SEC Form 4 · accession 0001262959-16-000086

HINES REAL ESTATE INVESTMENT TRUST INC

Statement of changes in beneficial ownership, as filed. Original on EDGAR ↗

Table I — non-derivative securities

Table II — derivative securities

Explanation of responses

• F1The "Participation Interest" is a profits interest in Hines REIT Properties, L.P., a Delaware limited partnership (the "Operating Partnership"), which increases monthly and is intended to approximate the economic equivalent of the cash acquisition and asset management fees earned by Hines Advisors Limited Partnership (the "Advisor") for the applicable month, and the immediate and automatic reinvestment of such amount into the Operating Partnership in exchange for OP Units (as defined in footnote #8 below). The Participation Interest is currently held by an entity which is owned ultimately by Jeffrey C. Hines and Gerald D. Hines. The holder of the Participation Interest is entitled to receive distributions from the Operating Partnership based on the percentage interest in the Operating Partnership September 1, 2016, the percentage interest attributable to the Participation Interest was approximately 8.3603%.
• F10In addition to these repurchase rights, the holder of the Participation Interest has the right to demand repurchase of the Participation Interest in the event the Advisory Agreement dated July 1, 2010 (or any renewal thereof) among the Company, the Operating Partnership and the Advisor expires without the consent of the Advisor, or such agreement is terminated for any reason other than by the Advisor.
• F11Monthly adjustments in the percentage interest attributable to the Participation Interest as described above shall cease at such time as an affiliate of Hines no longer serves as the Company's advisor though the percentage interest attributable to the Participation Interest may subsequently change as a result of adjustments for issuances or redemptions as described above.
• F12The Participation Interest is held by an entity indirectly owned and controlled by Jeffrey C. Hines and Gerald D. Hines.
• F2Adjustments in the percentage interest attributable to the Participation Interest as described below will cease at such time as an affiliate of Hines Interests Limited Partnership ("Hines") no longer serves as the Company's advisor. The percentage interest of the holder of the Participation Interest as of the end of a particular calendar month will equal the sum of: (a) the percentage interest attributable to the Participation Interest as of the end of the immediately preceding month, adjusted for any issuances or redemptions of OP Units during the month, plus (b) 0.0625% of the net equity received by the Operating Partnership and invested in real estate investments as of the end of the current month, divided by the "Equity Value" (as defined below) of the Operating Partnership as of the end of the current month, plus
• F3(c) 0.50% of the "Gross Real Estate Investments" (as defined below) made by the Operating Partnership during the current month, divided by the Equity Value of the Operating Partnership as of the end of such month. "Equity Value" as of a particular date means, in cases where the Company has an offering of Common Stock then in effect, the product of (i) the per-share offering price for the shares of Common Stock that are the subject of such offering, net of selling commissions, dealer manager fees and the per share estimate of organization and offering costs (based on the maximum number of shares of Common Stock being offered in the offering), multiplied by (ii) a number equal to the number of OP Units outstanding as of the end of such month, divided by the difference between 100% and the percentage interest attributable to the Participation Interest as of the end of such month.
• F4In cases where the Company does not have an offering of Common Stock then in effect, "Equity Value" as of a particular date means the net fair market value of the Operating Partnership's equity as of such date, as approved by the Company's board of directors, which shall generally equal the net proceeds that would be available for distribution by the Operating Partnership if all properties owned directly or indirectly by the Operating Partnership were sold at their fair market value in an all cash sale as of such date, and all expected transaction costs (including all closing costs customarily borne by a seller in the market where each property is located and estimated legal fees and expenses) were paid, and all liabilities were repaid, out of such proceeds.
• F5The term "Gross Real Estate Investments" of the Operating Partnership means the gross amount invested by the Operating Partnership in any real estate investments (either directly or indirectly, including real estate investments contributed to the Operating Partnership for OP Units), including debt attributable to such investments; provided that in the case of amounts invested in entities not wholly-owned by the Operating Partnership, the term shall mean our allocable share of the Gross Real Estate Investments of such entities. The Participation Interest was issued in consideration of an obligation by Hines and its affiliates to perform future services in connection with Company's real estate operations.
• F6The foregoing calculation of the percentage interest of the Participation Interest as of the end of a particular month will be effective as of the first day of the following month. While the Participation Interest increases on a monthly basis, the amount of the increase is diluted by the number of OP Units issued (including OP Units issued to the Company as the general partner of the Operating Partnership as a result of offering proceeds the Company raises), or increased as a result of OP Units redeemed, during such calendar month, so that the percentage interest attributable to the Participation Interest immediately after such issuance or redemption equals (i) the percentage interest attributable to the Participation Interest immediately prior to such issuance or redemption, multiplied by (ii) a fraction whose numerator is the number of OP Units outstanding immediately prior to such issuance or
• F7redemption and whose denominator is the number of OP Units outstanding immediately after such issuance or redemption. The Participation Interest may be repurchased for shares of Common Stock or cash as described below. Repurchases of the Participation Interest will result in a reduction in the percentage interest in the Operating Partnership attributable to the Participation Interest to the extent of such repurchase and will have no impact on the calculation of subsequent increases in the Participation Interest.
• F8"OP Units" are units representing limited partnership interests in the Operating Partnership, of which the Company is the general partner. Beginning one year after the OP Units were issued and for so long as an affiliate of Hines remains the advisor of the Company, these OP Units are redeemable for an equal number of shares of Common Stock or, at the election of the Company, cash. If an affiliate of Hines is no longer the advisor of the Company, OP Units held by affiliates of Hines are convertible into the Company's Common Stock on a one-for-one basis or, at the election of the holder(s), cash.
• F9The holder of the Participation Interest has the right, subject to certain limitations, to demand the repurchase of the Participation Interest for cash or, at the Company's option, shares of Common Stock. These repurchase rights became exercisable on May 25, 2005. The number of shares of Common Stock issuable in relation of the Participation Interest shall be equal to the number of shares issuable if the number of OP Units that would represent the percentage interest in the Operating Partnership evidenced by the Participation Interest were exchanged for shares of Common Stock on a one-for-one basis.