Director | ||||
Sherri W. Schugart | 43 | Director | ||||
Robert F. Muller, Jr. | 47 | Director and President — Retail Distribution | ||||
Frank R. Apollo | 42 | Vice President, Treasurer and Secretary | ||||
J. Mark Earley | 45 | National Sales Director — Retail Distribution | ||||
Julie B. Nickell | 40 | Chief Operating Officer | ||||
Lance O. Murphy | 38 | Divisional Director — Retail Distribution | ||||
Dugan Fife | 35 | Divisional Director — Retail Distribution |
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Estimated Maximum | ||||
(Based on | ||||
$3,000,000,000 in | ||||
Type and Recipient | Description and Method of Computation | Shares)(1) | ||
Organization and Offering Activities(2) | ||||
Selling Commissions — our Dealer Manager | Up to 7.5% of gross offering proceeds from our primary offering, excluding proceeds from our distribution reinvestment plan; up to 7.0% of gross offering proceeds from our primary offering may be reallowed to participating broker dealers. | $225,000,000(3) | ||
Dealer Manager Fee — our Dealer Manager | Up to 2.5% of gross offering proceeds from our primary offering excluding proceeds from our distribution reinvestment plan; up to 1.5% of gross offering proceeds from our primary offering may be reallowed to selected participating broker dealers as a market fee.(5) | $75,000,000(4) | ||
Reimbursement of Issuer Costs — our Advisor | We will reimburse our Advisor for any issuer costs that they pay on our behalf. Included in such amount is 0.25% of the gross offering proceeds as reimbursement to our Dealer Manager and participating broker dealers for bona fide out-of-pocket, itemized and detailed due diligence expenses incurred by these entities. | $24,393,400 | ||
Investment Activities(6) | ||||
Acquisition Fee — our Advisor | 2.0% of (i) the purchase price of real estate investments acquired, including any debt attributable to such investments or the principal amounts of any loans originated directly by us, or (ii) when we make an investment indirectly through another entity, such investment’s pro rata share of the gross asset value of real estate investments held by that entity.(7)(8) | $52,227,580(9) | ||
Acquisition Expenses — our Advisor | Reimbursement of acquisition expenses in connection with the purchase of real estate investments.(7) | Not determinable at this time | ||
Debt Financing Fee — our Advisor | 1.0% of the amount of any debt financing obtained or assumed by us or made available to us or our pro rata share of any debt financing obtained or assumed by or made available to any of our joint ventures. In no event will the debt financing fee be paid more than once in respect of the same debt. | Not determinable at this time(9)(10) | ||
Development Fee — Hines or its Affiliates | We will pay a development fee in an amount that is usual and customary for comparable services rendered to similar projects in the geographic area of the project.(12) | Not determinable at this time(11) | ||
Operational Activities(6) | ||||
Asset Management Fee — our Advisor | 0.125% per month of the net equity we have invested in real estate investments at the end of each month. | Not determinable at this time(9)(13) |
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Estimated Maximum | ||||
(Based on | ||||
$3,000,000,000 in | ||||
Type and Recipient | Description and Method of Computation | Shares)(1) | ||
Administrative Expense Reimbursements — our Advisor | Reimbursement of actual expenses incurred by our Advisor in connection with our administration on an ongoing basis.(14) | Not determinable at this time | ||
Property Management Fee — Hines or its Affiliates | Customary property management fees if Hines or an affiliate is our property manager. Such fees will be paid in an amount that is usual and customary in that geographic area for that type of property.(12)(15) | Not determinable at this time | ||
Leasing Fee — Hines or its Affiliates | Customary leasing fees if Hines or an affiliate is our primary leasing agent. Such fees will be paid in an amount that is usual and customary in that geographic area for that type of property.(12)(15) | Not determinable at this time | ||
Tenant Construction Management Fees — Hines or its Affiliates | Amount payable by the tenant under its lease or, if payable by the landlord, direct costs incurred by Hines or an affiliate if the related services are provided by off-site employees.(16) | Not determinable at this time | ||
Re-development Construction Management Fees — Hines or its Affiliates | Customary re-development construction management fees if Hines or its affiliates provide such services. Such fees will be paid in an amount that is usual and customary in the geographic area for that type of property.(12) | Not determinable at this time | ||
Expense Reimbursements — Hines or its Affiliates | Reimbursement of actual expenses incurred in connection with the management and operation of our properties.(17) | Not determinable at this time | ||
Disposition Fee — our Advisor | 1.0% of (i) the sales price of any real estate investments sold, held directly by us, or (ii) when we hold investments indirectly through another entity, our pro rata share of the sales price of the real estate investment sold by that entity.(18) | Not determinable at this time(9) | ||
Special OP Units — Hines Global REIT Associates Limited Partnership | The holder of the Special OP Units in the Operating Partnership will be entitled to receive distributions from the Operating Partnership in an amount equal to 15% of distributions, including from sales of real estate investments, refinancings and other sources, but only after our stockholders have received (or are deemed to have received), in the aggregate, cumulative distributions equal to their invested capital plus an 8.0% cumulative, non-compounded annual pre-tax return on such invested capital. The Special OP Units may be converted into OP Units that, at the election of the holder, will be repurchased for cash (or, in the case of (iii) below, a promissory note) or our shares, following: (i) the listing of our common stock on a national securities exchange, or (ii) a merger, consolidation or sale of substantially all of our assets or any similar transaction or any transaction pursuant to which a majority of our board of directors then in office are replaced or removed or (iii) the occurrence of certain events that result in the termination or non-renewal of our Advisory Agreement. | Not determinable at this time |
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Estimated Maximum | ||||
(Based on | ||||
$3,000,000,000 in | ||||
Type and Recipient | Description and Method of Computation | Shares)(1) | ||
Disposition and Liquidation(6) | ||||
Disposition Fee — our Advisor | 1.0% of (i) the sales price of any real estate investments sold, held directly by us, or (ii) when we hold investments indirectly through another entity, our pro rata share of the sales price of the real estate investment sold by that entity.(18) | Not determinable at this time(9) | ||
Special OP Units — Hines Global REIT Associates Limited Partnership | The holder of the Special OP Units in the Operating Partnership will be entitled to receive distributions from the Operating Partnership in an amount equal to 15% of distributions, including from sales of real estate investments, refinancings and other sources, but only after our stockholders have received (or are deemed to have received), in the aggregate, cumulative distributions equal to their invested capital plus an 8.0% cumulative, non-compounded annual pre-tax return on such invested capital. The Special OP Units may be converted into OP Units that, at the election of the holder, will be repurchased for cash (or, in the case of (iii) below, a promissory note) or our shares, following: (i) the listing of our common stock on a national securities exchange, (ii) a merger, consolidation or a sale of substantially all of our assets or any similar transaction or any transaction pursuant to which a majority of our board of directors then in office are replaced or removed or (iii) the occurrence of certain events that result in the termination or non-renewal of our Advisory Agreement. | Not determinable at this time |
(1) | Unless otherwise indicated, assumes we sell the maximum of $3,000,000,000 in shares in our primary offering and excludes the sale of any shares under our distribution reinvestment plan, which may be used for redemptions or other purposes. To the extent such proceeds are invested in real estate investments, certain fees will be increased but, except as set forth herein, the amounts are not determinable at this time. | |
(2) | The total compensation related to our organization and offering activities, which includes selling commissions, the dealer manager fee and issuer costs will not exceed 15% of the gross offering proceeds. | |
We expect to pay the following issuer costs in connection with the primary offering: |
Securities Act registration fees | $ | 117,900 | ||
FINRA filing fee | $ | 75,500 | ||
Blue sky qualification fees and expenses | $ | 500,000 | ||
Printing and mailing expenses | $ | 6,000,000 | ||
Legal fees and expenses | $ | 4,000,000 | ||
Accounting fees and expenses | $ | 1,000,000 | ||
Advertising and sales literature | $ | 1,200,000 | ||
Transfer agent fees | $ | 3,750,000 | ||
Bank and other administrative expenses | $ | 250,000 | ||
Due diligence expense reimbursements | $ | 7,500,000 | * | |
$ | 24,393,400 | |||
* | This amount reflects the expected amount of bona fide out-of-pocket, itemized and detailed due diligence expenses, but we are permitted to pay up to 0.5% of the gross offering proceeds for such expenses. |
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Additional Securities Act registration fees in the amount of $19,650 have been paid in connection with shares registered for our distribution reinvestment plan. | ||
(3) | Commissions may be reduced for volume or other discounts or waived as further described in the “Plan of Distribution” section of this prospectus; however, for purposes of calculating the estimated maximum selling commissions in this table, we have not assumed any such discounts or waivers. Further, our Dealer Manager will not receive selling commissions for shares issued pursuant to our distribution reinvestment plan. | |
(4) | The dealer manager fees may be waived as further described in the “Plan of Distribution” section of this prospectus; however, for purposes of calculating the estimated maximum dealer manager fees in this table, we have not assumed any such waivers. Further, our Dealer Manager will not receive the dealer manager fee for shares issued pursuant to our distribution reinvestment plan. | |
(5) | In addition, out of its dealer manager fee, the Dealer Manager may reimburse participating broker dealers for distribution and marketing-related costs and expenses, such as costs associated with attending or sponsoring conferences, technology costs and other marketing costs and expenses in an amount up to 1.0% of gross offering proceeds from our primary offering. | |
(6) | For a discussion of the expenses which may be reimbursed please see “Management — Our Advisor and Our Advisory Agreement — Compensation.” | |
(7) | The acquisition fees and acquisition expenses incurred in connection with the purchase of real estate investments will not exceed an amount equal to 6.0% of the contract purchase price of the investment. However, a majority of our directors (including a majority of our independent directors) not otherwise interested in the transaction may approve such fees and expenses in excess of this limit if they determine the transaction to be commercially competitive, fair and reasonable to us. Tenant construction management fees and re-development construction management fees will be included in the definition of acquisition fees or acquisition expenses for this purpose to the extent that they are paid in connection with the acquisition, development or redevelopment of a property. If any such fees are paid in connection with a portion of a leased property at the request of a tenant or in conjunction with a new lease or lease renewal, such fees will be treated as ongoing operating costs of the property, similar to leasing commissions. | |
(8) | For purposes of calculating the estimated maximum acquisition fees in this table, we have assumed that we will not use debt when making real estate investments. In the event we raise the maximum $3,000,000,000 pursuant to our primary offering and all of our real estate investments are 50% leveraged at the time we acquire them, the total acquisition fees payable will be $103,930,532. To the extent we use distribution reinvestment plan proceeds for acquisitions, rather than redemptions, our Advisor will also receive an acquisition fee for any such real estate investments. Accordingly, in the event we raise the maximum $3,000,000,000 pursuant to our primary offering and the maximum $500,000,000 pursuant to our distribution reinvestment plan, and we use all such proceeds for acquisitions (and all of our real estate investments are 50% leveraged at the time we acquire them), the total acquisition fees payable will be $123,361,905. Some of these fees may be payable out of the proceeds of such borrowings. | |
(9) | In the sole discretion of our Advisor, these fees are payable, in whole or in part, in cash or OP Units. For the purposes of the payment of these fees, each OP Unit will be valued at the per share offering price of our common stock in our most recent public offering minus the maximum selling commissions and dealer manager fee being allowed in such offering, to account for the fact that no selling commissions or dealer manager fees will be paid in connection with any such issuances (at the current offering price, each such OP Unit would be issued at $9.00 per share). Each OP Unit will be convertible into one share of our common stock. | |
(10) | Actual amounts are dependent upon the amount of any debt incurred in connection with our acquisitions and otherwise and therefore cannot be determined at the present time. In the event we raise the maximum $3,000,000,000 pursuant to our primary offering and all of our real estate investments are 50% leveraged, the total debt financing fees payable will be $26,756,066. If, in addition, we raise a maximum of $500,000,000 pursuant to our distribution reinvestment plan and we use all such proceeds for acquisitions, rather than redemptions (and all of our real estate investments are 50% leveraged at the time we acquire them) the total debt financing fees payable will be $31,756,006. |
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(11) | Actual amounts are dependent upon usual and customary development fees for specific projects and therefore the amount cannot be determined at the present time. | |
(12) | Such fees must be approved by a majority of our independent directors as being fair and reasonable and on terms and conditions not less favorable than those available from unaffiliated third parties. | |
(13) | The asset management fee equals 1.5% on an annual basis. However, because this fee is calculated monthly, and the net equity we have invested in real estate investments may change on a monthly basis, we cannot accurately determine or calculate the amount of this fee on an annual basis. | |
(14) | Our Advisor will reimburse us for any amounts by which operating expenses exceed the greater of (i) 2.0% of our invested assets or (ii) 25% of our net income, unless our independent directors determine that such excess was justified. To the extent operating expenses exceed these limitations, they may not be deferred and paid in subsequent periods. Operating expenses include generally all expenses paid or incurred by us as determined by accounting principles generally accepted in the United States, or U.S. GAAP, except certain expenses identified in our articles. The expenses identified by our articles as excluded from operating expenses include: (i) expenses of raising capital such as organization and offering costs, legal, audit, accounting, tax services, costs related to compliance with the Sarbanes-Oxley Act of 2002, underwriting, brokerage, listing, registration and other fees, printing and such other expenses and taxes incurred in connection with the issuance, distribution, transfer, registration and stock exchange listing of our shares; (ii) interest payments, taxes and non-cash expenditures such as depreciation, amortization and bad debt reserves; (iii) incentive fees; (iv) distributions made with respect to interests in the Operating Partnership and (v) all fees and expenses associated or paid in connection with the acquisition, disposition, management and ownership of assets (such as real estate commissions, disposition fees, acquisition and debt financing fees and expenses, costs of foreclosure, insurance premiums, legal services, maintenance, repair or improvement of property, etc.). Please see “Management — Our Advisor and our Advisory Agreement — Reimbursements by our Advisor” for a detailed description of these expenses. | |
(15) | Property management fees and leasing fees for international acquisitions may differ from our domestic property management fees and leasing fees due to differences in international markets, but in all events the fees shall be paid in compliance with our articles, and fees paid to Hines and its affiliates shall be approved by a majority of our independent directors. | |
(16) | These fees relate to construction management services for improvements and build-out to tenant space. | |
(17) | Included in reimbursement of actual expenses incurred by Hines or its affiliates are the costs of personnel and overhead expenses related to such personnel, to the extent to which such costs and expenses relate to or support the performance of their duties. Periodically, Hines or an affiliate may be retained to provide ancillary services for a property which are not covered by a property management agreement and are generally provided by third parties. These services are provided at market terms and are generally not material to the management of the property. |
(18) | Such fee will only be paid if our Advisor or its affiliates provide a substantial amount of services, as determined by our independent directors, in connection with the sale. In no event will the fee, when added to the fees paid to unaffiliated parties in such capacity, exceed the lesser of a reasonable and customary commission or an amount equal to 6% of the sales price of such assets. |
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• | persons known to us to beneficially own more than 5% of our common shares; | |
• | each director and executive officer; and | |
• | all directors and executive officers as a group. |
Common Shares | ||||||||||
Beneficially Owned(2) | ||||||||||
Number of Common | ||||||||||
Name of Beneficial Owner(1) | Position | Shares | Percentage of Class | |||||||
Jeffrey C. Hines | Chairman of the Board | 1,111.111 | 100 | %(3) | ||||||
C. Hastings Johnson | Director | — | — | |||||||
Charles M. Baughn | Director | — | — | |||||||
Jack L. Farley | Independent Director | — | — | |||||||
Thomas L. Mitchell | Independent Director | — | — | |||||||
John S. Moody | Independent Director | — | — | |||||||
Peter Shaper | Independent Director | — | — | |||||||
Charles N. Hazen | President and Chief | |||||||||
Executive Officer | — | — | ||||||||
Sherri W. Schugart | Chief Financial Officer | — | — | |||||||
Frank R. Apollo | Senior Vice President — Finance; Treasurer and Secretary | — | — | |||||||
Edmund A. Donaldson | Chief Investment Officer | — | — | |||||||
Kevin L. McMeans | Asset Management Officer | — | — | |||||||
Ryan T. Sims | Chief Accounting Officer | — | — | |||||||
Hines Global REIT Investor Limited Partnership | 1,111.111 | 100 | % | |||||||
Hines Global REIT Associates Limited Partnership(4) | — | (4) | — | (4) | ||||||
All directors and executive officers as a group | 1,111.111 | 100 | % |
(1) | The address of each person listed is c/o Hines Global, 2800 Post Oak Boulevard, Suite 5000, Houston, Texas 77056-6618. |
(2) | For purposes of this table, “beneficial ownership” is determined in accordance with Rule 13d-3 under the Exchange Act, pursuant to which a person is deemed to have “beneficial ownership” of shares of our stock that the person has the right to acquire within 60 days. For purposes of computing the percentage of outstanding shares of our stock held by each person or group of persons named in the table, any shares that such person or persons have the right to acquire within 60 days of July 31, 2009 are deemed to be outstanding, but are not deemed to be outstanding for the purpose of computing the percentage ownership of any other persons. |
(3) | Includes 1,111.111 common shares owned directly by Hines Global REIT Investor Limited Partnership. Mr. Hines is deemed to be the beneficial owner of the shares owned by Hines Global REIT Investor Limited Partnership. Mr. Hines may also be deemed to be the beneficial owner of interests held by Hines Global REIT Associates Limited Partnership. |
(4) | Hines Global REIT Associates Limited Partnership owns: (i) 21,111 OP Units in the Operating Partnership and (ii) the Special OP Units. Limited partners in the Operating Partnership may request repurchase of their OP Units for cash or, at our option, common shares on a one-for-one basis, beginning one year after such OP Units were issued. Please see “Management Compensation, Expense Reimbursements and |
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Operating Partnership OP Units and Special OP Units.” The holder of the Special OP Units is entitled to distributions from the Operating Partnership under certain circumstances. Please see “The Operating Partnership — Special OP Units” for a description of these distributions. In addition, under our Advisory Agreement, if we are not advised by an entity affiliated with Hines, Hines or its affiliates may cause the Operating Partnership to purchase some or all of the Special OP Units or any other OP Units then held by such entities for cash (or in certain cases, a promissory note) or our shares as determined by the seller. Please see “Management — Our Advisor and Our Advisory Agreement — Removal of our Advisor.” |
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• | investment objectives and strategy; | |
• | available funds for investment; | |
• | anticipated cash flow of the investment and the targeted returns; | |
• | diversification strategy, including geographic area, type of property or investment, size of the investment, and tenants; | |
• | leverage requirements, limitations, and availability; | |
• | tax considerations; and | |
• | expected holding period of the investment and the remaining term of the investment vehicle. |
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• | such partners or co-investors might have economic or other business interests or goals that are inconsistent with our business interests or goals, including goals relating to the financing, management, operation, leasing or sale of properties held in the joint venture or the timing of the termination and liquidation of the joint venture; | |
• | such partners or co-investors may be in a position to take action contrary to our instructions, requests, policies or objectives, including our policy with respect to maintaining our qualification as a REIT; | |
• | under joint venture or other co-investment arrangements, neither co-venturer may have the power to control the joint venture and, under certain circumstances, an impasse could result and this impasse could have an adverse impact on the joint venture, which could adversely impact the operations and profitability of the joint venture and/or the amount and timing of distributions we receive from such joint venture; and | |
• | under joint venture or other co-investment arrangements, each venture partner may have a buy/sell right and, as the result of the exercise of such a right by a co-venturer, we may be forced to sell our interest, or buy a co-venturer’s interest, at a time when it would not otherwise be in our best interest to do so. Please see “Risk Factors — Risks Related to Our Business in General — Actions of our joint venture partners, including other Hines investment vehicles and third parties, could negatively impact our performance.” |
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• | computation of compensation, expense reimbursements, interests, distributions, and other payments under the Operating Partnership’s partnership agreement, our articles, our Advisory Agreement, any property management and leasing agreements and our Dealer Manager Agreement; | |
• | enforcement or termination of the Operating Partnership’s partnership agreement, our articles, our Advisory Agreement, any property management and leasing agreements and our Dealer Manager Agreement; | |
• | order and priority in which we pay the obligations of the Operating Partnership, including amounts guaranteed by or due to our Advisor, Hines or its affiliates; | |
• | order and priority in which we pay amounts owed to third parties as opposed to amounts owed to our Advisor, Hines or its affiliates; | |
• | determination of whether to sell properties and acquire additional properties (as to acquisitions, our Advisor might receive additional fees and as to sales, our Advisor might lose fees such as asset management fees and property management fees); | |
• | timing, amount and manner in which we finance or refinance any indebtedness (as to which arrangements, our Advisor might receive additional fees); and | |
• | extent to which we repay or refinance the indebtedness which is recourse to Hines, if any, prior to nonrecourse indebtedness and the terms of any such refinancing, if applicable. |
• | Except as otherwise described in this prospectus or permitted in our articles, we will not engage in transactions with Hines or its affiliates unless a majority of our directors, including a majority of our independent directors, not otherwise interested in the transaction, approve such transactions as fair and reasonable to us and on terms and conditions not less favorable to us than those available from unaffiliated third parties. | |
• | We will not purchase a property from Hines or its affiliates without a determination by a majority of our directors, including a majority of our independent directors, not otherwise interested in the transaction, that the transaction is fair and reasonable to us and at a price no greater than the cost of the property to Hines or its affiliates, unless there is substantial justification for any amount that exceeds such cost and such excess amount is determined to be reasonable. In all cases where assets are acquired from Hines or one of its affiliates, the fair market value of such assets will be determined by an independent expert selected by our independent directors. In no event will we acquire any property from Hines or its affiliates at a price that exceeds the appraised value of the property; provided that in the case of a development, redevelopment or refurbishment project that we agree to acquire prior to completion of the project, the appraised value will be based upon the completed value of the project as determined at the time the agreement to purchase the property is entered into. We will not sell or lease a property to Hines or its affiliates or to our directors unless a majority of our directors, including a majority of the directors not otherwise interested in the transaction, determine the transaction is fair and reasonable to us. Even following these procedures, Hines and its affiliates (including our officers and |
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certain directors) may make substantial profits in connection with the acquisition or sale of properties from other investment vehicles sponsored by Hines or its affiliates. |
• | We will not enter into joint ventures with Hines or affiliates, unless a majority of our independent directors approves such transaction as being fair and reasonable to us and determines that our investment is on terms substantially similar to the terms of third parties making comparable investments. | |
• | We will not make any loan to Hines or its affiliates except in the case of loans to our wholly owned subsidiaries and loans in which an independent expert has appraised the underlying asset. Any loans to us by Hines or its affiliates must be approved by a majority of our directors, including a majority of the directors not otherwise interested in the transaction, as fair, competitive and commercially reasonable, and on terms no less favorable to us than loans between unaffiliated parties under the same circumstances. |
• | preserve invested capital; | |
• | invest in a diversified portfolio of quality commercial real estate properties and other real estate investments; | |
• | pay regular cash distributions; | |
• | achieve attractive total returns upon the ultimate sale of our investments or the occurrence of another Liquidity Event; and | |
• | remain qualified as a real estate investment trust, or “REIT,” for federal income tax purposes. |
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• | plans, specifications and surveys; | |
• | environmental reports; | |
• | evidence of marketable title, subject to such liens and encumbrances as are acceptable to our Advisor, as well as title and other insurance policies; and | |
• | financial information relating to the property, including the recent operating histories of properties that have operating histories. |
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• | the ratio of the amount of the investment to the value of the underlying property and other collateral or security; | |
• | the property’s potential for capital appreciation; | |
• | expected levels of rental and occupancy rates; | |
• | current and projected cash flow of the property; | |
• | potential for rental increases; | |
• | the degree of liquidity of the investment; | |
• | the geographic area of the property; | |
• | the condition and use of the property; | |
• | the property’s income-producing capacity; | |
• | the quality, experience and creditworthiness of the borrower and/or guarantor; and | |
• | general economic conditions in the area where the property is located. |
• | the percentage of our assets that may be invested in any type of loan or in any single loan; or | |
• | the types of properties subject to mortgages or other loans in which we may invest. |
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• | the principal amount of the loans relative to the value of the related properties; | |
• | the mortgage loan terms (e.g. amortization); | |
• | market assessment and geographic area; | |
• | construction quality of the property; | |
• | the creditworthiness of the borrowers; and | |
• | tenant quality, rents, lease expirations and other lease terms. |
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• | a majority of our directors, including a majority of our independent directors not otherwise interested in the transaction, approve the transaction as being fair and reasonable to us; and | |
• | the investment by us and other third-party investors making comparable investments in the joint venture are on substantially the same terms and conditions. |
• | The management of the joint venture, such as obtaining certain approval rights in joint ventures we do not control or providing for procedures to address decisions in the event of an impasse if we share control of the joint venture. | |
• | Our ability to exit a joint venture, such as requiring buy/sell rights, redemption rights or forced liquidation under certain circumstances. | |
• | Our ability to control transfers of interests held by other parties in the joint venture, such as requiring consent, right of first refusal or forced redemption rights in connection with transfers. |
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• | Invest in equity securities, other than investments in equity securities of publicly traded companies, unless a majority of our directors, including a majority of our independent directors, approve such investment as being fair, competitive and commercially reasonable. | |
• | Invest in commodities or commodity futures contracts, except for futures contracts when used solely for the purpose of hedging in connection with our ordinary business of investing in real estate assets and mortgages. | |
• | Invest in real estate contracts of sale, otherwise known as land sale contracts, unless the contract is in recordable form and is appropriately recorded in the chain of title. | |
• | Make or invest in mortgage loans (excluding any investment in mortgage programs or CMBS) unless an appraisal is obtained concerning the underlying asset, except for those mortgage loans insured or guaranteed by a government or government agency. In cases where a majority of our independent directors determines, and in all cases in which the transaction is with any of our directors or Hines and its affiliates, we will obtain an appraisal from an independent appraiser. | |
• | Make or invest in mortgage loans (excluding any investment in mortgage programs or CMBS) including construction loans, on any one property if the aggregate amount of all mortgage loans on such property would exceed an amount equal to 85% of the appraised value of such property, as determined by an appraisal, unless substantial justification exists for exceeding such limit because of the presence of other loan underwriting criteria. |
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• | Make or invest in any indebtedness secured by a mortgage on real property that is subordinate to any mortgage or equity interest of our Advisor, any of our directors, Hines or any of our affiliates. |
• | Invest in junior debt secured by a mortgage on real property which is subordinate to the lien or other senior debt except where the amount of such junior debt plus any senior debt does not exceed 90% of the appraised value of such property, if after giving effect thereto, the value of all such mortgage loans would not then exceed 25% of our net assets, which means our total assets less our total liabilities. | |
• | Make investments in unimproved property or indebtedness secured by a deed of trust or mortgage loans on unimproved property in excess of 10% of our total assets. | |
• | Issue equity securities on a deferred payment basis or other similar arrangement. | |
• | Issue debt securities in the absence of adequate cash flow to cover debt service. | |
• | Issue equity securities that are assessable or have voting rights that do not comply with our articles. | |
• | Issue “redeemable securities,” as defined in Section 2(a)(32) of the Investment Company Act. | |
• | When applicable, grant warrants or options to purchase shares to Hines or its affiliates or to officers or directors affiliated with Hines except on the same terms as the options or warrants that are sold to the general public. Further, the amount of the options or warrants issued to such persons cannot exceed an amount equal to 10% of outstanding shares on the date of grant of the warrants and options. | |
• | Engage in securities trading, or engage in the business of underwriting or the agency distribution of securities issued by other persons. | |
• | Lend money to Hines or its affiliates, except for certain loans permitted thereunder. | |
• | acquire interests or securities in any entity holding investments or engaging in the above prohibited activities except for investments in which we own a non-controlling interest or investments in any entity having securities listed on a national securities exchange. |
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• | the issuer issues securities the payment of which depends primarily on the cash flow from “eligible assets”; |
• | the securities sold are fixed-income securities rated investment grade by at least one rating agency (fixed-income securities which are unrated or rated below investment grade may be sold to institutional accredited investors and any securities may be sold to “qualified institutional buyers” and to persons involved in the organization or operation of the issuer); |
• | the issuer acquires and disposes of eligible assets (1) only in accordance with the agreements pursuant to which the securities are issued, (2) so that the acquisition or disposition does not result in a downgrading of the issuer’s fixed-income securities and (3) the eligible assets are not acquired or disposed of for the primary purpose of recognizing gains or decreasing losses resulting from market value changes; and |
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• | unless the issuer is issuing only commercial paper, the issuer appoints an independent trustee, takes reasonable steps to transfer to the trustee an ownership or perfected security interest in the eligible assets, and meets rating agency requirements for commingling of cash flows. |
• | underwrite securities of other issuers; or |
• | actively trade in loans or other investments. |
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• | a sale of our assets, | |
• | our sale or merger, | |
• | a listing of our shares on a national securities exchange, or | |
• | a similar transaction. |
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Type of Property | Existing | Construction | Total | |||||||||
Office | 56.0 | % | 23.1 | % | 79.1 | % | ||||||
Retail | 1.2 | % | 2.0 | % | 3.2 | % | ||||||
Residential | 0.3 | % | 4.7 | % | 5.0 | % | ||||||
Industrial, Hospitality, Parking Garage and Land | 1.2 | % | 11.5 | % | 12.7 | % | ||||||
Total | 58.7 | % | 41.3 | % | 100.0 | % | ||||||
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Properties Underlying the | ||||||||
Investments Made | ||||||||
Location | Number | Cost | ||||||
(in thousands) | ||||||||
United States: | ||||||||
East Region | 20 | $ | 2,380,750 | |||||
Southwest Region | 23 | $ | 2,756,930 | |||||
Midwest Region | 14 | $ | 2,171,180 | |||||
West Region | 51 | $ | 5,732,890 | |||||
Southeast Region | 17 | $ | 2,080,650 | |||||
TOTAL UNITED STATES | 125 | $ | 15,122,400 | |||||
International: | ||||||||
Western Europe | 44 | $ | 4,239,200 | |||||
France; Germany; Italy, Spain, United Kingdom | ||||||||
Canada | 1 | $ | 215,500 | |||||
Ontario | ||||||||
Emerging Market Economies | 70 | $ | 5,083,180 | |||||
Argentina; Brazil; China; India; Mexico; Poland; Russia | ||||||||
TOTAL INTERNATIONAL | 115 | $ | 9,537,880 | |||||
TOTAL ALL LOCATIONS | 240 | $ | 24,660,280 | |||||
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Programs in Investment Phase | ||
Hines Real Estate Investment Trust | Hines REIT was formed in August 2003 as an investment vehicle which invests primarily in institutional-quality office properties located throughout the U.S. and can also invest in properties outside the U.S., non-office properties and other real estate investments. Hines REIT has disclosed in its offering materials that it has not set a finite date or time frame by which it anticipates it might be liquidated. Hines REIT has raised US$2.2 billion and expects to continue to raise capital through public offerings. Hines REIT is managed by Hines, and Hines has discretion over investment decisions, subject to the approval of the Hines REIT board of directors. Deteriorating economic conditions and rising cap rates have led to a decline in the appraised values of the assets in this portfolio and as a result, Hines REIT reduced its offering and redemption prices in early 2009. | |
Hines US Core Office Fund LP | The Hines US Core Office Fund LP (“Core Fund”) is a partnership organized in August 2003 by Hines to invest in existing core office properties in the United States that Hines believes are desirable long-term core holdings. The Core Fund has capital commitments of US$2.1 billion. The Core Fund is managed by Hines, and Hines has discretion over investment decisions. Deteriorating economic conditions and rising cap rates have led to a steady decline in the appraised values of the assets in this portfolio resulting in decreases in the net asset value of the fund in the last several quarters. |
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Hines U.S. Office Value Added Fund II LP | Hines U.S. Office Value Added Fund II LP (“Hines VAF II”) was formed in October 2006 to acquire existing assets in major U.S. markets with the focus on large CBD office and multi-building suburban office campuses, seeking value add opportunities through leasing and redevelopment. As a successor fund to Hines VAF I, Hines VAF II had total equity capital commitments of US$828 million. Hines VAF II is managed by Hines, and Hines has discretion over investment decisions. Deteriorating economic conditions and rising cap rates have led to a steady decline in the values of the assets in this portfolio. | |
Hines Pan-European Core Fund | Hines Pan-European Core Fund (“HECF”) was formed in July 2006 to acquire and manage a geographically diversified portfolio of core real estate assets in the European Union, in EU concession countries as well as in Switzerland, Norway and Russia, with a focus on France, Germany, Italy, Spain and the United Kingdom. The primary objective of HECF is to generate sustainable current income from operating leases and long-term capital appreciation of asset values. HECF’s current equity capital commitments are €236.25 million (approximately US$333 million). This is an open ended fund with a plan to achieve aggregate equity capital of approximately €1.5 billion over time. HECF is managed by Hines, and Hines has discretion over investment decisions. Deteriorating economic conditions and rising cap rates in Europe have led to a decline in the appraised values of the assets in this portfolio resulting in a decrease in the net asset value of the fund. | |
National Office Partners Limited Partnership | National Office Partners Limited Partnership (“NOP”) was formed in July 1998 with CalPERS to acquire, develop, lease, own and sell Class A, multi-tenant office buildings in the United States. From inception through March 2005, the initial phase of the partnership, the total amount committed was US$3.4 billion. The current phase of the partnership has total equity invested and allocated for the year of US$868 million. CalPERS allocates capital to NOP on an annual basis. NOP may pursue core office opportunities, as well as investments in value added properties and development projects. NOP is managed by Hines, and Hines has discretion within specified limits over investment decisions. In November 2007, NOP invested $95 million in a mezzanine financing position. Due to declining values in the underlying portfolio, NOP lost substantially all of its investment when it sold this position in November 2008. In December 2006, NOP purchased three office towers in northern California. Due to deteriorating conditions in the capital and leasing markets these assets have defaulted on their loan. | |
Hines CalPERS Green Development Fund | Hines CalPERS Green Development Fund (“HCG”) was formed in August 2006 with CalPERS to develop sustainable office buildings that will be certified through the Leadership in Energy and Environmental Design Core and Shell Program (LEED-CS). HCG’s initial equity capital commitment was US$123 million and with additional equity capital committed by its partners in 2007 now totals US$277 million. HCG is managed by Hines, and Hines has discretion within specified limits over investment decisions. Due to deteriorating economic conditions, HCG has suspended the development of two projects for which the land had already been acquired. |
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Hines European Development Fund II LP | Hines European Development Fund II LP (“HEDF II”) was formed in February 2007 to develop new Class A office buildings and redevelop well-located existing buildings in the targeted countries of France, Germany, Italy, Spain and the UK. As a successor fund to HEDF, HEDF II had total equity capital commitments of €647 million (approximately US$912 million). HEDF II is managed by Hines, and Hines has discretion over investment decisions. | |
Hines India Fund | Hines India Fund LP (“HIF”) was formed in October 2007 to develop office projects and high end residential properties and to acquire fully entitled land with potential involvement in master-planned communities and township developments to meet the demand of multinational and Indian corporations and the growing middle class, respectively. Primary markets are New Delhi/National Capital Region, Bangalore and Mumbai; secondary markets are Hyderabad, Chennai and Pune. HIF had total equity capital commitments of US$300 million. HIF is managed by Hines, and Hines has discretion over investment decisions. | |
HCM Holdings II, LP | HCM Holdings II, LP (“HCM II”) was formed in March 2007 with CalPERS to develop and acquire residential, retail, office and industrial projects that serve the growing Mexico middle class in geographically diverse locations/segments in Mexico. As a successor fund to HCM I, HCM II had total equity capital commitments of US$100 million. HCM II is managed by Hines, and Hines has discretion over investment decisions subject to an annual investment plan and program guidelines approved by CalPERS. Due to cost overruns and deteriorating economic conditions that led to lower than projected sales prices on its retail and residential projects, HCM II has incurred a loss. Further, due to deteriorating economic conditions, HCM II has suspended two residential projects which have predevelopment costs that will not be recovered. | |
HCB Interests II, LP | HCB Interests II, LP (“HCB II”) was formed in March 2007 with CalPERS to develop and acquire institutional quality real estate targeting multi-national and major Brazilian corporate tenancies, residential development for low to middle income Brazilian households and continue the development and expansion of industrial distribution parks. As a successor fund to HCB I, HCB II had total equity capital commitments of US$500 million. HCB II is managed by Hines, and Hines has discretion over investment decisions. | |
Hines International Real Estate Fund | Hines International Real Estate Fund (“HIREF”) was formed in July 2006 to acquire and develop office, retail, residential and industrial projects in emerging markets, with its main focus being China, Russia and Poland. HIREF had total equity capital commitments of US$343 million. HIREF is managed by Hines, and Hines has discretion over investment decisions. | |
HCC Interests LP | HCC Interests LP (“HCC”) was formed in May 2006 with CalPERS to develop and acquire office, retail, land development, industrial, mixed use and hospitality projects in China. HCC had equity capital commitments of US$250 million. HCC is managed by Hines, and Hines has discretion over investment decisions. |
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Programs in Operations/Dispositions Phase | ||
Hines U.S. Office Value Added Fund LP | Hines U.S. Office Value Added Fund LP (“VAF I” or “Hines Value Added Fund”) was formed in December 2003 to invest in existing office properties in the United States with value add potential through leasing or redevelopment activities. Hines Value Added Fund had total equity capital commitments of US$276 million. VAF I is managed by Hines, and Hines has discretion over investment decisions. | |
Hines European Value Added Fund | Hines European Value Added Fund (“HEVAF”) was formed in March 2005 in the legal form of a Luxembourg FCP to invest in a geographically diverse portfolio of buildings across Europe with value add created through development, redevelopment, leasing and sale of the properties. HEVAF’s equity capital commitment was €287 million (approximately US$405 million). HEVAF is managed by Hines, and Hines has discretion over investment decisions. Deteriorating economic conditions and rising cap rates have led to a steady decline in the values of the assets in this portfolio. | |
HCB Interests, LP | HCB Interests, LP (“HCB I”) was formed in August 2005 with CalPERS to develop and acquire primarily Brazilian office, industrial, retail and residential projects with US$100 million equity capital committed. HCB is managed by Hines, and Hines has discretion over investment decisions. | |
HCM Holdings LP | HCM Holdings LP (“HCM I”) was formed in January 2005 with CalPERS to develop, lease, own and sell residential, retail, office and industrial projects in geographically diverse locations/segments in Mexico. HCM I’s equity capital commitment was US$110 million. HCM is managed by Hines, and Hines has discretion over investment decisions. Due to cost overruns and deteriorating economic conditions that led to lower than projected sales prices on its retail and residential projects, HCM I has incurred a loss. Additionally, HCM I has incurred predevelopment costs that will not be recovered on an office project that was suspended due to the economic environment. | |
Hines European Development Fund LP | Hines European Development Fund LP (“HEDF I”) was formed in October 2002 to develop and redevelop Class A office space in major metropolitan cities in Western Europe. HEDF I had total equity capital commitments of €387 million (approximately US$546 million). HEDF I is managed by Hines, and Hines has discretion over investment decisions. | |
Emerging Markets Real Estate Fund I LP | Emerging Markets Real Estate Fund I LP (“EMRE I”) was formed in September 1996 to develop, redevelop, lease, own and sell Class A office, residential and industrial projects in diverse emerging economies outside the United States. EMRE I had total equity capital commitments of US$410 million. EMRE I is managed by Hines, and Hines has discretion over investment decisions. | |
Emerging Markets Real Estate Fund II LP | Emerging Markets Real Estate Fund II LP (“EMRE II”) was formed in February 1999 to develop, re-develop, lease, own and sell Class A office, residential and industrial projects in diverse emerging economies outside the United States and certain Western European markets. EMRE II had total equity capital commitments of US$436 million. EMRE II is managed by Hines, and Hines has discretion over investment decisions. |
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Fully Monetized Programs | ||
HCS Interests LP | HCS Interest LP (“HCS”) was formed in January 2006 with CalPERS to invest primarily in Sunbelt coastal areas of Spain to develop parcels of land, residential communities and master-planned communities. HCS’s equity capital commitment was €183 million (approximately US$258 million). HCS is managed by Hines, and Hines has discretion over investment decisions. Due to changes in regional legislation and adverse market conditions in the Spanish residential market, HCS suspended two projects and began exercising caution in the underwriting of new potential deals. As a result, only 8% of the capital that was originally committed by the investors was invested in HCS. In 2009, HCS decided to close the fund resulting in a loss of all the capital that was invested. | |
Hines Suburban Office Venture LLC | Hines Suburban Office Venture LLC (“HSOV”) was formed in February 2002 to acquire suburban office properties with an acquisition cost of US$65 million or less and portfolios of such properties in diverse markets in the United States. HSOV had total equity capital committed of US$222 million. HSOV was managed by Hines, but Hines did not have complete discretion over investment decisions. | |
Hines 1997 U.S. Office Development Fund LP | Hines 1997 U.S. Office Development Fund LP (“USODF I”) was formed in January 1998 to develop, lease, own and sell Class A, multi-tenant office buildings in geographically diverse suburban core locations within the United States. USODF I had total equity capital committed of US$320 million. USODF I was managed by Hines, and Hines had discretion over investment decisions. | |
Hines 1999 U.S. Office Development Fund LP | Hines 1999 U.S. Office Development Fund LP (“USODF II”) was formed in June 1999 to develop, lease, own and sell Class A, multi-tenant office buildings in geographically diverse suburban core locations within the United States that would be attractive to quality tenants and institutional investors. USODF II had total equity capital committed of US$107 million. USODF II was managed by Hines, and Hines had discretion over investment decisions. | |
Hines Corporate Properties LLC | Hines Corporate Properties LLC (“HCP”) was formed in November 1997 to develop and acquire a portfolio of geographically diverse buildings which met the following criteria: (i) an office building at least 75% of which was or would be leased to a single tenant, or (ii) any office project proposed for development to a tenant as an alternative to a project that would be 75% or more leased to such tenant. HCP had total equity capital committed of US$560 million. HCP was managed by Hines, but Hines did not have complete discretion over investment decisions. | |
HMS Office LP | HMS Office LP (“HMS”) was formed in July 1995 to acquire a portfolio of 12 Class A, suburban office buildings, some with additional development parcels, located in 10 cities in the United States. HMS had total equity capital committed of US$156 million. HMS was managed by Hines, but Hines did not have complete discretion over investment decisions. |
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• | a merger, tender offer or proxy contest; | |
• | the assumption of control by a holder of a large block of our securities; or | |
• | the removal of incumbent management. |
• | amendments to our articles and the election and removal of directors (except as otherwise provided in our articles or under the Maryland General Corporation Law); | |
• | our liquidation or dissolution; and | |
• | a merger, consolidation or sale or other disposition of substantially all of our assets. |
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• | our Advisor’s ability to identify and execute investment opportunities at a pace consistent with capital we raise; | |
• | the ability of borrowers to meet their obligations under any real estate related debt investments we make; | |
• | our operating and interest expenses; | |
• | the ability of tenants to meet their obligations under any leases associated with any properties we acquire; | |
• | the amount of distributions we receive from our indirect real estate investments; | |
• | the ability of borrowers to meet their obligations under any real estate-related debt investments we make; | |
• | our ability to keep our properties occupied; | |
• | our ability to maintain or increase rental rates when renewing or replacing current leases; | |
• | capital expenditures and reserves therefor; | |
• | leasing commissions and tenant inducements for leasing space; | |
• | the issuance of additional shares; and | |
• | financings and refinancings. |
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• | $9.25 per share, for stockholders who have owned their shares for at least one year; | |
• | $9.50 per share, for stockholders who have owned their shares for at least two years; | |
• | $9.75 per share, for stockholders who have owned their shares for at least three years; and | |
• | $10.00 per share, for stockholders who have owned their shares for at least four years. |
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• | a transaction involving our securities that have been listed on a national securities exchange or traded through the National Association of Securities Dealers Automatic Quotation National Market System for at least 12 months; or | |
• | a transaction involving our conversion into a corporate, trust, or association form if, as a consequence of the transaction, there will be no significant adverse change in any of the following: our common stockholder voting rights; the term of our existence; compensation to our Advisor or our sponsor; or our investment objectives. |
• | accepting the securities of the Roll-up Entity offered in the proposed Roll-up Transaction; or | |
• | one of the following: |
• | remaining as stockholders and preserving their interests on the same terms and conditions as existed previously; or |
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• | receiving cash in an amount equal to the stockholder’s pro rata share of the appraised value of our net assets. |
• | that would result in our common stockholders having democracy rights in a Roll-up Entity that are less than those provided in our articles and described elsewhere in this prospectus, including rights with respect to the election and removal of directors, annual reports, annual and special meetings, amendment of our articles and our dissolution; | |
• | that includes provisions that would operate to materially impede or frustrate the accumulation of shares by any purchaser of the securities of the Roll-up Entity, except to the minimum extent necessary to preserve the tax status of the Roll-up Entity, or which would limit the ability of an investor to exercise the voting rights of its securities of the Roll-up Entity on the basis of the number of shares held by that investor; | |
• | in which investor’s rights to access of records of the Roll-up Entity will be less than those provided in the section of this prospectus entitled “Description of Capital Stock;” or | |
• | in which any of the costs of the Roll-up Transaction would be borne by us if the Roll-up Transaction is rejected by our common stockholders. |
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• | any person who beneficially owns ten percent or more of the voting power of the corporation’s outstanding voting stock; or | |
• | an affiliate or associate of the corporation who, at any time within the two-year period prior to the date in question, was the beneficial owner of ten percent or more of the voting power of the then outstanding stock of the corporation. |
• | 80% of the votes entitled to be cast by holders of outstanding shares of voting stock of the corporation; and | |
• | two-thirds of the votes entitled to be cast by holders of voting stock of the corporation other than shares held by the interested stockholder with whom or with whose affiliate the business combination is to be effected or held by an affiliate or associate of the interested stockholder. |
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• | owned by the acquiring person; | |
• | owned by officers; and | |
• | owned by employees who are also directors. |
• | one-tenth or more but less than one-third; | |
• | one-third or more but less than a majority; or | |
• | a majority or more of all voting power. |
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• | a classified board, | |
• | a two-thirds vote requirement for removing a director, | |
• | a requirement that the number of directors be fixed only by vote of the directors, | |
• | a requirement that a vacancy on the board be filled only by the remaining directors and for the remainder of the full term of the class of directors in which the vacancy occurred, and | |
• | a majority requirement for the calling of a special meeting of stockholders. |
• | Financial statements which are prepared in accordance with GAAP (or the then required accounting principles) and are audited by our independent registered public accounting firm; | |
• | If applicable, the ratio of the costs of raising capital during the year to the capital raised; | |
• | The aggregate amount of asset management fees and the aggregate amount of other fees paid to our Advisor and any affiliate of our Advisor by us or third parties doing business with us during the year; | |
• | Our total operating expenses for the year, stated as a percentage of our average invested assets and as a percentage of our net income; | |
• | A report from the independent directors that our policies are in the best interests of our stockholders in the aggregate and the basis for such determination; and | |
• | Separately stated, full disclosure of all material terms, factors and circumstances surrounding any and all transactions involving us and our Advisor, a director or any affiliate thereof during the year; and the independent directors are specifically charged with a duty to examine and comment in the report on the fairness of the transactions. |
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• | shares to the public at a price of $10.00 per share; and | |
• | shares for issuance pursuant to our distribution reinvestment plan at a price of $9.50 per share. |
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Percentage of | ||||||||
Maximum (Excluding | ||||||||
Type of Compensation and Expenses | Maximum Amount | DRP Shares) | ||||||
Selling Commissions(1) | $ | 225,000,000 | 7.5 | % | ||||
Dealer Manager Fees(2) | $ | 75,000,000 | 2.5 | % |
(1) | For purposes of this table, we have assumed no volume discounts or waived commissions as discussed elsewhere in this “Plan of Distribution.” We will not pay commissions for sales of shares pursuant to our distribution reinvestment plan. | |
(2) | For purposes of this table, we have assumed no waiver of the dealer manager fees as discussed elsewhere in this “Plan of Distribution.” We will not pay a dealer manager fee for sales of shares pursuant to our distribution reinvestment plan. |
• | has a contract for investment advisory and related brokerage services which includes a fee based on the amount of assets under management or a “wrap” fee feature; | |
• | has a contract for a “commission replacement” account, which is an account in which securities are held for a fee only; | |
• | has engaged the services of a registered investment adviser with whom the investor has agreed to pay compensation for investment advisory services or other financial or investment advice (except where an investor has a contract for financial planning services with a registered investment advisor that is also a registered broker-dealer, such contract will not qualify the investor for the discount reflecting nonpayment of the selling commissions as described below); or | |
• | is investing in a bank trust account with respect to which the investor has delegated the decision-making authority for investments made in the account to a bank trust department for a fee; |
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Maximum | ||||||||||||||
Amount of Selling | Selling | |||||||||||||
Commission Volume | Amount of Purchaser’s Investment | Commission | ||||||||||||
Discount | From | To | per Share | |||||||||||
1 | % | $ | 250,000 | $ | 499,999 | 6.5 | % | |||||||
2 | % | $ | 500,000 | $ | 999,999 | 5.5 | % | |||||||
3 | % | $ | 1,000,000 | $ | 2,499,999 | 4.5 | % | |||||||
4 | % | $ | 2,500,000 | $ | 4,999,999 | 3.5 | % | |||||||
5 | % | $ | 5,000,000 | $ | 9,999,999 | 2.5 | % | |||||||
6 | % | $ | 10,000,000 | and over | 1.5 | % |
• | an individual, his or her spouse or “domestic or life partner” and their children under the age of 21 who purchase the common shares for his, her or their own accounts for this purpose, “domestic or life partner” means any two unmarried, same-sex or opposite-sex individuals who are unrelated by blood, maintain a shared primary residence or home address, and have joint property or other insurable interests; | |
• | a corporation, partnership, association, joint-stock company, trust fund or any organized group of persons, whether incorporated or not; |
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• | an employees’ trust, pension, profit-sharing or other employee benefit plan qualified under Section 401(a) of the Code; | |
• | all commingled trust funds maintained by a given bank; and | |
• | subscriptions obtained by certain participating broker dealers, as discussed below. |
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• | your tax identification number set forth in the subscription agreement is accurate and you are not subject to backup withholding; |
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• | a copy of this prospectus was delivered or made available to you; | |
• | you meet the minimum income, net worth and any other applicable suitability standards established for you, as described in the “Suitability Standards” section of this prospectus; | |
• | you are purchasing the shares for your own account; and | |
• | you acknowledge that there is no public market for the shares and, thus, your investment in shares is not liquid. |
• | meets the minimum income and net worth standards set forth under the “Suitability Standards” section of this prospectus; | |
• | can reasonably benefit from an investment in our shares based on the prospective investor’s investment objectives and overall portfolio structure; | |
• | is able to bear the economic risk of the investment based on the prospective investor’s net worth and overall financial situation; and | |
• | has apparent understanding of: |
• | the fundamental risks of an investment in the shares; | |
• | the risk that the prospective investor may lose his or her entire investment; | |
• | the lack of liquidity of the shares; | |
• | the restrictions on transferability of the shares; and | |
• | the tax consequences of an investment in the shares. |
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• | income from operations is allocated first to the holder of the Special OP Units until such holder has been allocated income in an amount equal to distributions made or required to be made to such holder, and then to the remaining partners of the Operating Partnership in proportion to the number of units held by each of them; | |
• | gain from the sale or other disposition of property is generally allocated in such a manner as to cause the capital account balances of the holder of the Special OP Units and the holders of the OP Units to be in proportion to their respective percentage interests in the net liquidation value of the partnership capital as determined at such time; and | |
• | all losses are generally allocated in such a manner as to cause the capital account balances of the holder of the Special OP Units and the holders of the OP Units to be in proportion to their respective percentage interests in the net liquidation value of the partnership capital as determined at such time. |
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• | all expenses relating to the continuity of our existence; | |
• | all expenses associated with the preparation and filing of any periodic reports by us under federal, state or local laws or regulations; | |
• | all expenses associated with compliance by us with applicable laws, rules and regulations; | |
• | all costs and expenses relating to any issuance or repurchase of OP Units or our common shares; and | |
• | all our other operating or administrative costs incurred in the ordinary course of our business on behalf of the Operating Partnership. |
• | affect the conversion factor or redemption right in any manner adverse to the limited partners and; | |
• | adversely affect the rights of the limited partners to receive distributions payable to them other than with respect to the issuance of certain partnership units. |
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• | cause us to no longer qualify (or it would be likely that we no longer would qualify) as a REIT under the Code; | |
• | result in any person owning common shares in excess of our ownership limits; | |
• | constitute or be likely to constitute a violation of any applicable federal or state securities law; | |
• | violate any provision of our articles or bylaws; | |
• | cause us to be “closely held” within the meaning of Section 856(h) of the Code; | |
• | cause us to own 10% or more of the ownership interests in a tenant within the meaning of Section 856(d)(2)(B) of the Code; or | |
• | cause the Operating Partnership to be classified as a “publicly traded partnership” as that term is defined in Section 7704 of the Code or cause a technical termination of the Operating Partnership under Section 708 of the Code. In particular, as long as the Operating Partnership is potentially subject to classification as a publicly traded partnership, a limited partner may exercise repurchase rights only if: |
• | the repurchase would constitute a “private transfer” (as that term is defined in the Partnership Agreement); or | |
• | the repurchase, when aggregated with other transfers of OP Units within the same taxable year (but not including private transfers), would constitute 10% or less of the percentage interests in the Operating Partnership. |
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• | Hines Global for any liability, loss, cost or damage caused by its fraud, willful misconduct or gross negligence; | |
• | officers and directors of Hines Global (other than our independent directors) for any liability, loss, cost or damage caused by such person’s negligence or misconduct; or | |
• | our independent directors for any liability, loss, cost or damage caused by their gross negligence or willful misconduct. |
• | current provisions of the Code; | |
• | existing, temporary and currently proposed Treasury Regulations promulgated under the Code; | |
• | the legislative history of the Code; | |
• | existing administrative rulings; and | |
• | judicial interpretations of the foregoing. |
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• | Our current organization and method of operation has enabled, and our proposed method of operation will enable, us to continue to meet the requirements for qualification and taxation as a REIT under the Code. | |
• | The Operating Partnership will be properly classified as a partnership under the Code; and | |
• | All statements of law and legal conclusions, but not statements of facts, contained in this “Material Tax Considerations” section are correct in all material respects. |
• | our method of operation and share ownership structure are as described in this prospectus and in a certificate of an officer of Hines Global; | |
• | Hines Global and its subsidiaries are, and will continue to be, organized and managed as set forth in this prospectus, and in each such entity’s relevant organizational documents; | |
• | the organizational documents of Hines Global and each of its subsidiaries are not amended or modified in any material respect, and all material terms and conditions in such documents are and will be complied with; and | |
• | each of the written agreements to which we or any of our subsidiaries are a party will be implemented, construed and enforced in accordance with its terms. |
• | We must be organized as a domestic entity that would, if we did not maintain our REIT status, be taxable as a regular corporation. | |
• | We cannot be a financial institution or an insurance company. | |
• | We must be managed by one or more trustees or directors. | |
• | Our taxable year must be a calendar year. | |
• | Our beneficial ownership must be evidenced by transferable shares. | |
• | Beginning with the taxable year after the first taxable year for which we make an election to be taxed as a REIT, our capital stock must be held by at least 100 persons during at least 335 days of a taxable year of 12 months or during a proportionate part of a taxable year of less than 12 months. |
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• | Beginning with the taxable year after the first taxable year for which we make an election to be taxed as a REIT, not more than 50% of the value of our shares of capital stock may be held, directly or indirectly, applying certain constructive ownership rules, by five or fewer individuals at any time during the last half of each of our taxable years. While generally a tax-exempt entity is treated as a single taxpayer for this purpose, a domestic qualified employee pension trust is not. Pursuant to a “look through” rule, the beneficiaries of such a pension trust will be treated as holding our common shares in proportion to their interests in the trust. If we do not satisfy the stock ownership test described in this paragraph in the absence of this look through rule, part of the income and gain recognized by certain qualified employee pension trusts attributable to the ownership of our common shares may be treated as unrelated business taxable income. Please see “— Taxation of Tax Exempt Entities.” We do not expect to have to rely on this rule in order to meet the stock ownership requirement described in this paragraph. | |
• | We must elect to be taxed as a REIT and satisfy certain filing and other administrative requirements. |
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• | “rents from real property” (as described below); | |
• | gains from the sale of real property (excluding gain from the sale of property held primarily for sale to customers in the ordinary course of our trade or business, referred to below as “dealer property”); | |
• | abatements and refunds of real property taxes; | |
• | distributions or other distributions on, and gain (other than gain from prohibited transactions) from the sale or other disposition of, shares in other REITs; | |
• | interest on obligations secured by mortgages on real property or on interests in real property; and | |
• | “qualified temporary investment income” (which generally means income that is attributable to stock or debt instruments, is attributable to the temporary investment of capital received from our issuance of capital stock or debt securities that have a maturity of at least five years, and is received or accrued by us within one year from the date we receive such capital). |
• | “Rent from real property” can include rent attributable to personal property we lease in connection with the real property so long as the personal property rent does not exceed 15% of the total rent attributable to the lease. We do not expect to earn material amounts of rent attributable to personal property. | |
• | “Rent from real property” generally does not include rent based on the income or profits of the tenant leasing the property. We do not currently, nor do we intend to, lease property and receive rentals based on the tenant’s net income or profit. | |
• | “Rent from real property” can include rent based on a percentage of a tenant’s gross sales or gross receipts. We may have some leases, from time to time, where rent is based on a percentage of gross sales or receipts. | |
• | “Rent from real property” cannot include rent we receive from a person or corporation (or subtenant of such person of corporation) in which we (or any of our 10% or greater owners) directly or constructively own a 10% or greater interest. | |
• | “Rent from real property” generally cannot include amounts we receive with respect to services we provide for tenants, unless such services are “usually and customarily rendered” in connection with the rental of space for occupancy only or are not considered “rendered to the occupant.” If the services we provide do not meet this standard, they will be treated as impermissible tenant services, and the income we derive from the property will not qualify as “rent from real property,” unless the amount of such impermissible tenant services income does not exceed one percent of all amounts received from the property. We are allowed to operate or manage our properties, or provide services to our tenants, through an “independent contractor” from whom we do not derive any income or through taxable REIT subsidiaries. |
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• | following our identification of the failure to meet either or both of such income tests for any taxable year, a description of each item of our gross income is set forth in a schedule filed by us for such taxable year; and | |
• | our failure to meet the tests is due to reasonable cause and not to willful neglect. |
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• | Distributions declared by us in October, November, or December of a particular year and payable to our stockholders of record on a date during such month of such year will be deemed to have been paid during such year so long as such distributions are actually paid by us by January 31 of the following year. | |
• | Distributions declared after the end of, but before the due date (including extensions) of our tax return for, a particular taxable year will be deemed to have been paid during such taxable year if such distributions are actually paid by us (i) within 12 months of the end of such taxable year and (ii) no later than the date of our next regular distribution payment made after such declaration. |
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• | Prior to the Housing Act, foreign currency exchange gain was not explicitly included or excluded from the statutory definitions of qualifying income for purposes of the 95% and 75% income tests. The Housing Act provides that most real estate-related foreign currency gain recognized after July 30, 2008 is excluded from the computation of the income tests (i.e., such gain is excluded from the numerator and the denominator of the income test computations). However, foreign currency gain is treated as non-qualifying income if it is derived from substantial and regular trading or dealing in securities. These rules depart from previously issued IRS guidance that generally treated foreign currency gains as qualifying income under the 95% and 75% income tests to the extent such gains were attributable to assets producing qualifying income. Certain conforming changes have also been made to the asset tests, foreclosure property and prohibited transaction provisions of the Code. See ‘‘— Requirements for Qualification as a REIT — Operational Requirements — Gross Income Tests” and “— Requirements for Qualification as a REIT — Operational Requirements — Asset Tests” and “— Taxation as a REIT.” | |
• | The Housing Act expands the scope of the hedging exception by providing that the income tests will exclude any income from a hedging transaction entered into by the REIT after July 30, 2008 primarily to manage the risk of (1) interest rate changes with respect to borrowings made or to be made to acquire or carry real estate assets or (2) currency fluctuations with respect to an item of qualifying income under the 95% or 75% income test. Prior to the enactment of the Housing Act, income from a hedging transaction was treated as nonqualifying income for purposes of the 75% income test, and the income from hedging transactions described under number (1) above was only excluded from the 95% income test. See “— Requirements for Qualification as a REIT — Operational Requirements — Gross Income Tests.” | |
• | Under prior law, sales of property by a REIT were not treated as prohibited transactions if such sales came within certain safe harbors. Certain provisions of the Housing Act make it easier for a REIT to fit within these safe harbor provisions, including a reduction in the current four year safe harbor holding period to two years for sales occurring after July 30, 2008. See “— Taxation as a REIT.” | |
• | Previously, not more than 20% of a REIT’s total assets could be represented by securities of one or more of the REIT’s taxable REIT subsidiaries. The Housing Act amends this rule by increasing the limitation to 25%. This change is effective for our taxable years beginning after December 31, 2008. See “— Requirements for Qualification as a REIT — Operational Requirements — Asset Tests.” |
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• | we will be taxed at regular corporate rates on our undistributed taxable income, including undistributed net capital gains; | |
• | a tax of 100% applies to any net income we receive from prohibited transactions, (as mentioned, these transactions are usually sales or other dispositions of property held primarily for sale to customers in the ordinary course of business); | |
• | if we fail to meet either the 75% or 95% gross income test previously described, but still qualify for REIT status under the reasonable cause exception to those tests, we will be subject to a 100% tax on the amount obtained by multiplying (i) the greater of the amount, if any, by which we failed either the 75% gross income test or the 95% gross income test, times (ii) the ratio of our REIT taxable income to our gross income (excluding capital gain and certain other items); | |
• | under some circumstances, we will be subject to the alternative minimum tax; | |
• | we will be subject to a 4% excise tax if we fail, in any calendar year, to distribute to our stockholders an amount equal to the sum of 85% of our REIT ordinary income for such year, 95% of our REIT capital gain net income for such year, and any undistributed taxable income from prior years; | |
• | if we acquire any asset from a C-corporation (i.e., a corporation generally subject to corporate level tax) in a carry-over basis transaction and then recognize gain on the disposition of the asset within 10 years after we acquired the asset, then a portion of our gain may by subject to tax at the highest regular corporate rate (currently 35%); | |
• | any income (other than income otherwise qualifying for REIT purposes) or gain we receive from foreclosure property will be taxed at the highest corporate rate (currently 35%); and | |
• | a tax of 100% applies in certain cases to the extent that income is shifted away from, or deductions are shifted to, any taxable REIT subsidiary through the use of certain non-arm’s length pricing arrangements between the REIT and such taxable REIT subsidiary. |
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• | Except as provided below, distributions will generally be taxable to our stockholders, as ordinary income, in the year in which such distributions are actually or constructively received by them, to the extent of our current or accumulated earnings and profits. | |
• | Distributions declared during the last quarter of a calendar year and actually paid during January of the immediately following calendar year are generally treated as if received by the stockholders on December 31 of the calendar year during which they were declared. | |
• | Distributions we designate as capital gains distributions generally will be taxed as capital gains to stockholders to the extent that the distributions do not exceed our actual net capital gain for the taxable year. Corporate stockholders may be required to treat up to 20% of any such capital gains distributions as ordinary income. | |
• | If we elect to retain and pay income tax on any net long-term capital gain, our stockholders would include in their income as long-term capital gain their proportionate share of such net long-term capital gain. Each of our stockholders would receive a credit for such stockholder’s proportionate share of the tax paid by us on such retained capital gains and an increase in tax basis in their shares in an amount equal to the difference between the undistributed long-term capital gains and the amount of tax we paid. | |
• | No portion of the distributions paid by us, whether characterized as ordinary income or as capital gains, are eligible for the “distributions received” deduction for corporations. | |
• | Stockholders are not permitted to deduct our losses or loss carry-forwards. |
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• | none of our distributions will be eligible for treatment as capital gains distributions; | |
• | corporate stockholders will qualify for the “distributions received” deduction; and | |
• | stockholders will not be required to report any share of our tax preference items. |
• | when a stockholder fails to supply a correct and properly certified taxpayer identification number (which, for an individual, is his or her Social Security Number); | |
• | when the Internal Revenue Service notifies us that the stockholder is subject to the backup withholding rules; | |
• | when a stockholder furnishes an incorrect taxpayer identification number; or | |
• | in the case of corporations or others within certain exempt categories, when they fail to demonstrate that fact when required. |
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• | will be taxed on such capital gain distribution as if the distribution was an ordinary distribution; | |
• | will generally not be required to report distributions received from us on U.S. federal income tax returns; and | |
• | will not be subject to a branch profits tax with respect to such distribution. At the time you purchase shares in this offering, our shares will not be publicly traded, and we can give you no assurance that our shares will ever be publicly traded on an established securities exchange. |
• | such gain is not effectively connected with the conduct by such Non-U.S. Stockholder of a trade or business within the United States; | |
• | the Non-U.S. Stockholder is not present in the United States for 183 days or more during the taxable year and certain other conditions apply; and | |
• | we are a “domestically controlled REIT,” which generally means that less than 50% in value of our shares continues to be held directly or indirectly by foreign persons during a continuous 5-year period ending on the date of disposition or, if shorter, during the entire period of our existence; provided, however, that even if we are a “domestically controlled REIT,” a Non-U.S. Stockholder may be treated as having gain that is subject to U.S. federal income taxation if the Non-U.S. Stockholder (i) disposes of our common shares within a 30-day period preceding the ex-distribution date of a distribution on our common shares, any portion of which, but for such disposition, would have been treated as gain from |
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the sale or exchange of a U.S. real property interest and (ii) acquires, or enters into a contract or option to acquire, other shares of our common stock within 30 days after such ex-distribution date. |
• | it is not expressly classified as a corporation under Section 301.7701-2(b)(1) through (8) of the Treasury Regulations; | |
• | it does not elect to be classified as an association taxable as a corporation; and | |
• | either (i) it is not classified as a “publicly traded partnership” under Section 7704 of the Code or (ii) 90% or more of it’s gross income consists of specified types of “qualifying income” within the meaning of Section 7704(c)(2) of the Code (including interest, distributions, “real property rents” and gains from the disposition of real property). A partnership is deemed to be a “publicly traded partnership” if its interests are either (a) traded on an established securities exchange or (b) readily tradable on a secondary market (or the substantial equivalent thereof). |
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• | If the distributions are made in redemption repurchase of part or all of a partner’s interest in the Operating Partnership, the partner may recognize ordinary income under Section 751 of the Code. Such ordinary income would generally equal the amount of ordinary income (if any) that would have been allocated to the partner in respect of the redeemed interest if the Operating Partnership had sold all of its assets. | |
• | If a partner contributes appreciated property to the Operating Partnership and the Operating Partnership makes distributions, other than distributions of such partner’s share of operating income, to such partner within two years of such property contribution, part or all of such distributions may be treated as taxable sales proceeds to such partner. |
• | will be equal to the amount of cash and the basis of any other property contributed to the Operating Partnership by us and our proportionate share of the Operating Partnership’s indebtedness; | |
• | will be increased by our share of the Operating Partnership’s taxable and non-taxable income and any increase in our share of Operating Partnership indebtedness; and | |
• | will be decreased (but not below zero) by the distributions we receive, our share of deductible and non-deductible losses and expenses of the Operating Partnership and any decrease in our share of Operating Partnership indebtedness. |
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• | whether the investment satisfies the diversification requirements of Section 404(a)(1)(c) of ERISA; | |
• | whether the investment is in accordance with the documents and instruments governing the Plan as required by Section 404(a)(1)(D) of ERISA; | |
• | whether the investment is for the exclusive purpose of providing benefits to participants in the Plan and their beneficiaries, or defraying reasonable administrative expenses of the Plan; and | |
• | whether the investment is prudent under ERISA. |
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• | The Hines Global REIT Fact Card, Hines Global REIT Brochure and presentations, which briefly summarize (i) information about risks and suitability that investors should consider before investing in us; (ii) objectives and strategies relating to our selection of investments; and (iii) information about Hines Global and its sponsor, Hines; | |
• | Certain presentations, other print brochures and handouts, which include (i) information about risks and suitability that investors should consider before investing in us; (ii) various topics related to real estate investments and using real estate investments as part of an overall investment strategy; (iii) information regarding certain of our assets; and (iv) information about the sponsor, Hines; and | |
• | Certain information on our website, electronic media, presentations and third party articles. |
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2800 Post Oak Boulevard, Suite 5000
Houston, Texas 77056-6118
Tel.: 1-888-220-6121
Attn: Investor Relations
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Hines Global REIT, Inc.:
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June 30, | December 31, | |||||||
2009 | 2008 | |||||||
Cash and cash equivalents | $ | 200,000 | — | |||||
Total Assets | $ | 200,000 | $ | — | ||||
Total liabilities | — | — | ||||||
Equity | ||||||||
Stockholder’s equity | ||||||||
Common stock, $.001 par value; 200,000 shares authorized, 1,111 and none issued and outstanding as of June 30, 2009 and December 31, 2008, respectively | 1 | — | ||||||
Additional paid-in capital | 9,999 | — | ||||||
Total stockholder’s equity | 10,000 | — | ||||||
Noncontrolling interests | 190,000 | — | ||||||
Total Equity | 200,000 | — | ||||||
Total liabilities and equity | $ | 200,000 | $ | — | ||||
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1. | ORGANIZATION |
2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
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3. | RELATED PARTY TRANSACTIONS |
F-7
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F-8
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TABLE I | Experience in Raising and Investing Funds | |
TABLE II | Compensation to Sponsor | |
TABLE III | Operating Results of Prior Programs | |
TABLE IV | Results of Completed Programs | |
TABLE V | Sales or Disposals of Properties |
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EXPERIENCE IN RAISING AND INVESTING FUNDS AS OF DECEMBER 31, 2008
(ON A PERCENTAGE BASIS(1))
(Past/Prior Performance is Not Indicative of Future Results)
Hines Real Estate | Hines US | Hines US | Hines | |||||||||||||||||
Investment | Hines US Core | Office Value | Office Value | Pan-European | ||||||||||||||||
Trust, Inc. | Office Fund LP | Added Fund I | Added Fund II | Core Fund | ||||||||||||||||
Dollar amount offered | $ | 7,890,000 | $ | 2,052,061 | $ | 276,443 | $ | 827,895 | $ | 333,042 | ||||||||||
Dollar amount raised | $ | 2,152,443 | $ | 2,052,061 | (7) | $ | 276,443 | $ | 827,895 | $ | 333,042 | |||||||||
Percentage amount raised | 27.3 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||||
Less offering expenses: | ||||||||||||||||||||
Selling commissions | 8.1 | %(5) | 0.0 | % | 0.0 | % | 0.0 | % | 0.0 | % | ||||||||||
Organizational expenses | 2.5 | %(6) | 0.1 | % | 0.4 | % | 0.1 | % | 0.0 | % | ||||||||||
Reserves | 0.0 | % | 0.0 | % | 0.0 | % | 0.0 | % | 0.0 | % | ||||||||||
Percent available for investment | 89.4 | % | 99.9 | % | 99.6 | % | 99.9 | % | 100.0 | % | ||||||||||
Acquisition and development costs: | ||||||||||||||||||||
Prepaid items and fees | 0.2 | % | 0.0 | % | 0.0 | % | 0.0 | % | 0.3 | % | ||||||||||
Purchase price (cash down payment)(2) | 141.8 | % | 216.9 | % | 260.4 | % | 173.8 | % | 121.2 | % | ||||||||||
Acquisition fees | 1.7 | %(4) | 0.0 | %(8) | 0.0 | % | 0.0 | % | 1.3 | % | ||||||||||
Other capitalized costs | 1.7 | % | 4.3 | % | 0.4 | % | 0.1 | % | 3.3 | % | ||||||||||
Total acquisition and development costs | 145.4 | % | 221.2 | % | 260.8 | % | 173.9 | % | 126.1 | % | ||||||||||
Percent leveraged(3) | 54 | % | 54 | % | 37 | % | 61 | % | 34 | % | ||||||||||
Date offering began | Jun-04 | Aug-03 | Jun-02 | Jun-06 | Dec-05 | |||||||||||||||
Length of offering | continuing | continuing | 29 months | 13 months | continuing | |||||||||||||||
Months to invest 90% of amount available for investment | continuing | continuing | 36 months | continuing | continuing |
(1) | All percentage amounts except “Percent leveraged” represent percentages of the “Dollar amount raised” for each program. | |
(2) | “Purchase price (cash down payment)” includes both equity- and debt-financed payments. See “Percent leveraged” line for the approximate percentage of the purchase price financed with mortgage or other debt. | |
(3) | “Percent leveraged” represents total mortgage financing divided by total acquisition cost for properties acquired. | |
(4) | This amount includes only the cash portion of this fee. | |
(5) | This amount includes selling commissions of 6.0% and dealer-manager fees of 2.1%. | |
(6) | This amount includes organization and offering costs. | |
(7) | These amounts reflect the total dollar amount committed by Hines US Core Office Fund LP and its subsidiaries. | |
(8) | Acquisition fees are paid out of distributions to investors in the Hines US Core Office Fund LP. |
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Hines Real Estate | Hines US | Hines US | Hines US | Hines | ||||||||||||||||
Investment | Core Office | Value Added | Value Added | Pan-European | ||||||||||||||||
Trust, Inc. | Office Fund LP | Fund I | Fund II | Core Fund | ||||||||||||||||
Date offering commenced | Jun-04 | Aug-03 | Jun-02 | Jun-06 | Dec-05 | |||||||||||||||
Dollar amount raised | $ | 2,152,443 | $ | 2,052,061 | (1) | $ | 276,443 | (2) | $ | 827,895 | (3) | $ | 333,042 | |||||||
Amount paid to sponsor from proceeds of offering: | ||||||||||||||||||||
Underwriting fees | — | — | — | — | 1,956 | |||||||||||||||
Acquisition fees: | ||||||||||||||||||||
Real estate commissions | — | — | — | — | — | |||||||||||||||
Advisory fees | 23,533 | — | — | — | — | |||||||||||||||
Dollar amount of cash generated from operations before deducting payments to sponsor | 158,831 | 415,464 | (7,526 | ) | (11,100 | ) | 22,012 | |||||||||||||
Amount paid to sponsor from operations: | ||||||||||||||||||||
Property management fees | 13,492 | 26,723 | 4,446 | 2,961 | — | |||||||||||||||
Development, acquisition, and disposition fees | 45 | 1,888 | (4) | — | — | 4,925 | ||||||||||||||
Partnership and asset management fees | 23,580 | — | (4) | — | — | 3,552 | ||||||||||||||
Reimbursements | 28,504 | 56,308 | — | — | — | |||||||||||||||
Leasing commissions | 4,191 | 9,055 | 3,434 | 564 | — | |||||||||||||||
Dollar amount of cash generated from property sales and refinancing before deducting payments to sponsor: | ||||||||||||||||||||
Cash | — | — | 267,298 | — | — | |||||||||||||||
Notes | — | — | — | — | — | |||||||||||||||
Amount paid to sponsor from property Sales and refinancing: | ||||||||||||||||||||
Real estate commissions | — | — | — | — | — | |||||||||||||||
Incentive fees or distributions | — | — | — | — | — |
(1) | These amounts reflect the total dollar amount committed by Hines US Core Office Fund LP and its subsidiaries. |
(2) | For Hines US Value Added Fund I, asset management fees of $7,259,047 were paid directly by each investor (other than Hines) to the sponsor. These amounts do not reduce such investor’s total capital commitment. |
(3) | For Hines US Value Added Fund II, asset management fees of $20,229,777 were paid directly by each investor (other than Hines) to the sponsor. These amounts do not reduce such investor’s total capital commitment. |
(4) | Acquisition and asset management fees totaling $11,364,267 and $12,869,522, respectively, were paid out of distributions to investors. |
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Hines Real | Hines Real | Hines Real | Hines Real | Hines Real | ||||||||||||||||
Estate | Estate | Estate | Estate | Estate | ||||||||||||||||
Investment | Investment | Investment | Investment | Investment | ||||||||||||||||
Trust, Inc. | Trust, Inc. | Trust, Inc. | Trust, Inc. | Trust, Inc. | ||||||||||||||||
2004 | 2005 | 2006 | 2007 | 2008 | ||||||||||||||||
Gross revenues | $ | — | $ | 6,247 | $ | 63,930 | $ | 179,576 | $ | 333,698 | ||||||||||
Profit (loss) on sale of properties | — | — | — | — | ||||||||||||||||
Profit (loss) on sale of properties after previously recognized FMV Adj | — | — | — | — | — | |||||||||||||||
Less: Operating expenses | (16,617 | ) | (2,128 | ) | (54,873 | ) | (120,521 | ) | (191,612 | ) | ||||||||||
Interest expense | — | (2,447 | ) | (18,310 | ) | (47,835 | ) | (83,111 | ) | |||||||||||
Depreciation | — | (3,331 | ) | (22,478 | ) | (68,151 | ) | (122,798 | ) | |||||||||||
Other gain (loss) | 6,609 | (98 | ) | (6,759 | ) | (30,709 | ) | (101,585 | ) | |||||||||||
Net income (loss) — GAAP basis | (10,008 | ) | (1,757 | ) | (38,490 | ) | (87,640 | ) | (165,408 | ) | ||||||||||
Taxable income (loss): | ||||||||||||||||||||
From operations | (1,662 | ) | (13 | ) | 7,969 | 25,729 | 39,317 | |||||||||||||
From gain (loss) on sale | — | — | — | (257 | ) | |||||||||||||||
Cash generated (deficiency) from operations | (1,173 | ) | (1,775 | ) | 7,662 | 17,190 | 40,634 | |||||||||||||
Cash generated from sales | — | — | — | — | — | |||||||||||||||
Cash generated from refinancing | — | — | — | — | — | |||||||||||||||
Cash generated (deficiency) from investing and financing activities (before distributions) | 2,498 | 8,637 | 18,576 | 140,840 | (101,032 | ) | ||||||||||||||
Total cash generated (deficiency) | 1,325 | 6,862 | 26,238 | 158,030 | (60,398 | ) | ||||||||||||||
Less: Cash distributions to investors: | ||||||||||||||||||||
From operating cash flow | — | (2,242 | ) | (9,372 | ) | (29,324 | ) | (50,965 | ) | |||||||||||
From sales and refinancing | — | — | — | — | — | |||||||||||||||
From other (incentive) | — | — | — | — | — | |||||||||||||||
Cash generated (deficiency) after cash distributions | 1,325 | 4,620 | 16,866 | 128,706 | (111,363 | ) | ||||||||||||||
Less: Special items (not including sales and refinancing) | — | — | — | — | — | |||||||||||||||
Cash generated (deficiency) after cash distributions and special items | 1,325 | 4,620 | 16,866 | 128,706 | (111,363 | ) | ||||||||||||||
Tax and Distribution Data Per $1,000 Invested | ||||||||||||||||||||
Federal Income Tax Results: | ||||||||||||||||||||
Ordinary income (loss): | ||||||||||||||||||||
— from operations | (81 | ) | — | 10 | 16 | 19 | ||||||||||||||
— from recapture | — | — | — | — | — | |||||||||||||||
Capital gain (loss) | — | — | — | — | — | |||||||||||||||
Cash distributions to investors: | ||||||||||||||||||||
Source (on GAAP basis): | ||||||||||||||||||||
— from investment income | — | (10 | )(2) | (12 | )(2) | (18 | )(2) | (24 | )(2) | |||||||||||
— from return of capital | — | — | — | — | — | |||||||||||||||
Total distributions on GAAP basis | — | (10 | )(2) | (12 | )(2) | (18 | )(2) | (24 | )(2) | |||||||||||
Source (on cash basis): | ||||||||||||||||||||
— from sales | — | — | — | — | — | |||||||||||||||
— from refinancing | — | — | — | — | — | |||||||||||||||
— from operations | — | (10 | )(2) | (12 | )(2) | (18 | )(2) | (24 | )(2) | |||||||||||
— from other | — | — | — | — | — | |||||||||||||||
Total distributions on cash basis | — | (10 | )(2) | (12 | )(2) | (18 | )(2) | (24 | )(2) | |||||||||||
Amount (in percentage terms) remaining invested in program properties at the end of the last year reported in the Table | 100 | % | ||||||||||||||||||
(1) | This amount includes unrealized gains and losses on the fair value of investment properties. | |
(2) | This amount includes cash distributions paid and distributions reinvested during the year pursuant to the dividend reinvestment plan. |
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Hines US Core | Hines US Core | Hines US Core | Hines US Core | Hines US Core | ||||||||||||||||||||
Office Fund LP | Office Fund LP | Office Fund LP | Office Fund LP | Office Fund LP | ||||||||||||||||||||
2004 | 2005 | 2006 | 2007 | 2008 | ||||||||||||||||||||
Gross revenues | $ | 145,384 | $ | 200,677 | $ | 279,916 | $ | 411,086 | $ | 515,447 | ||||||||||||||
Profit (loss) on sale of properties | — | — | — | — | — | |||||||||||||||||||
Profit (loss) on sale of properties after previously recognized FMV Adj | — | — | — | — | — | |||||||||||||||||||
Less: Operating expenses | (55,170 | ) | (92,530 | ) | (128,645 | ) | (179,198 | ) | (226,572 | ) | ||||||||||||||
Interest expense | (30,349 | ) | (47,273 | ) | (68,260 | ) | (104,587 | ) | (139,705 | ) | ||||||||||||||
Depreciation | (43,618 | ) | (58,219 | ) | (87,731 | ) | (172,045 | ) | (213,369 | ) | ||||||||||||||
Other gain (loss) | (10,390 | ) | (5,732 | ) | (5,194 | ) | 18,257 | 12,091 | ||||||||||||||||
Net income (loss) — GAAP basis | 5,857 | (3,077 | ) | (9,914 | ) | (26,487 | ) | (52,108 | ) | |||||||||||||||
Taxable income (loss): | ||||||||||||||||||||||||
From operations | 49,605 | 37,743 | 41,573 | 66,217 | 69,078 | |||||||||||||||||||
From gain (loss) on sale | — | — | — | — | — | |||||||||||||||||||
Cash generated (deficiency) from operations | 79,329 | 46,901 | 69,879 | 115,607 | 136,004 | |||||||||||||||||||
Cash generated from sales | — | — | — | — | — | |||||||||||||||||||
Cash generated from refinancing | — | — | — | — | — | |||||||||||||||||||
Cash generated (deficiency) from investing and financing activities (before distributions) | 4,362 | 16,026 | 43,098 | 61,011 | 14,265 | |||||||||||||||||||
Total cash generated (deficiency) | 83,691 | 62,927 | 112,977 | 176,618 | 150,269 | |||||||||||||||||||
Less: Cash distributions to investors: | ||||||||||||||||||||||||
From operating cash flow | (47,662 | ) | (63,479 | ) | (87,464 | ) | (131,964 | ) | (148,096 | ) | ||||||||||||||
From sales and refinancing | — | — | — | — | — | |||||||||||||||||||
From other (incentive) | — | — | — | — | — | |||||||||||||||||||
Cash generated (deficiency) after cash distributions | 36,029 | (552 | ) | 25,513 | 44,654 | 2,173 | ||||||||||||||||||
Less: Special items (not including sales and refinancing) | — | — | — | — | — | |||||||||||||||||||
Cash generated (deficiency) after cash distributions and special items | 36,029 | (552 | ) | 25,513 | 44,654 | 2,173 | ||||||||||||||||||
Tax and Distribution Data Per $1,000 Invested | ||||||||||||||||||||||||
Federal Income Tax Results: | ||||||||||||||||||||||||
Ordinary income (loss): | ||||||||||||||||||||||||
— from operations | 67 | 39 | 24 | 32 | 34 | |||||||||||||||||||
— from recapture | — | — | — | — | — | |||||||||||||||||||
Capital gain (loss) | — | — | — | — | — | |||||||||||||||||||
Cash distributions to investors: | ||||||||||||||||||||||||
Source (on GAAP basis): | ||||||||||||||||||||||||
— from investment income | (64 | ) | (66 | ) | (50 | ) | (65 | ) | (72 | ) | ||||||||||||||
— from return of capital | — | — | — | — | — | |||||||||||||||||||
Total distributions on GAAP basis | (64 | ) | (66 | ) | (50 | ) | (65 | ) | (72 | ) | ||||||||||||||
Source (on cash basis): | ||||||||||||||||||||||||
— from sales | — | — | — | — | — | |||||||||||||||||||
— from refinancing | — | — | — | — | — | |||||||||||||||||||
— from operations | (64 | ) | (66 | ) | (50 | ) | (65 | ) | (72 | ) | ||||||||||||||
— from other | — | — | — | — | — | |||||||||||||||||||
Total distributions on cash basis | (64 | ) | (66 | ) | (50 | ) | (65 | ) | (72 | ) | ||||||||||||||
Amount (in percentage terms) remaining invested in program properties at the end of the last year reported in the Table | 100 | % | ||||||||||||||||||||||
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Hines U.S. | Hines U.S. | Hines U.S. | Hines U.S. | Hines U.S. | ||||||||||||||||||||||||
OfficeValue | OfficeValue | OfficeValue | OfficeValue | OfficeValue | ||||||||||||||||||||||||
Added | Added | Added | Added | Added | ||||||||||||||||||||||||
Fund I LP | Fund I LP | Fund I LP | Fund I LP | Fund I LP | ||||||||||||||||||||||||
2004 | 2005 | 2006 | 2007 | 2008 | ||||||||||||||||||||||||
Gross revenues | $ | 3,227 | $ | 25,855 | $ | 36,208 | $ | 39,342 | $ | 41,303 | ||||||||||||||||||
Profit (loss) on sale of properties | — | — | 34,178 | 133,605 | — | |||||||||||||||||||||||
Profit (loss) on sale of properties after previously recognized FMV Adj | — | — | — | — | — | |||||||||||||||||||||||
Less: Operating expenses | (2,160 | ) | (12,463 | ) | (19,280 | ) | (25,192 | ) | (23,843 | ) | ||||||||||||||||||
Interest expense | (1,209 | ) | (7,675 | ) | (13,576 | ) | (15,060 | ) | (13,325 | ) | ||||||||||||||||||
Depreciation | (1,596 | ) | (13,958 | ) | (15,891 | ) | (15,546 | ) | (13,865 | ) | ||||||||||||||||||
Other gain (loss) | (1,000 | ) | (3,768 | ) | (9,545 | ) | 185 | 91 | ||||||||||||||||||||
Net income (loss) — GAAP basis | (2,738 | ) | (12,009 | ) | 12,094 | 117,334 | (9,639 | ) | ||||||||||||||||||||
Taxable income (loss): | ||||||||||||||||||||||||||||
From operations | (460 | ) | 604 | (10,341 | ) | (16,326 | ) | (4,052 | ) | |||||||||||||||||||
From gain (loss) on sale | — | — | 27,192 | 143,354 | — | |||||||||||||||||||||||
Cash generated (deficiency) from operations | 203 | 7,425 | (3,817 | ) | (6,097 | ) | (5,492 | ) | ||||||||||||||||||||
Cash generated from sales | — | — | 73,376 | 181,922 | — | |||||||||||||||||||||||
Cash generated from refinancing | — | — | — | — | 12,000 | |||||||||||||||||||||||
Cash generated (deficiency) from investing and financing activities (before distributions) | 2,720 | 2,608 | 11,249 | 16,277 | 1,376 | |||||||||||||||||||||||
Total cash generated (deficiency) | 2,923 | 10,033 | 80,808 | 192,102 | 7,884 | |||||||||||||||||||||||
Less: Cash distributions to investors: | ||||||||||||||||||||||||||||
From operating cash flow | — | (8,200 | ) | (7,100 | ) | (12,518 | ) | — | ||||||||||||||||||||
From sales and refinancing | — | — | (69,000 | ) | (182,000 | ) | (12,000 | ) | ||||||||||||||||||||
From other (incentive) | — | — | — | — | — | |||||||||||||||||||||||
Cash generated (deficiency) after cash distributions | 2,923 | 1,833 | 4,708 | (2,416 | ) | (4,116 | ) | |||||||||||||||||||||
Less: Special items (not including sales and refinancing) | — | — | — | — | — | |||||||||||||||||||||||
Cash generated (deficiency) after cash distributions and special items | 2,923 | 1,833 | 4,708 | (2,416 | ) | (4,116 | ) | |||||||||||||||||||||
Tax and Distribution Data Per $1,000 Invested | ||||||||||||||||||||||||||||
Federal Income Tax Results: | ||||||||||||||||||||||||||||
Ordinary income (loss): | ||||||||||||||||||||||||||||
— from operations | (2 | ) | 2 | (37 | ) | (59 | ) | (15 | ) | |||||||||||||||||||
— from recapture | — | — | 18 | 27 | — | |||||||||||||||||||||||
Capital gain (loss) | — | — | 80 | 492 | — | |||||||||||||||||||||||
Cash distributions to investors: | ||||||||||||||||||||||||||||
Source (on GAAP basis): | ||||||||||||||||||||||||||||
— from investment income | — | (30 | ) | (107 | ) | (494 | ) | (300 | ) | |||||||||||||||||||
— from return of capital | — | — | (168 | ) | (210 | ) | — | |||||||||||||||||||||
Total distributions on GAAP basis | — | (30 | ) | (275 | ) | (704 | ) | (300 | ) | |||||||||||||||||||
Source (on cash basis): | ||||||||||||||||||||||||||||
— from sales | — | — | (249 | ) | (659 | ) | — | |||||||||||||||||||||
— from refinancing | — | — | — | — | — | |||||||||||||||||||||||
— from operations | — | (30 | ) | (26 | ) | (45 | ) | (300 | ) | |||||||||||||||||||
— from other | — | — | — | — | — | |||||||||||||||||||||||
Total distributions on cash basis | — | (30 | ) | (275 | ) | (704 | ) | (300 | ) | |||||||||||||||||||
Amount (in percentage terms) remaining invested in program properties at the end of the last year reported in the Table | 52 | % | ||||||||||||||||||||||||||
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Hines U.S. | Hines U.S. | Hines U.S. | ||||||||||||||||||
OfficeValue | OfficeValue | OfficeValue | Hines Suburban | Hines Suburban | ||||||||||||||||
Added | Added | Added | Office Venture | Office Venture | ||||||||||||||||
Fund II LP | Fund II LP | Fund II LP | LLC | LLC | ||||||||||||||||
2006 | 2007 | 2008 | 2004 | 2005 | ||||||||||||||||
Gross revenues | $ | 676 | $ | 47,590 | $ | 96,091 | $ | 15,275 | $ | 9,014 | ||||||||||
Profit (loss) on sale of properties | — | 20,220 | 8,925 | |||||||||||||||||
Profit (loss) on sale of properties after previously recognized FMV Adj | — | — | — | — | — | |||||||||||||||
Less: Operating expenses | (2,196 | ) | (33,228 | ) | (49,447 | ) | (7,531 | ) | (4,957 | ) | ||||||||||
Interest expense | (1,092 | ) | (37,539 | ) | (50,398 | ) | (3,920 | ) | (1,338 | ) | ||||||||||
Depreciation | (363 | ) | (32,767 | ) | (56,822 | ) | (4,617 | ) | (3,641 | ) | ||||||||||
Other gain (loss) | (387 | ) | (176 | ) | — | — | — | |||||||||||||
Net income (loss) — GAAP basis | (3,362 | ) | (56,120 | ) | (60,576 | ) | 19,427 | 8,003 | ||||||||||||
Taxable income (loss): | ||||||||||||||||||||
From operations | (378 | ) | (31,527 | ) | (11,331 | ) | 945 | 901 | ||||||||||||
From gain (loss) on sale | — | — | — | 20,042 | 8,438 | |||||||||||||||
Cash generated (deficiency) from operations | (100 | ) | (9,391 | ) | (5,134 | ) | 3,564 | 136 | ||||||||||||
Cash generated from sales | — | — | — | 40,719 | 18,053 | |||||||||||||||
Cash generated from refinancing | — | — | — | — | — | |||||||||||||||
Cash generated (deficiency) from investing and financing activities (before distributions) | 4,380 | 14,918 | 8,872 | (1,225 | ) | (1,685 | ) | |||||||||||||
Total cash generated (deficiency) | 4,280 | 5,527 | 3,738 | 43,058 | 16,504 | |||||||||||||||
Less: Cash distributions to investors: | ||||||||||||||||||||
From operating cash flow | — | — | — | (3,337 | ) | (770 | ) | |||||||||||||
From sales and refinancing | — | — | — | (40,503 | ) | (18,114 | ) | |||||||||||||
From other (incentive) | — | — | — | — | — | |||||||||||||||
Cash generated (deficiency) after cash distributions | 4,280 | 5,527 | 3,738 | (782 | ) | (2,380 | ) | |||||||||||||
Less: Special items (not including sales and refinancing) | — | — | — | — | — | |||||||||||||||
Cash generated (deficiency) after cash distributions and special items | 4,280 | 5,527 | 3,738 | (782 | ) | (2,380 | ) | |||||||||||||
Tax and Distribution Data Per $1,000 Invested | ||||||||||||||||||||
Federal Income Tax Results: | ||||||||||||||||||||
Ordinary income (loss): | ||||||||||||||||||||
— from operations | (1 | ) | (67 | ) | (14 | ) | 39 | 70 | ||||||||||||
— from recapture | — | — | — | — | — | |||||||||||||||
Capital gain (loss) | — | — | — | 834 | 659 | |||||||||||||||
Cash distributions to investors: | ||||||||||||||||||||
Source (on GAAP basis): | ||||||||||||||||||||
— from investment income | — | — | — | (778 | ) | (849 | ) | |||||||||||||
— from return of capital | — | — | — | (1,047 | ) | (972 | ) | |||||||||||||
Total distributions on GAAP basis | — | — | — | (1,825 | ) | (1,821 | ) | |||||||||||||
Source (on cash basis): | ||||||||||||||||||||
— from sales | — | — | — | (1,686 | ) | (1,747 | ) | |||||||||||||
— from refinancing | — | — | — | — | — | |||||||||||||||
— from operations | — | — | — | (139 | ) | (74 | ) | |||||||||||||
— from other | — | — | — | — | — | |||||||||||||||
Total distributions on cash basis | — | — | — | (1,825 | ) | (1,821 | ) | |||||||||||||
Amount (in percentage terms) remaining invested in program properties at the end of the last year reported in the Table | 57 | % | ||||||||||||||||||
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Hines Suburban | Hines Suburban | Hines Suburban | Hines Pan- | Hines Pan- | Hines Pan- | |||||||||||||||||||
Office Venture | Office Venture | Office Venture | European | European | European | |||||||||||||||||||
LLC | LLC | LLC | Core Fund LP | Core Fund LP | Core Fund LP | |||||||||||||||||||
2006 | 2007 | 2008 | 2006 | 2007 | 2008 | |||||||||||||||||||
Gross revenues | $ | 9,045 | $ | 5,956 | $ | 44 | $ | 1,246 | $ | 13,913 | $ | 27,439 | ||||||||||||
Profit (loss) on sale of properties | — | 19,738 | — | — | — | — | ||||||||||||||||||
Profit (loss) on sale of properties after previously recognized FMV Adj | — | — | — | — | ||||||||||||||||||||
Less: Operating expenses | (4,782 | ) | (3,691 | ) | (152 | ) | (158 | ) | (1,595 | ) | (2,949 | ) | ||||||||||||
Interest expense | (1,372 | ) | (810 | ) | — | (461 | ) | (4,455 | ) | (4,819 | ) | |||||||||||||
Depreciation | (2,938 | ) | (827 | ) | — | (7,991 | ) | — | ||||||||||||||||
Other gain (loss) | — | — | — | (2,256 | )(1) | (5,591 | )(1) | (63,098 | ) | |||||||||||||||
Net income (loss) — GAAP basis | (47 | ) | 20,366 | (108 | ) | (1,629 | ) | (5,719 | ) | (43,427 | ) | |||||||||||||
Taxable income (loss): | ||||||||||||||||||||||||
From operations | 279 | (3,881 | ) | — | (2,086 | ) | (403 | ) | 3,393 | |||||||||||||||
From gain (loss) on sale | — | 21,705 | — | — | — | — | ||||||||||||||||||
Cash generated (deficiency) from operations | (5,232 | ) | (6,038 | ) | (190 | ) | 1,088 | 12,318 | 24,490 | |||||||||||||||
Cash generated from sales | — | 42,049 | — | — | — | — | ||||||||||||||||||
Cash generated from refinancing | — | — | — | — | — | — | ||||||||||||||||||
Cash generated (deficiency) from investing and financing activities (before distributions) | 5,711 | 3,506 | — | 2,831 | 3,861 | (20,746 | ) | |||||||||||||||||
Total cash generated (deficiency) | 479 | 39,517 | (190 | ) | 3,919 | 16,179 | 3,744 | |||||||||||||||||
Less: Cash distributions to investors: | ||||||||||||||||||||||||
From operating cash flow | — | (115 | ) | (1,400 | ) | (544 | ) | (6,154 | ) | (12,389 | ) | |||||||||||||
From sales and refinancing | — | (38,682 | ) | — | — | — | ||||||||||||||||||
From other (incentive) | — | — | — | — | — | — | ||||||||||||||||||
Cash generated (deficiency) after cash distributions | 479 | 720 | (1,590 | ) | 3,375 | 10,025 | (8,645 | ) | ||||||||||||||||
Less: Special items (not including sales and refinancing) | — | — | — | — | — | — | ||||||||||||||||||
Cash generated (deficiency) after cash distributions and special items | 479 | 720 | (1,590 | ) | 3,375 | 10,025 | (8,645 | ) | ||||||||||||||||
Tax and Distribution Data Per $1,000 Invested | ||||||||||||||||||||||||
Federal Income Tax Results: | ||||||||||||||||||||||||
Ordinary income (loss): | ||||||||||||||||||||||||
— from operations | 5 | (69 | ) | N/A | (2) | (13 | ) | (3 | ) | 0 | ||||||||||||||
— from recapture | — | 60 | — | — | — | — | ||||||||||||||||||
Capital gain (loss) | — | 385 | — | — | — | — | ||||||||||||||||||
Cash distributions to investors: | ||||||||||||||||||||||||
Source (on GAAP basis): | ||||||||||||||||||||||||
— from investment income | — | (1,534 | ) | N/A | (2) | (4 | ) | (46 | ) | (133 | ) | |||||||||||||
— from return of capital | — | (1,850 | ) | N/A | (2) | — | — | — | ||||||||||||||||
Total distributions on GAAP basis | — | (3,384 | ) | (4 | ) | (46 | ) | (133 | ) | |||||||||||||||
Source (on cash basis): | ||||||||||||||||||||||||
— from sales | — | (3,374 | ) | N/A | (2) | — | — | — | ||||||||||||||||
— from refinancing | — | — | N/A | (2) | — | — | — | |||||||||||||||||
— from operations | — | (10 | ) | N/A | (2) | (4 | ) | (46 | ) | (133 | ) | |||||||||||||
— from other | — | — | N/A | (2) | — | — | — | |||||||||||||||||
Total distributions on cash basis | — | (3,384 | ) | (4 | ) | (46 | ) | (133 | ) | |||||||||||||||
Amount (in percentage terms) remaining invested in program properties at the end of the last year reported in the Table | 0 | % | 100 | % | ||||||||||||||||||||
(1) | This amount includes unrealized gains and losses on the fair value of investment properties. |
(2) | All invested capital was returned to the investors of Hines Suburban Office Venture LLC (HSOV) prior to December 31, 2007. However, during 2008 HSOV made a $1.4 million liquidating distribution and had operating tax losses of approximately $147,000. Since all invested proceeds were returned prior to 2008, the amount of distributions and ordinary tax losses per $1,000 invested cannot be calculated. |
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Hines 1997 | Hines 1999 | |||||||||||||||||||
U.S. Office | U.S. Office | National | Hines | |||||||||||||||||
Hines Suburban | Development | Development | Office | Corporate | ||||||||||||||||
Office Venture(1) | Fund LP(1) | Fund LP(1) | Partners | Properties(1) | ||||||||||||||||
Dollar amount raised (in thousands) | $ | 56,426 | $ | 243,560 | $ | 98,200 | $ | 3,445,204 | $ | 136,631 | ||||||||||
Number of properties purchased/developed | 3 | 13 | 4 | 30 | 12 | |||||||||||||||
Date of closing of offering | Feb-02 | Jan-98 | Jan-99 | Mar-05 | Dec-04 | |||||||||||||||
Date of first sale of property | Apr-04 | Oct-00 | Jun-03 | Sep-99 | Oct-02 | |||||||||||||||
Date of final sale of property | Aug-07 | Dec-04 | Aug-07 | Sep-06 | Jun-05 | |||||||||||||||
Tax and Distribution data Per $1,000 Invested | ||||||||||||||||||||
Federal income tax results: | ||||||||||||||||||||
Ordinary income (loss): | ||||||||||||||||||||
— from operations | 19 | 164 | 24 | 139 | (49 | ) | ||||||||||||||
— from recapture | 136 | — | 88 | 36 | 227 | |||||||||||||||
Capital gain | 872 | 474 | 1,396 | 203 | 1,493 | |||||||||||||||
Deferred gain: | ||||||||||||||||||||
Capital | — | — | — | — | — | |||||||||||||||
Ordinary | — | — | — | — | — | |||||||||||||||
Cash distributions to investors: | ||||||||||||||||||||
Source (on GAAP basis): | ||||||||||||||||||||
— from investment income | 858 | 664 | 1,495 | 354 | 1,451 | |||||||||||||||
— from return of capital | 1,000 | 1,000 | 1,000 | 1,000 | 1,000 | |||||||||||||||
Total distributions on GAAP basis | 1,858 | 1,664 | 2,495 | 1,354 | 2,451 | |||||||||||||||
Source (on cash basis): | ||||||||||||||||||||
— from sales | 1,724 | 1,356 | 2,412 | 834 | 2,137 | |||||||||||||||
— from refinancing | — | 71 | — | 334 | — | |||||||||||||||
— from operations | 134 | 237 | 83 | 186 | 314 | |||||||||||||||
Total distributions on cash basis | 1,858 | 1,664 | 2,495 | 1,354 | 2,451 | |||||||||||||||
(1) | Dollar amount raised for Hines Suburban Office Venture, Hines 1997 U.S. Office Development Fund LP, Hines 1999 US Office Development Fund LP and Hines Corporate Properties represents the total equity contributed by the partners rather than the equity committed to the partnership. |
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Selling Price, Net of Closing Costs and GAAP Adjustments | Cost of Property, | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Purchase | Including Closing and Soft Costs | Excess | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Money | Adjustments | Total | (Deficiency) of | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash | Mortgage | Mortgage | Resulting | Acquisition | Property | |||||||||||||||||||||||||||||||||||||||||||||||||||
Received, Net | Balance at | Taken | from | Original | Cost, Capital | Operating Cash | Capital | Ordinary | ||||||||||||||||||||||||||||||||||||||||||||||||
Date | Date of | of Closing | Time of | Back by | Application | Mortgage | Improvements | Receipts over Cash | Taxable | Gain | Gain | |||||||||||||||||||||||||||||||||||||||||||||
Property | Acquired | Sale | Costs | Sale | Program | of GAAP | Total | Financing | and Soft Costs | Total | Expenditures | Gain (Loss) | (Loss) | (Loss) | ||||||||||||||||||||||||||||||||||||||||||
Hines Suburban Office Venture LLC | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2345 Grand Boulevard | Mar-04 | Aug-07 | 42,049 | 31,600 | — | — | 73,649 | 31,600 | 28,209 | 59,809 | (3,637 | ) | 21,705 | 18,327 | 3,378 | |||||||||||||||||||||||||||||||||||||||||
Hines US Office Value Added Fund | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Capital Center | Sep-04 | Jul-06 | 42,638 | 47,973 | — | — | 90,611 | — | 72,680 | 72,680 | — | 21,114 | 18,481 | 2,633 | ||||||||||||||||||||||||||||||||||||||||||
Westwood of Lisle | Oct-04 | Oct-06 | 22,940 | 29,349 | — | — | 52,289 | — | 49,641 | 49,641 | — | 5,230 | 3,370 | 1,860 | ||||||||||||||||||||||||||||||||||||||||||
20 Independence | Jun-05 | Oct-06 | 7,798 | 11,153 | — | — | 18,951 | — | 18,963 | 18,963 | — | 848 | 344 | 504 | ||||||||||||||||||||||||||||||||||||||||||
Bank of America Center Houston | Nov-05 | Aug-07 | 181,922 | 120,745 | — | — | 302,667 | 127,579 | 55,003 | 182,582 | — | 143,354 | 135,898 | 7,456 |
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B-3
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B-4
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DISTRIBUTION REINVESTMENT PLAN
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PRIVACY POLICY
• | Information on applications, subscription agreements or other forms which may include your name, address, e-mail address, telephone number, tax identification number, date of birth, marital status, driver’s license number, citizenship, assets, income, employment history, beneficiary information, personal bank account information, broker/dealer, financial advisor, IRA custodian, account joint owners and similar parties; | |
• | Information about your transactions with us, our affiliates and others, such as the types of products you purchase, your account balances and transactional history; and | |
• | Information obtained from others, such as from consumer credit reporting agencies which may include information about your creditworthiness, debts, financial circumstances and credit history, including any bankruptcies and foreclosures. |
• | in order to identify you as a customer; | |
• | in order to establish and maintain your customer accounts; | |
• | in order to complete your customer transactions; | |
• | in order to market investment products or services that may meet your particular financial and investing circumstances; | |
• | in order to communicate and share information with your broker/dealer, financial advisor, IRA custodian, joint owners and other similar parties acting at your request and on your behalf; and | |
• | in order to meet our obligations under the laws and regulations that govern us. |
• | Our Affiliated Companies. We may offer investment products and services through certain of our affiliated companies, and we may share all of the Nonpublic Personal Information we collect on you with such affiliates. We believe that by sharing information about you and your accounts among our companies, we are better able to serve your investment needs and to suggest services or educational materials that may be of interest to you. You may limit the information we share with our affiliate companies as described at the end of this notice below. |
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• | Nonaffiliated Financial Service Providers and Joint Marketing Partners. From time to time, we use outside companies to perform services for us or functions on our behalf, including marketing of our own investment products and services or marketing products or services that we may offer jointly with other financial institutions. We may disclose all of the Nonpublic Personal Information we collect as described above to such companies. However, before we disclose Nonpublic Personal Information to any of our service providers or joint marketing partners, we require them to agree to keep your Nonpublic Personal Information confidential and secure and to use it only as authorized by us. | |
• | Other Nonaffiliated Third Parties. We do not sell or share your Nonpublic Personal Information with nonaffiliated outside marketers, for example, retail department stores, grocery stores or discount merchandise chains, who may want to offer you their own products and services. However, we may also use and disclose all of the Nonpublic Personal Information we collect about you to the extent permitted by law. For example, to: | |
• | correct technical problems and malfunctions in how we provide our products and services to you and to technically process your information; | |
• | protect the security and integrity of our records, Web Site and customer service center; | |
• | protect our rights and property and the rights and property of others; | |
• | take precautions against liability; | |
• | respond to claims that your information violates the rights and interests of third parties; | |
• | take actions required by law or to respond to judicial process; | |
• | assist with detection, investigation or reporting of actual or potential fraud, misrepresentation or criminal activity; and | |
• | provide personal information to law enforcement agencies or for an investigation on a matter related to public safety to the extent permitted under other provisions of law. |
• | Restricting physical and other access to your Nonpublic Personal Information to persons with a legitimate business need to know the information in order to service your account; | |
• | Contractually obligating third parties doing business with us to keep your Nonpublic Personal Information confidential and secure and to use it only as authorized by us; | |
• | Providing information to you only after we have used reasonable efforts to assure ourselves of your identity by asking for and receiving from you information only you should know; and | |
• | Maintaining reasonably adequate physical, electronic and procedural safeguards to protect your information. |
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Do not share information about my creditworthiness with your affiliates for their everyday business purposes. |
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• | Funds raised from investors: $15.1 billion | |
• | Aggregate amount of real estate investments: $24.7 billion | |
• | Number of properties: 240 | |
• | In the U.S., 125 properties with a cost of $15.1 billion |
• | Outside of the U.S., 115 properties with a cost of $9.5 billion |
• | 96 dispositions with an aggregate cost basis of $6.6 billion and sales price of $8.3 billion |
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Development (Dev) | ||||||||
U.S. or Non U.S. | and Acquisition (Acq) | |||||||
Summary of Hines closed investment programs* | ||||||||
Programs in the investment phase† | ||||||||
Hines Real Estate Investment Trust, Inc. | U.S. and Non U.S. | Acq | ||||||
Hines US Core Office Fund LP | U.S. | Acq | ||||||
Hines Pan-European Core Fund | Non U.S. | Acq | ||||||
Hines India Fund | Non U.S. | Acq, Dev | ||||||
Hines European Development Fund II, L.P. | Non U.S. | Dev | ||||||
HCM Holdings II, LP (Mexico) | Non U.S. | Acq, Dev | ||||||
HCB Interests II, LP (Brazil) | Non U.S. | Acq, Dev | ||||||
Hines U.S. Office Value Added Fund II, L.P. | U.S. | Acq | ||||||
Hines CalPERS Green Development Fund | U.S. | Dev | ||||||
Hines International Real Estate Fund | Non U.S. | Dev, Acq | ||||||
HCC Interests LP (China) | Non U.S. | Dev, Acq | ||||||
HCS Interest LP (Sunbelt Spain) | Non U.S. | Dev, Acq | ||||||
National Office Partners | U.S. | Acq, Dev | ||||||
Programs in the operations/dispositions phase | ||||||||
Hines European Value Added Fund | Non U.S. | Dev, Acq | ||||||
HCB Interests, LP (Brazil) | Non U.S. | Dev, Acq | ||||||
HCM Holdings LP (Mexico) | Non U.S. | Dev, Acq | ||||||
Hines U.S. Office Value Added Fund I | U.S. | Acq | ||||||
Hines European Development Fund | Non U.S. | Dev | ||||||
Emerging Markets Real Estate Fund II | Non U.S. | Dev, Acq | ||||||
Emerging Markets Real Estate Fund I | Non U.S. | Dev, Acq | ||||||
Programs that have gone full cycle | ||||||||
Hines Suburban Office Venture | U.S. | Acq | ||||||
Hines 1999 U.S. Office Development Fund | U.S. | Dev | ||||||
National Office Partners (Initial Phase — pre 4/05) | U.S. | Acq, Dev | ||||||
Hines Corporate Properties | U.S. | Dev, Acq | ||||||
Hines 1997 U.S. Office Development Fund | U.S. | Dev | ||||||
HMS Office | U.S. | Acq |
* | Certain of these programs have experienced adverse developments in the past. | |
† | The list does not include private investment programs that are open to new investors. |
• | Caixa | |
• | California Public Employees’ Retirement System | |
• | Colorado Public Employees’ Retirement Association | |
• | Deutsche Bank | |
• | E. ON Energie AG | |
• | Florida State Board of Administration |
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Table of Contents
• | General Motors Pension Trust | |
• | Ideenkapital AG | |
• | Illinois Teachers Retirement System | |
• | MEAG (Munich Ergo Asset Management) | |
• | New York State Teachers Retirement System | |
• | Pennsylvania Public School Employees’ Retirement System | |
• | Sparinvest S.A. | |
• | Stichting Pensioenfonds ABP | |
• | Teachers Insurance and Annuity Association | |
• | Westdeutsche Immobilien Bank (West Immo) |
1957 | — | Gerald D. Hines Interests founded as a sole proprietorship. | ||||||
1958 | — | After six office/warehouse projects, Hines completes the firm’s first Class A Office Project, 4219 Richmond Ave., Houston, Texas. | ||||||
1967 | — | Gerald D. Hines Interests celebrates its 10th anniversary with 97 office, warehouse, retail, parking and residential projects in its portfolio. | ||||||
1971 | — | Hines builds its first office tower in downtown Houston, the 50-story One Shell Plaza. | ||||||
1973 | — | Banking Division is formed to pursue development of bank headquarters in joint ventures outside Houston, starting national expansion of firm. | ||||||
1975 | — | Pennzoil Place is completed and named building of the year by the NY Times. | ||||||
1976 | — | Hines sells a major interest in Pennzoil Place to an international investor. Hines completes its first international development in Montreal. | ||||||
1978 | — | Construction of Three First National Plaza (Chicago) begins. | ||||||
1979 | — | The West Region office opens in San Francisco. |
1981 | — | The East Region office opens in New York City. | ||||
1982 | — | The Southeast Region office opens in Atlanta. | ||||
1983 | — | Transco Tower, now called Williams Tower, and Republic Bank Center, now called Bank of America Center (both in Houston) are completed, as is United Bank Center, now Wells Fargo Center (Denver) is completed. | ||||
1984 | — | 580 California (San Francisco), Huntington Center (Columbus) and Southeast Financial Center, now Wachovia Financial Center (Miami) are completed. | ||||
1985 | — | Ravinia Center (Atlanta) is completed. | ||||
1986 | — | 53rd At Third and 31 West 52nd Street are completed (both in New York). The Midwest Region office opens in Chicago. | ||||
1987 | — | Hines celebrates its 30th anniversary with 373 projects completed and 921 employees throughout the U.S. The Norwest Center (Minneapolis) and Columbia Square (Washington, D.C.) buildings are completed. | ||||
1988 — 1989 | — | 500 Bolyston (Boston) and Franklin Square (Washington, D.C.) are completed. |
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1990 | — | Jeffrey C. Hines appointed President of Hines Interests Limited Partnership; Gerald D. Hines becomes Chairman. 343 Sansome (San Francisco), 225 High Ridge Road (Stamford) and Figueroa at Wilshire (Los Angeles) are completed. | ||||||
1991 | — | The first international office opens in Berlin. 450 Lexington (New York) and One Detroit Center, now Comerica Tower (Detroit) are completed. | ||||||
1992 | — | Mexico City and Moscow offices open. The renovation and development of the historic Postal Square (Washington, D.C.) is completed. | ||||||
1993 | — | 700 11th Street (Washington, D.C.) is acquired, the first building acquisition by Hines. | ||||||
1994 | — | Hines begins the year with 18 major developments in progress in the U.S. and three foreign countries. Greenspoint Plaza (Houston) is acquired. Del Bosque is completed in Mexico City and sold to Coca-Cola for its Latin America headquarters. | ||||||
1995 | — | Paris, London, Frankfurt and Prague offices are all opened. In partnership with Morgan Stanley, Hines acquires the Homart portfolio (15 U.S. office buildings). | ||||||
1996 | — | The Barcelona and Beijing offices open. Hines closes its first international fund, Emerging Markets Fund I. | ||||||
1997 | — | Hines celebrates its 40th anniversary with 2,700 employees worldwide. Warsaw office opens. Construction begins on Diagonal Mar in Barcelona, the largest European undertaking for Hines to date. | ||||||
1998 | — | Hines completes its first international property acquisition, Reforma 350 in Mexico City. Hines Corporate Properties (Hines’ first Build-to-Suit Fund) closes. Hines U.S. Development Fund I closes. CalPERS selects Hines as partner and investment manager for its $1.0 billion portfolio of 18 properties. Sào Paulo office opens. | ||||||
1999 | — | The Hines U.S. Office Development Fund II and Emerging Markets Real Estate Fund II close. Hines completes Mala Sarka (Prague), DZ Bank (Berlin), and Main Tower (Frankfurt). Hines acquires Figueroa at Wilshire (Los Angeles), 1100 Louisiana (Houston), and Bank of America Tower (Miami). |
2000 | — | Hines starts major office projects in the central business districts of Seattle, Chicago, New York and San Francisco. Hines acquires 750 Seventh Avenue (New York). | ||||
2001 | — | Hines develops, Gannett/USA Today headquarters in Virginia and projects for Morgan Stanley Dean Witter, Bear Stearns and Swiss Bank Corporation (now UBS Warburg) in New York. Hines is named “ENERGY STAR” Partner of the year. | ||||
2002 | — | Hines initiates the Hines Suburban Office Venture to acquire suburban office properties. Hines completes 745 Seventh Avenue in New York City and the resort community of Aspen Highlands Village in Aspen, Colorado. Hines is named “ENERGY STAR” Partner of the year. | ||||
2003 | — | Completed projects include Hilton Americas-Houston, Toyota Center and Calpine Center (all in Houston), 2002 Summit Boulevard (Atlanta), ABN AMRO (Chicago), Benrather Karree (Düsseldorf) and Panamérica Park (São Paulo). |
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2003 (cont’d.) | — | Hines expands its presence in Paris with three significant projects. Hines begins the urban planning project Garibaldi Repubblica (Milan), a master plan project which includes residential, office, retail and a hotel as well as a 26-acre public park. Additional residential projects include Tower I of Park Avenue (Beijing), River Valley Ranch (Colorado) and master-planned community Diagonal Mars Illa de Llac in Barcelona. The Hines European Development Fund is formed to focus on Class A office properties in Western Europe. The Hines U.S. Core Fund acquires its first buildings, three New York City office buildings and a building in Washington D.C. The Hines U.S. Office Value Added Fund offering is closed. Construction begins on One South Dearborn (Chicago), 2525 Ponce de Leon (Coral Gables), 1180 Peachtree (Atlanta) and Torre Almirante (Rio de Janeiro). Hines is named “ENERGY STAR” Partner of the year. | ||||
2004 | — | Hines sponsors its first public program, Hines REIT, which commences its first public offering. Development continues on Cannon Place, 99 Queen Victoria and the new world headquarters for the Salvation Army (all in London), and International Plaza-Kempinski Hotel (São Paulo). Hines is honored with the Environmental Protection Agency’s ENERGY STAR Sustained Excellence Award. | ||||
2005 | — | Hines continues to seek out new development and investment opportunities in over 100 markets around the world. Hines and CalPERS create funds to invest in Mexico’s real estate market and Brazil’s office, industrial and residential markets. Properties in development include 300 North LaSalle and One South Dearborn in Chicago and 900 de Maisonneuve, (Montreal). | ||||
2006 | — | Hines and CalPERS establish the nation’s first real estate investment fund devoted solely to sustainable development. New Delhi office opens. Hines develops new region called Eurasia, which includes Poland, Russia and now India. | ||||
2007 | — | Hines celebrates its 50th anniversary with more than 3,150 employees and almost 900 projects completed and under way around the globe. The Dubai office opens. | ||||
2008 | — | Gerald D. Hines receives the first ever Visionary Leadership in Real Estate Development Award from Harvard Design School. Out of 651 foreign and domestic projects, Hines now has 12 projects that have been certified, 18 that have been pre-certified and 67 that are registered under LEED’s various programs. Together, these projects represent more than 65 million square feet. Hines owns and/or manages 134 ENERGY STAR labeled buildings. 10 Hines buildings, representing more than five million square feet receive the EPA’s “Designed to Earn the ENERGY STAR” (DEES) designation for excellence in pre-occupancy design and engineering. Hines REIT wins the NAREIT Gold Leader in the Light Award for demonstrating superior and sustained energy practices. |
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Item 30. | Quantitative and Qualitative Disclosure About Market Risk |
Item 31. | Other Expenses of Issuance and Distribution |
Amount | ||||||||
Securities Act registration fee | $ | 137,550 | (1) | |||||
FINRA filing fee | $ | 75,500 | ||||||
Blue sky qualification fees and expenses | $ | 500,000 | ||||||
Printing and mailing expenses | $ | 6,000,000 | ||||||
Legal fees and expenses | $ | 4,000,000 | ||||||
Accounting fees and expenses | $ | 1,000,000 | ||||||
Advertising and sales literature | $ | 1,200,000 | ||||||
Transfer agent fees | $ | 3,750,000 | ||||||
Bank and other administrative expenses | $ | 250,000 | ||||||
Due diligence expense reimbursements | $ | 7,500,000 | ||||||
Total | $ | 24,413,050 |
(1) | $117,900 of this fee was paid for the primary offering and $19,650 was paid for shares that may be issued in connection with the Distribution Reinvestment Plan as disclosed on the cover page of this Registration Statement. |
Item 32. | Sales to Special Parties |
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Item 33. | Recent Sales of Unregistered Securities |
Item 34. | Indemnification of Directors and Officers |
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Item 35. | Treatment of Proceeds from Stock Being Registered |
Item 36. | Financial Statements and Exhibits |
F-2 | ||||
F-3 | ||||
F-4 |
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Item 37. | Undertakings |
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Contract | ||||||||||||||||||||||||||||||||
Purchase | ||||||||||||||||||||||||||||||||
Gross | Original | Cash Down | Price Plus | Other Cash | Other Cash | |||||||||||||||||||||||||||
Leasable | Date Of | Mortgage | Payment | Acquisition | Expenditures | Expenditures | Total Cost | |||||||||||||||||||||||||
Property and location | Space (sq. ft.) | Purchase(1) | Financing | (Equity) | Fee | Expensed | Capitalized | of Property | ||||||||||||||||||||||||
Acquisitions: | ||||||||||||||||||||||||||||||||
Hines Real Estate Investment Trust, Inc. | ||||||||||||||||||||||||||||||||
Airport Corporate Center | 1,021,397 | Jan-06 | 90,649 | 66,151 | 158,396 | — | 543 | 158,939 | ||||||||||||||||||||||||
321 North Clark | 885,664 | Apr-06 | 136,632 | 110,668 | 249,773 | — | 9,587 | 259,360 | ||||||||||||||||||||||||
3400 Data Drive | 149,703 | Nov-06 | 18,079 | 14,721 | 33,128 | — | 153 | 33,281 | ||||||||||||||||||||||||
Watergate Tower IV | 344,433 | Dec-06 | 79,921 | 64,979 | 146,349 | — | 291 | 146,640 | ||||||||||||||||||||||||
Daytona Buildings | 251,313 | Dec-06 | 53,458 | 45,542 | 99,990 | — | 164 | 100,154 | ||||||||||||||||||||||||
Laguna Buildings | 464,701 | Jan-07 | 65,542 | 52,458 | 119,165 | — | 233 | 119,398 | ||||||||||||||||||||||||
Atrium on Bay | 1,071,517 | Feb-07 | 183,084 | 32,516 | 217,580 | — | 1,708 | 219,288 | ||||||||||||||||||||||||
Seattle Design Center | 390,684 | Jun-07 | 31,000 | 25,800 | 57,368 | — | 268 | 57,636 | ||||||||||||||||||||||||
5th and Bell | 197,135 | Jun-07 | 39,000 | 33,200 | 72,884 | 1,449 | 74,333 | |||||||||||||||||||||||||
3 Huntington Quadrangle | 407,731 | Jul-07 | 48,000 | 39,000 | 87,870 | — | 544 | 88,414 | ||||||||||||||||||||||||
Distribution Park Rio(2) | 693,115 | Jul-07 | — | 53,700 | 53,989 | — | — | 53,989 | ||||||||||||||||||||||||
One Wilshire | 661,553 | Aug-07 | 159,500 | 127,500 | 289,938 | — | 3,690 | 293,628 | ||||||||||||||||||||||||
Minneapolis Office/Flex Portfolio | 766,240 | Sep-07 | 45,000 | 42,000 | 87,860 | — | 1,000 | 88,860 | ||||||||||||||||||||||||
JPMorgan Chase Tower | 1,247,923 | Nov-07 | 160,000 | 129,600 | 292,481 | — | 1,435 | 293,916 | ||||||||||||||||||||||||
2555 Grand, Kansas City, MO | 595,607 | Feb-08 | 86,000 | 69,800 | 157,358 | — | 213 | 157,571 | ||||||||||||||||||||||||
Raytheon/DIRECTV Buildings, El Segundo, CAL | 550,579 | Mar-08 | 54,200 | 65,800 | 121,335 | — | 11,780 | 133,115 | ||||||||||||||||||||||||
Williams Tower, Houston, TX | 1,480,623 | May-08 | 165,000 | 106,500 | 274,215 | — | 354 | 274,569 | ||||||||||||||||||||||||
4050/4055 Corporate Drive, Dallas, TX | 643,429 | May-08 | — | 42,800 | 43,228 | — | 116 | 43,344 | ||||||||||||||||||||||||
Grocery-Anchored Portfolio, Multi-State(3) | 1,137,875 | Nov-08 | 100,000 | 105,120 | 209,428 | — | 938 | 210,366 | ||||||||||||||||||||||||
Distribution Park Araucaria, Curitiba, Brazil | 459,587 | Dec-08 | — | 32,723 | 33,705 | — | 39 | 33,744 | ||||||||||||||||||||||||
Distribution Park Elouveira, Sao Paulo, Brazil | 534,794 | Dec-08 | — | 40,383 | 41,594 | — | 47 | 41,641 | ||||||||||||||||||||||||
Distribution Park Vinhedo, Sao Paulo, Brazil | 609,474 | Dec-08 | — | 41,745 | 42,997 | — | 49 | 43,046 | ||||||||||||||||||||||||
345 Inverness Drive, Denver, CO | 175,287 | Dec-08 | 13,790 | 11,910 | 26,471 | — | 40 | 26,511 | ||||||||||||||||||||||||
Arapahoe Business Parks, Denver, CO | 309,450 | Dec-08 | 18,087 | 22,713 | 42,024 | — | 72 | 42,096 | ||||||||||||||||||||||||
Hines US Core Office Fund LP(4) | ||||||||||||||||||||||||||||||||
720 Olive Way, Seattle, WA | 300,710 | Jan-06 | 42,400 | 41,275 | 83,675 | — | 191 | 83,866 | ||||||||||||||||||||||||
333 West Wacker, Chicago, IL | 845,210 | Apr-06 | 124,000 | 99,000 | 223,000 | — | 5,870 | 228,870 | ||||||||||||||||||||||||
One Atlantic Center, Atlanta, GA | 1,100,312 | Jul-06 | 168,500 | 136,500 | 305,000 | — | 410 | 305,410 | ||||||||||||||||||||||||
Warner Center, Woodland Hills, CA | 808,274 | Oct-06 | 174,000 | 136,954 | 310,954 | — | 3,632 | 314,586 | ||||||||||||||||||||||||
Riverfront Plaza, Richmond, VA | 951,421 | Nov-06 | 135,900 | 141,600 | 277,500 | — | 869 | 278,369 | ||||||||||||||||||||||||
Douglas Boulveard Properties/Wells Fargo Ctr, Sacramento, CA | 1,385,001 | May-07 | 273,250 | 216,950 | 490,200 | — | 1,560 | 491,760 | ||||||||||||||||||||||||
Charlotte Plaza, Charlotte, NC | 625,026 | Jun-07 | 97,500 | 78,000 | 175,500 | — | 71 | 175,571 | ||||||||||||||||||||||||
The Carillon Building, Charlotte, NC | 470,942 | Jul-07 | 78,000 | 62,000 | 140,000 | — | 225 | 140,225 | ||||||||||||||||||||||||
Renaissance Square, Phoenix, AZ | 965,508 | Dec-07 | 188,800 | 82,100 | 270,900 | — | 539 | 271,439 | ||||||||||||||||||||||||
One North Wacker, Chicago, IL | 1,373,754 | Mar-08 | 213,967 | 326,033 | 540,000 | 23,416 | 563,416 | |||||||||||||||||||||||||
Hines US Office Value Added Fund I LP | ||||||||||||||||||||||||||||||||
Mountain View Corporate Center, Broomfield, CO | 461,438 | Apr-06 | — | 71,500 | 71,500 | — | 30 | 71,530 | ||||||||||||||||||||||||
NoCal Portfolio, San Jose, CA | 1,604,232 | Nov-06 | 81,250 | 33,313 | 114,563 | 702 | 115,264 |
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Contract | ||||||||||||||||||||||||||||||||
Purchase | ||||||||||||||||||||||||||||||||
Gross | Original | Cash Down | Price Plus | Other Cash | Other Cash | |||||||||||||||||||||||||||
Leasable | Date Of | Mortgage | Payment | Acquisition | Expenditures | Expenditures | Total Cost | |||||||||||||||||||||||||
Property and location | Space (sq. ft.) | Purchase(1) | Financing | (Equity) | Fee | Expensed | Capitalized | of Property | ||||||||||||||||||||||||
Hines US Office Value Added Fund II LP | ||||||||||||||||||||||||||||||||
NoCal Portfolio, San Jose, CA | 1,604,232 | Nov-06 | 168,750 | 69,188 | 237,938 | — | 1,457 | 239,395 | ||||||||||||||||||||||||
Doral Corporate Center, Miami, FL | 276,376 | Dec-06 | 39,025 | 16,725 | 55,750 | — | 13 | 55,763 | ||||||||||||||||||||||||
Two MacArthur Ridge, Irving, TX | 246,664 | Feb-07 | — | 41,250 | 41,250 | — | 28 | 41,278 | ||||||||||||||||||||||||
Sacto Portfolio, Sacramento, CA | 1,050,273 | May-07 | 189,420 | 80,380 | 269,800 | — | 542 | 270,342 | ||||||||||||||||||||||||
2100 M Street, Washington, DC | 298,928 | May-07 | 103,100 | 49,400 | 152,500 | — | 2,285 | 154,785 | ||||||||||||||||||||||||
101 North Wacker, Chicago, IL | 599,433 | Aug-07 | 91,875 | 37,625 | 129,500 | — | 986 | 130,486 | ||||||||||||||||||||||||
12100 Wilshire, Los Angeles, CA | 350,841 | Nov-07 | 130,000 | 95,000 | 225,000 | — | 1,283 | 226,283 | ||||||||||||||||||||||||
600 Clipper, Belmont, CA | 154,611 | Dec-07 | — | 50,000 | 50,000 | — | 33 | 50,033 | ||||||||||||||||||||||||
Citigroup Center, Los Angeles, CA | 891,056 | Sep-08 | 160,000 | 117,200 | 277,200 | — | 1,642 | 278,842 | ||||||||||||||||||||||||
Hines Pan-European Core Fund | ||||||||||||||||||||||||||||||||
Uptown Munich — Building E, Munich, Germany | 91,760 | Aug-06 | 24,600 | 24,677 | 47,227 | 45 | 1,850 | 49,122 | ||||||||||||||||||||||||
Cadbury Distribution Centre, Birmingham, U.K | 403,259 | Dec-06 | 27,868 | 24,169 | 41,681 | 423 | 1,717 | 43,821 | ||||||||||||||||||||||||
Eurosquare 1, St. Quen, France | 165,920 | Jul-07 | 50,391 | 120,571 | 167,981 | 323 | 2,496 | 170,800 | ||||||||||||||||||||||||
Alstom Building, St. Quen, France | 170,586 | Jul-07 | 15,295 | 30,591 | 118,836 | — | 1,845 | 120,681 | ||||||||||||||||||||||||
15 Suffolk Street, London, U.K | 21,100 | Dec-07 | 19,634 | 30,619 | 39,452 | 64 | 1,628 | 41,144 | ||||||||||||||||||||||||
Marienstrasse 15, Frankfurt, Germany | 60,461 | Sep-08 | 16,079 | 19,254 | 33,365 | 26 | 1,461 | 34,852 |
(1) | Date of purchase disclosed for developments is the completion date of the project. | |
(2) | Hines Real Estate Investment Trust, Inc. owns a 50% interest in this property. Amounts shown here represent a 100% interest. | |
(3) | Hines Real Estate Investment Trust, Inc. owns a 70% interest in this property. Amounts shown here represent a 100% interest. | |
(4) | Hines US Core Office Fund LP does not own 100% of these properties; its ownership interests in its properties ranges from 40.6% to 81.0%. |
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By: | /s/ Charles N. Hazen |
Signature | Title | Date | ||||
/s/ Jeffrey C. Hines* Jeffrey C. Hines | Chairman of the Board of Directors | August 3, 2009 | ||||
/s/ Charles N. Hazen Charles N. Hazen | President and Chief Executive Officer (principal executive officer) | August 3, 2009 | ||||
/s/ Sherri W. Schugart* Sherri W. Schugart | Chief Financial Officer (principal financial officer) | August 3, 2009 | ||||
/s/ Ryan T. Sims Ryan T. Sims | Chief Accounting Officer (principal accounting officer) | August 3, 2009 | ||||
/s/ Charles M. Baughn* Charles M. Baughn | Director | August 3, 2009 |
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Signature | Title | Date | ||||
/s/ Jack L. Farley Jack L. Farley | Director | August 3, 2009 | ||||
/s/ C. Hastings Johnson* C. Hastings Johnson | Director | August 3, 2009 | ||||
/s/ Thomas L. Mitchell Thomas L. Mitchell | Director | August 3, 2009 | ||||
/s/ John S. Moody John S. Moody | Director | August 3, 2009 | ||||
/s/ Peter Shaper Peter Shaper | Director | August 3, 2009 |
* | Signed on behalf of the named individuals by Ryan T. Sims under power of attorney. |
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Exhibit No. | Description | |||
1 | .1 | Dealer Management Agreement, dated as of August 3, 2009, by and between Hines Global REIT, Inc. and Hines Real Estate Investments, Inc. | ||
1 | .2 | Form of Selected Dealer Agreement | ||
3 | .1 | Articles of Amendment and Restatement of Hines Global REIT, Inc. | ||
3 | .2 | Bylaws of Hines Global REIT, Inc. (filed as Exhibit 3.2 to Amendment No. 1 to the Registration Statement on March 18, 2009 and incorporated herein by reference) | ||
4 | .1 | Form of Subscription Agreement (included in the Prospectus as Appendix B) | ||
5 | .1 | Opinion of Venable LLP, dated August 3, 2009 | ||
8 | .1 | Opinion of Greenberg Traurig, LLP as to tax matters, dated August 3, 2009 | ||
10 | .1 | Agreement of Limited Partnership of Hines Global REIT Properties LP, dated as of August 3, 2009 | ||
10 | .2 | Advisory Agreement, dated as of August 3, 2009, among Hines Global REIT Advisors LP, Hines Global REIT Properties LP and Hines Global REIT, Inc. | ||
10 | .3 | Hines Global REIT, Inc. Distribution Reinvestment Plan (included in the Prospectus as Appendix C) | ||
10 | .4 | Escrow Agreement, dated as of August 3, 2009, by and among Hines Real Estate Investments, Inc., Hines Global REIT, Inc. and UMB Bank, N.A. | ||
10 | .5 | Form of Indemnification Agreement entered into between Hines Global REIT, Inc. and each of the following persons as of August 3, 2009: Jeffrey C. Hines, C. Hastings Johnson, Charles M. Baughn, Jack L. Farley, Thomas L. Mitchell, John S. Moody, Peter Shaper, Charles N. Hazen, Sherri W. Schugart, Edmund A. Donaldson, Frank R. Apollo, Kevin L. McMeans and Ryan T. Sims | ||
21 | .1 | List of Subsidiaries of Hines Global REIT, Inc. (filed as Exhibit 21.1 to Amendment No. 2 to the Registration Statement on June 16, 2009 and incorporated herein by reference) | ||
23 | .1 | Consent of Deloitte & Touche LLP, dated August 3, 2009 | ||
23 | .2 | Consent of Venable LLP (included in Exhibit 5.1) | ||
23 | .3 | Consent of Greenberg Traurig, LLP (included in Exhibit 8.1) | ||
24 | .1 | Power of Attorney of certain signatories (included in the signature pages to this Amendment No. 3 to the Registration Statement and included in the signature pages to the initial Registration Statement on January 15, 2009 and incorporated herein by reference) |