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Hines Urges Shareholders To Reject Offer To Sell Shares In REIT At Big Discount

The Cabot

Hines has told the shareholders of a REIT it manages to reject an offer to sell its shares to a new investor at a steep discount to their current price.

In a letter to shareholders of Hines Global REIT last week, Hines Chairman Jeffrey Hines said investors should reject the tender offer put forward by investor MacKenzie Realty Capital to buy 1 million shares in the company for $1.50 a share, less than 25% of the unlisted REIT’s current net asset value. 

The tender offer by MacKenzie comes after similar tenders in 2018 and 2019. If successful it would have a less than 1% ownership stake in the REIT, but the discounted tender offer does highlight the uncertainty surrounding the vehicle.

The company told shareholders in 2018 that it planned to liquidate the $4.4B of assets it owned, split between the U.S., UK and Europe. It has eight assets valued at more than $1B remaining.

A deadline of July this year had been set for all of the assets to be sold and money returned to shareholders. If that doesn’t happen, the vehicle’s assets would be transferred a third-party trust that will liquidate them. 

But earlier this month, Hines told shareholders the coronavirus pandemic meant the liquidation plan might have to be delayed. 

“While we have been actively marketing the eight remaining assets for disposition, we anticipate that the sales of those assets will be delayed given the COVID-19 pandemic and its influence on the global economic environment,” Hines said in a letter to shareholders.

This week the REIT completed the sale of Bishop’s Square in Dublin to German investor GLL for €180M ($195M). 

But a deal to sell the Cabot building in London’s Canary Wharf district to Blackstone for £380M has been put on ice due to the pandemic. 

Hines said in its letter that it could not estimate the net asset value of the remaining assets because of the uncertainty caused by the economic impact of the virus. It said if the assets are transferred to the liquidating trust in July, it expects the trust to carry on with the current plan of managing the assets and selling them at the right time.