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UNITED S T A T E S

SECURITIES AND EXCHANGE COMMISSION

W A S H I N G T O N . D.C. 20549

D I V I S I O N OF

MARKET REGULATION

September 7,2006

Curtis B. Anderson

Baker Botts L.L.P.

2001 Ross Avenue

Dallas, Texas 75201-2980

Re: Hines Real Estate Investment Trust, Inc.

File No. TP 06-10

Dear Mr. Anderson:

We are responding to your letter dated September 7,2006, as supplemented by telephone

conversations with the staff, with regard to your request for exemptive and no-action

relief. To avoid having to recite or summarize the facts set forth in your letter, our

response is attached to the enclosed photocopy of your letter. Unless otherwise noted,

capitalized terms in this letter have the same meaning as in your letter.

As a consequence of the continuous offerings of the Company's shares of common stock,

the Company will be engaged in a distribution of its common stock pursuant to Rule 102

of Regulation M. As a result, bids for or purchases of shares of its common stock or any

reference security by the Company or any affiliated purchaser of the Company are

prohbited during the restricted period specified in Rule 102, unless specifically excepted

by or exempted fkom Rule 102.

On the basis of your representations and the facts presented, but without necessarily

concurring in your analysis, the Commission hereby grants an exemption fkom Rule 102

of Regulation M to permit the Company to redeem shares of its common stock under its

respective Revised Plan while the Company is engaged in a distribution of shares of

common stock. In granting this exemption, we considered the following facts, among

others:

shareholders of the Company must have held the shares of common stock in the

Company for at least one year to participate in the Revised Plan; however, if a

shareholder redeems all of his or her shares, there would be no holding period

requirement for shares purchased pursuant to the Company's dividend reinvestment

plan;

there is no trading market for the Company's common stock and the Company will

terminate its Revised Plan in the event the Company's shares are listed on a national

securities exchange or included for quotation in a national securities market, or that a

Hines Real Estate Investment Trust, Inc.

September 7,2006

Page 2 of 4

secondary market for the Company's common stock develops;

during the Offering, the shares of common stock will be redeemed at a price related

to, and at a fixed discount fi-om, the public offering price of the common stock at the

time of redemption;

during the Offering, the number of shares to be redeemed under the Revised Plan will

not exceed, at any time during any calendar year, 10% of the Company's outstanding

common stock measured as of exactly the same date in the prior calendar year; and

the terms of the Revised Plan will be fully disclosed in the Company's Prospectus as

well as any prospectus used for subsequent offerings. This exemption is subject to

the condition that the Company shall terminate its Revised Plan during the

distribution of its common stock.in the event the Company's shares are listed on a

national securities exchange or included for quotation in a national securities market,

or in the event a secondary market for the Company's common shares develops.

Based upon your opinion that the Redemption Program does not constitute an issuer

tender offer subject to Rule 13e-4, as well as the facts and representations made in

correspondence and conversations with the staff, the Division of Corporation Finance,

without necessarily concurring with the analysis or conclusions set forth in your letter,

will not recommend that the Commission take enforcement action under Rule 13e-4 with

respect to repurchases made under the Redemption Program. In issuing this no-action

position, the Division of Corporation Finance considered the following facts, among

others:

during any calendar year, redemptions under the Revised Plan will not exceed 10% of

the Company's outstanding common stock measured as of exactly the same date in

the prior calendar year;

the terms of the Revised Plan will be fully and timely disclosed to all shareholders in

the Prospectus as well as any prospectus used for subsequent offerings and will be

fully disclosed on the Company's website;

shareholders will receive written notice of any change in the redemption price at least

30 days prior to the change, and in the event the Company is conducting a public

offering, the Prospectus relating to such offering will be supplemented at such time to

disclose the new price;

during the Offering, the shares of common stock will be redeemed under the Revised

Plan at a price related to, and at a discount fi-om, the public offering price of the

common stock at the time of redemption and after the offering the repurchase price

for shares redeemed will not exceed the then-current offering price (if applicable);

Hines Real Estate Investment Trust, Inc.

September 7,2006

Page 3 of 4

purchases will be made on a quarterly basis and will be paid in cash at the same per

share price within three business days following the purchases;

the Company will not engage in activities or widespread solicitation for its shares

under the Revised Plan;

shareholders can tender and withdraw tendered shares at any time prior to the end of

the quarter;

the Company will purchase shares on a pro rata basis at the end of each quarter in the

event the amount of available proceeds is insufficient to satisfy all of the current

repurchase requests;

to date, all of the Company's redemptions have been conducted in conformity with

the terms of the Current Redemption Program as set forth in your June 4,2004 letter

attached to your September 7,2006 letter;

there is no trading market for the Company's common stock;

the Company operates as an open-end investment entity with no pre-established

liquidation date, no other established liquidity event and no set timefkame for the

listing of its shares on an exchange or for quotation; and

The Revised Plan will be terminated if the Company's shares are listed on a national

securities exchange, included for quotation in a national securities market or if a

secondary trading market otherwise develops.

The foregoing exemption and no-action position are based solely on the representations

and the facts presented in your letter dated September 7,2006, as supplemented by

telephone conversations with the Commission staff. The relief is strictly limited to the

application of the rules listed above to this transaction. You should discontinue this

transaction pending further consultations with the staff if any of the facts or

representations set forth in your letter change.

We also direct your attention to the anti-fkaud and anti-manipulation provisions of the

federal securities laws, including Section 14(e), Section 10(b) of the Exchange Act, and

Rule lob-5 thereunder. The participants in this transaction must comply with these and

any other applicable provisions of the federal securities laws. The Divisions of Market

Regulation and Corporation Finance express no view on any other questions that may be

Hines Real Estate Investment Trust, Inc.

September 7,2006

page 4 of 4

raised by the proposed transaction, including but not limited to, the adequacy of

disclosure concerning and the applicability of any other federal or state laws to the

proposed transaction.

For the Commission, by the

Division of Market Regulation,

pursuant to delegated authority,

James A. Brigagliano

Acting Associate Director

Division of Market Regulation

For the Division of Corporation Finance,

Chief

Office of Mergers & Acquisitions

Division of Corporation Finance

09/07/2006 13:52 F A X

2149536503

BAKER B O T T S D A L L A S

BAKER BOlTS

2001 ROSS AVEt\)UE

DA.LAS, TEW

75201.7980

AQSTN

r ~ t+ 1 2 14.953 m o

FAX +1 21d953 6503

www.bakerbohs.mm

HOUSTON

DALW

DUBN

I.IONG KONG

LOPI]DON

I\~.oS~W

NEW YORK

Rule 102(e) of Regulation M

Rule 13e-4 of the Securities and Excl~angeAct of 1934

RWADY

WASHINGTOW

Curlis B. Anderson

September 7,2006

TEL +1 214.953.6900

FAX + I 214.661 .A900

curtis.underson@bakerborts.con,

Office of Trading Practices and Processing

Division of Market Regulation

U.S.Securities and Exchange Commission

100 F Street N.E.

Washington D.C.20549

Attn: James A. Brigagliano

Ofice of Mergers and Acquisitions

Division of Corporation Finiice

U.S.Securities and Exchange Commission

I00 F Strcct N.E.

Washington D.C. 20549

Attn: Brian V. Breheny

Nicholas P. Panos

Re:

Hies Real Estate Investment Trust, Inc./Request for Exemption under Rule

102(e) of Regulation M; Request for Determination under Rule 13e 4

Ladies and Gentlcmm:

We are counsel to Hines Real Estate Investment Trust, Tnc. (the "Company"). The

Company is currently conducting a public offerii~gof up to $2,000,000,000 in common shares at

a price of $10.40 per share, and up to $200,00OY000in common shares issued pursuant to the

Company's dividend reinvestment plan at a price of $9.88 pw share (collectively, the

"Offering"). The Offering i s a continuous offering and is being conducted on a "best efforts"

basis p~usuantto a registration statement decln~edeffective by the Securities and Exchange

Commission (the "Cormnission") on June 19,2006.

The Company has not listed its shares on any securities exchange or the NASDAQ

National Market and the Company has no plans to do so in the future. Accordingly, the

Company considers itself to be an open-end investment entity with no finite date set for

liquidation or a listing o f its shares on an cxchange or market. This open-end structure is aligned

with the Company's overall invcstrnent objective of investing in real estate as a long-term

investment to pay regular cash dividends. Consequently, and as described mnorc fully below, t l ~ e

Company makes a share redemption program available to its shareholders (the ''Current

Redemption Plan") as the primary source of liquidity for their investment. By letter dated June

18,2004 (File No- TP 04-32) (the "Initial SEC Letter"), the Company received:

09/07/2006 13:52 F A X

2149536503

BAKER B O T T S D A L L A S

U.S.Securities and Exchange Commission

Septmber 7,2006

an exemption from Rule 102 of Regulation M from the Co~nmissionto permit the

Company to redeem shares of its common stock under the Current Redemption Plan

while it is engaged in a distribution of shares of common stock; and

a no-action position from the Division of Corporate Finance that it will not

recommend that the Commission take enforcement action under Rule I3e-4 with

respect to repurchases made under the Current Redemption Plan.

A copy ofthe Initial SEC Letter is attached to this letter.

On June 16, 2006, tlle Company completed its initial public offering of common shares

(the "Initial Offering"). Like the Offering, the Initial Offwing was a continuous, best efforts

offering. The Current Redemption Plan provides that fox five years after the lnitial Offering, the

number of shares redeemed by the Company under the plan during any calendar year will not

exceed the lesser of (i)the number of Shares that could be redeemed by the net proceeds

received undet the Company's dividend reinvestment plan (described in the Initial SEC Letter)

during the prior calendar yew, or (ii) 5% of the number of the Company's outstanding shares of

common stock as of the pritx calendar year end. Beginning five years after the termination of

the Initial Offering (or June 201 I), the limitation would change so that the Company could

redeem during any calendar year up to 10% of the number of the Company's outstanding shares

of common stock as of the prior calendar year end. The Company now proposes to revise the

Current Redemption Plan to allow it to redeem during any calendar year up to 10% of the

number of the Company's outstanding shares of common stock on December 3 1 of the prior year

(the "10% Limit"). The limit on redemptions contained in the Current Redemption Plan would

remain in place for redemptions occurring during 2006- The 10% Limit would apply to

redemptions occurring after January 1,2007.

In connection with the lnitial SEC Letter, the Company did not request that the

Commission take any position, or grant any relief, under Rule 13e-4 in regard to the Current

Redemption Plan at any time during which the number of sl~aresthat could be redeemed under

the plan could exceed 5% of the number of shares of outstanding common stock of the Company

as of the prior calendar ycal- end. At any time the number of shares that could be redeemed

under the Current Redemption Plan could exceed the 5% Iimitati~ndcs~ribedabove, the

Company undertook to file a tender offer statanent as required by Rule 13e-4 unlcss the

Division of Corporation Finance at that time either (i) agreed to not recommend that the

Commission take enforcement action under Rule 13e4 with respect to repurchases under the

plan under such circumstances, or (ii) exempted such repurchases, either unconditionally or on

specified t m s and conditions, as not constituting n fraudulent, deceptive or manipulative act or

practice comprehended with the purpose of Rule 13e-4. The exemption granted from Rule 102

of Regulation M under the Initial SEC Letter allowed the increase to 10% of outstanding shares

five yean after the termination of the Initial Offering.

On behalf of the Comj,any, we request that the:

09/07)2006

1 3 : 5 2 FAX

2149536503

BAKER BOTTS DALLAS

U.S. Securities and Exchange Commission

Scpttmber 7,2006

Division of Market Regulation grant the Company an exemption from the

prohibitions of Rule 1021a) of Rep2ation M with respect to redemptions by the

Company of shares of its common stock wa1derits proposed revised stock rede~nption

plan in accordance with the terms detailed below (the "Revised Plan"), under the

authority providcd in Rule 102(e) of Regulation M; and

Division of Corporation Finance gant the Company a no-action position that it will

not recommend tkilt the Commission take enforcement action under Rule 13e-4 with

respect to repurcl~asesmade under the Revised Plan.

The Company

The Company was incorporated in Maryland in August 2003 and cunrently owns real

estate investments. Thc Company files periodic reports with the Commission as required by

Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange

Act"). As mentioned, the Company' Initial Offering was completed on June 16, 2006 and the

Company is currently conducting the Offering, which is a continuous public offering currently

scheduled to terminate in June 2008. The Company expects to conduct follow-on continuous

public offerings themrenfter. 'fie Company also has a dividend reinvestment plan to facilitate the

reinvestment of dividmds by the Company's shareholders. The tenns o f thc Company's dividmd

reinvestment plan are more fully described in the Initial SEC Letter and the prospectus included

in the Company's registration statement filed in connection with the Offering, as the same may

be supplemented or amended from time KOtime (the "Prospectus").

Shares of the Company's common stock are neither listed an any securities exchange or

the NASDAQ National Market nor, to the Company's knowledge, the subject of bona fide

quotes on any inter dealcr cluotation syatm or electronic wrnmunicatinns network. The

Company currently docs nut intend to list its shares on any such exchange, market or system.

Further, the Company does not expect that its sllares will trade on any established market. The

Company is not required to list its common shares or liquidate its assets and distribute the

proceeds of such liquidatian to shareholders at or before ally future date. The Current

Rede~nptionPlan was created solely to provide sharel~oldersof the Company with an entity

through which, after having held shares and been at risk for at least one ycar, they can liquidate

all or a portion oftheir investment in the Company's common stock, in light of the fact that there

is no secondary trnding market for the shares and the Company does not antidpate that a

secondary trading market will develop.

The Current Redemption Plan currently provides that beginning five years after the

tenrlination of the Initial Offering, the limitation on the number of shams that could be redcemed

during any calendar year w0111d change to 20% of shares outstanding as of the most recent year

end. The Company proposes to revise thc Current Redemption Plan to includc the 10% Limit for

redemptions after J-mary 1, 2007 and provide that if a shareholder redeems all of his or her

shares, acre would be no holding period requirement for shares purchased pursuant to fhe

Company's dividend reinvestment plan (the "DRP Shares Change"). Other than the limitation

09/07/2006

13:53 F A X

2149536503

B A K E R B O T T S DALLAS

U .S. Securities and Exchange Commission

September 7,2006.

on the number of shares that can be redeemed during any calendar year, the other principal terms

of the plan will remain unck~angedand are described in the Prospectus.

To datc, the Company has opwited the Current Redemption Plm in accordance with our

no action request letter dated June 4, 2004 ns wcll as the corresponding reIief granted by the SEC

in the Initial SEC Letter- During 2005, thc Company redeemed a total of 20,993 shares, which

was approximately 0.53% of the number of shares outstanding on December 3 1, 2004. As of

August 14,2006, the Company had redeemed 151,921 shares, which is approximately 0.66% of

shares outstanding on December 3 1,2005.

The Company is unique among non-traded REITs as it is an open-end entity, with no preestablished liquidation date, no timc&me for the listing of its shares on an exchange or no other

established liquidity event. The Company is not aware of any other non-traded REIT with a

similar strucnue. Unlike other non-iradcd REITs, without an effective redemption program,

shareholders in the Company would generally be required to hoId their shares for an indefinite

time period. A key characteristic of an investment in the Company's shares is the Company's

share redemption pz;ogrm, which the Company expects will serve as the shareholders' sole

meaningful sourcc of liquidity absent a currently unforeseen alternative. The Company believes

that the current limit is too restrictive for an entity with no established liquidity event and,

accordingly, may not allow the redemption program to provide a sufficient ability for investors

to liquidate their investments at a time the investor believes is appropriate based on his or hcr

circumstances.

As disclosed in the Company's initial prospectus, the Company has always intended to

offer n lirnit based on 10% of outstanding sl~areson the terms noted in the Initial SEC Letter.

The Conlpany ariginally felt that it neded five years of growth after its initial offering before

implementing a 10% limit. Wowcver, the Company now feels that it is appropriate to accelerate

this limit for the following reasons:

Investors new1 assurances at the time they are considering an investment in an

open-end investment entity such as the Company that there is a sufficient'rneans

of exiting the iiwestment at the appropriate time should they so choose.

As discussed below, thc limit is diluted during the year in which it applies as long

ns thc Company conducts a continuous public offering during such ycar. This

dilution is most significant in the early years of the Company's existence.

Because of this expected significant dilution in early years, and based on the

success of the Company's offerings to date and the Company's expectations over

the next sevenll years, the Company decided that it does not need the initial five

year period after its first offering before increasing the limit.

The Coinpany now believes that there i s ao business reason to delay impIementing the

10% Limit. As the Company has no set liquidation or listing date, the Company believes that it

should provide investors with this expectation now when investors are making their investment

decision to acquire shares in the Company. The Company believes the Revised Plan is beneficial

09/07/2006

13:53 FAX

2149536503

BAKER BOTTS D A L L A S

U.S.Securities and Exchange Commission

September 7,2006

for its shareholders and is seeking to voluntarily adopt the Revised Plan. The Company's

primaty business purpose for seeking to adopt the Revised Plan i s that it believes potential

investors may react favorably to a more ineaniilgful share redemption plan, which could result in

increased investments in tlre Company. Ti~creascdinvestments should allow the Company to

acquire a larger and more diversified portfolio of real estate investments.

The Current Redemption Plan may be revised upon approval of such revision by

Company's board of directors and providing shareholders with 30 days written notice of the

revision. Approval of the Revised Plan would not require any revisions to the Company's

Articles of Incorporation or Bylaws, and would not violate the NASAA Statement of Policy

Regarding Real Estate Investment Trusts or applicable state law.

The Company's sponsor is a real estate acquisition and development firm which has

historically raised capital ftom institutional investors. The Company's sponsor has also

sponsored open-end, non-public b d s for U.S.and foreign pension plans and other institutional

investors as a long-term investment. The redemption rights enjoyed by partners in these funds

are typically limited by an annual 10% limitation similar to the 10% Limit, which limit the

Company's sponsor believes is market for institutional md other sophisticated investors

investing in a private, institutional open-end, illiquid hvestment entity. The Company would

like to offer individual investors investing in the Company redemption rights similar to those

enjoyed by institutional investors in similar investment entities.

Additionally, the Company believes that hlfilling redemptions under the redemption

program should not result in a negative financial impact on the Company and the sharehotders

who are not seeking redmlptions. In this regard, the Company believes that 10% is an

appropriate limit and, as mentioned above, the Company also bclieves that the institutional

investor market has eonfrrmed that the 10% Limit is appropriate for-balancing the interests of

both redeeming investors and non-redeeming investors.

This is especially true during the first several years of the Company's existence. The

Company expects to continuously raise capital through public offerings. Therefore, in early

years, the limit should be "diluted" significantly during the folIowing year ns a result of

continuous fwd raising. For example, 10% of the Company's outstanding shares on Dccember

31, 2005 represented approximately 2,300,000 sharcs. As of July 31, 2006, 2,300,000 shares

represented approximately only 4.2% uf outstanding shares and this percentage will continue to

decrease tl-iroughout the remainder of 2006 as the Company cxpects to be conducting an offering

during the entire period. Because the Company expects to be conducting a continuous public

offering for the foreseeable future, and because the limit is sct at the beginning of the year, the

limit on the number of Shares that could be redeemed at the end of any particular quarter should

be lower than 10% of thc number of Shares outstanding as of the date of redemption, as shown

above. Over time, the dilution of the limit as a percentage of outstanding shares when

rcdernptions actually occur would Iikely be less pronounced, but still exist as long as the

Company is conducting contil~uouspublic offerings.

0 9 / 0 7 / 2 0 0 6 13:54 F A X

2149536503

BAKER B O T T S D A L L A S

U.S. Securities and Exchange Commission

September 7,2006

The Company is aware that for more established non-traded REITs, a form of secondary

market has developed. These markets are very small and inefficient. Additionally, "mini-tender

offers" by third parties arc also made avaiIable to shareholders in non-traded REXTs. These

markets and offers havc to date generally resulted in purchase prices that arc typically at a

substantial discount to prices offered in redemption programs made availableby such companies.

The Company believes this is fisther evidence that sufficient liquidity options may not always

exist for such shareholders and shareholders often suffzr financially as a result. The Company

also notes that commentato~shave highlighted the lack of liquidity as a primary disadvantage of

investing in non-traded REITs. Commentators note this disadvantage even though these nontraded RETTs are closed-end entities (with set liquidity dates) and offer redemptioil progams,

which to the Company's knowledge we all currently subject to the limitations on rcdmptions

similar to those contained in the Current Redemption Program. The Company views this

criticism by commentators ELS an affirmation of its belief that many consider current redemption

programs as being potentially inadequate to provide a liquidity option, especiaIly for an entity

which is an open-end entity.

Discussion

Regulation M

Rule 102(a) of Regulation M, which. is intended to preclude manipulative conduct by

those with an interest in the outcome of a distribution, prohibits issuers and those affiliated with

issuers, among others, fiom bidding for, purchasing or attempting to induce another to bid for or

purchase, a security that is the subject of a then-current distribution. Rule 102(e) of Regulation

M authorizes the Commission to exempt fiom the provisions of Rule 102 any transaction or

series of transactions, eithcr :runconditionallyor subject to specified terms and conditions.

The Company respectfully requests that the Division of Market Regulation grant to the

Company an exemption undor Rule 102(e) to pennit it to effect redemptions under the Revised

Plan. In the Initial SEC Lctter, the exemption for the Current Redemption Plan aIlowed for the

proposed change on a calendar year basis to the Revised Plan five years after the termination of

the Initial Offering. The Company believes that accelerating the implementation of this limit

does not impact the analysis supporting the exemption grantcd in the Initial SEC Letter. Other

~hanthe DRP Shares Changc:, the other principal tenns of the plan will r~mainut~chnngcdand

are described in the Prospectus.

In particular, we note that the Revised Plan will be identical to the Current Redemption

Plan in that:

Shareholders of the Company must have held the shares of common stock to be

rcdeemed for a least one year prior to participating in the Revised Plan, except as

contemplated by the DRP Shares ~ 1 - i n n ~ e . l

W e note that the Division of Markct Regulalion has granted relief similar to that requested by this lectcr for share

redemption plans containing t e r m s idenlical to rhe DRY Share Change. Please see Wells Real Estate Invesbent

09/07/2006 13:54 F A X

2149536503

BAKER B U T T S D A L L A S

U.S. Securities and Exchange C o v i s s i o n

September 7,2006

There is no trading market for the Company's common stock.

The Revised Plan will be terminated in the event the Company's shares are listed on a

national securities exchange or included for quotation in a national securities market,

or in the event n secondarymnrkct for the Company's common shares develops.

During the Offering, the shares of common stock will be redeemed under the Revised

Plan at a price related to, and at a fixed discount from, the public offering price of the

common stock at the time of redemption.

The terms of the Revised Plan will be filly disclosed in a supplement to the

Prospectus.

Redemptions will not be solicited by the Company and wilI not be made with the purpose

of trading in, and should not have the cffect of manipulating or raising the offeringprice of, the

Company's common stock. Although shareholders of the Company are made aware of the

availability of the redemption plan at the time they purchase their shares, by means of a

descriptiou in the Prospectus, and will be informed in writing of any changes to the plan, the

Company will not affirmatively solicit participation by its shareholders in the Revised Plan. To

the contrary, thc Company expects that it will generally prefa that shareholders not participate in

the Revised Plan to allow the Company to use available cash f ~ other

purposes. Shareholders

desiring to present all or a portion of fheir shares for redemption will do so of their own volition

and not at the behest, invitation or encouragement of the Company, The role of the Company in

cffectuatirrg redemptions under the Revised Plan will be ministerial and will me-rely facilitate the

shareholders' exit *om their investment with the Company.

As with the Current Rede~nptionPlan, allowing the Company to effect redemptions under

the Revised Plntl during an offering should not increase the potential for manipulation of the

Company's stock price because the redemption price under the Revised Plau will be fixed as

determined by the board of directors of the Company. Shares redeemed by the Company will

become authorized but unissued shares and will not be resold to the public unless they are first

registered with the Comlnission under the Securities Act of 1933 and under appropriate state

securities laws or otherwise sold in compliance with such laws. The Revised Plan will be

tminatcd in the event the Company's shares are listed on a notional securities cxchange or

included for quotation in a national securities market, or in the event a secondary market for thc

Company's common shares dcvdops.

For the foregoing reasons, the Company believes that, as with the Current Redemption

Plan, there is a very low (iF any) risk that the market will be manipulated, conditioned or

stirtiulated by redemptions under its Revised Plan. Therefore, we respectfully request that the

Division of Market Regulation, pursuant to the authority delegated to it by the Commission and

under the authority provided in Rule 102(e), @ant the Company an exemption from the

Taust n, lnc. (December 9, 2003): Paladin Realty Income Properti-,

Harvard REIT et. el (October 26,2004).

hc. (October 14, 2004); and Behringer

09/07/2006 13:54 F A X

2149536503

B A K E R B O T T S DALLAS

U.S.Securities and Exchaqge Co~nmissivn

Septmber 7,2006

prohibitions of Rule 102(a) of Regulation M for redemptions under the Revised Plan, as

proposed, during the coursc of an offering. The Company believes that the relief it requests in

fhis letter is consistent with the relief granted by the Divisioil of Ma~ketRegu1ation in thc Jnitial

SEC Lcttm, as well as thc letters previously noted in the Initial SEC ~ e t t e r . ~

Rule 13e-d -Issuer Tender Offer Definition

Pursuant to Rule I3e-4 under the Exchange Act, an issuer with equity securities

registered under Section 12 of the Exchange Act or that is required to file periodic reports with

the Commission pursuant to Section 15(d) is required, in connection with any tender offer for its

own equity securities, to make certain disclosures and comply wit11 other procedures with respect

to such offers. The provisions of Rule 1304 are intendcd to prevent fraudulent, deceptive or

manipulative acts in connection with issuer tender offcrs.

The Company believes that redemptions under the Revised Plan do not constitute issuer

tender offers within the meaniry: of Rule 13e4. In SEC v. Carter Hawley Hale Stores,inc., 760

F2nd 945,950 (9th Cir. 2985), the court applied an eight-prong test asserted by the Commission

when determining whether purchases of shares constituted a "tender offor' for purposes of Rule

13e-4.~Set forth below is an application of this test to the Revised Plm.

Active and widespread solicitation qfpublic shareholdersfur the shares of

an issuer: The Revised Plan will be described in the Prospectus and any communications

(i)

to shareholders identifying changes to the plan. However, the Company will nat engage

in an active and widespread solicitation for its shares. Rather, the Company believes that

this disclosure is required by the Securities Act of 1933 and is provided to make

shareholders aware of the plan's existence. The Company will not make any othcr

significant public comrnunicntions about the Revised Plan except as contained in or

related to the Prospectus (or a future prospcctus), offering materials used in connection

with the Offering or a future offering, required communications in reports filed under thc

Exchange Act and colnmunications required by the plan itself. Publicity of a repurchase

program alone does nut result in active and widespread soli~itation.~Importantly,

bccause of the one-year holding period requirement, public statements made in

connection with a shnrehoIder's initial investment should not be considered a

- -

1n addition Lo the lecters refermccd in rhc Tnitinl SEC Letter, we nole the following letters recenrly issued by the

Division of Market Regulation dlar are also consistent with the relief requested: Orange Hospitality, Inc.

(Septcmher9,2004); PaIadin Rcalty Income Properties, Inc. (Octobcr 14,2004); and Behringer Harvard WIT et. a1

(Ocwber 26, 2004). See the letters identified in footnote 1 of this letter where rhc Division of Market Regulation

granted relicf consistent wirh the relief requested by shiv letter for share redemption plans containing the DRP Shares

Change.

The3c factors arc generally atvibbtable to Wellman v. Dickinsorr, 475 F.Supp. 1248 (C.D.Ca1. 1984). Only the

First seven factors were discussed in Wellman; I~owcv~r,

the eighth fiior was mentioned.

Sce, for cxample, Carcer Hawlejl, 760 F.2d at 950 wherc the court held h a t "publicity surrounding [the issuer's]

repurchase program" did not "result h a so~icitauon"where the "only public announcements by [the ismer] were

those mandated by the SEC or Exchange rula." As the Company's publicity of its redemption plan relates to

materials revicwed by the Commission and used in connection with public offerings, we believe this position

likewise applies to the Revised Plan.

09/07/2006 13:55 F A X

2149536503

BAKER B O T T S D A L L A S

U,S.Securities and Exchange Commission

September 7,2006

"solicitation" as the shareholder cannot participate in Rcvised Plan for one year after

receiving the materials (except as contemplated by the DRP S11ares Change). Thereafter,

shareholders desiring to present all or a portion of their sharcs for redemption will do so

of their own volition and not at the behest, invitation or encouragement of the Company.

The role of the Co~npanyin effectuating redemptions under the Revised Plan wilI be

ministerial and will merely facilitate the shareholder's full or partial exit fiom its

investment in the Company.

The solicitation is made fir a substantial percentage ofthe issuer's stock.

(ii)

The Curter Hbwley case noted that this factor is often addressed by the first (focusing on

whether a “solicitation" occurs) and the eighth (the amou~~t

of shares accumulated and

whether the accumulation was "rapid") factors. As noted in our discussion of these two

factors, wc believe both factors clearly tip the balance toward repurchases undcr the

Revised Plan not being characterized as an issuer tender offcr. Other than the "five per

centurn" threshold contained in Section 14(d)(1) of the Exchange Act, we are not aware

of any authority defining what constitutes a "substantial percentage" of an issuer's stock.

The Company intends to continuously raise capital through continuous public offerings

and invest the net proceeds tl~erefiomin real estate assets. As noted above, because the

10% Limit for any particular year is established on January 1 of the applicable year and

the Company expects to be raising capital during the ycar as it fiIfills requests for

redemptions, the Company believes that it is likely that the 10% Limit will be diluted if

measured against outstanding shares as of each quarterIy redemption date. We note that

one court has held that a one-time repurchase of 9.9% outstanding shares was not a

substantial percentage of the issuer's stack bccause it was acquired fiom a "very small

percentage7' uf stockholders. Other courts have held that, a1though a substantial

percentage of outvtmding shares wcre purchased (as high as 57% of outstanding shares in

one case) the solicitations were not deemed to be tender offers based on the other

T he Company does not believe that the 10% Limit for any particular calei~dar

f'd~tors.~

ycar, which the Company expects will bc diluted to some extent by new issuances during

the year, would constitute a substa~~tial

percentage of its stock over such pcriod.

However, even if it was determined that the 10% Limit did constitute a substantial

percentage for any particular year, authority clearly exists for dcerning the Revised Plan

to not be a tender offer bassd on the findings of courts involving substantially higher

percentages, as well as the Carter Hawley focus on the first and eighth factors when

analyzing the second factor.

Pin v. Tes:om,793 F.Zd 1448, 1454 (5th Cir. 1986).

bCarter Hawley, the repurchase plan resulled 111 the acquisirion of ovcr 50% of outsranding shares and yet the

plan did not consritute a tcnder offer under Rule 13c-4. See also Astronicr Cvrporation v. Protective Closure-YCo.,

Tnc., 561 F. Supp. 329, 335-336 (W.D.N.Y. 1983) (invoIving thc solicitation of 57% of outstanding share&);

Frunscm Ltd, rl. Edper Equiries Lid, 477 P.Supp. 773, 792 (S.D.N.Y. 1979) (involving the solicitation of 45% of

otlcstanding shares); and Strornfild v. Greaf Aflanric & Paci/ic Tea Company, Inc., 484 F-Supp. 1264 (S.D.N.Y)

(involving 42%o f outstanding shares). In these cases, the appliceble court noted that the substantial percentage rcst

was met but h a t this factor was not deremnina~ivc. In each case, other fwroru weighed (and ultimately tipped the

balance) against tcnder offer characlcrization.

09/07/2006 13:55 F A X

2149536503

BAKER B D T T S D A L L A S

U.S. Securities and Exchange Commission

September 7,2006

(iii) That the ofer to purchase is made at n promiurn over the prevailing

market price. No premimn will be paid by the Company for thc shares redeemed over

the prevailing market price. Further, the shares will always be redeemed at a discount

fiom the Company's then-current offering price (if applicable). There is no established

regular trading market for the Company's cormnon stock. The Revised Plan will be

terminated in the event the Company's shares are listed on a national securities exchauge

or included for quotation in a national securities market.

(iv) The terns of the o#er arc?firm, rather thun negotiabb. The terms of the

Revised Plan are fin.

The offer is contingent on the tender of a ,lined nurnbr of shares. The

(v)

Revised Plan is not contingent on the tender of a fixed number of shares-

(vi) The ofleer is operr on& for a limited p c k d of' time. The Revised Plan is

open for nn indefinite period, subject to limitations required by the 10% Limit. The risk

of manipulation and pressure to seIl associated with tender of* subject to limited time

fi-amesate not present in the Revised Plan.

(vii) The o ~ f i r e eis subjected ro pressure to sell. As noted above, the Company

will tlot encourage, invite, solicit or in any way prcssure shareholders to participate in the

Revised Plan. The role o f the Company in effectuating redemptions under the Revised

Plan will be purely ministerial. The Company acknowledges that some fatures of the

Revised Plan may to a limited extent encourage or pressure a shareholder to tender shares

at a particular time. Shareholders must tender shares prior to the end of a calendar

quarter in order for the tender to be made for such quarter. AdditionaIly, tllc 10% Limit

could be dmmd to pressurc shareholders to tender sharcs carly in a year as once the 'I0%

Limit is met redempiion q u e s t s may be reduced (for requests received in the quarter

during which the 10% Limit is met) or prohibited (for requests receivcd in any quarter

after the 10% Limit has been met). We do not believe that these pressures are the types

of pressures placcd on offerees in a tender offer as contentplated by this test or fm which

the Williams Act was intended to address. As noted, the ieatures of the Revised Plan are

first disclosed to shareholders whcn they make their initial decision to invest in the

Company, rather than at the time of their decision to participate in the redemption plan.

The one-ycar holding period that follows the introduction of the redemption plan to

shnreholders likewise alleviates the dangers associated with the "pressures to sell" for

which the Williams Act is intended to address. As such, shareholders are thmeforc not

presented with a "near" investment decision at the time they bocolne eligible to redeem

their shares under the plan. Additionally, the pressures inherent in the plan noted above

exist regardless of whcther the limit on redemptions is set at 5% or 10% of shares

outstanding as of the prior year-end. In fact, by increasing the chances that the

redemption offa will not be fully subscrlbcd, an increase of the limit to the 10% Limit

actually decreases these pressures.

09/07/2006 13:56 F A X

2149536503

BAKER BOTTS DALLAS

U.S. Securities and Exchange Commission

September 7,2006

(viii) A prcblic announcement of an acquisition pvogrum prior lo the

accumulation af stock by a purchaser. followed by rapid accumulation of a large amount

ofsecurities. The Company will describe the Revised Plan in the Prospectus and related

offering materials, in registration shtments and oflieringmaterials for future offerings (if

any), and when rcquired in filings made pursuant to the Exchange Act. The Company

will provide written notice to its shareholders, as required by the Revised Plan, describing

any change to or termination of the plan. The Company will not afbativeIy solicit or

encourage participation in the Revised PIan. A shareholder cannot act upon its initial

receipt of these public statements as a result of the one-year holding period requirement.

Likewise, the oneyear holding period prevented a "rapid accumulation" of any amount

of the Company's securities by the Company nftcr the Company's initial public

announcement of the

This requirement removes any opportunity for a public

announcement "followed by rapid accumulation." To the contray, the Rwised Plan

provides for slow, mechanical redemptions. The Company believes that the Revised Plan

is not characteristic of a publicly-announced acquisition program which is followed by a

rapid accumulation of a large amount of shares.

The Company believes that the only factor of this eight-factor test that suggests the

Revised Plan should be considered to be an issucr tender offer is factor (iv), the fact that the

tmns of the plan are firm. The Wellman cnurt rejected a repurchase program where only "two of

the eight indicia" were prescntS and another court rejected purchases where only three of the

factors wcre arguably present.g Consequently, the Company believes that redemptions made in

accordance with the Revisal Plan are not "issuer tender offers" subject to Rule 13e-4.

We also note that some courts have rejccted a rigid application of the eight-pronged

Wellman test and have, instead, applied a "totality of circumstances" test." This test looks to a11

circumstances surrounding the transnction to determine whether the chief objectives of the tender

offer regulations and rules are being met, specifically: to remove the element o f secrecy and

undue pressure associated with such transactions, and to provide shareholders with adequate

information to make an infonned investment dccision in connection therewith." As discussed at

length above and below, nont: of the three objectives will be adversely impacted by the operation

of the Revised Plan outside orthe specific requirements of Rule 13e-4.

For example, in llunrnn li-usr PLC v. SCM Corporariun, the court did not apply the

Wellman test and was guided by thc "statutory purpose" of the Williams Act. This purpose was

whether when ''viewing the transnction in the light of the totality of circumstances, there appears

to be a likelihood that unless the pre-acquisition filing strictures of [Section 14(d)J are followed

For comparison, Ccz??erHawle.~itlvolved an issuer repurchase of 50% of its outstanding shares over a period of

seven trading days. Yet the repur~hasewas still found to nor constitute an issuer tcnder offcr.

JVelirnan, 587 F.Supp. nt 1255.

Snomfeld, 484 P.Supy. ~r 1273.

Sec Hansoyon Trust PLC v. SCM C:orp.,774 F.Zd 47 (2d.Cir. 1985). See also Pin, 793 F.2d at 14W55 where this

test is applied to an issuer tender oRer case.

" For example, see WeIZman, 475 17.Suppat 821-23; Pin 793 P.Supp. nc 1454; and H a m n T h f , 774 F.2d at 5456.

09/07/2006 13:56 FAX

2149536503

BAKER BOTTS DALLAS

U.S.Securities and Exchange Commission

September 7,2006

theG will be a substaniial risk that solicitees will lack information needed to make a carefully

considered appraisal of the proposal put before them.""

The court found the totality of

circunstanccs surrounding the transactions did not require the pre-filing and waiting period

requirements contained in the Williams Act to avoid "a substantial risk of ill-cunsider~d,saIes of

SCM stock by ill-intmmcd shareholder^."'^

As the Company has not set a date before which it will liquidate or list its shares, the

Company expects that its redemption plan be the only viable option available if a shareholder

desires to sell its shares. Therefore, decisions to participate in the redemption plan can not be

viewed as "ill-considered" sales. The Prospectus clearly discloses to potential investors that an

investment in the Company is an illiquid investment and, essentially, thV&the investor should

assume that the Company's redemption plan may be its only liquidity option. Likewise,

shareholders participating ill the Revised Plan shouId clearly not be viewed as "ill-informed"

regarding the features of the plan. The terms of the plan are disclosed in detail in the Prospectus

which each investor must receive before becoming a shareholder in the Company, and the

Company will make the tams of the Revised Plan available to shareholders on its website.

Because the Company expects, and discloses, that t11e redemption plan may be the only viable

option shareholders will cnjoy to exit the investment, the Company expects that an investor's

consideration of the rcdbmption plan should likely bc material to an investment decision. As

explained in detail above, when a shareholder makes a decision to participate in the redemption

plan, the features of the plrm and its operation do not result in the risks the protections the

Williams Act are intended to protect against.

Therefore, we believe that tthc protections afforded shareholders by the Williams Act are

not needed for shareholders lo participate in the Revised Plan. We do not bdieve a "substantial

risk of ill-considered snles" made "by ill-informed shareholders" will exist For redemptions under

the Rcvised Plan if the Williams Act procedural protections are not iinplerncnted. As

shareholders nre provided full disclosure of the program before they invest, they should assume

when acquiring their shares that participation in the Company's redemption plan will be their

only viable option if they ever want to sell their shares, and that they will be required to wait for

one year to do so, we believe that under the Hamo~lTrust test, shareholders of the Company are

not the "particular class of persons [that] need the protection of' the Williams A C ~ "Finally, in

Carter Huwley, the court specitically met~tioncd "N1disclosure; time in which to make

investment decisions; withdriwal rights; and requirements for pro rata [purchases of

oversubscribed] sharcs" when referring to the substantive and procedural protections provided by

Rule 13e-4.15 We note that these protections are already inherent in the Revised Plan even if

Rule 13e-4 is not applied to the plan.

Humon nwst, 774 F.2d at 57 (emphasis added).

Id. at 58 (ernpha5is added). Specifically, the court noted that the sollm we* well ttwarc of essential facts &nut

the transaction, n significant amounr of sellers were no1 involved, the sellers were not pressured to sell, there was no

widespread or active solicitation, the price was not at a premium from the cmCnt tnatket price, purchases were not

conringcnt 011 the buyer acquiing a fixed number or percentage of shares and a general time limit cxisted.

id. At 57.

l5 Caner Hawley, 760 F.2d at 949.

09/07/2006 13:56 F A X

2149536503

BAKER B O T T S D A L L A S

U.S. Securities and Exchange Commission

September 7,2006

Rule 13e-4 -- No Action Request

Therefore, we resqectfully request that the Division of Corporation Finance confirm that

it will not recommend that the Comrnissioo take enforcemeut action under Rule 13e-4 with

respect to repurchases undm the Revised Plan. Other than revising the limit on the number of

shares that may be redeemed under the lan as noted above and the impact of the DRP Shares

Change on the one-yeor holding pcriod,lpthe Revised Plan is otherwise substantia11y identical to

the Current Redemption P1:m for which the Division of Corporate Finance granted a no-action

position in the Initial SEC 1~teer.l~We have found no authority that the increase in the number

of shares that can be redeemed under the plan to the 10% Limit significantly impacts the analysis

included in the Initial SEC .Letter or is otherwise inconsistent with the analysis therein. Factors

we believe that address these objectives and support this request include:

All material information relating to the plan will be fully and timely disclosed to all

shareholders. The terms of the Revised Plan will be hlly disclosed in the Prospectus

as well as any pl-ospectus used for subsequent offerings. The terms of the Revised

Plan will always be available to the Company's shareholders on the Company's

websitc.

The Company will not "solicit7' redemptions under the Revised Plan. Shareholders

desiring to preseut all or a portion of their shares for redemption will do so of their

own volition and not at the behest, invitation or encouragement of the Company. The

role of the Company in effectuating redemptions under the Revised Plan will be

ministerial.

The Company will provide written notice to all sharel~oldersat least 30 days prior to

any termination or suspension of, or atnmdment to, the Rcvisd Plan.

During the Offering, the shams of common stock will be redeemed under the Revised

Plan at a price related to, and at a fixed discount fiom, the public offering price of the

common stock at ,the time of redemption. Aftm the termination of the Offering, at all

times during which the Company is conducting a follow-011 public offering, the

repurchnsc price fbr shares redeemed will not exceed the offering price used in such

offering.

- -

We noore that ~ h llivision

of Corporate Finaxe has granted relief similar to that requested by this leltcr for share

redemption plo~lscontaining terms identical to the DRP Share Change. Please see WelIs Real Estate Invcstrneli~

Trust 11, Inc. (December 9, 2003); Paladin Realty Inconle Properties, Inc. (October 14, 2004); and Behringer

Harvard REIT et. al (October 26, 2004).

In addition to the letters referenced in the Initial SEC Letter in supporr of the Comnpmy's initid request, we note

h e following Ietteflr recently issued by the Division of Corporation Finiince hlare also consistent with the relief

requested: Orange Hospitality, b c . (September 9. 2004); Paladin Realry Income Properties, Inc. (Octobcr 14,

2004); and Bchringer Harvard RETI' er. a1 (October 26, 2004). We ahowledge that none of the letters referenced

in tho Initial SEC Letter, or listed above,provide support for incrcase of sharcs that cnn be redeemed under the plan

lo an amount equal to 10% of the numbcr of the Company's shares outstanding as of the prior year-end. However,

we do not bclieve chat this f a c m alone makes the Company's request inconsistent with the prior positions taken by

the Commission.

09/07/2006 13:57 F A X

2149536503

BAKER BOTTS DALLAS

U.S. Securities and Exchange Commission

September 7,2006

The Revised Plan will be terminated in the event the Company's shares are listed on a

national securities exchange or included for quotation in a national securities market,

or in the event a secondary market for thc Company's common shares develops.

Purchases will bc made on a quarterly basis and will be paid in cash and at the same

per share price. The Company will purchase shares promptly, within three business

days after the Company delivers a commitment to acquire sharcs subject to a

redemption request. Shareholders will receive written notice of any change in the

redemption price at least 30 days prior to the change and in the event the Company is

conducting a public offering, the prospectus relating to such' offering will be

suppIemented at such timc to disclosethe new price.

The Revised Plal will remain open indefinitely, subject to limitations required by the

10% Limit.

Shareholders may tender their shares at any time during the quarter, subject to

limitations required by the 10% Limit.

Shareholders may withdraw tendered shares at any time during the quarter,

During any year, the number of shares redeemed under the Revised Plan will never

exceed 10% of the number of outstanding shares on December 3 1 of the prior year.

The Co~npanywill purchase shares on a pro rata basis at the end ofeach quarter in the

event the 10% Limit is reached during such quarter or if the amou~ltof avaiIable

capital resources itre insufficie~~t

to satism all of the current redemption requests.

There is no established regular tmding market for the Cornpa~~y's

common stock.

The Revised Plan is open to all shareholders who lalaveheld shares for one year prior

to being redeemed (including shares acquired under the Company's dividend

reinvestment plan as contemplated by the DRP Shares Change).

The Company bclieves the Reviscd Plan as proposed would not result in the potential for

the abuses Rule 13a4 was intended to prevent and should not be subject to Rule 13c-4. Rather,

the Company believes that only shareholders will be harm& and no investors will benefit, by

thc Revised Plan not being implmented. The Company believes that the risks and evils

intended to be addressed by ItuIe 13e-4 do not exist as sharehoiders enjoy full disclosure of the

terms of the plan and there i s minimal risk of the pressures and opportunity for manipulative

conduct intended to be eliminated or ameliorated by Rule 1313-4.

09/07/2006 13:57 F A X

2149536503

BAKER B O T T S DALLAS

U.S. Securities and Exchange Commission

September 7,2006

Tf you have m y questions regarding this request, or if you need any additional

information, please do not hesitate to contact me at (214) 953-6900.

Respectfully submitted,

[,-$~-a.~d

Curtis Anderson

Baker Botts L.L.P.

2001 Ross Avenue

Dallas, Texas 75201-2980

Enclosure

09/07/2006 13:57 F A X

2149536503

BAKER B U T T S DALLAS

U N I T E D STATES

SECURITIES AND. EXCHANGE COMMISSION

WASHINGTON. 0 . C . 20543

June 18,2004

Curtis B.Gaderson

BakerBotts LL,P.

2001 Ross Avenue

Dallas, T W ~75202-2980

Re:

Hines Real Estate Investment Trust, bc.

File No.TP 04-32

Dear Mr. Andemm

In your letter dated June 4,22Q04, as supplmentedby contra sat ion^ with the,

yon request an

exernptianfrom Rde 102 of RegulationM a d an exemption b4or, alta;patively,a no-action

position rmdw, R d e 1 3 d lmdPdr the Exchange Act b permit Rinq Real Estae~

V l'ruef

b(the '

to LedEPrnkof if, mmmoostook mdexthe Company's renpsbGe

RedemptionPlan wbile the Companyis'eagagedin a 'distrimonof shares ofcormnan stodc We

have attached a cdpy of yoia let& tothis.response avoid recitingthe fads. Unless loQledwise

notad,eachdehdterminthisl~&haS&e~~em~esinyDur1~.

As a consequence of the U)&WUS o B h g s of the Cbmpany's s p a n of

k scommon stock,the

Company will be engaged in'adi8tribution of shares of it. mmmm ~tock

pmmmt to Rule 102 of

Regulation M. As a resu1f bids for or pmhases of shars ofits common sto& or any ~ f m c e

security by the CompanyY

or any affiliatedpurchases ofthe Cbmpany are prohibited during the

restricted pSod specifiedip $rile 105 imless specificallyexcepted by or exempted fiom~RuIe102.

b b e m o x e , in wmectim with the C0mpaay"s'pwiddicred+ofls

of shares of its common

stock pursuant to its respectiveRabption Plan, the Companymay be engaged in an issuer tender

offw fipulpose8 ofRule 1384 vnrdee the ExcbngeAct.

On the basia ofyour repreaexltationsand the facts presmted, but without necessarily

your d y e i s , f.heCommissionh&y

grants an exemption h m Rule 102 ofRqghtion M to

pennit the Cornpay to redean shares of its comcqon stock under its xtsp~tiveRedemption Plan

while the Company is engaged in a distribution of shahis.of common stock. kl granting his

exemption, we consideredthe following facts, among oth&. (i) shereholders of t h Company

must

have held the shares of common stock iq the Company for at least one yepr to participatk inthe

Redemption Plan; (ii) there is no t~acIhgmarket t3r the Company's common stock and the

Company will terminate its Redem~~tion

PIan in the event a secr,n-market

for its common stock

09/07/2006

13:58 FAX

2149536503

BAKER B O T T S D A L L A S

Curtis B. AnBaka Born LLP.

June IS,2004

Page 2

develaps; (iii) during the OflFerin&the shares ofcamman stock will be redeemed at a price related

to, and at a fixed discount flow the public oEering price of the common stock at the time of

redemption; (jv) during the Offering and for five yem .tzImaRet,the number of&aes to be

redeemed undatZletZleRedemption

Plan will not exceed, at any h e during a year, 5% of the number

ofshates outstanding ofthe Company an4 begirming five years after the tamhationofthe

Offerin& the mrmiba ofshares to be redeemedunder fhe RedemptionPlen will mt exceed,at any

time durisg a year, 110% of the number of & a m ouFstandidg ofthe Campany; and (v) the terms o f

the RdmplionPlan will be fdly disclosed in the Company's p r o s g e o ~included it1 the

Company's ~ s ~ o n 'This~ exempiion

~ t is

, subject to the wnditim that the Csmpany

shell taminateits Redempfion PIan during the distribution of its common stock ifa SCCO*

market for its cornmans k k develops.

Inadfition, based on your opinion that the Redemption Plan does iutt constitute an issuer tender

offer subject to Rule 1 3 4 , the fictsand rq~sentations

made in yout comqmndence and in

cmversati011swith the s

mtbeDivision of CorpomtionFinance, wirhout necessarilyconcurring

with the aaalyglie and c~nclusi0~9

set firth i

n your letter, will not mmmrdd that the Commission

take dorcernent action uadaRule 13e4 with respect to rkprchases made under the Rqmchase

Plan. In issuing& no-actionposition, the Division of Corporationl h m c e conaidared the

following fd,

among others:

that inany c o ~ s q d v 1e2-manthpcaiodthe number of shates repurchasedby tbe Company

under its Redemption Plan will not exceed 5% of the number o f sham of outs-@

cammon

ofthe Company as o f the beginning of slrch 12mconthpebiod;

the repurchaseprice will be based an the price at which the shams of commmstock W~IC

initially sold by the Company or the fixed offging price io tbe ~ o r n ~ , a n dividend

~'s

&vestment plan, as the case may be, though at no time will therepwhase price exceed the

curront public offering@,e;

p u r h d l be nlade'orr&q~arttrlj!

b&$ . . ? . . ..

~ o ~ d a s ~ a h ~ ~ ~ r ~ b a ~ e ~ a t r n y t i i n k d u r i n ~ f b e ~ ,

can withdraw tdered shares at anytimeprior to the end ofthe quartRb;

the Company will p

h &are8 on a pm rata basis at the end ofeach quarta in €he event the

amount of awihbie proceeds is insufficient to satisfy aU of the current repmlme req-;

the Company will pmvide thirtydays advance noticeprior to amending or suspend@ the

Redemption Plan;

the terms ofthe Redemption plan will be MIy disclosed in the Company's prospeduq and

there is na kadhgrnarkezfor the Company's wmmon stock.

T&e fbregoing exemption from Rule 102md no-actionposition tek& under Rule 13a4~ I Vbased

sdcly on your represmtatiom a d the t k t s presmed to'the staff: and are strictly limited to the

application of Rule 102 and Rule 13e-4 to the RedemptionP h as described a6ove. The

09/07/2006 13:58 F A X

2149536503

BAKER B O T T S DALLAS

CurtieB.Azdenmn

Baker Botts U . P .

June 18,2004

Page 3

Rehnptian Plan ehould be discontinued, pending presentation of fhe $cts for our considdon, in

tho event that any material change acmwith respect to any of those h t s or representations In

addition, your attentionis directed to the anti-bud and anti-manipulationgrovimans ofthe fideral

s d e s law4 p a r k d d y Section lo@)ofthe Exchange Act, a d RuIe lob-5 th-der,

Responsibilityfor compliancewith these and.anyother applicablepmvisions of the itdd

securities kwemust reat withthe Company. The ~ivision

of ~ i k e~egnlatiw

and Division of

CoxpaationFinance eqmss no view with respect to any othg guestion that the Redemption P h

may raise, inoldng, but not limilwl to, the adequacy of the'dscloaure &oe

and the

appWIZityo f other federalor shte 1 ~ to,~t hsRedamption

Ph. -

$or the Commission, by the

Division of Corporation Finance,

pursuant to delegated authority,

Chief

Officeof Magas 8t Acquisitions

Pivision of Coqmation Fidanue

For the Commission, by the

Division of Markat Regulation,

pursuant to delegated authority,

Assistant Director

Office ofRdug Practices and hwssing

Division ofMarket Reguhtion

09/07/2006

13:58 FAX

2149536503

BAKER BOTTS D A L L A S

'HIolRDGSAVENUE

DAU.45, m(AS

75201-2980

214.953.65CKI

FAK 21LPM.6m

EAKER BOWSu p

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BAKU

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WASHWON

Rule 102(e) of Regulation M

Rule 13e-4 of the Securities and EkchaugeAct of 1934

OfficeofTrading Practices and Processing

Division of Market Regulation

U.S.Securities and E~hangeCommission

450 F i iStreet,NW

Waahbgbn, D.C. 20549

MGC

of Mergers and ~cqi~itions

of Corporation F h c e

U-S.S d t i c s and Exchange Cqmrpission

450 Fifth Stre& NNW

~ m b g t oD

n.C.20549

Re:

Kmes Real Eswe Invcsfment Tw$,IncJRequest for Etyemptioa under Rule 102(e) o f

Regulation M;Reqwt for Oetemhation or Exemption under Rule 13e4

Ladies and Gentlaen:

We arc counsel .to Hies Real Estate Investment Trust, Tac. (the "Companf)- The

Company is a Maryland corporation which intends to operate, for federal income tax purposes,

as a

estate investment trust. On behalf of the Company, we request that the' Division of

Market Regulation, pursuant to the authority delegated to it by the Secu@es and Exchange

Ccbmission (the * C o ~ ~ s i o h " ) ~ . ~ ~ - t h an

e ~e~emption

~ m p m y h m the pmhibition~of

promulgated .under, among other provisions, the Securities

Rule 102(a) of ReguMon

Exchange Act of 1934, as amended (the "Exchange Act"), wifb respect to redemptions by the

Company of.sharesof its common stock under its proposed stock redemption plan in accordance

witb the temss detailed beIow, under the authorityprovided in Rule 102(e) of Regulation M. We .

also request that the Division of Corporation Finance concur in the Company's opinion that

'redemptionsunder its proposcd stock mhnption plan do not co&itute an issuer teizder offer

*thin the meaning of Rule 13e-4 ptornulgaid under the Exchange Act during the period of the

plan when aggregate ann~ral

redemptions are limited to no more than 5% of outstamhg shares as

described below, or9 in the dtennative, that the Division of Corporation Finance, under the

authority provided in Rule 13c-4[h)[9), exempt such redemptions, either unconditionaIly or on

09/07/2006 13:59 F A X

2149536503

BAKER B O T T S DALLAS

U.S. Securitiesand Exchange Commission

June 4,2004

specified terms and conditions, as not constituting a fiaudulent, deceptive or manipulative act or

practice comprehended within the purpose of Rule 13e-4.

The Company'

~ h Company

was incorporated in Maryland in August 2003, and was fonned primarily

to invest in office properties located throughout the United States. The Company cmmtly does

not own my properties,but it will use the fir6t $25,000,000 it raises in its public o f f i as well

as the $10,000,000 Hincs Real Estate Holdings-Limited Partnership will contribute to Hines'

REn Pm@es, L.P., the operating partnixship of thc Company (the "Operating Partnershipn),

to, acquire an intereat in a limited ptnessbip9 which currently owns interests Ih six office

buildings. Other than this initial~investment,the Company has not identified any real estate

assets it may acquire.

'1Ae Company issued 1,000 shares of its common stock to Hines REIT Investor, L.P., an

Sliate,of the Compiwy's advisor, Hines Advisors Limited.Partnership, for % 10,000. HALP

-0ciates Lited Partnership, an affitiatc of the Compauy's advisor, dso contributed $200,q00

to the Opratiag Parhm&p in connection with the Company's foxmation. The Company filed

an amended registration statement under the SecuritiesAct of 1933, es amended (the "Securities

Act") with the Commission (Regisdon No. 333-108780) on December 23, 2003, March 2,

2004 and April 9,2004. Rumantto,this registration sta@ment,the Company intends to offed up

-- toZOO,OOO,000 commonshares m an htial' p~blicoffering, at an offer prim of $10.00 per share,

and 20,000,000 shares pursmt 'to the Company's dividend ~hvestmentplan described below

. . :' (collkcti~el~,

the " O ~ g " ) The

. Compauy's mgistdon .statmept has not yet been declared

effe~tive~by

the Commission and, therefore, the Company has not commenced the Offering.\Ke

have provided a copy of thissicgistrationstatement with this letter.

. . -

Shares of the Company's common stock d l 1 not be listed on any securities exchauge or

the NASDAQ National Market, nor will sucb shares be the subject of bonafirle quotes on any

inter-dealer quotation system or electronic mnnmMications network The Company wilI file all

reports r

w by Section 13(a) or 15(d) of the Exchange Act..The Company is not currently

subject to the t e p o a requirements of the Exchange Act; howevsr, as soon as the Companfs

.regis@ation.statementis-declared.effebive,.the Company will be re&keded

to do so under the

Exchange Act.

Cmntly there exists no pegdm secondary trading market fbr the Sham, and it is

anticipated that no such market will develop duing ox after the Offering, unless and d l . &

Company detdxus to list the Shares on a securities exchange or on the NASDAQ National

Market.,Although the Company may, but does not currently intend to, list the Shares'or liquidate

its assets and distribute the prkceds of sucb.Iiquidation to shareholders at some future date, the

Company is not required to do either at any time. To provide shareholders with come liquidity

for Sbares they own, the Company intends to.adopt the redemption plan described below. A

dividend reinvestment plan also has been adopted for use by the Company to ficilitate the

09/07/2006 13:59 F A X

2149536503

BAKER B O T T S D A L L A S

U.S. Securities &id E x b g e Commission

June 4,2004

reinvestment of divide& by the Company'sshareholders. The terns of the Company's dividend

reinvestment plan are more li~llydescribed in the Company's regismion statement, a copy of

which is provided with this letter.

The Company has adopted a 'dividad reinvestment plan (the "Reinvestment Pb")

puasuant to which ~ h o l c I e r amay elect to have cash &+idends alhibutable to shares of

common stock owned by the paticipathg shamholdas seiaveskd in additional sham of the

Company5 coinnron stock. The Company anticipates that, g&erally, cash dividends will bc paid

to shareholderson a q1-y

basis.

AU dividends ae reinvesEed on behalf of participating sharehoIdm in shares of common

on the ciate that the dividends arq paid. Any dividends not so invested will be m e d to

the participating shareholdesrs. D e the offking, shareholders wiIl be allowed to purchase

additional shares ofcommon stock firom the Company pursuant to the Reinvestment Plan at a 5%

discount h m the publie &offeringprice (which will be %10.00 per share), which .equals a .

purchase pxice.of '$9.50 pet shsse. Afbx the Ofking and until the common stoqk of the

Cmpany is listed, if eva,the per s h e price of the mmmon d ~ c k

d the Con&my under the

Reinvestment Plan will be detamined by the bogd of directors of the Company based on'the

co&id#ation of.numwus fectm, including the: offering price lhen used if the Company i s

'+J:.~. -;..~-.,d',,,:-.

. ... ;.,., . . ~ u c $ n g l ( a s y ~ ~ t . a

;of..~,~,Uppn~.lis&~g,~

ff~g

if Iishg eyer we^ tci occur, .theprice .of .shms.ofcommon stock to be acquired by any participant ih the Reinvestmixit Plan will be the

thenan-ent

price an t k n a t i d g e d t i e s exchange or the over-thecounter market on

which the common stock is listed or traded on the purchm date.

st@

Shares purchased under the Reinvestment Plan are alIocated among the Company's

participating shareholders based on each participating shareholder's portion of the aggregate

dividends received on behalf' of participating shareholders. Any uninvested- dividends are

mhuned in cash to paxlieipants. Currently, under.the Reinvestment Plan, @upants may not

-. . xnake ~ 1 ~ ~ c o n t r i b u f i o

ta-plrrchase.strares.of

mmmon..stmkin excess'of the number of

shares that can be purchased with their kspective cash dividends; however, @ board of

dkctors of the Company may amend the terms of the Reinvestment Plan H the future ta pennit

such volmWy contributions. The Company id11 be responsible for paying any administrative

charges incurred m connection with its Kivestment PIan.

09/07/2006 14:OO F A X

BAKER B O T T S DALLAS

2149536503

U.S. Securities and Exchange Commission

June 4,2004

Redemption Plan

There is currently no public secondary market .for the common stock of the Company,

and the Company believes that them will be no secondary market for the common stock of the

Company during or aRer the OEe-,

dunless and until the Company decidea to list the Shares on

a national exchange or national market The Company is not at spy time r e q w to.list the

Shares on a national exchange or national market or liquidate its wsets and 'dishibute the

procads of such liquidation to shareholders. Themfkq in order to provide some Iiquidity b its

sbholdms, the COL&III~ intendsto adopt a shere redemptionp h (the "Rdemptiou Plan"). .

pursuant t~ the terms of dre riedemptio~plan, a sharehold= who .basheld Shares for

more than one year may, with appropriate notice, present dl ar a portioq of such sbmhoIdefs

Shares to the Company for redemption. In the limited event .of a redemption request received

after the death or disibility (as such tenn is defined in tha Intenral Revenue Code) of a

shamhoIder; *e Campany may waive .the one-year holding period as well as the annual

Ihitation discussed below.

The RedemptiqnPlan would pemnit the Company to d e e m shares while it is l~ngagedin

a r k g h m d public offering or othywise. When required, such,reClemptions 4 1 1 be effected

through a minv-t

agent , h t will be a regimered bmk'(x-dtder. The'Company may, at its

option, redeem the shares of common'Btock praehted for cash to the.exbmt it has sufftoimt cash

.flow to do so. l l m Cmpar!y may, but is not zqcpidto, use a ~ l a b l ecash flow not otherwise

dedicated to a particular use to mikt these rdemption needs, including cash pmceed~gmmated

.from the..ReinvesfmmtPlan, new offeirings, operating caSh flow not intended for'dividends,

.bornwingsand 'capital~ t i o n such

s as ass& sales or ~ ~ i p During

~ s the. Ofking and

for five years thereaftei., at no .time d u h g any year would the number of shares redeemed by rhe

Company under the Rdemptioi~P h ejccBed the lesser of (i) the number of Shares that wu~dbe

redeemed .by the net p r o d reoeived under the company:^ Reiavestntmt Plan w g the

applicable d d year, or (ii) 5% of the number of shams of ou~smditigcommrjn stock of thk

Company at prior calendar year end. Beginning five years

the temhattioa of the Offering,

the Company may annually redFern up to 10% of the shares outstanding as of the prior calendar

year end. Participitnb may also Withdraw t b k TequeSf for redemption at any time .prior to

. redemption. f i e terms

the d e m p t i o y ~ ' ~

areh fully didosed,inthe prospectus included in

the Compauy's kgistwion skdmmt.

I .

...

14:00 FAX

09/07/2006

2149536503

BAKER BDTTS DALLAS

BAKER fXMlSu~

U.S.Securities and Exchange Commission

The Company is not requesting that the C o d s s i o n take any position, or grant any

relief, under Rule 13e-4 in regard to the Redemption Plan at any time during which the number

of shares that can be redeerned'under the plan could exceed 5% of the number of shares of

outstanding common stock of the Company at the prior calendar year end. At any t h e the

number of shares that codd be redeemed under the Redemption Plan could exceed the 5%

limitation described above, the Company will file a tender oBer statement as required by Rule

13e-4 unless the Division of Corporation P i c e at that time either (i) agrees to not recornmead

that the & d o n take enforcanat action under Ride 13e-l with resped to qurcharcs under

the plan u d x such cinmrmstances,or (ii) exempts sucb r e p h e s , either unwnditionallyor on

specified terms and conditions, as not co-%

a fiauddent, deceptive or ;manipubive act or

practice comprehendedwith the purpose of Rule 13e-4.

The Cqmpany will redeem its common stock promptly afier the end of each calendax

quarter as set forth below, provided that the requisite written .notice of redemption h m

shareholders i s receive& AU requests for tadcmption must be meived by the Company prior to

' '

the end of the applicable qmrbr or postmarked on or before midnight on the last day of the

quartek and received by the Company'Within five business days t h e r h . Shareholders may

withdraw their redmaption request at -any time prior to .the last day of thc applicable qimtm.

. - W i d , requests .must.likewise ..be..d v e d by the Company.pior to the end of the

appIicable quarter or postmarked on or befire midnight on the last day of the q d r and

. received by the-Companywithin five business days thereafter. Xf the percentage of our sham

. .subject to redemption requests exceeds the'then applicable lindtati0115, each &areholder's

request w i l l be reduced on a p"rats basis at the end ofthe applicable quarter- In addition, ifthe

' C o ~ ~ j j c .n&~ &

~ ': : . ~ ~ . ~ b i ~ . . f ~ & . - &

at-&4

~ I'w

a b whali

l & "

; ~ d e +is ~ -g ~ ~

requested, participts can (i) witbdraw.theirn q k ~fmr

t redemption or (ii).ask that the Company . .

hbnor their request at such time; if any, deb sacient funds become available. Such-penrding

requests will generally be honored on a pro-rata basis.

Cornmitmests by the Company to repurchase shares will be communicated to each

shareholder who submitted'n request either teIephoN:cally or in writing at or pmrhptly (no more

than five business days) after the fifth business. day i%11ovvlhg the cnd .of each quark. The

amp-my wiIX d e a n the Shares subj$ct,.to these cornmitmenb,and pay the redemption price

associated therewith, within three business days following the delivery of s d commitmeats.

Shamholdem will not f l i u i s h to the Company their shares of common stock, mtil such time as

the Cbmpany redeems such shares. The Company will not guarantee thaf th& w i be

~ sufficient

funds to redeem the shares cif its common stock f i r which a redemption request is received.

During the Off&& WE shares will be redeemed .at 90% of'the offering price, or 59.00

per share. After the Offening, the per share redemption price will be based on the then-cumit

net asset value o f the shares; provided that the Company's board of directors may adjust the

price based on the consideration of cextain i2ctors, such as the then-current o f k i n g price (if the

Company is conducting a subsequent offering), ?he then-curten per share price of the

Company's dividend reinvestment p h (if appIicable), and general market conditions. At any

09/07/2006 14:00 F A X

2149536503

BAKER B O T T S D A L L A S

U.S.Semities and Exchange Cornmission

June 4,2004

time the Company isxmgaged in an offering of shares, the per share price for shares purcked .

under the Redemption Plan 4 1 be lower than the applicable per share offering price. The board

of d i i t o r s of the Company will announce any price adjustment and the time peaiod of its

effectiveness as a part of its regular communications with shareholders, which include the

quarterly distributionreports or annualreports we will provide to sharehofders.

Other than the disclosures required in the Company's prospectus (ilncludiag supplemmk

and amendmats then%) and .in periodic Exchange Act rqmrts, and the redemption price

discbm in aharehold& ~ u n i c ~ t i o &er

n s the O R ' ,the Company will not publick?its

iedemptionprogram. The Company wili not actively solicit redemptions. Its rule in the program

will be ministerial and'mekIyto facilitate shareholdetredemptionrequests.

Shares redeemed by the Company vviB be cancelled and will be held as treasury s h e s .

The Company will not r d l such shares to the public unless they are first registered with the

Codssjon under the Securities Act of 1933 and under appropriate state securities laws or

otherwise sold in compliance with such la&. The Company will terminate the Redemption.Plan

and the Company will not occept s h for redemption in the event the shares of wmmm stock

of the Company are listed on any securities exchange, the subject of bowJide quotes on any

interdealer quotation system or electronic ~ommunicationsnetwork, or are the subject of born

. fide qwtes in the pink sheets. ~dditiohdly,ihe board af directors of the Company may, hits

discrelion, atnend or suspend the Redemption Plan if it tiebznnines that to do so is in the best

intaxst of the Company. If t

bboard of directors amends or suqdencls the Redemption Plaa. the

Chapany will provide shardddexs with ;thirty(30) days advance &ihn notice by means of

. .either (i) an annual or qwkrly wport sent to shanihoiders, or (ii) a separtrte mailing

accompanied by disclosuire in a current or periodic report under the Exchange Act

- .

Dkcussion

Regulation M

Rule 102(a) o f Regulation M, which is intended to preclude maaipulative conduct by

those with an interest in the o~ltcomeof a distribution, prohibits issuers and those affiliated with

iasueas, .-ngothers, fbm.biddhgdii-pudmhg or attempting tsinduccanother to bid for or

p h a s e , a , security that is the subject of a then-c-t

distribution. Rule 102(e) of

ReguIationM authorizes the C o d s s i o n to exempt &.om the provisions of Rule 102 auy

'tmsaction or series of transactions, either unwnditiody or subject to specified terms and

g11ditions.

The Company respectfully quests mat the Division of Market Regulation, pursuant to

the authority delegated to it by the Conunission, grant tb the Company an exemption under Rule

102(e) to permit it to effect redemptions under the Redemption Plen,as pmposed, inasmuch as

such dmptions will not be actively solicitd by the Company and will not be made with the

purpose of hdhg'in, and should.nothave the effect of manipulating or raising the price of, the

09/07/2006 14:01 FAX

BAKER B O T T S DALLAS

2149536503

EAKCRBUIIS~~

U.S. Securities and Exchange Commission

June 4,2004

Company's stock. The Redemption Plan was created solely to provide shareholders of the

Company with a vehicle through whicb, after haring held shatcs and-bean at risk fm at least one

year, they can liquidate a portion of their investment in the Company's common stack, in light of

the h t that there is no public secondary trading market for the shares and the Company does not

anticipate that a secondary Inding market will develop. Further, allthough shareholders of the

Company are 8pp;ised of the availability of the redemption fature at the time they P&harre

their shares, by means of a description in the Companfs prospectus, the Company will not

actively solicit participation by its shareholders in the Redemption Plan. To the contmry, the

Company eqxcts that it will gemally prcfir that shareh01dm aot participate in the Redemption

Plan so the Company canuse available &h for other putposea. Shareholders desiring to prewnt

dI or a portion o f their

for redemption win do so of their own volition and not at the

behest, invitation or encouragement of the Company. The role of the Company in effectuating

redemptions under the Redemption Plan will be ministerial and will merely facilitate the

shareholders'exit from their investment with the Company.

,_..

Allowing thc Company to. effect redemptions under the Redemption Plan during aa

oering should not increase the potential fir zhaniplllation of the Company's stock price because

the redemption price under the Redemption Plan will be fixed as &tentined by the board of

kctoris of-the.Cocnpauy. Becim-the-redemption price during.the Offeriagwill be less -than,

and fixed in *lation to, the.offe&g paice of the Company's commm stock, the risk that the

'm'arket will be conditioned or stimulated by such mdem&om should be tcictually nonexistent.

.Duringthe'O~eririgand fir five Y& thefeafter, in no event will the number of shares deemed

' by the Company under the Redemption PIan i

n any year exceed the lesser of (i)'thti number of

Sbws that '&uld be redeemed by the net proceeds reckiveb underthe Company's Reinvestment

Plan during the applicable calendar yearI or (ii) 5% of tbe qumber of shares of.outstmdbg

comnhon stock of the Company at the end of the pwvious year. Beghnhg five y-.BW the

temhation of

Offwin%, in no event will the number of shares redeemed'bythe Company

under the Reinvestment.Planin any year exceed 10% of the number of shares of oumding

common stock of the Company at the end of the previous year. The Redemption Plan requires

the Cbmpany to accept ~edtlmptionrequests on a pm rata basis quarterly. Shares redeem& by

the Company will be cancelld and held as tmsury shares and d l not be resold to the public .

d e s s thqy w,@3tregistered.with .the_Cammission zmder the Securities Act' of 1933 pui under

agpmpriate state securities laws or otherwise sold in compliance with such laws. The

Redemption Plan Hill terminate once the Company lists its shares on a national exchange or

national mark$ or orace a secondary trading market is otherwise established. Except'as

described above, the terns and.conditiom applicable to redemptions during an offering will be

ideatical to those tbat would apply when an offixing is not in effect.

.For the f~mgohgm o b s , we tesp~~tfid1yq u e s t that the Division .of M a h ?

Regulation, pursuant to the authority delegated LO it by the Commission i d undw the authority

provided in Rule 102(e), grant the Company an exemption from the probibitions of Rule 102(~)

of Regulation M for redemptions under the Redemption Plan, as proposed, during the course of

an offering, as described hereid, The Company believes that the relief it requests in this letter is

09/07/2006 14:01 F A X

2149536503

BAKER BOTTS D A L L A S

aAKEREOnS u p

U.S. $&ties

and Exchange ~&ssion

consistent with the relief gauted. by the Division of Markt Regulation in CNL Income

Properties, Inc. (ktter dated March 11, 2004); Wells Red Estate Investment Trust 11, Inc.

(letter dated December 9, 2003); Inland.Western Retail Real Estate Trust, Xnc. (Letter dated

August 8,2003) and T R.Eil' hc. Getter dated August 13, 1998), under Regulation M and

Realty Trust Ini. (Letter dated May 21, 1992) under former Rule 10b;6. In particular, we note

that (i)slaareholrip'"~

of the Company must hold shares of m w o n stock for at leait one year to

participate in the Redemption Plan; {ji) there is no trading market for the shares of the

Company's common stock d the Company +I1 tamhate its Redemption Plan in the event a

secondary market fbr its common stock developg; (iii) during the Qfhing,the dmw of common

stock will be r c d m m d at a price related to, and at a fixed discount from, the public oflkrhg

price of the common K W C ~at thd fime of redemption; (iv) during the Offering and for five yean

thereafter, the number of shares to be redeemed mder the Redemption Plan wiII not exceed, at

.any time during a year, 5% of the number of shares outstariding of the Company and, beginaing

five years sftw the txmnination of the offering, the number of shares to be deemed under the

Redemption Plan will not exceed, at any t h e during a year, .lo%of Ehn umber of s h s

outscanding of ths: Company; and (v) the terms of the Redemption Plan are fully disclosed in the

prospectus included in the Company's registration statement'

The Company $so bepeves %t the requested relief is consistent with ~ e f :in . ~

Parithcr Pirhms; L.P. (Letter dated .March 3, 1994) and Dean W~tterCoperstone Pun& 11,111

and IV (btt&'dat:d June 3,1992) with respect to ce&h limited partnerships urider f o m R u l ~

10b-6 where (i).n~s w o n h~r k e t existed,or as expected to develop 'for the l i d

pkcrship ia~tebsts,(ii) the motivation .for repurddng IMW paraenhip lintexmts was to

tr,,..;r:,;+~.:i,.:~,v

.L,C." .;..

. ~ :. &

. ' -r

;.(iii) the.bikdWhipintemists we~.e..ri?aeaud

at prim: - . .. .

tbat were based on x

f the pattuembipd net assets, and (iv) the &kmPtion pmgsms

T'to be terminated In the event'a secondary market develaped. The Company beXies. the

Redemption Plan as proposed is consis-' with those plans described in the. afommtiond

cases and, similarly, have a very low risk of the type of manipulation that l2egulation.M and

former Rule 10b-6were promulgated to address.

Rule 13e-4

Plwuent to Rule 1364 uada the Exchange Ad, an issuer with equity sec&ties

registered under Sedion 12 o f the Exchange Act or that is required to fde periodic reports with

the Commission pursuant to Section i5(d) is reqqhed, in connection with

tender offetfor its

own equity securities, to r k k e certain di8closures with reispect tci such offas. The p&mof

Rule 13e-4 are intended to prevetit fraudulent, deceptive or manipulative acts in cbpoection with

issuer tender offers. The Company believes that redemptions under the Redemption PI& do not

constitute issuex tender offers within the meaning of Rule 1384. As the wurt in SEC v. Carter

Hawlev Hde Stores. Inc., 760 F A d 945,950 (9th Cir. 1985), asserted, the term "tender offer"

implie5 (i) d v e and widespread solicitation of public shareholders for the shares of an issuer;

(ii) that the solicitstion is mlde for a subsQntial percentage of the i s d s stock; (iii) that the

offex to purchase is made at a premium over the prevailing market price; (iv) thaf the terms of the

09/07/2006 14:02 F A X

2149536503

BAKER B O T T S DALLAS

BAKERBcariS,

US.Securities and Exchange Commission

June 4,2004

offer are firin, rather than negotiabb; (v) that the offer is contingent on the tender of a fixed

number of shares; (vi) that the o& is open only for a limited period of time; (vii) that the

offeree is subjected to pressure ta sel; and (viii) a public aunowm,rnent of an acquisition

'program prior to the BCWrniulation of stock by a putchaser. Bacause v W y none of these

factors apply to the Company in respect of redemptions under the Rmkqtion Pl+,. the

Company believes that such redemptiods are not tender offers.

The ~ o t & m ybelieves that, despite the fact that the Redemption Ran will be described

in its prospectus, the Company is hot eqyghg ia and w i l l not

ia an active and

widespread solicitation for its shares. Rather, idkmtion reganling the Redemption Plan is

'pmvi;led solely iol

h e f i t of the ~mpanfsinvwxs in onim m a ~ ~ ~ v i ~dIUXkXI? WMI

information about the limitad liquidity of their investment. Fwthcr, although the Company is

making the Redemption Plnn available to provide shareholders some liquidity, the Company

expects that it will generally prefer that ahareholders not participate in the plan to g o w the

Company to use available cash for other purposes.

A d d i t i d y , under the .Redemption P l q during the O f f h g and for five y ~ a m

&or&kr, Ule Company would redeem only up to a maximum of 5% of the' number of

a4y.yeat for; if d t e r ; the nmnberofShares .that

. . . . 6 e ~ s k 8 . o f i tamuaon~sta~kdutin~

could be pmhased by the net.pceedsmxid h k the Company's hinvesment Plan during

tlse.applicablecalendar year), and beginning five j a r s after the tamination of fhe O f k i n g ,the

Company would redean only up to a maximum of10%of the number of outstanding $hares of

the

, its copuaoa stock dining 6 year. As mentioned above, the Compmy is not questing

tb-kion

bke 'my position, or grant any leiie5 d e r Rule 1364 in r = dto Ule Redemption

Plan at. any time .duringwhich the number of shares that can be deemed under the plan could

exceed 5% of the number of shares .of outstanding common stock of the Compky at tke pdor

calendar year end At any 'time the number of shares that coutd be deemed under the

Redemption Plan could e x d the 5% lidtition described'above, the Compaay d l file a

tender offer statement as requkd by Rule 13e-4 unIess the Divigon of Corporate ~ & c e at that

time either (i)agrees to wt recommend that the Commissiontake enfomement action ugda Rple

138-4 with respect to repurchases under the plan under such circumstaam, qr (ii) exempts such

, r e p b e s , . either .uncondi-ly'

.oron.qeci6iedIEXZWJ md~oondition~~

.as.notam&uthg a

huddlent, deceptive or manipulative act or pmctice,wmpndm8ed with the purpose of Rule

134.

Further, no premium is to be paid by the Company for the shares redeemed [ i d , the

shares initially will be redeemed at a discokt from the t h e n m t offering prioe, which

provides an incentive for the shareholden to hold their shares), and-theRedemption Plan is hot

contingent on the tender of a fixed number of shares. FhalIy, redemptions under the

Redemption Plau may be made for an indefinite period of time. Consequently, the Company

believes that redemptions made in accordance with the Redemption Plan would not be*''issuer

tender offers"subject to &ti tiisclosure requirementsoiRule 13e-4 during the period in which the

09/07/2006 14:02 F A X

2149536503

BAKER BOTTS DALLAS

U.S.Securities and Exchange Commission

. June 4,2004

number of shares that can be *deemed under the Redemption Plan cannot exceed 5% of the

number of the Company's shares outstanding at the prior year end.

In -the event the Coinmimion does not concur with the Company'? position ihst such

redemptions are not issuer tender offers,the Company respectfdly requests an,exemption from

Ihe dikloslne requirementt of Rule 13e-4, pursuant to authority provided under Rule

13e-4(h)(9). The Cornmission has gcanted such relief in instances where redemptions made

under redemption progqns were made for cash on a periodic M s at fixed prices . w W ak

either based on a discount of ,t& price for a thcfl-existing offor bas& g m d y on the net

- asset values of the issuer's underlying assets, in some cases subject to the issuer's board

approval. Please see CNL income Properties, kc. (Letter dated March 11, ,2004); Inland

Western W l Real Estate Trust, Inc. (Letter dated August 8,2003); T REIT Inc. (Letter dated.

June 4, 2001); Puerto Rico :Investors FIexible AlIocation Fund (Lcrter dated J w 19, 1999);

Popular Balanced IRA Trust Fund (Letter dated April 29, 1999); CNL American Properties

Fund, Inc. (Leltm dated .August 13, 1998); Pu- Rico Income & Growth Fund, Inc. (Letter

dated March 27,J998); Fist Puerto Riw Growth and Xncorne Furid, Iac. [Letterdated Npvmber

. 5,1997); and Menrill Lynch Puerto Rico Tax Exempt Fund, Inc. (Letter dated August 7, 1995).

Such,exemptions' have been panted where, no more & 5% of the outstanding shares of the

issuer wen likely p have'been involaed,h.~hc

tmnsacti~nsfor.which..exemptions.H.ae requested

(such as Idmi.Western Retail..Real Em@ Twt, kc. o t t e r dated-August 8, 2003); CNL .

. ..

American Propezties'Fund,hc.(Litter dated August 13,1998); and Brock Exploration Company

(Letter dated June 30, 1980). Because redemptions under the Redemption Plan (i) would be

, priced.based on the o f k i n g price during the offering period, (ii) would be made on R quark~r1.y

... : .. ... . ~ & i ~ + . ' & ~ . ~ f i i ~ . ~ d ' ' ~&&r

~ ~ $p&ndl*e

~ v ~ ~ ' a ' fib cmpianys

&&es,

Company believes.the Redemption Plan as proposed would not d t in the potential for the .

- abuses Rule 13e-4 was intended to prevent '&d should not.be subject to Ruic 1 3 4 .

If you have any questionis regarding this request, or if

information, p

l do not

~ hesitate to contact me at (214) 9534900.

Respectfully submitted,

Baker B o b L.L.P.

2001 Ross Avque

Dallas, Texas 75201-2980

need any additional

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.