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425 Lexington Avenue
New York, New York
Property type: Office
Hines role: Property manager
Hines REIT has an 11.67% effective ownership
interest in this property; Hines Global REIT does not have an ownership interest in this property.

 

 Large institutional investors favor direct real estate investments*

For decades, institutional investors, such as pension plans, endowments, foundations, etc., have included direct real estate in their investment portfolios. These investors know that allocating a portion of their investments to direct real estate can potentially complement a portfolio of stocks, bonds and cash. In 2009 institutions invested an average of 9.16% of their total portfolios in real estate because it has historically provided:
  • Income
  • Inflation protection
  • Modest appreciation
  • Potential for lower volatility

History of delivering strong income
Rents are paid by tenants. After building and other expenses are paid, remaining cash is passed on to owners and investors and can provide a good source of supplemental income.

Potential for long-term growth
Real estate offers the potential for long-term growth from appreciation of the properties.

Historical inflation hedge
Our economy is not currently in an inflationary cycle, but cycles change. The best time to think about protecting against inflation may be before it returns. Real estate can help hedge against inflation since property values typically rise during inflationary periods. Why? Rents historically have increased during inflationary periods. Also, costs of materials to construct a new property have typically increased with inflation making it more costly to construct new buildings, which has made leasing existing properties more attractive.**

Diversification which offers the potential for lower volatility
Real estate historically doesn't move in the same direction at the same time as stocks and bonds. Real estate is described as having a low correlation to other asset classes, so it might help lower the overall volatility of a portfolio when added to an allocation of stocks, bonds and cash.

 

*Source: 2010 Plan Sponsor Survey by Kingsley Associates and Institutional Real Estate, Inc. Used with permission. Direct real estate signifies direct ownership and/or investment in private commingled funds. Institutions do not typically invest in public non-traded REITs.

**A continued economic slowdown or the development of other negative economic conditions in any of the markets in which we operate may significantly affect occupancy, rental rates and our ability to collect rent from our tenants, as well as cause our property values to decrease.

  



RISK FACTORS:
Real estate investment trust (REIT) securities are offered through Hines Real Estate Investments, Inc., member FINRA/SIPC. There are significant risks associated with an investment in REIT securities, including but not limited to:

  • a REIT may have no prior operating history or established financing sources;
  • distributions are uncertain, a return on your investment is not guaranteed and you may lose money;
  • a REIT may pay distributions from sources other than cash flow from operations, such as cash advances by its Advisor, cash resulting from a waiver of deferral fees, borrowings and/or offering proceeds, which will reduce the funds available for acquisitions and reduce your overall return;
  • there is no assurance that a REIT will achieve its investment objectives;
  • there is no public market for the REIT securities we offer, and these securities lack liquidity;
  • the REITs have only identified a few specific investments to make with the proceeds from their current offerings;
  • the REITs are subject to substantial conflicts of interest, including the payment of substantial fees to Hines Interests Limited Partnership (Hines) and its affiliates;
  • past performance is not an indication of future results;
  • unfavorable economic conditions in the markets in which a REIT operates could adversely affect your investment and
  • REITs that invest internationally are subject to additional international risks.

This material is neither an offer to sell nor the solicitation of an offer to buy any security, which can be made only by the applicable prospectus. For those considering an investment in any of the REIT securities we offer, these materials must be read in conjunction with the applicable prospectus in order to fully understand all the implications and risks of the respective offering of the securities to which it relates. This investment is not suitable for all investors. Please refer to the applicable prospectus for the particular suitability standards in your state.

Neither the Securities and Exchange Commission, the Attorney General of the State of New York nor any other state securities regulator has passed on or endorsed the merits of any offering being offered by Hines Real Estate Investment, Inc. Any representation to the contrary is unlawful.

Not FDIC insured. May lose value. No bank guarantee. The information on this web site was last updated August 2010.

© 2009-2010 Hines Real Estate Investments, Inc. All rights reserved. Hines and the Hines logo are registered trademarks of Hines Interests Limited Partnership. Hines Real Estate Investments, Inc. Member FINRA/SIPC

 

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