Hines REIT and Dividends

$10 million a month in commissions, fees and transaction expenses

Hines REIT and Dividends

Postby pnich45@aol.com » Sun May 16, 2010 8:30 am

It may already be too late; I just received/read the annual report. They state right in the management discussion that dividends may be cut this year. When they're paying mostly out of capital, dividends are really not a good idea anyhow. We'll all be stuck and I don't know how to get out.

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Re: Hines REIT and Dividends

Postby REIT Wrecks » Sun May 16, 2010 11:20 am

You may have read the comments on another Hines post, Hines REIT Ends Share Buybacks, Are Dividends Next?, where I said chances of a dividend cut at Hines are 110% (apparently, they have some big time debt issues too). If I were choosing whether to elect to participate in the DRIP plan, I would elect NOT to participate because the shares will soon be revalued in accordance with the requirements of FINRA 09-09. In almost every imaginable scenario, the share price will go DOWN, which means I would be re-investing at an inflated price.

Furthermore, If I am buying shares through the DRIP, Hines is simply taking my money and using it to pay off sellers (see below). In fact, they are so strapped for cash, they may have to suspend even "Special Redemptions". This means you won't be able to sell even if you're dead:

During the years ended December 31, 2009, 2008 and 2007, we redeemed $152.5 million, $58.7 million and $10.6 million in shares, respectively. During these years, all shareholder requests for redemptions were fully funded out of proceeds from our dividend reinvestment plan. During 2009, we experienced a significant increase in share redemptions, all of which were funded out of proceeds from our dividend reinvestment plan and our primary offering. Cash used to fund redemptions reduces our liquidity available to fund acquisitions of real estate investments and other cash needs. We cannot assure you that we will be able to fully fund Special Redemption Requests in the future.

The emphasis added to the second to last sentence is mine. This is a big problem, and they have been doing this for years. Using shareholder money for anything other than investing in real estate puts overall investor returns in great jeopardy. Hines REIT is a garbage disposal for money, and I would be pulling my cash out, not stuffing it back in via the DRIP.

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