HINES REAL ESTATE INVESTMENT TRUST INC - FORM 8-K - March 5, 2013

Attached files

file filename
EX-99.1 - WILLIAMS TOWER PRESS RELEASE - HINES REAL ESTATE INVESTMENT TRUST INCwilliamstowerclosingpressr.htm


UNITED STATES
 
SECURITIES AND EXCHANGE COMMISSION
 
WASHINGTON, D.C. 20549
 
FORM 8-K
 
CURRENT REPORT
 
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 
 
 
 
Date of Report (Date of Earliest Event Reported):
 
March 1, 2013
 
Hines Real Estate Investment Trust, Inc.
__________________________________________
 (Exact name of registrant as specified in its charter)
 
 
 
 
Maryland
000-50805
20-0138854
____________________
(State or other jurisdiction
_____________
(Commission
______________
(I.R.S. Employer
of incorporation)
File Number)
Identification No.)
 
 
 
2800 Post Oak Blvd, Suite 5000, Houston, Texas
 
77056-6118
_________________________________
(Address of principal executive offices)
 
___________
(Zip Code)
 
 
 
 
 
Registrant’s telephone number, including area code:
 
(888) 220-6121
 
Not Applicable
______________________________________________
Former name or former address, if changed since last report
 
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
 
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))





Item 2.01 Completion of Acquisition or Disposition of Assets.

On March 1, 2013, Hines REIT 2800 Post Oak LP, a subsidiary of Hines REIT Properties, L.P. (the “Operating Partnership”), which is a subsidiary of Hines Real Estate Investment Trust, Inc. (“Hines REIT”), sold Williams Tower, a 64-story office building with an adjacent parking garage located in the Galleria/West Loop submarket of Houston, Texas. The property was purchased in May 2008 for $271.5 million and was sold for $412.0 million. The net proceeds received by Hines REIT from this sale were $228.4 million after transaction costs. The buyer, Invesco Advisers, Inc., is not affiliated with Hines REIT or its affiliates. An affiliate, Hines Interests Limited Partnership (“Hines”), the sponsor of Hines REIT, will continue to manage the property for Invesco.

Item 7.01 Regulation FD Disclosure.

On March 5, 2013, Hines issued a press release relating to Hines REIT's sale of Williams Tower. A copy of such press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K. Pursuant to the rules and regulations of the Securities and Exchange Commission, such exhibit and the information set forth therein are deemed to have been furnished and shall not be deemed to be “filed” under the Securities Exchange Act of 1934, as amended.

Item 9.01 Financial Statements and Exhibits.

(b) Pro Forma Financial Information. The following financial information is submitted at the end of this Current Report on Form 8-K and is filed herewith and incorporated herein by reference:

Hines Real Estate Investment Trust, Inc.
Unaudited Pro Forma Consolidated Balance Sheet as of September 30, 2012
Unaudited Pro Forma Consolidated Statements of Operations for the Nine Months Ended September 30, 2012 and the Years Ended December 31, 2011, 2010 and 2009
Notes to the Unaudited Pro Forma Consolidated Financial Statements

(d) Exhibits:

99.1 Press Release of Hines, dated March 5, 2013.






1


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 
 
HINES REAL ESTATE INVESTMENT TRUST, INC.
 
 
 
 
 
March 5, 2013
 
By:
/s/ J. Shea Morgenroth
 
 
 
 
J. Shea Morgenroth
 
 
 
 
Chief Accounting Officer and Treasurer
 




2



Hines Real Estate Investment Trust, Inc.
Unaudited Pro Forma Consolidated Financial Statements
 
On March 1, 2013, a subsidiary of Hines Real Estate Investment Trust, Inc. ("Hines REIT") sold Williams Tower, a 64-story office building with an adjacent parking garage located in the Galleria/West Loop submarket of Houston, Texas to Invesco Advisers, Inc. The net proceeds received from this sale were $228.4 million after transaction costs. The buyer is not affiliated with Hines REIT or its affiliates.
 
The following unaudited pro forma consolidated financial information gives effect to the disposition of Williams Tower, including the receipt of proceeds from the sale.  In our opinion, all material adjustments necessary to reflect the effects of the above transaction have been made.

3


Hines Real Estate Investment Trust, Inc.
Unaudited Pro Forma Consolidated Balance Sheet
As of September 30, 2012
(In thousands)
 
The following unaudited Pro Forma Consolidated Balance Sheet is presented as if we had disposed of Williams Tower as of September 30, 2012.  This unaudited Pro Forma Consolidated Balance Sheet should be read in conjunction with our unaudited Pro Forma Consolidated Statement of Operations and our historical financial statements and notes thereto as filed in our quarterly report on Form 10-Q for the nine months ended September 30, 2012.  This unaudited Pro Forma Consolidated Balance Sheet is not necessarily indicative of what the actual financial position would have been had we completed this transaction on September 30, 2012, nor does it purport to represent our future financial position.
 
 
As of
 September 30, 2012 (a)
 
Adjustments for
Williams Tower
 
 
 
Pro Forma
ASSETS
 
 
 
 
 
 
 
 
Investment property, at cost:
 
 
 
 
 
 
 
 
Buildings and improvements, net
 
$
1,505,755

 
$
(168,548
)
 
(b)
 
$
1,337,207

Land
 
369,549

 
(37,502
)
 
(b)
 
332,047

Total investment property
 
1,875,304

 
(206,050
)
 
 
 
1,669,254

 
 
 
 
 
 
 
 
 
Investment in unconsolidated entities
 
354,419

 
—

 
 
 
354,419

Cash and cash equivalents
 
100,505

 
220,811

 
(c)
 
321,316

Restricted cash
 
110,049

 
—

 
 
 
110,049

Distributions receivable
 
6,165

 
—

 
 
 
6,165

Tenant and other receivables
 
70,631

 
(7,027
)
 
(b)
 
63,604

Intangible lease assets, net
 
134,515

 
(17,022
)
 
(b) 
 
117,493

Deferred leasing costs, net
 
177,424

 
(39,290
)
 
(b) 
 
138,134

Deferred financing costs, net
 
4,183

 
(102
)
 
(b) 
 
4,081

Other assets
 
3,432

 
(235
)
 
(b) 
 
3,197

TOTAL ASSETS
 
$
2,836,627

 
$
(48,915
)
 
 
 
$
2,787,712

 
 
 
 
 
 
 
 
 
LIABILITIES AND EQUITY
 
 
 
 
 
 
 
 
Liabilities:
 
 
 
 
 
 
 
 
Accounts payable and accrued expenses
 
$
109,054

 
$
(25,811
)
 
(b) 
 
$
83,243

Due to affiliates
 
6,803

 
(1,044
)
 
(b) 
 
5,759

Intangible lease liabilities, net
 
40,746

 
(9,351
)
 
(b) 
 
31,395

Other liabilities
 
12,804

 
(1,719
)
 
(b) 
 
11,085

Interest rate swap contracts
 
107,778

 
—

 
 
 
107,778

Participation interest liability
 
90,270

 
—

 
 
 
90,270

Distributions payable
 
29,434

 
—

 
 
 
29,434

Notes payable
 
1,336,997

 
(165,000
)
 
(b) 
 
1,171,997

Total liabilities
 
1,733,886

 
(202,925
)
 
 
 
1,530,961

 
 
 
 
 
 
 
 
 
Commitments and Contingencies
 
—

 
—

 
 
 
—

 
 
 
 
 
 
 
 
 
Shareholders' equity:
 
 
 
 
 
 
 
 
Preferred shares
 
—

 
—

 
 
 
—

Common shares
 
232

 
—

 
 
 
232

Additional paid-in capital
 
1,453,910

 
—

 
 
 
1,453,910

Retained deficit
 
(349,781
)
 
154,010

 
(d)
 
(195,771
)
Accumulated other comprehensive income (loss)
 
(1,620
)
 
—

 
 
 
(1,620
)
Total shareholders' equity
 
1,102,741

 
154,010

 
 
 
1,256,751

Noncontrolling interests
 
—

 
—

 
 
 
—

Total equity
 
1,102,741

 
154,010

 
 
 
1,256,751

TOTAL LIABILITIES AND EQUITY
 
$
2,836,627

 
$
(48,915
)
 
 
 
$
2,787,712

 
See notes to unaudited pro forma consolidated balance sheet and notes to unaudited pro forma consolidated financial statements.

4


Hines Real Estate Investment Trust, Inc.
Unaudited Pro Forma Consolidated Statement of Operations
For the Nine Months Ended September 30, 2012
(In thousands, except per share amounts)
 
The following unaudited Pro Forma Consolidated Statement of Operations is presented as if we had disposed of Williams Tower as of January 1, 2009.  This unaudited Pro Forma Consolidated Statement of Operations should be read in conjunction with our unaudited Pro Forma Consolidated Balance Sheet and our historical financial statements and notes thereto as filed in our quarterly report on Form 10-Q for the three and nine months ended September 30, 2012.  This unaudited Pro Forma Consolidated Statement of Operations is not necessarily indicative of what the actual results of operations would have been had we completed this transaction on January 1, 2009, nor does it purport to represent our future operations.
 
 
 
Nine Months Ended September 30, 2012 (a)
 
Adjustments for
 Williams Tower (b)
 
Pro Forma
Revenues:
 
 

 
 
 
 

Rental revenue
 
$
188,045

 
$
(30,792
)
 
$
157,253

Other revenue
 
16,705

 
(1,634
)
 
15,071

Total revenues 
 
204,750

 
(32,426
)
 
172,324

Expenses:
 
 
 
 
 
 
Property operating expenses
 
59,488

 
(9,575
)
 
49,913

Real property taxes
 
26,019

 
(4,671
)
 
21,348

Property management fees
 
4,809

 
(770
)
 
4,039

Depreciation and amortization
 
60,879

 
(8,339
)
 
52,540

Asset management and acquisition fees
 
23,513

 
—

 
23,513

General and administrative expenses
 
5,251

 
—

 
5,251

Impairment losses
 
46,058

 
—

 
46,058

Total expenses
 
226,017

 
(23,355
)
 
202,662

Income (loss) before other income (expense), provision for income taxes and equity in losses of unconsolidated entities, net
 
(21,267
)
 
(9,071
)
 
(30,338
)
Gain (loss) on derivative instruments, net
 
2,113

 
—

 
2,113

Interest expense
 
(58,501
)
 
6,921

 
(51,580
)
Interest income
 
523

 
(2
)
 
521

Income (loss) before other income (expense), benefit (provision) for income taxes and equity in earnings (losses) of unconsolidated entities, net
 
(77,132
)
 
(2,152
)
 
(79,284
)
Benefit (provision) for income taxes
 
(398
)
 
209

 
(189
)
Equity in earnings (losses) of unconsolidated entities, net
 
27,467

 
—

 
27,467

Income (loss) from continuing operations
 
$
(50,063
)
 
$
(1,943
)
 
$
(52,006
)
Income (loss) from continuing operations per common share
 
$
(0.22
)
 
 
 
$
(0.23
)
Weighted average number common shares outstanding
 
229,502

 
 
 
229,502

 
See notes to unaudited pro forma consolidated statement of operations and notes to unaudited pro forma consolidated financial statements.


5


Hines Real Estate Investment Trust, Inc.
Unaudited Pro Forma Consolidated Statement of Operations
For the Year Ended December 31, 2011
(In thousands, except per share amounts)
 
The following unaudited Pro Forma Consolidated Statement of Operations is presented as if we had disposed of Williams Tower as of January 1, 2009.  This unaudited Pro Forma Consolidated Statement of Operations should be read in conjunction with our unaudited Pro Forma Consolidated Balance Sheet and our historical financial statements and notes thereto as filed in our annual report on Form 10-K for the year ended December 31, 2011.  This unaudited Pro Forma Consolidated Statement of Operations is not necessarily indicative of what the actual results of operations would have been had we completed this transaction on January 1, 2009, nor does it purport to represent our future operations.
 
 
 
Year Ended December 31, 2011 (a)
 
Adjustments for
 Williams Tower (b)
 
Pro Forma
Revenues:
 
 

 
 
 
 

Rental revenue
 
$
256,249

 
$
(38,513
)
 
$
217,736

Other revenue
 
22,083

 
(2,399
)
 
19,684

Total revenues 
 
278,332

 
(40,912
)
 
237,420

Expenses:
 
 
 
 
 
 
Property operating expenses
 
78,904

 
(11,817
)
 
67,087

Real property taxes
 
31,591

 
(5,286
)
 
26,305

Property management fees
 
6,361

 
(911
)
 
5,450

Depreciation and amortization
 
92,518

 
(12,774
)
 
79,744

Asset management and acquisition fees
 
16,173

 
—

 
16,173

General and administrative expenses
 
6,740

 
—

 
6,740

Other losses, net
 
—

 
—

 
—

Total expenses
 
232,287

 
(30,788
)
 
201,499

Income (loss) before other income (expense), provision for income taxes and equity in losses of unconsolidated entities, net
 
46,045

 
(10,124
)
 
35,921

Gain (loss) on derivative instruments, net
 
(24,590
)
 
—

 
(24,590
)
Interest expense
 
(81,207
)
 
9,228

 
(71,979
)
Interest income
 
514

 
(4
)
 
510

Income (loss) before other income (expense), benefit (provision) for income taxes and equity in earnings (losses) of unconsolidated entities, net
 
(59,238
)
 
(900
)
 
(60,138
)
Benefit (provision) for income taxes
 
(494
)
 
229

 
(265
)
Equity in earnings (losses) of unconsolidated entities, net
 
(5,138
)
 
—

 
(5,138
)
Income (loss) from continuing operations
 
$
(64,870
)
 
$
(671
)
 
$
(65,541
)
Income (loss) from continuing operations per common share
 
$
(0.29
)
 
 
 
$
(0.29
)
Weighted average number common shares outstanding
 
225,442

 
 
 
225,442


 See notes to unaudited pro forma consolidated statement of operations and notes to unaudited pro forma consolidated financial statements.

6


Hines Real Estate Investment Trust, Inc.
Unaudited Pro Forma Consolidated Statement of Operations
For the Year Ended December 31, 2010
(In thousands, except per share amounts)
 
The following unaudited Pro Forma Consolidated Statement of Operations is presented as if we had disposed of Williams Tower as of January 1, 2009.  This unaudited Pro Forma Consolidated Statement of Operations should be read in conjunction with our unaudited Pro Forma Consolidated Balance Sheet and our historical financial statements and notes thereto as filed in our annual report on Form 10-K for the year ended December 31, 2010.  This unaudited Pro Forma Consolidated Statement of Operations is not necessarily indicative of what the actual results of operations would have been had we completed this transaction on January 1, 2009, nor does it purport to represent our future operations.
  
 
 
Year Ended December 31, 2010 (a)
 
Adjustments for
 Williams Tower (b)
 
Pro Forma
Revenues:
 
 

 
 
 
 

Rental revenue
 
$
267,168

 
$
(38,280
)
 
$
228,888

Other revenue
 
23,377

 
(2,279
)
 
21,098

Total revenues 
 
290,545

 
(40,559
)
 
249,986

Expenses:
 
 
 
 
 
 
Property operating expenses
 
80,022

 
(12,519
)
 
67,503

Real property taxes
 
32,084

 
(5,022
)
 
27,062

Property management fees
 
6,410

 
(872
)
 
5,538

Depreciation and amortization
 
102,012

 
(15,488
)
 
86,524

Asset management and acquisition fees
 
30,544

 
—

 
30,544

General and administrative expenses
 
6,925

 
—

 
6,925

Other losses, net
 
802

 
—

 
802

Total expenses
 
258,799

 
(33,901
)
 
224,898

Income (loss) before other income (expense), provision for income taxes and equity in losses of unconsolidated entities, net
 
31,746

 
(6,658
)
 
25,088

Gain (loss) on derivative instruments, net
 
(18,525
)
 
—

 
(18,525
)
Interest expense
 
(80,889
)
 
9,228

 
(71,661
)
Interest income
 
270

 
(7
)
 
263

Income (loss) before other income (expense), benefit (provision) for income taxes and equity in earnings (losses) of unconsolidated entities, net
 
(67,398
)
 
2,563

 
(64,835
)
Benefit (provision) for income taxes
 
(543
)
 
231

 
(312
)
Equity in earnings (losses) of unconsolidated entities, net
 
5,513

 
—

 
5,513

Income (loss) from continuing operations
 
$
(62,428
)
 
$
2,794

 
$
(59,634
)
Income (loss) from continuing operations per common share
 
$
(0.28
)
 
 
 
$
(0.27
)
Weighted average number common shares outstanding
 
220,896

 
 
 
220,896


See notes to unaudited pro forma consolidated statement of operations and notes to unaudited pro forma consolidated financial statements.

7


Hines Real Estate Investment Trust, Inc.
Unaudited Pro Forma Consolidated Statement of Operations
For the Year Ended December 31, 2009
(In thousands, except per share amounts)
 
The following unaudited Pro Forma Consolidated Statement of Operations is presented as if we had disposed of Williams Tower as of January 1, 2009.  This unaudited Pro Forma Consolidated Statement of Operations should be read in conjunction with our unaudited Pro Forma Consolidated Balance Sheet and our historical financial statements and notes thereto as filed in our annual report on Form 10-K for the year ended December 31, 2009.  This unaudited Pro Forma Consolidated Statement of Operations is not necessarily indicative of what the actual results of operations would have been had we completed this transaction on January 1, 2009, nor does it purport to represent our future operations.
  
 
 
Year Ended December 31, 2009 (a)
 
Adjustments for
 Williams Tower (b)
 
Pro Forma
Revenues:
 
 

 
 
 
 

Rental revenue
 
$
293,277

 
$
(38,147
)
 
$
255,130

Other revenue
 
23,615

 
(2,260
)
 
21,355

Total revenues 
 
316,892

 
(40,407
)
 
276,485

Expenses:
 
 
 
 
 
 
Property operating expenses
 
82,703

 
(13,096
)
 
69,607

Real property taxes
 
37,265

 
(5,206
)
 
32,059

Property management fees
 
6,992

 
(872
)
 
6,120

Depreciation and amortization
 
111,255

 
(15,395
)
 
95,860

Asset management and acquisition fees
 
27,984

 
—

 
27,984

General and administrative expenses
 
6,108

 
—

 
6,108

Other losses, net
 
3,441

 
—

 
3,441

Total expenses
 
275,748

 
(34,569
)
 
241,179

Income (loss) before other income (expense), provision for income taxes and equity in losses of unconsolidated entities, net
 
41,144

 
(5,838
)
 
35,306

Gain (loss) on derivative instruments, net
 
49,297

 
—

 
49,297

Interest expense
 
(82,371
)
 
9,228

 
(73,143
)
Interest income
 
401

 
(28
)
 
373

Income (loss) before other income (expense), benefit (provision) for income taxes and equity in earnings (losses) of unconsolidated entities, net
 
8,471

 
3,362

 
11,833

Benefit (provision) for income taxes
 
(550
)
 
233

 
(317
)
Equity in earnings (losses) of unconsolidated entities, net
 
(8,777
)
 
—

 
(8,777
)
Income (loss) from continuing operations
 
$
(856
)
 
$
3,595

 
$
2,739

Income (loss) from continuing operations per common share
 
$
—

 
 
 
$
0.01

Weighted average number common shares outstanding
 
207,807

 
 
 
207,807


See notes to unaudited pro forma consolidated statement of operations and notes to unaudited pro forma consolidated financial statements.

8


Hines Real Estate Investment Trust, Inc.
Unaudited Notes to Pro Forma Consolidated Financial Statements

Unaudited Pro Forma Consolidated Balance Sheet as of September 30, 2012
a.
Reflects the Company's historical consolidated balance sheet as of September 30, 2012.
b.
Reflects the Company's disposition of Williams Tower. Amounts represent the necessary adjustments to remove the assets and liabilities associated with Williams Tower.
c.
Reflects the proceeds received from the sale of Williams Tower ($228.4 million) less any cash on hand at Williams Tower as of September 30, 2012.
d.
Reflects the adjustments related to the disposition of Williams Tower and the gain on sale.
 
Unaudited Pro Forma Consolidated Statement of Operations for the Nine Months Ended September 30, 2012
a.
Reflects the Company's historical consolidated statement of operations for the nine months ended September 30, 2012.
b.
Reflects the Company's disposition of Williams Tower. Amounts represents the necessary adjustments to remove the historical revenues and expenses of Williams Tower, including property operating expenses, property taxes, management fees, depreciation and amortization, interest expense and interest income associated with Williams Tower. Such adjustments exclude the effect of the gain on sale, as this represents a non-recurring transaction.

 Unaudited Pro Forma Consolidated Statement of Operations for the Year Ended December 31, 2011
a.
Reflects the Company's historical consolidated statement of operations for the year ended December 31, 2011.
b.
Reflects the Company's disposition of Williams Tower. Amounts represents the necessary adjustments to remove the historical revenues and expenses of Williams Tower, including property operating expenses, property taxes, management fees, depreciation and amortization, interest expense and interest income associated with Williams Tower. Such adjustments exclude the effect of the gain on sale, as this represents a non-recurring transaction.

 Unaudited Pro Forma Consolidated Statement of Operations for the Year Ended December 31, 2010
a.
Reflects the Company's historical consolidated statement of operations for the year ended December 31, 2010.
b.
Reflects the Company's disposition of Williams Tower. Amounts represents the necessary adjustments to remove the historical revenues and expenses of Williams Tower, including property operating expenses, property taxes, management fees, depreciation and amortization, interest expense and interest income associated with Williams Tower. Such adjustments exclude the effect of the gain on sale, as this represents a non-recurring transaction.

Unaudited Pro Forma Consolidated Statement of Operations for the Year Ended December 31, 2009
a.
Reflects the Company's historical consolidated statement of operations for the year ended December 31, 2009.
b.
Reflects the Company's disposition of Williams Tower. Amounts represents the necessary adjustments to remove the historical revenues and expenses of Williams Tower, including property operating expenses, property taxes, management fees, depreciation and amortization, interest expense and interest income associated with Williams Tower. Such adjustments exclude the effect of the gain on sale, as this represents a non-recurring transaction.



9


Exhibit Index

Exhibit No.
 
Description
99.1
 
Press Release of Hines, dated March 5, 2013


10

HINES REAL ESTATE INVESTMENT TRUST INC Reports