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(Mark One)
x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended March 31, 2010
or
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from to

Maryland	26-3999995
(State or Other Jurisdiction of	(I.R.S. Employer
Incorporation or Organization)	Identification No.)
2800 Post Oak Boulevard
Suite 5000
Houston, Texas	77056-6118
(Address of principal executive offices)	(Zip code)

Large accelerated filer   o

Accelerated Filer   o

Non-accelerated Filer   ý

Smaller Reporting Company   o

 

PART I – FINANCIAL INFORMATION
Item 1.	Condensed Consolidated Financial Statements (Unaudited)
	Condensed Consolidated Balance Sheets			2
	Condensed Consolidated Statements of Operations			3
	Condensed Consolidated Statements of Equity			4
	Condensed Consolidated Statements of Cash Flows			5
	Notes to the Condensed Consolidated Financial Statements			6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations			10
Item 3.	Quantitative and Qualitative Disclosures About Market Risk			14
Item 4T.	Controls and Procedures			14
PART II – OTHER INFORMATION
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds			15
Item 6.	Exhibits			15
SIGNATURES
Certification
Certification
Certification of CEO & CFO pursuant to Section 906

		March 31, 2010				December 31, 2009
ASSETS
Cash and cash equivalents		$	71,467,563			$	28,167,703
Escrowed investor proceeds			60,000				—
Other receivables			739,218				312,880
Deposits on investment property			5,000,000				—
Other assets			70,000				—
Total Assets		$	77,336,781			$	28,480,583
LIABILITIES AND EQUITY
Liabilities:
Accounts payable and accrued expenses		$	208,968			$	52,992
Due to affiliates			972,411				2,526,723
Distributions payable			479,413				260,091
Escrowed investor proceeds liability			60,000				—
Total liabilities			1,720,792				2,839,806
Commitments and contingencies
Equity:
Stockholders’ equity:
Preferred shares, $.001 par value; 500,000,000 preferred shares authorized, none issued or outstanding as of  March 31, 2010 and December 31, 2009			—				—
Common stock, $.001 par value; 1,500,000,000 shares authorized, 9,034,580 and 3,276,376 issued and outstanding as of March 31, 2010 and December 31, 2009, respectively			9,035				3,276
Additional paid-in capital			76,378,784				26,012,411
Accumulated deficit			(799,363)				(407,632	)
Total stockholders’ equity			75,588,456				25,608,055
Noncontrolling interest			27,533				32,722
Total equity			75,615,989				25,640,777
Total liabilities and equity		$	77,336,781			$	28,480,583

		2010				2009
Revenue		$	—			$	—
Expenses:
Acquisition related expenses			88,992				—
General and administrative expenses			310,542				—
Total expenses			399,534				—
Loss before other income			(399,534	)			—
Interest income			6,258				—
Net loss			(393,276	)			—
Net loss attributable to noncontrolling interest			1,545				—
Net loss attributable to common stockholders		$	(391,731	)		$	—
Basic and diluted loss per common share:		$	(.07	)		$	—
Weighted average number of common shares outstanding			5,883,833				—

 

		Hines Global REIT, Inc.
		Common Shares				Amount				Additional Paid-in Capital				Accumulated Deficit				Total				Noncontrolling Interest
Balance as of January 1, 2009			—			$	—			$	—			$	—			$	—			$	—
Issuance of common shares			1,111				1				9,999				—				10,000				—
Contributions from noncontrolling interest			—				—				—				—				—				190,000
Balance as of March 31, 2009			1,111			$	1			$	9,999			$	—			$	10,000			$	190,000

Balance as of January 1, 2010			3,276,376			$	3,276			$	26,012,411			$	(407,632	)		$	25,608,055			$	32,722
Issuance of common shares			5,758,204				5,759				57,442,150				—				57,447,909				—
Distributions declared			—				—				(997,163	)			—				(997,163	)			(3,644	)
Selling commissions and dealer manager fees			—				—				(5,593,216	)			—				(5,593,216	)			—
Issuer costs			—				—				(485,398	)			—				(485,398	)			—
Net loss			—				—				—				(391,731	)			(391,731	)			(1,545	)
Balance as of March 31, 2010			9,034,580			$	9,035			$	76,378,784			$	(799,363	)		$	75,588,456			$	27,533

 

		2010				2009
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss		$	(393,276	)		$	—
Adjustments to reconcile net loss to net cash used in operating activities:
Increase in other assets			(70,000	)			—
Increase in other receivables			(743	)			—
Increase in accounts payable and accrued expenses			155,976				—
Decrease in due to affiliates			(85,577	)			—
Net cash used in operating activities			(393,620	)			—
CASH FLOWS FROM INVESTING ACTIVITIES:
Deposits on investment property			(5,000,000	)			—
Net cash used in investing activities			(5,000,000	)			—
CASH FLOWS FROM FINANCING ACTIVITIES:
Escrowed investor proceeds			(60,000	)			—
Escrowed investor proceeds liability			60,000				—
Payments of issuer costs			(1,907,724	)			—
Payment of selling commissions and dealer manager fees			(5,639,627	)			—
Proceeds from issuance of common stock			56,551,260				10,000
Contribution from noncontrolling interest			—				190,000
Distribution to shareholders and noncontrolling interest			(310,429	)			—
Net cash provided by financing activities			48,693,480				200,000
Net change in cash and cash equivalents			43,299,860				200,000
Cash and cash equivalents, beginning of period			28,167,703				—
Cash and cash equivalents, end of period		$	71,467,563			$	200,000

Supplemental schedule of non-cash financing activities
Unpaid selling commissions and dealer manager fees		$	260,405			$	—
Unpaid deferred issuer costs offset against additional paid-in capital		$	628,453			$	—
Distributions declared and unpaid		$	479,413			$	—
Other receivables		$	738,475			$	—
Distributions reinvested		$	471,055			$	—

 

Escrowed Investor Proceeds

Distributions for the Quarter Ended		Shareholder Total Declared			Noncontrolling Interests Total Declared
2010
March 31, 2010		$	997,163		$	3,644
2009
October 20, 2009 - December 31, 2009		$	257,135		$	2,956

 

		Incurred				Unpaid (receivable) as of
Type and Recipient		Three Months Ended March 31, 2010				March 31, 2010			December 31, 2009
Selling Commissions – Dealer Manager		$	4,171,043			$	286,858		$	4,775
Dealer Manager Fee – Dealer Manager		$	1,422,173			$	(26,452	)	$	302,040
Issuer Costs -  the Advisor		$	485,398			$	628,453		$	2,050,779
Other - the Advisor (1)		$	86,995			$	83,552		$	169,129
Due to Affiliates						$	972,411		$	2,526,723

Note: The Company was formed in 2008, but no costs were recorded in its financial statements until the 3rd quarter of 2009.

(1)	Includes amounts the Advisor paid on behalf of the Company such as general and administrative expenses and acquisition related expenses. These amounts are generally reimbursed to the Advisor during the month following the period in which they are incurred.

 

–	We have no prior operating history or established financing sources, and the prior performance of other Hines affiliated entities may not be a good measure of our future results; therefore, there is no assurance we will be able to achieve our investment objectives;

–

Our current offering is a best efforts offering and as such, the risk that we will not be able to accomplish our business objectives and that the poor performance of a single investment will materially adversely affect our overall investment performance, will increase if only a small number of shares are purchased in the offering;

–

Whether we will have the opportunity to invest offering and distribution reinvestment plan proceeds to acquire properties or other investments or whether such proceeds will be needed to redeem shares; and if proceeds are available for investment, our ability to make such investments in a timely manner and at appropriate amounts that provide acceptable returns;

–	Competition for tenants and real estate investment opportunities, 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 selection of 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 availability and timing of distributions we may pay is uncertain and cannot be assured;

–

Our distributions paid to date were paid using proceeds from the Offering and some or all of the distributions we pay in the future may be paid from sources such as cash advances by our Advisor, cash resulting from a waiver or deferral of fees, borrowings and/or proceeds from the offering. When we pay distributions from sources other than our cash flow from operations, we will have less funds available for the acquisition of properties, and your overall return may be reduced;

–	Risks associated with debt;

–	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 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 pay distributions and make additional investments;

–	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; and

–	Our ability to continue to qualify as a real estate investment trust (“REIT”) for federal income tax purposes.

 

On March 5, 2010, we entered into a contract to acquire Hock Plaza, a 12-story office building located in the North Durham submarket of Durham, North Carolina. Hock Plaza consists of 327,160 square feet of rentable area that is 98% leased. The contract purchase price for Hock Plaza is expected to be approximately $98.3 million, exclusive of transaction costs, financing fees and working capital reserves. We expect to fund the acquisition using proceeds from our current public offering and the assumption of an existing $80 million mortgage loan. The mortgage loan matures in December 2015 and has a fixed interest rate of 5.58%. We expect the closing of this acquisition to occur in July 2010, subject to a number of closing conditions. There is no guarantee that this acquisition will be consummated, and, if we elect not to close on the acquisition of Hock Plaza, we may forfeit our $5.0 million earnest money deposits.

Item 4T.    Controls and Procedures

 

The exhibits required by this item are set forth on the Exhibit Index attached hereto.

 

 

 

 

HINES GLOBAL REIT, INC.
May 17, 2010		By:	/s/ CHARLES N. HAZEN
			Charles N. Hazen
			President and Chief Executive Officer
May 17, 2010		By:	/s/ SHERRI W. SCHUGART
			Sherri W. Schugart
			Chief Financial Officer

 

Exhibit No.			Description
	3.1		Articles of Amendment and Restatement of Hines Global REIT, Inc. (filed as Exhibit 3.1 to Amendment No. 3 to the Registration Statement on Form S-11, File No. 333-156742, originally filed on January 15, 2009 (the “Registration Statement”) on August 3, 2009, and incorporated herein by reference).
	3.2		Bylaws of Hines Global REIT, Inc. (filed as Exhibit 3.2 to Amendment No. 1 to the Registration Statement on March 18, 2009 and incorporated herein by reference).
	10.1	*	Purchase and Sale Agreement dated as of March 5, 2010 between Brickman Durham LLC and Hines Global REIT Properties LP
	31.1	*	Certification.
	31.2	*	Certification.
	32.1	*	Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C., Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. Pursuant to SEC Release 34-47551 this Exhibit 32.1 is furnished to the SEC and shall not be deemed to be “filed.”
	99.1	*	First Amendment to Purchase and Sale Agreement dated as of March 22, 2010 between Brickman Durham LLC and Hines Global REIT Properties LP
	99.2	*	Second Amendment to Purchase and Sale Agreement dated as of March 24, 2010 between Brickman Durham LLC and Hines Global REIT Properties LP
	99.3	*	Third Amendment to Purchase and Sale Agreement dated as of March 25, 2010 between Brickman Durham LLC and Hines Global REIT Properties LP
	99.4	*	Fourth Amendment to Purchase and Sale Agreement dated as of March 26, 2010 between Brickman Durham LLC and Hines Global REIT Properties LP
	99.5	*	Fifth Amendment to Purchase and Sale Agreement dated as of April 12, 2010 between Brickman Durham LLC and Hines Global REIT Properties LP
	99.6	*	Sixth Amendment to Purchase and Sale Agreement dated as of April 22, 2010 between Brickman Durham LLC and Hines Global REIT Properties LP

*	Filed herewith