Hines REIT Reprices
Hines Real Estate Investment Trust, Inc. filed an 8-K yesterday announcing that it has valued its shares, as of March 31, 2011, at a price of $7.78 per share.   The valuations were determined using the following:

The estimate of the per-share value was made with consideration primarily of (1) valuations of the Company’s  real estate investments, including estimates of value which were determined by the Company’s management and independent third parties using methodologies that are commonly used in the commercial real estate industry (including discounted cash flow analyses and reviews of current, historical and projected capitalization rates for properties comparable to those owned by the Company); (2) valuations of notes payable, which were determined by an independent third party; and (3) the estimated values of other assets and liabilities which were determined by management, as of March 31, 2011.  In addition, the Company engaged an independent third party to review management’s market value estimates as of March 31, 2011 for selected assets that represented a substantial portion of the Company's property portfolio, and such third party has opined that management’s market value estimates are fair and reasonable.  Finally, the Board also considered the historical and anticipated results of operations of the Company, liquidity requirements and overall financial condition, the current and anticipated distribution payments, the current and anticipated capital and debt structure, and management’s and the Advisor’s recommendations and assessment of the Company’s prospects and expected execution of the Company’s operating strategies.

In other words, they wrote some potential values on Post-Its, stuck them to a wall and threw a dart.  Joking aside, you should read this post from the Snyder Kearney blog on non-traded REIT valuations. 

Hines Advisors, LP, Hines REIT's external advisor, agreed to reduce its annual asset management fee from .75% to .50%, for the six-month period July 1, 2011 to December 31, 2011.  In other words, investors get a permenant impairment to value while management gets a temporary financial rebuke.