UNITED STATES
 
SECURITIES AND EXCHANGE COMMISSION
 
WASHINGTON, D.C. 20549
 
FORM 8-K/A
 
CURRENT REPORT
 
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 
 
 
 
Date of Report (Date of Earliest Event Reported):
 
November 10, 2016
 
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))






Explanatory Note.

On November 10, 2016, Hines Real Estate Investment Trust, Inc. filed a Current Report on Form 8-K (the “Initial Report”) with regard to the dispositions of certain of its assets. This amendment to the Initial Report is being filed for the sole purpose of filing the pro forma financial information required by Item 9.01 of Form 8-K, and should be read in conjunction with the Initial Report.

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/A and is filed herewith and incorporated herein by reference:

Hines Real Estate Investment Trust, Inc.
Unaudited Pro Forma Condensed Consolidated Balance Sheet as of September 30, 2016
Unaudited Pro Forma Condensed Consolidated Statements of Operations for the Nine Months Ended September 30, 2016 and the Year Ended December 31, 2015
Notes to the Unaudited Pro Forma Condensed Consolidated Financial Statements







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.
 
 
 
 
 
November 16, 2016
 
By:
/s/ J. Shea Morgenroth
 
 
 
 
J. Shea Morgenroth
 
 
 
 
Chief Accounting Officer and Treasurer
 




2




Hines Real Estate Investment Trust, Inc.
Unaudited Pro Forma Condensed Consolidated Financial Statements
 
On November 10, 2016, Hines Real Estate Investment Trust, Inc. (“Hines REIT”), through Hines REIT 5th and Bell LLC, Hines REIT Daytona Campus LLC, Hines REIT Laguna Campus LLC, Hines REIT 2851 Junction Ave LP, Hines REIT Watergate LP, Hines REIT 1900/2000 Alameda De Las Pulgas LLC and Hines REIT West LA Portfolio LP, all of which are wholly-owned subsidiaries of Hines REIT’s operating partnership, sold 5th and Bell in Seattle, WA; the Daytona Buildings in Redmond, WA; the Laguna Buildings in Redmond, WA; 2851 Junction Avenue in San Jose, CA; 2100 Powell in Emeryville, CA; 1900 and 2000 Alameda in San Mateo, CA; and Howard Hughes Center in Los Angeles, CA (collectively, the “West Coast Assets”) to BRE Hydra Property Owner LLC (the “West Coast Purchaser”), an affiliate of Blackstone Real Estate Partners VIII L.P. for a sales price of $1.162 billion, exclusive of transaction costs and closing prorations. The West Coast Purchaser is not affiliated with Hines REIT or its affiliates.

Also on November 10, 2016, Hines REIT, through Hines REIT Civica Office Commons LLC, a wholly-owned subsidiary of Hines REIT’s operating partnership, sold Civica Office Commons in Bellevue, Washington to AEW CPT Acquisitions, LLC (the “Civica Purchaser”) for a sales price of $193.0 million, exclusive of transaction costs, certain other closing credits and adjustments for closing prorations and a holdback of $5.0 million, which will be released to Hines REIT only if Hines REIT meets certain closing conditions within six months after the sale. The Civica Purchaser is not affiliated with Hines REIT or its affiliates.

The following unaudited pro forma condensed consolidated financial information gives effect to the dispositions of the West Coast Assets and Civica Office Commons, including the receipt of proceeds from the sales. In our opinion, all material adjustments necessary to reflect the effects of the above transactions have been made.

3



Hines Real Estate Investment Trust, Inc.
Unaudited Pro Forma Condensed Consolidated Balance Sheet
As of September 30, 2016
(In thousands)
The following unaudited Pro Forma Condensed Consolidated Balance Sheet is presented assuming the dispositions of the West Coast Assets and Civica Office Commons had occurred as of September 30, 2016.  This unaudited Pro Forma Condensed Consolidated Balance Sheet should be read in conjunction with our unaudited Pro Forma Condensed Consolidated Statements of Operations appearing herein and our historical financial statements and notes thereto as filed in our quarterly report on Form 10-Q for the nine months ended September 30, 2016.  This unaudited Pro Forma Condensed Consolidated Balance Sheet is not necessarily indicative of what the actual financial position would have been had we completed these transactions on September 30, 2016, nor does it purport to represent our future financial position.

 
 
As of
 September 30, 2016 (a)
 
Adjustments for the
West Coast Assets
 
 
Adjustments for Civica Office Commons
 
 
Pro Forma
ASSETS
 
 
 
 
 
 
 
 
 
 
Investment property, at cost:
 
 
 
 
 
 
 
 
 
 
Buildings and improvements, net
 
$

 
$

 
 
$

 
 
$

Land
 

 

 
 

 
 

Total investment property
 

 

 
 

 
 

 
 
 
 
 
 
 
 
 
 

Investments in unconsolidated entities
 
$
77,451

 
$

 
 
$

 
 
$
77,451

Cash and cash equivalents
 
101,456

 
1,122,314

 
(b)
180,922

 
(e)
1,404,692

Restricted cash
 

 

 
 

 
 

Distributions receivable
 
1,382

 

 
 

 
 
1,382

Tenant and other receivables, net
 

 

 
 

 
 

Intangible lease assets, net
 

 

 
 

 
 

Deferred leasing costs, net
 

 

 
 

 
 

Deferred financing costs, net
 

 

 
 

 
 

Other assets
 

 

 
 

 
 

Assets held for sale
 
1,238,542

 
(960,699
)
 
(c)
(186,875
)
 
(f)
90,968

TOTAL ASSETS
 
$
1,418,831

 
$
161,615

 
 
$
(5,953
)
 
 
$
1,574,493

 
 

 
 
 
 
 
 
 

LIABILITIES AND EQUITY
 
 
 
 
 
 
 
 
 

Liabilities:
 
 
 
 
 
 
 
 
 

Accounts payable and accrued expenses
 
$

 
$

 
 
$

 
 
$

Due to affiliates
 
3,438

 
(953
)
 
(c)
(50
)
 
(f)
2,435

Intangible lease liabilities, net
 

 

 
 

 
 

Other liabilities
 

 

 
 

 
 

Interest rate swap contracts
 

 

 
 

 
 

Participation interest liability
 
133,942

 

 
 

 
 
133,942

Distributions payable
 

 

 
 

 
 

Notes payable, net
 

 

 
 

 
 

Liabilities associated with assets held for sale
 
62,121

 
(47,481
)
 
(c)
(6,143
)
 
(f)
8,497

Total liabilities
 
199,501

 
(48,434
)
 
 
(6,193
)
 
 
144,874

 
 


 
 
 
 
 
 
 


Commitments and contingencies
 

 

 
 

 
 

 
 
 
 
 
 
 
 
 
 

Equity:
 
 
 
 
 
 
 
 
 

Preferred shares
 

 

 
 

 
 

Common shares
 
223

 

 
 

 
 
223

Additional paid-in capital
 
2,104,456

 

 
 

 
 
2,104,456

Accumulated distributions in excess of earnings
 
(884,152
)
 
210,049

 
(d)
240

 
(g)
(673,863
)
Accumulated other comprehensive income (loss)
 
(1,197
)
 

 
 

 
 
(1,197
)
Total stockholders’ equity
 
1,219,330

 
210,049

 
 
240

 
 
1,429,619

Noncontrolling interests
 

 

 
 

 
 

Total equity
 
1,219,330

 
210,049

 
 
240

 
 
1,429,619

TOTAL LIABILITIES AND EQUITY
 
$
1,418,831

 
$
161,615

 
 
$
(5,953
)
 
 
$
1,574,493

See notes to unaudited pro forma condensed consolidated financial statements.

4



Hines Real Estate Investment Trust, Inc.
Unaudited Pro Forma Condensed Consolidated Statement of Operations
For the Nine Months Ended September 30, 2016
(In thousands, except per share amounts)
 
The following unaudited Pro Forma Condensed Consolidated Statement of Operations is presented assuming the dispositions of the West Coast Assets and Civica Office Commons had occurred as of January 1, 2015.  This unaudited Pro Forma Condensed Consolidated Statement of Operations should be read in conjunction with our unaudited Pro Forma Condensed Consolidated Balance Sheet appearing herein 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, 2016.  This unaudited Pro Forma Condensed Consolidated Statement of Operations is not necessarily indicative of what the actual results of operations would have been had we completed these transactions on January 1, 2015, nor does it purport to represent our future operations.
 
 
 
Nine Months Ended
September 30, 2016 (a)
 
Adjustments for the West Coast Assets (b)
 
Adjustments for Civica Office Commons (c)
 
Prior Dispositions Pro Forma Adjustments (d)
 
Pro Forma
Revenues:
 
 

 
 
 
 
 
 

 
 

Rental revenue
 
$
130,515

 
$
(65,636
)
 
$
(9,128
)
 
$
(39,787
)
 
$
15,964

Other revenue
 
13,980

 
(7,374
)
 
(2,577
)
 
(2,807
)
 
1,222

Total revenues 
 
144,495

 
(73,010
)
 
(11,705
)
 
(42,594
)
 
17,186

Expenses:
 
 
 
 
 
 
 
 
 

Property operating expenses
 
37,997

 
(18,456
)
 
(2,180
)
 
(11,702
)
 
5,659

Real property taxes
 
19,207

 
(8,686
)
 
(1,042
)
 
(6,866
)
 
2,613

Property management fees
 
3,614

 
(1,994
)
 
(313
)
 
(1,232
)
 
75

Depreciation and amortization
 
38,190

 
(18,974
)
 
(5,601
)
 
(9,626
)
 
3,989

Asset management and acquisition fees
 
21,106

 

 

 

 
21,106

General and administrative
 
5,346

 

 

 

 
5,346

Transaction expenses
 
4,391

 

 

 

 
4,391

Impairment losses
 
30,372

 

 
(11,718
)
 
(2,884
)
 
15,770

Total expenses
 
160,223

 
(48,110
)
 
(20,854
)
 
(32,310
)
 
58,949

Operating income (loss)
 
(15,728
)
 
(24,900
)
 
9,149

 
(10,284
)
 
(41,763
)
Other income (expenses):
 
 
 
 
 
 
 
 
 


Gain (loss) on derivative instruments, net
 
12,311

 

 

 

 
12,311

Gain (loss) on settlement of debt
 
(978
)
 

 

 
380

 
(598
)
Equity in earnings (losses) of unconsolidated entities, net
 
(830
)
 

 

 

 
(830
)
Gain (loss) on sale of real estate investments
 
209,774

 

 

 
(171,438
)
 
38,336

Interest expense
 
(21,202
)
 
8,157

 

 
6,043

 
(7,002
)
Interest income
 
125

 
(24
)
 
(4
)
 
(15
)
 
82

Income (loss) from continuing operations before benefit (provision) for income taxes
 
183,472

 
(16,767
)
 
9,145

 
(175,314
)
 
536

Benefit (provision) for income taxes
 
(33
)
 

 

 
20

 
(13
)
Income (loss) from continuing operations
 
$
183,439

 
$
(16,767
)
 
$
9,145

 
$
(175,294
)
 
$
523

Income (loss) from continuing operations per common share
 
$
0.83

 
 
 
 
 
 

 
$

Weighted average number common shares outstanding
 
221,790

 
 
 
 
 
 

 
221,790

 
See notes to unaudited pro forma condensed consolidated financial statements.

5



Hines Real Estate Investment Trust, Inc.
Unaudited Pro Forma Condensed Consolidated Statement of Operations
For the Year Ended December 31, 2015
(In thousands, except per share amounts)
 
The following unaudited Pro Forma Condensed Consolidated Statement of Operations is presented assuming the dispositions of the West Coast Assets and Civica Office Commons had occurred as of January 1, 2015.  This unaudited Pro Forma Condensed Consolidated Statement of Operations should be read in conjunction with our unaudited Pro Forma Condensed Consolidated Balance Sheet appearing herein and our historical financial statements and notes thereto as filed in our annual report on Form 10-K for the year ended December 31, 2015.  This unaudited Pro Forma Condensed Consolidated Statement of Operations is not necessarily indicative of what the actual results of operations would have been had we completed these transactions on January 1, 2015, nor does it purport to represent our future operations. 

 
 
Year Ended December 31, 2015 (a)
 
Adjustments for
the West Coast Assets (b)
 
Adjustments for Civica Office Commons (c)
 
Prior Dispositions Pro Forma Adjustments (d)
 
Pro Forma
Revenues:
 
 

 
 
 
 
 
 
 
 

Rental revenue
 
$
198,684

 
$
(79,028
)
 
$
(11,000
)
 
$
(76,861
)
 
$
31,795

Other revenue
 
20,105

 
(9,408
)
 
(3,113
)
 
(5,445
)
 
2,139

Total revenues 
 
218,789

 
(88,436
)
 
(14,113
)
 
(82,306
)

33,934

Expenses:
 
 
 
 
 
 
 
 
 

Property operating expenses
 
59,996

 
(24,469
)
 
(2,788
)
 
(23,112
)
 
9,627

Real property taxes
 
30,931

 
(10,330
)
 
(1,054
)
 
(14,829
)
 
4,718

Property management fees
 
5,683

 
(2,430
)
 
(348
)
 
(2,419
)
 
486

Depreciation and amortization
 
87,923

 
(44,383
)
 
(10,781
)
 
(23,202
)
 
9,557

Acquisition related expense
 
505

 
(3
)
 
(51
)
 

 
451

Asset management and acquisition fees
 
36,576

 

 

 

 
36,576

General and administrative
 
6,635

 

 

 

 
6,635

Impairment losses
 
19,663

 

 

 
(11,865
)
 
7,798

Total expenses
 
247,912

 
(81,615
)
 
(15,022
)
 
(75,427
)

75,848

Operating income (loss)
 
(29,123
)
 
(6,821
)
 
909

 
(6,879
)

(41,914
)
Other income (expenses):
 
 
 
 
 
 
 
 
 

Gain (loss) on derivative instruments, net
 
16,945

 

 

 

 
16,945

Equity in earnings (losses) of unconsolidated entities, net
 
43,267

 

 

 

 
43,267

Gain (loss) on sale of real estate investments
 
50,144

 

 

 
(20,747
)
 
29,397

Interest expense
 
(37,684
)
 
12,679

 

 
12,744

 
(12,261
)
Interest income
 
46

 
(11
)
 
(2
)
 
(12
)
 
21

Income (loss) from continuing operations before benefit (provision) for income taxes
 
43,595

 
5,847

 
907

 
(14,894
)

35,455

Benefit (provision) for income taxes
 
(225
)
 

 

 
191

 
(34
)
Income (loss) from continuing operations
 
$
43,370

 
$
5,847

 
$
907

 
$
(14,703
)

$
35,421

Income (loss) from continuing operations per common share
 
$
0.19

 
 
 
 
 
 
 
$
0.16

Weighted average number common shares outstanding
 
223,369

 
 
 
 
 
 
 
223,369


 See notes to unaudited pro forma condensed consolidated financial statements.

6



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

Unaudited Pro Forma Condensed Consolidated Balance Sheet as of September 30, 2016
a.
Reflects the Company's historical condensed consolidated balance sheet as of September 30, 2016.
b.
Reflects the proceeds received from the sale of the West Coast Assets less any cash on hand at the West Coast Assets as of September 30, 2016.
c.
Reflects the Company's disposition of the West Coast Assets. Amounts represent the adjustments necessary to remove the assets and liabilities associated with the West Coast Assets.
d.
Reflects the adjustments related to the disposition of the West Coast Assets and the gain on sale.
e.
Reflects the proceeds received from the sale of Civica Office Commons less any cash on hand at Civica Office Commons as of September 30, 2016.
f.
Reflects the Company's disposition of Civica Office Commons. Amounts represent the adjustments necessary to remove the assets and liabilities associated with Civica Office Commons.
g.
Reflects the adjustments related to the disposition of Civica Office Commons and the gain on sale.
 
Unaudited Pro Forma Condensed Consolidated Statement of Operations for the Nine Months Ended September 30, 2016
a.
Reflects the Company's historical condensed consolidated statement of operations for the nine months ended September 30, 2016.
b.
Reflects the Company's disposition of the West Coast Assets. Amounts represent the adjustments necessary to remove the historical revenues and expenses of the West Coast Assets, including property operating expenses, property taxes, management fees, depreciation and amortization, interest expense and interest income associated with the West Coast Assets. Such adjustments exclude the effect of the gain on sale, as this represents a non-recurring transaction.
c.
Reflects the Company's disposition of Civica Office Commons. Amounts represent the adjustments necessary to remove the historical revenues and expenses of Civica Office Commons, including property operating expenses, property taxes, management fees, depreciation and amortization, impairment losses and interest income associated with Civica Office Commons. Such adjustments exclude the effect of the gain on sale, as this represents a non-recurring transaction.
d.
Reflects the Company's dispositions of JPMorgan Chase Tower, 321 North Clark and the Grocery-Anchored Portfolio. Amounts represent the adjustments necessary to remove the historical revenues and expenses of JPMorgan Chase Tower, 321 North Clark and the Grocery-Anchored Portfolio, including property operating expenses, property taxes, management fees, depreciation and amortization, impairment losses, interest expense and interest income associated with JPMorgan Chase Tower, 321 North Clark and the Grocery-Anchored Portfolio. Such adjustments exclude the effect of the gain on sale, as this represents a non-recurring transaction.

 Unaudited Pro Forma Condensed Consolidated Statement of Operations for the Year Ended December 31, 2015
a.
Reflects the Company's historical condensed consolidated statement of operations for the year ended December 31, 2015.
b.
Reflects the Company's disposition of the West Coast Assets. Amounts represent the adjustments necessary to remove the historical revenues and expenses of the West Coast Assets, including property operating expenses, property taxes, management fees, depreciation and amortization, acquisition related expense, interest expense and interest income associated with the West Coast Assets. Such adjustments exclude the effect of the gain on sale, as this represents a non-recurring transaction.
c.
Reflects the Company's disposition of Civica Office Commons. Amounts represent the adjustments necessary to remove the historical revenues and expenses of Civica Office Commons, including property operating expenses, property taxes, management fees, depreciation and amortization, acquisition related expense and interest income associated with Civica Office Commons. Such adjustments exclude the effect of the gain on sale, as this represents a non-recurring transaction.
d.
Reflects the Company's dispositions of 2555 Grand, JPMorgan Chase Tower, 321 North Clark and the Grocery-Anchored Portfolio. Amounts represent the adjustments necessary to remove the historical revenues and expenses of 2555 Grand, JPMorgan Chase Tower, 321 North Clark and the Grocery-Anchored Portfolio, including property operating expenses, property taxes, management fees, depreciation and amortization, impairment losses, interest expense and interest income associated with 2555 Grand, JPMorgan Chase Tower, 321 North Clark and the Grocery-Anchored Portfolio. Such adjustments exclude the effect of the gain on sale, as this represents a non-recurring transaction.

7