HGR Liquidating Trust (formerly Hines Global REIT) Decreases NAV after Special Distribution
Are you concerned about your investment losses in Hines Global REIT? If so, the securities attorneys at The White Law Group may be able to help you by filing a FINRA Dispute Resolution claim against the brokerage firm that sold you the investment.
The White Law Group continues to investigate FINRA arbitration claims involving brokerage firms who may have unsuitably recommended Hines Global REIT to investors. If you have suffered investment losses, the securities attorneys at The White Law Group may be able to help you.
According to a letter to Hines Global REIT investors on September 23, the REIT declared a NAV (net asset value) of $2.09 per share in March 2021, and doesn’t expect the Trust to generate taxable income to investors for 2021.
HGR Liquidating Trust has declared a special distribution of $0.80 per unit to be processed on or around September 29 to unitholders of record as of September 29, 2021, according to the letter. This will reduce investors’ remaining investment in the Trust, adjusting the NAV to $1.29 per unit. After this special distribution is paid, the REIT notes that it has paid aggregate distributions of $13.89 per unit to holders who have been invested since the inception of Hines Global REIT, Inc.
Shareholders apparently had to wait quite a while for news of the REIT’s liquidation after approving a plan in July 2018 for liquidation and dissolution. The dissolution was originally planned to be finalized in July 2020 with final distributions to be paid to Hines Global REIT shareholders at that time. The company was reportedly unable to liquidate right away due to adverse market conditions, according to SEC filings. Instead, the REIT set up a reserve for its remaining obligations and to cover its expenses as it completes its wind down and dissolution.
July 16, 2020 – HGR Liquidating Trust
Hines Global REIT reportedly transferred its remaining assets and liabilities to the HGR Liquidating Trust in July 2020, according to SEC filings. The trust’s primary purpose is reportedly to liquidate assets transferred to it and distribute the sales proceeds to equity holders after paying any of the remaining liabilities.
The company and the trust 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.
The company also reports that it has paid “aggregate distributions of $10.64 per unit to holders that have been invested since the inception” of Hines Global REIT.” The offering price for Hines Global REIT at the inception was $10.00 per share/unit.
According to the letter, the board of trustees determined a NAV per unit of $5.58 as of June 30, 2020, following the completion of third-party valuations of the Trust’s seven remaining assets.
This NAV represents an approximate 10% decrease from the previous NAV per share of $6.17 determined as of February 14, 2019. The company notes that the decrease was primarily a result of “declines in values of the Trust’s four remaining retail assets, including the most recent negative impact related to the COVID-19 pandemic.”
May 4, 2020 Tender Offer Price May Indicate Losses for Investors
Mackenzie Realty Capital extended a tender offer to investors to purchase shares of Hines Global REIT for just $1.50 per share last May. According to Mackenzie’s letter to investors on April 13, 2020 in conjunction with its Plan of Liquidation, Hines’ ordinary redemptions were suspended on February 2, 2019. The share repurchase program was only available for hardship cases, like the death or disability of a shareholder.
The REIT’s original plan was to liquidate and make final distributions by July 17, 2020, according to the offer letter. Unfortunately, the COVID-19 pandemic and its impact to the global economic environment is expected to have “an adverse impact on overall market conditions and the Company’s disposition process.”
Recovery of Investment Losses
Non-traded REITs are typcially complex, high-risk investments and are not suitable for all investors. Liquidity is frequently a problem with non-traded REITs, and when an investor is ready to sell, they often are unable to find a buyer.
High commissions could be a motivating factor for unscrupulous financial advisors to sell the REIT regardless of whether the investment is in line with the client’s investment objectives and profile. Moreover, the total commissions and expenses make it difficult for non-traded REITs to perform in line with the market. Prior to making recommendations to an individual investor, brokerage firms are required by the Financial Industry Regulatory Authority (FINRA) to disclose all the risks of an investment. Recommendations should only be made if the investment is suitable for an individual investor given their age, investment objections, investment experience and risk tolerance.
Brokerage firms that do not perform adequate due diligence on an investment and/or make unsuitable recommendations can be held accountable for investment losses through FINRA arbitration.
If you are concerned about your investment in Hines Global REIT, please call the securities attorneys of The White Law Group at 888-637-5510 for a free consultation.
For more information on the firm’s investigation, please see:
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