Per
Share
|
Total
Minimum
|
Total
Maximum
|
|||||||||
Primary
Offering
|
|||||||||||
Price
to Public
|
$
|
10.000
|
$
|
2,000,000
|
$
|
100,000,000
|
|||||
Selling
Commissions*
|
.675
|
135,000
|
6,750,000
|
||||||||
Dealer
Manager Fee
|
.250
|
50,000
|
2,500,000
|
||||||||
Proceeds
to Us
|
$
|
9.075
|
$
|
1,815,000
|
$
|
90,750,000
|
|||||
Dividend
Reinvestment Plan
|
|||||||||||
Price
to Public
|
$
|
9.500
|
—
|
$
|
9,500,000
|
||||||
Selling
Commissions*
|
—
|
—
|
—
|
||||||||
Dealer
Manager Fee
|
—
|
—
|
—
|
||||||||
Proceeds
to Us
|
$
|
9.500
|
—
|
$
|
9,500,000
|
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· |
a
net worth of at least $150,000;
or
|
· |
a
gross annual income of at least $45,000 and a net worth of at least
$45,000.
|
Q: |
What
is a REIT?
|
A: |
In
general, a REIT is an entity that:
|
· |
combines
the capital of many investors to acquire or provide financing for
real
properties;
|
· |
enables
individual investors to invest in a professionally managed portfolio
of
real estate assets;
|
· |
provided
certain income tax requirements are satisfied, avoids the “double
taxation” treatment of income that generally results from investments in a
corporation because a REIT is not generally subject to federal corporate
income taxes on that portion of its income distributed to shareholders;
and
|
· |
pays
dividends to investors of at least 90.0% of its taxable
income.
|
Q: |
What
is Hartman Commercial Properties
REIT?
|
A: |
Hartman
Commercial Properties REIT is a Maryland real estate investment trust
organized in December 2003 for the purpose of merging with Hartman
Commercial Properties REIT, a Texas real estate investment trust
organized
in August 1998. On June 4, 2004, the shareholders of the Texas entity
approved the merger, and on July 28, 2004, the reorganization was
completed. We are the surviving entity as a result of the merger.
The sole
purpose of the reorganization was to change our state of domicile
to
Maryland. We acquire and manage retail, industrial and office properties
in the Houston, Dallas and San Antonio metropolitan areas. We owned
37
commercial properties on March 31, 2006, primarily consisting of
retail
centers, industrial and office properties.
|
Q: |
What
is the experience of your executive officers and
trustees?
|
A: |
Allen
R. Hartman has been our president, secretary and member of our board
of
trustees since our formation in 1998. He is also the sole limited
partner
of our advisor and property manager, Hartman Management, L.P. (which
we
refer to as Hartman Management or the Management Company), as well
as the
president, secretary, sole trustee and sole shareholder of the general
partner of Hartman Management. Since 1984, Mr. Hartman, as an individual
general partner, has been the sponsor of 17 private limited and general
partnerships that have invested in commercial real estate in Houston,
Dallas and San Antonio, Texas. Mr. Hartman has over 30 years of
experience in the commercial real estate industry. From 1978 to 1983,
Mr. Hartman owned and operated residential rental
properties.
|
Q: |
Who
is Hartman Management,
L.P.?
|
A: |
Hartman
Management is our advisor and property manager. Hartman Management
was
organized as a Texas corporation in 1990 and reorganized as a Texas
limited partnership in 2001. Hartman Management manages our day-to-day
operations and our portfolio of properties. As of December 31, 2005,
Hartman Management had sponsored or advised private real estate programs
that had raised approximately $170 million from approximately 2,596
investors, including investors in us, and that owned and operated
more
than 5.8 million square feet of commercial real estate properties.
|
Q: |
In
what types of real property will you
invest?
|
A: |
We
generally will seek to use the offering proceeds available for investment
after the payment of fees and expenses to acquire commercial retail,
office and industrial properties that we intend to hold for a period
of
seven to ten years from the date of acquisition. We will seek to
invest in
commercial properties in major metropolitan cities in the United
States,
principally in the Southern United States. We may invest in other
property
types or geographic areas in order to reduce overall portfolio risk
or
enhance overall portfolio returns if our advisor determines that
it would
be advantageous to do so.
|
Q: |
May
you invest in anything other than real
property?
|
A: |
Yes.
We anticipate there will be opportunities to acquire some or all
of the
ownership interests of unaffiliated enterprises having real property
investments consistent with those we intend to acquire directly.
In
addition, if our advisor determines that, due to the state of the
real
estate market or in order to diversify our investment portfolio,
it would
be advantageous to us, we may also provide mortgage loans to owners
of
commercial retail, office or industrial properties or purchase such
mortgage loans or participations in mortgage loans from other mortgage
lenders. Because there are significant limitations on the amount
of
non-real estate assets that a REIT may own without losing its status
as a
REIT, we will be significantly limited as to ownership of non-real
estate
investments. These limitations may limit our ability to maximize
profits.
|
Q: |
How
are you different from your competitors who offer unlisted REIT shares
to
the public?
|
A: |
We
have a track record of acquiring properties for prices that provide
us the
ability to add value. Our REIT has an existing, growing portfolio
of
properties and we intend that growth trend to continue. One very
important
difference is that we use Hartman Management, our advisor, also as
our
property manager. Many of our competitors outsource that function
to
unaffiliated third parties or establish an affiliated property manager
that also performs services for unaffiliated third-party developers.
Hartman Management only manages properties in various Hartman programs.
Other third-party managers work for multiple, unrelated owners. We
believe
Hartman Management is able to provide us more individualized
service.
|
Q: |
Who
will choose the investments you
make?
|
A: |
Hartman
Management is our advisor and makes recommendations on all investments
to
our board of trustees. Hartman Management is wholly owned by Allen
R.
Hartman, who is our President and a member of our board of trustees.
Mr.
Hartman has extensive experience investing in commercial real estate.
In
addition, various other officers and key employees of Hartman Management
have extensive experience in the areas of commercial property management,
leasing, development or investment. The officers, trustees and key
employees of Hartman Management are Terry L. Henderson, John Crossin
and
Valarie L. King, and they will assist Mr. Hartman in making property
acquisition recommendations on behalf of Hartman Management to our
board
of trustees. Our board of trustees, including a majority of our
independent trustees, must approve all of our
investments.
|
Q: |
How
will Hartman Management select potential properties for acquisition?
|
A: |
Hartman
Management will generally seek to acquire good quality retail, office
and
industrial buildings located in major metropolitan cities in the
United
States, principally in the Southern United States, and leased to
creditworthy companies. Many factors enter into what we consider
to be
“good quality,” including a location that generates and retains tenants
because it is good for their business, construction that is attractive,
meets building codes and uses materials that withstand ordinary use,
and
sufficient tenancy to generate current returns on investment. Current
tenants of our existing properties include Kroger Food Stores, 99
Cents
Only Stores Texas, Bally Total Fitness, Circuit City, Michael’s, PETsMART
and Carrier. Some of the properties may be acquired from affiliated
entities, such as the private real estate programs sponsored or advised
by
Hartman Management.
|
Q: |
How
many properties do you currently own?
|
A. |
As
of March 31, 2006, we owned 37 commercial properties. These properties
are
retail, industrial and office properties located in the Houston,
Dallas
and San Antonio metropolitan areas. Because we have not identified
any
specific properties to acquire with the proceeds from this offering,
we
are considered to be a partial blind pool.
|
Q: |
Do
you intend to acquire some of your properties in joint ventures?
|
A: |
We
may want to acquire properties in joint ventures if we determine
it
necessary in order to diversify our portfolio of properties in terms
of
geographic region, property type or tenant industry group. Also,
a joint
venture may enable us to invest net proceeds from this offering sooner
than would be possible otherwise, since the amount of gross proceeds
raised in the early stages of this offering may be insufficient to
acquire
title to all of a real property targeted for investment. Such joint
ventures may be with our affiliates or with third parties. In January
2004, we entered into a joint venture with an affiliate to acquire
an
office building in Houston, Texas. We may also make or invest in
mortgage
loans secured by properties owned by such joint ventures.
|
Q: |
What
steps do you take to make sure you invest in environmentally compliant
property?
|
A: |
We
will obtain a Phase I environmental assessment of each property purchased.
In addition, we expect that in most cases we will obtain a representation
from the seller that, to its knowledge, the property is not contaminated
with hazardous materials.
|
Q: |
What
will be the terms of your leases?
|
A: |
We
will seek to secure leases with creditworthy tenants before or at
the time
we acquire a property. We expect that our leases generally will be
economically net leases, which means that the tenant would be responsible
for the cost of repairs, maintenance, property taxes, utilities,
insurance
and other operating costs. In most of these leases, we will probably
be
responsible for the replacement of specific structural components
of a
property, such as the roof of the building or the parking lot. We
expect
that our leases generally will have terms of three to five or more
years,
some of which may have renewal
options.
|
Q: |
How
will you own your real estate
properties?
|
A: |
As
an “UPREIT,” we expect to own substantially all of our real estate
properties through Hartman REIT Operating Partnership, L.P., which
we
refer to as Hartman OP or the Operating Partnership. We organized
Hartman OP to own, operate and manage real properties on our behalf.
We
are the sole general partner and owned, as of December 31, 2005,
59.55% of
the outstanding units of partnership interest of Hartman OP. We may,
however, own investments directly or through other entities.
|
Q: |
What
is an “UPREIT”?
|
A: |
UPREIT
stands for Umbrella Partnership Real Estate Investment Trust. We
use this
structure because a sale of property directly to the REIT is generally
a
taxable transaction to the selling property owner. In an UPREIT structure,
a seller of a property who desires to defer taxable gain on the sale
of
his property may transfer the property to the UPREIT in exchange
for
limited partnership units in the UPREIT and defer taxation of gain
until
the seller later exchanges his UPREIT units on a one-for-one basis
for
REIT shares. If the REIT shares are publicly traded, the former property
owner will achieve liquidity for his investment. Using an UPREIT
structure
gives us an advantage in acquiring desired properties from persons
who may
not otherwise sell their properties because of unfavorable tax results.
|
Q: |
If
I buy shares, will I receive dividends and how often?
|
A: |
Provided
we have sufficient cash flow to pay dividends, we intend to declare
dividends to our shareholders on a quarterly basis and to pay the
dividends on a monthly basis during the following quarter. We intend
to
coordinate our dividend distribution dates with our monthly new investor
admission dates so our investors will be entitled to be paid dividends
in
the next declaration of quarterly dividends following their admission.
We
have paid cash dividends ever since our operations commenced in 1999.
Our
board of trustees will make the determination of whether to authorize
a
dividend and the amount thereof consistent with its duties. We will
not
pay a dividend when we are unable to pay our debts as they become
due in
the usual course of business. However, in order to maintain our
qualification as a REIT, we must make aggregate annual distributions
equal
to at least 90.0% of our taxable income (which does not necessarily
equal
net income as calculated in accordance with accounting principles
generally accepted in the United States
(GAAP)).
|
Q: |
How
do you calculate the payment of dividends to shareholders?
|
A: |
We
intend to calculate our dividends on a monthly basis to shareholders
of
record. As a result, any dividend rights will begin to accrue immediately
upon our monthly admission of new shareholders. Such dividends will
be
paid to new shareholders beginning with the dividend payment made
on the
third month following their acquisition of our common
shares.
|
Q: |
May
I reinvest my dividends in shares of Hartman Commercial Properties
REIT?
|
A: |
Yes.
You may participate in our dividend reinvestment plan by checking
the
appropriate box on the subscription agreement or by filling out an
enrollment form, which we will provide to you at your request. The
purchase price for shares purchased under the dividend reinvestment
plan
will be $9.50.
|
Q: |
Will
the dividends I receive be taxable as ordinary income?
|
A: |
Generally,
dividends that you receive, including dividends that are reinvested
pursuant to our dividend reinvestment plan, will be taxed as ordinary
income to the extent they are from current or accumulated earnings
and
profits. We expect that some portion of your dividends may not be
subject
to tax in the year in which they are received because depreciation
expense
reduces the amount of taxable income but does not reduce cash available
for distribution to our shareholders. The portion of your dividend
that is
not subject to tax immediately is considered a return of capital
for tax
purposes and will reduce the tax basis of your investment. This,
in
effect, can defer a portion of your tax until your investment is
sold or
we are liquidated, at which time you will be taxed at capital gains
rates.
Any dividend or distribution that we properly designate as a capital
gain
distribution generally will be treated as long-term capital gain
without
regard to the period for which you have held your shares. However,
because each investor’s tax considerations are different, we suggest that
you consult with your tax advisor. You should also review the section
of
this prospectus entitled “Federal Income Tax
Considerations.”
|
Q: |
What
will you do with the money raised in this offering?
|
A: |
We
intend to use substantially all of the net proceeds from this offering
to
acquire and operate commercial real estate primarily consisting of
retail,
office and industrial properties leased to creditworthy companies.
Assuming that approximately 360,000 of the shares we sell in this
offering
are sold by our dealer manager without the payment of commissions,
we
estimate that approximately $8.625 of per share proceeds will be
available
for the purchase of real estate, with the remaining proceeds to pay
fees
and expenses of this offering and an acquisition fee to our advisor.
|
Q: |
What
kind of offering is this?
|
A: |
We
are offering to the public up to 10,000,000 common shares of beneficial
interest on a “best efforts” basis. We are also offering up to 1,000,000
common shares of beneficial interest to be issued pursuant to our
dividend
reinvestment plan.
|
Q: |
How
does a “best efforts” offering
work?
|
A: |
When
shares are offered on a “best efforts” basis, the broker-dealers
participating in the offering are only required to use their best
efforts
to sell the shares and have no firm commitment or obligation to purchase
any of the shares. Therefore, we may not sell all or any of the shares
that we are offering.
|
Q: |
How
long will this offering last?
|
A: |
We
expect that this offering will continue until the earlier of September
15,
2006 or the date we sell all of the 10,000,000 primary offering shares.
If
we have not sold all of the primary offering shares by September
15, 2006,
we may extend this offering for one additional year, until September
15,
2007. Under rules recently promulgated by the SEC, in some circumstances
we could continue the primary offering until as late as March 13,
2008. If
we decide to continue the primary offering beyond September 15, 2006,
we
will provide that information in a prospectus supplement. We may
continue
to offer the 1,000,000 dividend reinvestment plan shares beyond these
dates until we have sold all of these shares through the reinvestment
of
dividends. In some states, we may not be able to continue the offering
for
these periods without renewing the registration statement or filing
a new
registration statement. We may terminate this offering at any
time.
|
Q: |
Who
can buy shares?
|
A: |
An
investment in our company is only suitable for persons who have adequate
financial means and who will not need immediate liquidity from their
investment. Residents of most states can buy shares in this offering
provided that they have either (1) a net worth of at least $45,000
and an
annual gross income of at least $45,000, or (2) a net worth of at
least
$150,000. For this purpose, net worth does not include your home,
home
furnishings and automobiles. These minimum levels may be higher in
certain
states, so you should carefully read the more detailed description
in the
“Plan of Distribution - Suitability Standards” section of this
prospectus.
|
Q: |
May
I make an investment through my IRA, SEP or other tax-deferred
account?
|
A: |
Yes.
You may make an investment through your individual retirement account
(IRA), a simplified employee pension (SEP) plan or other tax-deferred
account. In making these investment decisions, decision
makers should, at a minimum, consider (1) whether the investment
is in
accordance with the documents and instruments governing such IRA,
plan or
other account, (2) whether the investment satisfies the fiduciary
requirements associated with such IRA, plan or other account, (3)
whether
the investment will generate unrelated business taxable income (UBTI)
to
such IRA, plan or other account, (4) whether there is sufficient
liquidity
for such investment under such IRA, plan or other account, (5) the
need to
value the assets of such IRA, plan or other account annually or more
frequently, and (6) whether such investment would constitute a prohibited
transaction under applicable
law.
|
Q: |
Have
you arranged for a custodian for investments made through IRA, SEP
or
other tax-deferred
accounts?
|
A: |
Yes.
Resources Trust Company has agreed to serve as custodian for investments
made through IRA, SEP and certain other tax-deferred accounts. We
will pay
the fees related to the establishment of investor accounts with Resources
Trust Company, and we will also pay the fees related to the maintenance
of
any such account for the first year following its establishment.
Thereafter, Resources Trust Company has agreed to provide this service
to
our shareholders with annual maintenance fees charged at their standard
rate. Resources Trust Company is a member of the Fiserv, Inc. family
of
financial services companies. Fiserv, Inc. is a publicly traded financial
services company based in Brookfield,
Wisconsin.
|
Q: |
Is
there any minimum investment required?
|
A: |
Yes.
Generally, you must invest at least $1,000. Thereafter, you may purchase
additional shares in $250 increments. Investors who already own our
shares
can make purchases for less than the minimum investment. These minimum
investment levels may be higher in certain states, so you should
carefully
read the more detailed description of the minimum investment requirements
appearing in the “Plan of Distribution - Minimum Purchase Requirements”
section of this prospectus.
|
Q: |
How
do I subscribe for shares?
|
A: |
If
you choose to purchase shares in this offering, you will need to
complete
and sign a subscription agreement, like the one contained in this
prospectus as Appendix B, for a specific number of shares and pay
for the
shares at the time you subscribe. Your payment will be placed into
an
escrow account with Wells Fargo Bank, N.A., where your funds will
be held,
along with those of other subscribers, until we admit new investors,
which
we expect to do monthly. Separate escrow accounts will be established
for
subscriptions of residents of New York and Pennsylvania. See the
section
of this prospectus captioned “Plan of Distribution - Subscription
Procedures” for a detailed discussion of how to subscribe for shares.
|
Q: |
If
I buy shares in this offering, how may I later sell them?
|
A: |
At
the time you purchase the shares, they will not be listed for trading
on
any securities exchange or over-the-counter market. In fact, we cannot
be
sure that any public market will ever develop for the shares. As
a result,
you may find it difficult to find a buyer for your shares. If you
are able
to find a buyer for your shares, you may sell your shares to that
buyer
only if the buyer satisfies the suitability standards applicable
to him or
her, including any suitability standards imposed by such potential
buyer’s
state of residence, or unless such sale would cause the buyer to
own more
than 9.8% of the outstanding common shares. See the “Suitability
Standards,” “Plan of Distribution - Suitability Standards” and
“Description of Shares - Restrictions on Transfer” sections of this
prospectus.
|
Q: |
What
are your exit strategies?
|
A: |
We
will seek to return your investment to you by listing our shares
on the
New York Stock Exchange, the American Stock Exchange, the Nasdaq
National
Market or another national exchange within twelve years from the
termination of this offering or, if we do not obtain such a listing,
by
making an orderly disposition of our properties and distributing
the net
proceeds from such sales to you, unless a majority of the members
of our
board of trustees, including a majority of our independent trustees,
in
their relationship as fiduciaries to us and to our shareholders,
approves
otherwise and sets a future date for our listing and/or
termination.
|
Q: |
Who
is the transfer agent?
|
A: |
American
Stock Transfer and Trust Co.
59
Maiden Lane
New
York, New York 10038
(212)
936-5100
|
Q: |
Will
I be notified of how my investment is doing?
|
A: |
Yes.
We will provide you with periodic updates on the performance of your
investment with us, including:
|
· |
monthly
newsletters or dividend reports;
|
· |
three
quarterly financial reports, which are filed with the Securities
and
Exchange Commission and will be distributed to you upon
request;
|
· |
an
annual report; and
|
· |
an
annual IRS Form 1099-DIV, if required;
and
|
· |
supplements
to this prospectus.
|
· |
United
States mail or other courier;
|
· |
facsimile;
|
· |
electronic
delivery; and
|
· |
posting
on our affiliated website, at
www.hartmanmgmt.com.
|
Q: |
When
will I receive my detailed tax information?
|
A: |
Your
Form 1099 tax information will be placed in the mail by January 31
of each
year.
|
Q: |
Who
can help answer my questions?
|
A: |
If
you have more questions about the offering or if you would like additional
copies of this prospectus, you should contact your registered
representative or contact:
|
· |
There
is no public trading market for the shares, and we cannot assure
you that
one will ever develop. Until the shares are publicly traded, you
will have
difficulty selling your shares, and even if you are able to sell
your
shares, you will likely have to sell them at a substantial
discount.
|
· |
All
of our properties are located in the Houston, Dallas and San Antonio
metropolitan areas. Because of the lack of geographic diversification
of
our portfolio, an economic downturn in the Houston, Dallas and San
Antonio
metropolitan areas could adversely impact our operations and ability
to
pay dividends to our shareholders.
|
· |
We
have not identified any investments that we will make with the proceeds
of
this offering. You will not have the opportunity to evaluate our
investments prior to our making them. You must rely totally upon
Hartman
Management’s ability to select our
investments.
|
· |
The
number of properties that we will acquire and the diversification
of our
investments will be reduced to the extent that we sell less than
all of
the 11,000,000 shares being offered. For example, if we are only
able to
invest in one additional property, the value of your investment may
fluctuate more widely with the performance of the specific investment.
There is a greater risk that you will lose money in your investment
if we
cannot diversify our portfolio of investments by geographic location
and
property type.
|
· |
Our
ability to achieve our investment objectives and to pay dividends
depends
on the performance of Hartman Management, our advisor, for the day-to-day
management of our business and the selection of our real estate
properties, mortgage loans and other
investments.
|
· |
We
will pay significant fees to Hartman Management and its affiliates,
some
of which are payable based upon factors other than the quality of
services
provided to us.
|
· |
We
may incur substantial debt. Loans we obtain will be secured by some
of our
properties, which will put those properties at risk of forfeiture
if we
are unable to pay our debts and could hinder our ability to pay dividends
to our shareholders in the event that income on such properties,
or their
value, falls.
|
· |
We
may not remain qualified as a REIT for federal income tax purposes,
which
would subject us to the payment of tax on our income at corporate
rates
and reduce the amount of funds available for payment of dividends
to our
shareholders.
|
· |
We
depend on tenants for our revenue and on anchor tenants to attract
non-anchor tenants. We cannot predict what the occupancy level will
be in
a particular building or that any tenant will remain solvent. We
also
cannot predict the future value of our properties. Accordingly, we
cannot
guarantee that you will receive cash dividends or appreciation of
your
investment.
|
· |
To
ensure that we continue to qualify as a REIT, our charter prohibits
any
shareholder from owning more than 9.8% of our outstanding common
shares.
|
· |
You
will not have preemptive rights as a shareholder, so any shares that
we
issue in the future may dilute your interest in our company. In addition,
our charter permits our board of trustees to issue capital shares
that may
subordinate the rights of holders of our common
shares.
|
· |
Approximately
30.2% of our gross leasable area is subject to leases that expire
prior to
December 31, 2007.
|
· |
If
we do not obtain listing of our common shares on the New York Stock
Exchange, the American Stock Exchange, the Nasdaq National Market
or
another national exchange by the twelfth anniversary of the termination
of
the offering, our charter provides that we must liquidate our assets
unless a majority of our board of trustees, including a majority
of our
independent trustees, shall approve
otherwise.
|
· |
The
vote of shareholders owning a majority of our shares will bind all
of the
shareholders as to certain matters such as the election of trustees
and
any amendment to our charter.
|
· |
Potential
liability as the result of environmental matters could adversely
affect
our operations.
|
· |
Allen R.
Hartman controls other entities that compete with us for his time
as well
as for tenants and acquisition opportunities. Accordingly,
Mr. Hartman will face conflicts of interest resulting from his duties
to these other entities.
|
· |
We
have acquired a majority of our properties from entities owned, in
whole
or in part, by Allen R.
Hartman.
|
· |
to
maximize cash dividends paid to you;
|
· |
to
obtain and preserve long-term capital appreciation in the value of
our
properties to be realized upon our ultimate sale of such properties;
and
|
· |
to
provide you with a return of your investment by listing the shares
on the
New York Stock Exchange, the American Stock Exchange, the Nasdaq
National
Market or another national exchange within twelve years of the termination
of this offering or, if we do not obtain listing of the shares within
twelve years of the termination of this offering, by making an orderly
disposition of our properties and distributing the cash to you.
|
· |
Our
board of trustees oversees our operations. We have five members on
our
board of trustees. Three of our trustees are independent of Hartman
Management and have responsibility for reviewing its
performance.
|
· |
We
pay Hartman Management significant compensation for services it performs,
the majority of which is not dependent on the quality of the service
provided to us. We also reimburse Hartman Management for expenses
it pays
on our behalf.
|
· |
Hartman
Management will experience conflicts of interest in connection with
the
management of our business and properties, such
as:
|
- |
Mr.
Hartman and other employees of Hartman Management will need to allocate
their time between our operations and the operations of other companies
managed by Hartman Management that are affiliated with Mr. Hartman.
|
- |
We
compete for tenants with other companies affiliated with Mr. Hartman
also
managed by Hartman Management.
|
- |
We
may acquire properties from entities affiliated with Mr. Hartman
but
otherwise not affiliated with us.
|
- |
Hartman
Management must determine which properties we should acquire and
which
properties should be acquired by another Hartman
program.
|
- |
Hartman
Management will receive fees in connection with transactions involving
the
purchase, management and sale of our properties regardless of the
quality
of the property acquired or service provided to
us.
|
(1) |
Allen
R. Hartman is the sole shareholder of Hartman Property Management
Holdings, LLC.
|
(2) |
Allen
R. Hartman owns 2.85% of the issued and outstanding common shares
of
Hartman Commercial Properties REIT. Units of Hartman REIT Operating
Partnership, L.P. may be converted into common shares of Hartman
Commercial Properties REIT. Assuming Mr. Hartman makes such a conversion,
and assuming that he is deemed the beneficial owner of Houston R.
E.
Income Properties XIV, Mr. Hartman will own 23.44% of the issued
and
outstanding common shares of Hartman Commercial Properties
REIT.
|
(3) |
Allen
R. Hartman is the sole limited partner of Hartman Management, L.P.,
which
serves as the advisor and the property manager to Hartman Commercial
Properties REIT. Hartman Property Management Holdings, LLC is the
sole
general partner of Hartman Management,
L.P.
|
(4) |
Hartman
Commercial Properties REIT is the 59.55% owner and the general partner
of
Hartman REIT Operating Partnership,
L.P.
|
(5) |
Hartman
REIT Operating Partnership II, L.P. is a wholly owned subsidiary
of
Hartman REIT Operating Partnership, L.P. and was formed in order
to secure
a loan from GMAC.
|
(6) |
Hartman
REIT Operating Partnership III LP is a wholly owned subsidiary of
Hartman
REIT Operating Partnership, L.P. and was formed in order to secure
a
revolving line of credit facility with a consortium of banks led
by
KeyBank National Association.
|
Type
of Compensation
|
Form
of Compensation
|
Estimated
Amount for
Maximum
Offering
(11,000,000
shares -
$109,500,000)
|
Offering
Stage
|
||
Sales
Commissions
|
Up
to 7.0% of gross offering proceeds for sales made by participating
broker-dealers and no selling commissions on sales through our dealer
manager by registered representatives or principals of our dealer
manager
who are affiliates of our company, which are anticipated to be
approximately 360,000 shares of all sales (blended average of 6.75%);
no
selling commissions will be paid with respect to purchases under
our
dividend reinvestment plan
|
$6,750,000
|
Dealer
Manager Fee
|
Up
to 2.5% of gross offering proceeds; no dealer manager fee will be
paid
with respect to purchases under our dividend reinvestment
plan
|
$2,500,000
|
Organization
and Offering Expenses
|
Up
to 2.5% of gross offering proceeds
|
$2,737,500
|
Acquisition
and Development Stage
|
||
Acquisition
Fees
|
2.0%
of gross offering proceeds
|
$2,190,000
|
Operational
Stage
|
||
Property
Management and Leasing Fees
|
Based
upon the customary property management and leasing fees applicable
to the
geographic location and type of property (i.e.,
generally 2.0% to 4.0% of gross revenues for management of commercial
office buildings and 5.0% of gross revenues for management of retail
and
industrial properties)
|
N/A
|
Asset
Management Fee
|
Annual
fee of 0.25% of our gross asset value. The fee is payable quarterly
in an
amount equal to 0.0625% of gross asset value as of the last day of
the
immediately preceding quarter
|
N/A
|
Type
of Compensation
|
Form
of Compensation
|
Estimated
Amount for
Maximum
Offering
(11,000,000
shares -
$109,500,000)
|
Real
Estate Commissions
|
1.0%
of contract price for properties sold for substantial assistance
in
connection with sale
|
N/A
|
Subordinated
Participation in Net Sale Proceeds (payable only if our shares are
not
listed on an exchange)
|
15.0%
of remaining amounts of net sale proceeds after return of capital
plus
payment to investors of a 7.0% annual, cumulative, noncompounded
return on
capital
|
N/A
|
Subordinated
Incentive Listing Fee (payable only if our shares are listed on an
exchange)
|
15.0%
of the amount by which our adjusted market value exceeds the aggregate
capital contributions contributed by investors plus payment to investors
of a 7.0% annual, cumulative, noncompounded return on capital
|
N/A
|
· |
identify
and acquire investments that further our investment
strategies;
|
· |
increase
awareness of the Hartman name within the investment products market
outside of the Houston, Dallas and San Antonio, Texas metropolitan
areas;
|
· |
establish
and maintain our network of licensed securities brokers and other
agents;
|
· |
attract,
integrate, motivate and retain qualified personnel to manage our
day-to-day operations;
|
·
|
respond
to competition for our targeted real estate properties and other
investments as well as for potential investors in us;
and
|
· |
continue
to build and expand our operations structure to support our
business.
|
· |
the
amount of the cash available for
distribution;
|
· |
our
UPREIT’s financial condition;
|
· |
our
UPREIT’s capital expenditure requirements;
and
|
· |
our
annual distribution requirements necessary to maintain our qualification
as a REIT.
|
· |
risks
that investments will fail to perform in accordance with
expectations;
|
· |
risks
that judgments with respect to the costs of necessary improvements
will
prove inaccurate; and
|
· |
general
investment risks associated with any real estate investment.
|
· |
the
risks of construction delays or cost overruns that may increase
project
costs and could make such project
uneconomical;
|
· |
the
risk that occupancy or rental rates at the completed project will
not be
sufficient to enable us to pay operating expenses or earn the targeted
rate of return on our investment;
and
|
· |
the
risk of incurrence of redevelopment costs in connection with projects
that
are not completed.
|
· |
tenants
will not renew such leases;
|
· |
we
will not be able to re-lease the space subject to such leases;
and
|
· |
the
terms of any renewal or re-lease will not be as favorable as current
leases.
|
· |
the
possibility that our partners or co-investors might become insolvent
or
bankrupt;
|
· |
that
such partners or co-investors might have economic or other business
interests or goals that are inconsistent with our business interests
or
goals;
|
· |
the
possibility that we may incur liabilities as the result of the
action
taken by our partner or co-investor;
or
|
· |
that
such partners or co-investors may be in a position to take action
contrary
to our instructions or requests or contrary to our policies or
objectives,
including our policy with respect to maintaining our qualification
as a
REIT.
|
· |
the
possibility that our co-venturer, co-tenant or partner in an investment
might become bankrupt;
|
· |
that
such co-venturer, co-tenant or partner may at any time have economic
or
business interests or goals that are or that become inconsistent
with our
business interests or goals;
or
|
· |
that
such co-venturer, co-tenant or partner may be in a position to
take action
contrary to our instructions or requests or contrary to our policies
or
objectives.
|
· |
897,117.19
OP Units, as adjusted to reflect the recapitalization, in consideration
of
Mr. Hartman’s general partner interest in the selling
entities;
|
· |
the
ability to limit his future exposure to general partner liability
as a
result of Mr. Hartman no longer serving as the general partner
to certain
of the selling entities; and
|
· |
the
repayment of debt encumbering various of our properties that was
personally guaranteed by Mr.
Hartman.
|
· |
any
person who beneficially owns ten percent or more of the voting
power of
the trust’s shares; or
|
· |
an
affiliate or associate of the trust who, at any time within the
two-year
period prior to the date in question, was the beneficial owner
of ten
percent or more of the voting power of the then outstanding voting
shares
of the trust.
|
· |
eighty
percent of the votes entitled to be cast by holders of outstanding
voting
shares of the trust; and
|
· |
two-thirds
of the votes entitled to be cast by holders of voting shares of
the trust
other than shares held by the interested shareholder with whom
or with
whose affiliate the business combination is to be effected or held
by an
affiliate or associate of the interested
shareholder.
|
· |
limitations
on capital structure;
|
· |
restrictions
on specified investments;
|
· |
prohibitions
on transactions with affiliates; and
|
· |
compliance
with reporting, record keeping, voting, proxy disclosure and other
rules
and regulations that would significantly change our operations.
|
· |
the
election or removal of
trustees;
|
· |
any
amendment of our charter (including a change in our investment
objectives), except that our board of trustees may amend our charter
without shareholder approval, to increase or decrease the aggregate
number
of our shares, to increase or decrease the number of our shares
of any
class or series that we have the authority to issue, or to classify
or
reclassify any unissued shares by setting or changing the preferences,
conversion or other rights, restrictions, limitations as to dividends,
qualifications or terms and conditions of redemption of such shares,
provided however, that any such amendment does not adversely affect
the
rights, preferences and privileges of the
shareholders;
|
· |
our
liquidation or dissolution;
|
· |
a
reorganization as provided in our charter;
and
|
· |
any
merger, consolidation or sale or other disposition of substantially
all of
our assets.
|
· |
poor
economic times may result in tenant defaults under our
leases;
|
· |
job
transfers and layoffs may increase
vacancies;
|
· |
maintaining
occupancy levels may require increased concessions or reduced rental
rates; and
|
· |
increased
insurance premiums, resulting in part from the increased risk of
terrorism, may reduce funds available for payment of dividends
or, to the
extent we can pass such increases through to tenants, may lead
to tenant
defaults. Increased insurance premiums also may make it difficult
to
increase rents to tenants on turnover, which may adversely affect
our
ability to increase our returns.
|
· |
conditions
in financial markets;
|
· |
over-building;
|
· |
a
reduction in rental income as the result of the inability to maintain
occupancy levels;
|
· |
adverse
changes in applicable tax, real estate, environmental or zoning
laws;
|
· |
changes
in general economic
conditions;
|
· |
a
taking of any of our properties by eminent
domain;
|
· |
adverse
local conditions (such as changes in real estate zoning laws that
may
reduce the desirability of real estate in the area);
|
· |
acts
of God, such as earthquakes or floods and other uninsured
losses;
|
· |
changes
in supply of or demand for similar or competing properties in an
area;
|
· |
changes
in interest rates and availability of permanent mortgage funds,
which may
render the sale of a property difficult or unattractive; and
|
· |
periods
of high interest rates and tight money
supply.
|
· |
net
worth requirements;
|
· |
debt
service coverage of at least 1.5 to
1.0;
|
· |
loan-to-value
ratio of the borrowing base pool to total funded loan balance of
at least
1.67 to 1.00;
|
· |
total
debt not to exceed 60% of fair market value of the real estate
assets;
|
· |
the
ratio of secured debt to fair market value of real estate assets
not to
exceed 40%;
|
· |
interest
coverage ratio of at least 2.0 to
1.0;
|
· |
we
must hedge certain amounts of variable interest rate
debt;
|
· |
maintenance
of specific levels of insurance;
and
|
· |
limitations
on our ability to make distributions or other payments to our
shareholders, sell assets or engage in mergers, consolidation or
make
certain acquisitions.
|
· |
the
risk that a co-tenant may at any time have economic or business
interests
or goals which are or which become inconsistent with our business
interests or goals;
|
· |
the
risk that a co-tenant may be in a position to take action contrary
to our
instructions or requests or contrary to our policies or objectives;
or
|
· |
the
possibility that a co-tenant might become insolvent or bankrupt,
which may
be an event of default under mortgage loan financing documents
or allow
the bankruptcy court to reject the tenants in common agreement
or
management agreement entered into by the co-tenants owning interests
in
the property.
|
· |
we would
not be allowed to deduct our distributions to shareholders when
computing
our taxable
income;
|
· |
we
would be subject to federal income tax (including any applicable
alternative minimum tax) on our taxable income at regular corporate
rates;
|
· |
we
would be disqualified from being taxed as a REIT for the four taxable
years following the year during which qualification was lost, unless
entitled to relief under certain statutory provisions;
|
· |
our
cash available for dividends would be reduced and we would have
less cash
to pay dividends to shareholders;
and
|
· |
we
may be required to borrow additional funds or sell some of our
assets in
order to pay corporate tax obligations we may incur as a result
of our
disqualification.
|
· |
is
subject to the “plan assets” rules under ERISA and the Internal Revenue
Code;
|
· |
satisfies
the fiduciary standards of care established under
ERISA;
|
· |
is
subject to the unrelated business taxation rules under Section
511 of the
Internal Revenue Code; and
|
· |
constitutes
a prohibited transaction under ERISA or the Internal Revenue Code.
Those
investors subject to ERISA should read the “ERISA Considerations” for
further discussion of ERISA
topics.
|
· |
your
investment is consistent with your fiduciary obligations under
ERISA and
the Internal Revenue
Code;
|
· |
your
investment is made in accordance with the documents and instruments
governing your plan or IRA, including your plan’s investment
policy;
|
· |
your
investment satisfies the prudence and diversification requirements
of
ERISA;
|
· |
your
investment will not impair the liquidity of the plan or
IRA;
|
· |
your
investment will not produce UBTI for the plan or
IRA;
|
· |
you
will be able to value the assets of the plan annually in accordance
with
ERISA requirements; and
|
· |
your
investment will not constitute a prohibited transaction under Section
406
of ERISA or Section 4975 of the Internal Revenue
Code.
|
· |
future
economic performance;
|
· |
plans
and objectives of management for future operations;
and
|
· |
projections
of revenue and other financial
items.
|
· |
Selling
commissions and the dealer manager fee, which consist of selling
commissions of up to 7.0% of aggregate gross offering proceeds, which
commissions may be waived or reduced under certain circumstances,
and a
dealer manager fee of up to 2.5% of aggregate gross offering proceeds,
both of which are payable to D.H. Hill Securities. D.H. Hill Securities
may pay commissions of up to 7.0% of the gross offering proceeds
to other
broker-dealers participating in the offering of our shares. With
respect
to shares sold by D.H. Hill Securities by registered representatives
and
principals of D.H. Hill Securities who are affiliates of our company,
D.H.
Hill Securities has agreed to waive the full amount of the selling
commission otherwise payable to it by the purchaser of those shares,
which
will increase the money that we will use to buy real properties.
D.H. Hill
Securities may re-allow a portion of its dealer manager fee in an
aggregate amount up to 1.5% of gross offering proceeds to broker-dealers
participating in the offering to be paid as marketing fees, including
bona
fide conference fees incurred, and due diligence expense reimbursement.
In
no event shall the total underwriting compensation, including selling
commissions, the dealer manager fee and underwriting expense
reimbursements, exceed 9.5% of gross offering proceeds. See the “Plan of
Distribution” section of this prospectus for a description of additional
provisions relating to selling commissions and the dealer manager
fee.
|
· |
Organization
and offering expenses are defined generally as any and all costs
and
expenses incurred by us, our advisor or an affiliate of our advisor
in
connection with our formation, qualification and registration and
the
marketing and distribution of our shares, including, but not limited
to,
accounting and escrow fees, printing, advertising and marketing expenses,
and other accountable offering expenses, other than selling commissions
and the dealer manager fee. Hartman Management and its affiliates
will be
responsible for the payment of organization and offering expenses,
other
than selling commissions and the dealer manager fee, to the extent
they
exceed 2.5% of gross offering proceeds, without recourse against
or
reimbursement by us and, pursuant to our charter, the aggregate sum
of
such organization and offering expenses, selling commissions and
the
dealer manager fee, shall in no event exceed 15.0% of the gross offering
proceeds.
|
· |
Acquisition
fees, which are defined generally as fees and commissions paid by
any
party to any person in connection with identifying, reviewing, evaluating,
investing in, and the purchase, development or construction of properties,
or the making or investing in mortgage loans or other investments.
We will
pay Hartman Management, as our advisor, acquisition fees of 2.0%
of the
gross offering proceeds upon receipt of the offering proceeds rather
than
at the time a property is acquired. However, if either party terminates
or
fails to renew the advisory agreement, Hartman Management must return
any
acquisition fees not yet allocated to one of our investments. Acquisition
fees do not include acquisitions
expenses.
|
MINIMUM
OFFERING
|
MAXIMUM
OFFERING
|
||||||||||||
Amount
|
Percent
|
Amount
|
Percent
|
||||||||||
Gross
offering proceeds
|
$
|
2,000,000
|
100.00
|
%
|
$
|
109,500,000
|
100.00
|
%
|
|||||
Less
public offering expenses:
|
|||||||||||||
Selling
commissions and dealer manager fee (1)
|
185,000
|
9.25
|
9,250,000
|
8.45
|
|||||||||
Other
organization and offering expenses (2)
|
50,000
|
2.50
|
2,737,500
|
2.50
|
|||||||||
Acquisition
fees (3)
|
40,000
|
2.00
|
2,190,000
|
2.00
|
|||||||||
Initial
working capital reserve (4)
|
—
|
—
|
—
|
—
|
|||||||||
Amount
estimated to be invested (5)
|
$
|
1,725,000
|
86.25
|
%
|
$
|
95,322,500
|
87.05
|
%
|
|||||
(1) |
We
have assumed that 360,000
of the shares sold in the offering will be sold through our dealer
manager
by registered representatives and principals of our dealer manager
who are
affiliates of our company, in which case investors will pay $10.00
per
share but no commission will be paid with respect to such purchases.
As a
result of our dealer manager’s agreement not to charge a commission for
such sales, the amounts that would otherwise be paid as commissions
will
be retained and used by us for investment in real properties. We
have also
assumed that none of the shares sold by our dealer manager without
commission qualify for volume discounts. To the extent that any of
such
sales qualify for volume discounts, the amount of the volume discount
will
reduce the proceeds otherwise available to us for investment. For
purposes
of this table, we have also assumed that the minimum offering amounts
do
not include any purchases under our dividend reinvestment plan. We
will
not pay any sales commission with respect to purchases pursuant to
our
dividend reinvestment plan.
|
(2) |
We
had estimated that approximately $400,000 of organization and offering
expenses would be incurred if the minimum offering of 200,000 shares
($2.0
million) was sold. However, of such amount, only $50,000 would have
been
paid by us, and the balance would have been paid by our advisor.
Our
advisor would have received funds to pay such expenses from capital
contributions from affiliates of our advisor. Organization and offering
expenses are required to be reasonable. The advisor or an affiliate
of the
advisor will pay any amount exceeding 2.5% of the gross offering
proceeds.
Organization and offering expenses will necessarily increase as the
volume
of shares sold in the offering increases, in order to pay the increased
expenses of qualification and registration of the additional shares
and
the marketing and distribution of the additional shares.
|
(3) |
We
will pay Hartman Management, as our advisor, acquisition fees of
2.0% of
gross offering proceeds for its services in connection with the
investigation, selection and acquisition of properties. We will pay
Hartman Management the acquisition fee amount upon receipt of the
offering
proceeds rather than at the time a property is acquired. In addition
to
this acquisition fee, we may also incur customary third-party acquisition
expenses in connection with the acquisition (or attempted acquisition)
of
a property. See Note 5 below.
|
(4) |
Because
we expect that the vast majority of leases for the properties acquired
by
us will provide for tenant reimbursement of operating expenses, we
do not
anticipate that a permanent reserve for maintenance and repairs of
real
estate properties will be established. However, to the extent that
we have
insufficient funds for such purposes, we may establish reserves from
gross
offering proceeds, out of cash flow generated by operating properties
or
out of non-liquidating net sale proceeds (defined generally to mean
the
net cash proceeds received by us from any sale or exchange of
properties).
|
(5) |
The
amount estimated to be invested will include customary third-party
acquisition expenses, such as legal fees and expenses, costs of appraisal,
accounting fees and expenses, title insurance premiums and other
closing
costs and miscellaneous expenses relating to the acquisition of real
estate. We estimate that the third-party costs would average 0.5%
of the
contract purchase price of property acquisitions.
|
· |
we
sold all the remaining 8,134,443 common shares offered by this
prospectus
to the public;
|
· |
we
sold all the remaining 962,049 common shares offered pursuant to
our
dividend reinvestment plan;
and
|
· |
we
received additional net proceeds of $80,494,077 from this
offering,
|
Per
share offering price of this offering before any expenses, commissions
and
other fees
|
$10.00
|
Per
share offering price of shares issuable pursuant to dividend reinvestment
plan before expenses,
commissions and other fees
|
$
9.50
|
Net
tangible book value of each common share as December 31,
2005
|
$
5.83
|
Pro
forma net tangible book value of each common share assuming the completion
of this offering
(1)
|
$
7.35
|
Pro
forma increase in net tangible book value per common share to existing
shareholders attributable
to this offering
|
$
1.52 (26.1%)
|
Pro
forma decrease (dilution) in net tangible book value per common share
to
new investors
|
$
2.65 (26.5%)
|
(1) |
This
figure assumes that we received net proceeds of $82,756,175 from
selling
the remaining shares from this offering, after deducting 7.0% of
gross
proceeds for the payment of selling commissions to third party broker
dealers and the 2.5% dealer manager fee from the proceeds of sales
other
than dividend reinvestment plan shares. These selling commission
amounts
assume that 100% of all remaining shares offered by this prospectus
are
sold by registered broker dealers on our behalf. We will pay such
broker
dealers a selling commission of up to 7.0% of the gross proceeds
we
receive from shares they place, however no sales commission will
be paid
with respect to dividend reinvestment plan purchases. To the extent
our
executive officers sell shares in this offering, a commission will
not be
paid for such shares and we will receive the excess proceeds.
Consequently, to the extent that our executive officers sell any
of the
shares, our net tangible book value will increase. We give no effect
to
the possible conversion of any OP Units into common
shares.
|
Shares
Issued (1)
|
Book
Value of Total
Consideration
|
Book
Value of
Consideration
Per Share
|
||||||||||||||
Number
|
Percent
|
Amount
|
Percent
|
|||||||||||||
Existing
shareholders
|
8,913,654
|
49.5
|
%
|
$
|
51,938,512
|
39.2
|
%
|
$
|
5.83
|
|||||||
New
shareholders
|
9,096,492
|
50.5
|
%
|
$
|
80,894,077
|
60.8
|
%
|
$
|
8.85
|
|||||||
Total
|
18,010,146
|
100.0
|
%
|
$
|
132,432,589
|
100.0
|
%
|
$
|
7.35
|
(1) |
Because
the outstanding units of partnership interest of Hartman OP are
convertible into our common shares on a one-for-one basis, we give
no
effect to the possible conversion of units of partnership interest
of
Hartman OP into common shares.
|
· |
the amount
of the fees paid to Hartman Management in relation to the size,
composition and performance of our
investments;
|
· |
the
success of Hartman Management in generating appropriate investment
opportunities;
|
· |
rates
charged to other REITs, especially REITs of similar structure,
and to
investors other than REITs by advisors performing the same or similar
services;
|
· |
additional
revenues realized by Hartman Management and its affiliates through
their
relationship with us, whether they are paid by us or they are paid
by
others with whom we do
business;
|
· |
the
quality and extent of service and advice furnished by Hartman Management
and the performance of our investment portfolio;
and
|
· |
the
quality of our portfolio relative to the investments generated
by Hartman
Management or its affiliates for their own
accounts.
|
Name
|
Age
|
Position(s)
|
Allen
R. Hartman
|
54
|
President,
Secretary and Trustee
|
Terry
L. Henderson
|
55
|
Chief
Financial Officer and Trustee
|
Jack
L. Mahaffey
|
74
|
Independent
Trustee
|
Chris
A. Minton
|
69
|
Independent
Trustee
|
Chand
Vyas
|
61
|
Independent
Trustee
|
· |
accelerate
the vesting and/or exercisability of the non-assumed option;
and/or
|
· |
unilaterally
cancel such non-assumed option in exchange
for:
|
- |
whole
and/or fractional shares (or for whole shares and cash in lieu of
any
fractional share) or whole and/or fractional shares of a successor
(or for
whole shares of a successor and cash in lieu of any fractional share)
which, in the aggregate, are equal in value to the excess of the
fair
market value of the shares that could be purchased subject to such
non-assumed option determined as of the Action Effective Date (taking
into
account vesting) over the aggregate exercise price for such shares;
or
|
- |
cash
or other property equal in value to the excess of the fair market
value of
the shares that could be purchased subject to such non-assumed option
determined as of the Action Effective Date (taking into account vesting)
over the aggregate exercise price for such shares;
and/or,
|
· |
unilaterally
cancel such non-assumed option after providing the holder of such
option
with (1) an opportunity to exercise such non-assumed option to
the extent
vested within a specified period prior to the date of the change
of
control, and (2) notice of such opportunity to exercise prior to
the
commencement of such specified
period.
|
· |
the
average closing sale price for the five consecutive trading days
ending on
such date, if the shares are traded on a national stock
exchange;
|
· |
the
average of the high bid and low asked prices on such date, if the
shares
are quoted on the Nasdaq Stock
Market;
|
· |
the
per share offering price of our common shares, if there is a current
public offering and the shares are not traded or listed as provided
above;
or
|
· |
the
fair market value as determined by our board of
trustees.
|
· |
the
act or omission of the director or officer was material to the matter
giving rise to the proceeding and (i) was committed in bad faith or
(ii) was the result of active and deliberate dishonesty,
|
· |
the
director or officer actually received an improper personal benefit
in
money, property or services or
|
· |
in
the case of any criminal proceeding, the director or officer had
reasonable cause to believe that the act or omission was unlawful.
|
· |
the
trustees, advisor or affiliates have determined, in good faith,
that the
course of conduct that caused the loss or liability was in our
best
interests;
|
· |
the
trustees, advisor or affiliates were acting on our behalf or performing
services for us;
|
· |
in
the case of our non-independent trustees, advisor or affiliates,
the
liability or loss was not the result of negligence or misconduct
by the
party seeking
indemnification;
|
· |
in
the case of independent trustees, the liability or loss was not
the result
of gross negligence or willful misconduct by the party seeking
indemnification; and
|
· |
the
indemnification or agreement to hold harmless is recoverable only
out of
our net assets and not from the
shareholders.
|
· |
there
has been a successful adjudication on the merits of each count
involving
alleged securities law
violations;
|
· |
such
claims have been dismissed with prejudice on the merits by a court
of
competent jurisdiction; or
|
· |
a
court of competent jurisdiction approves a settlement of the claims
against the indemnitee and finds that indemnification of the settlement
and the related costs should be made, and the court considering
the
request for indemnification has been advised of the position of
the
Securities and Exchange Commission and of the published position
of any
state securities regulatory authority in which our securities were
offered
as to indemnification for violations of securities
laws.
|
· |
the
legal action relates to acts or omissions with respect to the performance
of duties or services on behalf of
us;
|
· |
our
trustees, officers, employees, agents, advisor or affiliates provide
us
with written affirmation of their good faith belief that they have
met the
standard of conduct necessary for
indemnification;
|
· |
the
legal action is initiated by a third party who is not a shareholder
or, if
the legal action is initiated by a shareholder acting in his or
her
capacity as such, a court of competent jurisdiction specifically
approves
such advancement; and
|
· |
our
trustees, officers, employees, agents, advisor or affiliates agree
in
writing to repay the advanced funds to us together with the applicable
legal rate of interest thereon, in cases in which such trustees,
officers,
employees, agents, advisor or affiliates are found not to be entitled
to
indemnification.
|
Name
|
Age
|
Position
|
Allen
R. Hartman
|
54
|
President,
Secretary and Trustee
|
Terry
L. Henderson
|
55
|
Chief
Financial Officer
|
John
Crossin
|
66
|
Director
of Leasing
|
Valarie
L. King
|
44
|
Director
of Property Management
|
· |
find,
present and recommend to us real estate investment opportunities
consistent with our investment policies and
objectives;
|
· |
structure
the terms and conditions of our real estate acquisitions, sales
or joint
ventures;
|
· |
acquire
properties on our behalf in compliance with our investment objectives
and
policies;
|
· |
arrange
for financing and refinancing for our
properties;
|
· |
enter
into leases and service contracts for our
properties;
|
· |
oversee
the property managers’
performance;
|
· |
review
and analyze the properties’ operating and capital
budgets;
|
· |
generate
an annual budget for us;
|
· |
review
and analyze financial information for each property and the overall
portfolio;
|
· |
formulate
and oversee the implementation of strategies for the administration,
promotion, management, operation, maintenance, improvement, financing
and
refinancing, marketing, leasing and disposition of
properties;
|
· |
perform
transfer agent functions; and
|
· |
engage
our agents.
|
· |
perform
the duties of a landlord under all leases insofar as such duties
relate to
operation, maintenance, and day-to-day
management;
|
· |
cause
the properties to be maintained in the same manner as similar properties
in the area;
|
· |
coordinate
the leasing of properties and negotiate and use its best efforts
to secure
executed leases from qualified tenants for available space in the
properties;
|
· |
forward
notices of violations or other notices from any governmental authority,
board of fire underwriters or any insurance
company;
|
· |
enter
into or renew contracts for electricity, gas, steam, landscaping,
fuel,
oil, maintenance and other services as are customarily furnished
or
rendered;
|
· |
analyze
and pay all bills received for services, work and supplies in connection
with maintaining and operating the
properties;
|
· |
collect
all rent and other monies from tenants and any sums otherwise due
with
respect to the properties;
and
|
· |
establish
and maintain a separate checking account for funds relating to
the
properties.
|
Type
of Compensation
|
Form
of Compensation
|
Estimated
Amount for Maximum
Offering
(1)
|
Offering
Stage
|
||
Selling
Commissions -
D.H.
Hill Securities
|
Up
to 7.0% of gross offering proceeds for sales made by participating
broker-dealers and no selling commissions on sales through our dealer
manager by registered representatives or principals of our dealer
manager
who are affiliates of our company, which are anticipated to be
approximately 360,000 shares (blended average of 6.75%); no selling
commissions will be paid with respect to purchases under our dividend
reinvestment plan. D.H. Hill Securities intends to re-allow 100.0%
of
commissions earned to participating broker-dealers.
|
$6,750,000
(2)
|
Dealer
Manager Fee -
D.H.
Hill Securities
|
Up
to 2.5% of gross offering proceeds before reallowance to participating
broker-dealers. D.H. Hill Securities may reallow a portion of its
dealer
manager fee to such participating broker-dealers as marketing fees,
including bona fide conference fees incurred, and due diligence expense
reimbursement. No dealer manager fee will be paid in respect of dividend
reinvestment plan purchases.
|
$2,500,000
|
Reimbursement
of Organization and Offering Expenses - Hartman Management (3)
|
Up
to 2.5% of gross offering proceeds. Hartman Management will pay our
organization and offering expenses (excluding selling commissions
and the
dealer manager fee). We will then reimburse Hartman Management for
these
amounts up to 2.5% of gross offering proceeds.
|
$2,737,500
|
Acquisition
and Development Stage
|
||
Acquisition
Fees - Hartman Management (4)
(5)
|
2.0%
of the gross offering proceeds for services in connection with the
selection, purchase, development or construction of real property.
|
$2,190,000
|
Operational
Stage
|
||
Property
Management and Leasing Fees - Hartman Management
|
For
the management and leasing of our properties, we will pay Hartman
Management, our property manager, property management and leasing
fees
equal to what other management companies generally charge for the
management and leasing of similar properties in the applicable geographic
location of such properties (i.e.,
generally 2.0% to 4.0% of gross revenues for management of
commercial office buildings and 5.0% of gross revenues for management
of
retail and industrial properties), which may include reimbursement
of the
costs and expenses Hartman Management incurs in managing the properties.
Reimbursable costs and expenses include wages and salaries and other
expenses of employees engaged in operating, managing, maintaining
and
leasing the properties.
|
Actual
amounts are dependent upon results of operations and therefore cannot
be
determined at the present time.
|
Type
of Compensation
|
Form
of Compensation
|
Estimated
Amount for Maximum
Offering
(1)
|
Asset
Management Fee - Hartman Management (6)
|
Annual
fee of 0.25% of gross asset value of our real estate portfolio. The
fee is
payable quarterly in an amount equal to 0.0625% of gross asset value
as of
the last day of the immediately preceding quarter. Any portion of
the
asset management fee may be deferred and paid in a subsequent
quarter.
|
Actual
amounts are dependent upon results of operations and therefore cannot
be
determined at the present time.
|
Real
Estate Commissions - Hartman Management
|
If
our advisor provides a substantial amount of services, as determined
by
our independent trustees, in connection with the sale of our properties,
we will pay our advisor an amount equal to 1.0% of the contract price
of
each property sold; provided, however, in no event may the real estate
commission paid to Hartman Management, its affiliates and unaffiliated
third parties exceed 6.0% of the contract sales price.
|
Actual
amounts are dependent upon results of operations and therefore cannot
be
determined at the present time.
|
Subordinated
Participation in Net Sale Proceeds - Hartman Management and D.H.
Hill Securities
(7)
(8) (9)
|
After
investors have received a return of their net capital contributions
and a
7.0% annual, cumulative, noncompounded return, then Hartman Management
is
entitled to receive 15.0% of remaining net sale proceeds. Hartman
Management will distribute 20.0% of any subordinate participation
in net
sale proceeds (up to an amount not to exceed 1.0% of gross offering
proceeds) to the dealer manager, which will redistribute such amount
to
certain participating broker-dealers. Any such fees that are not
paid at
the date of sale, because investors have not yet received their required
minimum distributions, will be deferred and paid at such time as
these
subordination conditions have been satisfied.
|
Actual
amounts are dependent upon results of operations and therefore cannot
be
determined at the present time.
|
Subordinated
Incentive Listing Fee - Hartman Management and D.H. Hill
Securities
(7)
(8) (9) (10)
|
Upon
listing our shares on a national securities exchange or quotation
on the
Nasdaq National Market, a fee equal to 15.0% of the amount, if any,
by
which (1) the market value of our outstanding common shares plus
dividends
paid by us prior to listing with respect to the shares sold in this
offering, exceeds (2) the sum of the total amount of capital raised
from
investors and the amount of cash flow necessary to generate a 7.0%
annual,
cumulative, noncompounded return to investors. Hartman Management
will
distribute 20.0% of any incentive listing fee (up to an amount not
to
exceed 1.0% of gross offering proceeds) to the dealer manager, which
will
redistribute such amount to certain participating
broker-dealers.
|
Actual
amounts are dependent upon results of operations and therefore cannot
be
determined at the present time.
|
Operating
Expenses - Hartman Management
|
We
will reimburse our advisor for all expenses incurred by our advisor
in
connection with the services provided to us, subject to the limitation
that we will not reimburse for any amount by which our operating
expenses
(including the asset management fee) at the end of the four preceding
fiscal quarters exceeds the greater of: (i) 2.0% of our average invested
assets, or (ii) 25.0% of our net income other than any additions
to
reserves for depreciation, bad debts or other similar non-cash reserves
and excluding any gain from the sale of our assets for that
period.
|
Actual
amounts are dependent upon results of operations and therefore cannot
be
determined at the present time.
|
(1) |
The
estimated maximum dollar amounts are based on the sale of a maximum
of
11,000,000 shares to the public, including 1,000,000 shares sold
pursuant
to our dividend reinvestment plan.
|
(2) |
We
will not pay selling commissions in respect of any shares sold by
our
dealer manager without the involvement of another participating
broker-dealer. We estimate that our dealer manager, through
representatives that are affiliates of our company, will sell
approximately 360,000
of the shares sold pursuant to this offering in this manner. Accordingly,
the estimated amounts assume that selling commissions will not apply
to
360,000
of the shares registered in this offering. Actual amounts could be
more or
less than the amount shown. If the actual amount of shares sold by
our
dealer manager, through representatives that are affiliates of our
company, is less than 360,000
of the shares being registered, we would have to use more of our
offering
proceeds to pay commissions and, as a result, less of the proceeds
would
be available for investments in properties. To the extent that we
sell
shares without the payment of commissions, we will apply the additional
proceeds to us resulting from the elimination of the commission to
investments in properties and working capital
purposes.
|
(3) |
Organization
and offering expenses are only those expenses associated with our
organization and this offering, including any portion of the subordinated
participation in net sale proceeds or the subordinated incentive
listing
fee distributed to the dealer manager. They do not include expenses
associated with the organization of our advisor or any other affiliate.
We
will not reimburse organization and offering expenses incurred by
our
sponsor in excess of 2.5% of gross offering
proceeds.
|
(4) |
Under
our charter, the total of all acquisition fees and acquisition expenses
shall not exceed, in the aggregate, an amount equal to 6.0% of the
contract price of all of the properties that we will purchase. However,
a
majority of our independent trustees may approve fees and expenses
in
excess of this limit if they determine the transaction to be commercially
competitive, fair and reasonable to us.
|
(5) |
We
will pay Hartman Management the acquisition fee amount upon receipt
of the
offering proceeds rather than at the time a property is
acquired.
|
(6) |
Gross
asset value will be equal to the aggregate book value of our assets
(other
than investments in bank accounts, money market funds or other current
assets), before depreciation, bad debts or other similar non-cash
reserves
and without reduction for any debt relating to such assets, at the
date of
measurement, except that during such periods in which we are obtaining
regular independent valuations of the current value of our assets
for
purposes of enabling fiduciaries of employee benefit plan shareholders
to
comply with applicable Department of Labor reporting requirements,
gross
asset value is the greater of (i) the amount determined pursuant
to the
foregoing or (ii) our assets’ aggregate valuation established by the most
recent such valuation report without reduction for depreciation,
bad debts
or other similar non-cash reserves and without reduction for any
debt
relating to such assets.
|
(7) |
In
the event that our common shares become listed and Hartman Management
receives the subordinated incentive listing fee, as of the date of
listing
Hartman Management will no longer be entitled to any participation
in net
sale proceeds other than accrued and unpaid amounts.
|
(8) |
Upon
termination of the advisory agreement, Hartman Management may be
entitled
to a similar fee if Hartman Management would have been entitled to
a
subordinated participation in net sale proceeds had the portfolio
been
liquidated (based on independent appraised value of the portfolio)
on the
date of termination. The subordinated participation in net sale proceeds
and the subordinated incentive listing fee to be received by Hartman
Management are mutually exclusive of each other. Hartman Management
cannot
earn both fees.
|
(9) |
In
order for any broker-dealer to participate in any subordinated
participation in net sale proceeds or subordinated incentive listing
fee,
such broker-dealer must (1) be unaffiliated with us and Hartman
Management, (2) continue to be a party to a selected dealer agreement
with the dealer manager at the time of the payment of any such fee
and
(3) have sold a minimum of $1.0 million of our shares. The portion of
the subordinated participation in net sales proceeds or subordinated
incentive listing fee distributed to the dealer manager will be
redistributed to the participating broker-dealers meeting this criteria
pro rata based upon the relative value of the total amount of shares
sold
by each broker-dealer. In no event will the broker-dealers’ portion of the
subordinated participation in net sales proceeds or subordinated
incentive
listing fee, as the case may be, exceed in the aggregate 1.0% of
the gross
proceeds from this offering. If no broker-dealer qualifies for
participation in any subordinated participation in net sales proceeds
or
subordinated incentive listing fee, then Hartman Management will
not
distribute any portion of its subordinated participation in net sales
proceeds or subordinated incentive listing fee, as the case may be,
to the
dealer manager.
|
(10) |
The
market value of our outstanding shares will be calculated based on
the
average market value of the shares issued and outstanding at listing
over
the 30 trading days beginning 180 days after the shares are first
listed
on a stock exchange. Payment of the subordinated incentive listing
fee
will be made from the net sales proceeds from our assets as we dispose
of
them. We shall have the option to pay this fee in the form of cash,
Shares, a promissory note or any combination of the
foregoing.
|
· |
the
size of the advisory fee in relation to the size, composition and
profitability of our
portfolio;
|
· |
the
success of Hartman Management in generating opportunities that
meet our
investment objectives;
|
· |
the
rates charged to other REITs, especially similarly structured REITs,
and
to investors other than REITs by advisors performing similar
services;
|
· |
additional
revenues realized by Hartman Management through their relationship
with
us;
|
· |
the
quality and extent of service and advice furnished by Hartman
Management;
|
· |
the
performance of our investment portfolio, including income, conservation
or
appreciation of capital, frequency of problem investments and competence
in dealing with distress situations;
and
|
· |
the
quality of our portfolio in relationship to the investments generated
by
Hartman Management for the account of other
clients.
|
Number
of
Shares
Beneficially Owned(1)
|
Percent
|
Percent
Assuming
Completion
of the Offering (2)
|
|||||||||||||||||
Name
of
Beneficial
Owner(3)
|
Actual
|
Assuming
Conversion
of All
OP Units
|
Actual
|
Assuming
Conversion
of
All OP Units
|
Actual
|
Assuming
Conversion
of
All OP Units
|
|||||||||||||
Allen
R. Hartman(4)(5)
|
270,003.42
|
2,561,862.61
|
2.85
|
%
|
21.77
|
%
|
1.45
|
%
|
12.28
|
%
|
|||||||||
Terry
L. Henderson
|
-
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||
Jack
L. Mahaffey
|
72,730.50
|
104,673.18
|
*
|
1.10
|
*
|
*
|
|||||||||||||
Chris
A. Minton(6)
|
44,671.74
|
74,902.53
|
*
|
*
|
*
|
*
|
|||||||||||||
Chand
Vyas
|
142,857.00
|
142,857.00
|
1.51
|
1.51
|
*
|
*
|
|||||||||||||
All
trustees and executive officers as a group (5 persons)
|
530,262.66
|
2,884,295.32
|
5.60
|
24.38
|
2.85
|
13.78
|
* |
Less
than 1.0%
|
(1) |
Beneficial
ownership is determined in accordance with the rules of the Securities
and
Exchange Commission that deem shares to be beneficially owned by
any
person or group who has or shares voting and investment power with
respect
to such shares. Actual amounts do not take into account OP Units
held by
the named person that are exchangeable for our common shares. Percentage
ownership assuming conversion of OP Units assumes only the named
person
has converted his OP Units for our shares and does not take into
effect
any conversion by any other person.
|
(2) |
Assumes
the shareholders listed do not purchase any additional shares in
this
offering.
|
(3) |
Each
person listed has an address in care of Hartman Commercial Properties
REIT, 1450 West Sam Houston Parkway North, Suite 100, Houston, Texas
77043.
|
(4) |
Includes
Hartman Partnership, L.P. (198,935.515 shares and 489,183.74 OP Units),
Hartman Partnership XII, L.P. (70,597.63 OP Units) and Hartman Partnership
XV, LLC (47.14 OP Units).
|
(5) |
Includes
1,231,393.58 OP Units owned by Houston R.E. Income Properties XIV,
LP. Mr.
Hartman does not own any limited partner interests in this partnership.
However, Mr. Hartman owns 100% of the equity of the general partner
of
this partnership. As a result, Mr. Hartman may be deemed to be the
beneficial owner of the securities held by this partnership. Therefore,
the number of OP Units reported herein as beneficially owned by
Mr. Hartman includes the 1,231,393.58 OP Units owned by Houston R.E.
Income Properties XIV, LP. Consequently, for purposes of this table,
Mr.
Hartman is deemed to beneficially own the 1,231,393.58 common shares
into
which these OP Units are convertible. Mr. Hartman disclaims beneficial
ownership of these OP Units and, for the purposes of this table,
all
common shares into which such OP Units are
convertible.
|
(6) | Includes 41,356.74 common shares and 30,230.78 OP Units owned by Mr. Minton’s wife for which Mr. Minton shares voting and dispositive power, and 3,315 common shares owned by Minton Enterprises, Inc., an entity controlled by Mr. Minton. |
Property
|
Name
of Prior Owner
|
Year
Prior
Owner
Acquired
Property
|
Year
Acquired
by
Us
|
Purchase
Price
Paid
by Us (1)
|
Purchase
Price
Paid
by
Prior
Owner
|
Appraised
Value
|
Date
of
Appraisal
|
Real
Estate
Appraiser
|
||||||||
Holly
Knight (2)
|
Holly
Knight Plaza, Ltd.
|
1984
|
2000
|
$1,612,801
|
$1,399,141
|
$1,750,000
|
10-26-99
|
O’Connor
& Assoc.
|
||||||||
Bissonnet/Beltway
|
Bissonnet/Beltway
Plaza, Ltd.
|
1987
|
1999
|
2,361,323
|
1,694,502
|
2,200,000
|
10-3-98
|
O’Connor
& Assoc.
|
||||||||
Interstate
10
|
Interstate
10 Office/ Warehouse, Ltd.
|
1986
|
1999
|
3,908,072
|
2,315,000
|
3,960,000
|
10-19-98
|
O’Connor
& Assoc.
|
||||||||
Kempwood
Plaza
|
Kempwood
Plaza, Ltd.
|
1986
|
1999
|
2,531,876
|
2,900,000
|
2,720,000
|
1-1-99
|
O’Connor
& Assoc.
|
||||||||
Westbelt
Plaza
|
Westbelt
Plaza, Ltd.
|
1988
|
1999
|
2,733,009
|
1,025,000
|
2,465,000
|
10-19-98
|
O’Connor
& Assoc.
|
||||||||
Greens
Road
|
Houston
R.E. Income Properties, Ltd.
|
1990
|
1999
|
1,637,217
|
703,950
|
1,580,000
|
10-5-98
|
O’Connor
& Assoc.
|
||||||||
Town
Park
|
Houston
R.E. Income Properties, Ltd.
|
1990
|
1999
|
3,760,735
|
905,100
|
3,500,000
|
10-3-98
|
O’Connor
& Assoc.
|
||||||||
Bellnot
Square
|
Houston
R.E. Income Properties VIII, Ltd.
|
1990
|
2002
|
5,792,294
|
4,100,000
|
5,825,000
|
4-1-02
|
O’Connor
& Assoc.
|
||||||||
Corporate
Park Northwest
|
Houston
R.E. Income Property IX, Ltd.
|
1992
|
2002
|
7,839,539
|
4,100,000
|
7,500,000
|
4-1-02
|
O’Connor
& Assoc.
|
||||||||
Webster
Point
|
Houston
R.E. Income Properties X, Ltd.
|
1992
|
2000
|
1,870,365
|
800,000
|
1,700,000
|
10-9-99
|
O’Connor
& Assoc.
|
||||||||
Centre
South
|
Houston
R.E. Income Properties X, Ltd.
|
1993
|
2000
|
2,077,198
|
600,000
|
1,900,000
|
10-25-99
|
O’Connor
& Assoc.
|
||||||||
Torrey
Square
|
Houston
R.E. Income Properties X, Ltd.
|
1994
|
2000
|
4,952,317
|
3,000,000
|
4,500,000
|
10-10-99
|
O’Connor
& Assoc.
|
||||||||
Main
Park
|
Houston
R.E. Income Properties XI, Ltd.
|
1994
|
1999
|
4,048,837
|
1,950,000
|
4,130,000
|
10-22-98
|
O’Connor
& Assoc.
|
||||||||
Dairy
Ashford
|
Houston
R.E. Income Properties XI, Ltd.
|
1994
|
1999
|
1,437,020
|
700,000
|
1,510,000
|
10-19-98
|
O’Connor
& Assoc.
|
Property
|
Name
of Prior Owner
|
Year
Prior
Owner
Acquired
Property
|
Year
Acquired
by
Us
|
Purchase
Price
Paid
by Us (1)
|
Purchase
Price
Paid
by
Prior
Owner
|
Appraised
Value
|
Date
of
Appraisal
|
Real
Estate
Appraiser
|
Westgate
|
Houston
R.E. Income Properties XI, Ltd.
|
1994
|
2002
|
3,448,182
|
1,450,000
|
2,800,000
|
4-1-02
|
O’Connor
& Assoc.
|
||||||||
Northeast
Square
|
Houston
R.E. Income Properties XI, Ltd.
|
1995
|
1999
|
2,572,512
|
1,450,000
|
2,900,000
|
10-12-98
|
O’Connor
& Assoc.
|
||||||||
Plaza
Park
|
Houston
R.E. Income Properties XII, L.P.
|
1995
|
2000
|
4,195,116
|
1,550,000
|
4,250,000
|
10-14-99
|
O’Connor
& Assoc.
|
||||||||
Northwest
Place II
|
Houston
R.E. Income Properties XII, L.P.
|
1996
|
2000
|
1,089,344
|
850,000
|
1,100,000
|
10-12-99
|
O’Connor
& Assoc.
|
||||||||
Lion
Square
|
Houston
R.E. Income Properties XII, L.P.
|
1997
|
2000
|
5,835,108
|
4,250,000
|
5,900,000
|
10-13-99
|
O’Connor
& Assoc.
|
||||||||
Zeta
Building (3)
|
Houston
R.E. Income Properties XII, L.P.
|
1997
|
2000
|
2,456,589
|
-
|
2,500,000
|
10-19-99
|
O’Connor
& Assoc.
|
||||||||
Royal
Crest (3)
|
Houston
R.E. Income Properties XII, L.P.
|
1997
|
2000
|
1,864,065
|
-
|
1,900,000
|
10-19-99
|
O’Connor
& Assoc.
|
||||||||
Featherwood
(3)
|
Houston
R.E. Income Properties XII, L.P.
|
1997
|
2000
|
2,959,309
|
-
|
3,000,000
|
10-4-99
|
O’Connor
& Assoc.
|
||||||||
Garden
Oaks
|
Houston
R.E. Income Properties XIV, Ltd.
|
1997
|
2002
|
6,577,782
|
4,150,000
|
6,100,000
|
4-1-02
|
O’Connor
& Assoc.
|
||||||||
Westchase
|
Houston
R.E. Income Properties XIV, Ltd.
|
1998
|
2002
|
2,173,300
|
1,400,000
|
2,000,000
|
4-1-02
|
O’Connor
& Assoc.
|
||||||||
Sunridge
|
Houston
R.E. Income Properties XIV, Ltd.
|
1998
|
2002
|
1,461,571
|
2,228,750
|
2,000,000
|
4-1-02
|
O’Connor
& Assoc.
|
||||||||
Holly
Hall
|
Houston
R.E. Income Properties XIV, Ltd.
|
1998
|
2002
|
3,123,400
|
1,590,000
|
2,500,000
|
4-1-02
|
O’Connor
& Assoc.
|
||||||||
Brookhill
|
Houston
R.E. Income Properties XIV, Ltd.
|
1998
|
2002
|
973,264
|
970,000
|
1,100,000
|
4-1-02
|
O’Connor
& Assoc.
|
||||||||
Corporate
Park West (4)
|
Houston
R.E. Income Properties XV, Ltd.
|
1998
|
2002
|
13,062,980
|
10,856,517
|
12,893,000
|
4-1-02
|
O’Connor
& Assoc.
|
(1) |
Unless
otherwise noted, we paid for these properties using common shares
or
Operating Partnership units equal to dollar value
provided.
|
(2) |
Purchased
with cash.
|
(3) |
Houston
R.E. Income Properties XII, L.P. purchased the Featherwood, Zeta
and Royal
Crest office buildings from a single seller for an aggregate purchase
price of $6,950,000.
|
(4) |
This
property was developed by Houston R.E. Income Properties XV, Ltd.
Total
construction costs were $8,889,544, plus $1,966,973 in organizational
and
offering costs.
|
Property
|
Date
Through Which
Depreciation
Claimed
|
Depreciation
Claimed
|
|||||||
Main
Park
|
12/31/98
|
$ |
242,297
|
||||||
Dairy
Ashford
|
12/31/98
|
76,841
|
|||||||
Northeast
Square
|
12/31/98
|
115,045
|
|||||||
Plaza
Park
|
12/31/99
|
175,556
|
|||||||
Northwest
Place II
|
12/31/99
|
89,584
|
Property
|
Date
Through Which
Depreciation
Claimed
|
Depreciation
Claimed
|
|||||||
Lion
Square
|
12/31/99
|
363,076
|
|||||||
Zeta
Building
|
12/31/99
|
115,915
|
|||||||
Royal
Crest
|
12/31/99
|
97,795
|
|||||||
Featherwood
|
12/31/99
|
206,525
|
|||||||
Garden
Oaks
|
12/31/01
|
481,624
|
|||||||
Westchase
|
12/31/01
|
117,884
|
|||||||
Sunridge
|
12/31/01
|
193,231
|
|||||||
Holly
Hall
|
12/31/01
|
92,130
|
|||||||
Brookhill
|
12/31/01
|
88,038
|
|||||||
Corporate
Park West
|
12/31/01
|
970,298
|
· |
the
receipt of 897,117.19 OP Units, as adjusted to reflect the
recapitalization, in consideration of Mr. Hartman’s general partner
interest in the selling
entities;
|
· |
the
ability to limit his future exposure to general partner liability
as a
result of Mr. Hartman no longer serving as the general partner
to certain
of the entities; and
|
· |
the
repayment of debt encumbering various of our properties which was
personally guaranteed by Mr. Hartman.
|
· |
897,117.19
OP Units, as adjusted to reflect the recapitalization, in consideration
of
Mr. Hartman’s general partner interest in the selling
entities;
|
· |
the
ability to limit his future exposure to general partner liability
as a
result of Mr. Hartman no longer serving as the general partner
to certain
of the selling entities; and
|
· |
the
repayment of debt encumbering various of our properties which was
personally guaranteed by Mr.
Hartman.
|
Payer
|
Description
|
|
Houston
R.E. Income Properties XIV, L.P.
|
Effective
January 2002, Houston R.E. XIV contributed five properties to the
Operating Partnership in exchange for OP Units. Houston R.E. XIV
continued
to own two additional properties, one of which was contributed to
the
Operating Partnership in October 2002 in exchange for OP Units. All
of
these properties secured a single loan, which was repaid by the Company
in
December 2002. Houston R.E. XIV agreed to pay the Company the portion
of
the loan repaid by the Company that was attributable to the last
property
held by Houston R.E. XIV. As of December 31, 2005, Houston R.E. XIV
owed
the Company $3,493,217. The loan accrues interest at a rate of 2.5%
over
LIBOR and payable upon demand. An affiliate of Mr. Hartman is the
general
partner of Houston R.E. XIV.
|
|
Hartman
Management, LP.
|
Hartman
Management, L.P. owed the Company $-0- and $130,863 as of December
31,
2005 and December 31, 2004, respectively, as a result of various
transactions undertaken in the normal course of business. All of
these
transactions arose prior to 2000 between Hartman Management, L.P.
and the
Company or its predecessor entities. The balance owing at December
31,
2004 was paid in full in January
2005.
|
· |
computation
of fees and/or reimbursements under Hartman OP’s partnership agreement and
the management
agreement;
|
· |
enforcement
of the management agreement;
|
· |
termination
of the management agreement;
|
· |
order
and priority in which we pay the obligations of Hartman OP, including
amounts guaranteed by or due to Mr. Hartman or his
affiliates;
|
· |
order
and priority in which we pay amounts owed to third parties as opposed
to
amounts owed to Hartman
Management;
|
· |
timing,
amount and manner in which we refinance any indebtedness; and
|
· |
extent
to which we repay or refinance the indebtedness which is recourse
to Mr.
Hartman prior to nonrecourse indebtedness and the terms of any
such
refinancing.
|
· |
the
continuation, renewal or enforcement of our agreements with Hartman
Management and its affiliates, including the advisory agreement
and the
dealer manager agreement;
|
· |
public
offering of securities;
|
· |
property
sales;
|
· |
property
acquisitions;
|
· |
transactions
with affiliates;
|
· |
compensation
of our officers and trustees who are affiliated with our
advisors;
|
· |
whether
and when we seek to list our common shares on the New York Stock
Exchange,
the American Stock Exchange, the Nasdaq National Market or another
national exchange; and
|
· |
whether
and when we seek to sell the company or its
assets.
|
· |
We
will not purchase or lease properties in which Hartman Management,
any of
our trustees or any of their respective affiliates has an interest
without
a determination by a majority of the trustees, including a majority
of the
independent trustees, not otherwise interested in such transaction
that
such transaction is fair and reasonable to us and at a price to
us no
greater than the cost of the property to the seller or lessor unless
there
is substantial justification for any amount that exceeds such cost
and
such excess amount is determined to be reasonable. In no event
will we
acquire any such property at an amount in excess of its appraised
value.
We will not sell or lease properties to Hartman Management, any
of our
trustees or any of their respective affiliates unless a majority
of the
trustees, including a majority of the independent trustees, not otherwise
interested in the transaction, determines the transaction is fair
and
reasonable to us.
|
· |
We
will not make any loans to Hartman Management, any of our trustees
or any
of their respective affiliates, except that we may make or invest
in
mortgage loans involving Hartman Management, our trustees or their
respective affiliates, provided that an appraisal of the underlying
property is obtained from an independent appraiser and the transaction
is
approved as fair and reasonable to us and on terms no less favorable
to us
than those available from third parties. In addition, Hartman Management,
any of our trustees and any of their respective affiliates will
not make
loans to us or to joint ventures in which we are a joint venture
partner
unless approved by a majority of the trustees, including a majority
of the
independent trustees, not otherwise interested in the transaction
as fair,
competitive and commercially reasonable, and no less favorable
to us than
comparable loans between unaffiliated parties.
|
· |
Hartman
Management and its affiliates shall be entitled to reimbursement,
at cost,
for actual expenses incurred by them on behalf of us or joint ventures
in
which we are a joint venture partner, subject to the limitation
that for
any year in which we qualify as a REIT, Hartman Management must
reimburse
us for the amount, if any, by which our total operating expenses,
including the asset management fee, paid during the previous fiscal
year
exceeds the greater of: (i) 2.0% of our average invested assets
for that
fiscal year, or (ii) 25.0% of our net income, before any additions
to
reserves for depreciation, bad debts or other similar non-cash
reserves
and before any gain from the sale of our assets, for that fiscal
year.
|
· |
In
the event that an investment opportunity becomes available that
is
suitable, under all of the factors considered by Hartman Management,
for
both us and one or more other entities affiliated with Hartman
Management
and its affiliates, and for which more than one of such entities
has
sufficient uninvested funds, then the entity that has had the longest
period of time elapse since it was offered an investment opportunity
will
first be offered such investment opportunity. It shall be the duty
of our
board of trustees, including the independent trustees, to insure
that this
method is applied fairly to us. In determining whether or not an
investment opportunity is suitable for more than one program, Hartman
Management, subject to approval by our board of trustees, shall
examine,
among others, the following
factors:
|
-
|
the
anticipated cash flow of the property to be acquired and the cash
requirements of each program;
|
-
|
the
effect of the acquisition both on diversification of each program’s
investments by type of property and geographic area and on diversification
of the tenants of its properties;
|
-
|
the
policy of each program relating to leverage of
properties;
|
-
|
the
income tax effects of the purchase to each
program;
|
-
|
the
size of the investment; and
|
-
|
the
amount of funds available to each program and the length of time
such
funds have been available for investment.
|
· |
If
a subsequent development, such as a delay in the closing of a property
or
a delay in the construction of a property, causes any such investment,
in
the opinion of our board of trustees and Hartman Management, to
be more
appropriate for a program other than the program that committed
to make
the investment, Hartman Management may determine that another program
affiliated with Hartman Management or its affiliates will make
the
investment. Our board of trustees has a duty to ensure that the
method
used by Hartman Management for the allocation of the acquisition
of
properties by two or more affiliated programs seeking to acquire
similar
types of properties is applied fairly to us.
|
· |
We
will not accept goods or services from Hartman Management or its
affiliates or enter into any other transaction with Hartman Management
or
its affiliates unless a majority of our trustees, including a majority
of
the independent trustees, not otherwise interested in the transaction
approve such transaction as fair and reasonable to us and on terms
and
conditions not less favorable to us than those available from unaffiliated
third parties.
|
· |
to
maximize cash dividends paid to our
shareholders;
|
· |
to
continue to qualify as a REIT for federal income tax
purposes;
|
· |
to
obtain and preserve long-term capital appreciation in the value
of our
properties to be realized upon our ultimate sale of such properties;
and
|
· |
to
provide our shareholders with liquidity for their investment in
us by
listing our shares on the New York Stock Exchange, the American
Stock
Exchange, the Nasdaq National Market or another national exchange
within
twelve years after the completion of this
offering.
|
· |
the
location of the property;
|
· |
the
property’s condition, suitability for the current or proposed use and any
refurbishment needs;
|
· |
the
property’s historical operation and any potential liabilities associated
therewith;
|
· |
information
learned from surveys, environmental reports, title reports and
policies
and similar materials;
|
· |
the
property’s income-producing history and
capacity;
|
· |
the
property’s prospects for long-term
appreciation;
|
· |
the
potential liquidity of the property;
and
|
· |
income
tax considerations.
|
· |
plans
and specifications;
|
· |
environmental
reports;
|
· |
surveys;
|
· |
evidence
of marketable title subject to such liens and encumbrances as are
acceptable to Hartman
Management;
|
· |
audited
financial statements covering recent operations of properties having
operating histories; and
|
· |
title
and liability insurance
policies.
|
· |
changes
in general economic or local
conditions;
|
· |
changes
in supply of or demand for similar or competing properties in an
area;
|
· |
changes
in interest rates and availability of permanent mortgage funds
that may
render the sale of a property difficult or
unattractive;
|
· |
changes
in tax, real estate, environmental and zoning
laws;
|
· |
periods
of high interest rates and tight money supply that may make the
sale of
properties more difficult;
|
· |
tenant
turnover; and
|
· |
general
overbuilding or excess supply in the market
area.
|
· |
a
majority of our trustees, including a majority of the independent
trustees, approve the transaction as being fair and reasonable
to us and
on substantially the same terms and conditions as those received
by other
joint venturers;and
|
· |
we
will have a right of first refusal to buy if such co-venturer elects
to
sell its interest in the property held by the joint
venture.
|
· |
the
percentage of our assets that may be invested in any type of mortgage
or
in any single mortgage; or
|
· |
the
types of properties subject to mortgages in which we may invest.
|
· |
the
ratio of the amount of the investment to the value of the property
by
which it is secured;
|
· |
the
property’s potential for capital
appreciation;
|
· |
expected
levels of rental and occupancy
rates;
|
· |
current
and projected cash flow of the property;
|
· |
potential
for rental increases;
|
· |
the
degree of liquidity of the
investment;
|
· |
geographic
location of the property;
|
· |
the
condition and use of the
property;
|
· |
the
property’s income-producing
capacity;
|
· |
the
quality, experience and creditworthiness of the borrower;
|
· |
general
economic conditions in the area where the property is located;
and
|
· |
any
other factors that the advisor believes are
relevant.
|
· |
invest
in commodities or commodity futures contracts, except for futures
contracts when used solely for the purpose of hedging in connection
with
our ordinary business of investing in real estate assets and
mortgages;
|
· |
invest
in real estate contracts of sale, otherwise known as land sale
contracts,
unless the contract is in recordable form and is appropriately
recorded in
the chain of title;
|
· |
make
or invest in mortgage loans unless an appraisal is obtained concerning
the
underlying property, except for those mortgage loans insured or
guaranteed
by a government or government agency. In cases where our independent
trustees determine, and in all cases in which the transaction is
with any
of our trustees or Hartman Management and its affiliates, such
appraisal
shall be obtained from an independent appraiser. We will maintain
such
appraisal in our records for at least five years, and it will be
available
for inspection and duplication by our shareholders. We will also
obtain a
mortgagee’s or owner’s title insurance policy as to the priority of the
mortgage;
|
· |
make
or invest in mortgage loans that are subordinate to any mortgage
or equity
interest of any of our trustees, Hartman Management or its affiliates;
|
· |
make
or invest in mortgage loans, including construction loans, on any
one
property if the aggregate amount of all mortgage loans on such
property,
including loans to us, would exceed an amount equal to 85.0% of
the
appraised value of such property as determined by appraisal unless
substantial justification exists for exceeding such limit because
of the
presence of other underwriting criteria;
|
· |
borrow
in excess of 55.0% of the aggregate value of all assets owned by
us as of
the date of any borrowing without approval from a majority of our
independent trustees;
|
· |
make
investments in unimproved property or indebtedness secured by a
deed of
trust or mortgage loans on unimproved property in excess of 10.0%
of our
total assets;
|
· |
issue
equity securities on a deferred payment basis or other similar
arrangement;
|
· |
issue
debt securities in the absence of adequate cash flow to cover debt
service;
|
· |
issue
securities which are redeemable solely at the option of the holder
(except
for shares offered by shareholders to us pursuant to our share
repurchase
plan);
|
· |
grant
warrants or options to purchase shares to officers or affiliated
trustees
or to Hartman Management or its affiliates except on the same terms
as the
options or warrants are sold to the general public and the amount
of the
options or warrants does not exceed an amount equal to 10.0% of
the
outstanding shares on the date of grant of the warrants and options;
or
|
· |
make
any investment that we believe would be inconsistent with our objectives
of qualifying and remaining qualified as a
REIT.
|
· |
invest
in the securities of other issuers for the purpose of exercising
control
over such issuer (except as described above);
|
· |
underwrite
securities of other issuers; or
|
· |
actively
trade in loans or other
investments.
|
· |
national
tenants as any tenant that operates in at least four metropolitan
areas
located in more than one region (i.e.,
Northwest, Midwest, Southwest or
Southeast);
|
· |
regional
tenants as any tenant that operates in two or more metropolitan
areas
located within the same region;
and
|
· |
local
tenants as any tenant that operates stores only within the metropolitan
Houston, Dallas or San Antonio, Texas
area.
|
Property
|
Total
Rents
Received
in 2005
|
Percent
of Company’s
Total
Rents
Received
in 2005
|
|||||
Windsor
Park
|
$
|
2,113,291
|
8.42
|
%
|
|||
Corporate
Park West
|
1,621,269
|
6.46
|
|||||
Corporate
Park Northwest
|
1,523,195
|
6.07
|
|||||
Lion
Square
|
1,379,145
|
5.50
|
|||||
Sugar
Park Plaza
|
1,248,845
|
4.98
|
|||||
Total
|
$
|
7,885,745
|
31.43
|
%
|
Property
|
Year
Developed/
Renovated
|
Total
Leasable
Area
(Sq. Ft.)
|
Purchase
Price
|
Anchor
or Largest Tenant
|
|||||||||
Bissonnet/Beltway
|
1978
|
29,205
|
$
|
2,361,323
|
Lydia
& Ajibade Owoyemi
|
||||||||
Webster
Point
|
1984
|
26,060
|
1,870,365
|
Houston
Learning Academy
|
|||||||||
Centre
South
|
1974
|
44,593
|
2,077,198
|
|
Carlos
Alvarez
|
||||||||
Torrey
Square
|
1983
|
105,766
|
4,952,317
|
99
Cents Only Stores
|
|||||||||
Providence
|
1980
|
90,327
|
4,592,668
|
99
Cents Only Stores
|
|||||||||
Holly
Knight
|
1984
|
20,015
|
1,612,801
|
Quick
Wash Laundry
|
|||||||||
Plaza
Park
|
1982
|
105,530
|
4,195,116
|
American
Medical Response
|
|||||||||
Northwest
Place II
|
1984
|
27,974
|
1,089,344
|
Terra
Mar, Inc.
|
|||||||||
Lion
Square
|
1980
|
119,621
|
5,835,108
|
Bellaire
Marketplace
|
|||||||||
Zeta
Building
|
1982
|
37,740
|
2,456,589
|
Texas
Retirement & Tax Advisors
|
|||||||||
Royal
Crest
|
1984
|
24,900
|
1,864,065
|
Emerald
Environmental Service
|
|||||||||
Featherwood
|
1983
|
49,670
|
2,959,309
|
Transwestern
Publishing
|
|||||||||
Interstate
10
|
1980
|
151,000
|
3,908,072
|
River
Oaks, L-M, Inc.
|
|||||||||
Westbelt
Plaza
|
1978
|
65,619
|
2,733,009
|
Magnum
Staffing
|
|||||||||
Greens
Road
|
1979
|
20,507
|
1,637,217
|
Celaya
Meat Market
|
|||||||||
Town
Park
|
1978
|
43,526
|
3,760,735
|
Omar’s
Meat Market
|
|||||||||
Northeast
Square
|
1984
|
40,525
|
2,572,512
|
Sultan
Allana/99 Cent Store
|
|||||||||
Main
Park
|
1982
|
113,410
|
4,048,837
|
Transport
Sales Associates
|
|||||||||
Dairy
Ashford
|
1981
|
42,902
|
1,437,020
|
Foster
Wheeler USA Corp.
|
|||||||||
South
Richey
|
1980
|
69,928
|
3,361,887
|
Kroger
Food Stores, Inc.
|
|||||||||
Corporate
Park Woodland
|
2000
|
99,937
|
6,028,362
|
Carrier
Sales and Distribution
|
|||||||||
South
Shaver
|
1978
|
21,926
|
817,003
|
EZ
Pawn
|
|||||||||
Kempwood
Plaza
|
1974
|
112,359
|
2,531,876
|
Dollar
General
|
|||||||||
Bellnot
Square
|
1982
|
73,930
|
5,792,294
|
Kroger
Food Stores, Inc.
|
|||||||||
Corporate
Park Northwest
|
1981
|
185,627
|
7,839,539
|
Air
Consulting & Engineering
|
|||||||||
Westgate
|
1984
|
97,225
|
3,448,182
|
Postmark
DMS, LLC
|
|||||||||
Garden
Oaks
|
1954
|
95,046
|
6,577,782
|
Bally
Total Fitness
|
|||||||||
Westchase
|
1978
|
42,924
|
2,173,300
|
Jesus
Corral
|
|||||||||
Sunridge
|
1979
|
49,359
|
1,461,571
|
Puro
Latino, Inc.
|
|||||||||
Holly
Hall
|
1980
|
90,000
|
3,123,400
|
The
Methodist Hospital
|
|||||||||
Brookhill
|
1979
|
74,757
|
973,264
|
T.S.
Moly-Lubricants
|
|||||||||
Corporate
Park West
|
1999
|
175,665
|
13,062,980
|
LTC
Pharmacy Services
|
|||||||||
Windsor
Park
|
1992
|
192,458
|
13,102,500
|
The
Sports Authority/Home Depot
|
|||||||||
SugarPark
Plaza
|
1974
|
95,032
|
8,906,057
|
Marshall’s
|
|||||||||
Woodlake
Plaza
|
1974
|
106,169
|
5,466,710
|
Rock
Solid Images
|
|||||||||
9101
LBJ Freeway
|
1985
|
125,874
|
8,093,296
|
Air
Liquide America
|
|||||||||
Uptown
Tower
|
1982
|
253,981
|
17,171,486
|
Brockett
Davis Drake Inc.
|
|||||||||
Total
|
3,121,037
|
$
|
165,896,094
|
Property
|
Percent
Leased
|
Total
Leasable
Area
(Sq. Ft.)
|
Total
Annualized
Rents
Based
on
Occupancy
|
Effective
Net
Rent
Per
Sq. Ft.
|
Annual
Percentage
Rents
|
|||||||||||
Bissonnet/Beltway
|
81.9%
|
|
29,205
|
423,626
|
$
|
14.51
|
—
|
|||||||||
Webster
Point
|
72.7%
|
|
26,060
|
305,098
|
11.71
|
—
|
||||||||||
Centre
South
|
66.8%
|
|
44,543
|
316,665
|
7.11
|
—
|
||||||||||
Torrey
Square
|
80.2%
|
|
105,766
|
825,253
|
7.80
|
—
|
||||||||||
Providence
|
93.5%
|
|
90,327
|
938,504
|
10.39
|
—
|
||||||||||
Holly
Knight
|
92.5%
|
|
20,015
|
344,189
|
17.20
|
—
|
||||||||||
Plaza
Park
|
67.4%
|
|
105,530
|
749,138
|
7.10
|
—
|
||||||||||
Northwest
Place II
|
61.7%
|
|
27,974
|
150,494
|
5.38
|
—
|
||||||||||
Lion
Square
|
100.0%
|
|
119,621
|
1,375,471
|
11.50
|
—
|
||||||||||
Zeta
Building
|
88.1%
|
|
37,740
|
493,167
|
13.06
|
—
|
||||||||||
Royal
Crest
|
74.9%
|
|
24,900
|
293,841
|
11.80
|
—
|
||||||||||
Featherwood
|
94.7%
|
|
49,670
|
873,246
|
17.58
|
—
|
||||||||||
Interstate
10
|
80.3%
|
|
151,000
|
729,607
|
4.83
|
—
|
||||||||||
Westbelt
Plaza
|
66.7%
|
|
65,619
|
537,138
|
8.19
|
—
|
||||||||||
Greens
Road
|
72.1%
|
|
20,507
|
358,424
|
17.48
|
—
|
||||||||||
Town
Park
|
91.3%
|
|
43,526
|
753,576
|
17.31
|
—
|
||||||||||
Northeast
Square
|
93.7%
|
|
40,525
|
567,755
|
14.01
|
—
|
||||||||||
Main
Park
|
70.3%
|
|
113,410
|
510,031
|
4.50
|
—
|
||||||||||
Dairy
Ashford
|
32.1%
|
|
42,902
|
91,597
|
2.14
|
—
|
||||||||||
South
Richey
|
68.3%
|
|
69,928
|
433,154
|
6.19
|
—
|
||||||||||
Corporate
Park Woodland
|
86.2%
|
|
99,937
|
986,915
|
9.88
|
—
|
||||||||||
South
Shaver
|
84.1%
|
|
21,926
|
263,266
|
12.01
|
—
|
||||||||||
Kempwood
Plaza
|
73.5%
|
|
112,359
|
899,397
|
8.00
|
—
|
||||||||||
Bellnot
Square
|
95.9%
|
|
73,930
|
842,224
|
11.39
|
—
|
||||||||||
Corporate
Park Northwest
|
82.7%
|
|
185,627
|
1,579,322
|
8.51
|
—
|
||||||||||
Westgate
|
92.9%
|
|
97,225
|
683,172
|
7.03
|
—
|
||||||||||
Garden
Oaks
|
75.7%
|
|
95,046
|
877,349
|
9.23
|
—
|
||||||||||
Westchase
|
81.9%
|
|
42,924
|
485,265
|
11.31
|
—
|
||||||||||
Sunridge
|
89.6%
|
|
49,359
|
488,000
|
9.89
|
—
|
||||||||||
Holly
Hall
|
100.0%
|
|
90,000
|
512,668
|
5.70
|
—
|
||||||||||
Brookhill
|
80.7%
|
|
74,757
|
272,818
|
3.65
|
—
|
||||||||||
Corporate
Park West
|
74.7%
|
|
175,665
|
1,573,820
|
8.96
|
—
|
||||||||||
Windsor
Park
|
82.3%
|
|
192,458
|
1,564,945
|
8.13
|
—
|
||||||||||
SugarPark
Plaza
|
100.0%
|
|
95,032
|
1,238,605
|
13.03
|
—
|
||||||||||
Woodlake
Plaza
|
82.5%
|
|
106,169
|
1,306,670
|
12.31
|
—
|
||||||||||
9101
LBJ Freeway
|
90.4%
|
|
125,874
|
1,463,084
|
11.62
|
—
|
||||||||||
Uptown
Tower
|
83.3%
|
|
253,981
|
3,211,264
|
12.64
|
—
|
||||||||||
Total/Average
|
82.3%
|
|
3,121,037
|
$
|
29,318,762
|
$
|
9.39
|
—
|
2001
|
2002
|
2003
|
2004
|
2005
|
|||||||||||||||||||||||||||
Property
|
Percent
Leased
|
Average
Income
Per
Sq. Ft.
|
Percent
Leased
|
Average
Income
Per
Sq. Ft.
|
Percent
Leased
|
Average
Income
Per
Sq. Ft.
|
Percent
Leased
|
Average
Income
Per
Sq. Ft.
|
Percent
Leased
|
Average
Income
Per
Sq. Ft.
|
|||||||||||||||||||||
Bissonnet/Beltway
|
100
|
%
|
$
|
17.02
|
93
|
%
|
$
|
16.50
|
100
|
%
|
$
|
16.97
|
100
|
%
|
$
|
15.54
|
82
|
%
|
$
|
15.24
|
|||||||||||
Webster
Point
|
93
|
10.57
|
83
|
11.83
|
88
|
12.05
|
87
|
12.99
|
73
|
11.74
|
|||||||||||||||||||||
Centre
South
|
88
|
7.96
|
88
|
7.40
|
85
|
8.03
|
87
|
9.19
|
67
|
7.99
|
|||||||||||||||||||||
Torrey
Square
|
99
|
9.71
|
96
|
9.82
|
87
|
8.09
|
86
|
8.02
|
80
|
8.38
|
|||||||||||||||||||||
Providence
|
100
|
8.81
|
98
|
12.71
|
72
|
11.19
|
69
|
6.51
|
94
|
6.73
|
|||||||||||||||||||||
Holly
Knight
|
100
|
17.58
|
91
|
16.46
|
96
|
17.50
|
93
|
16.39
|
93
|
15.72
|
|||||||||||||||||||||
Plaza
Park
|
83
|
7.60
|
93
|
7.89
|
79
|
8.26
|
92
|
9.63
|
67
|
7.56
|
|||||||||||||||||||||
Northwest
Place II
|
52
|
5.31
|
52
|
4.40
|
62
|
4.96
|
62
|
4.61
|
62
|
5.71
|
|||||||||||||||||||||
Lion
Square
|
100
|
9.59
|
98
|
9.91
|
98
|
9.68
|
100
|
10.50
|
100
|
10.14
|
|||||||||||||||||||||
Zeta
Building
|
91
|
13.84
|
94
|
14.21
|
98
|
12.46
|
80
|
12.99
|
88
|
13.28
|
|||||||||||||||||||||
Royal
Crest
|
73
|
7.38
|
88
|
10.24
|
95
|
11.43
|
100
|
12.34
|
75
|
13.47
|
|||||||||||||||||||||
Featherwood
|
96
|
12.86
|
96
|
15.46
|
98
|
16.07
|
89
|
17.37
|
95
|
15.07
|
|||||||||||||||||||||
Interstate
10
|
97
|
4.36
|
96
|
4.78
|
83
|
4.84
|
74
|
4.09
|
80
|
4.31
|
|||||||||||||||||||||
Westbelt
Plaza
|
85
|
7.21
|
92
|
8.88
|
82
|
8.26
|
91
|
8.68
|
67
|
10.08
|
|||||||||||||||||||||
Greens
Road
|
100
|
16.54
|
100
|
18.60
|
100
|
16.15
|
100
|
17.02
|
72
|
11.79
|
|||||||||||||||||||||
Town
Park
|
100
|
19.01
|
100
|
17.88
|
98
|
18.12
|
100
|
18.08
|
91
|
12.56
|
|||||||||||||||||||||
Northeast
Square
|
84
|
9.14
|
90
|
11.81
|
81
|
12.48
|
84
|
11.80
|
94
|
9.82
|
|||||||||||||||||||||
Main
Park
|
89
|
4.89
|
87
|
5.53
|
90
|
5.57
|
87
|
5.57
|
70
|
5.06
|
|||||||||||||||||||||
Dairy
Ashford
|
100
|
6.11
|
100
|
5.83
|
55
|
3.41
|
51
|
3.99
|
32
|
6.27
|
|||||||||||||||||||||
South
Richey
|
94
|
9.45
|
100
|
9.63
|
94
|
8.57
|
74
|
7.77
|
68
|
8.46
|
|||||||||||||||||||||
Corporate
Park Woodland
|
19
|
1.75
|
76
|
4.70
|
97
|
7.76
|
86
|
8.67
|
86
|
7.25
|
|||||||||||||||||||||
South
Shaver
|
83
|
7.29
|
97
|
9.82
|
89
|
11.06
|
76
|
11.75
|
84
|
9.61
|
|||||||||||||||||||||
Kempwood
Plaza
|
91
|
5.72
|
93
|
6.73
|
95
|
7.88
|
74
|
7.64
|
73
|
7.49
|
|||||||||||||||||||||
Bellnot
Square
|
98
|
11.71
|
98
|
11.53
|
96
|
11.82
|
100
|
11.60
|
96
|
9.84
|
|||||||||||||||||||||
Corporate
Park Northwest
|
91
|
8.28
|
90
|
8.74
|
90
|
8.33
|
84
|
8.34
|
83
|
9.76
|
|||||||||||||||||||||
Westgate
|
96
|
5.54
|
96
|
6.78
|
85
|
6.88
|
83
|
6.53
|
93
|
5.68
|
|||||||||||||||||||||
Garden
Oaks
|
82
|
10.32
|
86
|
10.69
|
78
|
10.34
|
79
|
10.38
|
76
|
10.24
|
|||||||||||||||||||||
Westchase
|
75
|
7.16
|
66
|
8.15
|
77
|
8.94
|
92
|
8.83
|
82
|
9.03
|
|||||||||||||||||||||
Sunridge
|
77
|
9.39
|
96
|
10.71
|
90
|
10.93
|
90
|
9.56
|
90
|
7.75
|
|||||||||||||||||||||
Holly
Hall
|
100
|
5.12
|
100
|
4.63
|
100
|
5.45
|
90
|
5.89
|
100
|
4.69
|
|||||||||||||||||||||
Brookhill
|
75
|
3.43
|
89
|
3.45
|
59
|
3.39
|
70
|
3.51
|
81
|
2.85
|
|||||||||||||||||||||
Corporate
Park West
|
92
|
8.47
|
95
|
9.79
|
94
|
9.13
|
86
|
9.68
|
75
|
9.38
|
|||||||||||||||||||||
Windsor
Park
|
-
|
-
|
-
|
-
|
-
|
-
|
100
|
11.48
|
82
|
10.63
|
|||||||||||||||||||||
Sugarpark
Plaza
|
-
|
-
|
-
|
-
|
-
|
-
|
99
|
12.24
|
100
|
9.14
|
|||||||||||||||||||||
Woodlake
Plaza
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
11.14
|
|||||||||||||||||||||
9101
LBJ Freeway
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
4.59
|
|||||||||||||||||||||
Uptown
Tower
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
1.68
|
Property
|
Name
of Tenant
|
Total
Leased
Area
(Sq. Ft.)
|
Total
Annual
Rent
|
Effective
Net
Rent
per
Sq. Ft.
|
Lease
Expiration
Date
|
|||||||||||
Bissonnet/Beltway
|
Lydia
& Ajibade Owoyemi
|
3,000
|
$
|
42,780
|
$
|
14.26
|
9/30/09
|
|||||||||
Webster
Point
|
Houston
Learning Academy
|
3,976
|
64,737
|
16.28
|
12/31/06
|
|||||||||||
Centre
South
|
Carlos
Alvarez
|
10,407
|
96,091
|
9.23
|
3/31/06
|
|||||||||||
Torrey
Square
|
99
Cents Only Stores
|
25,296
|
219,100
|
8.66
|
9/18/04
|
|||||||||||
Providence
|
99
Cents Only Stores
|
23,859
|
225,567
|
9.45
|
9/9/08
|
|||||||||||
Holly
Knight
|
Quick
Wash Laundry
|
2,460
|
50,373
|
20.48
|
9/30/09
|
|||||||||||
Plaza
Park
|
American
Medical Response
|
14,765
|
136,299
|
9.23
|
5/31/06
|
|||||||||||
Northwest
Place II
|
Terra
Mar, Inc.
|
13,923
|
112,743
|
8.10
|
7/31/08
|
|||||||||||
Lion
Square
|
Bellaire
Marketplace
|
42,205
|
253,440
|
6.00
|
10/31/05
|
|||||||||||
Zeta
Building
|
Texas
Retirement & Tax Advisors
|
3,233
|
54,314
|
16.80
|
2/28/05
|
|||||||||||
Royal
Crest
|
Emerald
Environmental Service
|
2,500
|
33,596
|
13.44
|
2/28/07
|
|||||||||||
Featherwood
|
Transwestern
Publishing
|
9,543
|
167,774
|
17.58
|
11/30/07
|
|||||||||||
Interstate
10
|
River
Oaks, L-M, Inc.
|
28,050
|
159,885
|
5.70
|
12/31/05
|
|||||||||||
Westbelt
Plaza
|
Magnum
Staffing
|
6,743
|
64,526
|
9.57
|
12/31/09
|
|||||||||||
Greens
Road
|
Celaya
Meat Market
|
3,985
|
28,965
|
7.27
|
12/31/11
|
|||||||||||
Town
Park
|
Omar’s
Meat Market
|
6,450
|
121,680
|
18.87
|
12/31/07
|
|||||||||||
Northeast
Square
|
Sultan
Allana/99 Cent Store
|
4,573
|
52,220
|
11.42
|
11/30/05
|
|||||||||||
Main
Park
|
Transport
Sales Associates
|
23,882
|
103,143
|
4.32
|
8/31/05
|
|||||||||||
Dairy
Ashford
|
Foster
Wheeler USA Corp.
|
|
5,118
|
34,760
|
6.79
|
1/31/09
|
||||||||||
South
Richey
|
Kroger
Food Stores, Inc.
|
42,130
|
265,416
|
6.30
|
2/28/06
|
|||||||||||
Corporate
Park Woodland
|
Carrier
Sales and Distribution
|
16,991
|
164,204
|
9.66
|
7/31/08
|
|||||||||||
South
Shaver
|
EZ
Pawn
|
4,547
|
61,133
|
13.44
|
11/30/07
|
|||||||||||
Kempwood
Plaza
|
Dollar
General
|
7,960
|
84,931
|
10.67
|
10/31/14
|
|||||||||||
Bellnot
Square
|
Kroger
Food Stores, Inc.
|
42,130
|
337,044
|
8.00
|
7/31/07
|
|||||||||||
Corporate
Park Northwest
|
Air
Consulting & Engineering
|
11,226
|
115,472
|
10.29
|
5/31/08
|
|||||||||||
Westgate
|
Postmark
DMS, LLC
|
18,818
|
139,175
|
7.40
|
2/28/09
|
|||||||||||
Garden
Oaks
|
Bally
Total Fitness
|
25,722
|
259,166
|
10.08
|
6/30/05
|
|||||||||||
Westchase
|
Jesus
Corral
|
5,396
|
60,271
|
11.17
|
2/28/07
|
|||||||||||
Sunridge
|
Puro
Latino, Inc.
|
9,416
|
53,381
|
5.67
|
5/31/10
|
|||||||||||
Holly
Hall
|
The
Methodist Hospital
|
30,000
|
183,960
|
6.13
|
12/31/11
|
|||||||||||
Brookhill
|
T.S.
Moly-Lubricants
|
10,187
|
48,897
|
4.80
|
9/30/07
|
|||||||||||
Corporate
Park West
|
LTC
Pharmacy Services
|
18,330
|
151,003
|
8.24
|
7/31/06
|
|||||||||||
Windsor
Park
|
The
Sports Authority/Home Depot
|
54,517
|
463,472
|
8.50
|
8/31/15
|
|||||||||||
SugarPark
Plaza
|
Marshall’s
|
31,008
|
280,956
|
9.06
|
1/31/08
|
|||||||||||
Woodlake
Plaza
|
Rock
Solid Images
|
11,785
|
161,646
|
13.72
|
7/31/09
|
|||||||||||
9101
LBJ Freeway
|
Air
Liquide America
|
16,587
|
265,392
|
16.00
|
5/31/07
|
|||||||||||
Uptown
Tower
|
Brockett
Davis Drake Inc.
|
16,078
|
342,248
|
21.29
|
4/30/11
|
Gross
Leasable Area
|
Annual
Rental Income
|
|||||||||||||||
Year
|
Number
of
Leases
|
Approximate
Square
Feet
|
Percent
of
Total
Leasable Area
|
Amount
|
Percent
of the
Company’s
Total
Rental
Income
|
|||||||||||
2006
|
167
|
472,364
|
15.13
|
%
|
$
|
4,520,536
|
15.69
|
%
|
||||||||
2007
|
138
|
438,984
|
14.07
|
5,061,562
|
17.56
|
|||||||||||
2008
|
147
|
510,982
|
16.37
|
5,615,586
|
19.48
|
|||||||||||
2009
|
111
|
360,258
|
11.54
|
4,422,203
|
15.34
|
|||||||||||
2010
|
67
|
227,590
|
7.29
|
2,716,267
|
9.42
|
|||||||||||
2011
|
50
|
206,266
|
6.61
|
2,494,173
|
8.65
|
|||||||||||
2012
|
17
|
75,939
|
2.43
|
933,414
|
3.24
|
|||||||||||
2013
|
13
|
61,170
|
1.96
|
714,646
|
2.48
|
|||||||||||
2014
|
10
|
39,968
|
1.28
|
545,526
|
1.89
|
|||||||||||
2015
|
16
|
99,177
|
3.18
|
1,000,808
|
3.47
|
|||||||||||
Total
|
736
|
2,492,698
|
79.87
|
%
|
$
|
28,024,721
|
97.24
|
%
|
Property
|
Federal
Tax Basis
|
Realty
Tax Rate
|
2005
Realty Taxes
|
|||||||
Bissonnet/Beltway
|
$
|
1,994,838
|
$
|
0.0301377
|
$
|
40,686
|
||||
Webster
Point
|
1,382,126
|
0.0267877
|
22,183
|
|||||||
Centre
South
|
1,737,670
|
0.0324414
|
35,685
|
|||||||
Torrey
Square
|
3,655,917
|
0.0357580
|
134,700
|
|||||||
Providence
|
4,830,878
|
0.0322774
|
95,680
|
|||||||
Holly
Knight
|
1,755,142
|
0.0300954
|
39,124
|
|||||||
Plaza
Park
|
2,207,153
|
0.0300954
|
84,267
|
|||||||
Northwest
Place II
|
972,976
|
0.0321447
|
24,816
|
|||||||
Lion
Square
|
4,817,718
|
0.0301377
|
134,997
|
|||||||
Zeta
Building
|
2,415,787
|
0.0335877
|
48,701
|
|||||||
Royal
Crest
|
1,947,638
|
0.0335877
|
24,351
|
|||||||
Featherwood
|
3,429,782
|
0.0324414
|
90,836
|
|||||||
Interstate
10
|
2,880,585
|
0.0310377
|
101,555
|
|||||||
Westbelt
Plaza
|
1,881,709
|
0.0310377
|
57,358
|
|||||||
Greens
Road
|
893,702
|
0.0328698
|
49,591
|
|||||||
Town
Park
|
1,438,238
|
0.0301377
|
60,095
|
|||||||
Northeast
Square
|
1,748,599
|
0.0299624
|
62,793
|
|||||||
Main
Park
|
2,794,446
|
0.0300954
|
76,217
|
|||||||
Dairy
Ashford
|
834,072
|
0.0300954
|
23,234
|
|||||||
South
Richey
|
3,495,149
|
0.0324414
|
97,324
|
|||||||
Corporate
Park Woodlands
|
6,528,746
|
0.0302660
|
152,428
|
|||||||
South
Shaver
|
921,353
|
0.0316364
|
39,495
|
|||||||
Kempwood
Plaza
|
3,431,385
|
0.0310377
|
69,835
|
|||||||
Bellnot
Square
|
4,377,709
|
0.0301371
|
102,555
|
|||||||
Corporate
Park Northwest
|
4,947,247
|
0.0321447
|
181,778
|
|||||||
Westgate
|
1,900,518
|
0.0331627
|
74,029
|
Property
|
Federal
Tax Basis
|
Realty
Tax Rate
|
2005
Realty Taxes
|
|||||||
Garden
Oaks
|
4,594,681
|
0.0300954
|
108,343
|
|||||||
Westchase
|
1,683,364
|
0.0310377
|
55,868
|
|||||||
Sunridge
|
2,332,002
|
0.0310377
|
69,835
|
|||||||
Holly
Hall
|
1,817,735
|
0.0300954
|
67,053
|
|||||||
Brookhill
|
1,262,409
|
0.0300954
|
31,914
|
|||||||
Corporate
Park West
|
9,548,146
|
0.0331627
|
210,019
|
|||||||
Windsor
Park
|
13,102,500
|
0.0293585
|
300,366
|
|||||||
SugarPark
Plaza
|
8,925,849
|
0.0311377
|
177,641
|
|||||||
Woodlake
Plaza
|
5,641,292
|
0.0309954
|
130,181
|
|||||||
9101
LBJ Freeway
|
7,675,009
|
0.0311650
|
158,348
|
|||||||
Uptown
Tower
|
16,960,082
|
0.0298486
|
388,032
|
Year
Ended
December
31,
|
||||||||||||||||
2005
|
2004
|
2003
|
2002
|
2001
|
||||||||||||
(in
thousands, except per share data)
|
||||||||||||||||
Income
Statement Data:
|
||||||||||||||||
Revenues
|
$
|
25,219
|
$
|
23,484
|
$
|
20,973
|
$
|
20,755
|
$
|
11,704
|
||||||
Operations
expenses
|
11,011
|
9,183
|
8,383
|
8,242
|
5,068
|
|||||||||||
Interest
|
3,770
|
2,664
|
1,323
|
1,573
|
812
|
|||||||||||
Depreciation
and amortization
|
6,099
|
5,223
|
4,758
|
4,042
|
2,151
|
|||||||||||
Total
expenses
|
20,880
|
17,070
|
14,464
|
13,857
|
8,031
|
|||||||||||
Income
before minority interests
|
4,339
|
6,414
|
6,509
|
6,898
|
3,673
|
|||||||||||
Minority
interest in income
|
(1,891
|
)
|
(2,990
|
)
|
(3,035
|
)
|
(3,193
|
)
|
(1,932
|
)
|
||||||
Net
income
|
$
|
2,448
|
$
|
3,424
|
$
|
3,474
|
$
|
3,705
|
$
|
1,741
|
||||||
Net
income per common share
|
$
|
0.310
|
$
|
0.488
|
$
|
0.496
|
$
|
0.529
|
$
|
0.401
|
||||||
Weighted
average shares outstanding
|
7,888
|
7,010
|
7,010
|
7,007
|
4,336
|
|||||||||||
Balance
Sheet Data:
|
||||||||||||||||
Real
estate
|
$
|
153,965
|
$
|
126,547
|
$
|
120,256
|
$
|
109,294
|
$
|
66,269
|
||||||
Other
assets
|
17,497
|
16,070
|
13,810
|
17,670
|
4,409
|
|||||||||||
Total
assets
|
$
|
171,462
|
$
|
142,617
|
$
|
134,066
|
$
|
126,964
|
$
|
70,678
|
||||||
Liabilities
|
$
|
83,462
|
$
|
66,299
|
$
|
55,183
|
$
|
45,617
|
$
|
16,311
|
||||||
Minority
interests in Operating Partnership
|
34,272
|
36,489
|
37,567
|
38,598
|
27,264
|
|||||||||||
Shareholders’
equity
|
53,728
|
39,829
|
41,316
|
42,749
|
27,103
|
|||||||||||
Total
Liabilities and Shareholders’
Equity
|
$
|
171,462
|
$
|
142,617
|
$
|
134,066
|
$
|
126,964
|
$
|
70,678
|
||||||
Cash
Flow Data:
|
||||||||||||||||
Proceeds
from issuance of common shares
|
$
|
17,035
|
$
|
—
|
$
|
—
|
$
|
155
|
$
|
6,748
|
||||||
Additions
to real estate
|
31,792
|
10,277
|
8,242
|
1,983
|
5,028
|
|||||||||||
Other
Financial Data:
|
||||||||||||||||
Distributions
per share
|
$
|
0.7072
|
$
|
0.7005
|
$
|
0.7000
|
$
|
0.6738
|
$
|
0.5688
|
· |
property
management fees in an amount not to exceed the fees customarily
charged in
arm’s length transactions by others rendering similar services in the
same
geographic area for similar properties as determined by a survey
of
brokers and agents in such area. Generally, we expect these fees
to be
between approximately two and four percent (2.0%-4.0%) of gross
revenues
for the management of commercial office buildings and approximately
five
percent (5.0%) of gross revenues for the management of retail and
office-warehouse properties;
|
· |
for
the leasing of the properties, a separate fee for the leases of
new
tenants and renewals of leases with existing tenants in an amount
not to
exceed the fee customarily charged in arm’s length transactions by others
rendering similar services in the same geographic area for similar
properties as determined by a survey of brokers and agents in such
area;
and
|
· |
except
as otherwise specifically provided, all costs and expenses incurred
by the
Management Company in fulfilling its duties for the account of
and on
behalf of us. Such costs and expenses shall include the wages and
salaries
and other employee-related expenses of all on-site and off-site
employees
of the Management Company who are engaged in the operation, management,
maintenance and leasing or access control of our properties, including
taxes, insurance and benefits relating to such employees, and legal,
travel and other out-of-pocket expenses that are directly related
to the
management of specific properties.
|
· |
acquire
additional material assets;
|
· |
merge
or consolidate with any other
entity;
|
· |
engage
in any other business or activity other than the ownership, operation
and
maintenance of the properties securing the
note;
|
· |
make
certain investments;
|
· |
incur,
assume or guarantee additional
indebtedness;
|
· |
grant
certain liens; and
|
· |
loan
money to others.
|
Total
Leverage Ratio
|
LIBOR
Margin
|
Alternative
Base
Rate
Margin
|
||
Less
than 60% but greater than or equal to 50%
|
2.40%
|
1.150%
|
||
Less
than 50% but greater than or equal to 45%
|
2.15%
|
1.025%
|
||
Less
than 45%
|
1.90%
|
1.000%
|
· |
The
Company will provide a negative pledge on the borrowing base pool
and may
not provide a negative pledge of the borrowing base pool to any
other
lender.
|
· |
The
properties must be free of all liens, unless otherwise
permitted.
|
· |
All
eligible properties must be retail, office-warehouse, or office
properties, must be free and clear of material environmental concerns
and
must be in good repair.
|
· |
The
aggregate physical occupancy of the borrowing base pool must remain
above
80% at all times.
|
· |
No
property may comprise more than 15% of the value of the borrowing
base
pool with the exception of Corporate Park Northwest, which is allowed
into
the borrowing base pool.
|
· |
The
borrowing base pool must at all times be comprised of at least
10
properties.
|
· |
The
borrowing base pool properties may not contain development or
redevelopment projects.
|
· |
The
Company will not permit any liens on the properties in the borrowing
base
pool unless otherwise
permitted.
|
· |
The
ratio of aggregate net operating income from the borrowing base
pool to
debt service shall at all times exceed 1.5 to 1.0. For any quarter,
debt
service shall be equal to the average loan balance for the past
quarter
times an interest rate which is the greater of (a) the then current
annual
yield on 10 year United States Treasury notes over 25 years plus
2%; (b) a
6.5% constant; or (c) the actual interest rate for the
facility.
|
· |
The
ratio of the value of the borrowing base pool to total funded loan
balance
must always exceed 1.67 to 1.00. The value of the borrowing base
pool is
defined as aggregate net operating income for the preceding four
quarters,
less a $0.15 per square foot per annum capital expenditure reserve,
divided by a 9.25% capitalization
rate.
|
· |
The
Company will not permit its total indebtedness to exceed 60% of
the fair
market value of its real estate assets at the end of any quarter.
Total
indebtedness is defined as all liabilities of the Company, including
this
facility and all other secured and unsecured debt of the Company,
including letters of credit and guarantees. Fair market value of
real
estate assets is defined as aggregate net operating income for
the
preceding four quarters, less a $0.15 per square foot per annum
capital
expenditure reserve, divided by a 9.25% capitalization
rate.
|
· |
The
ratio of consolidated rolling four-quarter earnings before interest,
income tax, deprecation and amortization expenses for such quarter
to
total interest expense, including capitalized interest, shall not
be less
than 2.0 to 1.0.
|
· |
The
ratio of consolidated earnings before interest, income tax, deprecation
and amortization expenses for such quarter to total interest, including
capitalized interest, principal amortization, capital expenditures
and
preferred stock dividends shall not be less than 1.5 to 1.0. Capital
expenditures shall be deemed to be $0.15 per square foot per
annum.
|
· |
The
ratio of secured debt to fair market value of real estate assets
shall not
be greater than 40%.
|
· |
The
ratio of declared dividends to funds from operations shall not
be greater
than 95%.
|
· |
The
ratio of development assets to fair market value of real estate
assets
shall not be greater than
20%.
|
· |
The
Company must maintain its status as a real estate investment trust
for
income tax purposes.
|
· |
Total
other investments shall not exceed 30% of total asset value. Other
investments shall include investments in joint ventures, unimproved
land,
marketable securities and mortgage notes receivable. Additionally,
the
preceding investment categories shall not comprise greater than
30%, 15%,
10% and 20%, respectively, of total other
investments.
|
Payment
due by period
|
||||||||||
|
TOTAL
|
Less
than
One
Year
|
One
to
Three
Years
|
Three
to
Five
Years
|
More
than
Five
Years
|
|||||
Long-Term
Debt Obligations
|
$73,025,535
|
$
5,610,441
|
$67,415,094
|
—
|
—
|
|||||
Capital
Lease Obligations
|
—
|
—
|
—
|
—
|
—
|
|||||
Operating
Lease Obligations
|
—
|
—
|
—
|
—
|
—
|
|||||
Purchase
Obligations
|
—
|
—
|
—
|
—
|
—
|
|||||
Other
Long-Term Liabilities Reflected on the Registrant’s Balance Sheet under
GAAP
|
—
|
—
|
—
|
—
|
—
|
|||||
Total
|
$73,025,535
|
$
5,610,441
|
$67,415,094
|
—
|
—
|
Month
Paid or Payable
|
Total
Amount of
Distributions
Paid or Payable
|
Distributions
Per
Share
|
|||
April
2004
|
$408,762
|
$0.0583
|
|||
May
2004
|
408,762
|
0.0583
|
|||
June
2004
|
409,253
|
0.0584
|
|||
July
2004
|
408,762
|
0.0583
|
|||
August
2004
|
408,762
|
0.0583
|
|||
September
2004
|
409,253
|
0.0584
|
|||
October
2004
|
408,692
|
0.0583
|
|||
November
2004
|
408,692
|
0.0583
|
|||
December
2004
|
409,392
|
0.0584
|
|||
January
2005
|
408,692
|
0.0583
|
|||
February
2005
|
408,692
|
0.0583
|
|||
March
2005
|
412,897
|
0.0589
|
|||
April
2005
|
412,931
|
0.0589
|
|||
May
2005
|
429,416
|
0.0589
|
|||
June
2005
|
439,453
|
0.0590
|
|||
July
2005
|
445,621
|
0.0589
|
|||
August
2005
|
452,396
|
0.0589
|
|||
September
2005
|
460,284
|
0.0590
|
|||
October
2005
|
467,260
|
0.0589
|
|||
November
2005
|
470,627
|
0.0589
|
|||
December
2005
|
481,028
|
0.0590
|
|||
Average
Per Quarter
|
$0.1758
|
Tax
Status
|
2005
|
2004
|
2003
|
2002
|
2001
|
|||||||||||
Ordinary
income
|
62.6
|
%
|
67.7
|
%
|
24.8
|
%
|
85.1
|
%
|
70.5
|
%
|
||||||
Return
of capital
|
37.4
|
%
|
32.3
|
%
|
75.2
|
%
|
14.9
|
%
|
29.5
|
%
|
||||||
Capital
gain
|
-
|
-
|
-
|
-
|
-
|
|||||||||||
Total
|
100.0
|
%
|
100.0
|
%
|
100.0
|
%
|
100.0
|
%
|
100.0
|
%
|
Month
Paid or Payable
|
Total
Amount of
Distributions
Paid or Payable
|
Distributions
Per
Share
|
|||
April
2004
|
$726,368
|
$0.0583
|
|||
May
2004
|
726,368
|
0.0583
|
|||
June
2004
|
727,240
|
0.0584
|
|||
July
2004
|
726,368
|
0.0583
|
|||
August
2004
|
726,368
|
0.0583
|
|||
September
2004
|
727,240
|
0.0584
|
|||
October
2004
|
726,243
|
0.0583
|
|||
November
2004
|
726,243
|
0.0583
|
|||
December
2004
|
727,488
|
0.0584
|
|||
January
2005
|
726,243
|
0.0583
|
|||
February
2005
|
726,243
|
0.0583
|
|||
March
2005
|
733,717
|
0.0589
|
|||
April
2005
|
733,748
|
0.0589
|
|||
May
2005
|
748,498
|
0.0589
|
|||
June
2005
|
758,154
|
0.0590
|
|||
July
2005
|
762,996
|
0.0589
|
|||
August
2005
|
768,976
|
0.0589
|
|||
September
2005
|
776,345
|
0.0590
|
|||
October
2005
|
782,136
|
0.0589
|
|||
November
2005
|
785,388
|
0.0589
|
|||
December
2005
|
794,998
|
0.0590
|
|||
Average
Per Quarter
|
$0.1758
|
December
31, 2004
|
December
31, 2005
|
||||||
Number
of properties owned and operated
|
34
|
37
|
|||||
Aggregate
gross leasable area (sq. ft.)
|
2,635,063
|
3,121,037
|
|||||
Occupancy
rate
|
86%
|
|
82%
|
|
|||
Total
Revenues
|
$
|
23,483,657
|
$
|
25,219,233
|
|||
Total
Operating Expenses
|
$
|
17,069,628
|
$
|
20,880,435
|
|||
Income
before Minority Interest
|
$
|
6,414,029
|
$
|
4,338,798
|
|||
Minority
Interest in the Operating Partnership
|
$
|
(2,990,410
|
)
|
$
|
(1,890,616
|
)
|
|
Net
Income
|
$
|
3,423,619
|
$
|
2,448,182
|
December
31, 2003
|
December
31, 2004
|
||||||
Number
of properties owned and operated
|
33
|
34
|
|||||
Aggregate
gross leasable area (sq. ft.)
|
2,540,031
|
2,635,063
|
|||||
Occupancy
rate
|
88%
|
|
86%
|
|
|||
Total
Revenues
|
$
|
20,972,951
|
$
|
23,483,657
|
|||
Total
Operating Expenses
|
$
|
14,463,982
|
$
|
17,069,628
|
|||
Income
before Minority Interest
|
$
|
6,508,969
|
$
|
6,414,029
|
|||
Minority
Interest in the Operating Partnership
|
$
|
(3,034,795
|
)
|
$
|
(2,990,410
|
)
|
|
Net
Income
|
$
|
3,474,174
|
$
|
3,423,619
|
Partnership
Name
|
Year
Offering Completed
|
Year
Consolidated with Us
|
||
Holly
Knight Plaza, Ltd.
|
1984
|
2000
|
||
Woodedge
Plaza, Ltd.
|
1985
|
n/a
|
||
Bissonnet/Beltway
Plaza, Ltd.
|
1985
|
1999
|
||
Interstate
10 Office/Warehouse, Ltd.
|
1985
|
1999
|
||
Kempwood
Plaza, Ltd.
|
1987
|
1999
|
||
Westbelt
Plaza, Ltd.
|
1988
|
1999
|
||
Houston
R.E. Income Properties, Ltd.
|
1989
|
1999
|
||
Houston
R.E. Income Properties VIII, Ltd.
|
1990
|
1999
and 2002(1)
|
||
Houston
R.E. Income Properties IX, Ltd.
|
1991
|
2002
|
||
Houston
R.E. Income Properties X, Ltd.
|
1992
|
2000
|
||
Houston
R.E. Income Properties XI, Ltd.
|
1994
|
2002(2)
|
||
Houston
R.E. Income Properties XII, L.P.
|
1999
|
2000
|
||
Houston
R.E. Income Properties XIV, Ltd.
|
1997
|
2002(3)
|
||
Houston
R.E. Income Properties XV, Ltd.
|
1999
|
2002
|
||
Houston
R.E. Income Properties XVI, Ltd.
|
2002
|
n/a
|
||
Houston
R.E. Income Properties XVII, Ltd.
|
2003
|
n/a
|
||
Hartman
Income Properties XVIII, Ltd.
|
n/a
|
n/a
|
||
Hartman
Gulf Plaza Acquisitions LP
|
2004
|
n/a
|
||
Hartman 3100 Weslayan Acquisitions LP |
2005
|
n/a
|
(1) |
We
acquired all but one of the properties owned by Houston R.E. Income
Properties VIII, Ltd. in 1999 and we acquired the last property in
2002.
|
(2) |
We
acquired all but one of the properties owned Houston R.E. Income
Properties XI, Ltd. in 1999 and we acquired the last property in
2002.
|
(3) |
We
acquired six of the seven properties owned by Houston R.E. Income
Properties XIV, Ltd.
|
Number
of Programs Sponsored:
|
19
|
Total
amount of money raised from investors:
|
Approximately
$170,000,000
|
Total
number of investors:
|
2,596
|
Total
number of properties purchased:
|
56
|
Aggregate
dollar amount of properties purchased:
|
Approximately
$262,884,000
|
Percentage
of number of properties that are:
|
|
Office/warehouse
properties:
|
41%
|
Retail
shopping centers:
|
29%
|
Office
buildings:
|
30%
|
Percentage
of purchase price for:
|
|
New
properties:
|
0%
|
Used
properties:
|
94%
|
Construction:
|
6%
|
· |
a
retail center with two buildings totaling approximately 75,000
rentable
square feet;
|
· |
an
office/warehouse complex containing four buildings totaling approximately
66,000 rentable square feet;
|
· |
an
office/warehouse complex containing two buildings totaling approximately
21,000 rentable square feet;
|
· |
a
six-story office building with approximately 88,000 rentable square
feet;
|
· |
an
office complex containing seven two- and three-story buildings
totaling
approximately 208,000 rentable square feet;
|
· |
a
retail center with two buildings totaling approximately 70,000
square
feet; and
|
· |
a
ten-story office building with approximately 183,000 square
feet.
|
· |
a
retail center in San Antonio, Texas with five buildings totaling
approximately 246,000 rentable square
feet;
|
· |
a
nine-story office building in Houston, Texas totaling approximately
156,000 rentable square feet;
|
· |
a
two-building office complex in Houston, Texas containing three-story
buildings totaling approximately 225,000 rentable square feet;
and
|
· |
an
office building in Dallas, Texas containing 198,374 rentable square
feet.
|
· |
an
eight story office building in Dallas, totaling
approximately 128,000
rentable square feet; and
|
· |
a
five-story office building in Houston totaling
approximately 111,000
rentable
square feet,
with a two story parking
garage.
|
· |
current
provisions of the Internal Revenue Code;
|
· |
existing,
temporary and currently proposed Treasury Regulations promulgated
under
the Internal Revenue Code;
|
· |
the
legislative history of the Internal Revenue Code;
|
· |
currently
published administrative rulings; and
|
· |
judicial
interpretations of the foregoing.
|
· |
We
will be taxed at regular corporate rates on our undistributed REIT
taxable
income, including undistributed net capital
gains.
|
· |
Under
some circumstances, we will be subject to alternative minimum
tax.
|
· |
If
we have net income from the sale or other disposition of “foreclosure
property” that is held primarily for sale to customers in the ordinary
course of business or other non-qualifying income from foreclosure
property, we will be subject to tax at the highest corporate rate
on that
income to the extent it does not constitute qualifying income for
purposes
of the 75% Income Test (discussed
below).
|
· |
If
we have net income from prohibited transactions (which are, in
general,
sales or other dispositions of property other than foreclosure
property
that is held primarily for sale to customers in the ordinary course
of
business), we will be subject to a 100.0% tax on such
income.
|
· |
If
we fail to satisfy either of the 75.0% or 95.0% Income Tests (discussed
below) but have nonetheless maintained our qualification as a REIT
because
applicable conditions have been met, we will be subject to a 100.0%
tax on
the net income attributable to the greater of (i) the amount by
which we
fail the 75% Income Test or (ii) the amount by which 90% of our
gross
income exceeds the amount of income qualifying for the 95% Income
Test,
multiplied by a fraction calculated to reflect our
profitability.
|
· |
If
we fail to distribute during each year an amount equal to at least
the sum
of (i) 85.0% of our REIT ordinary income for such year, (ii) 95.0%
of our
REIT capital gain net income for such year and (iii) any
undistributed taxable income from prior periods, we will be subject
to a
4.0% excise tax on the excess of the required distribution over
the sum of
(A) amounts actually distributed and (B) retained amounts on which
income
tax is paid at the corporate
level.
|
· |
If
we acquire any asset from a C corporation (i.e.,
a corporation generally subject to full corporate-level tax) in
a
carryover-basis transaction and we subsequently recognize gain
on the
disposition of such asset during the ten-year period beginning
on the date
on which we acquired the asset, then we generally will be subject
to tax
at the highest regular corporate rate on the lesser of the amount
of gain
that we recognize at the time of the sale or disposition and the
amount of
gain that we would have recognized if we had sold the asset at
the time we
acquired the asset, pursuant to guidelines issued by the Internal
Revenue
Service.
|
· |
be
a domestic corporation;
|
· |
elect
to be taxed as a REIT and satisfy relevant filing and other administrative
requirements;
|
· |
be
managed by one or more trustees or
directors;
|
· |
have
transferable shares;
|
· |
not
be a financial institution or an insurance
company;
|
· |
use
a calendar year for federal income tax
purposes;
|
· |
have
at least 100 shareholders for at least 335 days of each taxable
year of
twelve months; and
|
· |
not
be closely held.
|
· |
We
must derive directly or indirectly at least 75.0% of our gross
income,
excluding gross income from prohibited transactions, for each taxable
year
from investments relating to real property or mortgages on real
property.
Gross income includes “rents from real property” and, in some
circumstances, interest, but excludes gross income from dispositions
of
property held primarily for sale to customers in the ordinary course
of a
trade or business. Such dispositions are referred to as “prohibited
transactions.” This is known as the 75.0% Income
Test.
|
· |
We
must derive at least 95.0% of our gross income, excluding gross
income
from prohibited transactions, for each taxable year from the real
property
investments described above, and from dividends, interest and gains
from
the sale or disposition of stock or securities or from any combination
of
the foregoing. This is known as the 95.0% Income
Test.
|
· |
The
amount of rent received from a tenant generally must not be based
in whole
or in part on the income or profits of any person; however, an
amount
received or accrued generally will not be excluded from the term
“rents
from real property” solely by reason of being based on a fixed percentage
or percentages of gross receipts or
sales.
|
· |
Rents
received from a tenant will not qualify as “rents from real property” if
we own 10.0% or more of (i) the total combined voting power of all
classes of voting stock of a corporation, (ii) the total value
of shares
of all classes of stock of a corporation or (iii) the total assets
or net
profits in any entity that is not a corporation of the tenant or
a
subtenant of the tenant (in which case only rent attributable to
the
subtenant is disqualified).
|
· |
If
rent attributable to personal property leased in connection with
a lease
of real property is greater than 15.0% of the total rent received
under
the lease, then the portion of rent attributable to the personal
property
will not qualify as “rents from real
property.”
|
· |
The
REIT must not operate or manage the property or furnish or render
services
to tenants, other than through an “independent contractor” who is
adequately compensated and from whom the REIT does not derive any
income.
However, a REIT may provide services with respect to its properties,
and
the income derived therefrom will qualify as “rents from real property,”
if the services are “usually or customarily rendered” in connection with
the rental of space only and are not otherwise considered “rendered to the
occupant.” Even if the services with respect to a property are
impermissible tenant services, the income derived therefrom will
qualify
as “rents from real property” if such income does not exceed 1.0% of all
amounts received or accrued with respect to that property.
|
· |
our
failure to meet these tests was due to reasonable cause and not
due to
willful neglect;
|
· |
we
attach a schedule of our income sources to our federal income tax
return;
and
|
· |
any
incorrect information on the schedule is not due to fraud with
intent to
evade tax.
|
· |
First,
at least 75.0% of the value of our total assets must be represented
by
real estate assets, cash, cash items and government securities.
The term
“real estate assets” includes real property, mortgages on real property,
shares in other qualified REITs and a proportionate share of any
real
estate assets owned by a partnership in which we are a partner
or of any
qualified REIT subsidiary of
ours.
|
· |
Second,
no more than 25.0% of our total assets may be represented by securities
other than those in the 75.0% asset
class.
|
· |
Third,
of the investments included in the 25.0% asset class, the value
of any one
issuer’s securities that we own may not exceed 5.0% of the value of our
total assets. Additionally, we may not own more than 10.0% of any
one
issuer’s outstanding voting
securities.
|
· |
85.0%
of our ordinary income for that
year;
|
· |
95.0%
of our capital gain net income other than the capital gain net
income that
we elect to retain and pay tax on for that year;
and
|
· |
any
undistributed taxable income from prior
periods,
|
· |
we
would be required to pay the tax on these
gains;
|
· |
our
shareholders, while required to include their proportionate share
of the
undistributed long-term capital gains in income, would receive
a credit or
refund for their share of the tax paid by us;
and
|
· |
the
basis of a shareholder’s shares would be increased by the amount of our
undistributed long-term capital gains, minus the amount of capital
gains
tax we pay, included in the shareholder’s long-term capital
gains.
|
· |
is
a citizen or resident of the United
States;
|
· |
is
a corporation, partnership or other entity created or organized
in or
under the laws of the United States or of any political subdivision
thereof;
|
· |
is
an estate or trust, the income of which is subject to United States
federal income taxation regardless of its source;
or
|
· |
a
trust, if a United States court is able to exercise primary supervision
over the administration of the trust and one or more United States
persons
have the authority to control all substantial decisions of the
trust.
|
· |
fails
to furnish his or her taxpayer identification number, which, for
an
individual, would be his or her Social Security
Number;
|
· |
furnishes
an incorrect tax identification
number;
|
· |
is
notified by the Internal Revenue Service that he or she has failed
properly to report payments of interest and distributions or is
otherwise
subject to backup withholding;
or
|
· |
under
some circumstances, fails to certify, under penalties of perjury,
that he
or she has furnished a correct tax identification number and that
(a) he
or she has not been notified by the Internal Revenue Service that
he or
she is subject to backup withholding for failure to report interest
and
distribution payments or (b) he or she has been notified by the
Internal
Revenue Service that he or she is no longer subject to backup
withholding.
|
· |
35.0%
of designated capital gain distributions or, if greater, 35.0%
of the
amount of any distributions that could be designated as capital
gain
distributions; and
|
· |
30.0%
of ordinary income distributions (i.e.,
distributions paid out of our earnings and
profits).
|
· |
whether
the investment is in accordance with the documents and instruments
governing such Plan or IRA;
|
· |
whether
the investment satisfies the prudence and diversification and other
fiduciary requirements of ERISA, if applicable;
|
· |
whether
the investment will result in UBTI to the Plan or IRA, see “Federal Income
Tax Considerations -
Treatment of Tax-Exempt Shareholders”;
|
· |
whether
there is sufficient liquidity for the Plan or IRA, considering
the minimum
distribution requirements under the Internal Revenue Code and the
liquidity needs of such Plan or IRA, after taking this investment
into
account;
|
· |
the
need to value the assets of the Plan or IRA annually; and
|
· |
whether
the investment would constitute or give rise to a prohibited transaction
under ERISA and/or the Internal Revenue Code, if applicable.
|
· |
the
estimated value per share would actually be realized by our shareholders
upon liquidation, because these estimates do not necessarily indicate
the
price at which properties can be
sold;
|
· |
our
shareholders would be able to realize estimated net asset values
if they
were to attempt to sell their shares, because no public market
for our
shares exists or is likely to develop;
or
|
· |
that
the value, or method used to establish value, would comply with
ERISA or
Internal Revenue Code requirements described
above.
|
· |
in
securities issued by an investment company registered under the
Investment
Company Act;
|
· |
in
“publicly offered securities,” defined generally as interests that are
“freely transferable,” “widely held” and registered with the Securities
and Exchange Commission;
|
· |
in
which equity participation by “benefit plan investors” is not significant;
or
|
· |
in
an “operating company,” which includes “venture capital operating
companies” and “real estate operating companies.”
|
· |
the
removal of trustees;
|
· |
any
amendment of our Declaration of Trust, except that our board of
trustees
may amend our Declaration of Trust without shareholder approval
to
increase or decrease the aggregate number of our shares or the
number of
our shares of any class or series that we have the authority to
issue, to
classify or reclassify any unissued shares or to qualify as a REIT
under
the Internal Revenue Code or the Maryland REIT Law, provided however,
that
such amendment does not adversely affect the rights, preferences
and
privileges of the holders of our issued and outstanding
shares;
|
· |
any
merger, consolidation or sale or other disposition of substantially
all of
our property (which also requires the approval of our board of
trustees);
and
|
· |
our
termination (which also may be approved by action of our board
of
trustees).
|
· |
If
one or more tenants defaults or terminates its lease, there could
be a
decrease or cessation of rental payments, which would mean less cash
available for dividends.
|
· |
Any
failure by a borrower under our mortgage loans to repay the loans
or
interest on the loans will reduce our income and dividends to
shareholders.
|
· |
Cash
available for dividends may be reduced if we are required to spend
money
to correct defects or to make improvements to
properties.
|
· |
Cash
available to pay dividends may decrease if the assets we acquire
have
lower yields than expected.
|
· |
There
may be a delay between the sale of the common shares and our purchase
of
real properties. During that time, we may invest in lower yielding
short-term instruments, which could result in a lower yield on
your
investment.
|
· |
Federal
income tax laws require REITs to distribute at least 90.0% of their
taxable income to shareholders. This limits the earnings that we
may
retain for corporate growth, such as property acquisition, development
or
expansion and makes us more dependent upon additional debt or equity
financing than corporations that are not REITs. If we borrow more
funds in
the future, more of our operating cash will be needed to make debt
payments and cash available for dividends may therefore
decrease.
|
· |
In
connection with future property acquisitions, we may issue additional
shares of common shares, operating partnership units or interests
in other
entities that own our properties. We cannot predict the number
of shares
of common shares, units or interests which we may issue, or the
effect
that these additional shares might have on cash available for dividends
to
you. If we issue additional shares, they could reduce the cash
available
for dividends to you.
|
· |
We
pay dividends to our shareholders to comply with the distribution
requirements of the Internal Revenue Code and to eliminate, or
at least
minimize, exposure to federal income taxes and the nondeductible
REIT
excise tax. Differences in timing between the receipt of income
and the
payment of expenses, and the effect of required debt payments,
could
require us to borrow funds on a short-term basis to meet the distribution
requirements that are necessary to achieve the tax benefits associated
with qualifying as a REIT.
|
Month
Paid
|
Total
Amount of
Dividends
Paid
|
Dividends
Per
Share
|
||
November
1999
|
$
59,365
|
$0.1610
|
||
February
2000
|
109,294
|
0.1628
|
||
May
2000
|
320,276
|
0.1645
|
||
August
2000
|
402,124
|
0.1663
|
||
November
2000
|
478,206
|
0.1680
|
||
February
2001
|
559,440
|
0.1698
|
||
May
2001
|
541,380
|
0.1400
|
||
August
2001
|
602,138
|
0.1400
|
||
November
2001
|
635,778
|
0.1400
|
||
February
2002
|
687,544
|
0.1488
|
||
May
2002
|
1,102,340
|
0.1575
|
||
August
2002
|
1,166,709
|
0.1663
|
||
November
2002
|
1,226,777
|
0.1750
|
||
February
2003
|
1,226,777
|
0.1750
|
||
April
2003
|
408,762
|
0.0583
|
||
May
2003
|
408,762
|
0.0583
|
||
June
2003
|
409,253
|
0.0584
|
||
July
2003
|
408,762
|
0.0583
|
||
August
2003
|
408,762
|
0.0583
|
||
September
2003
|
409,253
|
0.0584
|
||
October
2003
|
408,762
|
0.0583
|
||
November
2003
|
408,762
|
0.0583
|
||
December
2003
|
409,253
|
0.0584
|
||
January
2004
|
408,762
|
0.0583
|
||
February
2004
|
408,762
|
0.0583
|
||
March
2004
|
409,253
|
0.0584
|
||
April
2004
|
408,762
|
0.0583
|
||
May
2004
|
408,762
|
0.0583
|
||
June
2004
|
409,253
|
0.0584
|
||
July
2004
|
408,762
|
0.0583
|
||
August
2004
|
408,762
|
0.0583
|
||
September
2004
|
409,253
|
0.0584
|
||
October
2004
|
408,692
|
0.0583
|
||
November
2004
|
408,692
|
0.0583
|
||
December
2004
|
409,392
|
0.0584
|
||
January
2005
|
408,692
|
0.0583
|
||
February
2005
|
408,692
|
0.0583
|
||
March
2005
|
412,897
|
0.0589
|
||
April
2005
|
412,931
|
0.0589
|
||
May
2005
|
429,416
|
0.0589
|
||
June
2005
|
439,453
|
0.0590
|
||
July
2005
|
445,621
|
0.0589
|
||
August
2005
|
452,396
|
0.0589
|
||
September
2005
|
460,284
|
0.0590
|
||
October
2005
|
467,260
|
0.0589
|
||
November
2005
|
470,627
|
0.0589
|
||
December
2005
|
481,028
|
0.0590
|
||
Average
Per Quarter
|
$0.1666
|
· |
our
operating and interest expenses;
|
· |
the
ability of tenants to meet their obligations under the leases associated
with our properties;
|
· |
our
ability to keep our properties occupied;
|
· |
our
ability to maintain or increase rental rates when renewing or replacing
current leases;
|
· |
unanticipated
capital expenditures; and
|
· |
our
effectiveness in using the proceeds received from the offering
contemplated by this
prospectus.
|
· |
a
transaction involving our securities that have been for at least
twelve
months listed on the New York Stock Exchange, the American Stock
Exchange,
the Nasdaq National Market or another national exchange;
or
|
· |
a
transaction involving our conversion to trust, or association form
if, as
a consequence of the transaction, there will be no significant
adverse
change in shareholder voting rights, the term of our existence,
compensation to our advisor or our investment
objectives.
|
· |
accepting
the securities of the Roll-up Entity offered in the proposed Roll-up
Transaction; or
|
· |
one
of the following:
|
- |
remaining
as holders of our common shares and preserving their interests therein
on
the same terms and conditions as existed previously,
or
|
- |
receiving
cash in an amount equal to the shareholder’s pro rata share of the
appraised value of our net assets.
|
· |
that
would result in the shareholders having voting rights in a Roll-up
Entity
that are less than those provided in our bylaws and described elsewhere
in
this prospectus, including rights with respect to the election
and removal
of trustees, annual reports, annual and special meetings, amendment
of our
Declaration of Trust, and our
termination;
|
· |
that
includes provisions that would materially impede or frustrate the
accumulation of shares by any purchaser of the securities of the
Roll-up
Entity, except to the minimum extent necessary to preserve the
tax status
of the Roll-up Entity, or which would limit the ability of an investor
to
exercise the voting rights of its securities of the Roll-up Entity
on the
basis of the number of shares held by that
investor;
|
· |
in
which our investor’s rights to access of records of the Roll-up Entity
will be less than those provided in the section of this prospectus
entitled “— Meetings and Special Voting Requirements” above;
or
|
· |
in
which any of the costs of the Roll-up Transaction would be borne
by us if
the Roll-up Transaction is not approved by the
shareholders.
|
· |
any
person who beneficially owns ten percent or more of the voting
power of
the trust’s shares; or
|
· |
an
affiliate or associate of the trust who, at any time within the
two-year
period prior to the date in question, was the beneficial owner
of ten
percent or more of the voting power of the then outstanding voting
shares
of the trust.
|
· |
80%
of the votes entitled to be cast by holders of outstanding voting
shares
of the trust; and
|
· |
two-thirds
of the votes entitled to be cast by holders of voting shares of
the trust
other than shares held by the interested shareholder with whom
or with
whose affiliate the business combination is to be effected or held
by an
affiliate or associate of the interested
shareholder.
|
· |
one-tenth
or more but less than one-third,
|
· |
one-third
or more but less than a majority, or
|
· |
a
majority or more of all voting power.
|
· |
a
classified board,
|
· |
two-thirds
vote requirement for removing a
trustee,
|
· |
a
requirement that the number of trustees be fixed only by vote of
the
trustees,
|
· |
a
requirement that a vacancy on the board be filled only by the remaining
trustees and for the remainder of the full term of the trusteeship
in
which the vacancy occurred,
and
|
· |
a
majority requirement for the calling of a special meeting of
shareholders.
|
· |
each
dividend reinvested for your account during the
quarter;
|
· |
the
date of the reinvestment;
|
· |
the
number and price of the shares purchased by you;
and
|
· |
the
total number of shares in your
account.
|
· |
acquire,
purchase, own, operate, lease and dispose of any real property
and any
other property;
|
· |
construct
buildings and make other improvements on owned or leased
properties;
|
· |
authorize,
issue, sell, redeem or otherwise purchase any debt or other
securities;
|
· |
borrow
money;
|
· |
make
or revoke any tax election;
|
· |
maintain
insurance coverage in amounts and types as we determine is
necessary;
|
· |
retain
employees or other service
providers;
|
· |
form
or acquire interests in joint ventures;
and
|
· |
merge,
consolidate or combine Hartman OP with another
entity.
|
· |
all
expenses relating to our formation and continuity of
existence;
|
· |
all
expenses relating to the public offering and registration of our
securities;
|
· |
all
expenses associated with the preparation and filing of our periodic
reports under federal, state or local laws or
regulations;
|
· |
all
expenses associated with our compliance with applicable laws, rules
and
regulations; and
|
· |
all
of our other operating or administrative costs incurred in the
ordinary
course of business.
|
· |
result
in any person owning shares in excess of the ownership limit in
our
charter (unless exempted by our board of
trustees);
|
· |
result
in our shares being owned by fewer than 100
persons;
|
· |
result
in us being “closely held” within the meaning of Section 856(h) of the
Internal Revenue Code;
|
· |
cause
us to own 10% or more of the ownership interests in a tenant within
the
meaning of Section 856(d)(2)(B) of the Internal Revenue
Code;
|
· |
result
in such limited partner or any other person owning, directly or
constructively under Section 856(d)(5) of the Internal Revenue Code,
in excess of 9.8% of the total issued and outstanding shares in
the
company;
|
· |
cause
more than 50% of the value of the company’s shares to be held by five or
fewer individuals and certain organizations under Section 856(h) and
542(a)(2) of the Internal Revenue
Code;
|
· |
cause
the acquisition of shares in the company to be “integrated” with any other
distribution of interests in the company for purposes of complying
with
the registration provisions of the Securities
Act;
|
· |
cause
us to be terminated as a partnership under Section 708 of the Internal
Revenue Code.
|
· |
to
enlarge the obligation of any partner to make contributions to
the capital
of Hartman OP;
|
· |
to
modify the allocation of profits or losses or distributions among
partners
except as may be otherwise permitted under the limited partnership
agreement; or
|
· |
to
amend the transferability provisions contained in the limited partnership
agreement, the amendment provisions contained in the limited partnership
agreement, the provision regarding the limitations on the power
and
authority of the general partner and the name of Hartman
OP.
|
Per
Share
|
Maximum
Offering
|
|||||||
Primary
Offering
|
||||||||
Price
to Public
|
$
|
10.000
|
$
|
100,000,000
|
||||
Selling
Commissions
|
.675
|
6,750,000
|
||||||
Dealer
Manager Fee
|
.250
|
2,500,000
|
||||||
Proceeds
to Us
|
$
|
9.075
|
$
|
90,750,000
|
||||
Dividend
Reinvestment Plan
|
||||||||
Price
to Public
|
$
|
9.50
|
$
|
9,500,000
|
||||
Selling
Commissions
|
__
|
—
|
||||||
Dealer
Manager Fee
|
—
|
—
|
||||||
Proceeds
to Us
|
$
|
9.50
|
$
|
9,500,000
|
Shares
Purchased
in
the Transaction
|
Commission
Rate
|
Price
Per
Share
|
||
1 to
50,000
|
7.0%
|
$10.00
|
||
50,001
to 100,000
|
5.0
|
9.80
|
||
100,001
and over
|
3.0
|
9.60
|
· |
50,000
shares at $10.00 per share (total: $500,000) and a 7.0% commission
(based
on $10.00 per share);
|
· |
50,000
shares at $9.80 per share (total: $490,000) and a 5.0% commission
(based
on $10.00 per share); and
|
· |
26,020
shares at $9.60 per share (total: $249,792) and a 3.0% commission
(based
on $10.00 per share).
|
· |
meets
the minimum income and net worth standards set forth under “Suitability
Standards” immediately following the cover page of this
prospectus;
|
· |
can
reasonably benefit from an investment in our shares based on the
prospective shareholder’s overall investment objectives and portfolio
structure;
|
· |
is
able to bear the economic risk of the investment based on the prospective
shareholder’s overall financial situation;
and
|
· |
has
apparent understanding of:
|
Page
|
|
Hartman
Commercial Properties REIT Consolidated Financial Statements
(audited)
|
|
Report
of Independent Registered Public Accounting Firm
|
F-2
|
Consolidated
Balance Sheets as of December 31, 2005 and 2004
|
F-3
|
Consolidated
Statements of Income for the Years Ended December 31, 2005, 2004
and
2003
|
F-5
|
Consolidated
Statements of Changes in Shareholders’ Equity for the Years Ended
December
31, 2005, 2004 and 2003
|
F-6
|
Consolidated
Statements of Cash Flows for the Years Ended December 31, 2005,
2004
and 2003
|
F-7
|
Notes
to Consolidated Financial Statements
|
F-8
|
Schedule
II - Valuation and Qualifying Accounts
|
F-4
|
Schedule
III - Real Estate and Accumulated Depreciation
|
F-5
|
All
other schedules for which provision is made in the applicable accounting
regulations of the Securities and Exchange Commission are not required
under the related instructions or are inapplicable, and therefore
have
been omitted.
|
|
2002
Acquisition Properties (audited)
|
|
Report
of Independent Registered Public Accounting Firm
|
F-27
|
Statement
of Revenue and Certain Expenses for Each of the Years Ended December
31,
2001 and
2000
|
F-28
|
Notes
to Statement of Revenue and Certain Expenses for Each of the
Years Ended
December
31, 2001 and 2000
|
F-29
|
Windsor
Park Centre
|
|
Report
of Independent Registered Public Accounting Firm
|
F-31
|
Statement
of Revenue and Certain Expenses for the Year Ended December 31,
2002
(audited) and
the Nine Month Period Ended September 30, 2003
(unaudited)
|
F-32
|
Notes
to Statement of Revenue and Certain Expenses
|
F-33
|
Pro
Forma Condensed Consolidated Balance Sheet as of September 30,
2003
(unaudited)
|
F-35
|
Notes
to Pro Forma Condensed Consolidated Balance Sheet
|
F-37
|
Pro
Forma Consolidated Statement of Income for the Nine Month Period
Ended September 30, 2003 (unaudited)
|
F-39
|
Pro
Forma Consolidated Statement of Income for the Year Ended December
31,
2002 (unaudited)
|
F-40
|
Notes
to Pro Forma Consolidated Statements of Income
|
F-41
|
9101
LBJ Freeway
|
|
Report
of Independent Registered Public Accounting Firm
|
F-42
|
Statement
of Revenue and Certain Expenses for the Year Ended December 31,
2004 and
the Nine
Month Period Ended September 30, 2005 (unaudited)
|
F-43
|
Notes
to Statements of Revenue and Certain Expenses
|
F-44
|
Uptown
Tower
|
|
Report
of Independent Registered Public Accounting Firm
|
F-46
|
Statement
of Revenue and Certain Expenses for the Year Ended December 31,
2004 and
the Nine
Month Period Ended September 30, 2005 (unaudited)
|
F-47
|
Notes
to Statements of Revenue and Certain Expenses
|
F-48
|
9101
LBJ Freeway and Uptown Tower
|
|
Pro
Forma Condensed Consolidated Balance Sheet as of September 30,
2005
(unaudited)
|
F-50
|
Notes
to Pro Forma Condensed Consolidated Balance Sheet
|
F-52
|
Pro
Forma Consolidated Statement of Income for the Nine Month
Period Ended September 30, 2005 (unaudited)
|
F-54
|
Pro
Forma Consolidated Statement of Income for the Year Ended
December 31, 2005 (unaudited)
|
F-55
|
Notes
to Pro Forma Consolidated Statements of
Income
|
F-56
|
December
31,
|
|||||||
2005
|
2004
|
||||||
Assets
|
|||||||
Real
estate
|
|||||||
Land
|
$
|
32,770,566
|
$
|
28,446,210
|
|||
Buildings
and improvements
|
141,018,810
|
113,551,420
|
|||||
173,789,376
|
141,997,630
|
||||||
Less
accumulated depreciation
|
(19,824,386
|
)
|
(15,450,416
|
)
|
|||
Real
estate, net
|
153,964,990
|
126,547,214
|
|||||
Cash
and cash equivalents
|
848,998
|
631,978
|
|||||
Escrows
and acquisition deposits
|
5,307,663
|
4,978,362
|
|||||
Note
receivable
|
628,936
|
655,035
|
|||||
Receivables
|
|||||||
Accounts
receivable, net of allowance for doubtful accounts of $472,875 and
$342,690 in 2005 and 2004, respectively
|
1,248,985
|
1,008,621
|
|||||
Accrued
rent receivable
|
2,593,060
|
2,594,933
|
|||||
Due
from affiliates
|
3,180,663
|
3,300,202
|
|||||
Receivables,
net
|
7,022,708
|
6,903,756
|
|||||
Deferred
costs, net
|
3,004,218
|
2,797,294
|
|||||
Prepaid
expenses and other assets
|
684,536
|
103,301
|
|||||
Total
assets
|
$
|
171,462,049
|
$
|
142,616,940
|
December
31,
|
|||||||
2005
|
2004
|
||||||
Liabilities
and Shareholders’ Equity
|
|||||||
Liabilities
|
|||||||
Notes
payable
|
$
|
73,025,535
|
$
|
57,226,111
|
|||
Accounts
payable and accrued expenses
|
4,063,126
|
3,354,610
|
|||||
Due
to affiliates
|
350,865
|
675,861
|
|||||
Tenants’
security deposits
|
1,440,864
|
1,066,147
|
|||||
Prepaid
rent
|
470,248
|
254,765
|
|||||
Offering
proceeds escrowed
|
1,559,439
|
1,471,696
|
|||||
Dividends
payable
|
1,525,460
|
1,230,281
|
|||||
Other
liabilities
|
1,026,914
|
1,019,363
|
|||||
Total
liabilities
|
83,462,451
|
66,298,834
|
|||||
Minority
interests of unit holders in Operating Partnership, 5,808,337 units
at
December 31, 2005 and 2004
|
34,272,074
|
36,489,114
|
|||||
Commitments
and contingencies
|
—
|
—
|
|||||
Shareholders’
equity
|
|||||||
Preferred
shares, $0.001 par value per share; 50,000,000 shares authorized;
none
issued and outstanding at December 31, 2005 and 2004
|
—
|
—
|
|||||
Common
shares, $0.001 par value per share; 400,000,000 shares authorized;
8,913,654 and 7,010,146 issued and outstanding at December 31, 2005
and
2004, respectively
|
8,914
|
7,010
|
|||||
Additional
paid-in capital
|
62,560,077
|
45,527,152
|
|||||
Accumulated
deficit
|
(8,841,467
|
)
|
(5,705,170
|
)
|
|||
Total
shareholders’ equity
|
53,727,524
|
39,828,992
|
|||||
Total
liabilities and shareholders’ equity
|
$
|
171,462,049
|
$
|
142,616,940
|
Year
Ended December 31,
|
||||||||||
2005
|
2004
|
2003
|
||||||||
Revenues
|
||||||||||
Rental
income
|
$
|
20,072,597
|
$
|
18,426,558
|
$
|
16,656,340
|
||||
Tenants’
reimbursements
|
4,634,715
|
4,612,408
|
3,948,821
|
|||||||
Interest
and other income
|
511,921
|
444,691
|
367,790
|
|||||||
Total
revenues
|
25,219,233
|
23,483,657
|
20,972,951
|
|||||||
Expenses
|
||||||||||
Operation
and maintenance
|
3,227,481
|
2,838,618
|
2,505,756
|
|||||||
Interest
expense
|
3,769,636
|
2,664,135
|
1,323,378
|
|||||||
Real
estate taxes
|
2,980,709
|
2,595,346
|
2,050,738
|
|||||||
Insurance
|
455,577
|
459,801
|
509,498
|
|||||||
Electricity,
water and gas utilities
|
1,587,439
|
817,484
|
805,772
|
|||||||
Management
and partnership and
|
||||||||||
asset
management fees to an affiliate
|
1,405,587
|
1,339,822
|
1,232,127
|
|||||||
General
and administrative
|
1,224,946
|
1,139,060
|
1,065,416
|
|||||||
Depreciation
|
4,373,970
|
3,986,136
|
3,728,925
|
|||||||
Amortization
|
1,724,905
|
1,237,286
|
1,029,122
|
|||||||
Bad
debt expense (recoveries)
|
130,185
|
(8,060
|
)
|
213,250
|
||||||
Total
operating expenses
|
20,880,435
|
17,069,628
|
14,463,982
|
|||||||
Income
before minority interests
|
4,338,798
|
6,414,029
|
6,508,969
|
|||||||
Minority
interests in Operating Partnership
|
(1,890,616
|
)
|
(2,990,410
|
)
|
(3,034,795
|
)
|
||||
Net
income
|
$
|
2,448,182
|
$
|
3,423,619
|
$
|
3,474,174
|
||||
Net
income per common share
|
$
|
0.310
|
$
|
0.488
|
$
|
0.496
|
||||
Weighted-average
shares outstanding
|
7,887,749
|
7,010,146
|
7,010,146
|
|||||||
Common
Stock
|
||||||||||||||||
Shares
|
Amount
|
Additional
Paid-in
Capital
|
Accumulated
Deficit
|
Total
|
||||||||||||
Balance,
December 31, 2002
|
7,010,146
|
$
|
7,010
|
$
|
45,527,152
|
$
|
(2,785,244
|
)
|
$
|
42,748,918
|
||||||
Net
income
|
—
|
—
|
—
|
3,474,174
|
3,474,174
|
|||||||||||
Dividends
|
—
|
—
|
—
|
(4,907,108
|
)
|
(4,907,108
|
)
|
|||||||||
Balance,
December 31, 2003
|
7,010,146
|
7,010
|
45,527,152
|
(4,218,178
|
)
|
41,315,984
|
||||||||||
Net
income
|
—
|
—
|
—
|
3,423,619
|
3,423,619
|
|||||||||||
Dividends
|
—
|
—
|
—
|
(4,910,611
|
)
|
(4,910,611
|
)
|
|||||||||
Balance,
December 31, 2004
|
7,010,146
|
7,010
|
45,527,152
|
(5,705,170
|
)
|
39,828,992
|
||||||||||
|
||||||||||||||||
Issuance
of common stock for cash, net
of $1,981,276 offering costs
|
1,865,557
|
1,866
|
16,672,428
|
—
|
16,674,294
|
|||||||||||
Issuance
of shares under dividend reinvestment
plan at $9.50 per share
|
37,951
|
38
|
360,497
|
—
|
360,535
|
|||||||||||
Net
income
|
—
|
—
|
—
|
2,448,182
|
2,448,182
|
|||||||||||
Dividends
|
—
|
—
|
—
|
(5,584,479
|
)
|
(5,584,479
|
)
|
|||||||||
Balance,
December 31, 2005
|
8,913,654
|
$
|
8,914
|
$
|
$62,560,077
|
$
|
$(8,841,467
|
)
|
$
|
$53,727,524
|
||||||
Year
Ended December 31,
|
||||||||||
2005
|
2004
|
2003
|
||||||||
Cash
flows from operating activities:
|
||||||||||
Net
income
|
$
|
2,448,182
|
$
|
3,423,619
|
$
|
3,474,174
|
||||
Adjustments
to reconcile net income to net cash provided by operating
activities
|
||||||||||
Depreciation
|
4,373,970
|
3,986,136
|
3,728,925
|
|||||||
Amortization
|
1,724,905
|
1,237,286
|
1,029,122
|
|||||||
Minority
interests in Operating Partnership
|
1,890,616
|
2,990,410
|
3,034,795
|
|||||||
Equity
in income of real estate partnership
|
—
|
(209,737
|
)
|
—
|
||||||
Bad
debt expense (recoveries)
|
130,185
|
(8,060
|
)
|
213,250
|
||||||
Changes
in operating assets and liabilities:
|
||||||||||
Escrows
and acquisition deposits
|
(329,301
|
)
|
(317,739
|
)
|
(223,663
|
)
|
||||
Receivables
|
(368,676
|
)
|
(1,105,425
|
)
|
(387,143
|
)
|
||||
Due
from affiliates
|
(205,457
|
)
|
297,810
|
(939,038
|
)
|
|||||
Deferred
costs
|
(1,588,018
|
)
|
(952,756
|
)
|
(978,398
|
)
|
||||
Prepaid
expenses and other assets
|
(590,978
|
)
|
352,586
|
(15,336
|
)
|
|||||
Accounts
payable and accrued expenses
|
708,514
|
30,149
|
23,215
|
|||||||
Tenants’
security deposits
|
374,717
|
4,938
|
(60,295
|
)
|
||||||
Prepaid
rent
|
215,483
|
(198,656
|
)
|
88,828
|
||||||
Net
cash provided by operating activities
|
8,784,142
|
9,530,561
|
8,988,436
|
|||||||
Cash
flows used in investing activities:
|
||||||||||
Additions
to real estate
|
(31,791,746
|
)
|
(10,276,996
|
)
|
(8,242,179
|
)
|
||||
Investment
in real estate partnership
|
—
|
(9,033,561
|
)
|
—
|
||||||
Distributions
received from real estate partnership
|
9,743
|
9,233,555
|
—
|
|||||||
Issuance
of note receivable
|
—
|
—
|
(290,000
|
)
|
||||||
Collections
of note receivable
|
26,099
|
31,968
|
22,997
|
|||||||
Net
cash used in investing activities
|
(31,755,904
|
)
|
(10,045,034
|
)
|
(8,509,182
|
)
|
||||
Cash
flows from financing activities:
|
||||||||||
Dividends
paid
|
(5,289,300
|
)
|
(4,907,107
|
)
|
(4,907,108
|
)
|
||||
Distributions
paid to OP unit holders
|
(4,100,105
|
)
|
(4,065,839
|
)
|
(4,065,840
|
)
|
||||
Proceeds
from stock offering
|
17,034,829
|
1,471,696
|
—
|
|||||||
Proceeds
from stock offering escrowed
|
87,743
|
(1,471,974
|
)
|
—
|
||||||
Proceeds
from notes payable
|
46,725,322
|
19,013,180
|
6,353,182
|
|||||||
Proceeds
from payment of note payable to affiliate
|
—
|
—
|
(3,278,000
|
)
|
||||||
Repayments
of notes payable
|
(30,925,898
|
)
|
(9,430,029
|
)
|
—
|
|||||
Payments
of loan origination costs
|
(343,809
|
)
|
(42,163
|
)
|
(94,500
|
)
|
||||
Net
cash provided by (used in) financing activities
|
23,188,782
|
567,764
|
(5,992,266
|
)
|
||||||
Net
increase (decrease) in cash
|
217,020
|
53,291
|
(5,513,012
|
)
|
||||||
Cash
and cash equivalents at beginning of year
|
631,978
|
578,687
|
6,091,699
|
|||||||
Cash
and cash equivalents at end of year
|
$
|
848,998
|
$
|
631,978
|
$
|
578,687
|
||||
Supplemental
disclosure of cash flow information
|
||||||||||
Debt
assumed in connection with acquisition of properties
|
$
|
—
|
$
|
—
|
$
|
6,550,000
|
||||
Gross
offering proceeds
|
$
|
1,560,100
|
||
Less
discounts
|
(661
|
)
|
||
Balance
in escrow account at December 31, 2005
|
$
|
1,559,439
|
December
31,
|
|||||||
2005
|
2004
|
||||||
Leasing
commissions
|
$
|
5,921,323
|
$
|
4,333,305
|
|||
Deferred
financing costs
|
1,829,191
|
1,485,381
|
|||||
7,750,514
|
5,818,686
|
||||||
Less:
accumulated amortization
|
(4,746,296
|
)
|
(3,021,392
|
)
|
|||
$
|
3,004,218
|
$
|
2,797,294
|
Years
Ended
December
31,
|
||||
2006
|
$
|
776,083
|
||
2007
|
675,970
|
|||
2008
|
458,703
|
|||
2009
|
313,239
|
|||
2010
|
213,928
|
|||
Thereafter
|
566,295
|
|||
$
|
3,004,218
|
Years
Ended
December
31,
|
||||
2006
|
$
|
19,518,573
|
||
2007
|
16,775,309
|
|||
2008
|
13,219,848
|
|||
2009
|
9,536,569
|
|||
2010
|
6,513,033
|
|||
Thereafter
|
17,240,829
|
|||
$
|
82,804,161
|
December
31,
|
|||||||
2005
|
2004
|
||||||
Mortgages
and other notes payable
|
$
|
40,050,441
|
$
|
40,526,111
|
|||
Revolving
loan secured by ownership in properties
|
32,975,094
|
16,700,000
|
|||||
Total
|
$
|
73,025,535
|
$
|
57,226,111
|
|||
Total
Leverage Ratio
|
LIBOR
Margin
|
Alternative
Base Rate Margin
|
||
Less
than 60% but greater than or equal to 50%
|
2.40%
|
1.15%
|
||
Less
than 50% but greater than or equal to 45%
|
2.15%
|
1.025%
|
||
Less
than 45%
|
1.90%
|
1.00%
|
Year
Ended
December
31,
|
||||
2006
|
$
|
5,610,441
|
||
2007
|
—
|
|||
2008
|
67,415,094
|
|||
$
|
73,025,535
|
Year
Ended December 31,
|
||||||||||
2005
|
2004
|
2003
|
||||||||
Basic
and diluted earnings per share
Weighted
average common shares outstanding
|
7,887,749
|
7,010,146
|
7,010,146
|
|||||||
Basic
and diluted earnings per share
|
$
|
0.310
|
$
|
0.488
|
$
|
0.496
|
||||
Net
income
|
$
|
2,448,182
|
$
|
3,423,619
|
$
|
3,474,174
|
2005
|
2004
|
2003
|
||||
Ordinary
income (unaudited)
|
62.6%
|
67.7%
|
24.8%
|
|||
Return
of capital (unaudited)
|
37.4%
|
32.3%
|
75.2%
|
|||
Capital
gain distributions (unaudited)
|
0.0%
|
0.0%
|
0.0%
|
|||
Total
|
100%
|
100%
|
100%
|
HCP
Shareholders
|
||||
Dividend/Distribution
per Common Share
|
Date
Dividend Payable
|
Total
Amount Payable
|
||
0.0583
|
|
4/15/04
|
|
$408,762
|
0.0583
|
|
5/15/04
|
|
408,762
|
0.0584
|
|
6/15/04
|
|
409,253
|
0.0583
|
|
7/15/04
|
|
408,762
|
0.0583
|
|
8/15/04
|
|
408,762
|
0.0584
|
|
9/15/04
|
|
409,253
|
0.0583
|
|
10/15/04
|
|
408,692
|
0.0583
|
|
11/15/04
|
|
408,692
|
0.0584
|
|
12/15/04
|
|
409,392
|
0.0583
|
|
1/15/05
|
|
408,692
|
0.0583
|
|
2/15/05
|
|
408,692
|
0.0589
|
|
3/15/05
|
|
412,897
|
0.0589
|
|
4/15/05
|
|
412,931
|
0.0589
|
|
5/15/05
|
|
429,416
|
0.0590
|
|
6/15/05
|
|
439,453
|
0.0589
|
|
7/15/05
|
|
445,621
|
0.0589
|
|
8/15/05
|
|
452,396
|
0.0590
|
|
9/15/05
|
|
460,581
|
0.0589
|
|
10/15/05
|
|
467,260
|
0.0589
|
|
11/15/05
|
|
470,627
|
0.0590
|
|
12/15/05
|
|
480,737
|
0.0589
|
|
1/15/06
|
|
489,019
|
0.0589
|
|
2/15/06
|
|
509,475
|
0.0590
|
|
3/15/06
|
|
526,966
|
|
|
Dividend/Distribution
per OP Unit
|
Date
Dividend Payable
|
Total
Amount Payable
|
||
0.0583
|
|
1/15/04
|
|
$726,368
|
0.0583
|
|
2/15/04
|
|
726,368
|
0.0584
|
|
3/15/04
|
|
727,240
|
0.0583
|
|
4/15/04
|
|
726,368
|
0.0583
|
|
5/15/04
|
|
726,368
|
0.0584
|
|
6/15/04
|
|
727,240
|
0.0583
|
|
7/15/04
|
|
726,368
|
0.0583
|
|
8/15/04
|
|
726,368
|
0.0584
|
|
9/15/04
|
|
727,240
|
0.0583
|
|
10/15/04
|
|
726,243
|
0.0583
|
|
11/15/04
|
|
726,243
|
0.0584
|
|
12/15/04
|
|
727,488
|
0.0583
|
|
1/15/05
|
|
726,243
|
0.0583
|
|
2/15/05
|
|
726,243
|
0.0589
|
|
3/15/05
|
|
733,717
|
0.0589
|
|
4/15/05
|
|
733,748
|
0.0589
|
|
5/15/05
|
|
748,498
|
0.0590
|
|
6/15/05
|
|
758,154
|
0.0589
|
|
7/15/05
|
|
762,996
|
0.0589
|
|
8/15/05
|
|
768,976
|
0.0590
|
|
9/15/05
|
|
776,345
|
0.0589
|
|
10/15/05
|
|
782,136
|
0.0589
|
|
11/15/05
|
|
785,388
|
0.0590
|
|
12/15/05
|
|
802,101
|
0.0589
|
|
01/15/06
|
|
809,838
|
0.0589
|
|
02/15/06
|
|
830,294
|
0.0590
|
|
03/15/06
|
|
848,042
|
Year
Ended
December
31, 2005
|
Year
Ended
December
31, 2004
|
||||||
Pro
forma revenues
|
$
|
27,518,098
|
$
|
27,500,345
|
|||
Pro
forma net income available to common shareholders
|
$
|
2,240,150
|
$
|
3,307,715
|
|||
Pro
forma basic and diluted earnings per common share
|
$
|
0.284
|
$
|
0.471
|
First
Quarter
|
Second
Quarter
|
Third
Quarter
|
Fourth
Quarter
|
||||||||||
2005
|
|||||||||||||
Revenues
|
$
|
6,312,640
|
$
|
6,270,409
|
$
|
6,204,629
|
$
|
6,431,555
|
|||||
Income
before minority interests
|
1,521,681
|
1,339,869
|
894,172
|
583,076
|
|||||||||
Minority
interest in income
|
(697,237
|
)
|
(593,383
|
)
|
(382,662
|
)
|
(217,334
|
)
|
|||||
Net
income
|
824,444
|
746,486
|
511,510
|
365,742
|
|||||||||
Basic
and diluted earnings per share
|
$
|
0.114
|
$
|
0.097
|
$
|
0.064
|
$
|
0.035
|
|||||
2004
|
|||||||||||||
Revenues
|
$
|
5,486,426
|
$
|
6,095,742
|
$
|
5,922,856
|
$
|
5,978,633
|
|||||
Income
before minority interests
|
1,384,807
|
1,792,127
|
1,493,760
|
1,743,335
|
|||||||||
Minority
interest in income
|
(645,689
|
)
|
(835,606
|
)
|
(696,464
|
)
|
(812,651
|
)
|
|||||
Net
income
|
739,118
|
956,521
|
797,296
|
930,684
|
|||||||||
Basic
and diluted earnings per share
|
$
|
0.105
|
$
|
0.136
|
$
|
0.114
|
$
|
0.133
|
Description
|
Balance
at
Beginning
of
Period
|
Additions
Charged
(Recoveries
Credited)
to
Expense
|
Deductions
|
Balance
at
End
of Period
|
|||||||||
Allowance
for doubtful accounts:
|
|||||||||||||
Year
ended December 31, 2005
|
$
|
342,690
|
$
|
130,185
|
$
|
-
|
$
|
472,875
|
|||||
Year
ended December 31, 2004
|
$
|
350,750
|
$
|
(8,060
|
)
|
$
|
-
|
$
|
342,690
|
||||
Year
ended December 31, 2003
|
$
|
391,500
|
$
|
213,250
|
$
|
(254,000
|
)
|
$
|
350,750
|
Initial
Cost
|
Costs
Capitalized
Subsequent
to Acquisition
|
Gross
Amount
at
which Carried
at
End of Period (1) (2)
|
|||||||||||||||||||||||
Name
|
Description
|
Land
|
Building
and
Improvements
|
Improvements
|
Carrying
Costs
|
Land
|
Building
and
Improvements
|
Total
|
|||||||||||||||||
Holly
Knight
|
Retail |
$
|
319,981
|
$
|
1,292,820
|
$
|
38,226
|
-
|
$
|
319,981
|
$
|
1,331,046
|
$
|
1,651,027
|
|||||||||||
Kempwood
Plaza
|
Retail |
733,443
|
1,798,433
|
941,766
|
-
|
733,443
|
2,740,199
|
3,473,642
|
|||||||||||||||||
Bissonnet
Beltway
|
Retail |
414,515
|
1,946,808
|
162,650
|
-
|
414,515
|
2,109,458
|
2,523,973
|
|||||||||||||||||
Interstate
10
|
Office-warehouse |
207,903
|
3,700,169
|
258,711
|
-
|
207,903
|
3,958,880
|
4,166,783
|
|||||||||||||||||
West
Belt Plaza
|
Office-warehouse |
567,805
|
2,165,204
|
318,666
|
-
|
567,805
|
2,483,870
|
3,051,675
|
|||||||||||||||||
Greens
Road
|
Retail |
353,604
|
1,283,613
|
97,778
|
-
|
353,604
|
1,381,391
|
1,734,995
|
|||||||||||||||||
Town
Park
|
Retail |
849,529
|
2,911,206
|
198,963
|
-
|
849,529
|
3,110,169
|
3,959,698
|
|||||||||||||||||
Webster
Point
|
Retail |
720,336
|
1,150,029
|
75,253
|
-
|
720,336
|
1,225,282
|
1,945,618
|
|||||||||||||||||
Centre
South
|
Retail |
481,201
|
1,595,997
|
386,964
|
-
|
481,201
|
1,982,961
|
2,464,162
|
|||||||||||||||||
Torrey
Square
|
Retail |
1,981,406
|
2,970,911
|
378,109
|
-
|
1,981,406
|
3,349,020
|
5,330,426
|
|||||||||||||||||
Dairy
Ashford
|
Office-warehouse |
225,544
|
1,211,476
|
90,854
|
-
|
225,544
|
1,302,330
|
1,527,874
|
|||||||||||||||||
Main
Park
|
Office-warehouse |
1,327,762
|
2,721,075
|
496,123
|
-
|
1,327,762
|
3,217,198
|
4,544,960
|
|||||||||||||||||
Northeast
Square
|
Retail |
564,927
|
2,007,585
|
283,436
|
-
|
564,927
|
2,291,021
|
2,855,948
|
|||||||||||||||||
Plaza
Park
|
Office-warehouse |
901,602
|
3,293,514
|
247,948
|
-
|
901,602
|
3,541,462
|
4,443,064
|
|||||||||||||||||
Northwest
Place
|
Office-warehouse |
110,790
|
978,554
|
27,365
|
-
|
110,790
|
1,005,919
|
1,116,709
|
|||||||||||||||||
Lion
Square
|
Retail |
1,546,010
|
4,289,098
|
281,567
|
-
|
1,546,010
|
4,570,665
|
6,116,675
|
|||||||||||||||||
Zeta
Building
|
Office |
637,180
|
1,819,409
|
152,200
|
-
|
637,180
|
1,971,609
|
2,608,789
|
|||||||||||||||||
Royal
Crest
|
Office |
508,850
|
1,355,215
|
129,852
|
-
|
508,850
|
1,485,067
|
1,993,917
|
|||||||||||||||||
Featherwood
|
Office |
368,283
|
2,591,026
|
479,721
|
-
|
368,283
|
3,070,747
|
3,439,030
|
|||||||||||||||||
South
Richey
|
Retail |
777,720
|
2,584,167
|
231,926
|
-
|
777,720
|
2,816,093
|
3,593,813
|
|||||||||||||||||
Corporate
Park Woodland
|
Office-warehouse |
651,549
|
5,376,813
|
516,690
|
-
|
651,549
|
5,893,503
|
6,545,052
|
|||||||||||||||||
South
Shaver
|
Retail |
184,368
|
632,635
|
192,875
|
-
|
184,368
|
825,510
|
1,009,878
|
|||||||||||||||||
Providence
|
Retail |
917,936
|
3,674,732
|
476,520
|
-
|
917,936
|
4,151,252
|
5,069,188
|
|||||||||||||||||
Corporate
Park Northwest
|
Office-warehouse |
1,533,940
|
6,305,599
|
453,026
|
-
|
1,533,940
|
6,758,625
|
8,292,565
|
|||||||||||||||||
Bellnot
Square
|
Retail |
1,154,239
|
4,638,055
|
53,643
|
-
|
1,154,239
|
4,691,698
|
5,845,937
|
|||||||||||||||||
Corporate
Park West
|
Office-warehouse |
2,555,289
|
10,507,691
|
338,354
|
-
|
2,555,289
|
10,846,045
|
13,401,334
|
|||||||||||||||||
Westgate
|
Office-warehouse |
672,303
|
2,775,879
|
137,630
|
-
|
672,303
|
2,913,509
|
3,585,812
|
|||||||||||||||||
Garden
Oaks
|
Retail |
1,285,027
|
5,292,755
|
185,828
|
-
|
1,285,027
|
5,478,583
|
6,763,610
|
|||||||||||||||||
Westchase
|
Retail |
422,745
|
1,750,555
|
240,132
|
-
|
422,745
|
1,990,687
|
2,413,432
|
|||||||||||||||||
Sunridge
|
Retail |
275,534
|
1,186,037
|
58,295
|
-
|
275,534
|
1,244,332
|
1,519,866
|
|||||||||||||||||
Holly
Hall
|
Office-warehouse |
607,519
|
2,515,881
|
20,803
|
-
|
607,519
|
2,536,684
|
3,144,203
|
|||||||||||||||||
Brookhill
|
Office-warehouse |
185,659
|
787,605
|
166,014
|
-
|
185,659
|
953,619
|
1,139,278
|
|||||||||||||||||
Windsor
Park
|
Retail |
2,620,500
|
10,482,000
|
-
|
-
|
2,620,500
|
10,482,000
|
13,102,500
|
|||||||||||||||||
SugarPark
Plaza
|
Retail |
1,781,211
|
7,124,846
|
20,098
|
-
|
1,781,211
|
7,144,944
|
8,926,155
|
|||||||||||||||||
Woodlake
Plaza
|
Office |
1,106,541
|
4,426,169
|
108,582
|
-
|
1,106,541
|
4,534,751
|
5,641,292
|
|||||||||||||||||
9101
LBJ Freeway
|
Office |
1,597,190
|
6,077,820
|
-
|
-
|
1,597,190
|
6,077,820
|
7,675,010
|
|||||||||||||||||
Uptown
Tower
|
Office |
1,620,625
|
15,550,861
|
-
|
-
|
1,620,625
|
15,550,861
|
17,171,486
|
|||||||||||||||||
|
|||||||||||||||||||||||||
TOTAL
|
$
|
32,770,566
|
$
|
132,772,242
|
$
|
8,246,568
|
$
|
-
|
$
|
32,770,566
|
$
|
141,018,810
|
$
|
173,789,376
|
Name
|
Description
|
Accumulated
Depreciation
|
Date
of Construction
|
Date
Acquired
|
Depreciation
Life
|
|||||||||||
Holly
Knight
|
Retail |
$
|
338,536
|
8/1/00
|
5-39
years
|
|||||||||||
Kempwood
Plaza
|
Retail |
834,002
|
2/2/99
|
5-39
years
|
||||||||||||
Bissonnet
Beltway
|
Retail |
616,715
|
1/1/99
|
5-39
years
|
||||||||||||
Interstate
10
|
Office-warehouse |
1,184,715
|
1/1/99
|
5-39
years
|
||||||||||||
West
Belt Plaza
|
Office-warehouse |
768,161
|
1/1/99
|
5-39
years
|
||||||||||||
Greens
Road
|
Retail |
356,008
|
1/1/99
|
5-39
years
|
||||||||||||
Town
Park
|
Retail |
818,353
|
1/1/99
|
5-39
years
|
||||||||||||
Webster
Point
|
Retail |
256,690
|
1/1/00
|
5-39
years
|
||||||||||||
Centre
South
|
Retail |
512,427
|
1/1/00
|
5-39
years
|
||||||||||||
Torrey
Square
|
Retail |
618,091
|
1/1/00
|
5-39
years
|
||||||||||||
Dairy
Ashford
|
Office-warehouse |
335,129
|
1/1/99
|
5-39
years
|
||||||||||||
Main
Park
|
Office-warehouse |
902,119
|
1/1/99
|
5-39
years
|
||||||||||||
Northeast
Square
|
Retail |
541,413
|
1/1/99
|
5-39
years
|
||||||||||||
Plaza
Park
|
Office-warehouse |
762,163
|
1/1/00
|
5-39
years
|
||||||||||||
Northwest
Place
|
Office-warehouse |
198,531
|
1/1/00
|
5-39
years
|
||||||||||||
Lion
Square
|
Retail |
911,889
|
1/1/00
|
5-39
years
|
||||||||||||
Zeta
Building
|
Office |
394,162
|
1/1/00
|
5-39
years
|
||||||||||||
Royal
Crest
|
Office |
346,036
|
1/1/00
|
5-39
years
|
||||||||||||
Featherwood
|
Office |
779,583
|
1/1/00
|
5-39
years
|
||||||||||||
South
Richey
|
Retail |
575,481
|
8/25/99
|
5-39
years
|
||||||||||||
Corporate
Park Woodland
|
Office-warehouse |
1,257,607
|
11/1/00
|
5-39
years
|
||||||||||||
South
Shaver
|
Retail |
239,183
|
12/17/99
|
5-39
years
|
||||||||||||
Providence
|
Retail |
584,646
|
3/30/01
|
5-39
years
|
||||||||||||
Corporate
Park Northwest
|
Office-warehouse |
832,896
|
1/1/02
|
5-39
years
|
||||||||||||
Bellnot
Square
|
Retail |
537,795
|
1/1/02
|
5-39
years
|
||||||||||||
Corporate
Park West
|
Office-warehouse |
1,276,672
|
1/1/02
|
5-39
years
|
||||||||||||
Westgate
|
Office-warehouse |
367,747
|
1/1/02
|
5-39
years
|
||||||||||||
Garden
Oaks
|
Retail |
680,428
|
1/1/02
|
5-39
years
|
||||||||||||
Westchase
|
Retail |
298,180
|
1/1/02
|
5-39
years
|
||||||||||||
Sunridge
|
Retail |
138,815
|
1/1/02
|
5-39
years
|
||||||||||||
Holly
Hall
|
Office-warehouse |
291,896
|
1/1/02
|
5-39
years
|
||||||||||||
Brookhill
|
Office-warehouse |
191,030
|
1/1/02
|
5-39
years
|
||||||||||||
Windsor
Park
|
Retail |
509,792
|
12/16/03
|
5-39
years
|
||||||||||||
SugarPark
Plaza
|
Retail |
266,500
|
9/8/04
|
5-39
years
|
||||||||||||
Woodlake
Plaza
|
Office |
102,958
|
3/14/05
|
5-39
years
|
||||||||||||
9101
LBJ Freeway
|
Office |
89,990
|
8/10/05
|
5-39
years
|
||||||||||||
Uptown
Tower
|
Office |
108,047
|
11/22/05
|
5-39
years
|
||||||||||||
TOTAL
|
$
|
19,824,386
|
2005
|
2004
|
2003
|
||||||||
Balance
at beginning of period
|
$
|
141,997,630
|
$
|
131,720,634
|
$
|
117,029,136
|
||||
Additions
during the period
|
||||||||||
Acquisitions
|
30,379,206
|
8,906,057
|
13,102,500
|
|||||||
Improvements
|
1,412,540
|
1,370,939
|
1,588,998
|
|||||||
31,791,746
|
10,276,996
|
14,691,498
|
||||||||
Deductions
- cost of real estate sold
|
—
|
—
|
—
|
|||||||
Balance
at close of period
|
$
|
173,789,376
|
$
|
141,997,630
|
$
|
131,720,634
|
Year
Ended December 31,
|
|||||||
2001
|
2000
|
||||||
Revenue
|
|||||||
Rent
|
$
|
5,914,917
|
$
|
4,526,906
|
|||
Recoveries
from tenants
|
942,934
|
699,350
|
|||||
Other
|
51,051
|
88,052
|
|||||
Total
revenue
|
6,908,902
|
5,314,308
|
|||||
Certain
expenses
|
|||||||
Operation
and maintenance
|
635,903
|
503,906
|
|||||
Interest
|
979,196
|
1,071,963
|
|||||
Real
estate taxes
|
984,105
|
950,015
|
|||||
Insurance
|
95,835
|
96,073
|
|||||
Electricity,
water and gas utilities
|
218,286
|
210,061
|
|||||
Management
fees
|
404,605
|
346,618
|
|||||
General
and administrative
|
130,647
|
117,288
|
|||||
Bad
debts
|
46,473
|
55,500
|
|||||
Tenant-in-common
interest
|
22,858
|
25,285
|
|||||
3,517,908
|
3,376,709
|
||||||
Revenue
in excess of certain expenses
|
$
|
3,390,994
|
$
|
1,937,599
|
|||
Year
Ending December 31,
|
||||
2002
|
$
|
5,373,539
|
||
2003
|
4,104,974 | |||
2004
|
3,067,560 | |||
2005
|
2,001,313 | |||
2006
|
1,240,169 | |||
Thereafter
|
1,407,781 | |||
|
||||
Total
|
$
|
17,195,336
|
Year
Ended
December
31,
|
Nine
Month
Period
Ended
September
30,
|
||||||
2002
|
2003
|
||||||
(Unaudited)
|
|||||||
Revenue
|
|||||||
Rent
|
$
|
1,577,425
|
$
|
1,237,864
|
|||
Tenants’
reimbursements
|
379,546
|
344,060
|
|||||
Other
|
4,094
|
84
|
|||||
Total
revenue
|
1,961,065
|
1,582,008
|
|||||
Certain
expenses
|
|||||||
Interest
|
745,193
|
548,367
|
|||||
Real
estate taxes
|
290,316
|
215,820
|
|||||
Insurance
|
24,673
|
23,329
|
|||||
Electricity,
water and gas utilities
|
11,323
|
10,298
|
|||||
Management
fees
|
32,815
|
24,757
|
|||||
General
and administrative
|
33,108
|
39,718
|
|||||
Operation
and maintenance
|
79,487
|
127,593
|
|||||
1,216,915
|
989,882
|
||||||
Revenue
in excess of certain expenses
|
$
|
744,150
|
$
|
592,126
|
|||
Year
Ending
December
31,
|
||||
2003
|
$
|
1,658,313
|
||
2004
|
1,641,092
|
|||
2005
|
1,599,431
|
|||
2006
|
1,418,081
|
|||
2007
|
1,286,201
|
|||
Thereafter
|
6,145,380
|
|||
Total
|
$
|
13,748,498
|
The
accompanying unaudited Pro Forma Condensed Consolidated Balance Sheet
of
Hartman Commercial Properties REIT and Subsidiary (the “Company”) is
presented as if Windsor Park Centre had been acquired on September
30,
2003. This Pro Forma Condensed Consolidated Balance Sheet should
be read
in conjunction with the Pro Forma Condensed Consolidated Statements
of
Income for the nine month period ended September 30, 2003 and for
the year
ended December 31, 2002 and the historical consolidated financial
statements and notes thereto of the Company reported on Form 10-Q
for the
nine month period ended September 30, 2003 and for the year ended
December
31, 2002 included in the Company’s Form 10 and included in the Company’s
Registration Statement on Form S-11, as filed on December 31, 2003.
In
management’s opinion, all adjustments necessary to reflect the acquisition
of Windsor Park Centre have been made. The following Pro Forma Condensed
Consolidated Balance Sheet is not necessarily indicative of what
the
actual financial position would have been assuming the above transaction
had been consummated at September 30, 2003, nor does it purport to
represent the future financial position of the
Company.
|
Historical
Amounts
(A)
|
Pro
Forma
Adjustments
(B)
|
Pro
Forma
Amounts
|
||||||||
Assets
|
||||||||||
Real
estate investments, net
|
$
|
107,853,291
|
$
|
13,102,500
|
$
|
120,955,791
|
||||
Cash
and cash equivalents
|
763,009
|
—
|
763,009
|
|||||||
Escrows
and acquisition deposits
|
2,863,060
|
—
|
2,863,060
|
|||||||
Note
receivable
|
694,400
|
—
|
694,400
|
|||||||
Receivables,
net
|
5,780,821
|
—
|
5,780,821
|
|||||||
Deferred
costs, net
|
2,922,931
|
—
|
2,922,931
|
|||||||
Prepaids
and other assets
|
215,038
|
—
|
215,038
|
|||||||
Total
assets
|
$
|
121,092,550
|
$
|
13,102,500
|
$
|
134,195,050
|
||||
Liabilities
and Shareholders’ Equity
|
||||||||||
Notes
payable
|
$
|
34,531,382
|
$
|
12,903,182
|
$
|
47,434,564
|
||||
Accounts
payable and accrued expenses
|
2,737,925
|
199,318
|
2,937,243
|
|||||||
Due
to affiliates
|
766,584
|
—
|
766,584
|
|||||||
Tenants’
security deposits
|
1,076,842
|
—
|
1,076,842
|
|||||||
Dividends
payable
|
1,226,777
|
—
|
1,226,777
|
|||||||
Other
liabilities
|
1,016,460
|
—
|
1,016,460
|
|||||||
Total
liabilities
|
41,355,970
|
13,102,500
|
54,458,470
|
|||||||
Minority
interests
|
37,937,590
|
—
|
37,937,590
|
|||||||
Common
stock (C)
|
7,010
|
—
|
7,010
|
|||||||
Additional
paid-in capital (C)
|
45,527,152
|
—
|
45,527,152
|
|||||||
Accumulated
deficit
|
(3,735,172
|
)
|
—
|
(3,735,172
|
)
|
|||||
Total
shareholders’ equity
|
41,798,990
|
—
|
41,798,990
|
|||||||
Total
liabilities and shareholders’ equity
|
$
|
121,092,550
|
$
|
13,102,500
|
$
|
134,195,050
|
||||
(A) |
Represents
the condensed consolidated balance sheet of the Company as of September
30, 2003, as contained in the historical consolidated financial statements
and notes thereto filed on Form
10-Q.
|
(B) |
Represents
the completed acquisition of Windsor Park Centre. This property was
purchased during the quarter ending December 31, 2003 for a total
purchase
price of $13.1 million. The acquisition of this property was funded
through draws under the Company’s line of credit facility and assumption
of a mortgage note payable.
|
(C) |
Represents
amounts retroactively adjusted for the recapitalization discussed
in the
historical consolidated financial statements and notes appearing
elsewhere
in this filing.
|
Historical
Amounts
(A)
|
Pro
Forma
Adjustments
(B)
|
Pro
Forma
Amounts
|
||||||||
Revenues
|
||||||||||
Rental
income
|
$
|
12,677,629
|
$
|
1,237,864
|
$
|
13,915,493
|
||||
Tenants’
reimbursements
|
3,030,599
|
344,060
|
3,374,659
|
|||||||
Interest
and other income
|
348,611
|
84
|
348,695
|
|||||||
Total
revenues
|
16,056,839
|
1,582,008
|
17,638,847
|
|||||||
Expenses
|
||||||||||
Operation
and maintenance
|
1,954,001
|
127,593
|
2,081,594
|
|||||||
Interest
expense
|
977,324
|
669,428
|
1,646,752
|
|||||||
Real
estate taxes
|
1,463,318
|
215,820
|
1,679,138
|
|||||||
Insurance
|
372,039
|
23,329
|
395,368
|
|||||||
Electricity,
water and gas utilities
|
615,979
|
10,298
|
626,277
|
|||||||
Management
and partnership management
|
||||||||||
fees
to an affiliate
|
939,336
|
81,510
|
1,020,846
|
|||||||
General
and administrative
|
810,538
|
39,718
|
850,256
|
|||||||
Depreciation
|
2,785,557
|
201,577
|
2,987,134
|
|||||||
Amortization
|
737,865
|
11,250
|
749,115
|
|||||||
Bad
debt expense
|
282,000
|
—
|
282,000
|
|||||||
Total
operating expenses
|
10,937,957
|
1,380,523
|
12,318,480
|
|||||||
Income
before minority interests
|
5,118,882
|
201,485
|
5,320,367
|
|||||||
Minority
interests in operating partnership
|
(2,388,479
|
)
|
(94,013
|
)
|
(2,482,492
|
)
|
||||
Net
income
|
$
|
2,730,403
|
$
|
107,472
|
$
|
2,837,875
|
||||
Net
income per common share - basic
|
||||||||||
and
diluted (D)
|
$
|
0.389
|
$
|
0.015
|
$
|
0.405
|
||||
Weighted
- average shares outstanding -
|
||||||||||
basic
and diluted (D)
|
7,010,146
|
7,010,146
|
7,010,146
|
Historical
Amounts
(A)
|
Pro
Forma
Adjustments
(C)
|
Pro
Forma
Amounts
|
||||||||
Revenues
|
||||||||||
Rental
income
|
$
|
16,794,963
|
$
|
1,577,425
|
$
|
18,372,388
|
||||
Tenants’
reimbursements
|
3,628,522
|
379,546
|
4,008,068
|
|||||||
Interest
and other income
|
331,541
|
4,094
|
335,635
|
|||||||
Total
revenues
|
20,755,026
|
1,961,065
|
22,716,091
|
|||||||
Expenses
|
||||||||||
Operation
and maintenance
|
2,299,377
|
79,487
|
2,378,864
|
|||||||
Interest
expense
|
1,573,270
|
925,360
|
2,498,630
|
|||||||
Real
estate taxes
|
2,629,122
|
290,316
|
2,919,438
|
|||||||
Insurance
|
381,155
|
24,673
|
405,828
|
|||||||
Electricity,
water and gas utilities
|
795,431
|
11,323
|
806,754
|
|||||||
Management
and partnership management
|
||||||||||
fees
to an affiliate
|
1,231,212
|
117,664
|
1,348,876
|
|||||||
General
and administrative
|
831,675
|
33,108
|
864,783
|
|||||||
Depreciation
|
3,550,325
|
268,769
|
3,819,094
|
|||||||
Amortization
|
491,536
|
15,000
|
506,536
|
|||||||
Bad
debt expense
|
74,200
|
—
|
74,200
|
|||||||
Total
operating expenses
|
13,857,303
|
1,765,700
|
15,623,003
|
|||||||
Income
before minority interests
|
6,897,723
|
195,365
|
7,093,088
|
|||||||
Minority
interests in operating partnership
|
(3,192,605
|
)
|
(90,425
|
)
|
(3,283,030
|
)
|
||||
Net
income
|
$
|
3,705,118
|
$
|
104,940
|
$
|
3,810,058
|
||||
Net
income per common share - basic
|
||||||||||
and
diluted (D)
|
$
|
0.529
|
$
|
0.015
|
$
|
0.544
|
||||
Weighted
- average shares outstanding -
|
||||||||||
basic
and diluted (D)
|
7,007,167
|
7,007,167
|
7,007,167
|
(A) |
Represents
the historical consolidated statement of income of the Company as
contained in the historical consolidated financial statements included
in
previous filings with the Securities and Exchange
Commission.
|
(B) |
Represents
the pro forma revenue and expenses for the nine months ended September
30,
2003 attributable to the Property as if the acquisition had occurred
on
January 1, 2002. Interest expense of $669,000 includes pro forma
interest
of $121,000 attributable to draws under a line of credit to fund
this
acquisition. Management and partnership management fees to an affiliate
includes pro forma fees of $57,000 attributable to an increase in
the
management and partnership management fees paid by the Company under
its
management agreement. Depreciation includes a pro forma decrease
of
$62,000 attributable to a decrease in the cost basis of the property
post
acquisition.
|
(C) |
Represents
the pro forma revenue and expenses for the year ended December 31,
2002
attributable to the Property as if the acquisition had occurred on
January
1, 2002. Interest expense of $925,000 includes pro forma interest
of
$180,000 attributable to draws under a line of credit to fund this
acquisition. Management and partnership management fees to an affiliate
includes pro forma fees of $85,000 attributable to an increase in
management and partnership management fees paid by the Company under
its
operating agreement. Depreciation includes a pro forma decrease of
$82,000
attributable to a decrease in the cost basis of the property post
acquisition.
|
(D) |
Represents
amounts retroactively adjusted for the recapitalization disclosed
in the
historical consolidated financial statements and notes appearing
elsewhere
in this filing.
|
Year
Ended
December
31,
|
Nine
Month
Period
Ended
September
30,
|
||||||
2004
|
2005
|
||||||
(Unaudited)
|
|||||||
Revenue
|
|||||||
Rent
|
$
|
1,160,007
|
$
|
970,683
|
|||
Tenant
reimbursements
|
4,075
|
27,291
|
|||||
Other
|
10,352
|
50,336
|
|||||
Total
revenue
|
1,174,434
|
1,048,310
|
|||||
Certain
expenses
|
|||||||
Real
estate taxes
|
135,325
|
118,080
|
|||||
Insurance
|
13,913
|
12,745
|
|||||
Electricity,
water and gas utilities
|
204,527
|
135,953
|
|||||
Management
fees
|
41,451
|
36,129
|
|||||
General
and administrative
|
129,903
|
84,249
|
|||||
Operation
and maintenance
|
355,333
|
215,200
|
|||||
Bad
debt expense
|
14,498
|
8,075
|
|||||
894,950
|
610,431
|
||||||
Revenue
in excess of certain expenses
|
$
|
279,484
|
$
|
437,879
|
|||
Year
Ending
December
31,
|
||||
2005
|
$
|
1,145,473
|
||
2006
|
1,336,428
|
|||
2007
|
1,226,617
|
|||
2008
|
1,144,615
|
|||
2009
|
867,940
|
|||
Thereafter
|
711,804
|
|||
Total
|
$
|
6,432,877
|
Year
Ended
December
31,
|
Nine
Month
Period
Ended
September
30,
|
||||||
2004
|
2005
|
||||||
(Unaudited)
|
|||||||
Revenue
|
|||||||
Rent
|
$
|
2,763,870
|
$
|
2,170,160
|
|||
Tenant
reimbursements
|
40,022
|
10,714
|
|||||
Other
|
38,362
|
14,183
|
|||||
Total
revenue
|
2,842,254
|
2,195,057
|
|||||
Certain
expenses
|
|||||||
Real
estate taxes
|
385,587
|
297,900
|
|||||
Insurance
|
68,552
|
45,118
|
|||||
Electricity,
water and gas utilities
|
291,608
|
220,779
|
|||||
Management
fees
|
68,797
|
59,629
|
|||||
General
and administrative
|
104,955
|
70,216
|
|||||
Operation
and maintenance
|
786,696
|
519,345
|
|||||
Bad
debt expense
|
1,061
|
3,106
|
|||||
1,707,256
|
1,216,093
|
||||||
Revenue
in excess of certain expenses
|
$
|
1,134,998
|
$
|
978,964
|
|||
Year
Ending
December
31,
|
||||
2005
|
$
|
2,942,324
|
||
2006
|
3,092,785
|
|||
2007
|
2,750,513
|
|||
2008
|
2,421,752
|
|||
2009
|
1,935,952
|
|||
Thereafter
|
3,076,538
|
|||
Total
|
$
|
16,219,864
|
The
accompanying unaudited Pro Forma Condensed Consolidated Balance Sheet
of
Hartman Commercial Properties REIT and Subsidiary (the “Company”) is
presented as if 9101 LBJ Freeway and Uptown Tower had been acquired
on
September 30, 2005. This Pro Forma Condensed Consolidated Balance
Sheet
should be read in conjunction with the Pro Forma Condensed Consolidated
Statements of Income for the nine month period ended September 30,
2005
and for the year ended December 31, 2004 and the historical consolidated
financial statements and notes thereto of the Company reported on
Form
10-Q for the nine month period ended September 30, 2005 and for the
year
ended December 31, 2004 included in the Company’s Annual Report on Form
10-K. In management’s opinion, all adjustments necessary to reflect the
acquisition of 9101 LBJ Freeway and Uptown Tower have been made.
The
following Pro Forma Condensed Consolidated Balance Sheet is not
necessarily indicative of what the actual financial position would
have
been assuming the above transaction had been consummated at September
30,
2005, nor does it purport to represent the future financial position
of
the Company.
|
Historical
Amounts
(A)
|
Pro
Forma
Adjustments
9101
LBJ
Freeway
(B)
|
Pro
Forma
Adjustments
Uptown
Tower(C)
|
Pro
Forma
Amounts
|
||||||||||
Assets
|
|||||||||||||
Real
estate investments, net
|
$
|
137,379,365
|
$
|
-
|
$
|
16,950,000
|
$
|
154,329,365
|
|||||
Cash
and cash equivalents
|
1,566,355
|
-
|
(409,155
|
)
|
1,157,200
|
||||||||
Escrows
and acquisition deposits
|
4,612,768
|
-
|
-
|
4,612,768
|
|||||||||
Note
receivable
|
639,104
|
-
|
-
|
639,104
|
|||||||||
Receivables,
net
|
6,826,267
|
-
|
-
|
6,826,267
|
|||||||||
Deferred
costs, net
|
3,796,493
|
-
|
-
|
3,796,493
|
|||||||||
Prepaids
and other assets
|
272,851
|
-
|
-
|
272,851
|
|||||||||
Total
assets
|
$
|
155,093,203
|
$
|
-
|
$
|
16,540,845
|
$
|
171,634,048
|
|||||
Liabilities
and Shareholders’ Equity
|
|||||||||||||
Notes
payable
|
$
|
63,520,797
|
$
|
-
|
$
|
15,950,000
|
$
|
79,470,797
|
|||||
Accounts
payable and accrued expenses
|
2,996,142
|
-
|
423,061
|
3,419,203
|
|||||||||
Due
to affiliates
|
168,692
|
-
|
-
|
168,692
|
|||||||||
Tenants’
security deposits
|
1,278,777
|
-
|
167,784
|
1,446,561
|
|||||||||
Prepaid
rent
|
373,844
|
-
|
-
|
373,844
|
|||||||||
Offering
proceeds escrowed
|
1,485,192
|
-
|
-
|
1,485,192
|
|||||||||
Dividends
payable
|
1,412,087
|
-
|
-
|
1,412,087
|
|||||||||
Other
liabilities
|
1,026,914
|
-
|
-
|
1,026,914
|
|||||||||
Total
liabilities
|
72,262,445
|
-
|
16,540,845
|
88,803,290
|
|||||||||
Minority
interests
|
35,077,864
|
-
|
-
|
35,077,864
|
|||||||||
Common
stock
|
8,138
|
-
|
-
|
8,138
|
|||||||||
Additional
paid-in capital
|
55,415,884
|
-
|
-
|
55,415,884
|
|||||||||
Accumulated
deficit
|
(7,671,128
|
)
|
-
|
-
|
(7,671,128
|
)
|
|||||||
Total
shareholders’ equity
|
47,752,894
|
-
|
-
|
47,752,894
|
|||||||||
Total
liabilities and shareholders’ equity
|
$
|
155,093,203
|
$
|
-
|
$
|
16,540,845
|
$
|
171,634,048
|
|||||
(A) |
Represents
the condensed consolidated balance sheet of the Company as of September
30, 2005, as contained in the historical consolidated financial statements
and notes thereto filed on Form
10-Q.
|
(B) |
9101
LBJ Freeway was purchased on August 10, 2005. All assets and liabilities
of 9101 LBJ Freeway are contained in the historical consolidated
financial
statements as of September 30, 2005 as filed on Form 10-Q. As such,
no
pro-forma adjustments are required.
|
(C) |
Represents
the completed acquisition of Uptown Tower on November 22, 2005. This
property was purchased during the quarter ending December 31, 2005
for a
total purchase price of $16.95 million. The acquisition of this property
was funded through a draw under the Company’s line of credit
facility.
|
The
accompanying unaudited Pro Forma Consolidated Statements of Income
for the
nine month period ended September 30, 2005 and for the year ended
December
31, 2004 of the Company are presented as if 9101 LBJ Freeway and
Uptown
Tower (the “Properties”) had been acquired on January 1,
2004.
|
These
Pro Forma Consolidated Statements of Income should be read in conjunction
with the historical consolidated financial statements included in
the
Company’s previous filings with the Securities and Exchange
Commission.
|
The
unaudited Pro Forma Consolidated Statements of Income are not necessarily
indicative of what the actual results of operations would have been
for
the nine month period ended September 30, 2005 or for the year ended
December 31, 2004 assuming the above transactions had been consummated
on
January 1, 2004, nor do they purport to represent the future results
of
operations of the Company.
|
Historical
Amounts
(A)
|
Pro
Forma
Adjustments
9101
LBJ
Freeway (B)
|
ProForma
Adjustments
Uptown
Tower
(B)
|
Pro
Forma
Amounts
|
||||||||||
Revenues
|
|||||||||||||
Rental
income
|
$
|
14,785,885
|
$
|
778,266
|
$
|
2,170,160
|
$
|
17,734,311
|
|||||
Tenant
reimbursements
|
3,603,535
|
25,812
|
10,714
|
3,640,061
|
|||||||||
Interest
and other income
|
398,258
|
50,336
|
14,183
|
462,777
|
|||||||||
Total
revenues
|
18,787,678
|
854,414
|
2,195,057
|
21,837,149
|
|||||||||
Expenses
|
|||||||||||||
Operation
and maintenance
|
2,491,107
|
212,876
|
519,345
|
3,223,328
|
|||||||||
Interest
expense
|
2,651,906
|
257,994
|
671,121
|
3,581,021
|
|||||||||
Real
estate taxes
|
2,391,661
|
95,464
|
297,900
|
2,785,025
|
|||||||||
Insurance
|
331,973
|
12,745
|
45,118
|
389,836
|
|||||||||
Electricity,
water and gas utilities
|
724,574
|
131,945
|
220,779
|
1,077,298
|
|||||||||
Management
and partnership management
|
|||||||||||||
fees
to an affiliate
|
1,052,679
|
25,632
|
64,496
|
1,142,807
|
|||||||||
General
and administrative
|
955,665
|
81,550
|
70,216
|
1,107,431
|
|||||||||
Depreciation
|
3,186,910
|
81,919
|
294,990
|
3,563,819
|
|||||||||
Amortization
|
1,089,696
|
71,919
|
-
|
1,161,615
|
|||||||||
Bad
debt expense
|
155,785
|
-
|
3,106
|
158,891
|
|||||||||
Total
operating expenses
|
15,031,956
|
972,044
|
2,187,071
|
18,191,071
|
|||||||||
Income
(loss) before minority interests
|
3,755,722
|
(117,630
|
)
|
7,986
|
3,646,078
|
||||||||
Minority
interests in operating partnership
|
(1,669,492
|
)
|
52,288
|
(3,550
|
)
|
(1,620,754
|
)
|
||||||
Net
income (loss)
|
$
|
2,086,230
|
$
|
(65,342
|
)
|
$
|
4,436
|
$
|
2,025,324
|
||||
Net
income (loss) per common share -
|
|||||||||||||
basic
and diluted
|
$
|
0.273
|
$
|
(0.009
|
)
|
$
|
0.001
|
$
|
0.265
|
||||
Weighted
- average shares outstanding -
|
|||||||||||||
basic
and diluted
|
7,645,483
|
7,645,483
|
7,645,483
|
7,645,483
|
Historical
Amounts
(A)
|
Pro
Forma
Adjustments
9101
LBJ
Freeway (C)
|
Pro
Forma
Adjustments
Uptown
Tower
(C)
|
Pro
Forma
Amounts
|
||||||||||
Revenues
|
|||||||||||||
Rental
income
|
$
|
18,426,558
|
$
|
1,160,007
|
$
|
2,763,870
|
$
|
22,350,435
|
|||||
Tenant
reimbursements
|
4,612,408
|
4,075
|
40,022
|
4,656,505
|
|||||||||
Interest
and other income
|
444,691
|
10,352
|
38,362
|
493,405
|
|||||||||
Total
revenues
|
23,483,657
|
1,174,434
|
2,842,254
|
27,500,345
|
|||||||||
Expenses
|
|||||||||||||
Operation
and maintenance
|
2,838,618
|
355,333
|
786,696
|
3,980,647
|
|||||||||
Interest
expense
|
2,664,135
|
312,212
|
657,460
|
3,633,807
|
|||||||||
Real
estate taxes
|
2,595,346
|
135,325
|
385,587
|
3,116,258
|
|||||||||
Insurance
|
459,801
|
13,913
|
68,552
|
542,266
|
|||||||||
Electricity,
water and gas utilities
|
817,484
|
204,527
|
291,608
|
1,313,619
|
|||||||||
Management
and partnership management
|
|||||||||||||
fees
to an affiliate
|
1,339,822
|
35,233
|
83,910
|
1,458,965
|
|||||||||
General
and administrative
|
1,139,060
|
129,903
|
104,955
|
1,373,918
|
|||||||||
Depreciation
|
3,986,136
|
163,836
|
393,319
|
4,543,291
|
|||||||||
Amortization
|
1,237,286
|
95,892
|
-
|
1,333,178
|
|||||||||
Bad
debt expense
|
(8,060
|
)
|
14,498
|
1,061
|
7,499
|
||||||||
Total
operating expenses
|
17,069,628
|
1,460,672
|
2,773,148
|
21,303,448
|
|||||||||
Income
(loss) before minority interests
|
6,414,029
|
(286,238
|
)
|
69,106
|
6,196,897
|
||||||||
Minority
interests in operating partnership
|
(2,990,410
|
)
|
133,446
|
(32,218
|
)
|
(2,889,182
|
)
|
||||||
Net
income (loss)
|
$
|
3,423,619
|
$
|
(152,792
|
)
|
$
|
36,888
|
$
|
3,307,715
|
||||
Net
income (loss) per common share -
|
|||||||||||||
basic
and diluted
|
$
|
0.488
|
$
|
(0.022
|
)
|
$
|
0.005
|
$
|
0.471
|
||||
Weighted
- average shares outstanding -
|
|||||||||||||
basic
and diluted
|
7,010,146
|
7,010,146
|
7,010,146
|
7,010,146
|
(A) |
Represents
the historical consolidated statement of income of the Company as
contained in the historical consolidated financial statements included
in
previous filings with the Securities and Exchange
Commission.
|
(B) |
Represents
the pro forma revenue and expenses for the nine months ended September
30,
2005 attributable to the Properties as if the acquisitions had occurred
on
January 1, 2004. Interest expense of $929,000 includes pro forma
interest
drawn under a line of credit to fund this acquisition. Management
and
partnership management fees to an affiliate includes pro forma fees
that
would have been paid by the Company under its management agreement.
Depreciation is computed using the straight-line method over the
Properties’ estimated useful lives.
|
(C) |
Represents
the pro forma revenue and expenses for the year ended December 31,
2004
attributable to the Property as if the acquisition had occurred on
January
1, 2004. Interest expense of $970,000 includes pro forma interest
drawn
under a line of credit to fund this acquisition. Management and
partnership management fees to an affiliate represents pro forma
fees that
would have been paid by the Company under its operating agreement.
Depreciation is computed using the straight-line method over the
Properties’ estimated useful lives.
|
Houston
R.E. Income
Properties,
Ltd.
|
Houston
R.E. Income
Properties
VIII, Ltd.
|
Houston
R.E. Income
Properties
IX, Ltd.
|
Houston
R.E. Income
Properties
X, Ltd.
|
Houston
R.E. Income
Properties
XI, Ltd.
|
|||||
Dollar
amount offered
|
$2,138,500
|
$2,210,000
|
$2,550,000
|
$5,000,000
|
$5,000,000
|
||||
|
|||||||||
Dollar
amount raised
|
$2,028,000
|
$2,210,000
|
$2,550,000
|
$4,770,000
|
$4,810,000
|
||||
|
|||||||||
Less
offering expenses:
|
|||||||||
Selling
commissions and discounts retained by affiliates
|
12.0%
|
12.0%
|
10.5%
|
10.5%
|
10.5%
|
||||
Organizational
expenses
|
8.0%
|
8.0%
|
5.5%
|
4.5%
|
4.5%
|
||||
|
|||||||||
Reserve
for operations
|
15.5%
|
10.0%
|
—
|
—
|
—
|
||||
Percent
available for investment
|
64.5%
|
70.0%
|
84.0%
|
85.0%
|
85.0%
|
||||
Acquisition
costs:
|
|||||||||
Prepaid
items and fees related to purchase of property
|
5.2%
|
2.2%
|
3.0%
|
—
|
—
|
||||
Cash
down payment
|
41.80%
|
52.00%
|
43.1%
|
57.00%
|
81.00%
|
||||
Acquisition
fees
|
—
|
—
|
—
|
4.00%
|
4.00%
|
||||
Other
|
17.5%
|
15.8%
|
32.7%
|
24.0%
|
—
|
||||
Total
acquisition costs
|
64.5%
|
70.0%
|
78.8%
|
85.0%
|
85.0%
|
||||
Percent
leverage
|
87.60%
|
82.00%
|
84.0%
|
38.60%
|
33.33%
|
||||
Date
offering began
|
03/15/90
|
10/31/90
|
01/01/92
|
10/01/92
|
03/21/94
|
||||
Length
of offering (months)
|
7
|
5
|
5
|
15
|
12
|
||||
Months
to invest 90% of amount available
for investment
|
6
|
4
|
3.5
|
14
|
9
|
Houston
R.E.
Income
Properties
XII,
Ltd.
|
Houston
R.E.
Income
Properties
XIV,
Ltd.
|
Houston
R.E.
Income
Properties
XV,
Ltd.
|
Hartman
Commercial
Properties
REIT
|
Houston
R.E.
Income
Properties
XVI,
Ltd.
|
|||||
Dollar
amount offered
|
$10,000,000
|
$10,000,000
|
$10,000,000
|
$25,000,000
|
$25,000,000
|
||||
Dollar
amount raised
|
$9,982,000
|
$10,000,000
|
$9,948,500
|
$24,817,451
|
$25,000,000
|
||||
Less
offering expenses:
|
|||||||||
Selling
commissions and discounts retained by affiliates
|
10.5%
|
10.0%
|
9.0%
|
8.0%
|
8.0%
|
||||
Organizational
expenses
|
4.5%
|
3.0%
|
2.0%
|
2.0%
|
4.0%
|
||||
Reserve
for operations
|
—
|
—
|
—
|
—
|
—
|
||||
Percent
available for investment
|
85.0%
|
87.0%
|
89.0%
|
90.0%
|
88.0%
|
||||
Acquisition
costs:
|
|||||||||
Prepaid
items and fees related to
purchase of property
|
—
|
—
|
—
|
—
|
—
|
||||
Cash
down payment
|
81.00%
|
84.00%
|
87.00%
|
86.00%
|
84.00%
|
||||
Acquisition
fees
|
4.00%
|
3.00%
|
2.00%
|
4.00%
|
4.00%
|
||||
Other
|
|||||||||
Total
acquisition costs
|
85.0%
|
87.0%
|
89.0%
|
90.0%
|
88.0%
|
||||
Percent
leverage
|
39.20%
|
23.70%
|
21.65%
|
35.31%
|
23.18%
|
||||
Date
offering began
|
07/01/95
|
04/01/97
|
09/08/98
|
5/21/99
|
07/01/01
|
||||
Length
of offering (months)
|
18
|
12
|
8
|
19
|
17
|
||||
|
|||||||||
Months
to invest 90% of amount available for investment
|
12
|
9
|
14
|
19
|
17
|
Houston
R.E.
Income
Properties
XVII,
Ltd.
|
Hartman
Income
Properties
XVIII,
Ltd.
(Note 1)
|
Hartman
Gulf Plaza
Acquisitions
LP
|
Hartman
3100 Weslayan
Acquisitions
LP
(Note
1)
|
||||
Dollar
amount offered
|
$25,000,000
|
$25,000,000
|
$7,050,000
|
$3,820,000
|
|||
Dollar
amount raised
|
$24,984,900
|
$18,890,800
|
$7,050,000
|
$3,820,000
|
|||
Less
offering expenses:
|
|||||||
Selling
commissions and discounts retained by affiliates
|
8.0%
|
8.0%
|
9.0%
|
8.0%
|
|||
Organizational
expenses
|
4.0%
|
4.0%
|
4.0%
|
4.0%
|
|||
Reserve
for operations
|
—
|
—
|
—
|
—
|
|||
Percent
available for investment
|
88.0%
|
88.0%
|
87.0%
|
88.0%
|
|||
Acquisition
costs:
|
|||||||
Prepaid
items and fees related to
purchase of property
|
—
|
—
|
—
|
—
|
|||
Cash
down payment
|
84.00%
|
84.00%
|
80.62%
|
80.50%
|
|||
Acquisition
fees
|
4.00%
|
4.00%
|
6.38%
|
7.50%
|
|||
|
|||||||
Other
|
|||||||
Total
acquisition costs
|
88.0%
|
88.0%
|
87.0%
|
88.0%
|
|||
Percent
leverage
|
26.11%
|
—
|
54.15%
|
54.90%
|
|||
Date
offering began
|
11/15/02
|
11/25/03
|
2/04/04
|
8/30/04
|
|||
Length
of offering (months)
|
12
|
25
|
5
|
5
|
|||
Months
to invest 90% of amount available for investment
|
13
|
25
|
5
|
5
|
Houston
R.E. Income
Properties,
Ltd.
|
Houston
R.E. Income
Properties
VIII, Ltd.
|
Houston
R.E. Income
Properties
IX, Ltd.
|
Houston
R.E. Income
Properties
X, Ltd.
|
Houston
R.E. Income
Properties
XI, Ltd.
|
|||||
Date
offering commenced
|
03/15/90
|
10/31/90
|
01/01/92
|
10/01/92
|
03/21/94
|
||||
Dollar
amount raised
|
$2,028,000
|
$2,210,000
|
$2,550,000
|
$4,770,000
|
$4,810,000
|
||||
Amount
paid to sponsor from proceeds of offering:
|
|||||||||
Selling
commissions and discounts retained
by affiliates
|
213,850
|
221,000
|
267,750
|
502,162
|
505,050
|
||||
Organizational
expenses
|
213,790
|
220,940
|
140,250
|
406,513
|
216,450
|
||||
Acquisition
fees
|
|
|
|
|
|
||||
Real
estate commissions
|
—
|
—
|
—
|
—
|
—
|
||||
Advisory
fees
|
—
|
—
|
192,400
|
192,400
|
192,400
|
||||
Other
fees (Note 1)
|
375,000
|
350,000
|
832,907
|
1,143,750
|
—
|
||||
Dollar
amount of cash generated from operations before deducting payments
to
sponsor
|
2,497,784
|
3,285,654
|
3,664,956
|
3,412,552
|
4,624,691
|
||||
Amount
paid to sponsor from operations:
|
|||||||||
Property
management fees
|
299,255
|
404,816
|
617,208
|
372,121
|
369,226
|
||||
Partnership
management fees
|
117,653
|
150,741
|
230,005
|
123,193
|
73,843
|
||||
Leasing
commissions
|
176,163
|
87,494
|
503,415
|
267,405
|
391,207
|
||||
Other
|
—
|
—
|
—
|
—
|
—
|
||||
Dollar
amount of property sales and refinancing before deducting payments
to
sponsor
|
—
|
—
|
—
|
—
|
—
|
||||
Amount
paid to sponsor from property sales and refinancing
|
—
|
—
|
—
|
—
|
—
|
Houston
R.E.
Income
Properties
XII,
Ltd.
|
Houston
R.E.
Income
Properties
XIV,
Ltd.
|
Houston
R.E.
Income
Properties
XV,
Ltd.
|
Hartman
Commercial
Properties
REIT
|
Houston
R.E.
Income
Properties
XVI,
Ltd.
|
|||||
Date
offering commenced
|
07/01/95
|
04/01/97
|
09/08/98
|
07/01/99
|
07/01/01
|
||||
|
|||||||||
Dollar
amount raised
|
$10,000,000
|
$10,000,000
|
$9,948,500
|
$24,817,451
|
$25,000,000
|
||||
Amount
paid to sponsor from proceeds of offering:
|
|||||||||
Selling
commissions and discounts retained by affiliates
|
1,050,000
|
1,000,000
|
895,365
|
—
|
—
|
||||
Organizational
expenses
|
450,000
|
300,000
|
198,970
|
438,027
|
859,604
|
||||
Acquisition
fees
|
|
|
|
|
|
||||
Real
estate commissions
|
—
|
—
|
—
|
—
|
—
|
||||
Advisory
fees
|
400,000
|
300,000
|
198,970
|
992,698
|
1,000,000
|
||||
Other
fees (Note 1)
|
—
|
—
|
—
|
—
|
—
|
||||
Dollar
amount of cash generated from operations before deducting payments
to
sponsor
|
4,723,075
|
9,044,589
|
1,337,692
|
61,465,904
|
9,996,339
|
||||
Amount
paid to sponsor from operations:
|
|||||||||
Property
management fees
|
429,768
|
674,141
|
112,879
|
5,603,117
|
754,122
|
||||
Partnership
management fees
|
85,958
|
134,828
|
21,668
|
1,120,624
|
150,824
|
||||
Leasing
commissions
|
386,366
|
600,560
|
437,836
|
5,899,717
|
1,182,949
|
||||
Other
|
—
|
—
|
—
|
—
|
—
|
||||
Dollar
amount of property sales and refinancing before deducting payments
to
sponsor
|
—
|
—
|
—
|
—
|
—
|
||||
Amount
paid to sponsor from property sales and refinancing
|
—
|
—
|
—
|
—
|
—
|
Houston
R.E.
Income
Properties
XVII,
Ltd.
|
Hartman
Income
Properties
XVIII,
Ltd.
|
Hartman
Gulf
Plaza
Acquisitions
LP
|
Hartman
3100
Weslayan
Acquisitions
LP
|
||||
Date
offering commenced
|
11/15/02
|
11/25/03
|
2/04/04
|
8/30/04
|
|||
Dollar
amount raised
|
$24,984,900
|
$18,890,800
|
$7,050,000
|
$3,820,000
|
|||
Amount
paid to sponsor from proceeds of offering:
|
|||||||
Selling
commissions and discounts retained by affiliates
|
—
|
—
|
—
|
—
|
|||
Organizational
expenses
|
868,213
|
676,569
|
282,000
|
152,800
|
|||
Acquisition
fees
|
|
|
|||||
Real
estate commissions
|
—
|
—
|
—
|
—
|
|||
Advisory
fees
|
999,396
|
755,632
|
450,000
|
286,500
|
|||
Other
fees (Note 1)
|
—
|
—
|
—
|
—
|
|||
Dollar
amount of cash generated from operations before deducting payments
to
sponsor
|
5,275,638
|
1,102,955
|
1,028,020
|
466,567
|
|||
Amount
paid to sponsor from operations:
|
|||||||
Property
management fees
|
386,969
|
74,026
|
142,250
|
50,460
|
|||
Partnership
management fees
|
77,394
|
14,802
|
—
|
—
|
|||
Leasing
commissions
|
282,186
|
103,631
|
50,676
|
140,176
|
|||
Other
|
—
|
—
|
—
|
—
|
|||
Dollar
amount of property sales and refinancing before deducting payments
to
sponsor
|
—
|
—
|
—
|
—
|
|||
Amount
paid to sponsor from property sales and refinancing
|
—
|
—
|
—
|
—
|
1990
|
1991
|
1992
|
1993
|
1994
|
1995
|
1996
|
1997
|
1998
|
1999(1)
|
||||||||||||||||||||||
Gross
revenues
|
$
|
254,247
|
$
|
469,696
|
$
|
578,693
|
$
|
575,185
|
$
|
652,326
|
$
|
760,170
|
$
|
805,536
|
$
|
836,259
|
$
|
930,336
|
—
|
||||||||||||
Profit
(loss) on sale of properties
|
31,443
|
(46,287
|
)
|
18,399
|
14,481
|
64,476
|
45,198
|
76,589
|
115,493
|
92,051
|
—
|
||||||||||||||||||||
Less:
|
|||||||||||||||||||||||||||||||
Operating
expenses
|
212,345
|
253,093
|
275,381
|
261,152
|
344,089
|
366,704
|
369,970
|
365,770
|
433,489
|
—
|
|||||||||||||||||||||
Interest
expense
|
84,510
|
111,827
|
113,560
|
106,765
|
123,814
|
122,109
|
113,867
|
84,993
|
87,308
|
—
|
|||||||||||||||||||||
Depreciation
|
19,564
|
26,263
|
28,140
|
29,768
|
31,271
|
31,872
|
51,920
|
34,934
|
35,657
|
—
|
|||||||||||||||||||||
Net
income - GAAP basis
|
(30,729
|
)
|
32,226
|
180,011
|
191,981
|
217,628
|
284,683
|
346,368
|
466,055
|
465,933
|
—
|
||||||||||||||||||||
Taxable
income
|
|||||||||||||||||||||||||||||||
-
from operations
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||||||||
-
from gain on sale
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||||||||
Cash
generated
|
|||||||||||||||||||||||||||||||
-
from operations
|
9,326
|
32,226
|
180,011
|
290,883
|
77,678
|
321,791
|
377,070
|
481,380
|
134,348
|
—
|
|||||||||||||||||||||
-
from gain on sale
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||||||||
-
from refinancing
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||||||||
Cash
generated from operations, sales and refinancings
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||||||||
Less:
Cash distributions to investors
|
|||||||||||||||||||||||||||||||
-
from operating cash flow
|
43,265
|
159,795
|
218,400
|
246,810
|
237,120
|
175,590
|
167,564
|
150,130
|
308,441
|
106,314
|
|||||||||||||||||||||
-
from sales and refinancing
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||||||||
Cash
generated (deficiency) after cash distributions
|
—
|
(127,569
|
)
|
(38,389
|
)
|
44,073
|
(159,442
|
)
|
146,201
|
209,506
|
331,250
|
(174,093
|
)
|
(106,314
|
)
|
||||||||||||||||
Less:
|
|||||||||||||||||||||||||||||||
Special
items
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||||||||
Cash
generated (deficiency) after cash distributions and special
items
|
—
|
(127,569
|
)
|
(38,389
|
)
|
44,073
|
(159,442
|
)
|
146,201
|
209,506
|
331,250
|
(174,093
|
)
|
(106,314
|
)
|
||||||||||||||||
Tax
and Distribution Data Per $1,000 Invested
|
|||||||||||||||||||||||||||||||
Federal
income tax results:
|
|||||||||||||||||||||||||||||||
Ordinary
income (loss)
|
|||||||||||||||||||||||||||||||
-
from operations
|
(14.81
|
)
|
15.73
|
87.88
|
90.04
|
106.23
|
139.00
|
177.62
|
236.60
|
244.52
|
—
|
||||||||||||||||||||
-
from recapture
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||||||||
Cash
distributions to investors:
|
|||||||||||||||||||||||||||||||
Source
(on tax basis)
|
|||||||||||||||||||||||||||||||
-
from investment income
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||||||||
-
from return of capital
|
31.27
|
79.88
|
107.69
|
116.92
|
116.92
|
86.31
|
82.63
|
74.04
|
318.47
|
—
|
|||||||||||||||||||||
Source
(on cash basis)
|
|||||||||||||||||||||||||||||||
-
from sales
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||||||||
-
from refinancing
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||||||||
-
from operations
|
31.27
|
79.88
|
107.69
|
116.92
|
116.92
|
86.31
|
82.63
|
74.04
|
318.47
|
—
|
|||||||||||||||||||||
-
other
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||||||||
Amount
(in percentage terms) remaining invested in program properties at
the end
of last year reported in table
|
100
|
%
|
100
|
%
|
100
|
%
|
100
|
%
|
100
|
%
|
100
|
%
|
100
|
%
|
100
|
%
|
100
|
%
|
—
|
1990
|
1991
|
1992
|
1993
|
1994
|
1995
|
||||||||||||||
Gross
revenues
|
$
|
116,478
|
$
|
498,934
|
$
|
642,587
|
$
|
666,489
|
$
|
735,130
|
$
|
703,201
|
|||||||
Profit
on sale of properties
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||
Less:
|
|||||||||||||||||||
Operating
expenses
|
23,994
|
205,313
|
210,669
|
247,256
|
209,863
|
238,920
|
|||||||||||||
Interest
expense
|
29,652
|
318,732
|
306,524
|
301,137
|
291,136
|
273,609
|
|||||||||||||
Depreciation
|
17,079
|
82,299
|
83,135
|
84,829
|
86,011
|
86,819
|
|||||||||||||
Net
income - GAAP basis
|
45,753
|
(107,410
|
)
|
42,259
|
33,267
|
148,120
|
103,853
|
||||||||||||
Taxable
income
|
|||||||||||||||||||
-
from operations
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||
-
from gain on sale
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||
Cash
generated
|
|||||||||||||||||||
-
from operations
|
45,753
|
(107,410
|
)
|
42,259
|
226,191
|
136,862
|
178,135
|
||||||||||||
-
from gain on sale
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||
-
from refinancing
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||
Cash
generated from operations, sales and refinancings
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||
Less:
Cash distributions to investors
|
|||||||||||||||||||
-
from operating cash flow
|
—
|
39,212
|
204,789
|
178,593
|
111,246
|
55,250
|
|||||||||||||
-
from sales and refinancing
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||
Cash
generated (deficiency) after cash distributions
|
—
|
(146,622
|
)
|
(162,530
|
)
|
47,598
|
25,616
|
122,885
|
|||||||||||
Less:
|
|||||||||||||||||||
Special
items
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||
Cash
generated (deficiency) after cash distributions and special
items
|
—
|
(146,622
|
)
|
(162,530
|
)
|
47,598
|
25,616
|
122,885
|
|||||||||||
Tax
and Distribution Data Per $1,000 Invested
|
|||||||||||||||||||
Federal
income tax results:
|
|||||||||||||||||||
Ordinary
income (loss)
|
|||||||||||||||||||
-
from operations
|
8.08
|
(45.73
|
)
|
22.77
|
14.08
|
65.00
|
55.04
|
||||||||||||
-
from recapture
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||
Cash
distributions to investors:
|
|||||||||||||||||||
Source
(on tax basis)
|
|||||||||||||||||||
-
from investment income
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||
-
from return of capital
|
—
|
60.65
|
76.92
|
80.85
|
50.35
|
25.00
|
|||||||||||||
Source
(on cash basis)
|
|||||||||||||||||||
-
from sales
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||
-
from refinancing
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||
-
from operations
|
—
|
60.65
|
76.92
|
80.85
|
50.35
|
25.00
|
|||||||||||||
-
other
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||
Amount
(in percentage terms) remaining invested in program properties at
the end
of last year reported in table
|
100
|
%
|
100
|
%
|
100
|
%
|
100
|
%
|
100
|
%
|
100
|
%
|
1996
|
1997
|
1998
|
1999
|
2000
|
2001
|
2002
|
||||||||||||||||
Gross
revenues
|
$
|
692,764
|
$
|
768,623
|
$
|
782,005
|
$
|
758,771
|
$
|
791,003
|
$
|
866,079
|
—
|
|||||||||
Profit
on sale of properties
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||
Less:
|
||||||||||||||||||||||
Operating
expenses
|
228,161
|
221,079
|
294,831
|
242,861
|
307,907
|
298,754
|
—
|
|||||||||||||||
Interest
expense
|
206,803
|
194,810
|
188,191
|
177,024
|
181,134
|
156,497
|
—
|
|||||||||||||||
Depreciation
|
86,970
|
87,410
|
87,513
|
88,890
|
89,921
|
89,423
|
—
|
|||||||||||||||
Net
income - GAAP basis
|
170,830
|
265,324
|
211,470
|
249,996
|
212,041
|
321,405
|
—
|
|||||||||||||||
Taxable
income
|
||||||||||||||||||||||
-
from operations
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||
-
from gain on sale
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||
Cash
generated
|
||||||||||||||||||||||
-
from operations
|
260,350
|
363,686
|
343,095
|
241,478
|
347,055
|
452,795
|
—
|
|||||||||||||||
-
from gain on sale
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||
-
from refinancing
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||
Cash
generated from operations, sales and refinancings
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||
Less:
Cash distributions to investors
|
||||||||||||||||||||||
-
from operating cash flow
|
160,745
|
229,287
|
190,613
|
187,850
|
237,575
|
232,050
|
60,775
|
|||||||||||||||
-
from sales and refinancing
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||
Cash
generated (deficiency) after cash distributions
|
99,605
|
134,399
|
152,482
|
53,628
|
109,480
|
220,745
|
(60,775
|
)
|
||||||||||||||
Less:
|
||||||||||||||||||||||
Special
items
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||
Cash
generated (deficiency) after cash distributions and special
items
|
99,605
|
134,399
|
152,482
|
53,628
|
109,480
|
220,745
|
(60,775
|
)
|
||||||||||||||
Tax
and Distribution Data Per $1,000 Invested
|
||||||||||||||||||||||
Federal
income tax results:
|
||||||||||||||||||||||
Ordinary
income (loss)
|
||||||||||||||||||||||
-
from operations
|
79.62
|
108.15
|
90.50
|
124.00
|
95.92
|
126.45
|
—
|
|||||||||||||||
-
from recapture
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||
Cash
distributions to investors:
|
||||||||||||||||||||||
Source
(on tax basis)
|
||||||||||||||||||||||
-
from investment income
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||
-
from return of capital
|
72.50
|
103.77
|
86.23
|
85.00
|
107.50
|
105.00
|
—
|
|||||||||||||||
Source
(on cash basis)
|
||||||||||||||||||||||
-
from sales
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||
-
from refinancing
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||
-
from operations
|
72.50
|
103.77
|
86.23
|
85.00
|
107.50
|
105.00
|
—
|
|||||||||||||||
-
other
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||
Amount
(in percentage terms) remaining invested in program properties at
the end
of last year reported in table
|
100
|
%
|
100
|
%
|
100
|
%
|
100
|
%
|
100
|
%
|
100
|
%
|
—
|
1992
|
1993
|
1994
|
1995
|
1996
|
1997
|
||||||||||||||
Gross
revenues
|
$
|
874,732
|
$
|
1,109,588
|
$
|
1,174,911
|
$
|
1,169,649
|
$
|
1,109,390
|
$
|
1,163,547
|
|||||||
Profit
on sale of properties
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||
Less:
|
|||||||||||||||||||
Operating
expenses
|
472,929
|
539,007
|
609,792
|
786,970
|
548,397
|
603,052
|
|||||||||||||
Interest
expense
|
203,869
|
268,648
|
258,665
|
—
|
245,864
|
265,773
|
|||||||||||||
Depreciation
|
78,908
|
131,103
|
133,392
|
136,060
|
138,541
|
142,100
|
|||||||||||||
Net
income - GAAP basis
|
119,026
|
170,830
|
173,062
|
246,619
|
176,588
|
152,622
|
|||||||||||||
Taxable
income
|
|||||||||||||||||||
-
from operations
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||
-
from gain on sale
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||
Cash
generated
|
|||||||||||||||||||
-
from operations
|
119,026
|
346,001
|
310,701
|
433,235
|
345,164
|
306,967
|
|||||||||||||
-
from gain on sale
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||
-
from refinancing
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||
Cash
generated from operations, sales and refinancings
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||
Less:
Cash distributions to investors
|
|||||||||||||||||||
-
from operating cash flow
|
129,417
|
273,340
|
297,056
|
305,988
|
280,491
|
216,750
|
|||||||||||||
-
from sales and refinancing
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||
Cash
generated (deficiency) after cash distributions
|
—
|
72,661
|
13,645
|
127,247
|
64,673
|
90,217
|
|||||||||||||
Less:
|
|||||||||||||||||||
Special
items
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||
Cash
generated (deficiency) after cash distributions and special
items
|
—
|
72,661
|
13,645
|
127,247
|
64,673
|
90,217
|
|||||||||||||
Tax
and Distribution Data Per $1,000 Invested
|
|||||||||||||||||||
Federal
income tax results:
|
|||||||||||||||||||
Ordinary
income (loss)
|
|||||||||||||||||||
-
from operations
|
56.88
|
64.04
|
75.96
|
93.12
|
55.68
|
55.04
|
|||||||||||||
-
from recapture
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||
Cash
distributions to investors:
|
|||||||||||||||||||
Source
(on tax basis)
|
|||||||||||||||||||
-
from investment income
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||
-
from return of capital
|
61.04
|
110.00
|
117.52
|
120.00
|
110.00
|
85.00
|
|||||||||||||
Source
(on cash basis)
|
|||||||||||||||||||
-
from sales
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||
-
from refinancing
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||
-
from operations
|
61.04
|
110.00
|
117.52
|
120.00
|
110.00
|
85.00
|
|||||||||||||
-
other
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||
Amount
(in percentage terms) remaining invested in program properties at
the end
of last year reported in table
|
100
|
%
|
100
|
%
|
100
|
%
|
100
|
%
|
100
|
%
|
100
|
%
|
1998
|
1999
|
2000
|
2001
|
2002
|
||||||||||||
Gross
revenues
|
$
|
1,338,032
|
$
|
1,369,210
|
$
|
1,357,544
|
$
|
1,536,352
|
—
|
|||||||
Profit
on sale of properties
|
—
|
—
|
—
|
—
|
—
|
|||||||||||
Less:
|
||||||||||||||||
Operating
expenses
|
547,984
|
752,250
|
656,137
|
701,469
|
—
|
|||||||||||
Interest
expense
|
230,872
|
226,168
|
238,753
|
214,302
|
—
|
|||||||||||
Depreciation
|
144,326
|
148,642
|
151,103
|
150,710
|
—
|
|||||||||||
Net
income - GAAP basis
|
414,850
|
242,150
|
311,551
|
469,871
|
—
|
|||||||||||
Taxable
income
|
||||||||||||||||
-
from operations
|
—
|
—
|
—
|
—
|
—
|
|||||||||||
-
from gain on sale
|
—
|
—
|
—
|
—
|
—
|
|||||||||||
Cash
generated
|
||||||||||||||||
-
from operations
|
577,399
|
419,024
|
559,218
|
675,746
|
—
|
|||||||||||
-
from gain on sale
|
—
|
—
|
—
|
—
|
—
|
|||||||||||
-
from refinancing
|
—
|
—
|
—
|
—
|
—
|
|||||||||||
Cash
generated from operations, sales and refinancings
|
—
|
—
|
—
|
—
|
—
|
|||||||||||
Less:
Cash distributions to investors
|
||||||||||||||||
-
from operating cash flow
|
313,125
|
330,750
|
363,375
|
382,500
|
95,625
|
|||||||||||
-
from sales and refinancing
|
—
|
—
|
—
|
—
|
—
|
|||||||||||
Cash
generated (deficiency) after cash distributions
|
264,274
|
88,275
|
195,843
|
293,246
|
(95,625
|
)
|
||||||||||
Less:
|
||||||||||||||||
Special
items
|
—
|
—
|
—
|
—
|
—
|
|||||||||||
Cash
generated (deficiency) after cash distributions and special
items
|
264,274
|
88,275
|
195,843
|
293,246
|
(95,625
|
)
|
||||||||||
Tax
and Distribution Data Per $1,000 Invested
|
||||||||||||||||
Federal
income tax results:
|
||||||||||||||||
Ordinary
income (loss)
|
||||||||||||||||
-
from operations
|
143.08
|
80.00
|
94.20
|
126.72
|
—
|
|||||||||||
-
from recapture
|
—
|
—
|
—
|
—
|
—
|
|||||||||||
Cash
distributions to investors:
|
||||||||||||||||
Source
(on tax basis)
|
||||||||||||||||
-
from investment income
|
—
|
—
|
—
|
—
|
—
|
|||||||||||
-
from return of capital
|
122.48
|
130.00
|
142.50
|
150.00
|
—
|
|||||||||||
Source
(on cash basis)
|
||||||||||||||||
-
from sales
|
—
|
—
|
—
|
—
|
—
|
|||||||||||
-
from refinancing
|
—
|
—
|
—
|
—
|
—
|
|||||||||||
-
from operations
|
122.48
|
130.00
|
142.50
|
150.00
|
—
|
|||||||||||
-
other
|
—
|
—
|
—
|
—
|
—
|
|||||||||||
Amount
(in percentage terms) remaining invested in program properties at
the end
of last year reported in table
|
100
|
%
|
100
|
%
|
100
|
%
|
100
|
%
|
—
|
1992
|
1993
|
1994
|
1995
|
1996
|
1997
|
1998
|
1999
|
2000(1)
|
||||||||||||||||||||
Gross
revenues
|
$
|
64,090
|
$
|
262,416
|
$
|
953,872
|
$
|
1,339,237
|
$
|
1,171,931
|
$
|
1,151,283
|
$
|
1,273,330
|
$
|
1,361,484
|
—
|
|||||||||||
Profit
on sale of properties
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||||||
Less:
|
||||||||||||||||||||||||||||
Operating
expenses
|
21,329
|
162,890
|
406,017
|
594,749
|
503,991
|
478,593
|
610,936
|
498,928
|
—
|
|||||||||||||||||||
Interest
expense
|
1,422
|
11,173
|
144,953
|
139,356
|
137,158
|
132,135
|
142,214
|
116,714
|
—
|
|||||||||||||||||||
Depreciation
|
6,459
|
32,812
|
104,549
|
117,725
|
174,940
|
244,650
|
126,013
|
144,125
|
—
|
|||||||||||||||||||
Net
income - GAAP basis
|
34,880
|
55,541
|
298,353
|
487,407
|
355,842
|
295,905
|
394,167
|
601,717
|
—
|
|||||||||||||||||||
Taxable
income
|
||||||||||||||||||||||||||||
-
from operations
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||||||
-
from gain on sale
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||||||
Cash
generated
|
||||||||||||||||||||||||||||
-
from operations
|
—
|
169,951
|
385,545
|
637,006
|
371,281
|
900,971
|
600,774
|
765,387
|
—
|
|||||||||||||||||||
-
from gain on sale
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||||||
-
from refinancing
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||||||
Cash
generated from operations, sales and refinancings
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||||||
Less:
Cash distributions to investors
|
||||||||||||||||||||||||||||
-
from operating cash flow
|
—
|
92,936
|
394,583
|
290,423
|
432,353
|
433,238
|
472,775
|
483,129
|
131,175
|
|||||||||||||||||||
-
from sales and refinancing
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||||||
Cash
generated (deficiency) after cash distributions
|
—
|
77,015
|
(9,038
|
)
|
346,583
|
(61,072
|
)
|
467,733
|
127,999
|
282,258
|
(131,175
|
)
|
||||||||||||||||
Less:
|
||||||||||||||||||||||||||||
Special
items
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||||||
Cash
generated (deficiency) after cash distributions and special
items
|
—
|
77,015
|
(9,038
|
)
|
346,583
|
(61,072
|
)
|
467,733
|
127,999
|
282,258
|
(131,175
|
)
|
||||||||||||||||
Tax
and Distribution Data Per $1,000 Invested
|
||||||||||||||||||||||||||||
Federal
income tax results:
|
||||||||||||||||||||||||||||
Ordinary
income (loss)
|
||||||||||||||||||||||||||||
-
from operations
|
44.96
|
33.16
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||||||
-
from recapture
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||||||
Cash
distributions to investors:
|
||||||||||||||||||||||||||||
Source
(on tax basis)
|
||||||||||||||||||||||||||||
-
from investment income
|
—
|
—
|
67.50
|
61.80
|
90.64
|
90.64
|
98.64
|
130.00
|
—
|
|||||||||||||||||||
-
from return of capital
|
—
|
72.52
|
20.00
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||||||
Source
(on cash basis)
|
||||||||||||||||||||||||||||
-
from sales
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||||||
-
from refinancing
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||||||
-
from operations
|
—
|
72.52
|
87.50
|
61.80
|
90.64
|
90.64
|
98.64
|
130.00
|
—
|
|||||||||||||||||||
-
other
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||||||
Amount
(in percentage terms) remaining invested in program properties at
the end
of last year reported in table
|
100
|
%
|
100
|
%
|
100
|
%
|
100
|
%
|
100
|
%
|
100
|
%
|
100
|
%
|
100
|
%
|
—
|
1994
|
1995
|
1996
|
1997
|
1998
|
1999
|
2000
|
2001
|
2002
|
||||||||||||||||||||
Gross
revenues
|
$
|
314,988
|
$
|
1,254,423
|
$
|
1,615,413
|
$
|
1,587,600
|
$
|
1,760,587
|
$
|
402,699
|
$
|
413,785
|
$
|
538,294
|
$
|
—
|
||||||||||
Profit
on sale of properties
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||||||
Less:
|
||||||||||||||||||||||||||||
Operating
expenses
|
107,392
|
422,428
|
538,134
|
668,586
|
705,717
|
201,850
|
236,034
|
222,276
|
—
|
|||||||||||||||||||
Interest
expense
|
11,821
|
149,042
|
164,236
|
167,573
|
171,189
|
86,157
|
90,186
|
80,286
|
—
|
|||||||||||||||||||
Depreciation
|
28,858
|
128,636
|
158,652
|
159,936
|
165,270
|
50,505
|
52,350
|
54,363
|
—
|
|||||||||||||||||||
Net
income - GAAP basis
|
166,917
|
554,317
|
754,391
|
591,505
|
718,411
|
64,187
|
35,215
|
181,369
|
—
|
|||||||||||||||||||
Taxable
income
|
||||||||||||||||||||||||||||
-
from operations
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||||||
-
from gain on sale
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||||||
Cash
generated
|
||||||||||||||||||||||||||||
-
from operations
|
431,804
|
655,535
|
921,755
|
833,117
|
420,764
|
115,433
|
134,497
|
267,153
|
—
|
|||||||||||||||||||
-
from gain on sale
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||||||
-
from refinancing
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||||||
Cash
generated from operations, sales and refinancings
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||||||
Less:
Cash distributions to investors
|
||||||||||||||||||||||||||||
-
from operating cash flow
|
79,619
|
516,798
|
762,652
|
723,145
|
789,417
|
116,090
|
219,615
|
116,025
|
38,675
|
|||||||||||||||||||
-
from sales and refinancing
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||||||
Cash
generated (deficiency) after cash distributions
|
352,185
|
138,737
|
159,103
|
109,972
|
(368,653
|
)
|
(657
|
)
|
(85,118
|
)
|
151,128
|
(38,675
|
)
|
|||||||||||||||
Less:
|
||||||||||||||||||||||||||||
Special
items
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||||||
Cash
generated (deficiency) after cash distributions and special
items
|
352,185
|
138,737
|
159,103
|
109,972
|
(368,653
|
)
|
(657
|
)
|
(85,118
|
)
|
151,128
|
(38,675
|
)
|
|||||||||||||||
Tax
and Distribution Data Per $1,000 Invested
|
||||||||||||||||||||||||||||
Federal
income tax results:
|
||||||||||||||||||||||||||||
Ordinary
income (loss)
|
||||||||||||||||||||||||||||
-
from operations
|
71.60
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||||||
-
from recapture
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||||||
Cash
distributions to investors:
|
||||||||||||||||||||||||||||
Source
(on tax basis)
|
||||||||||||||||||||||||||||
-
from investment income
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||||||
-
from return of capital
|
45.46
|
110.00
|
150.10
|
145.70
|
164.12
|
141.64
|
129.06
|
126.30
|
—
|
|||||||||||||||||||
Source
(on cash basis)
|
||||||||||||||||||||||||||||
-
from sales
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||||||
-
from refinancing
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||||||
-
from operations
|
45.46
|
110.00
|
150.10
|
145.70
|
164.12
|
141.64
|
129.06
|
126.30
|
—
|
|||||||||||||||||||
-
other
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||||||
Amount
(in percentage terms) remaining invested in program properties at
the end
of last year reported in table
|
100
|
%
|
100
|
%
|
100
|
%
|
100
|
%
|
100
|
%
|
12.9
|
%
|
12.9
|
%
|
12.9
|
%
|
—
|
1996
|
1997
|
1998
|
1999
|
2000
|
2001
|
2002
|
||||||||||||||||
Gross
revenues
|
$
|
470,838
|
$
|
1,664,779
|
$
|
3,186,920
|
$
|
3,167,907
|
$
|
922,017
|
$
|
747,159
|
$
|
—
|
||||||||
Profit
on sale of properties
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||
Less:
|
||||||||||||||||||||||
Operating
expenses
|
253,642
|
642,294
|
1,430,053
|
1,430,780
|
2,673
|
2,673
|
—
|
|||||||||||||||
Interest
expense
|
6,274
|
57,684
|
522,561
|
485,501
|
—
|
—
|
—
|
|||||||||||||||
Depreciation
|
39,410
|
238,389
|
388,435
|
379,830
|
—
|
—
|
—
|
|||||||||||||||
Net
income - GAAP basis
|
171,512
|
726,412
|
845,871
|
871,796
|
919,344
|
744,486
|
—
|
|||||||||||||||
Taxable
income
|
||||||||||||||||||||||
-
from operations
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||
-
from gain on sale
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||
Cash
generated
|
||||||||||||||||||||||
-
from operations
|
246,620
|
1,088,431
|
1,234,306
|
1,251,626
|
827,887
|
979,099
|
247,710
|
|||||||||||||||
-
from gain on sale
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||
-
from refinancing
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||
Cash
generated from operations, sales and refinancings
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||
Less:
Cash distributions to investors
|
||||||||||||||||||||||
-
from operating cash flow
|
238,922
|
846,508
|
1,133,853
|
1,184,776
|
980,559
|
982,099
|
247,710
|
|||||||||||||||
-
from sales and refinancing
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||
Cash
generated (deficiency) after cash distributions
|
7,698
|
241,923
|
100,453
|
66,850
|
(152,672
|
)
|
(3,000
|
)
|
—
|
|||||||||||||
Less:
|
||||||||||||||||||||||
Special
items
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||
Cash
generated (deficiency) after cash distributions and special
items
|
7,698
|
241,923
|
100,453
|
66,850
|
(152,672
|
)
|
(3,000
|
)
|
—
|
|||||||||||||
Tax
and Distribution Data Per $1,000 Invested
|
||||||||||||||||||||||
Federal
income tax results:
|
||||||||||||||||||||||
Ordinary
income (loss)
|
||||||||||||||||||||||
-
from operations
|
47.56
|
72.68
|
84.20
|
90.72
|
75.06
|
75.26
|
—
|
|||||||||||||||
-
from recapture
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||
Cash
distributions to investors:
|
||||||||||||||||||||||
Source
(on tax basis)
|
||||||||||||||||||||||
-
from investment income
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||
-
from return of capital
|
80.49
|
100.06
|
113.58
|
117.82
|
94.04
|
94.19
|
23.76
|
|||||||||||||||
Source
(on cash basis)
|
||||||||||||||||||||||
-
from sales
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||
-
from refinancing
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||
-
from operations
|
80.49
|
100.06
|
113.58
|
117.82
|
94.04
|
94.19
|
23.76
|
|||||||||||||||
-
other
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||
Amount
(in percentage terms) remaining invested in program properties at
the end
of last year reported in table
|
100
|
%
|
100
|
%
|
100
|
%
|
100
|
%
|
100
|
%
|
100
|
%
|
—
|
1997
|
1998
|
1999
|
2000
|
2001
|
2002
|
2003
|
2004
|
2005
|
||||||||||||||||||||
Gross
revenues
|
$
|
145,601
|
$
|
1,727,551
|
$
|
3,422,423
|
$
|
3,041,089
|
$
|
3,240,421
|
$
|
1,348,874
|
$
|
1,111,166
|
$
|
1,336,278
|
$
|
1,531,031
|
||||||||||
Profit
on sale of properties
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||||||
Less:
|
||||||||||||||||||||||||||||
Operating
expenses
|
56,776
|
931,274
|
1,380,468
|
1,395,816
|
1,554,992
|
492,893
|
497,894
|
400,236
|
503,555
|
|||||||||||||||||||
Interest
expense
|
19,220
|
7,756
|
405,690
|
713,388
|
549,683
|
146,656
|
110,387
|
139,959
|
202,065
|
|||||||||||||||||||
Depreciation
|
42,278
|
216,627
|
324,574
|
372,682
|
356,014
|
109,508
|
520,759
|
184,271
|
247,787
|
|||||||||||||||||||
Net
income - GAAP basis
|
27,327
|
571,894
|
1,311,691
|
559,203
|
779,732
|
599,816
|
(17,874
|
)
|
611,812
|
577,624
|
||||||||||||||||||
Taxable
income
|
||||||||||||||||||||||||||||
-
from operations
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||||||
-
from gain on sale
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||||||
Cash
generated
|
||||||||||||||||||||||||||||
-
from operations
|
69,605
|
780,980
|
1,277,243
|
1,296,845
|
1,328,463
|
765,051
|
485,096
|
820,140
|
844,120
|
|||||||||||||||||||
-
from gain on sale
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||||||
-
from refinancing
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||||||
Cash
generated from operations, sales and refinancings
|
||||||||||||||||||||||||||||
Less:
Cash distributions to investors
|
||||||||||||||||||||||||||||
-
from operating cash flow
|
3,261
|
719,794
|
1,072,500
|
1,275,000
|
1,050,000
|
739,207
|
803,001
|
862,007
|
869,201
|
|||||||||||||||||||
-
from sales and refinancing
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||||||
Cash
generated (deficiency) after cash distributions
|
66,344
|
61,186
|
204,743
|
21,845
|
278,463
|
25,844
|
(317,905
|
)
|
(41,867
|
)
|
(25,084
|
)
|
||||||||||||||||
Less:
|
||||||||||||||||||||||||||||
Special
items
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||||||
Cash
generated (deficiency) after cash distributions and special
items
|
66,344
|
61,186
|
204,743
|
21,845
|
278,463
|
25,844
|
(317,905
|
)
|
(41,867
|
)
|
(25,084
|
)
|
||||||||||||||||
Tax
and Distribution Data Per $1,000 Invested
|
||||||||||||||||||||||||||||
Federal
income tax results:
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||||||
Ordinary
income (loss)
|
||||||||||||||||||||||||||||
-
from operations
|
15.72
|
58.68
|
130.24
|
66.41
|
21.60
|
63.07
|
3.65
|
57.20
|
n/a
|
|
||||||||||||||||||
-
from recapture
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||||||
Cash
distributions to investors:
|
||||||||||||||||||||||||||||
Source
(on tax basis)
|
||||||||||||||||||||||||||||
-
from investment income
|
—
|
—
|
—
|
—
|
—
|
—
|
3.65
|
57.20
|
n/a
|
|
||||||||||||||||||
-
from return of capital
|
4.60
|
90.25
|
107.48
|
127.50
|
105.00
|
73.92
|
76.65
|
29.00
|
n/a
|
|
||||||||||||||||||
Source
(on cash basis)
|
||||||||||||||||||||||||||||
-
from sales
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||||||
-
from refinancing
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||||||
-
from operations
|
4.60
|
90.25
|
107.48
|
127.50
|
105.00
|
73.92
|
80.30
|
86.20
|
n/a
|
|
||||||||||||||||||
-
other
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||||||
Amount
(in percentage terms) remaining invested in program properties at
the end
of last year reported in table
|
100
|
%
|
100
|
%
|
100
|
%
|
100
|
%
|
100
|
%
|
100
|
%
|
100
|
%
|
100
|
%
|
100
|
%
|
1999
|
2000
|
2001
|
2002
|
2003
|
2004
|
2005
|
||||||||||||||||
Gross
revenues
|
$
|
5,009,497
|
$
|
9,625,758
|
$
|
11,703,737
|
$
|
20,755,026
|
$
|
20,972,951
|
$
|
23,483,657
|
$
|
25,219,233
|
||||||||
Profit
on sale of properties
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||
Less:
|
||||||||||||||||||||||
Operating
expenses
|
2,019,411
|
4,117,011
|
5,296,787
|
8,733,708
|
9,411,679
|
10,419,354
|
11,011,924
|
|||||||||||||||
Interest
expense
|
731,919
|
1,271,194
|
812,029
|
1,573,270
|
1,323,378
|
2,664,135
|
3,769,636
|
|||||||||||||||
Depreciation
|
848,167
|
1,593,779
|
1,922,247
|
3,550,325
|
3,728,925
|
3,986,136
|
6,098,875
|
|||||||||||||||
Income
before minority interests
|
1,410,000
|
2,643,774
|
3,672,674
|
6,897,723
|
6,508,969
|
6,414,031
|
4,338,798
|
|||||||||||||||
Taxable
income
|
||||||||||||||||||||||
-
from operations
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||
-
from gain on sale
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||
Cash
generated (before minority interests)
|
||||||||||||||||||||||
-
from operations
|
—
|
4,715,981
|
3,118,723
|
10,586,046
|
8,988,436
|
9,045,827
|
7,354,808
|
|||||||||||||||
-
from gain on sale
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||
-
from refinancing
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||
Cash
generated from operations, sales and refinancings
|
—
|
4,715,981
|
3,118,723
|
10,586,046
|
8,988,436
|
9,045,827
|
7,354,808
|
|||||||||||||||
Less:
Cash distributions to investors
|
||||||||||||||||||||||
-
from operating cash flow (1)
|
—
|
3,872,158
|
4,638,118
|
8,435,644
|
8,972,948
|
8,972,946
|
9,389,405
|
|||||||||||||||
-
from sales and refinancing
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||
Cash
generated (deficiency) after cash distributions
|
—
|
843,823
|
(1,519,395
|
)
|
2,150,402
|
15,488
|
72,881
|
(2,034,597
|
)
|
|||||||||||||
Less:
|
||||||||||||||||||||||
Special
items
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||
Cash
generated (deficiency) after cash distributions and special
items
|
—
|
843,823
|
(1,519,395
|
)
|
2,150,402
|
15,488
|
72,881
|
(2,034,597
|
)
|
|||||||||||||
Tax
and Distribution Data Per $1,000 Invested
|
||||||||||||||||||||||
Federal
income tax results:
|
||||||||||||||||||||||
Ordinary
income (loss)
|
||||||||||||||||||||||
-
from operations
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||
-
from recapture
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||
Cash
distributions to investors:
|
||||||||||||||||||||||
Source
(on tax basis)
|
||||||||||||||||||||||
-
from investment income
|
69.44
|
72.47
|
57.27
|
81.92
|
24.84
|
67.70
|
62.60
|
|||||||||||||||
-
from return of capital
|
22.06
|
23.03
|
23.98
|
14.33
|
75.16
|
32.30
|
37.40
|
|||||||||||||||
Source
(on cash basis)
|
||||||||||||||||||||||
-
from sales
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||
-
from refinancing
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||
-
from operations
|
91.50
|
95.50
|
81.25
|
96.25
|
100.00
|
100.00
|
100.00
|
|||||||||||||||
-
other
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||
Amount
(in percentage terms) remaining invested in program properties at
the end
of last year reported in table
|
100
|
%
|
100
|
%
|
100
|
%
|
100
|
%
|
100
|
%
|
100
|
%
|
100
|
%
|
1999
|
2000
|
2001
|
2002
|
||||||||||
Gross
revenues
|
$
|
71,535
|
$
|
681,067
|
$
|
1,488,560
|
—
|
||||||
Profit
on sale of properties
|
—
|
—
|
—
|
—
|
|||||||||
Less:
|
|||||||||||||
Operating
expenses
|
117,309
|
604,150
|
661,692
|
—
|
|||||||||
Interest
expense
|
—
|
150,085
|
179,999
|
—
|
|||||||||
Depreciation
|
20,784
|
188,607
|
199,552
|
—
|
|||||||||
Net
income - GAAP basis
|
(66,558
|
)
|
(261,775
|
)
|
447,317
|
—
|
|||||||
Taxable
income
|
|||||||||||||
-
from operations
|
—
|
—
|
—
|
—
|
|||||||||
-
from gain on sale
|
—
|
—
|
—
|
—
|
|||||||||
Cash
generated
|
|||||||||||||
-
from operations
|
44,228
|
(52,126
|
)
|
773,208
|
—
|
||||||||
-
from gain on sale
|
—
|
—
|
—
|
—
|
|||||||||
-
from refinancing
|
—
|
—
|
—
|
—
|
|||||||||
Cash
generated from operations, sales and refinancings
|
—
|
—
|
—
|
—
|
|||||||||
Less:
Cash distributions to investors
|
|||||||||||||
-
from operating cash flow
|
560,392
|
796,500
|
795,876
|
198,969
|
|||||||||
-
from sales and refinancing
|
—
|
—
|
—
|
—
|
|||||||||
Cash
generated (deficiency) after cash distributions
|
(516,164
|
)
|
(848,626
|
)
|
(22,668
|
)
|
(198,969
|
)
|
|||||
Less:
|
|||||||||||||
Special
items
|
—
|
—
|
—
|
—
|
|||||||||
Cash
generated (deficiency) after cash distributions and special
items
|
(516,164
|
)
|
(848,626
|
)
|
(22,668
|
)
|
(198,969
|
)
|
|||||
Tax
and Distribution Data Per $1,000 Invested
|
|||||||||||||
Federal
income tax results:
|
|||||||||||||
Ordinary
income (loss)
|
|||||||||||||
-
from operations
|
(4.09
|
)
|
(25.31
|
)
|
31.90
|
—
|
|||||||
-
from recapture
|
—
|
—
|
—
|
—
|
|||||||||
Cash
distributions to investors:
|
|||||||||||||
Source
(on tax basis)
|
|||||||||||||
-
from investment income
|
—
|
—
|
—
|
—
|
|||||||||
-
from return of capital
|
80.00
|
80.00
|
80.00
|
—
|
|||||||||
Source
(on cash basis)
|
|||||||||||||
-
from sales
|
—
|
—
|
—
|
—
|
|||||||||
-
from refinancing
|
—
|
—
|
—
|
—
|
|||||||||
-
from operations
|
80.00
|
80.00
|
80.00
|
—
|
|||||||||
-
other
|
—
|
—
|
—
|
—
|
|||||||||
Amount
(in percentage terms) remaining invested in program properties at
the end
of last year reported in table
|
100
|
%
|
100
|
%
|
100
|
%
|
—
|
2001
|
2002
|
2003
|
2004
|
2005
|
||||||||||||
Gross
revenues
|
$
|
41,808
|
$
|
2,155,030
|
$
|
5,651,238
|
$
|
7,392,193
|
$
|
7,680,831
|
||||||
Profit
on sale of properties
|
—
|
—
|
—
|
—
|
—
|
|||||||||||
Less:
|
||||||||||||||||
Operating
expenses
|
42,793
|
1,147,886
|
3,387,789
|
5,100,951
|
4,709,276
|
|||||||||||
Interest
expense
|
—
|
—
|
138,429
|
447,524
|
598,472
|
|||||||||||
Depreciation
|
3,193
|
155,825
|
1,367,496
|
1,456,791
|
1,427,045
|
|||||||||||
Net
income - GAAP basis
|
(4,178
|
)
|
851,320
|
757,525
|
386,926
|
946,038
|
||||||||||
Taxable
income
|
||||||||||||||||
-
from operations
|
—
|
—
|
—
|
—
|
—
|
|||||||||||
-
from gain on sale
|
—
|
—
|
—
|
—
|
—
|
|||||||||||
Cash
generated
|
||||||||||||||||
-
from operations
|
(2,846
|
)
|
1,135,306
|
2,358,097
|
2,011,686
|
2,187,214
|
||||||||||
-
from gain on sale
|
—
|
—
|
—
|
—
|
—
|
|||||||||||
-
from refinancing
|
—
|
—
|
—
|
—
|
—
|
|||||||||||
Cash
generated from operations, sales and refinancings
|
—
|
—
|
—
|
—
|
—
|
|||||||||||
Less:
Cash distributions to investors
|
||||||||||||||||
-
from operating cash flow
|
1,395
|
664,674
|
1,984,113
|
2,187,622
|
2,437,637
|
|||||||||||
-
from sales and refinancing
|
—
|
—
|
—
|
—
|
—
|
|||||||||||
Cash
generated (deficiency) after cash distributions
|
(4,241
|
)
|
470,632
|
373,984
|
(175,936
|
)
|
(250,423
|
)
|
||||||||
Less:
|
||||||||||||||||
Special
items
|
—
|
—
|
—
|
—
|
—
|
|||||||||||
Cash
generated (deficiency) after cash distributions and special
items
|
(4,241
|
)
|
470,632
|
373,984
|
(175,936
|
)
|
(250,423
|
)
|
||||||||
Tax
and Distribution Data Per $1,000 Invested
|
||||||||||||||||
Federal
income tax results:
|
||||||||||||||||
Ordinary
income (loss)
|
||||||||||||||||
-
from operations
|
(0.98
|
)
|
34.05
|
24.54
|
13.82
|
n/a
|
|
|||||||||
-
from recapture
|
—
|
—
|
—
|
—
|
—
|
|||||||||||
Cash
distributions to investors:
|
||||||||||||||||
Source
(on tax basis)
|
||||||||||||||||
-
from investment income
|
—
|
—
|
—
|
—
|
—
|
|||||||||||
-
from return of capital
|
20.00
|
80.00
|
80.00
|
73.68
|
n/a
|
|
||||||||||
Source
(on cash basis)
|
||||||||||||||||
-
from sales
|
—
|
—
|
—
|
—
|
—
|
|||||||||||
-
from refinancing
|
—
|
—
|
—
|
—
|
—
|
|||||||||||
-
from operations
|
20.00
|
80.00
|
80.00
|
73.68
|
n/a
|
|
||||||||||
-
other
|
—
|
—
|
—
|
—
|
—
|
|||||||||||
Amount
(in percentage terms) remaining invested in program properties at
the end
of last year reported in table
|
100
|
%
|
100
|
%
|
100
|
%
|
100
|
%
|
100
|
%
|
||||||
n/a - not yet available |
2002
|
2003
|
2004
|
2005
|
||||||||||
Gross
revenues
|
$
|
129
|
$
|
3,102,598
|
$
|
6,602,741
|
$
|
6,560,115
|
|||||
Profit
on sale of properties
|
—
|
—
|
—
|
—
|
|||||||||
Less:
|
|||||||||||||
Operating
expenses
|
29
|
1,032,296
|
4,064,465
|
4,719,185
|
|||||||||
Interest
expense
|
—
|
—
|
216,964
|
638,299
|
|||||||||
Depreciation
|
—
|
260,143
|
1,647,585
|
1,887,750
|
|||||||||
Minority
Interest
|
—
|
—
|
4,381
|
||||||||||
Net
income - GAAP basis
|
100
|
1,810,159
|
669,346
|
(685,119
|
)
|
||||||||
Taxable
income
|
|||||||||||||
-
from operations
|
—
|
—
|
—
|
—
|
|||||||||
-
from gain on sale
|
—
|
—
|
—
|
—
|
|||||||||
Cash
generated
|
|||||||||||||
-
from operations
|
100
|
2,253,033
|
2,323,905
|
1,174,613
|
|||||||||
-
from gain on sale
|
—
|
—
|
—
|
—
|
|||||||||
-
from refinancing
|
—
|
—
|
—
|
—
|
|||||||||
Cash
generated from operations, sales and refinancings
|
100
|
2,253,033
|
2,323,905
|
1,174,613
|
|||||||||
Less:
Cash distributions to investors
|
|||||||||||||
-
from operating cash flow
|
—
|
452,819
|
1,976,780
|
2,123,716
|
|||||||||
-
from sales and refinancing
|
—
|
—
|
—
|
—
|
|||||||||
Cash
generated (deficiency) after cash distributions
|
100
|
1,800,215
|
347,125
|
(949,103
|
)
|
||||||||
Less:
|
|||||||||||||
Special
items
|
—
|
—
|
—
|
—
|
|||||||||
Cash
generated (deficiency) after cash distributions and special
items
|
100
|
1,800,215
|
347,125
|
(949,103
|
)
|
||||||||
Tax
and Distribution Data Per $1,000 Invested
|
|||||||||||||
Federal
income tax results:
|
|||||||||||||
Ordinary
income (loss)
|
|||||||||||||
-
from operations
|
0.14
|
35.16
|
29.52
|
n/a
|
|
||||||||
-
from recapture
|
—
|
73.01
|
—
|
n/a
|
|
||||||||
Cash
distributions to investors
|
|||||||||||||
Source
(on tax basis)
|
|||||||||||||
-
from investment income
|
—
|
33.26
|
29.52
|
n/a
|
|
||||||||
-
from return of capital
|
—
|
—
|
49.55
|
—
|
|||||||||
Source
(on cash basis)
|
|||||||||||||
-
from sales
|
—
|
—
|
—
|
—
|
|||||||||
-
from refinancing
|
—
|
—
|
—
|
—
|
|||||||||
-
from operations
|
—
|
33.26
|
79.07
|
n/a
|
|
||||||||
-
other
|
—
|
—
|
—
|
—
|
|||||||||
Amount
(in percentage terms) remaining invested in program properties at
the end
of last year reported in table
|
100
|
%
|
100
|
%
|
100
|
%
|
100
|
%
|
|||||
n/a - not yet available |
2004
|
2005
|
||||||
Gross
revenues
|
$
|
439,267
|
$
|
2,506,335
|
|||
Profit
on sale of properties
|
—
|
—
|
|||||
Less:
|
|
||||||
Operating
expenses
|
1,032,296
|
1,749,482
|
|||||
Interest
expense
|
—
|
—
|
|||||
Depreciation
|
260,143
|
503,777
|
|||||
Net
income - GAAP basis
|
1,810,159
|
253,076
|
|||||
Taxable
income
|
|
||||||
-
from operations
|
—
|
—
|
|||||
-
from gain on sale
|
—
|
—
|
|||||
Cash
generated
|
|
||||||
-
from operations
|
2,253,033
|
939,688
|
|||||
-
from gain on sale
|
—
|
—
|
|||||
-
from refinancing
|
—
|
—
|
|||||
Cash
generated from operations, sales and refinancings
|
—
|
—
|
|||||
Less:
Cash distributions to investors
|
|
||||||
-
from operating cash flow
|
452,819
|
884,952
|
|||||
-
from sales and refinancing
|
—
|
—
|
|||||
Cash
generated (deficiency) after cash distributions
|
1,800,215
|
54,736
|
|||||
Less:
|
|
||||||
Special
items
|
—
|
—
|
|||||
Cash
generated (deficiency) after cash distributions and special
items
|
1,800,215
|
54,736
|
|||||
Tax
and Distribution Data Per $1,000 Invested
|
|
||||||
Federal
income tax results:
|
|
||||||
Ordinary
income (loss)
|
|
||||||
-
from operations
|
(.80
|
)
|
n/a
|
||||
-
from recapture
|
—
|
—
|
|||||
Cash
distributions to investors
|
|
||||||
Source
(on tax basis)
|
|
||||||
-
from investment income
|
(.80
|
)
|
n/a
|
||||
-
from return of capital
|
8.28
|
n/a
|
|||||
Source
(on cash basis)
|
|
||||||
-
from sales
|
—
|
—
|
|||||
-
from refinancing
|
—
|
—
|
|||||
-
from operations
|
7.49
|
n/a
|
|||||
-
other
|
—
|
—
|
|||||
Amount
(in percentage terms) remaining invested in program properties at
the end
of last year reported in table
|
100
|
%
|
100
|
%
|
|||
n/a not yet available |
Houston
R.E.
Income
Properties
Ltd.
(1)
|
Houston
R.E.
Income
Properties
VIII,
Ltd.(1)
|
Houston
R.E.
Income
Properties
IX,
Ltd. (1)
|
Houston
R.E.
Income
Properties
X,
Ltd. (1)
|
||||
Dollar
amount raised
|
$
2,028,000
|
$
2,210,000
|
$
2,550,000
|
$
4,770,000
|
|||
Number
of properties purchased
|
2
|
1
|
1
|
3
|
|||
Date
of closing of offering
|
10/31/90
|
3/31/91
|
5/31/92
|
12/31/93
|
|||
Date
of first sale of property
|
N/A
|
N/A
|
N/A
|
N/A
|
|||
Date
of final sale of property
|
N/A
|
N/A
|
N/A
|
N/A
|
|||
Tax
and Distribution Data
Per
$1,000 Investment
|
|||||||
Federal
income tax results through:
|
12/31/98
|
12/31/01
|
12/31/01
|
12/31/99
|
|||
Ordinary
income (loss)
|
|||||||
-
from operations
|
$
1,062
|
$
768
|
$
971
|
$
529
|
|||
-
from recapture
|
|||||||
Capital
gain (loss)
|
—
|
—
|
—
|
—
|
|||
Deferred
gain
|
|||||||
Capital
|
—
|
—
|
—
|
—
|
|||
Ordinary
|
—
|
—
|
—
|
—
|
|||
|
|||||||
Cash
distributions to investors
|
|||||||
Source
(on GAAP basis)
|
|||||||
-
Investment income
|
894
|
768
|
971
|
529
|
|||
-
Return of capital
|
—
|
86
|
200
|
38
|
|||
Source
(on cash basis)
|
|||||||
-
Sales
|
—
|
—
|
—
|
—
|
|||
-
Refinancing
|
—
|
—
|
—
|
—
|
|||
-
Operations
|
—
|
—
|
—
|
—
|
|||
-
Other
|
—
|
—
|
—
|
—
|
|||
|
|||||||
Receivable
on net purchase money financing
|
—
|
—
|
—
|
—
|
Houston
R.E.
Income
Properties
XI
Ltd. (1)
|
Houston
R.E.
Income
Properties
XII,
Ltd.(1)
|
Houston
R.E.
Income
Properties
XV,
Ltd. (1)
|
|||
Dollar
amount raised
|
$
4,810,000
|
$9,982,000
|
$
9,948,500
|
||
Number
of properties purchased
|
4
|
6
|
1
|
||
Date
of closing of offering
|
3/31/95
|
12/31/96
|
5/31/99
|
||
Date
of first sale of property
|
N/A
|
N/A
|
N/A
|
||
Date
of final sale of property
|
N/A
|
N/A
|
N/A
|
||
Tax
and Distribution Data
Per
$1,000 Investment
|
|||||
Federal
income tax results through:
|
12/31/01
|
12/31/01
|
12/31/01
|
||
Ordinary
income (loss)
|
|||||
-
from operations
|
$
635
|
$
426
|
$
3
|
||
-
from recapture
|
|||||
Capital
gain (loss)
|
—
|
—
|
—
|
||
Deferred
gain
|
|||||
Capital
|
—
|
—
|
—
|
||
Ordinary
|
—
|
—
|
—
|
||
Cash
distributions to investors
|
|||||
Source
(on GAAP basis)
|
|||||
-
Investment income
|
635
|
426
|
12
|
||
-
Return of capital
|
11
|
180
|
224
|
||
Source
(on cash basis)
|
|||||
-
Sales
|
—
|
—
|
—
|
||
-
Refinancing
|
—
|
—
|
—
|
||
-
Operations
|
—
|
—
|
—
|
||
-
Other
|
—
|
—
|
—
|
||
Receivable
on net purchase money financing
|
—
|
—
|
—
|
· |
All
prospective investors are urged to carefully read the prospectus
of the
Company dated May 3, 2006, as supplemented to date (the
“Prospectus”).
|
· |
Prospective
investors should understand the risks associated with an investment
in the
Shares, as described in the Prospectus, prior to submitting this
Subscription Agreement.
|
· |
The
assignability and transferability of the Shares is restricted and
will be
governed by the Company’s charter and bylaws and all applicable laws as
described in the Prospectus.
|
· |
Prospective
investors should not invest in Shares unless they have an adequate
means
of providing for their current needs and personal contingencies and
have
no need for liquidity in this investment.
|
· |
There
is no public market for the Shares, and accordingly, it may not be
possible to readily liquidate an investment in the Company.
|
________________
_________________
# of
Shares
Total
$ Invested
(#
Shares x $10 = Total $ Invested)
Minimum
purchase: $1,000 or 100 Shares
|
Except
for Custodial Accounts,
Make
Investment Check Payable to:
Wells
Fargo Bank, N.A.,
Hartman
Commercial Properties REIT
|
|
o
Initial Investment (Minimum $1,000)
o
Additional Investment (Minimum $250)
State
in which sale was made:
___________________
|
o
Individual
o
IRA Type: ________________________
o
Joint Tenants with Right of Survivorship
o
Community Property
o
Tenants in Common
o
UGMA State of ______________________
o
UTMA State of ______________________
|
o
Other Qualified Plan:
o
MPPP o
Profit Sharing o
Keogh
o
TRUST/TRUST
TYPE:________________________
(Please
specify, i.e., Family, Living, Revocable, etc.)
o
OTHER:
___________
|
|
Name | FEIN or Social Security Number |
-
|
-
|
Additional Name (if applicable) | FEIN or Social Security Number |
-
|
-
|
Street
Address
or
P.O. Box
|
City
|
State
|
Zip
Code
|
Home
Telephone
No.
|
(
)
|
Business
Telephone No.
|
(
)
|
Email
Address
(Optional)
|
Country of
Citizenship
|
(a)
|
I
have received the Prospectus.
|
_______
Initials
|
_______
Initials
|
(b)
|
I
have (i) a net worth (exclusive of home, home furnishings and automobiles)
of $150,000 or more; or (ii) a net worth (exclusive of home, home
furnishings and automobiles) of at least $45,000 and had during the
last
tax year or estimate that I will have during the current tax year
a
minimum of $45,000 annual gross income, or that I meet the higher
suitability requirements imposed by my state of primary residence
as set
forth in the prospectus under “Suitability Standards.”
|
______
Initials
|
_______
Initials
|
(c)
|
If
I am a California resident or if the Person to whom I subsequently
propose
to assign or transfer any Shares is a California resident, I may
not
consummate a sale or transfer of my Shares, or any interest therein,
or
receive any consideration therefor, without the prior written consent
of
the Commissioner of the Department of Corporations of the State of
California, except as permitted in the Commissioner’s Rules, and I
understand that my Shares, or any document evidencing my Shares,
will bear
a legend reflecting the substance of the foregoing
understanding.
|
_______
Initials
|
_______
Initials
|
(d)
|
If
I am a resident of California, Kansas, Ohio, or Oklahoma, this investment
does not exceed 10.0% of my net worth.
|
_______
Initials
|
_______
Initials
|
(e)
|
I
am purchasing the Shares for my own account.
|
_______
Initials
|
_______
Initials
|
(f)
|
I
acknowledge that there is no public market for the Shares.
|
_______
Initials
|
_______
Initials
|
(g)
|
I
am in compliance with the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act
of
2001. I am not, nor are any of my principal owners, partners, members,
directors or officers included on: (i) the Office of Foreign Assets
Control list of foreign nations, organizations and individuals subject
to
economic and trade sanctions, based on U.S. foreign policy and national
security goals; (ii) Executive Order 13224, which sets forth a
list of individuals and groups with whom U.S. persons are prohibited
from
doing business because such persons have been identified as terrorists
or
persons who support terrorism or (iii) any other watch list issued by
any governmental authority, including the Securities and Exchange
Commission.
|
_______
Initials
|
_______
Initials
|
_________________________________
Signature
of Investor or Trustee
|
_________________________________
Signature
of Joint Owner, if applicable
|
________________
Date
|
Broker-Dealer
or Investment Adviser Name (Name of Entity)
|
Telephone
No.
|
(
)
|
Broker-Dealer
or Investment Adviser Signature
|
Date
|
Broker-Dealer
or Investment Adviser Account Number
|
Individual
Representative Name
|
Telephone
No.
|
(
)
|
Rep.
Street Address or P.O. Box
|
City
|
State
|
Zip
Code
|
A. o |
Through
D.H. Hill Securities, LLP or its affiliates by a registered representative
or principal of D.H. Hill Securities, LLP, who is an affiliate
of Hartman
Commercial Properties REIT.
|
B. o |
Through
D.H. Hill Securities, LLP or its affiliates by a registered representative
or principal of D.H. Hill Securities, LLP, who is not an affiliate
of
Hartman Commercial Properties REIT.
|
C. o |
Through
a participating Broker-Dealer - indicate the correct commission
rate
below:
|
_____ (1) |
Full
commission
|
_____ (2) |
Waiver
of selling commission, purchased through affiliated investment
adviser
|
_____ (3) |
Waiver
of selling commission; purchase is for participating Broker-Dealer
or its
retirement plan, or for a representative of participating Broker-Dealer
or
his or her retirement plan or family
members
|
D. o |
Through
investment adviser unaffiliated with a Broker-Dealer - Certification
of
Client Suitability form must be attached.
|
Date
|
FOR
INTERNAL USE ONLY:
|
|
Accepted
by:
Hartman
Commercial Properties REIT
By:
_________________________________
Name:
____________________________
Title:
_____________________________
|
Date: ______________________________
Amount: ______________________________
|
(a)
|
The
issuer of any security upon which a restriction on transfer has been
imposed pursuant to Sections 260.102.6, 260.141.10 or 260.534 of
the Rules
(the “Rules”) adopted under the California Corporate Securities Law (the
“Code”) shall cause a copy of this section to be delivered to each issuee
or transferee of such security at the time the certificate evidencing
the
security is delivered to the issuee or transferee.
|
(b)
|
It
is unlawful for the holder of any such security to consummate a sale
or
transfer of such security, or any interest therein, without the prior
written consent of the Commissioner (until this condition is removed
pursuant to Section 260.141.12 of the Rules), except:
|
(1)
|
to
the issuer;
|
(2)
|
pursuant
to the order or process of any court;
|
(3)
|
to
any person described in subdivision (i) of Section 25102 of the Code
or
Section 260.105.14 of the Rules;
|
(4)
|
to
the transferor’s ancestors, descendants or spouse, or any custodian or
trustee for the account of the transferor or the transferor’s ancestors,
descendants or spouse; or to a transferee by a trustee or custodian
for
the account of the transferee or the transferee’s ancestors, descendants
or spouse;
|
(5)
|
to
holders of securities of the same class of the same issuer;
|
(6)
|
by
way of gift or donation inter vivos or on death;
|
(7)
|
by
or through a broker-dealer licensed under the Code (either acting
as such
or as a finder) to a resident of a foreign state, territory or country
who
is neither domiciled in this state to the knowledge of the broker-dealer,
nor actually present in this state if the sale of such securities
is not
in violation of any securities laws of the foreign state, territory
or
country concerned;
|
(8)
|
to
a broker-dealer licensed under the Code in a principal transaction,
or as
an underwriter or member of an underwriting syndicate or selling
group;
|
(9)
|
if
the interest sold or transferred is a pledge or other lien given
by the
purchaser to the seller upon a sale of the security for which the
Commissioner’s written consent is obtained or under this rule not
required;
|
(10)
|
by
way of a sale qualified under Sections 25111, 25112, 25113 or 25121
of the
Code, of the securities to be transferred, provided that no order
under
Section 25140 or subdivision (a) of Section 25143 is in effect with
respect to such qualification;
|
(11)
|
by
a corporation to a wholly owned subsidiary of such corporation, or
by a
wholly owned subsidiary of a corporation to such corporation;
|
(12)
|
by
way of an exchange qualified under Section 25111, 25112 or 25113
of the
Code provided that no order under Section 25140 or subdivision (a)
of
Section 25143 is in effect with respect to such qualification;
|
(13)
|
between
residents of foreign states, territories or countries who are neither
domiciled or actually present in this state;
|
(14)
|
to
the State Controller pursuant to the Unclaimed Property Law or to
the
administrator of the unclaimed property law of another state;
|
(15)
|
by
the State Controller pursuant to the Unclaimed Property Law or by
the
administrator of the unclaimed property law of another state if,
in either
such case, such person (i) discloses to potential purchasers at the
sale
that transfer of the securities is restricted under this rule, (ii)
delivers to each purchaser a copy of this rule, and (iii) advises
the
Commissioner of the name of each purchaser;
|
(16)
|
by
a trustee to a successor trustee when such transfer does not involve
a
change in the beneficial ownership of the securities;
|
(17)
|
by
way of an offer and sale of outstanding securities in an issuer
transaction that is subject to the qualification requirement of Section
25110 of the Code but exempt from that qualification requirement
by
subdivision (f) of Section 25102; provided that any such transfer
is on
the condition that any certificate evidencing the security issued
to such
transferee shall contain the legend required by this section.
|
(c)
|
The
certificates representing all such securities subject to such a
restriction on transfer, whether upon initial issuance or upon any
transfer thereof, shall bear on their face a legend, prominently
stamped
or printed thereon in capital letters of not less than 10-point size,
reading as follows:
|
· |
A
minimum investment of $1,000 (100 Shares) is required, except for
certain
states that require a higher minimum investment.
|
· |
A
CHECK FOR THE FULL PURCHASE PRICE OF THE SHARES SUBSCRIBED FOR SHOULD
BE
MADE PAYABLE TO THE ORDER OF “WELLS FARGO BANK, N.A., HARTMAN COMMERCIAL
PROPERTIES REIT.” FOR CUSTODIAL ACCOUNTS, CHECKS SHOULD BE MADE PAYABLE TO
THE CUSTODIAN AND SENT, WITH A SIGNED COPY OF THIS AGREEMENT, TO
THE
CUSTODIAN.
|
· |
Investors
who have satisfied the minimum purchase requirements in connection
with
previous investments in the Company may invest as little as $250
(25
Shares), except for residents of
Oregon.
|
· |
Shares
may be purchased only by persons meeting the standards set forth
under the
section of the prospectus entitled “Suitability Standards.”
|
· |
Please
indicate the state in which the sale is to be made.
|
· |
Please
check the appropriate box to indicate the type of entity or type
of
individuals subscribing.
|
· |
Please
enter the exact name in which the Shares are to be held.
|
-
|
For
joint tenants with right of survivorship or tenants in common, include
the
names of both investors.
|
-
|
In
the case of partnerships or corporations, include the name of an
individual to whom correspondence will be addressed.
|
-
|
Trusts
should include the name of the trustee.
|
· |
All
investors must complete the space provided for taxpayer identification
number or social security number. In the case of a qualified plan
or
trust, enter both the investor’s social security number (for
identification purposes) and the custodian or trustee’s taxpayer
identification number (for tax purposes). By signing in Section 7,
the
investor is certifying that this number is correct.
|
· |
Enter
the mailing address and telephone numbers of the registered owner
of this
investment. In the case of a qualified plan or trust, this will be
the
address of the custodian or trustee.
|
· |
FOR
EACH INDIVIDUAL REGISTERED OWNER, INCLUDE A COPY OF A GOVERNMENT
ISSUED
IDENTIFICATION DOCUMENT EVIDENCING RESIDENCE OR NATIONALITY AND BEARING
A
PHOTOGRAPH OR SIMILAR SAFEGUARD, SUCH AS A DRIVER’S LICENSE,
IDENTIFICATION CARD, OR PASSPORT.
|
· |
WITH
THE SUBMISSION OF THE SUBSCRIPTION AGREEMENT, EACH INVESTOR MUST
ENCLOSE A
MANUALLY SIGNED COPY OF A COMPLETED IRS FORM W-9. A BLANK FORM W-9
IS
ATTACHED HERETO AS ANNEX A.
|
· |
Please
separately initial each representation where indicated.
|
· |
If
title is to be held jointly, all parties must date and sign this
Section
as follows:
|
- |
Individual:
One signature required.
|
- |
Joint
Tenants with Right of Survivorship:
All parties must sign.
|
- |
Tenants
In Common:
All parties must sign.
|
- |
Community
Property:
Only one investor’s signature required.
|
- |
Pension
or Profit-Sharing Plans:
The trustee signs the Signature Page.
|
- |
Trust:
The trustee signs. Provide the name of the trust, the name of the
trustee
and the name of the beneficiary.
|
- |
Partnership:
Identify whether the entity is a general or limited partnership.
The
general partners must be identified and each must sign. In the case
of an
investment by a general partnership, all partners must sign (unless
a
“managing partner” has been designated for the partnership, in which case
he or she may sign on behalf of the partnership if a certified copy
of the
document granting him authority to invest on behalf of the partnership
is
submitted).
|
- |
Corporation:
The Subscription Agreement must be accompanied by (i) a certified
copy of the resolution of your board of directors designating the
officer(s) of the corporation authorized to sign on behalf of the
corporation and (ii) a certified copy of the Board’s resolution
authorizing the investment.
|
- |
IRA
and IRA Rollovers:
Requires signature of authorized signer (e.g., an officer) of the
bank,
trust company, or other fiduciary. The address of the trustee must
be
provided in order for the trustee to receive checks and other pertinent
information regarding the investment.
|
- |
Keogh
(HR 10):
Same rules as those applicable to IRAs.
|
- |
Uniform
Gift to Minors Act (UGMA) or Uniform Transfers to Minors Act
(UTMA):
The required signature is that of the custodian, not of the parent
(unless
the parent has been designated as the custodian). Only one child
is
permitted in each investment under UGMA or UTMA. In addition, designate
the state under which the gift is being
made.
|
· |
PLEASE
NOTE THAT THESE SIGNATURES DO NOT HAVE TO BE NOTARIZED.
|
· |
By
electing the Dividend Reinvestment Plan, the investor elects to reinvest
all of the dividends otherwise payable to such investor in Shares
of the
Company.
|
· |
Each
investor who elects the Dividend Reinvestment Plan agrees to notify
the
Company and the broker-dealer named in the Subscription Agreement
in
writing if at any time he or she fails to meet the applicable suitability
standards or he or she is unable to make any other representations
and
warranties as set forth in the Prospectus or Subscription
Agreement.
|
· |
This
Section is to be completed by the investor’s Registered Representative.
Please complete all requested broker-dealer information, including
suitability certification.
|
· |
Include
documentation completed by the broker-dealer that the investor(s)
and
registered owner(s) do not appear on the Office of Foreign Assets
Control
list of foreign nations, organizations and individuals subject to
economic
and trade sanctions. This could include a screen print from the NASD
Anti-Money Laundering web site if an electronic check is performed,
a
signed attestation from the person performing a manual check if this
method is used, or a screen-print and written attestation if some
other
database is used.
|
Form
W-9
(Rev.
January 2003)
Department
of the Treasury
Internal
Revenue Service
|
Request
for Taxpayer
Identification
Number and Certification
|
Give
form to the
requester.
Do not
send
to the IRS.
|
Print
or type
See
Specific
Instructions on
page 2.
|
Name
|
||||||||||||||||||
Business
name, if different from above
|
|||||||||||||||||||
o
Individual/ o
Corporation
o
Partnership
o
Other
Check
appropriate box: Sole
proprietor
|
o
Exempt
from backup
withholding
|
||||||||||||||||||
Address
(number, street, and apt. or suite no.)
|
Requester’s
name and address (optional)
|
||||||||||||||||||
City,
state, and ZIP code
|
|||||||||||||||||||
List
account number(s) here (optional)
|
|||||||||||||||||||
Part
I Taxpayer Identification
Number (TIN)
|
|||||||||||||||||||
Enter
your TIN in the appropriate box. For individuals, this is
your social
security number (SSN).
However,
for a resident alien, sole proprietor, or disregarded entity,
see the Part
I instructions on page 3. For
other entities, it is your employer identification number
(EIN). If you do
not have a number, see
How
to get a TIN on
page 3.
Note:
If
the account is in more than one name, see the chart on page
4 for
guidelines on whose number to
enter.
|
Social
security number
|
||||||||||||||||||
|
|||||||||||||||||||
or
Employer
identification number
|
|||||||||||||||||||
|
|||||||||||||||||||
Part
II Certification
|
Under
penalties of perjury, I certify that:
1.
The number shown on this form is my correct taxpayer
identification number (or I am waiting for a number to
be issued to me),
and
2.
I am not subject to backup withholding because:
(a)
I am exempt from backup withholding, or (b) I
have not been notified by the Internal Revenue
Service (IRS) that I am subject to backup withholding as
a result of a
failure to report all interest or dividends, or (c) the
IRS has notified me that I am no longer subject to backup
withholding, and
3.
I am a U.S. person (including a U.S. resident
alien).
Certification
instructions. You must cross out item 2 above if
you have been notified by the IRS that you are currently
subject to backup
withholding because you have failed to report all interest
and dividends
on your tax return. For real estate transactions, item
2
does not apply. For mortgage interest paid, acquisition
or
abandonment of secured property, cancellation of debt,
contributions to an
individual retirement arrangement (IRA), and generally,
payments other
than interest and dividends, you are not required to sign
the
Certification, but you must provide your correct TIN. (See
the
instructions on page 4.)
|
Sign
Here
|
Signature
of
U.S.
person w
|
Date
w
|
Purpose
of Form
A
person who is required to file an information return with
the IRS, must
obtain your correct taxpayer identification number (TIN)
to report, for
example, income paid to you, real estate transactions, mortgage
interest
you paid, acquisition or abandonment of secured property,
cancellation of
debt, or contributions you made to an IRA.
U.S. person. Use Form W-9 only if you are a U.S. person (including a resident alien), to provide your correct TIN to the person requesting it (the requester) and, when applicable, to: 1.
Certify that the TIN you are giving is correct (or
you are
waiting for a number to be issued),
2.
Certify that you are not subject to backup withholding,
or
3.
Claim exemption from backup withholding if you are
a U.S. exempt
payee.
Note:
If a requester gives you a form other than
Form W-9
to request your TIN, you must use the requester’s form if it is
substantially similar to this Form W-9.
Foreign
person. If you are a foreign person, use the appropriate
Form W-8
(see Pub. 515, Withholding of Tax on Nonresident Aliens
and Foreign Entities).
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Nonresident
alien who becomes a resident alien.
Generally, only a nonresident alien individual may use the terms of a tax treaty to reduce or eliminate U.S. tax on certain types of income. However, most tax treaties contain a provision known as a “saving clause.” Exceptions specified in the saving clause may permit an exemption from tax to continue for certain types of income even after the recipient has otherwise become a U.S. resident alien for tax purposes. If you are a U.S. resident alien who is relying on an exception contained in the saving clause of a tax treaty to claim an exemption from U.S. tax on certain types of income, you must attach a statement that specifies the following five items: 1. The treaty country. Generally, this must be the same treaty under which you claimed exemption from tax as anonresident alien. 2.
The treaty article addressing the income.
3.
The article number (or location) in the tax treaty
that contains
the saving clause and its exceptions.
4.
The type and amount of income that qualifies for
the exemption
from tax.
5.
Sufficient facts to justify the exemption from tax
under the
terms of the treaty article.
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Cat.
No. 10231X
|
Form
W-9
(Rev.
1-2003)
|
Form
W-9 (Rev. 1-2003)
|
Page
2
|
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Example.
Article
20 of the U.S.-China income tax treaty allows an exemption
from tax for
scholarship income received by a Chinese student temporarily
present in
the United States. Under U.S. law, this student will become
a resident
alien for tax purposes if his or her stay in the United States
exceeds 5
calendar years. However, paragraph 2 of the first Protocol
to the
U.S.-China treaty (dated April 30, 1984) allows the provisions
of Article
20 to continue to apply even after the Chinese student becomes
a resident
alien of the United States. A Chinese student who qualifies
for this
exception (under paragraph 2 of the first protocol) and is
relying on this
exception to claim an exemption from tax on his or her scholarship
or
fellowship income would attach to Form W-9 a statement that
includes the
information described above to support that exemption.
If
you are a nonresident
alien or a foreign entity not
subject to backup withholding, give the requester the appropriate
completed Form W-8.
What
is backup withholding? Persons
making certain payments to you must under certain conditions
withhold and
pay to the IRS 30% of such payments (29% after
December
31, 2003; 28% after
December
31, 2005). This is called “backup withholding.” Payments that may be
subject to backup withholding include interest, dividends,
broker and
barter exchange transactions, rents, royalties, nonemployee
pay, and
certain payments from fishing boat operators. Real estate
transactions are
not subject to backup withholding.
You
will not
be
subject to backup withholding on payments you receive if
you give the
requester your correct TIN, make the proper certifications,
and report all
your taxable interest and dividends on your tax return.
Payments
you receive will be subject to backup
withholding
if:
1.
You
do not furnish your TIN to the requester, or
2.
You
do not certify your TIN when required (see the Part II instructions
on
page 4 for details), or
3.
The
IRS tells the requester that you furnished an incorrect TIN,
or
4.
The
IRS tells you that you are subject to backup withholding
because you did
not report all your interest and dividends on your tax return
(for
reportable interest and dividends only), or
5.
You
do not certify to the requester that you are not subject
to backup
withholding under 4
above
(for reportable interest and dividend accounts opened after
1983
only).
Certain
payees and payments are exempt from backup withholding. See
the
instructions below and the separate
Instructions
for the Requester of Form W-9.
Penalties
Failure
to furnish TIN. If
you fail to furnish your correct TIN to a requester, you
are subject to a
penalty of $50 for each such failure unless your failure
is due to
reasonable cause and not to willful neglect.
Civil
penalty for false information with respect to withholding.
If
you make a false statement with no reasonable
basis that results in no backup withholding, you are
subject to a $500 penalty.
Criminal
penalty for falsifying information. Willfully
falsifying certifications or affirmations may subject you
to criminal
penalties including fines and/or imprisonment.
Misuse
of TINs. If
the requester discloses or uses TINs in violation of Federal
law, the
requester may be subject to civil and criminal penalties.
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Specific
Instructions
Name
If
you are an individual, you must generally enter the name
shown on your
social security card. However, if you have changed your last
name, for
instance, due to marriage without informing the Social Security
Administration of the name change, enter your first name,
the last name
shown on your social security card, and your new last name.
If
the account is in joint names, list first, and then circle,
the name of
the person or entity whose number you entered in Part I of
the
form.
Sole
proprietor. Enter
your individual
name
as shown on your social security card on the “Name” line. You may enter
your business, trade, or “doing business as (DBA)” name on the “Business
name” line.
Limited
liability company (LLC). If
you are a single-member LLC (including a foreign LLC with
a domestic
owner) that is disregarded as an entity separate from its
owner under
Treasury regulations section 301.7701-3, enter
the owner’s name
on the “Name” line. Enter
the LLC’s name on the “Business name” line.
Other
entities. Enter
your business name as shown on required Federal tax documents
on the
“Name” line. This name should match the name shown on the charter
or other
legal document creating the entity. You may enter any business,
trade, or
DBA name on the “Business name” line.
Note:
You
are requested to check the appropriate box for your status
(individual/sole proprietor, corporation, etc.)
Exempt
From Backup Withholding
If
you are exempt, enter your name as described above and check
the
appropriate box for your status, then check the “Exempt from backup
withholding” box in the line following the business name, sign and date
the form.
Generally,
individuals (including sole proprietors) are not exempt from
backup
withholding. Corporations are exempt from backup withholding
for certain
payments, such as interest and dividends.
Note:
If
you are exempt from backup withholding, you should still
complete this
form to avoid possible erroneous backup withholding.
Exempt
payees. Backup
withholding is not
required on
any payments made to the following payees:
1.
An
organization exempt from tax under section 501(a), any IRA,
or a custodial
account under section 403(b)(7) if the account satisfies
the requirements
of section 401(f)(2);
2.
The
United States or any of its agencies or instrumentalities;
3.
A
state, the District of Columbia, a possession of the United
States, or any
of their political subdivisions or instrumentalities;
4.
A
foreign government or any of its political subdivisions,
agencies, or
instrumentalities; or
5.
An
international organization or any of its agencies or
instrumentalities.
Other
payees that may
be exempt from
backup withholding include:
6.
A
corporation;
7.
A
foreign central bank of issue;
8.
A
dealer in securities or commodities required to register
in the United
States, the District of Columbia, or a possession of the
United
States;
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Form
W-9 (Rev. 1-2003)
|
Page
3
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9. A
futures commission merchant registered with the Commodity
Futures Trading Commission;
10.
A
real estate investment trust;
11.
An
entity registered at all times during the tax year under the
Investment Company Act of 1940;
12.
A
common trust fund operated by a bank under section 584(a);
13.
A
financial institution;
14.
A
middleman known in the investment community as a nominee
or custodian; or
15.
A
trust exempt from tax under section 664 or described in
section 4947.
The
chart below shows types of payments that may be exempt
from backup withholding. The chart applies to the exempt
recipients listed above, 1
through
15.
|
Part
I. Taxpayer Identification
Number
(TIN)
Enter
your TIN in the appropriate box. If
you are a resident
alien and
you do not have and are not eligible to get an SSN,
your TIN is your IRS individual taxpayer identification number
(ITIN). Enter it in the social security number box. If you
do not have an ITIN, see How
to get a TIN below.
If
you are a sole
proprietor and
you have an EIN, you may enter
either your SSN or EIN. However, the IRS prefers that you
use your SSN.
If
you are a single-owner LLC
that
is disregarded as an entity
separate from its owner (see Limited
liability company (LLC) on
page 2), enter your SSN (or EIN, if you have
one). If the LLC is a corporation, partnership, etc., enter the
entity’s EIN.
Note:
See
the chart on page 4 for further clarification of name
and TIN combinations.
How
to get a TIN. If
you do not have a TIN, apply for one immediately. To apply
for an SSN, get
Form
SS-5,
Application
for a Social Security Card, from your local Social Security
Administration
office or get this form on-line at www.ssa.gov/online/ss5.html.
You may also get this form by calling 1-800-772-1213. Use Form
W-7, Application
for IRS Individual Taxpayer Identification Number, to apply
for an ITIN,
or Form
SS-4, Application
for Employer Identification Number, to apply for an EIN. You
can get Forms
W-7 and SS-4 from the IRS by calling 1-800-TAX-FORM (1-800-829-3676)
or
from the IRS Web Site at www.irs.gov.
If
you are asked to complete Form W-9 but do not have a TIN, write
“Applied
For” in the space for the TIN, sign and date the form, and give
it to the
requester. For interest and dividend payments, and certain
payments made
with respect to readily tradable instruments, generally you
will have 60
days to get a TIN and give it to the requester before you are
subject to
backup withholding on payments. The 60-day rule does not apply
to other
types of payments. You will be subject to backup withholding
on all such
payments until you provide your TIN to the requester. Note:
Writing
“Applied For” means that you have already applied
for a TIN or
that
you intend to apply for one soon. Caution:
A
disregarded domestic entity that has a foreign owner
must use the appropriate Form W-8.
|
|
If
the payment is for . . .
|
THEN
the payment is exempt
for
. . .
|
|
Interest
and dividend payments
|
All
exempt recipients except
for
9
|
|
Broker
transactions
|
Exempt
recipients 1
through
13.
Also,
a person registered under
the
Investment Advisers Act of
1940
who regularly acts as a broker
|
|
Barter
exchange transactions and
patronage
dividends
|
Exempt
recipients 1
through
5
|
|
Payments
over $600 required to
be
reported and direct sales over
$5,000
1
|
Generally,
exempt recipients
1
through 7 2
|
|
1
See Form 1099-MISC, Miscellaneous Income, and its
instructions.
2
However, the following payments made to a corporation
(including
gross proceeds paid to an attorney under section 6045(f), even
if the
attorney is a corporation) and reportable on Form 1099-MISC
are
not exempt from backup withholding: medical and health
care payments, attorneys’ fees; and payments for services paid by a
Federal executive agency.
|
Form
W-9 (Rev. 1-2003)
|
Page
4
|
|
Part
II. Certification
To
establish to the withholding agent that you are a U.S. person,
or resident alien, sign Form W-9. You may be requested
to sign by the withholding agent even if items 1, 3, and
5 below indicate otherwise.
For
a joint account, only the person whose TIN is shown in Part
I should sign (when required). Exempt recipients, see Exempt
from backup withholding on
page 2.
Signature
requirements. Complete
the certification as indicated
in 1
through
5
below.
1.
Interest, dividend, and barter exchange accounts opened
before 1984 and broker accounts considered active
during 1983. You
must give your correct TIN, but you do
not have to sign the certification.
2.
Interest, dividend, broker, and barter exchange accounts
opened after 1983 and broker accounts considered
inactive during 1983. You
must sign the certification
or backup withholding will apply. If you are subject
to
backup withholding and you are merely providing your
correct
TIN to the requester, you must cross out item 2
in
the certification
before signing the form.
3.
Real estate transactions. You
must sign the certification.
You may cross out item 2
of
the certification.
4.
Other payments. You
must give your correct TIN, but you
do not have to sign the certification unless you have been notified
that you have previously given an incorrect TIN. “Other payments”
include payments made in the course of the requester’s
trade or business for rents, royalties, goods (other than
bills for merchandise), medical and health care services (including
payments to corporations), payments to a nonemployee
for services, payments to certain fishing boat crew
members and fishermen, and gross proceeds paid to attorneys
(including payments to corporations).
5.
Mortgage interest paid by you, acquisition or abandonment
of secured property, cancellation of debt, qualified
tuition program payments (under section 529), IRA
or Archer MSA contributions or distributions, and pension
distributions. You
must give your correct TIN, but you
do not have to sign the certification.
|
What
Name and Number To Give the
Requester
|
|
For
this type of account:
|
Give
name and SSN of:
|
|
1. Individual
2. Two
or more individuals (joint account)
3. Custodian
account of a minor (Uniform
Gift to Minors Act)
4. a.
The usual revocable savings
trust (grantor
is also trustee)
b.
So-called trust account that
is not a legal or
valid trust
under
state law
5. Sole
proprietorship or single- owner
LLC
|
The
individual
The
actual owner of the account or, if combined funds, the first
individual on
the account 1
The
minor 2
The grantor-trustee 1 The actual owner 1 The owner 3 |
|
For
this type of account:
|
Give
name and EIN of:
|
|
6.
Sole
proprietorship or single-owner
LLC
7.
A
valid trust, estate, or pension
trust
8.
Corporate
or LLC electing corporate
status on Form
8832
9.
Association,
club, religious, charitable,
educational,
or other tax-exempt
organization
10.
Partnership
or multi-member LLC
11.
A
broker or registered nominee
12.
Account
with the Department of
Agriculture
in the name of a
public
entity
(such as a state
or local
government, school
district
or
prison) that receives
agricultural
program payments
|
The
owner 3
Legal
entity 4
The
corporation
The
organization
The
partnership
The
broker or nominee
The
public entity
|
|
1
List first and circle the name of the person whose number you
furnish. If
only one person on a joint account has an SSN, that person’s number must
be furnished.
2
Circle the minor’s name and furnish the minor’s SSN.
3
You must show your individual name, but you may also enter your
business
or “DBA” name. You may use either your SSN or EIN (if you have
one).
4
List first and circle the name of the legal trust, estate, or
pension
trust. (Do not furnish the TIN of the personal representative
or trustee
unless the legal entity itself is not designated in the account
title.)
Note:
If
no name is circled when more than one name is listed, the number
will be
considered to be that of the first name
listed.
|
ALPHABETICAL
INDEX
|
Page
|
Additional
Information
|
149
|
Conflicts
of Interest
|
60
|
Dilution
|
43
|
Description
of Real Estate and Operating Data
|
82
|
Description
of Shares
|
128
|
Estimated
Use of Proceeds
|
41
|
Experts
|
149
|
Federal
Income Tax Considerations.
|
110
|
Financial
Information
|
F-1
|
Investment
by Tax-Exempt Entities and ERISA Considerations
|
124
|
Investment
Objectives and Criteria
|
70
|
Legal
Matters
|
149
|
Management
|
45
|
Management
Compensation
|
55
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
|
93
|
Ownership
of Shares
|
59
|
Plan
of Distribution
|
145
|
Prior
Performance Summary
|
107
|
Prior
Performance Tables
|
A-1
|
Prospectus
Summary
|
9
|
Questions
and Answers About This Offering
|
1
|
Risk
Factors
|
17
|
Selected
Financial Data
|
92
|
Suitability
Standards.
|
1
|
Summary
of Dividend Reinvestment Plan
|
140
|
Supplemental
Sales Material.
|
149
|
The
Operating Partnership Agreement
|
142
|