Hines BDC Suspends Share Repurchases and Decreases Monthly DRIP Price
HMS Income Fund, a publicly registered, non-traded business development company sponsored by Hines, has suspended its share repurchase program and decreased its monthly distribution reinvestment plan price amid the coronavirus (COVID-19) pandemic.
HMS Income Fund, a publicly registered, non-traded business development company sponsored by Hines, has suspended its share repurchase program and decreased its monthly distribution reinvestment plan price amid the coronavirus (COVID-19) pandemic.
The share repurchase program suspension will begin with the second quarter of 2020, the board plans to reevaluate the suspension for future quarters “based on circumstances and expectations at the time of consideration.”
“As HMS invests and lends to primarily small and midsize US companies, we face some clear challenges ahead due to the potential effects of the COVID-19 pandemic on such businesses,” the company said in a letter to shareholders. “One of those challenges has been a steep decline in leveraged loan market values, which affects the value of many of the loans we hold.”
Accordingly, HMS Income Find decreased its monthly distribution reinvestment plan price from $7.80 to $6.65 for the April 1, 2020 distribution.
“The price change was determined by a committee of the HMS board of directors and was based on the best estimates of the underlying change in the company’s net asset value utilizing information available as of the date of determination and which was indictive of the valuation changes we have seen in the current market,” the company said.
HMS Income Fund said that it has maintained a $0.175 quarterly distribution over 31 quarters which represents an annual distribution rate of 7 percent – 8.24 percent, depending on investment timing.
HMS Income Fund invests in and lends to a portfolio of small and mid-size companies throughout the United States and oversees a portfolio of approximately $1 billion of investments in 124 companies. As of December 31, 2019, the BDC raised approximately $236.3 million in the offering including proceeds from the distribution reinvestment plan of approximately $104.6 million.
