Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part Ii- Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Mine Safety Disclosures
Item 5. Other Information
Item 6. Exhibits
Exhibits
EX-31.1
hgr06302019exhibit311.htm
EX-31.2
hgr06302019exhibit312.htm
EX-32.1
hgr06302019exhibit321.htm
Hines Global REIT Earnings 2019-06-30
HGRI 10Q Quarterly Report
Balance Sheet
Income Statement
Cash Flow
10-Q 1 hgr_0630201910-q.htm HINES GLOBAL REIT 6.30.2019 10-Q Document
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
þ
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2019
or
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number: 000-53964
Hines Global REIT, Inc.
(Exact name of registrant as specified in its charter)
Maryland
26-3999995
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
2800 Post Oak Boulevard
Suite 5000
Houston, Texas
77056-6118
(Address of principal executive offices)
(Zip code)
(888) 220-6121
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Exchange Act: None.
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes þ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☐
Accelerated filer ☐
Non-accelerated filer þ
Smaller reporting company ☐
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13 (a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No þ
As of August 6, 2019, approximately 263.8 million shares of the registrant’s common stock were outstanding.
Preferred shares, $.001 par value; 500,000 preferred shares authorized, none issued or outstanding as of June 30, 2019 and December 31, 2018
—
—
Common stock, $.001 par value; 1,500,000 shares authorized, 264,068 and 267,073 issued and outstanding as of June 30, 2019 and December 31, 2018, respectively
264
267
Additional paid-in capital
2,391,123
2,409,529
Accumulated distributions in excess of earnings
(1,168,777
)
(688,475
)
Accumulated other comprehensive income (loss)
(125,063
)
(128,927
)
Total stockholders’ equity
1,097,547
1,592,394
Noncontrolling interests
501
468
Total equity
1,098,048
1,592,862
Total liabilities and equity
$
2,069,028
$
2,499,711
See notes to the condensed consolidated financial statements.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the Three and Six Months Ended June 30, 2019 and 2018
1. ORGANIZATION
The accompanying interim unaudited condensed consolidated financial information has been prepared according to the rules and regulations of the United States Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted according to such rules and regulations. For further information, refer to the financial statements and footnotes for the year ended December 31, 2018 included in Hines Global REIT, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2018. In the opinion of management, all adjustments and eliminations, consisting only of normal recurring adjustments, necessary to present fairly and in conformity with GAAP the financial position of Hines Global REIT, Inc. as of June 30, 2019, the results of operations for the three and six months ended June 30, 2019 and 2018 and cash flows for the six months ended June 30, 2019 and 2018 have been included. The results of operations for such interim periods are not necessarily indicative of the results for the full year.
Hines Global REIT, Inc. (the “Company”) was formed as a Maryland corporation on December 10, 2008, under the General Corporation Law of the state of Maryland for the purpose of engaging in the business of investing in and owning commercial real estate properties and other real estate investments. The Company conducts substantially all of its operations through Hines Global REIT Properties, LP (the “Operating Partnership”) and subsidiaries of the Operating Partnership. The Company operates in a manner to qualify as a real estate investment trust (“REIT”) for U.S. federal income tax purposes. The business of the Company is managed by Hines Global REIT Advisors LP (the “Advisor”), an affiliate of Hines Interests Limited Partnership (“Hines”), pursuant to the Advisory Agreement between the Company, the Advisor and the Operating Partnership (the “Advisory Agreement”).
The Company raised the equity capital for its real estate investments through two public offerings from August 5, 2009 through April 11, 2014, which included primary offering shares as well as shares issued through its distribution reinvestment plan. The Company terminated its offering of primary offering shares in April 2014, but continued to issue shares through its distribution reinvestment plan (the “DRP Offering”) from April 24, 2014 to August 2018. Collectively, through these public offerings, the Company received gross offering proceeds of approximately $3.1 billion from the sale of 313.3 million shares, which was invested in the Company’s real estate portfolio.
In recent years, the Company has concentrated its efforts on actively managing its assets and exploring a variety of strategic opportunities focused on enhancing the composition of its portfolio and its total return potential for its stockholders. On April 23, 2018, in connection with its review of potential strategic alternatives available to the Company, the Company’s board of directors determined that it is in the best interest of the Company and its stockholders to sell all or substantially all of the Company’s properties and assets and for the Company to liquidate and dissolve pursuant to a Plan of Liquidation and Dissolution (the “Plan of Liquidation”). The principal purpose of the Plan of Liquidation is to provide liquidity to the Company’s stockholders by selling the Company’s assets, paying its debts and distributing the net proceeds from liquidation to the Company’s stockholders.
As required by Maryland law and the Company’s charter, the Plan of Liquidation was approved by the affirmative vote of the holders of at least a majority of the shares of the Company’s common stock outstanding and entitled to vote thereon at the Company’s annual meeting of stockholders held on July 17, 2018. In accordance with Maryland law, the Plan of Liquidation provides the Company’s board of directors with the authority to modify or amend the Plan of Liquidation without further action by the Company’s stockholders to the extent permitted by then-current law and to terminate the Plan of Liquidation for any reason, provided that the board of directors may not terminate the Plan of Liquidation after Articles of Dissolution have been filed with and accepted for record by the State Department of Assessments and Taxation of Maryland. If the sale of all or substantially all of the Company’s assets is completed as expected, the Company expects to make one or more additional liquidating distributions to its stockholders during the period of the liquidation process and to make the final liquidating distribution to its stockholders on or before a date that is within 24 months after stockholder approval of the Plan of Liquidation. There can be no assurances regarding the timing or amounts of any additional liquidating distributions or that the Company will make the final distribution on or before July 17, 2020. In addition, even if the Company sells all of its assets by July 17, 2020, it may determine not to distribute all distributable cash by that date and may establish a reserve to provide for any remaining obligations and to cover its expenses as it completes its wind down and dissolution.
Through August 14, 2019, the Company has paid aggregate return of capital distributions of $4.00 per share to its stockholders, which included $2.83 per share of liquidating distributions pursuant to the Plan of Liquidation. See “Note 5 — Distributions” for additional information regarding these distributions.
Because the Plan of Liquidation follows the Company’s initial business plan and given the Company’s board of directors has the authority to modify, amend, or terminate the Plan of Liquidation without further action by the Company’s stockholders, these financial statements have not been prepared on the liquidation basis of accounting.
The Company sold its interests in six properties for an aggregate sales price of $1.0 billion during 2017, 20 properties in 2018 for an aggregate sales price of $1.7 billion, and two properties in the first quarter of 2019 for an aggregate sales price of $477.8 million. As of June 30, 2019, the Company owned interests in 12 real estate investments, consisting of the following types of investments:
•
Domestic office investments (3 investments)
•
Domestic other investments (4 investments)
•
International office investments (4 investments)
•
International other investments (1 investments)
As of August 14, 2019, the Company has $720.6 million of debt scheduled to mature within a year. The Company does not have sufficient cash on hand or other legally binding commitments that can be utilized to repay such debt. In evaluating the Company’s current and projected sources of liquidity to meet the obligations of such debt, the Company has assessed its available options and has determined that its plan is to repay such obligations with proceeds from the sale of assets pursuant to the Plan of Liquidation. To the extent such proceeds are not sufficient, the Company has determined it is probable that it will either meet the covenant requirements necessary to exercise the extension options on its Revolving Credit Facility (as defined in Note 4) or that market-based alternatives to refinance the maturing debt will be available and that these actions will provide the necessary cash flows to repay the maturing debt.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Described below are certain of the Company’s significant accounting policies. The disclosures regarding several of the policies have been condensed or omitted in accordance with interim reporting regulations specified in the instructions for Form 10-Q. Please see the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 for a complete listing of all of its significant accounting policies.
Other Assets
Other assets included the following (in thousands):
June 30, 2019
December 31, 2018
Prepaid expenses
$
2,506
$
1,770
Deferred tax assets
14,195
12,654
Other
303
341
Other assets
$
17,004
$
14,765
Revenue Recognition
Rental payments are generally paid by the tenants prior to the beginning of each month or quarter to which they relate. As of June 30, 2019 and December 31, 2018, respectively, the Company recorded liabilities of $11.7 million and $15.5 million related to prepaid rental payments, which were included in other liabilities in the accompanying Condensed Consolidated Balance Sheets. The Company recognizes rental revenue on a straight-line basis over the life of the lease, including rent holidays, if any. Straight-line rent receivable was $41.6 million and $44.0 million as of June 30, 2019 and December 31, 2018, respectively. Straight-line rent receivable consists of the difference between the tenants’ rents calculated on a straight-line basis from the date of acquisition or lease commencement over the remaining terms of the related leases and the tenants’ actual rents due under the lease agreements and is included in tenant and other receivables in the accompanying Condensed Consolidated Balance Sheets. Revenues associated with operating expense recoveries are recognized in the period in which the expenses are incurred based upon the tenant lease provisions. Revenues relating to lease termination fees are recognized on a straight-line basis amortized from the time that a tenant’s right to occupy the leased space is modified through the end of the revised lease term.
Other revenues consist primarily of parking revenue. Parking revenue represents amounts generated from contractual and transient parking and is recognized in accordance with contractual terms or as services are rendered.
In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-02 which requires companies that lease assets to recognize on the balance sheet the right-of-use assets and related lease liabilities (“ASC 842”). The accounting by companies that own the assets leased by the lessee (the lessor) is largely unchanged from previous GAAP. The Company adopted ASC 842 as of January 1, 2019, and is using the modified retrospective approach. No adjustment to opening retained earnings was required.
In July 2018, the FASB issued ASU 2018-11, which allows lessors to account for lease and non-lease components by class of underlying assets, as a single lease component if certain criteria are met. Also, the new standard indicates that companies are permitted to recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption in lieu of restating prior periods in accordance with ASC 842 and provides other optional practical expedients.
Upon adoption, the Company has elected the following practical expedients:
•
The transition method in which the application date of January 1, 2019 is the beginning of the reporting period that the Company first applied the new guidance.
•
The practical expedient package which allows an entity not to reassess (1) whether any expired or existing contracts are or contain leases; (2) the lease classification for any expired or existing leases; (3) initial direct costs for any existing leases.
•
As an accounting policy election, a lessor may choose not to separate the non-lease components, by class of underlying assets, from the lease components and instead account for both types of components as a single component under certain conditions.
•
As an accounting policy election, a lessee may choose not to separate the non-lease components, by class of underlying assets, from the lease components and instead account for both types of components as a single component. The Company elected to apply the practical expedient for all of its leases to account for the lease and non-lease components as a single, combined operating lease component.
The Company completed its evaluation of the impact that the adoption of ASC 842 will have on the Company’s consolidated financial statements relating to its leases from both the lessee and lessor perspective. Based on the Company’s analysis, the Company identified the following changes to result from its adoption of ASC 842:
Lessor Accounting
•
The Company is entitled to receive tenant reimbursements for operating expenses for common area maintenance (“CAM”). Based on guidance in these ASUs, CAM reimbursement revenue is defined as a non-lease component, which would be accounted for in accordance with ASC 606. However, the Company elected to apply the practical expedient for all of its leases to account for the lease and non-lease components as a single, combined operating lease component.
•
Capitalization of leasing costs is limited to initial direct costs. Initial direct costs have been defined as incremental costs of a lease that would not have been incurred if the lease had not been obtained. Legal costs are no longer capitalized, but expensed as incurred. There is no change in the Company’s accounting for lease inducements and commissions.
•
The Company’s existing leases continue to be classified as operating leases, however, leases entered into or modified after January 1, 2019 may be classified as either operating or sales-type leases, based on specific classification criteria. The Company believes all of its leases will continue to be classified as operating leases, and all operating leases will continue to have a similar pattern of recognition as under current GAAP.
Lessee Accounting
•
The Company has two ground lease agreements in which the Company is the lessee for land underneath 25 Cabot Square. The Company previously recognized an amount related to these ground leases as part of the allocation of the purchase price of 25 Cabot Square, which was recorded to intangible lease assets, net. The leases have remaining terms of 198 years and 973 years. Upon adoption of ASC 842 on January 1, 2019, the Company reclassified approximately £58.3 million (approximately $74.4 million converted using an exchange rate of $1.28 per GBP on January 1, 2019) from intangible lease assets, net to right-of-use asset in the Company’s Condensed Consolidated Balance Sheets. No lease liability was recorded since the payments required under the lease are immaterial.
The Company has a ground lease agreement in which the Company is the lessee for land underneath New City that is currently accounted for as an operating lease. The lease currently ends in December 2089 and has fixed payments. The rental expense associated with this lease was $0.2 million and $0.2 million for the six months ended June 30, 2019, and 2018, respectively. The Company previously recognized an amount related to this ground lease as part of the allocation of the purchase price of New City, which was recorded to intangible lease assets, net. Upon adoption of ASC 842 on January 1, 2019, the Company recorded a right-of-use asset and lease liability of approximately $3.6 million in right-of-use asset, net and other liabilities, respectively, in the Company’s Condensed Consolidated Balance Sheets and reclassified an additional 65.1 million Polish zloty (“PLN”) (approximately $17.3 million converted using an exchange rate of $0.27 per PLN on January 1, 2019) from intangible lease assets, net to right-of-use asset in the Company’s Condensed Consolidated Balance Sheets.
The Company’s estimate of the amount of the right-of-use asset and lease liability included assumptions for the discount rate, which is based on the incremental borrowing rate of the lease contract. The incremental borrowing rate is the rate of interest that a lessee would have to pay to borrow on a collateralized basis over a term similar to the lease. Since the term of the New City ground lease is much longer than a typical borrowing, we derived the incremental borrowing rate of 6.4%, as the spread in a current financing quote for the property plus the applicable base rate corresponding to the longest term available in the base rate market. A reconciliation of our lease liabilities on an undiscounted cash flow basis for the ground lease at New City as of June 30, 2019, for the period from July 1, 2019 through December 31, 2019 and for each of the years ending December 31, 2020 through December 31, 2024 are as follows (in thousands):
Lease Payments
July 1, 2019 through December 31, 2019
$
—
2020
238
2021
238
2022
238
2023
238
2024
238
Thereafter
15,475
Total
$
16,665
Lease liabilities (included in other liabilities)
$
3,678
Undiscounted excess amount
$
12,987
New Accounting Pronouncements
In August 2018, the FASB issued ASU No. 2018-13, "Changes to the Disclosure Requirements for Fair Value Measurement." This ASU amends and removes several disclosure requirements including the valuation processes for Level 3 fair value measurements. The ASU also modifies some disclosure requirements and requires additional disclosures for changes in unrealized gains and losses included in other comprehensive income for recurring Level 3 fair value measurements and requires the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. The ASU is effective for fiscal years beginning after December 15, 2019, including interim periods therein. Early adoption is permitted for any eliminated or modified disclosures upon issuance of this ASU. The Company is currently assessing the impact the adoption of this guidance will have on its financial statements.
Investment property consisted of the following amounts as of June 30, 2019 and December 31, 2018 (in thousands):
June 30, 2019
December 31, 2018
Buildings and improvements (1)
$
1,301,796
$
1,475,007
Less: accumulated depreciation
(149,642
)
(172,659
)
Buildings and improvements, net
1,152,154
1,302,348
Land
398,366
467,607
Investment property, net
$
1,550,520
$
1,769,955
(1)
Included in buildings and improvements was approximately $20.1 million of construction-in-progress related to the Company’s development at Summit III. In 2019, the Company commenced construction of Summit III, a new 374,220 square foot building at the Summit property. The office space has been fully pre-leased to a single tenant. The construction project is expected to be completed in 2020.
Recent Dispositions of Real Estate Investments
In January 2019, the Company completed the sale of 55M Street for a contract sales price of $135.3 million. The Company recognized a gain on sale of this asset of $17.4 million net of disposition fees, which was recorded in gain on sale of real estate investments on the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss).
In February 2019, the Company completed the sale of 550 Terry Francois for a contract sales price of $342.5 million. The Company recognized a gain on sale of this asset of $175.0 million net of disposition fees, which was recorded in gain on sale of real estate investments on the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss).
As of June 30, 2019, the cost basis and accumulated amortization related to lease intangibles were as follows (in thousands):
Lease Intangibles
In-Place Leases (1)
Out-of-Market
Lease Assets
Out-of-Market
Lease Liabilities
Cost
$
267,935
$
22,533
$
(94,810
)
Less: accumulated amortization
(166,012
)
(15,471
)
43,475
Net
$
101,923
$
7,062
$
(51,335
)
(1)
The Company adopted ASC 842 beginning January 1, 2019 and reclassified certain assets from intangible lease assets, net to right-of-use asset, net in the Company’s Condensed Consolidated Balance Sheets. The amounts reclassified from intangible lease assets included $93.5 million in gross cost, net of $1.8 million of accumulated amortization. See “Note 2 — Summary of Significant Accounting Policies” for more information on the adoption of ASC 842.
As of December 31, 2018, the cost basis and accumulated amortization related to lease intangibles were as follows (in thousands):
Lease Intangibles
Out-of-Market
Lease Assets
Out-of-Market
Lease Liabilities
In-Place Leases
Cost
$
404,662
$
26,072
$
(99,434
)
Less: accumulated amortization
(187,581
)
(16,560
)
43,913
Net
$
217,081
$
9,512
$
(55,521
)
Amortization expense of in-place leases was $4.0 million and $14.2 million for the three months ended June 30, 2019 and 2018, respectively. Net amortization of out-of-market leases resulted in increases to rental revenue of $1.1 million and $3.6 million for the three months ended June 30, 2019 and 2018, respectively.
Amortization expense of in-place leases was $8.5 million and $32.5 million for the six months ended June 30, 2019 and 2018, respectively. Net amortization of out-of-market leases resulted in increases to rental revenue of $2.1 million and $5.8 million for the six months ended June 30, 2019 and 2018, respectively.
Anticipated amortization of in-place leases and out-of-market leases, net, for the period from July 1, 2019 through December 31, 2019 and for each of the years ending December 31, 2020 through December 31, 2023 are as follows (in thousands):
In-Place
Leases
Out-of-Market
Leases, Net
July 1, 2019 through December 31, 2019
$
7,740
$
(2,155
)
2020
$
14,437
$
(4,136
)
2021
$
12,341
$
(3,778
)
2022
$
11,034
$
(2,945
)
2023
$
10,204
$
(2,625
)
Leases
The Company’s leases are generally for terms of 15 years or less and may include multiple options to extend the lease term upon tenant election. The Company’s leases typically do not include an option to purchase. Generally, the Company does not expect the value of its real estate assets to be impacted materially at the end of any individual lease term, as the Company is typically able to re-lease the space and real estate assets tend to hold their value over a long period of time. Tenant terminations prior to the lease end date occasionally result in a one-time termination fee based on the remaining unpaid lease payments including variable payments and could be material to the tenant. Many of the Company’s leases have increasing minimum rental rates during the terms of the leases through escalation provisions. In addition, the majority of the Company’s leases provide for separate billings for variable rent, such as, reimbursements of real estate taxes, maintenance and insurance and may include an amount based on a percentage of the tenants’ sales. Total billings related to expense reimbursements from tenants for the three and six months ended June 30, 2019 was $12.3 million and $24.5 million, respectively, which is included in rental revenue on the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss).
The Company has entered into non-cancelable lease agreements with tenants for space. As of June 30, 2019, the approximate fixed future minimum rentals for the period from July 1, 2019 through December 31, 2019, for each of the years ending December 31, 2020 through December 31, 2023 and for the period thereafter are as follows (in thousands):
Fixed Future Minimum Rentals
July 1, 2019 through December 31, 2019
$
67,798
2020
134,741
2021
141,508
2022
135,248
2023
121,762
Thereafter
882,738
Total
$
1,483,795
During the six months ended June 30, 2019 and 2018, the Company did not earn more than 10% of its total rental revenue from any individual tenant.
As of June 30, 2019 and December 31, 2018, the Company had approximately $782.5 million and $678.1 million of principal outstanding, respectively, with a weighted average years to maturity of 0.8 years and 0.9 years, respectively, and a weighted average interest rate of 3.5% and 3.4%, respectively. The following table describes the Company’s debt outstanding at June 30, 2019 and December 31, 2018 (in thousands, except percentages):
JPMorgan Chase Revolving Credit Facility - Term Loan
5/22/2013
3/4/2020
Variable
3.87
%
225,000
300,000
Total Principal Outstanding
$
782,500
$
678,052
Unamortized Deferred Financing Costs(3)
$
(1,240
)
$
(1,285
)
Notes Payable, net
$
781,260
$
676,767
(1)In August 2019, the Company paid off the secured mortgage loan related to Minneapolis Retail Center.
(2)In June 2019, the loan was amended and the maturity date was extended to July 25, 2020.
(3)Includes unamortized deferred financing costs related to the secured mortgage debt and the term loan commitment of the JPMorgan Chase Revolving Credit Facility. Unamortized deferred financing costs related to the revolving loan commitment of the JPMorgan Chase Revolving Credit Facility are included in deferred financing costs, net on the Company’s Condensed Consolidated Balance Sheets.
The variable-rate debt has interest rates ranging from the LIBOR or EURIBOR screen rate plus 1.45% to 2.50% per annum. As of June 30, 2019, $138.2 million of the Company’s variable-rate debt was capped at strike rates ranging from 1.00% to 2.00%. Additionally, as of December 31, 2018, $140.0 million of our variable rate debt was capped at strike rates ranging from 1.00% to 2.00%.
JPMorgan Chase Revolving Credit Facility
In April 2012, the Operating Partnership entered into a credit agreement (the “Credit Agreement”) with JPMorgan Chase Bank, N.A., as administrative agent for itself and various lenders named in the Credit Agreement. The Company refers to the Revolving Loan Commitment and Term Loan Commitment collectively as the “Revolving Credit Facility.” As amended in June 2015, the borrowings may be denominated in U.S. dollars, British pound sterling, Euros, Australian dollars or Canadian dollars with up to $920.0 million maximum amount available under the Revolving Credit Facility.
In March 2019, the Company entered into an amendment to its Revolving Credit Facility, which resulted in the following changes:
•
a decrease in total commitments to $725.0 million, including $225.0 million to the term loan commitment (“Term Loan Commitment”), and $500.0 million available under the revolving loan commitment (“Revolving Loan Commitment”);
•
extended the maturity date to March 4, 2020, subject to three additional six-month extensions at the Company’s option and subject to the satisfaction of certain conditions.
During the six months ended June 30, 2019, the Company made draws of approximately $182.0 million and payments of $75.0 million on the Revolving Credit Facility. From July 1, 2019 through August 14, 2019, the Company made additional borrowings of $77.0 million under the Revolving Credit Facility, resulting in an outstanding principal balance of $484.0 million as of August 14, 2019.
The Company's mortgage agreements and other loan documents for the debt described in the table above contain customary events of default, with corresponding grace periods, including payment defaults, cross-defaults to other agreements and bankruptcy-related defaults, and customary covenants, including limitations on liens and indebtedness and maintenance of certain financial ratios. In addition, the Company has executed customary recourse carve-out guarantees of certain obligations under its mortgage agreements and the other loan documents. The Company is not aware of any instances of noncompliance with financial covenants as of June 30, 2019.
Principal Payments on Debt
The Company is required to make the following principal payments on its outstanding notes payable for period July 1, 2019 through December 31, 2019, and each of the years ending December 31, 2020 through December 31, 2023 and for the period thereafter (amounts are in thousands):
Payments due by Year
July 1, 2019 through December 31, 2019
2020
2021
2022
2023
Thereafter
Principal payments
$
66,644
(1)
$
645,889
$
69,967
$
—
$
—
$
—
(1)
Includes Minneapolis Retail Center debt of $65.5 million that was paid off in August 2019 using proceeds from the Revolving Credit Facility that is set to mature in 2020.
5. DISTRIBUTIONS
The Company declared distributions for the months of January 2018 through December 2018 at an amount equal to $0.0541667 per share, per month ($0.65 per share on an annualized basis). Approximately $0.45 per share of these distributions were designated as a return of a portion of the stockholders’ invested capital as described further below.
From January 2018 through February 2019, the Company paid aggregate return of capital distributions (“Return of Capital Distributions”) to stockholders totaling approximately $4.00 per share, which represented a return of a portion of the stockholders’ invested capital. These Return of Capital Distributions were made up of the following:
•
a $1.05 per share special distribution (the “Special Distribution”) declared to all stockholders of record as of December 30, 2017 and paid in January 2018. The Special Distribution was funded with a portion of the net proceeds received from the strategic sale of six assets during 2017.
•
$0.12 per share resulting from a portion of the monthly distributions declared for the months of January 2018 through June 2018, (approximately $0.02 per share, per month), which were designated by our board of directors as a return of a portion of the stockholders’ invested capital and, as such, reduced the stockholders’ remaining investment in the Company.
•
Approximately $0.33 per share resulting from the monthly liquidating distributions declared for the months of July 2018 through December 2018 ($0.541667 per share, per month), which were designated as liquidating distributions and, as such, reduced the stockholders’ remaining investment in the Company.
•
a $2.50 per share designated liquidating distribution declared to all stockholders of record as of February 13, 2019 and paid in February 2019.
On July 17, 2018, in connection with the stockholder approval of the Plan of Liquidation, the board of directors determined to suspend the distribution reinvestment plan indefinitely effective as of August 31, 2018. As a result of the suspension of the distribution reinvestment plan, all distributions paid after August 31, 2018 were paid to stockholders in cash. Additionally, because the Company already sold a significant number of assets and its expectation is to sell all of its remaining assets in the time frame set forth under its Plan of Liquidation, the Company determined to stop paying monthly distributions for periods after December 2018. The Company intends to fund all future liquidating distributions with proceeds from the sale of its remaining properties in addition to any distributable cash from the operating income of its remaining properties.
The table below outlines the Company’s total distributions declared to stockholders and noncontrolling interests for each of the quarters ended during 2019 and 2018, including the breakout between the distributions declared in cash and those reinvested pursuant to the Company’s distribution reinvestment plan (in thousands).
Stockholders
Noncontrolling Interests
Distributions for the three months ended
Cash Distributions
Distributions Reinvested
Total Declared
Distributions Declared per Common Share
Total Declared
2019
June 30, 2019
$
—
$
—
$
—
$
—
$
—
March 31, 2019
661,238
—
661,238
2.50
53
Total
$
661,238
$
—
$
661,238
$
2.50
$
53
2018
December 31, 2018
$
43,586
$
—
$
43,586
$
0.1625
$
134
September 30, 2018
36,970
7,187
44,157
0.1625
11,769
(1)
June 30, 2018
22,457
21,844
44,301
0.1625
52
March 31, 2018
22,126
22,294
44,420
0.1625
60
Total
$
125,139
$
51,325
$
176,464
$
0.65
$
12,015
(1)
For the three months ended September 30, 2018, distributions declared to noncontrolling interests included a distribution totaling $11.6 million to an affiliate of Hines, who was the Company’s joint venture partner in the WaterWall joint venture, as a result of the sale of WaterWall Place.
6. RELATED PARTY TRANSACTIONS
The table below outlines fees and expense reimbursements incurred that are payable by the Company to the Advisor, Hines and its affiliates for the periods indicated below and amounts unpaid as of June 30, 2019 and December 31, 2018 (in thousands):
Incurred
Three Months Ended June 30,
Six Months Ended June 30,
Unpaid as of
Type and Recipient
2019
2018
2019
2018
June 30, 2019
December 31, 2018
Asset Management Fee- the Advisor and affiliates of Hines
$
6,571
$
8,782
$
13,351
$
17,641
$
1,972
$
2,495
Disposition Fee- the Advisor
$
—
$
1,533
$
4,777
$
1,533
—
—
Other (1)
$
1,146
$
1,393
$
2,635
$
2,888
722
2,089
Property Management Fee- Hines
$
1,014
$
1,597
$
2,007
$
3,128
100
125
Development/Construction Management Fee- Hines
$
444
$
456
$
1,016
$
939
399
314
Leasing Fee- Hines
$
349
$
913
$
543
$
1,219
2,017
2,361
Expense Reimbursement- Hines (with respect to management and operations of the Company’s properties)
$
2,229
$
2,448
$
4,062
$
4,888
295
584
Due to Affiliates
$
5,505
$
7,968
(1)
Includes amounts the Advisor paid on behalf of the Company such as general and administrative expenses and issuer costs. These amounts are generally reimbursed to the Advisor during the month following the period in which they are incurred.
Summit Development Agreement
In March 2019, the Company entered into a Development Management Agreement with Hines, the Company’s sponsor, for the construction and development of an office building at the Summit in Bellevue, Washington. Hines will be paid a project administration fee equal to 2.5% of the qualified construction costs.
As of June 30, 2019, the Company estimated that the fair value of its notes payable, which had a book value (excluding any unamortized discount or premium) of $782.5 million, was $783.4 million. As of December 31, 2018, the Company estimated that the fair value of its notes payable, which had a book value of $678.1 million, was $679.3 million. Management has utilized available market information, such as interest rate and spread assumptions of notes payable with similar terms and remaining maturities, to estimate the amounts required to be disclosed. Although the Company has determined the majority of the inputs used to value its notes payable fall within Level 2 of the fair value hierarchy, the credit quality adjustments associated with its fair value of notes payable utilize Level 3 inputs. However, as of June 30, 2019, the Company has assessed the significance of the impact of the credit quality adjustments on the overall valuations of its fair market value of notes payable and has determined that they are not significant. As a result, the Company has determined these financial instruments utilize Level 2 inputs. Since such amounts are estimates that are based on limited available market information for similar transactions, there can be no assurance that the disclosed values could be realized.
Other financial instruments not measured at fair value on a recurring basis include cash and cash equivalents, restricted cash, tenant and other receivables, accounts payable and accrued expenses, other liabilities, due to affiliates and distributions payable. The carrying value of these items reasonably approximates their fair value based on their highly-liquid nature and/or short-term maturities. Due to the short-term nature of these instruments, Level 1 inputs are utilized to estimate the fair value of the cash and cash equivalents and restricted cash and Level 2 inputs are utilized to estimate the fair value of the remaining financial instruments.
Financial Instruments Measured on a Nonrecurring Basis
Certain long-lived assets are measured at fair value on a non-recurring basis. These assets are not measured at fair value on an ongoing basis, but are subject to fair value adjustments (i.e., impairments) in certain circumstances. The inputs associated with the valuation of long-lived assets are generally included in Level 3 of the fair value hierarchy.
Impairment of Investment Property
Investment properties are reviewed for impairment at each reporting period if events or changes in circumstances indicate that the carrying amount may not be recoverable. The Company determined that one of its properties was impaired for the six months ended June 30, 2019 as a result of deteriorating market conditions.
For the year ended December 31, 2018, the Company determined that three of its properties (two of which were measured using executed purchase and sale agreements which are considered level 2 inputs, and one of which was measured using level 3 inputs) were impaired as a result of deteriorating market conditions.
The changes in assumptions resulted in the net book value of the assets exceeding the projected undiscounted cash flows for the property. As a result, these properties were written down to fair value. The following table summarizes activity for the properties measured at fair value, on a non-recurring basis as of June 30, 2019 and December 31, 2018 (in thousands).
Basis of Fair Value Measurements
As of
Description
Fair Value of Assets
Quoted Prices In Active Markets for Identical Items
The Company’s estimated fair value of the property measured using level 3 inputs was based on comparisons of recent market activity and discounted cash flow models, which include estimates of property-specific inflows and outflows over a specific holding period. Significant unobservable quantitative inputs used in determining the fair value of the investment property for the period ended June 30, 2019 include: a discount rate of 7.21%; a capitalization rate of 6.25%; stabilized occupancy rate of 91.8%; and a current market rental rate of $25.00 per square foot. Significant unobservable quantitative inputs used in determining the fair value of the investment property for the period ended December 31, 2018 include: a discount rate of 9.00%; a capitalization rate of 8.00%; stabilized occupancy rate of 90.0%; and a current market rental rate of $25.00 per square foot. These inputs are based on the location, type and nature of each property, current and anticipated market conditions, and management’s knowledge and expertise in real estate.
8. REPORTABLE SEGMENTS
The Company’s real estate investments are geographically diversified and management evaluates the operating performance of each at an individual investment level and considers each investment to be an operating segment. The Company has aggregated all of its operating segments into four reportable segments based on the location of the segment and the underlying asset class. Management has aggregated the Company’s investments that are not office properties in “other” based on the geographic location of the investment, due to the Company’s ownership of interests in various different types of investments that do not stand alone as their own reportable segment. The Company’s reporting segments consist of the following, based on the Company’s investments as of June 30, 2019:
•
Domestic office investments (3 investments)
•
Domestic other investments (4 investments)
•
International office investments (4 investments)
•
International other investments (1 investments)
The tables below provide additional information related to each of the Company’s segments, geographic location and a reconciliation to the Company’s net income (loss), as applicable. “Corporate-Level Accounts” includes amounts incurred by the corporate-level entities which are not allocated to any of the reportable segments (all amounts are in thousands, except for percentages):
Three Months Ended June 30,
Six Months Ended June 30,
2019
2018
2019
2018
Total Revenue
Domestic office investments
$
14,650
$
33,033
$
31,492
$
65,696
Domestic other investments
18,604
25,172
37,264
45,275
International office investments
11,972
17,654
23,963
39,163
International other investments
835
9,283
1,575
19,507
Total Revenue
$
46,061
$
85,142
$
94,294
$
169,641
For the three and six months ended June 30, 2019 and 2018 the Company’s total revenue was attributable to the following countries:
For the three and six months ended June 30, 2019 and 2018, the Company’s property revenues in excess of expenses by segment was as follows (in thousands):
Three Months Ended June 30,
Six Months Ended June 30,
2019
2018
2019
2018
Property revenues in excess of expenses (1)
Domestic office investments
$
8,704
$
20,758
$
18,871
$
41,660
Domestic other investments
11,229
16,530
22,632
27,970
International office investments
5,935
10,118
11,533
21,350
International other investments
578
6,346
979
13,617
Property revenues in excess of expenses
$
26,446
$
53,752
$
54,015
$
104,597
(1)
Revenues less property operating expenses, real property taxes and property management fees.
As of June 30, 2019 and December 31, 2018, the Company’s total assets by segment was as follows (in thousands):
June 30, 2019
December 31, 2018
Total Assets
Domestic office investments
$
656,261
$
913,982
Domestic other investments
700,968
715,919
International office investments
663,196
640,319
International other investments
34,636
33,905
Corporate-level accounts
13,967
195,586
Total Assets
$
2,069,028
$
2,499,711
As of June 30, 2019 and December 31, 2018, the Company’s total assets were attributable to the following countries:
For the three and six months ended June 30, 2019 and 2018, the reconciliation of the Company’s total property revenues in excess of expenses to the Company’s net income (loss) is as follows (in thousands):
Three Months Ended June 30,
Six Months Ended June 30,
2019
2018
2019
2018
Reconciliation to property revenues in excess of expenses
Net income (loss)
$
(10,484
)
$
45,436
$
180,926
$
35,254
Depreciation and amortization
12,863
29,426
26,307
63,423
Asset management fees
6,571
8,782
13,351
17,641
General and administrative expenses
1,833
3,073
4,427
5,975
Impairment Losses
7,185
5,105
7,185
5,105
(Gain) loss on derivatives
—
(467
)
126
(818
)
(Gain) loss on sale of real estate investments
1,412
(58,655
)
(190,777
)
(58,674
)
Foreign currency (gains) losses
(618
)
7,141
(1,017
)
8,361
Interest expense
7,860
15,218
15,207
30,217
Other (income) expenses
(95
)
(146
)
(1,365
)
(409
)
(Benefit) provision for income taxes
(81
)
(1,161
)
(355
)
(1,478
)
Total property revenues in excess of expenses
$
26,446
$
53,752
$
54,015
$
104,597
9. SUPPLEMENTAL CASH FLOW DISCLOSURES
Supplemental cash flow disclosures for the six months ended June 30, 2019 and 2018 (in thousands):
Six Months Ended June 30,
2019
2018
Supplemental Disclosure of Cash Flow Information
Cash paid for interest
$
12,964
$
28,585
Cash paid for taxes
$
1,357
$
18,939
Supplemental Schedule of Non-Cash Activities
Distributions declared and unpaid
$
—
$
14,759
Distributions reinvested
$
—
$
44,591
Shares tendered for redemption
$
591
$
9,790
Assumption of mortgage upon disposition of property
In May 2018, Puget Sound Energy renewed its lease for its space in The Summit located in Bellevue, Washington. In connection with this lease, the Company committed to fund $9.7 million of tenant inducements, to be paid in future periods. As of June 30, 2019, $1.9 million of the Company’s commitment remained unfunded and is recorded in accounts payable and accrued expenses in the accompanying Condensed Consolidated Balance Sheet.
In September 2018, WeWork signed a lease for space in The Summit located in Bellevue, Washington. In connection with this lease, the Company committed to fund $14.0 million of tenant inducements, to be paid in future periods. As of June 30, 2019, $4.3 million of the Company’s commitment remained unfunded and is recorded in accounts payable and accrued expenses in the accompanying Condensed Consolidated Balance Sheet.
In December 2018, Amazon signed a lease for space in the new building that is being constructed at The Summit property, which is located in Bellevue, Washington. In connection with this lease, the Company committed to fund $40.7 million of tenant inducements, to be paid in future periods. As of June 30, 2019, $40.7 million of the Company’s commitment remained unfunded and is recorded in accounts payable and accrued expenses in the accompanying Condensed Consolidated Balance Sheet. See “Note 3 — Investment Property” for more information on the building construction project.
The Company may be subject to various legal proceedings and claims that arise in the ordinary course of business. These matters are generally covered by insurance. While the resolution of these matters cannot be predicted with certainty, management believes the final outcome of such matters will not have a material adverse effect on the Company’s condensed consolidated financial statements.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and the notes thereto included in Item 1 in this Quarterly Report on Form 10-Q. The following discussion should also be read in conjunction with our audited consolidated financial statements and the notes thereto and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report on Form 10-K for the year ended December 31, 2018.
This Quarterly Report on Form 10-Q includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Such statements include statements concerning future financial performance and distributions, future debt and financing levels, investment objectives, payments to Hines Global REIT Advisors Limited Partnership (the “Advisor”), and its affiliates and other plans and objectives of management for future operations or economic performance, or assumptions or forecasts related thereto as well as all other statements that are not historical statements. These statements are only predictions. We caution that forward-looking statements are not guarantees. Actual events or our investments and results of operations could differ materially from those expressed or implied in forward-looking statements. Forward-looking statements are typically identified by the use of terms such as “may,” “should,” “expect,” “could,” “intend,” “plan,” “anticipate,” “estimate,” “believe,” “continue,” “predict,” “potential” or the negative of such terms and other comparable terminology.
The forward-looking statements included in this Quarterly Report on Form 10-Q are based on our current expectations, plans, estimates, assumptions and beliefs that involve numerous risks and uncertainties. Assumptions relating to the foregoing involve judgments with respect to, among other things, future economic, competitive and market conditions, the availability of future financing and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond our control. Any of the assumptions underlying forward-looking statements could prove to be inaccurate. To the extent that our assumptions differ from actual results, our ability to meet such forward-looking statements, including our ability to generate positive cash flow from operations, pay additional liquidating distributions to our shareholders and maintain the value of any real estate investments and real estate-related investments in which we may hold an interest, may be significantly hindered.
The following are some of the risks and uncertainties, which could cause actual results to differ materially from those presented in certain forward-looking statements:
—
Whether we will be able to complete the sale of all or substantially all of our assets as expected;
—
Unanticipated difficulties, expenditures or delays relating to our implementation of our Plan of Liquidation and Dissolution (the “Plan of Liquidation”), which may reduce or delay our payment of additional liquidating distributions to our stockholders;
—
Risks associated with the potential response of tenants, business partners and competitors to our adoption and implementation of the Plan of Liquidation;
—
Risks associated with legal proceedings that may be instituted against us and others related to the Plan of Liquidation;
—
Competition for tenants, including competition with affiliates of Hines Interests Limited Partnership (“Hines”);
—
Our reliance on our Advisor, Hines and affiliates of Hines for our day-to-day operations and the management of our real estate investments, and our Advisor’s ability to attract and retain high-quality personnel who can provide service at a level acceptable to us;
—
Risks associated with conflicts of interests that result from our relationship with our Advisor and Hines, as well as conflicts of interests certain of our officers and directors face relating to the positions they hold with other entities;
—
The potential need to fund tenant improvements, lease-up costs or other capital expenditures, as well as increases in property operating expenses and costs of compliance with environmental matters or discovery of previously undetected environmentally hazardous or other undetected adverse conditions at our properties;
—
The amount and timing of additional liquidating distributions we may pay is uncertain and cannot be assured;
—
Risks associated with debt and our ability to secure financing;
—
Risks associated with adverse changes in general economic or local market conditions, including terrorist attacks and other acts of violence, which may affect the markets in which we and our tenants operate;
—
Catastrophic events, such as hurricanes, earthquakes, tornadoes and terrorist attacks; and our ability to secure adequate insurance at reasonable and appropriate rates;
—
The failure of any bank in which we deposit our funds could reduce the amount of cash we have available to fund our operating expenses and other capital expenditures;
—
Changes in governmental, tax, real estate and zoning laws and regulations and the related costs of compliance and increases in our administrative operating expenses, including expenses associated with operating as a public company;
—
International investment risks, including the burden of complying with a wide variety of foreign laws and the uncertainty of such laws, the tax treatment of transaction structures, political and economic instability, foreign currency fluctuations, and inflation and governmental measures to curb inflation may adversely affect our operations and our ability to make distributions;
—
The lack of liquidity associated with our assets;
—
Our ability to continue to qualify as a real estate investment trust (“REIT”) for U.S. federal income tax purposes;
—
Risks related to the United Kingdom's pending exit from the European Union (“Brexit”), including, but not limited to the decline of revenue derived from, and the market value of, our properties located in the United Kingdom and continental Europe; and
—
Our ability to refinance or sell our properties located in the United Kingdom and continental Europe may be impacted by the economic and political uncertainty following the approval of “Brexit” by a majority of votes in the United Kingdom in June 2016 and the subsequent notice of departure sent by the United Kingdom to the European Union in March 2017, commencing the two-year period of negotiations to determine the terms of the United Kingdom’s relationship with the European Union after the exit, including, among other things, the terms of trade between the United Kingdom and the European Union. Without further agreement, the United Kingdom will formally leave the European Union on May 22, 2019.
These risks are more fully discussed in, and all forward-looking statements should be read in light of, all of the factors discussed in “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2018.
You are cautioned not to place undue reliance on any forward-looking statements included in this Quarterly Report on Form 10-Q. All forward-looking statements are made as of the date of this Quarterly Report on Form 10-Q and the risk that actual results will differ materially from the expectations expressed in this Quarterly Report on Form 10-Q may increase with the passage of time. In light of the significant uncertainties inherent in the forward-looking statements included in this Quarterly Report on Form 10-Q, the inclusion of such forward-looking statements should not be regarded as a representation by us or any other person that the objectives and plans set forth in this Quarterly Report on Form 10-Q will be achieved. All subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by reference to these risks and uncertainties. Each forward-looking statement speaks only as of the date of the particular statement, and we do not undertake to update any forward-looking statement.
Executive Summary
Hines Global REIT, Inc. (“Hines Global” and, together with its consolidated subsidiaries, “we”, “us” or the “Company”) was incorporated under the Maryland General Corporation Law on December 10, 2008, primarily for the purpose of investing in a diversified portfolio of quality commercial real estate properties and other real estate investments located throughout the United States and internationally. Hines Global raised the equity capital for its real estate investments through two public offerings from August 2009 through April 2014, and through its distribution reinvestment plan (the “DRP Offering”) from April through August 2018. Collectively, through its public offerings, Hines Global raised gross offering proceeds of approximately $3.1 billion, including the DRP Offering, all of which was invested in the Company’s real estate portfolio.
We invested the proceeds from our public offerings into a diverse portfolio of real estate investments. In recent years, we have concentrated our efforts on actively managing our assets and exploring a variety of strategic opportunities focused on enhancing the composition of our portfolio and its total return potential for its stockholders. On April 23, 2018, in connection with its review of potential strategic alternatives available to the Company, our board of directors determined that it is in the best interest of the Company and its stockholders to sell all or substantially all of our properties and assets and for the Company to liquidate and dissolve pursuant to the Plan of Liquidation. The principal purpose of the liquidation is to provide liquidity to our stockholders by selling the Company’s assets, paying its debts and distributing the net proceeds from liquidation to our stockholders. As required by Maryland law and our charter, the Plan of Liquidation was approved by the affirmative vote of the holders of at least a majority of the shares of our common stock outstanding and entitled to vote thereon at the Company’s annual meeting of stockholders held on July 17, 2018.
In April 2018, our board of directors estimated that, in addition to regular operating distributions paid to our stockholders, if we are able to successfully implement the Plan of Liquidation, then after the sale of all or substantially all of our assets and the payment of all of our outstanding liabilities, we will have made total Return of Capital Distributions to our stockholders of approximately $10.00 to $11.00 per share of the our common stock, consisting of three components: (i) the $1.05 per share Special Distribution paid to stockholders in January 2018 (the “Special Distribution”); (ii) the $0.12 per share of return of invested capital distributions paid to stockholders for the six months ended June 30, 2018 (the “Return of Invested Capital Distributions”); and (iii) the range of liquidating distributions to be made pursuant to the Plan of Liquidation of $8.83 to $9.83 per share, estimated by our board of directors in April 2018, and we have made liquidating distributions of approximately $2.83 per share to date.
From January 2018 through February 2019, we paid Return of Capital Distributions totaling approximately $4.00 per share, consisting of the $1.05 per share Special Distribution, the $0.12 per share Return of Invested Capital Distributions, $0.33 per share monthly liquidating distributions paid between August 2018 and January 2019, and the $2.50 per share liquidating distribution paid in February 2019. We expect to make the final liquidating distribution on or before a date that is within 24 months after stockholder approval of the Plan of Liquidation. However, there can be no assurances regarding the timing or amounts of any further liquidating distributions or that we will make the final distribution on or before July 17, 2020. In addition, even if we sell all of our assets by July 17, 2020, we may determine not to distribute all distributable cash by that date and may establish a reserve to provide for any remaining obligations and to cover our expenses as we complete our wind down and dissolution.
At the peak of our acquisition phase, we owned interests in 45 properties. We sold interests in six properties for an aggregate sales price of $1.0 billion during 2017, 20 properties for an aggregate sales price of $1.7 billion during 2018 and two additional properties in the first quarter of 2019 for an aggregate sales price of $477.8 million. As of June 30, 2019, we owned 12 properties in our portfolio that include the following investments:
Our portfolio is comprised of approximately 68% domestic and 32% international investments and our current investment types encompass approximately 60% office, 39% retail, and 1% industrial based on the estimated values of our investments as of June 30, 2019, which were based on the appraised values of our real estate investments as of December 31, 2018.
The following table provides additional information regarding each of the properties in which we owned an interest as of June 30, 2019.
Property
Location
Investment Type
Date Acquired/ Net Purchase Price (in millions)(1)