SEC Division of Corporation Finance no-action letter: Hines Real Estate Investment Trust, Inc.

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON. D.C. 20549
DIVISION 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 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 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 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, d Chief Office of Mergers & Acquisitions Division of Corporation Finance

09/07/2006 13:52 FAX 2149536503 BAKER BOTTS DALLAS 2001 ROSS AVEt)UE AQSTN BAKERBOlTS DA.LAS, TEW 75201.7980 DALW DUBN I.IONG KONG r~t+ 1 2 14.953 mo HOUSTON FAX +1 21d953 6503 LOPI]DON www.bakerbohs.mm I~.oS~W Rule 102(e) of RegulationM NEW YORK RWADY Rule 13e-4 of the Securities and Excl~angeAct of 1934 WASHINGTOW Curlis B. Anderson TEL +1 214.953.6900 September 7,2006 FAX +I 214.661.A900 curtis.underson@bakerborts.con, Office of TradingPractices and Processing Division of Market Regulation U.S.Securitiesand Exchange Commission 100F Street N.E. WashingtonD.C.20549 Attn: James A. Brigagliano Ofice of Mergers and Acquisitions Division of Corporation Finiice U.S.Securitiesand ExchangeCommission 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 13e4 Ladies and Gentlcmm:
We are counsel to Hines Real Estate Investment Trust, Tnc. (the "Company"). The Company is currently conducting a public offerii~g of up to $2,000,000,000 in common shares at a price of $10.40 per share, and up to $200,00OY000 in common shares issued pursuant to the Company's dividend reinvestment plan at a price of $9.88 pw share (collectively, the "Offering"). The Offering is 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 of 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, tl~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 FAX 2149536503 BAKER BOTTS DALLAS 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 ofshares 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 InitialSEC 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 201I), 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 31 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~n dcs~ribed above, 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 tms 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 13:52 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 wa1der its proposed revised stock rede~nption plan in accordance with the terms detailed below (the "Revised Plan"), under the authorityprovidcd 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~ases made 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'sshareholders. The tenns of 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~olders of 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 FAX 2149536503 BAKER BOTTS 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~anged and 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 31, 2004. As of August 14,2006, the Company had redeemed 151,921 shares, which is approximately 0.66% of sharesoutstanding on December 3 1,2005. The Company is unique among non-traded REITs as it is an open-end entity, with no pre￾established 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~ares on 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 ofexiting 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 is 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 DALLAS U.S.Securities and Exchange Commission September7,2006 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 is 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~creascd investments 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 applicablestate 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 bds 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-redeeminginvestors. 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~uous public offerings.

09/07/2006 13:54 FAX 2149536503 BAKER BOTTS DALLAS 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 non￾traded 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 :runconditionally or 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-inn~e.l I We note that the Division of Markct Regulalion has granted reliefsimilar to that requested by this lectcr for share redemption plans containing terms idenlical to rhe DRY Share Change. Please see Wells Real Estate Invesbent

09/07/2006 13:54 FAX 2149536503 BAKER BUTTS DALLAS U.S. Securities and Exchange Covission 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 fixeddiscount 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~rother 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-relyfacilitate the shareholders' exit *om their investment with the Company. As with the Current Rede~nptionPlan, allowingthe 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-, hc. (October 14, 2004); and Behringer Harvard REIT et. el (October 26,2004).

09/07/2006 13:54 FAX 2149536503 BAKER BOTTS 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~ket Regu1ation in thc Jnitial SEC Lcttm, as well as thc letters previously noted in the Initial SEC ~etter.~ 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 wit11other 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 themeaniry:of Rule 13e4.InSEC 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. (i) Active and widespread solicitationqfpublic shareholdersfur the shares of an issuer: The Revised Plan will be described in the Prospectus and any communications 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 Offeringor 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 redemptionplans containingthe DRP Shares Change. 3 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 hat "publicity surrounding [the issuer's] repurchase program" did not "result ha 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 FAX 2149536503 BAKER BOTTS DALLAS U,S.Securities and Exchange Commission September7,2006 "solicitation" as the shareholder cannot participate in Rcvised Plan for one year after receiving the materials (except as contemplated by the DRP S11aresChange). 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. (ii) The solicitation is madefir a substantial percentage ofthe issuer's stock. The Curter Hbwley case noted that this factor is often addressed by the first (focusing on whether a “solicitation" occurs) and the eighth (the amout 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 f'd~tors.~The Company does not believe that the 10% Limit for any particular calei~dar ycar, which the Company expects will bc diluted to some extent by new issuances during the year, would constitute a substatialpercentage 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 solicitationof 45% of otlcstanding shares); and Strornfild v. Greaf Aflanric & Paci/ic Tea Company, Inc., 484 F-Supp. 1264 (S.D.N.Y) (involving 42%of outstanding shares). In these cases, the appliceble court noted that the substantialpercentage rcst was met but hat 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 FAX 2149536503 BAKER BDTTS DALLAS 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. (v) The offer is contingent on the tender of a ,lined nurnbr of shares. The Revised Planis not contingent on the tender of a fixed number of shares- (vi) The ofleer is operr on& for a limited pckd of' time. The Revised Plan is open for nn indefiniteperiod, 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~fireeis subjected ro pressure to sell. As noted above, the Company will tlot encourage, invite, solicit or in any way prcssure shareholdersto participate in the Revised Plan. The role of 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 dmmdto pressurc shareholders to tender sharcs carly in a year as once the 'I0% Limit is met redempiion quests 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 FAX 2149536503 BAKER BOTTS DALLAS U.S. Securities and Exchange Commission September7,2006 (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 Wellmancnurt 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 accordancewith 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 of 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. Thispurpose 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 7 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. Q Snomfeld, 484 P.Supy.~r 1273. 10 Sec Hansoyon Trust PLC v. SCM C:orp.,774F.Zd 47 (2d.Cir. 1985). See also Pin, 793 F.2d at 14W55where 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 Hamn Thf, 774 F.2d at 54- 56.

09/07/2006 13:56 FAX 2149536503 BAKER BOTTS DALLAS U.S.Securitiesand 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 illthe 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 AC~"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-4is not applied to the plan. 12 Humon nwst, 774 F.2d at 57 (emphasis added). 13 Id. at 58 (ernpha5isadded). Specifically,the court noted that the sollm we* well ttwarc of essential facts &nut the transaction, n significant amounr of sellers were no1involved, the sellers were not pressured to sell, there was no widespread or active solicitation,the price was not at a premium from the cmCnttnatket price, purchases were not conringcnt 011 the buyer acquiing a fixed number or percentage of shares and a general time limit cxisted. I* id. -. At 57. l5 Caner Hawley, 760 F.2d at 949.

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09/07/2006 13:56 FAX 2149536503 BAKER BOTTS DALLAS 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 substantia11yidentical 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. r 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 ,thetime 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 - ~hellivision of Corporate Finaxe has granted relief similarto that requestedby 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). 17 In addition to the letters referenced in the Initial SEC Letter in supporr of the Comnpmy's initid request, we note he following Ietteflr recently issued by the Division of Corporation Finiince hlare also consistent with the relief requested: Orange Hospitality, bc. (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 facm alone makes the Company's request inconsistent with the prior positions taken by the Commission.

09/07/2006 13:57 FAX 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 quarterlybasis 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. TheRevised Plalwill remain open indefinitely, subject to limitations required by the 10% Limit. Shareholders may tender their shares at any time during the quarter, subject to limitationsrequired 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 31 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 insufficiet to satism all of the current redemption requests. There is no established regular tmding market for the Cornpay'scommon stock. The Revised Plan is open to all shareholders who lalave held 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 13a4was 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 is 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 FAX 2149536503 BAKER BOTTS DALLAS U.S. Securities and Exchange Commission September 7,2006 Tf you have my 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 B.Anderson Baker Botts L.L.P. 2001 Ross Avenue Dallas, Texas 75201-2980 Enclosure

09/07/2006 13:57 FAX 2149536503 BAKER BUTTS DALLAS UNITED STATES SECURITIES AND. EXCHANGE COMMISSION WASHINGTON. 0.C. 20543 June 18,2004 CurtisB.Gaderson BakerBotts LL,P. 2001 Ross Avenue Dallas, TW~S 75202-2980 Re: Hines Real Estate Investment Trust, bc. File No.TP04-32 Dear Mr. Andemm Inyourletter dated June 4,22Q04, as supplmentedby contra sat ion^ with the, yonrequestan exernptianfromRde 102ofRegulationM ad anexemptionb4or, alta;patively,a no-action position rmdw, Rde 13dlmdPdrthe Exchange Act bpermit Rinq Real Estae~ V l'ruef ~ N b-(the '-0 toLedEPrnkof if,mmmoostook mdextheCompany's renpsbGe RedemptionPlanwbile the Companyis'eagagedin a'distrimonof shares ofcormnanstodc We have attachedacdpyof yoia let& tothis.response avoidrecitingthe fads. Unless loQledwise notad,eachdehdterminthisl~&haS&eem~esinyDur1~. As aconsequenceof the U)&WUS oBhgs of the Cbmpany's spanks of common stock,the Company will be engaged in'adi8tributionofsharesofit.mmmm ~tockpmmmt to Rule 102 of RegulationM.As aresu1f bids for or pmhases of sharsofits common sto& orany~fmce securityby the CompanyYor any affiliatedpurchasesofthe Cbmpany areprohibited duringthe , restricted pSod specifiedip$rile 105imlessspecificallyexceptedby or exemptedfiom~RuIe102. bbemoxe, inwmectim with the C0mpaay"s'pwiddicred+ofls of shares ofits common stockpursuant toitsrespectiveRabption Plan, theCompanymaybe engagedinan issuertender offwfipulpose8 ofRule 1384vnrdeethe ExcbngeAct. Onthebasia ofyourrepreaexltationsandthe factspresmted,but without necessarily in your dyeis, f.heCommissionh&y grants an exemptionhm Rule 102ofRqghtionM to pennit the Cornpayto redean shares of its comcqon stock under its xtsp~tiveRedemptionPlan while the Company is engagedina distribution ofshahis.of common stock. klgranting his exemption,we consideredthe followingfacts, among oth&. (i) shereholdersofth~Companymust have held the sharesof common stock iqthe Company for at least one yepr to participatkinthe RedemptionPlan; (ii) there is not~acIhgmarket t3r theCompany's common stockandthe Companywill terminate its Redemtion PIan inthe event a secr,n-market for its common stock

BAKER BOTTS DALLAS 09/07/2006 13:58 FAX 2149536503 Curtis B.An￾Baka Born LLP. June IS,2004 develaps; (iii)during the OflFerin&the shares ofcamman stock will be redeemedat a price related to, andat a fixed discount flow the public oEeringprice ofthe common stock at thetime of redemption; (jv) duringthe Offering and for five yem .tzImaRet,the number of&aes to be redeemed undatZletZleRedemption Plan will notexceed, at anyhe during ayear, 5% ofthenumber ofshates outstanding ofthe Company an4 begirmingfive years after the tamhationofthe Offerin&themrmibaofsharestobe redeemedunderfheRedemptionPlenwillmt exceed,at any time durisg ayear, 110%ofthe number of &am ouFstandidgofthe Campany; and (v)the terms of the RdmplionPlanwill befdly disclosed inthe Company's prosgeo~included it1the Company's~ s ~ o n ' This~ exempiion ~ t is , subjecttothe wnditimthat the Csmpany shell taminateitsRedempfionPIan during the distribution ofits common stock ifa SCCO* market for its cornmanskk develops. Inadfition, based onyour opinion that the Redemption Plan does iutt constitutean issuer tender offer subject to Rule 134, thefictsand rq~sentationsmadeinyout comqmndence andin cmversati011swith the smtbeDivision of CorpomtionFinance, wirhoutnecessarilyconcurring with the aaalyglie and c~nclusi0~9set firth inyour letter, will notmmmrdd thatthe Commission take dorcernent action uadaRule 13e4 withrespectto rkprchases made under the Rqmchase Plan. Inissuing&no-actionposition, the Division ofCorporationlhmce conaidaredthe followingfd,amongothers:
that inany co~sqdve12-manthpcaiodthenumber of shates repurchasedby tbe Company under its RedemptionPlan willnot exceed5% ofthe number ofsham of outs-@ cammon ofthe Company as ofthe beginning of slrch 12mconthpebiod; therepurchaseprice will be based anthe priceat which the shams ofcommmstock W~IC initially sold by the Companyorthe fixed offgingprice iotbe ~orn~,an~'s dividend . &vestment plan, asthe case may be, though at no timewill therepwhaseprice exceed the currontpublic offering@,e; purh dl be nlade'orr&q~arttrlj! b&$..? . . .. ~o~das~ah~~~r~ba~e~atrnytiinkdurin~fbe~, canwithdraw tdered sharesat anytimeprior tothe end ofthe quartRb; the Company will p h &are8 on apm ratabasis at theend ofeachquartain €he eventthe amount of awihbieproceeds is insufficient tosatisfy aU ofthe current repmlme req-; the Companywillpmvide thirtydays advance noticeprior to amending or suspend@ the RedemptionPlan; the termsofthe Redemption plan will beMIy disclosedin theCompany's prospeduq and there isnakadhgrnarkezfor the Company's wmmon stock. T&efbregoingexemption from Rule 102md no-action positiontek& under Rule 13a4~IVbased sdclyon your represmtatiom ad the tkts presmed to'thestaff: and arestrictly limited to the applicationofRule 102 and Rule 13e-4 to the RedemptionPh as describeda6ove. ' The

09/07/2006 13:58 FAX 2149536503 BAKER BOTTS DALLAS CurtieB.Azdenmn Baker Botts U.P. June 18,2004 Rehnptian Plan ehould be discontinued, pending presentation offhe $ctsfor our considdon, in tho event that anymaterial change acmwith respect to anyof those hts or representations In addition, your attentionisdirected tothe anti-budand anti-manipulationgrovimans ofthe fideral sdes law4 parkddy Section lo@)ofthe Exchange Act,ad RuIe lob-5 th-der, Responsibilityfor compliancewith these and.anyother applicablepmvisions ofthe itdd securities kwemustreatwiththe Company. The~ivisionof ~iket~egnlatiwandDivision of CoxpaationFinance eqmssno view with respect to any othgguestionthat theRedemptionPh may raise, inoldng, but notlimilwl to, theadequacyofthe'dscloaure eo& and the appWIZityofother federalor shte 1 ~ to,~th~ sRedamptionPh. - $or the Commission, bythe . For the Commission, by the Division of CorporationFinance, Division ofMarkat Regulation, pursuant to delegated authority, pursuant to delegated authority, Chief AssistantDirector Officeof Magas 8t Acquisitions OfficeofRdug Practices andhwssing Pivision of Coqmation Fidanue Division ofMarket Reguhtion

09/07/2006 13:58 FAX 2149536503 BAKER BOTTS DALLAS 'HIolRDGSAVENUE AumN EAKERBOWSup DAU.45, m(AS 75201-2980 214.953.65CKI BAKU hUA5 lm!imN FAK 21LPM.6m lmCC4l wmci3w NWVwK luyAW WASHWON Rule 102(e) of RegulationM Rule 13e-4 ofthe Securities and EkchaugeAct of 1934 OfficeofTrading Practices and Processing Division of Market Regulation U.S.Securities andE~hangeCommission 450 FiiStreet,NW Waahbgbn, D.C. 20549 MGCofMergers and ~cqi~itions , of Corporation Fhce U-S.Sdtics and Exchange Cqmrpission 450 Fifth Stre& NNW ~mbgtonD.C.20549 Re: Kmes Real Eswe Invcsfment Tw$,IncJRequest for Etyemptioa underRule 102(e) of RegulationM;Reqwt for Oetemhation or Exemption under Rule 13e4 I I

• • Ladies and Gentlaen:
    We arc counsel .to Hies Real Estate Investment Trust, Tac. (the "Companf)- The i 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 *Cosioh")~.-the~~mpmy an e~emptionhm the pmhibition~of Rule 102(a) of ReguMon promulgated .under, among other provisions, the Securities Exchange Act of 1934, as amended (the "Exchange Act"), wifb respect to redemptions by the Company of.sharesof its common stock under its proposed stockredemption plan in accordance witb thetemss 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 ofthe plan when aggregate ann~ralredemptionsare limited to no more than 5% of outstamhg sharesas . 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 FAX 2149536503 BAKER BOTTS DALLAS U.S. Securitiesand Exchange Commission 2 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' ~hkCompany was incorporated inMaryland in August 2003, and was fonned primarily to investin officeproperties located throughout the United States. The Company cmmtly does not own myproperties,but it will usethe fir6t $25,000,000 it raises in its public offi aswell 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 ptnessbip9which 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 commonstock to Hines REIT Investor, L.P.,an Sliate,of the Compiwy's advisor, Hines Advisors Limited.Partnership, for %10,000. HALP -0ciates Lited Partnership, anaffitiatc 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,thisregistrationsta@ment,the Company intendsto offed up toZOO,OOO,000 commonshares m an htial'p~blicoffering, at an offer prim of $10.00per 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~bythe Commissionand, therefore, the Company has not commenced the Offering.\Ke haveprovided a copy of thissicgistrationstatementwith this letter. - - . . -- i Shares of the Company's common stock dl1 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 reqwby Section 13(a) or 15(d) ofthe Exchange Act..The Company is not currently subject to the tepoa requirements of the Exchange Act; howevsr, as soon as the Companfs .regis@ation.statementis-declared.effebive,.the Company will be re&kededto do so under the ExchangeAct. - j ! 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 dl.& Company detdxus to list the Shares on a securities exchange or on the NASDAQ National Market.,Althoughthe Company may, but does not currentlyintendto, list the Shares'orliquidate its assets and distribute the prkceds of sucb.Iiquidation to shareholders at some futuredate, 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 te r

09/07/2006 13:59 FAX 2149536503 BAKER BOTTS DALLAS U.S.Securities&id Exbge Commission 3 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 ~holcIeramay 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 anticipatesthat, g&erally, cash dividends will bc paid to shareholderson a q-1y basis. AU dividends ae reinvesEed on behalfof participating sharehoIdm in shares ofcommon st@ on the ciate that the dividends arq paid. Any dividends not so invested will be med to the participating shareholdesrs. De the offking, shareholders wiIl be allowed to purchase additionalshares ofcommon stock firom the Company pursuant to the Reinvestment Plan at a 5% discount hm the publie &offeringprice (which will be %10.00 per share), which .equals a . purchase pxice.of'$9.50 pet shsse. Afbx the Ofking and until the common stoqk of the Cmpany is listed, if eva,the per she price ofthe mmmond~ckdthe Con&my under the Reinvestment Plan will be detamined by the bogd of directors of the Company based on'the co&id#ation of.numwus fectm, including the: offering price lhen used if the Company is '+J:.~. -;..~-.,d',,,:-. . ...,.;., .%..~uc$ngl(asyt.aff~g ;of..~,~,Uppn~.lis&~g,~ if Iishg eyer we^ tci occur, .theprice .- of.shms.ofcommon stock tobe acquired by any participant ih the Reinvestmixit Planwill be the thenan-ent price an tk natid gedties exchange or the over-thecounter market on which the common stock is listed or traded onthe purchm date. 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 ~1contribufions ta-plrrchase.strares.ofmmmon..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 Hthe future ta pennit such volmWy contributions. The Company id11 be responsible for paying any administrative ' charges incurred mconnectionwith its Kivestment PIan.

09/07/2006 14:OO FAX 2149536503 BAKER BOTTS DALLAS W B ~ L L P U.S. Securitiesand Exchange Commission 4 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 Shareson a national exchange or national market The Company is not at spy time reqw to.listthe , Shares on a national exchange or national market or liquidate its wsets and 'dishibute the procads of suchliquidationto shareholders. Themfkq in orderto provide some Iiquidity b its sbholdms, theCOL&III~ intendsto adopta shere redemptionph (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 todeem shares while it is l~ngagedin a rkghmd public offering or othywise. When required, such,reClemptions 411 be effected

• through a minv-t agent ,htwill be a regimered bmk'(x-dtder. The'Companymay, at its
  . option, redeem the shares of common'Btock praehted for cash to the.exbmtit has sufftoimt cash .flowto do so. llm Cmpar!y may, but is not zqcpidto, use a~lablecash flow not otherwise dedicated to a particular use to mikt these rdemption needs,including cashpmceed~gmmated
  I. ... .from the..ReinvesfmmtPlan, new offeirings, operating caSh flow not intended for'dividends,
  .bornwingsand 'capital~tionssuch as ass& sales or ~ ~ i p During ~ s the .Ofking and for five years thereaftei., at no.timeduhg any year would the number of sharesredeemed by rhe Company under the Rdemptioi~PhejccBed the lesser of(i) the number ofShares that wu~dbe . redeemed.bythe net prod reoeived under the company:^ Reiavestntmt Plan wg the applicable ddyear, or (ii) 5% ofthe 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 tbk TequeSf for redemption at any time .prior to .. . redemption. fie terms the demptioy~'~hare fully didosed,inthe prospectus included in the Compauy's kgistwionskdmmt.

09/07/2006 14:00 FAX 2149536503 BAKER BDTTS DALLAS BAKER fXMlSu~ U.S.Securitiesand ExchangeCommission 5 , The Company is not requesting that the Codssion 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 the 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 Pice at that time either (i) agrees to not recornmead that the &don take enforcanat action under Ride 13e-l with resped to qurcharcs under the plan udx such cinmrmstances,or (ii) exempts sucbrephes, either unwnditionallyor on specified terms and conditions, as not co-% a fiauddent, deceptive or ;manipubiveact or practice comprehendedwiththe 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 hm shareholdersis receive& AU requests for tadcmptionmust be meived by the Companyprior 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 therh. Shareholders may withdraw their redmaption request at -any time prior to.the last day of thc applicable qimtm. . -Wid,requests .must.likewise ..be..dved by the Company.pior to the end of the appIicable quarter or postmarked on or befire midnight on the last day of the qdr and . received by the-Companywithin five business days thereafter. Xfthe percentage of our sham .subject to redemption requests exceeds the'then applicable lindtati0115, each &areholder's . . request will be reduced on a p"rats basis at the end ofthe applicable quarter- In addition, ifthe ' ' ' ' 'Cojjc.~&': n& ~:..~bi~..f~&.-&~Iabl&; at-&4 'wwhali"~de+~g~~ is - requested,participts can(i)witbdraw.theirnqk~t fmr redemption or (ii).ask that the Company . . hbnor their request at such time; if any, debsacient 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:callyor in writing at or pmrhptly (no more than five business days) after the fifth business.day i%11ovvlhg the cnd .ofeach quark. The , amp-my wiIX dean the Shares subj$ct,.to these cornmitmenb,and pay the redemption price associated therewith, within three business days following the delivery of sd commitmeats. Shamholdem will not fliuish to the Company their shares of common stock,mtil such timeas the Cbmpanyredeems suchshares. TheCompanywill not guarantee thafth& wi~be sufficient funds to redeem the shares cif its
common stockfir which a redemption request is received. . During the Off&& WE shareswill 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 of 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 ofking price (if the h Company is conducting a subsequent offering), ?he then-curten per share price of the .- Company's dividend reinvestment ph (if appIicable), and general market conditions. At any I

09/07/2006 14:00 FAX 2149536503 BAKER BOTTS DALLAS U.S.Semities and Exchange Cornmission 6 June 4,2004 time the Company isxmgaged in an offering of shares, the per share price for shares purcked . under the RedemptionPlan 41 be lower thanthe applicable per share offeringprice. The board of diitors 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 willprovide tosharehofders. ' Other than the disclosures required inthe Company's prospectus (ilncludiag supplemmk and amendmats then%) and .in periodic Exchange Act rqmrts, and the redemption price discbm in aharehold& ~unic~tions &er the OR',the Company will not publick?its iedemptionprogram. TheCompany wili not actively solicitredemptions. Its rule inthe program will be ministerial and'mekIyto facilitate shareholdetredemptionrequests. ! Shares redeemed by the Company vviB be cancelled and will be held as treasury shes. ' The Company will not rdl 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 suchla&. TheCompanywillterminate theRedemption.Plan andthe 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 directorsofthe 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 tbboard ofdirectors amends orsuqdencls 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 disclosuireina current orperiodic report under the Exchange Act i ' , r . -. Dkcussion RegulationM I Rule 102(a) of Regulation M, which is intended to preclude maaipulative conduct by those with an interest in the o~ltcome of adistribution, prohibits issuers and those affiliated with iasueas, .-ngothers, fbm.biddhgdii-pudmhgor attemptingtsinduccanotherto bid for or phase, a,security that is the subject of a then-c-t distribution. Rule 102(e) of ReguIationM authorizes the Codssion 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 ' L such dmptions will not be
actively solicitd by the Company and will not be made with the purpose ofhdhg'in, and should.nothave the effect of manipulating or raising the price of, the

09/07/2006 14:01 FAX 2149536503 BAKER BOTTS DALLAS EAKCRBUIIS~~ U.S. Securities and Exchange Commission 7 June4,2004 - 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 fmat least one year,they can liquidate a portion of their investment in the Company's common stack, in light of the ht that there is no public secondary trading market for the sharesand the Companydoes 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 prcfirthat shareh01dm aot participate inthe Redemption Plan so the Company canuse available &h for otherputposea. Shareholdersdesiring to prewnt dI or a portion of 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'exitfrom their investment with the Company. ' Allowing thc Company to.effect redemptions under the Redemption Plan during aa oering should not increasethe 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 fiveY& thefeafter, in no event willthe number of sharesdeemed ,_.. . '. ' by the Company under the Redemption PIan in any year exceed the lesser of (i)'thti number of Sbws that '&uld be redeemed by the net proceeds reckivebunderthe Company's Reinvestment Plan during the applicable calendar yearI or (ii) 5% of tbe qumber of shares of.outstmdbg comnhon stock ofthe 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 dl not be resold to the public . . dess thqy w,@3tregistered.with.the_Cammission zmder the SecuritiesAct'of 1933 pui under agpmpriate state securities laws or otherwise sold in compliance with such laws. The Redemption Plan Hillterminate 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.conditiomapplicable to redemptions during an offering will be ideatical to those tbat would apply when an offixing is not in effect. .For the f~mgohgmobs, we tesptfid1yquest that the Division .of Mah? Regulation, pursuant to the authoritydelegated LO it by the Commission id undwthe authority provided in Rule 102(e), grant the Company an exemptionfrom 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 inthisletter is ,-

09/07/2006 14:01 FAX 2149536503 BAKER BOTTS DALLAS aAKEREOnSup U.S.$&ties and Exchange ~&ssion 8 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 RegulationMand . 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 mwon 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 dthe Company +I1 tamhate its Redemption Plan inthe event a . secondarymarket fbr its common stock developg; (iii) during the Qfhing,the dmw of common stock will be rcdmmd at a price related to, and at a fixed discount from, the public oflkrhg price of the common KWC~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 .anytime during a year, 5% ofthe number of shares outstariding of the Company and, beginaing five years sftw the txmnination ofthe offering, the number of shares to be deemed under the Redemption Plan will not exceed, at any the during a year, .lo%of Ehn umber of shs outscanding of ths:Company; and (v) the terms of the Redemption Plan are fully disclosed in the prospectus included inthe 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 June3,1992) withrespect to ce&h limited partnerships urider fom Rul~ 10b-6 where (i).n~swon~hrket existed,or as expected to develop 'for the lid . pkcrship ia~tebsts,(ii) the motivation.for repurddng IMW paraenhip lintexmts was to tr,,..;-r:,;+~.:i,.:~,v ..,LC" .;.. .~:&r . . ' - ;.(iii) the.bikdWhipintemists we~.e..ri?aeaud at prim: - . .. . tbat were based onx f the pattuembipd net assets, and (iv) the &kmPtion pmgsms \ T'to be terminated Inthe 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.Mand former Rule 10b-6were promulgatedto address. Rule 13e-4 . . Plwuent to Rule 1364 uada the Exchange Ad, an issuer with equity sec&ties registered under Sedion 12 of the Exchange Act or that is required to fde periodic reports with the Commissionpursuant to Section i5(d) is reqqhed, in connection with tender offetfor its own equity securities, to rkke certaindi8closures 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 redemptionsunder 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 FAd 945,950 (9th Cir. 1985), asserted, the term "tenderoffer" b implie5 (i) dve and widespread solicitation of public shareholders for the shares of an issuer; (ii) that the solicitstion is mlde for a subsQntial percentage of the isds stock; (iii) that the C offex to purchaseismade at a premium over the prevailing market price; (iv) thaf the termsof the

09/07/2006 14:02 FAX 2149536503 BAKER BOTTS DALLAS BAKERBcariS, US.Securities and Exchange Commission 9 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 vWy none of these factors apply to the Company in respect of redemptions under the Rmkqtion Pl+,. the Companybelievesthat such redemptiods arenot tender offers. The ~ot&mybelieves that, despite the fact that the Redemption Ran will be described in its prospectus, the Company is hot eqyghg ia and will not ia an active and widespread solicitation for its shares. Rather, idkmtion reganling the Redemption Plan is 'pmvi;led solely iol hefit of the ~mpanfsinvwxs in onim m a~~~vidk? ~IUXXI 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 gow the Company to use availablecash for other purposes. Additidy, under the .Redemption Plq during the Offhg and for five y~am &or&kr, Ule Company would redeem only up to a maximum of 5% of the' number of . . . ..6e~sk8.ofits amuaon~sta~kdutin~ a4y.yeat for;ifdter; the nmnberofShares.that could be pmhased by the net.pceedsmxidhkthe Company's hinvesment Plan during , tlse.applicablecalendar year), and beginning five jars after thetamination of fhe Ofking,the ' Company would redean only up to a maximum of10%of the number of outstanding$hares of :. G , its copuaoa stock dining 6year. As mentionedabove, the Compmy is not questing the tb-kion bke 'myposition, or grant any leiie5 der Rule 1364 in r=dto UleRedemption Plan at.any time .duringwhich the number of shares that can be deemed underthe 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 exd the 5% lidtition described'above,the Compaay dl file a tender offer statement as requkdby Rule 13e-4 unIess the Divigon of Corporate ~&ce at that time either (i)agrees towt recommendthat the Commissiontake enfomementactionugda Rple 138-4 with respect to repurchases under the plan under suchcircumstaam, qr (ii) exempts such .. ,, repbes,. either .uncondi-ly' .or-on.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 [id, the shares initially will be redeemed at a discokt from the thenmt 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 inwhich the L

09/07/2006 14:02 FAX 2149536503 BAKER BOTTS DALLAS U.S. Securities and Exchange Commission 10 . 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 Ms at fixed prices .wW ak either based on a discount of ,t& price for a thcfl-existing off- or bas& gmdy 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 Wl 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 Jw 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,J 998); Fist Puerto Riw Growth and Xncorne Furid, Iac. [Letter dated 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~ns for .which..exemptions .H.ae requested (such as Idmi. Western Retail.. Real Em@ Twt, kc. otter 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 ofking price during the offering period, (ii) would be made on R quark~r1.y . .. : .. ... .~&i~+.'&~.~fii~.~d''~~~$~v~~'a' &&r p&ndl*e fib cmpianys 'g~~~w &&es, ' - .. Company believes. the Redemption Plan as proposed would not dt in the potential for the . abuses Rule 13e-4 was intended to prevent '&d should not. be subject to Ruic 134. - - If you have any questionis regarding this request, or if need any additional information, pl~ do not hesitate to contact me at (214) 9534900. Respectfully submitted, Baker Bob L.L.P. 200 1 Ross Avque Dallas, Texas 75201-2980