HGR Liquidating Trust, the liquidating trust of non-traded real estate investment trust Hines Global REIT Inc., has declared a special distribution of $1.00 per unit which will be paid in cash on July 31, 2020 to unitholders of record at the close of business on July 15, 2020. This special distribution reflects a total distribution of $262 million.
After this special distribution is paid, the company and the trust will have made total special distributions, including return of invested capital distributions and liquidating distributions, of approximately $5.00 per share/unit between January 2018 and July 2020.
In addition to the $5.00 of special distributions, the REIT paid $5.64 of regular operating distributions since inception, for a combined total of $10.64. The amount of regular operating distributions received by each investor depends on when the investment was made and will be lower for those who invested after inception.
Hines Global REIT recently formed HGR Liquidating Trust to complete its plan of liquidation approved by stockholders on July 17, 2018. The trust’s primary purpose is to liquidate assets transferred to it and distribute the sales proceeds to equity holders after paying any of the remaining liabilities.
When Hines Global REIT adopted its plan of liquidation in July 2018, it anticipated completing the sale of all of its assets within the 24-month period imposed by the Internal Revenue Service. The REIT said that it had been actively marketing the remaining assets for disposition, however, the sales of those assets have been delayed given the COVID-19 pandemic and its influence on the global economic environment. Accordingly, Hines Global REIT formed the trust, where it transferred its remaining assets and liabilities.
Hines Global REIT distributed units in the trust to its stockholders, and one unit was distributed for each share of common stock held.
In addition, the board determined a new per unit net asset value of $5.58 as of June 30, 2020, which is approximately 10 percent lower than the per share NAV of $6.17 previously determined as of February 14, 2019.
The company indicated that the decrease is primarily the result of declines in values of its four remaining retail assets, including the most recent negative impact related to the COVID-19 pandemic.
The board then adjusted the NAV to reflect the $1.00 special distribution, resulting in a new per unit NAV of $4.58 as of July 15, 2020.
The value of the seven remaining real estate property investments as of June 30, 2020 was $1.2 billion. The trust sold five properties and several outparcels at one of its properties since February 14, 2019, with a total sales price of $1.1 billion.
Including the effect of the sold properties, the company noted that the total value of the real estate property investments decreased 7.3 percent when compared to the previously determined value of those assets as of February 14, 2019.
This 7.3 percent net decrease resulted from a 6.7 percent depreciation in the total values of the trust’s real estate property investments, as well as a 0.6 percent decrease from the weakening of the Euro and British pound sterling against the U.S dollar.
The total value of the its real estate property investments owned as of June 30, 2020 also represented a 23.1 percent decrease compared to their net purchase price.
The portfolio has seven assets remaining that are in various phases of the marketing process as part of the plan of liquidation, but given current events related to the coronavirus (COVID-19) pandemic, the sales of those assets have been delayed. The company said that it is still actively in discussions with potential buyers for certain of the assets and will continue its efforts to move those processes forward.
Hines Global REIT launched in December 2008 and closed its offering in April 2014 after raising $2.7 billion in investor equity.