Document_and_Entity_Informatio
Document and Entity Information (USD $) | 12 Months Ended |
Dec. 31, 2013 | |
Document and Entity Information: | ' |
Entity Registrant Name | 'Hartman Short Term Income Properties XX, Inc. |
Document Type | '10-K |
Document Period End Date | 31-Dec-13 |
Amendment Flag | 'false |
Entity Central Index Key | '0001446687 |
Current Fiscal Year End Date | '--12-31 |
Entity Common Stock, Shares Outstanding | 6,312,691 |
Entity Public Float | $63,126,910 |
Entity Filer Category | 'Smaller Reporting Company |
Entity Current Reporting Status | 'No |
Entity Voluntary Filers | 'No |
Entity Well-known Seasoned Issuer | 'No |
Document Fiscal Year Focus | '2013 |
Document Fiscal Period Focus | 'FY |
CONSOLIDATED_BALANCE_SHEETS
CONSOLIDATED BALANCE SHEETS (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
ASSETS | ' | ' |
Real estate assets, at cost | $56,992,904 | $42,316,291 |
Accumulated depreciation and amortization | -6,278,801 | -2,533,101 |
Real estate assets, net | 50,714,103 | 39,783,190 |
Cash and cash equivalents | 143,038 | 61,894 |
Accrued rent and accounts receivable, net | 518,877 | 176,159 |
Deferred lease commissions and loan costs, net | 995,528 | 902,038 |
Goodwill | 249,686 | 249,686 |
Prepaid expenses and other assets | 379,804 | 404,863 |
Real estate assets held for disposition | ' | 3,253,671 |
Total assets | 53,001,036 | 44,831,501 |
LIABILITIES | ' | ' |
Note payable | 2,300,000 | 15,000,000 |
Accounts payable and accrued expenses | 2,545,833 | 1,588,746 |
Due to related parties | 67,651 | 664,911 |
Tenants' security deposits | 319,258 | 292,343 |
Total liabilities | 5,232,742 | 17,546,000 |
STOCKHOLDERS' EQUITY | ' | ' |
Preferred stock, $0.001 par value, 200,000,000 convertible, non-voting shares authorized, 1,000 shares issued and outstanding at December 31, 2013 and December 31, 2012, respectively | 1 | 1 |
Common stock, $0.001 par value, 750,000,000 authorized, 6,311,691 shares and 3,538,682 shares issued and outstanding at December 31, 2013 and December 31, 2012, respectively | 6,312 | 3,538 |
Additional paid in capital | 58,844,825 | 32,957,063 |
Accumulated distributions and net loss | -11,082,844 | -5,675,101 |
Total stockholders' equity | 47,768,294 | 27,285,501 |
Total liabilities and total stockholders' equity | $53,001,036 | $44,831,501 |
CONSOLIDATED_STATEMENTS_OF_OPE
CONSOLIDATED STATEMENTS OF OPERATIONS (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Revenues | ' | ' |
Rental revenues | $6,064,190 | $2,830,366 |
Tenant reimbursements and other revenues | 1,249,386 | 781,250 |
Total revenues | 7,313,576 | 3,611,616 |
Expenses | ' | ' |
Property operating expenses | 1,880,124 | 658,008 |
Asset management and acquisition fees | 526,529 | 868,006 |
Organization and offering costs | 543,943 | 136,321 |
Real estate taxes and insurance | 1,305,578 | 769,023 |
Depreciation and amortization | 3,745,701 | 2,180,489 |
General and administrative | 696,434 | 336,710 |
Interest expense | 766,781 | 746,843 |
Total expenses | 9,465,090 | 5,695,400 |
Loss from continuing operations | -2,151,514 | -2,083,784 |
Income from discontinued operations | 166,641 | -27,253 |
Net loss | ($1,984,873) | ($2,111,037) |
Basic and diluted loss per common share | ' | ' |
Loss attributable to common stockholders | ($0.40) | ($0.50) |
Weighted average number of common shares outstanding, basic and diluted | 4,927,708 | 2,647,039 |
CONSOLIDATED_STATEMENTS_OF_STO
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (USD $) | Preferred Stock | Common Stock | Additional Paid-In Capital | Accumulated Distributions In Excess Of Net Income | Total |
Stockholders' equity, starting balance (value) at Dec. 31, 2012 | $1 | $3,538 | $32,957,063 | ($5,675,101) | $27,285,501 |
Beginning balance - common Stock (shares) at Dec. 31 2012 at Dec. 31, 2012 | ' | 3,538,682 | ' | ' | 3,538,682 |
Beginning balance - preferred Stock (shares) at Dec. 31 2012 at Dec. 31, 2012 | 1,000 | ' | ' | ' | 1,000 |
Issuance of common shares, net of redemption (value) | 0 | 2,774 | 26,561,376 | 0 | 26,564,150 |
Issuance of common shares, net of redemption (shares) | ' | 2,773,009 | ' | ' | 2,773,009 |
Selling commissions | 0 | 0 | -673,614 | 0 | -673,614 |
Dividends and distributions | 0 | 0 | 0 | -3,422,870 | -3,422,870 |
Net loss | 0 | 0 | 0 | -1,984,873 | -1,984,873 |
Stockholders' equity, ending balance at Dec. 31, 2013 | $1 | $6,312 | $58,844,825 | ($11,082,844) | $47,768,294 |
Ending balance - common Stock (in shares) at Jun. 30, 2013 at Dec. 31, 2013 | ' | 6,311,691 | ' | ' | 6,311,691 |
Ending balance - preferred Stock (in shares) at Jun. 30, 2013 at Dec. 31, 2013 | 1,000 | ' | ' | ' | 1,000 |
CONSOLIDATED_STATEMENTS_OF_CAS
CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Cash flows from operating activities: | ' | ' |
Net loss | ($1,984,873) | ($2,111,037) |
Stock based compensation | 87,500 | 80,000 |
Depreciation and amortization expense | 3,745,700 | 2,180,489 |
Amortization of deferred loan and leasing commission costs | 202,642 | 148,135 |
Bad debt provision | 97,583 | 126,511 |
Gain on sale of Haute Harwin property | -174,043 | ' |
Changes in operating assets and liabilities: | ' | ' |
(Increase) decrease accrued rent and accounts receivable | -440,301 | -266,623 |
Deferred leasing commmission costs | -247,981 | -660,888 |
(Increase) decrease prepaid expenses and other assets | -324,941 | -35,921 |
Increase (decrease) accounts payable and accrued expenses | 809,710 | 724,361 |
Increase (decrease) on due to related parties | -597,260 | -243,600 |
Increase (decrease) tenants' security deposits | 26,915 | 225,337 |
Net cash provided by (used in) operating activities | 1,200,651 | 166,764 |
Cash flows from investing activities: | ' | ' |
Acquisition deposit | ' | -350,000 |
Disposition of Haute Harwin property | 3,400,000 | ' |
Additions to real estate | -14,298,900 | -26,601,817 |
Net cash used in investing activities | -10,898,900 | -26,951,817 |
Cash flows from financing activities: | ' | ' |
Dividend distributions paid in cash | -1,681,620 | -892,241 |
Payment of selling commissions | -673,614 | -908,514 |
Deferred loan costs paid | -48,151 | -294,132 |
Proceeds from revolving credit advances, net of repayments | -12,700,000 | 5,425,000 |
Proceeds from issuance of common stock, net of redemption | 24,882,778 | 16,076,472 |
Net cash provided by financing activities | 9,779,393 | 19,406,585 |
Net change in cash | 81,144 | -7,378,468 |
Cash at the beginning of period | 61,894 | 7,440,362 |
Cash at the end of period | $143,038 | $61,894 |
Organization_and_Business
Organization and Business | 12 Months Ended |
Dec. 31, 2013 | |
Notes | ' |
Organization and Business | ' |
Note 1 — Organization and Business | |
Hartman Short Term Income Properties XX, Inc. (the “Company”), is a Maryland corporation formed on February 5, 2009. The Company elected to be treated as a real estate investment trust (“REIT”) beginning with the taxable year ending December 31, 2011. Effective July 16, 2013 the Company is offering 20,000,000 shares to the public in its follow-on offering (exclusive of 1,900,000 shares available pursuant to the Company’s distribution reinvestment plan) at a price of $10.00 per share. The Company was originally a majority owned subsidiary of Hartman XX Holdings, Inc. Hartman XX Holdings, Inc. is a Texas corporation wholly owned by Allen R. Hartman. The Company sold 19,000 shares to Hartman XX Holdings, Inc. at a price of $10.00 per share. The Company has also issued 1,000 shares of convertible preferred shares to its advisor, Hartman Advisors LLC at a price of $10.00 per share. Hartman Advisors LLC (the “Advisor”) is the Company’s advisor. The Advisor is owned 70% by Allen R. Hartman and 30% by Hartman Income REIT Management, Inc. (the Property Manager). The Property Manager is a wholly owned subsidiary of Hartman Income REIT Management, LLC, which is wholly owned by Hartman Income REIT, INC. and Subsidiaries of which approximately 20% is owned by Allen R. Hartman who is the Chief Executive Officer and Chairman of the Board of Directors. | |
As of December 31, 2013, the Company had accepted investor’s subscriptions for, and issued 5,985,173 shares of the Company’s common stock in its public offering, resulting in gross proceeds to the Company of $58,400,455. | |
On December 7, 2012, the Company filed a registration statement on Form S-11 with the Securities and Exchange Commission (“SEC”) to register a follow-on public offering of up to 21,900,000 shares of the Company’s common stock. In the follow-on offering, the Company is offering up to 20,000,000 shares of the Company’s common stock to the public and up to 1,900,000 shares of the Company’s common stock pursuant to the distribution reinvestment plan (the “DRIP”). The offering price for shares to be offered to the public in the follow-on offering will be determined by the Company’s board of directors. The Company’s board of directors may change the price at which the Company offers shares to the public in the follow-on offering from time to time during the follow-on offering, but not more frequently than quarterly, to reflect changes in the Company’s estimated per-share net asset value and other factors the Company’s board of directors deems relevant. On April 25, 2013, the Company stopped accepting subscriptions for the sale of its common stock pursuant to its initial public offering due to the fact the Company’s offering prospectus was no longer deemed effective under the Securities Act of 1933. On July 16, 2013, the SEC declared the Company’s follow-on offering registration statement effective and the Company has recommenced offering of its common shares as of that date. | |
The management of the Company is through the Advisor. Management of the Company’s properties is through Hartman Income REIT Management, Inc. (“HIR Management” or the “Property Manager”). D.H. Hill Securities, LLLP is the dealer manager for the offering. These parties receive compensation and fees for services related to the offering and for the investment and management of the Company’s assets. These entities will receive fees during the offering, acquisition, operational and liquidation stages. | |
As of December 31, 2013 we owned 4 commercial properties located in Richardson, Arlington, and Dallas, Texas comprising approximately 605,000 square feet plus 3 pad sites. As of December 31, 2012 we owned 3 commercial properties located in Richardson, Arlington, and Dallas, Texas comprising approximately 469,000 square feet plus 3 pad sites. As of December 31, 2012 we also owned a retail shopping center located in Houston, Texas which was being held for resale to an affiliate of the Company. See Note 4 – Real estate assets held for disposition. | |
Summary_of_Significant_Account
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2013 | |
Notes | ' |
Summary of Significant Accounting Policies | ' |
Summary of Significant Accounting Policies | |
Basis of Presentation | |
The accompanying consolidated financial statements as of December 31, 2013 and 2012 and for the years then ended have been prepared by us in accordance with accounting principles generally accepted in the United States and pursuant to the rules and regulations of the Securities and Exchange Commission, including Form 10-K and Regulation S-K. The information furnished herein reflects all adjustments (consisting of normal recurring accruals and adjustments), which are, in the opinion of management necessary to fairly present the operating results for the respective periods. | |
These consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries: Hartman Richardson Heights Properties, LLC for the twelve months ended December 31, 2013 and 2012; Hartman Cooper Street Plaza, LLC for the twelve months ended December 31, 2013 and for the period from May 11, 2012, the date this subsidiary acquired the Cooper Street Property, to December 31, 2012; Hartman Haute Harwin, LLC for the period from August 7, 2012, the date this subsidiary acquired the Harwin Property, to December 31, 2012 and for the period from January 1, 2013 to March 28, 2013, the date the disposition of this discontinued operation was completed; Hartman Bent Tree, LLC for the twelve months ended December 31, 2013 and for the period from October 16, 2012, the date this subsidiary acquired the Bent Tree Green Property, to December 31, 2012; and, Hartman Parkway LLC, for the period from March 15, 2013, the date this subsidiary acquired the Parkway Property, to December 31, 2013. All significant intercompany balances and transactions have been eliminated. | |
Use of Estimates | |
The preparation of financial statements in conformity with generally accepted accounting principles in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. | |
Reclassifications | |
We have reclassified certain prior fiscal year amounts in the accompanying consolidated financial statements in order to be consistent with the current fiscal year presentation. These reclassifications had no effect on the previously reported working capital or results of operations. | |
Cash and Cash Equivalents | |
All highly liquid investments with original maturities of three months or less are considered to be cash equivalents. Cash and cash equivalents as of December 31, 2013 and 2012 consisted of demand deposits at commercial banks. | |
Financial Instruments | |
The accompanying consolidated balance sheets include the following financial instruments: cash and cash equivalents, accrued rent and accounts receivable, accounts payable and accrued expenses and due to related parties. The Company considers the carrying value to approximate the fair value of these financial instruments based on the short duration between origination of the instruments and their expected realization. Based on borrowing rates currently available to the Company for loans with similar terms, the carrying value of its note payable approximates fair value. | |
Revenue Recognition | |
Our leases are accounted for as operating leases. Certain leases provide for tenant occupancy during periods for which no rent is due and/or for increases or decreases in the minimum lease payments over the terms of the leases. Revenue is recognized on a straight-line basis over the terms of the individual leases. Revenue recognition under a lease begins when the tenant takes possession of or controls the physical use of the leased space. When the Company acquires a property, the term of existing leases is considered to commence as of the acquisition date for the purposes of this calculation. Accrued rents are included in accrued rent and accounts receivable, net. In accordance with ASC 605-10-S99, Revenue Recognition, the Company will defer the recognition of contingent rental income, such as percentage rents, until the specific target that triggers the contingent rental income is achieved. Cost recoveries from tenants are included in tenant reimbursement income in the period the related costs are incurred. | |
Real Estate | |
Allocation of Purchase Price of Acquired Assets | |
Upon the acquisition of real properties, it is the Company’s policy to allocate the purchase price of properties to acquired tangible assets, consisting of land and buildings, and identified intangible assets and liabilities, consisting of the value of above-market and below-market leases, other value of in-place leases and leasehold improvements and value of tenant relationships, based in each case on their fair values. The Company utilizes internal valuation methods to determine the fair values of the tangible assets of an acquired property (which includes land and buildings). | |
The fair values of above-market and below-market in-place lease values, including below-market renewal options for which renewal has been determined to be reasonably assured, are recorded based on the present value (using an interest rate which reflects the risks associated with the leases acquired) of the difference between (a) the contractual amounts to be paid pursuant to the in-place leases and (b) an estimate of fair market lease rates for the corresponding in-place leases and below-market renewal options, which is generally obtained from independent appraisals, measured over a period equal to the remaining non-cancelable term of the lease. The above-market and below-market lease and renewal option values are capitalized as intangible lease assets or liabilities and amortized as an adjustment of rental income over the remaining expected terms of the respective leases. | |
The fair values of in-place leases include direct costs associated with obtaining a new tenant, opportunity costs associated with lost rentals which are avoided by acquiring an in-place lease, and tenant relationships. Direct costs associated with obtaining a new tenant include commissions, tenant improvements, and other direct costs and are estimated based on independent appraisals and management’s consideration of current market costs to execute a similar lease. These direct costs are included in intangible lease assets and are amortized to expense over the remaining terms of the respective leases. The value of opportunity costs is calculated using the contractual amounts to be paid pursuant to the in-place leases over a market absorption period for a similar lease. Customer relationships are valued based on expected renewal of a lease or the likelihood of obtaining a particular tenant for other locations. These intangibles are included in real estate assets in the consolidated balance sheets and are being amortized to expense over the remaining term of the respective leases. | |
The determination of the fair values of the assets and liabilities acquired requires the use of significant assumptions with regard to the current market rental rates, rental growth rates, discount rates and other variables. The use of inappropriate estimates would result in an incorrect assessment of the purchase price allocations, which could impact the amount of the Company’s reported net loss. | |
Depreciation and amortization | |
Depreciation is computed using the straight-line method over the estimated useful lives of 5 to 39 years for buildings and improvements. Tenant improvements are depreciated using the straight-line method over the lesser of the life of the improvement or the remaining term of the lease. In-place leases are amortized using the straight-line method over the weighted years calculated on terms of all of the leases in-place when acquired. | |
Impairment | |
We review our real estate assets for impairment at least annually or whenever events or changes in circumstances indicate that the carrying amount of the assets, including accrued rental income, may not be recoverable through operations. We determine whether an impairment in value has occurred by comparing the estimated future cash flows (undiscounted and without interest charges), including the estimated residual value of the property, with the carrying cost of the property. If impairment is indicated, a loss will be recorded for the amount by which the carrying value of the property exceeds its fair value. Management has determined that there has been no impairment in the carrying value of our real estate assets as of December 31, 2013 and 2012. | |
Projections of expected future cash flows require management to estimate future market rental income amounts subsequent to the expiration of current lease agreements, property operating expenses, discount rates, the number of months it takes to release the property and the number of years the property is held for investment. The use of inappropriate assumptions in the future cash flow analysis would result in an incorrect assessment of the property’s future cash flow and fair value and could result in the overstatement of the carrying value of our real estate and related intangible assets and net income. | |
Accrued Rent and Accounts Receivable | |
Included in accrued rent and accounts receivable are base rents, tenant reimbursements and receivables attributable to recording rents on a straight-line basis. An allowance for the uncollectible portion of accrued rents and accounts receivable is determined based upon customer credit-worthiness (including expected recovery of our claim with respect to any tenants in bankruptcy), historical bad debt levels, and current economic trends. As of December 31, 2013 and 2012, we had an allowance for uncollectible accounts of $260,885 and $163,302, respectively. For the years ended December 31, 2013 and 2012 we recorded bad debt expense in the amount of $97,583 and $126,511, respectively, related to tenant receivables that we specifically identified as potentially uncollectible based on our assessment of each tenant’s credit-worthiness. Bad debt expenses and any related recoveries are included in property operating expenses in the accompanying consolidated statements of operations. | |
Deferred Loan and Leasing Commissions Costs | |
Leasing commissions are capitalized and amortized using the straight-line method over the term of the related lease agreements. Loan costs are capitalized and amortized using the straight-line method over the terms of the loans, which approximate the interest method. | |
Goodwill | |
Generally accepted accounting principles in the United States require the Company to test goodwill for impairment at least annually or more frequently whenever events or circumstances occur indicating goodwill might be impaired. The Company has the option to perform a qualitative assessment to determine if it is more likely than not that the fair value is less than the carrying amount. If the qualitative assessment determines that it is more likely than not that the fair value is less than the carrying amount, or if the Company elects to bypass the qualitative assessment, the Company performs a two-step impairment test. In the first step, management compares its net book value of the Company to the carrying amount of goodwill at the balance sheet date. In the event net book value of the Company is less than the carrying amount of goodwill, the Company proceeds to step two and assesses the need to record an impairment charge. For the years ended December 31, 2013 and 2012, no goodwill impairment was recognized in the accompanying consolidated financial statements. | |
Organization and Offering Costs | |
The Company has incurred certain expenses in connection with organizing the company. These costs principally relate to professional and filing fees. For the years ended December 31, 2013 and 2012, such costs totaled $543,943 and $136,321, respectively, which have been expensed as incurred. | |
Organization and offering costs will be reimbursed by the Advisor as set forth in the “Costs of Formation and Fees to Related Parties” section of the prospectus, to the extent that organization and offering costs ultimately exceed 1.5% of gross offering proceeds. As of December 31, 2013 and 2012 the offering and organizational expense incurred in excess of 1.5% of gross offering proceeds is $289,629 and $118,928, respectively. No demand has been made of the Advisor for reimbursement as of December 31, 2013 and no receivable has been recorded with respect to the excess costs as of that date. | |
Stock-Based Compensation | |
The Company follows ASC 718- Compensation- Stock Compensation with regard to issuance of stock in payment of services. ASC 718 requires that compensation cost relating to share-based payment transactions be recognized in the consolidated financial statements. The compensation cost is measured based on the fair value of the equity or liability instruments issued. | |
Stock-based compensation expense is included in general and administrative expense in the accompanying consolidated statements of operations. | |
Advertising | |
The Company expenses advertising costs as incurred and such costs are included in general and administrative expenses in the accompanying consolidated statements of operations. Advertising costs totaled $17,470 and $11,962 for the years ended December 31, 2013 and 2012, respectively. | |
Income Taxes | |
We have elected to be treated as a REIT under the Internal Revenue Code of 1986, as amended, beginning with our taxable year ended December 31, 2011. To qualify as a REIT, the Company must meet certain organizational and operational requirements, including a requirement to distribute at least 90% of the Company’s annual REIT taxable income to stockholders (which is computed without regard to the dividends-paid deduction or net capital gain and which does not necessarily equal net income as calculated in accordance with GAAP). As a REIT, the Company generally will not be subject to federal income tax on income that it distributes as dividends to its stockholders. If the Company fails to qualify as a REIT in any taxable year, it will be subject to federal income tax on its taxable income at regular corporate income tax rates and generally will not be permitted to qualify for treatment as a REIT for federal income tax purposes for the four taxable years following the year during which qualification is lost, unless the Internal Revenue Service grants the Company relief under certain statutory provisions. Such an event could materially and adversely affect the Company’s net income and net cash available for distribution to stockholders. However, the Company believes that it is organized and will operate in such a manner as to qualify for treatment as a REIT. | |
For the years ended December 31, 2013 and 2012, the Company incurred a net loss of $1,984,873 and $2,111,037, respectively. The Company does not currently anticipate forming any taxable REIT subsidiaries or otherwise generating future taxable income which may be offset by the net loss carry forward. The Company considers that any deferred tax benefit and corresponding deferred tax asset which may be recorded in light of the net loss carry forward would be properly offset by an equal valuation allowance in that no future taxable income is expected. Accordingly no deferred tax benefit or deferred tax asset has been recorded in the consolidated financial statements. | |
The Company is required to recognize in its consolidated financial statements the financial effects of a tax position only if it is determined that it is more likely than not that the tax position will not be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. Management has reviewed the Company’s tax positions and is of the opinion that material positions taken by the Company would more likely than not be sustained upon examination. Accordingly, the Company has not recognized a liability related to uncertain tax positions. | |
Loss Per Share | |
The computations of basic and diluted loss per common share are based upon the weighted average number of common shares outstanding and potentially dilutive securities. The Company’s potentially dilutive securities include preferred shares that are convertible into the Company’s common stock. As of December 31, 2013 and 2012, there were no shares issuable in connection with these potentially dilutive securities. These potentially dilutive securities were excluded from the computations of diluted net loss per share for the years ended December 31, 2013 and 2012 because no shares are issuable and inclusion of such potentially dilutive securities would have been anti-dilutive. | |
Concentration of Risk | |
Substantially all of our revenues are derived from two retail and two office building properties located in the Dallas, Texas metropolitan area. We maintain cash accounts in one U.S. financial institution. The terms of these deposits are on demand to minimize risk. The balances of these accounts may exceed the federally insured limits. No losses have been incurred in connection with these deposits. | |
Real_Estate
Real Estate | 12 Months Ended | ||||
Dec. 31, 2013 | |||||
Notes | ' | ||||
Real Estate | ' | ||||
Note 3 — Real Estate | |||||
Real estate assets consisted of the following: | |||||
December 31, | |||||
2013 | 2012 | ||||
Land | $ | 12,816,250 | $ | 10,443,750 | |
Buildings and improvements | 33,420,171 | 23,468,037 | |||
In-place lease value intangible | 10,756,483 | 8,404,504 | |||
56,992,904 | 42,316,291 | ||||
Less accumulated depreciation and amortization | -6,278,801 | -2,533,101 | |||
Total real estate assets | $ | 50,714,103 | $ | 39,783,190 | |
Depreciation expense for the years ended December 31, 2013 and 2012 was $1,181,669 and $756,019, respectively. | |||||
We identify and record the value of acquired lease intangibles at the property acquisition date. Such intangibles include the value of acquired in-place leases and above and below-market leases. Acquired lease intangibles are amortized over the leases' remaining terms. With respect to all properties owned by the Company, we consider all of the in-place leases to be market rate leases. | |||||
The amount of total in-place lease intangible asset and the respective accumulated amortization as of December 31, 2013 and 2012 are as follows: | |||||
December 31, | |||||
2013 | 2012 | ||||
In-place lease value intangible | $ | 10,756,483 | $ | 8,404,504 | |
In-place leases – accumulated amortization | -4,253,233 | -1,689,202 | |||
Acquired lease intangible assets, net | $ | 6,503,250 | $ | 6,715,302 | |
The estimated aggregate future amortization amounts from acquired lease intangibles are as follows: | |||||
Years ending December 31, | In-place- lease | ||||
amortization | |||||
2014 | $ | 2,673,686 | |||
2015 | 1,683,670 | ||||
2016 | 1,607,195 | ||||
2017 | 538,699 | ||||
Total | $ | 6,503,250 | |||
Amortization expense for the year ended December 31, 2013 and 2012 was $2,564,031 and $1,424,470, respectively. | |||||
As of December 31, 2013 we owned 4 commercial properties located in Richardson, Arlington, and Dallas, Texas comprising approximately 605,000 square feet plus 3 pad sites. As of December 31, 2012 we owned 3 commercial properties located in Richardson, Arlington, and Dallas, Texas comprising approximately 469,000 square feet plus 3 pad sites. As of December 31, 2012 we also owned a retail shopping center located in Houston, Texas which was being held for resale to an affiliate of the Company. See Note 4 – Real estate assets held for disposition. | |||||
On October 16, 2012 the Company acquired the Bent Tree Green office building for $12,012,500. The following table summarizes the fair values of the Bent Tree Green office building assets acquired and liabilities assumed at the acquisition date: | |||||
Assets acquired: | |||||
Real estate assets | $ | 12,012,500 | |||
Total assets acquired | 12,012,500 | ||||
Liabilities assumed: | |||||
Accounts payable and accrued expenses | 38,623 | ||||
Tenants’ security deposits | 144,575 | ||||
Total liabilities assumed | 183,198 | ||||
Fair value of net assets acquired | $ | 11,829,302 | |||
On May 11, 2012 the Company acquired the Cooper Street Plaza Shopping Center for $10,612,500. The following table summarizes the fair values of the Cooper Street Plaza Shopping Center assets acquired and liabilities assumed at the acquisition date: | |||||
Assets acquired: | |||||
Real estate assets | $ | 10,612,500 | |||
Total assets acquired | 10,612,500 | ||||
Liabilities assumed: | |||||
Accounts payable and accrued expenses | 85,407 | ||||
Tenants’ security deposits | 27,823 | ||||
Total liabilities assumed | 113,230 | ||||
Fair value of net assets acquired | $ | 10,499,270 | |||
On March 15, 2013, the Company acquired two office buildings comprising approximately 136,506 square feet located in Dallas, Texas commonly known as Parkway I & II (the “Parkway Property”) through Hartman Parkway, LLC (“Parkway LLC”), a wholly owned subsidiary of the Company. Parkway LLC acquired the Parkway Property for $9,490,000, exclusive of closing costs. The Parkway Property was 68% occupied at the acquisition date. An acquisition fee of $237,250 was earned by the Advisor in connection with the purchase of the Parkway Property. | |||||
The following table summarizes the fair values of the Parkway Property assets acquired and liabilities assumed based upon our initial purchase price allocation as of the acquisition date: | |||||
Assets acquired: | |||||
Real estate assets | $ | 9,490,000 | |||
Total assets acquired | 9,490,000 | ||||
Liabilities assumed: | |||||
Accounts payable and accrued expenses | 32,034 | ||||
Tenants’ security deposits | 49,768 | ||||
Total liabilities assumed | 81,802 | ||||
Fair value of net assets acquired | $ | 9,408,198 | |||
Richardson Heights – Alamo Draft House Lease | |||||
On June 26, 2012, the Company, through its wholly owned subsidiary, Hartman Richardson Heights Properties LLC (“HRHP LLC”), entered in to a lease agreement with the exclusive Alamo Draft House franchisee for the Dallas/Fort Worth area. Alamo Draft House is a specialized movie theater concept which combines showings of new release and classic films with dining and other entertainment. The lease agreement has a 15 year term and a total lease value of $9.36 million. The building and tenant improvement cost for the Alamo Draft House lease is estimated to be approximately $4.8 million. The City of Richardson, Texas and HRHP LLC have entered into an economic development incentive agreement. Under the terms of the incentive agreement, the City of Richardson will provide annual grants to be paid to HRHP LLC in equal installments over a five year period of up to $1.5 million and sales tax grants to be paid annually over the first 10 years of the tenant lease. The Company has substantiated its cost burden under the development incentive agreement. On September 30, 2013 the Company received the first annual grant installment of $300,000, which is included in tenant reimbursements and other revenues on the consolidated statements of operations. | |||||
Payments received by the Company in the form of annual grants and annual sales tax grants are subject to refund or adjustment during the term of the economic development incentive agreement. In general the incentive agreement provides that the Company must continue to be in good standing with respect to the terms and conditions of the agreement and that the Alamo Draft House lessee must continue as a tenant of the Richardson Heights Property during the term of its lease agreement. As of December 31, 2013, no uncured breach or default exists under the terms of the incentive agreement and the Company has no liability or other obligation to repay any grants received under the agreement. | |||||
Real_Estate_Assets_Held_For_Di
Real Estate Assets Held For Disposition | 12 Months Ended | ||||
Dec. 31, 2013 | |||||
Notes | ' | ||||
Real Estate Assets Held For Disposition | ' | ||||
Note 4 — Real estate assets held for disposition | |||||
On May 2, 2012, the Company acquired the lender’s interest of Wells Fargo Bank, N.A., as Trustee for the Registered Holders of Credit Suisse First Boston Mortgage Securities Corp., Commercial Mortgage Pass-Through Certificates, Series 2005-C6, in a promissory note dated August 11, 2005 in the face amount of $5,200,000 (the “Haute Harwin Note”). The Haute Harwin Note is secured by a Deed of Trust and Security Agreement together with other customary security instruments covering a commercial retail shopping center consisting or approximately 38,813 rentable square feet and located at 6959 Harwin Drive, Houston, Texas (the “Harwin Property”). | |||||
The assets secured by the lenders interest were subject to a receivership order dated August 5, 2011 by the 164th Judicial District Court of Harris County, Texas. The Company paid $3,215,237 cash for the lender’s interest acquired. | |||||
The Haute Harwin Note was posted for foreclosure in Harris County, Texas and on August 7, 2012, the Company acquired fee simple title to the Harwin Property. The receivership order has terminated and the case giving rise to the receivership order has been dismissed. | |||||
On July 23, 2012 the Company’s board of directors approved a sale of the Company’s interest in the Harwin Property to Hartman XIX for $3,272,000 cash. | |||||
On August 7, 2012, the Company foreclosed on its investment in the Haute Harwin Note and converted its ownership in the Harwin Property to fee simple. The Harwin Property is recorded on the consolidated balance sheets as real estate assets held for disposition, and the related operations are presented as discontinued operations on the consolidated statements of operations, consistent with the board of director’s resolution to sell the property. | |||||
On October 23, 2012 the Company’s board of directors reviewed the independent appraisal reflecting an “As Is” fair value of $3.4 million. Based on the independent appraisal the board of directors amended its offer to sell the Harwin Property to increase the asking price to $3.4 million. The board of directors of Harwin XIX accepted the price modification. | |||||
Effective March 28, 2013, the Company sold the Harwin Property to Hartman XIX pursuant to the terms agreed upon and approved by both the boards of directors of the Company and of Hartman XIX. The Company sold the Harwin Property for $3,400,000 cash. The Company recognized a $174,043 gain on the sale. | |||||
Income (loss) from discontinued operations is comprised as follows: | |||||
Years ended December 31, | |||||
2013 | 2012 | ||||
Total property revenues | $ | 65,115 | $ | 113,948 | |
Property operating expenses | 53,745 | 60,227 | |||
Real estate taxes and insurance | 18,772 | 80,974 | |||
Depreciation & amortization | - | - | |||
Total property and other expenses | 72,517 | 141,201 | |||
Gain on sale of property | 174,043 | - | |||
Income (loss) from discontinued operations | $ | 166,641 | $ | -27,253 | |
Deferred_Loan_and_Leasing_Comm
Deferred Loan and Leasing Commission Costs | 12 Months Ended | |||||
Dec. 31, 2013 | ||||||
Notes | ' | |||||
Deferred Loan and Leasing Commission Costs | ' | |||||
Note 6 — Deferred Loan and Leasing Commission Costs | ||||||
Costs which have been deferred consist of the following: | ||||||
December 31, | ||||||
2013 | 2012 | |||||
Deferred loan costs | $ | 475,688 | $ | 427,537 | ||
Less: deferred loan cost accumulated amortization | -304,617 | -186,083 | ||||
Total cost, net of accumulated amortization | $ | 171,071 | $ | 241,454 | ||
December 31, | ||||||
2013 | 2012 | |||||
Deferred Leasing Commissions | $ | 908,869 | $ | 660,888 | ||
Less: deferred leasing commissions accumulated amortization | -84,412 | -304 | ||||
Total cost, net of accumulated amortization | $ | 824,457 | $ | 660,584 | ||
Future_Minimum_Lease_Income
Future Minimum Lease Income | 12 Months Ended | ||
Dec. 31, 2013 | |||
Notes | ' | ||
Future Minimum Lease Income | ' | ||
Note 7 — Future Minimum Lease Income | |||
We lease the majority of our properties under noncancelable operating leases which provide for minimum base rentals. A summary of minimum future rentals to be received (exclusive of renewals, tenant reimbursements, and contingent rentals) under noncancelable operating leases in existence at December 31, 2013 is as follows: | |||
Years ending December 31, | Minimum Future Rents | ||
2014 | $ | 5,721,230 | |
2015 | 5,256,170 | ||
2016 | 4,812,604 | ||
2017 | 3,790,832 | ||
2018 | 3,111,670 | ||
Thereafter | 12,142,195 | ||
Total | $ | 34,834,701 | |
Note_Payable
Note Payable | 12 Months Ended |
Dec. 31, 2013 | |
Notes | ' |
Note Payable | ' |
Note 8 — Note Payable | |
The Company is a party to a $30.0 million revolving credit agreement (the “Credit Facility”) with a bank. The borrowing base of the Credit Facility may be adjusted from time to time subject to the lenders underwriting with respect to real property collateral. In connection with the acquisition of the Parkway Property, the borrowing base of the Credit Facility was increased from $20.0 million to $22.5 million. Effective October 15, 2013, the note bears interest at the bank’s prime rate plus 1% per annum but in any event not less than 4.5% per annum. The interest rate was 4.5% and 5.0% per annum as of December 31, 2013 and 2012, respectively. The loan matures on May 9, 2015. The outstanding balance under the Credit Facility was $2.3 million and $15.0 million as of December 31, 2013 and 2012, respectively. As of December 31, 2013 the amount available to be borrowed is $20.2 million. The revolving credit facility is secured by our four (4) properties. The loan is subject to customary covenants. As of December 31, 2013, we were in compliance with all loan covenants. | |
Loss_Per_Share
Loss Per Share | 12 Months Ended | |||||
Dec. 31, 2013 | ||||||
Notes | ' | |||||
Loss Per Share | ' | |||||
Note 9 — Loss Per Share | ||||||
Basic earnings (loss) per share is computed using net income (loss) attributable to common stockholders and the weighted average number of common shares outstanding. Diluted weighted average shares outstanding reflect common shares issuable from the assumed conversion of convertible preferred stock into common shares. Only those items that have a dilutive impact on basic earnings (loss) per share are included in the diluted earnings (loss) per share. | ||||||
Year Ended December 31, | ||||||
2013 | 2012 | |||||
Numerator: | ||||||
Net loss attributable to common stockholders | ($1,984,873) | ($2,111,037) | ||||
Denominator: | ||||||
Weighted average number of common shares outstanding, basic and diluted | 4,927,708 | 2,647,039 | ||||
Basic and diluted loss per common share: | ||||||
Net loss attributable to common stockholders per share | ($0.40) | ($0.80) | ||||
Income_Taxes
Income Taxes | 12 Months Ended | |||
Dec. 31, 2013 | ||||
Notes | ' | |||
Income Taxes | ' | |||
Note 10 — Income Taxes | ||||
Federal income taxes are not provided for because we qualify as a REIT under the provisions of the Internal Revenue Code and because we have distributed and intend to continue to distribute all of our taxable income to our stockholders. Our stockholders include their proportionate taxable income in their individual tax returns. As a REIT, we must distribute at least 90% of our real estate investment trust taxable income to our stockholders and meet certain income sources and investment restriction requirements. In addition, REITs are subject to a number of organizational and operational requirements. If we fail to qualify as a REIT in any taxable year, we will be subject to federal income tax (including any applicable alternative minimum tax) on our taxable income at regular corporate tax rates. The Company’s federal income tax returns for the years ended December 31, 2010, 2011 and 2012 have not been examined by the Internal Revenue Service. The Company’s federal income tax return for the year ended December 31, 2010 may be examined on or before September 15, 2014. | ||||
Taxable income differs from net income for financial reporting purposes principally due to differences in the timing of recognition of interest, real estate taxes, depreciation and amortization and rental revenue. | ||||
For Federal income tax purposes, the cash dividends distributed to stockholders are characterized as follows for the years ended December 31: | ||||
2013 | 2012 | |||
Ordinary income (unaudited) | 24.50% | 6.00% | ||
Return of capital (unaudited) | 75.50% | 94.00% | ||
Capital gains distribution (unaudited) | - % | - | - % | |
Total | 100.00% | 100.00% | ||
A provision for Texas Franchise tax under the Texas Margin Tax Bill in the amount of $51,413 and $25,364 was recorded in the consolidated financial statements for the years ended December 31, 2013 and 2012, respectively, with a corresponding charge to real estate taxes and insurance. | ||||
Related_Party_Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2013 | |
Notes | ' |
Related Party Transactions | ' |
Note 11 — Related Party Transactions | |
Hartman Advisors LLC, is a Texas limited liability company owned 70% by Allen R. Hartman individually and 30% by the Property Manager. The Property Manager is a wholly owned subsidiary of Hartman Income REIT Management, LLC, which is wholly owned by Hartman Income REIT, Inc. and Subsidiaries of which approximately 20% is owned by Allen R. Hartman who is the Chief Executive Officer and Chairman of the Board of Directors. | |
We pay acquisition fees and asset management fees to our Advisor in connection with the acquisition of properties and management of the Company. We pay property management and leasing commissions to our Property Manager in connection with the management and leasing of our properties. For the years ended December 31, 2013 and 2012 we incurred property management fees of $272,799 and $170,491, respectively, and $247,981 and $660,888, respectively for leasing commissions owed to our Property Manager. We incurred asset management fees of $369,659 and $219,001, respectively owed to Advisor. Acquisition fees incurred to our Advisor were $156,870 and $649,005 for the years ended December 31, 2013 and 2012, respectively. Acquisition fees in 2012 includes $80,380 in fees related to the investment in the Haute Harwin note, which was refunded to the Company in 2013. | |
As of December 31, 2013 and December 31, 2012, respectively, the Company had a balance due to (from) the Property Manager of ($578,919) and $188,660. | |
The Company owed the Advisor $488,502 and $111,973 for asset management fees as of December 31, 2013 and December 31, 2012, respectively. These fees are monthly fees equal to one-twelfth of 0.75% of the sum of the higher of the cost or value of each asset. The asset management fee will be based only on the portion of the cost or value attributable to the Company’s investment in an asset, if we do not own all or a majority of an asset. | |
The Company owed $158,068 and $364,278 to Hartman XIX as of December 31, 2013 and December 31, 2012, respectively. The balance due to Hartman XIX represents undistributed funds from operations due to Hartman XIX with respect to its former ownership interest in the Richardson Heights joint venture and the Harwin Property was sold to Hartman XIX. | |
Stockholders_Equity
Stockholders' Equity | 12 Months Ended | ||||||
Dec. 31, 2013 | |||||||
Notes | ' | ||||||
Stockholders' Equity | ' | ||||||
Note 12 – Stockholders’ Equity | |||||||
Common Stock | |||||||
Shares of common stock entitle the holders to one vote per share on all matters which stockholders are entitled to vote, to receive dividends and other distributions as authorized by the Company’s board of directors in accordance with the Maryland General Corporation Law and to all rights of a stockholder pursuant to the Maryland General Corporation Law. The common stock has no preferences or preemptive, conversion or exchange rights. | |||||||
Under our articles of incorporation, we have authority to issue 750,000,000 common shares of beneficial interest, $0.001 par value per share, and 200,000,000 preferred shares of beneficial interest, $0.001 par value per share. | |||||||
As of December 31, 2013, the Company has accepted investors’ subscriptions for and issued 5,985,173 shares of the Company’s common stock it is public offering, resulting in gross proceeds to the Company of $58,400,455. | |||||||
Preferred Stock | |||||||
Under our articles of incorporation the Company’s board of directors has the authority to issue one or more classes or series of preferred stock, and prior to the issuance of such stock, the board of directors shall have the power to classify or reclassify, in one or more series, any unissued shares and designate the preferences, rights and privileges of such shares. As of December 31, 2013 and 2012 we have issued 1,000 shares of convertible preferred shares to Hartman Advisors LLC at a price of $10.00 per share. | |||||||
Common Stock Issuable Upon Conversion of Convertible Preferred Stock | |||||||
The convertible preferred stock will convert to shares of common stock if (1) the Company has made total distributions on then outstanding shares of the Company’s common stock equal to the issue price of those shares plus a 6% cumulative, non-compounded, annual return on the issue price of those outstanding shares, (2) the Company lists its common stock for trading on a national securities exchange if the sum of prior distributions on then outstanding shares of our common stock plus the aggregate market value of our common stock (based on the 30-day average closing price) meets the same 6% performance threshold, or (3) the Company’s advisory agreement with Hartman Advisors, LLC expires without renewal or is terminated (other than because of a material breach by our advisor), and at the time of such expiration or termination the Company is deemed to have met the foregoing 6% performance threshold based on the Company’s enterprise value and prior distributions and, at or subsequent to the expiration or termination, the shareholders actually realize such level of performance upon listing or through total distributions. In general, the convertible stock will convert into shares of common stock with a value equal to 15% of the excess of the Company’s enterprise value plus the aggregate value of distributions paid to date on then outstanding shares of common stock over the aggregate issue price of those outstanding shares plus a 6% cumulative, non-compounded, annual return on the issue price of those outstanding shares. With respect to conversion in connection with the termination of the advisory agreement, this calculation is made at the time of termination even though the actual conversion may occur later, or not at all. | |||||||
Stock-Based Compensation | |||||||
We award vested restricted common shares to non-employee directors as compensation in part for their service as members of the board of directors of the Company. These shares are fully vested when granted. These shares may not be sold while an independent director is serving on the board of directors. For the years ended December 31, 2013 and 2012, respectively, the Company granted 6,750 and 6,000 shares of restricted common stock to independent directors as compensation for services. We recognized $67,500 and $60,000 as share-based compensation expense for the years ended December 31, 2013 and 2012, respectively, based upon the estimated fair value per share. Share based compensation also includes incentive plan awards discussed at Note 13. These amounts are included in general and administrative expenses for the years ending December 31, 2013 and 2012, respectively in the accompanying consolidated statements of operations. | |||||||
Distributions | |||||||
The following table reflects the total distributions we have paid in cash and through the distribution reinvestment plan, including the total amount paid and amount paid per common share, in each indicated quarter: | |||||||
Distributions per Common Share | Total Distributions Paid | ||||||
Quarter paid | |||||||
2013 | |||||||
4th Quarter | $ | 0.175 | $ | 1,033,066 | |||
3rd Quarter | 0.175 | 854,120 | |||||
2nd Quarter | 0.175 | 760,551 | |||||
1st Quarter | 0.175 | 627,754 | |||||
Total | $ | 0.7 | $ | 3,275,491 | |||
2012 | |||||||
4th Quarter | $ | 0.175 | $ | 550,016 | |||
3rd Quarter | 0.175 | 482,186 | |||||
2nd Quarter | 0.175 | 402,956 | |||||
1st Quarter | 0.175 | 324,358 | |||||
Total | $ | 0.7 | $ | 1,759,516 | |||
Incentive_Awards_Plan
Incentive Awards Plan | 12 Months Ended |
Dec. 31, 2013 | |
Notes | ' |
Incentive Awards Plan | ' |
Note 13 – Incentive Awards Plan | |
The Company has adopted an incentive plan (the “Omnibus Stock Incentive Plan” or the “Incentive Plan”) that provides for the grant of incentive stock options, non-qualified stock options, stock appreciation rights, deferred stock awards, restricted stock awards, dividend equivalent rights and other stock-based awards within the meaning of Internal Revenue Code Section 422, or any combination of the foregoing. We have initially reserved 5,000,000 shares of our common stock for the issuance of awards under our stock incentive plan, but in no event more than ten (10%) percent of our issued and outstanding shares. The number of shares reserved under our stock incentive plan is also subject to adjustment in the event of a stock split, stock dividend or other change in our capitalization. Generally, shares that are forfeited or canceled from awards under our stock incentive plan also will be available for future awards. The Compensation Committee of the Board of Directors approved awards of 1,000 shares of restricted common stock that were effective January 1, 2013 and 2012 to each of two executives of Hartman Income REIT Management, the Property Manager for the Company. We recognized stock-based compensation expense of $20,000 and $20,000 with respect to these awards based on the amount offering price of $10 per share during the years ending December 31, 2013 and 2012, respectively. | |
Commitments_and_Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2013 | |
Notes | ' |
Commitments and Contingencies | ' |
Note 14 – Commitments and Contingencies | |
Economic Dependency | |
The Company is dependent on the Property Manager, the Advisor and the Dealer Manager for certain services that are essential to the Company, including the sale of the Company’s shares of common stock and preferred stock available for issue; the identification, evaluation, negotiation, purchase and disposition of properties, management of the daily operations of the Company’s real estate portfolio, and other general and administrative responsibilities. In the event that these companies are unable to provide the respective services, the Company will be required to obtain such services from other providers. | |
Litigation | |
The Company is subject to various claims and legal actions that arise in the ordinary course of business. Management of the Company believes that the final disposition of such matters will not have a material adverse effect on the financial position of the Company. | |
Rescission Rights of Certain Stockholders | |
In connection with the Company’s initial public offering, the Company may have a contingent liability to certain stockholders who purchased shares of the Company’s common stock during the period which the Company’s registration statement was not effective and during which time the Company may have been in violation of one or more securities laws. The Company has considered the possibility of affording the remedy of rescission to stockholders who purchased common shares during the period that the Company was required to file post-effective amendments to its registration statement. Any such rescission would obligate the Company to reacquire the stockholders common shares at a price equal to the price originally paid for such shares with market interest, less the amount of any income received with respect to such shares. If affected stockholders were successful in seeking rescission and/or damages, we would face financial demands that could adversely affect our business and operations. Additionally, we may become subject to penalties imposed by the SEC and state securities agencies. If stockholders seek rescission and/or damages or we conduct a rescission offer, we may or may not have the resources to fund the repurchase of all of the securities tendered. We have determined not to offer rescission because the Advisor and the Company do not believe that any material number of affected investors would choose to rescind their common share purchases. On July 16, 2013, the SEC declared the Company’s follow-on offering registration statement effective and the Company has recommenced offering of its common shares as of that date. No rescission requests have been received by the Company as of December 31, 2013. | |
Subsequent_Events
Subsequent Events | 12 Months Ended | |||||
Dec. 31, 2013 | ||||||
Notes | ' | |||||
Subsequent Events | ' | |||||
Note 15 – Subsequent Events | ||||||
On February 7, 2014 the Company entered into a purchase agreement to acquire an office building in the Energy Corridor of Houston, Texas. On March 11, 2014 the Company completed the purchase of the property, commonly known as Gulf Plaza. The property was acquired from fourteen tenant-in-common investors including Hartman Gulf Plaza Acquisitions, LP (“Acquisitions”) which owned 1% of Gulf Plaza. Acquisitions is an affiliate of Hartman Income REIT Management, Inc., our property manager, which indirectly owns approximately 15% of Acquisitions. Approximately 10% of Acquisitions is owned by Allen Hartman, our President and CEO, or his affiliates. The following table provides summary information regarding the investment in Gulf Plaza. | ||||||
Name/Location | Approx. Rentable | Date Acquired | Property Acquisition Cost | Approx. Annualized | Approx.% | |
SF | Base Rent | Leased | ||||
Gulf Plaza, Houston, TX | 120,651 | 3/11/14 | $13,950,000 | $1,406,000 | 100% | |
Gulf Plaza was constructed in 1983. Gulf Plaza is 100% leased to Gulf Interstate Engineering Company (“GIE”). The initial lease date for GIE was March 14, 2003. | ||||||
An acquisition fee of approximately $348,750 was earned by Hartman Advisors LLC, the Company’s Advisor, in connection with the purchase of Gulf Plaza. The acquisition fee is payable to the Advisor pursuant to the terms of the advisory agreement between the Company and the Advisor. | ||||||
In connection with the Gulf Plaza acquisition, approximately $12.6 million was drawn on the Credit facility. | ||||||
On March 12, 2014, the Company entered into a purchase agreement with AFS NW Business Park, L.P. to acquire an approximately 377,752 square foot office/industrial business park located in northwest Houston, Texas for an aggregate purchase price of $19,400,000. The property is commonly referred to as the Mitchelldale Business Park. | ||||||
The acquisition of the Mitchelldale Business Park is subject to certain conditions to closing, including the absence of a material adverse change to the property prior to the acquisition date. The expected closing date of the acquisition is on or before May 14, 2014. | ||||||
The Mitchelldale Business Park consists of 12 buildings constructed in 1977. The property is approximately 88% occupied as of January 1, 2014. Mitchelldale Business Park is occupied, as of January 1, 2014 by 68 tenants. There is no current tenant who occupies 10% or more of the property. The largest single tenant occupies approximately 5.2% of the property. The top ten tenants occupy approximately 33% of the property and comprise approximately 38% of current annual base rent. Major tenants include Craven Carpet, A Better Tripp Moving and Storage, GC Services, LP, Crusader Gun Company and LOYC Investments. | ||||||
Summary_of_Significant_Account1
Summary of Significant Accounting Policies: Basis of Presentation (Policies) | 12 Months Ended |
Dec. 31, 2013 | |
Policies | ' |
Basis of Presentation | ' |
Basis of Presentation | |
The accompanying consolidated financial statements as of December 31, 2013 and 2012 and for the years then ended have been prepared by us in accordance with accounting principles generally accepted in the United States and pursuant to the rules and regulations of the Securities and Exchange Commission, including Form 10-K and Regulation S-K. The information furnished herein reflects all adjustments (consisting of normal recurring accruals and adjustments), which are, in the opinion of management necessary to fairly present the operating results for the respective periods. | |
These consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries: Hartman Richardson Heights Properties, LLC for the twelve months ended December 31, 2013 and 2012; Hartman Cooper Street Plaza, LLC for the twelve months ended December 31, 2013 and for the period from May 11, 2012, the date this subsidiary acquired the Cooper Street Property, to December 31, 2012; Hartman Haute Harwin, LLC for the period from August 7, 2012, the date this subsidiary acquired the Harwin Property, to December 31, 2012 and for the period from January 1, 2013 to March 28, 2013, the date the disposition of this discontinued operation was completed; Hartman Bent Tree, LLC for the twelve months ended December 31, 2013 and for the period from October 16, 2012, the date this subsidiary acquired the Bent Tree Green Property, to December 31, 2012; and, Hartman Parkway LLC, for the period from March 15, 2013, the date this subsidiary acquired the Parkway Property, to December 31, 2013. All significant intercompany balances and transactions have been eliminated. |
Summary_of_Significant_Account2
Summary of Significant Accounting Policies: Use of Estimates (Policies) | 12 Months Ended |
Dec. 31, 2013 | |
Policies | ' |
Use of Estimates | ' |
Use of Estimates | |
The preparation of financial statements in conformity with generally accepted accounting principles in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. | |
Summary_of_Significant_Account3
Summary of Significant Accounting Policies: Reclassifications (Policies) | 12 Months Ended |
Dec. 31, 2013 | |
Policies | ' |
Reclassifications | ' |
Reclassifications | |
We have reclassified certain prior fiscal year amounts in the accompanying consolidated financial statements in order to be consistent with the current fiscal year presentation. These reclassifications had no effect on the previously reported working capital or results of operations. | |
Summary_of_Significant_Account4
Summary of Significant Accounting Policies: Cash and Cash Equivalents (Policies) | 12 Months Ended |
Dec. 31, 2013 | |
Policies | ' |
Cash and Cash Equivalents | ' |
Cash and Cash Equivalents | |
All highly liquid investments with original maturities of three months or less are considered to be cash equivalents. Cash and cash equivalents as of December 31, 2013 and 2012 consisted of demand deposits at commercial banks. | |
Summary_of_Significant_Account5
Summary of Significant Accounting Policies: Financial Instruments (Policies) | 12 Months Ended |
Dec. 31, 2013 | |
Policies | ' |
Financial Instruments | ' |
Financial Instruments | |
The accompanying consolidated balance sheets include the following financial instruments: cash and cash equivalents, accrued rent and accounts receivable, accounts payable and accrued expenses and due to related parties. The Company considers the carrying value to approximate the fair value of these financial instruments based on the short duration between origination of the instruments and their expected realization. Based on borrowing rates currently available to the Company for loans with similar terms, the carrying value of its note payable approximates fair value. |
Summary_of_Significant_Account6
Summary of Significant Accounting Policies: Revenue Recognition (Policies) | 12 Months Ended |
Dec. 31, 2013 | |
Policies | ' |
Revenue Recognition | ' |
Revenue Recognition | |
Our leases are accounted for as operating leases. Certain leases provide for tenant occupancy during periods for which no rent is due and/or for increases or decreases in the minimum lease payments over the terms of the leases. Revenue is recognized on a straight-line basis over the terms of the individual leases. Revenue recognition under a lease begins when the tenant takes possession of or controls the physical use of the leased space. When the Company acquires a property, the term of existing leases is considered to commence as of the acquisition date for the purposes of this calculation. Accrued rents are included in accrued rent and accounts receivable, net. In accordance with ASC 605-10-S99, Revenue Recognition, the Company will defer the recognition of contingent rental income, such as percentage rents, until the specific target that triggers the contingent rental income is achieved. Cost recoveries from tenants are included in tenant reimbursement income in the period the related costs are incurred. | |
Summary_of_Significant_Account7
Summary of Significant Accounting Policies: Real Estate (Policies) | 12 Months Ended |
Dec. 31, 2013 | |
Policies | ' |
Real Estate | ' |
Real Estate | |
Allocation of Purchase Price of Acquired Assets | |
Upon the acquisition of real properties, it is the Company’s policy to allocate the purchase price of properties to acquired tangible assets, consisting of land and buildings, and identified intangible assets and liabilities, consisting of the value of above-market and below-market leases, other value of in-place leases and leasehold improvements and value of tenant relationships, based in each case on their fair values. The Company utilizes internal valuation methods to determine the fair values of the tangible assets of an acquired property (which includes land and buildings). | |
The fair values of above-market and below-market in-place lease values, including below-market renewal options for which renewal has been determined to be reasonably assured, are recorded based on the present value (using an interest rate which reflects the risks associated with the leases acquired) of the difference between (a) the contractual amounts to be paid pursuant to the in-place leases and (b) an estimate of fair market lease rates for the corresponding in-place leases and below-market renewal options, which is generally obtained from independent appraisals, measured over a period equal to the remaining non-cancelable term of the lease. The above-market and below-market lease and renewal option values are capitalized as intangible lease assets or liabilities and amortized as an adjustment of rental income over the remaining expected terms of the respective leases. | |
The fair values of in-place leases include direct costs associated with obtaining a new tenant, opportunity costs associated with lost rentals which are avoided by acquiring an in-place lease, and tenant relationships. Direct costs associated with obtaining a new tenant include commissions, tenant improvements, and other direct costs and are estimated based on independent appraisals and management’s consideration of current market costs to execute a similar lease. These direct costs are included in intangible lease assets and are amortized to expense over the remaining terms of the respective leases. The value of opportunity costs is calculated using the contractual amounts to be paid pursuant to the in-place leases over a market absorption period for a similar lease. Customer relationships are valued based on expected renewal of a lease or the likelihood of obtaining a particular tenant for other locations. These intangibles are included in real estate assets in the consolidated balance sheets and are being amortized to expense over the remaining term of the respective leases. | |
The determination of the fair values of the assets and liabilities acquired requires the use of significant assumptions with regard to the current market rental rates, rental growth rates, discount rates and other variables. The use of inappropriate estimates would result in an incorrect assessment of the purchase price allocations, which could impact the amount of the Company’s reported net loss. | |
Depreciation and amortization | |
Depreciation is computed using the straight-line method over the estimated useful lives of 5 to 39 years for buildings and improvements. Tenant improvements are depreciated using the straight-line method over the lesser of the life of the improvement or the remaining term of the lease. In-place leases are amortized using the straight-line method over the weighted years calculated on terms of all of the leases in-place when acquired. | |
Impairment | |
We review our real estate assets for impairment at least annually or whenever events or changes in circumstances indicate that the carrying amount of the assets, including accrued rental income, may not be recoverable through operations. We determine whether an impairment in value has occurred by comparing the estimated future cash flows (undiscounted and without interest charges), including the estimated residual value of the property, with the carrying cost of the property. If impairment is indicated, a loss will be recorded for the amount by which the carrying value of the property exceeds its fair value. Management has determined that there has been no impairment in the carrying value of our real estate assets as of December 31, 2013 and 2012. | |
Projections of expected future cash flows require management to estimate future market rental income amounts subsequent to the expiration of current lease agreements, property operating expenses, discount rates, the number of months it takes to release the property and the number of years the property is held for investment. The use of inappropriate assumptions in the future cash flow analysis would result in an incorrect assessment of the property’s future cash flow and fair value and could result in the overstatement of the carrying value of our real estate and related intangible assets and net income. |
Summary_of_Significant_Account8
Summary of Significant Accounting Policies: Accrued Rent and Accounts Receivable (Policies) | 12 Months Ended |
Dec. 31, 2013 | |
Policies | ' |
Accrued Rent and Accounts Receivable | ' |
Accrued Rent and Accounts Receivable | |
Included in accrued rent and accounts receivable are base rents, tenant reimbursements and receivables attributable to recording rents on a straight-line basis. An allowance for the uncollectible portion of accrued rents and accounts receivable is determined based upon customer credit-worthiness (including expected recovery of our claim with respect to any tenants in bankruptcy), historical bad debt levels, and current economic trends. As of December 31, 2013 and 2012, we had an allowance for uncollectible accounts of $260,885 and $163,302, respectively. For the years ended December 31, 2013 and 2012 we recorded bad debt expense in the amount of $97,583 and $126,511, respectively, related to tenant receivables that we specifically identified as potentially uncollectible based on our assessment of each tenant’s credit-worthiness. Bad debt expenses and any related recoveries are included in property operating expenses in the accompanying consolidated statements of operations. | |
Summary_of_Significant_Account9
Summary of Significant Accounting Policies: Deferred Loan and Leasing Commissions Costs (Policies) | 12 Months Ended |
Dec. 31, 2013 | |
Policies | ' |
Deferred Loan and Leasing Commissions Costs | ' |
Deferred Loan and Leasing Commissions Costs | |
Leasing commissions are capitalized and amortized using the straight-line method over the term of the related lease agreements. Loan costs are capitalized and amortized using the straight-line method over the terms of the loans, which approximate the interest method. | |
Recovered_Sheet1
Summary of Significant Accounting Policies: Goodwill (Policies) | 12 Months Ended |
Dec. 31, 2013 | |
Policies | ' |
Goodwill | ' |
Goodwill | |
Generally accepted accounting principles in the United States require the Company to test goodwill for impairment at least annually or more frequently whenever events or circumstances occur indicating goodwill might be impaired. The Company has the option to perform a qualitative assessment to determine if it is more likely than not that the fair value is less than the carrying amount. If the qualitative assessment determines that it is more likely than not that the fair value is less than the carrying amount, or if the Company elects to bypass the qualitative assessment, the Company performs a two-step impairment test. In the first step, management compares its net book value of the Company to the carrying amount of goodwill at the balance sheet date. In the event net book value of the Company is less than the carrying amount of goodwill, the Company proceeds to step two and assesses the need to record an impairment charge. For the years ended December 31, 2013 and 2012, no goodwill impairment was recognized in the accompanying consolidated financial statements. |
Recovered_Sheet2
Summary of Significant Accounting Policies: Organization and Offering Costs (Policies) | 12 Months Ended |
Dec. 31, 2013 | |
Policies | ' |
Organization and Offering Costs | ' |
Organization and Offering Costs | |
The Company has incurred certain expenses in connection with organizing the company. These costs principally relate to professional and filing fees. For the years ended December 31, 2013 and 2012, such costs totaled $543,943 and $136,321, respectively, which have been expensed as incurred. | |
Organization and offering costs will be reimbursed by the Advisor as set forth in the “Costs of Formation and Fees to Related Parties” section of the prospectus, to the extent that organization and offering costs ultimately exceed 1.5% of gross offering proceeds. As of December 31, 2013 and 2012 the offering and organizational expense incurred in excess of 1.5% of gross offering proceeds is $289,629 and $118,928, respectively. No demand has been made of the Advisor for reimbursement as of December 31, 2013 and no receivable has been recorded with respect to the excess costs as of that date. | |
Recovered_Sheet3
Summary of Significant Accounting Policies: Stock-based Compensation (Policies) | 12 Months Ended |
Dec. 31, 2013 | |
Policies | ' |
Stock-based Compensation | ' |
Stock-Based Compensation | |
The Company follows ASC 718- Compensation- Stock Compensation with regard to issuance of stock in payment of services. ASC 718 requires that compensation cost relating to share-based payment transactions be recognized in the consolidated financial statements. The compensation cost is measured based on the fair value of the equity or liability instruments issued. | |
Stock-based compensation expense is included in general and administrative expense in the accompanying consolidated statements of operations. | |
Recovered_Sheet4
Summary of Significant Accounting Policies: Advertising (Policies) | 12 Months Ended |
Dec. 31, 2013 | |
Policies | ' |
Advertising | ' |
Advertising | |
The Company expenses advertising costs as incurred and such costs are included in general and administrative expenses in the accompanying consolidated statements of operations. Advertising costs totaled $17,470 and $11,962 for the years ended December 31, 2013 and 2012, respectively. | |
Recovered_Sheet5
Summary of Significant Accounting Policies: Income Taxes (Policies) | 12 Months Ended |
Dec. 31, 2013 | |
Policies | ' |
Income Taxes | ' |
Income Taxes | |
We have elected to be treated as a REIT under the Internal Revenue Code of 1986, as amended, beginning with our taxable year ended December 31, 2011. To qualify as a REIT, the Company must meet certain organizational and operational requirements, including a requirement to distribute at least 90% of the Company’s annual REIT taxable income to stockholders (which is computed without regard to the dividends-paid deduction or net capital gain and which does not necessarily equal net income as calculated in accordance with GAAP). As a REIT, the Company generally will not be subject to federal income tax on income that it distributes as dividends to its stockholders. If the Company fails to qualify as a REIT in any taxable year, it will be subject to federal income tax on its taxable income at regular corporate income tax rates and generally will not be permitted to qualify for treatment as a REIT for federal income tax purposes for the four taxable years following the year during which qualification is lost, unless the Internal Revenue Service grants the Company relief under certain statutory provisions. Such an event could materially and adversely affect the Company’s net income and net cash available for distribution to stockholders. However, the Company believes that it is organized and will operate in such a manner as to qualify for treatment as a REIT. | |
For the years ended December 31, 2013 and 2012, the Company incurred a net loss of $1,984,873 and $2,111,037, respectively. The Company does not currently anticipate forming any taxable REIT subsidiaries or otherwise generating future taxable income which may be offset by the net loss carry forward. The Company considers that any deferred tax benefit and corresponding deferred tax asset which may be recorded in light of the net loss carry forward would be properly offset by an equal valuation allowance in that no future taxable income is expected. Accordingly no deferred tax benefit or deferred tax asset has been recorded in the consolidated financial statements. | |
The Company is required to recognize in its consolidated financial statements the financial effects of a tax position only if it is determined that it is more likely than not that the tax position will not be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. Management has reviewed the Company’s tax positions and is of the opinion that material positions taken by the Company would more likely than not be sustained upon examination. Accordingly, the Company has not recognized a liability related to uncertain tax positions. | |
Recovered_Sheet6
Summary of Significant Accounting Policies: Loss Per Share (Policies) | 12 Months Ended |
Dec. 31, 2013 | |
Policies | ' |
Loss Per Share | ' |
Loss Per Share | |
The computations of basic and diluted loss per common share are based upon the weighted average number of common shares outstanding and potentially dilutive securities. The Company’s potentially dilutive securities include preferred shares that are convertible into the Company’s common stock. As of December 31, 2013 and 2012, there were no shares issuable in connection with these potentially dilutive securities. These potentially dilutive securities were excluded from the computations of diluted net loss per share for the years ended December 31, 2013 and 2012 because no shares are issuable and inclusion of such potentially dilutive securities would have been anti-dilutive. | |
Recovered_Sheet7
Summary of Significant Accounting Policies: Concentration of Risk (Policies) | 12 Months Ended |
Dec. 31, 2013 | |
Policies | ' |
Concentration of Risk | ' |
Concentration of Risk | |
Substantially all of our revenues are derived from two retail and two office building properties located in the Dallas, Texas metropolitan area. We maintain cash accounts in one U.S. financial institution. The terms of these deposits are on demand to minimize risk. The balances of these accounts may exceed the federally insured limits. No losses have been incurred in connection with these deposits. | |
Accrued_Rent_and_Accounts_Rece
Accrued Rent and Accounts Receivable, net (Tables) | 12 Months Ended | |||||
Dec. 31, 2013 | ||||||
Tables/Schedules | ' | |||||
Accrued Rent and Accounts Receivable, net | ' | |||||
December 31, | ||||||
2013 | 2012 | |||||
Tenant receivables | $ | 312,218 | $ | 257,665 | ||
Accrued rent | 467,544 | 81,796 | ||||
Allowance for doubtful accounts | -260,885 | -163,302 | ||||
Accrued Rents and Accounts Receivable, net | $ | 518,877 | $ | 176,159 |
Real_Estate_Schedule_of_Real_E
Real Estate: Schedule of Real Estate Properties (Tables) | 12 Months Ended | ||||
Dec. 31, 2013 | |||||
Tables/Schedules | ' | ||||
Schedule of Real Estate Properties | ' | ||||
December 31, | |||||
2013 | 2012 | ||||
Land | $ | 12,816,250 | $ | 10,443,750 | |
Buildings and improvements | 33,420,171 | 23,468,037 | |||
In-place lease value intangible | 10,756,483 | 8,404,504 | |||
56,992,904 | 42,316,291 | ||||
Less accumulated depreciation and amortization | -6,278,801 | -2,533,101 | |||
Total real estate assets | $ | 50,714,103 | $ | 39,783,190 |
Real_Estate_Inplace_lease_valu
Real Estate: In-place lease value intangible (Tables) | 12 Months Ended | ||||
Dec. 31, 2013 | |||||
Tables/Schedules | ' | ||||
In-place lease value intangible | ' | ||||
December 31, | |||||
2013 | 2012 | ||||
In-place lease value intangible | $ | 10,756,483 | $ | 8,404,504 | |
In-place leases – accumulated amortization | -4,253,233 | -1,689,202 | |||
Acquired lease intangible assets, net | $ | 6,503,250 | $ | 6,715,302 |
Real_Estate_Inplace_lease_amor
Real Estate: In-place lease amortization in the future (Tables) | 12 Months Ended | ||
Dec. 31, 2013 | |||
Tables/Schedules | ' | ||
In-place lease amortization in the future | ' | ||
The estimated aggregate future amortization amounts from acquired lease intangibles are as follows: | |||
Years ending December 31, | In-place- lease | ||
amortization | |||
2014 | $ | 2,673,686 | |
2015 | 1,683,670 | ||
2016 | 1,607,195 | ||
2017 | 538,699 | ||
Total | $ | 6,503,250 |
Real_Estate_Acquired_the_Bent_
Real Estate: Acquired the Bent Tree Green office building (Tables) | 12 Months Ended | ||
Dec. 31, 2013 | |||
Tables/Schedules | ' | ||
Acquired the Bent Tree Green office building | ' | ||
Assets acquired: | |||
Real estate assets | $ | 12,012,500 | |
Total assets acquired | 12,012,500 | ||
Liabilities assumed: | |||
Accounts payable and accrued expenses | 38,623 | ||
Tenants’ security deposits | 144,575 | ||
Total liabilities assumed | 183,198 | ||
Fair value of net assets acquired | $ | 11,829,302 |
Real_Estate_Cooper_Street_Plaz
Real Estate: Cooper Street Plaza (Tables) | 12 Months Ended | ||
Dec. 31, 2013 | |||
Tables/Schedules | ' | ||
Cooper Street Plaza | ' | ||
Assets acquired: | |||
Real estate assets | $ | 10,612,500 | |
Total assets acquired | 10,612,500 | ||
Liabilities assumed: | |||
Accounts payable and accrued expenses | 85,407 | ||
Tenants’ security deposits | 27,823 | ||
Total liabilities assumed | 113,230 | ||
Fair value of net assets acquired | $ | 10,499,270 |
Real_Estate_Parkway_Property_a
Real Estate: Parkway Property assets acquired (Tables) | 12 Months Ended | ||
Dec. 31, 2013 | |||
Tables/Schedules | ' | ||
Parkway Property assets acquired | ' | ||
Assets acquired: | |||
Real estate assets | $ | 9,490,000 | |
Total assets acquired | 9,490,000 | ||
Liabilities assumed: | |||
Accounts payable and accrued expenses | 32,034 | ||
Tenants’ security deposits | 49,768 | ||
Total liabilities assumed | 81,802 | ||
Fair value of net assets acquired | $ | 9,408,198 |
Real_Estate_Assets_Held_For_Di1
Real Estate Assets Held For Disposition: Income (loss) from discontinued operations (Tables) | 12 Months Ended | ||||
Dec. 31, 2013 | |||||
Tables/Schedules | ' | ||||
Income (loss) from discontinued operations | ' | ||||
Years ended December 31, | |||||
2013 | 2012 | ||||
Total property revenues | $ | 65,115 | $ | 113,948 | |
Property operating expenses | 53,745 | 60,227 | |||
Real estate taxes and insurance | 18,772 | 80,974 | |||
Depreciation & amortization | - | - | |||
Total property and other expenses | 72,517 | 141,201 | |||
Gain on sale of property | 174,043 | - | |||
Income (loss) from discontinued operations | $ | 166,641 | $ | -27,253 |
Deferred_Loan_and_Leasing_Comm1
Deferred Loan and Leasing Commission Costs: Deferred loan costs (Tables) | 12 Months Ended | |||||
Dec. 31, 2013 | ||||||
Tables/Schedules | ' | |||||
Deferred loan costs | ' | |||||
December 31, | ||||||
2013 | 2012 | |||||
Deferred loan costs | $ | 475,688 | $ | 427,537 | ||
Less: deferred loan cost accumulated amortization | -304,617 | -186,083 | ||||
Total cost, net of accumulated amortization | $ | 171,071 | $ | 241,454 |
Deferred_Loan_and_Leasing_Comm2
Deferred Loan and Leasing Commission Costs: Deferred Leasing Commissions (Tables) | 12 Months Ended | |||||
Dec. 31, 2013 | ||||||
Tables/Schedules | ' | |||||
Deferred Leasing Commissions | ' | |||||
December 31, | ||||||
2013 | 2012 | |||||
Deferred Leasing Commissions | $ | 908,869 | $ | 660,888 | ||
Less: deferred leasing commissions accumulated amortization | -84,412 | -304 | ||||
Total cost, net of accumulated amortization | $ | 824,457 | $ | 660,584 |
Future_Minimum_Lease_Income_Fu
Future Minimum Lease Income: Future Minimum Lease Income Schedule (Tables) | 12 Months Ended | ||
Dec. 31, 2013 | |||
Tables/Schedules | ' | ||
Future Minimum Lease Income Schedule | ' | ||
Years ending December 31, | Minimum Future Rents | ||
2014 | $ | 5,721,230 | |
2015 | 5,256,170 | ||
2016 | 4,812,604 | ||
2017 | 3,790,832 | ||
2018 | 3,111,670 | ||
Thereafter | 12,142,195 | ||
Total | $ | 34,834,701 |
Loss_Per_Share_Schedule_of_Ear
Loss Per Share: Schedule of Earnings Per Share, Basic and Diluted (Tables) | 12 Months Ended | |||||
Dec. 31, 2013 | ||||||
Tables/Schedules | ' | |||||
Schedule of Earnings Per Share, Basic and Diluted | ' | |||||
Year Ended December 31, | ||||||
2013 | 2012 | |||||
Numerator: | ||||||
Net loss attributable to common stockholders | ($1,984,873) | ($2,111,037) | ||||
Denominator: | ||||||
Weighted average number of common shares outstanding, basic and diluted | 4,927,708 | 2,647,039 | ||||
Basic and diluted loss per common share: | ||||||
Net loss attributable to common stockholders per share | ($0.40) | ($0.80) |
Income_Taxes_Dividends_distrib
Income Taxes: Dividends distributed tax characterized table (Tables) | 12 Months Ended | |||
Dec. 31, 2013 | ||||
Tables/Schedules | ' | |||
Dividends distributed tax characterized table | ' | |||
2013 | 2012 | |||
Ordinary income (unaudited) | 24.50% | 6.00% | ||
Return of capital (unaudited) | 75.50% | 94.00% | ||
Capital gains distribution (unaudited) | - % | - | - % | |
Total | 100.00% | 100.00% |
Stockholders_Equity_Distributi
Stockholders' Equity: Distributions Table (Tables) | 12 Months Ended | ||||||
Dec. 31, 2013 | |||||||
Tables/Schedules | ' | ||||||
Distributions Table | ' | ||||||
Distributions per Common Share | Total Distributions Paid | ||||||
Quarter paid | |||||||
2013 | |||||||
4th Quarter | $ | 0.175 | $ | 1,033,066 | |||
3rd Quarter | 0.175 | 854,120 | |||||
2nd Quarter | 0.175 | 760,551 | |||||
1st Quarter | 0.175 | 627,754 | |||||
Total | $ | 0.7 | $ | 3,275,491 | |||
2012 | |||||||
4th Quarter | $ | 0.175 | $ | 550,016 | |||
3rd Quarter | 0.175 | 482,186 | |||||
2nd Quarter | 0.175 | 402,956 | |||||
1st Quarter | 0.175 | 324,358 | |||||
Total | $ | 0.7 | $ | 1,759,516 |
Subsequent_Events_Schedule_of_
Subsequent Events: Schedule of Subsequent Events (Tables) | 12 Months Ended | |||||
Dec. 31, 2013 | ||||||
Tables/Schedules | ' | |||||
Schedule of Subsequent Events | ' | |||||
Name/Location | Approx. Rentable | Date Acquired | Property Acquisition Cost | Approx. Annualized | Approx.% | |
SF | Base Rent | Leased | ||||
Gulf Plaza, Houston, TX | 120,651 | 3/11/14 | $13,950,000 | $1,406,000 | 100% |
Organization_and_Business_Deta
Organization and Business (Details) (USD $) | Dec. 31, 2013 |
Details | ' |
Preferred Stock, Shares Issued | 1,000 |
Common Shares issued to public | 5,985,173 |
Gross proceeds | $58,400,455 |
Commercial properties | 4 |
Pad sites | 3 |
Recovered_Sheet8
Summary of Significant Accounting Policies: Accrued Rent and Accounts Receivable (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Details | ' | ' |
Allowance for Doubtful Accounts Receivable | $260,885 | $163,302 |
Bad debt provision | $97,583 | $126,511 |
Recovered_Sheet9
Summary of Significant Accounting Policies (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Details | ' | ' |
Organization and offering costs | $543,943 | $136,321 |
Recovered_Sheet10
Summary of Significant Accounting Policies: Advertising (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Details | ' | ' |
Advertising Expense | $17,470 | $11,962 |
Real_Estate_Schedule_of_Real_E1
Real Estate: Schedule of Real Estate Properties (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Details | ' | ' |
Land | $12,816,250 | $10,443,750 |
Buildings and Improvements, Gross | 33,420,171 | 23,468,037 |
Intangible Assets, Gross (Excluding Goodwill) | 10,756,483 | 8,404,504 |
Preconfirmation, Accumulated Depreciation and Amortization | -6,278,801 | -2,533,101 |
Total real estate assets | $50,714,103 | $39,783,190 |
Real_Estate_Details
Real Estate (Details) (USD $) | 12 Months Ended | |||||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Details | ' | ' | ' | ' | ' | ' |
Depreciation expenses | ' | ' | ' | ' | $1,181,669 | $756,019 |
Amortization expense on in-place lease | $538,699 | $1,607,195 | $1,683,670 | $2,673,686 | $2,564,031 | $1,424,470 |
Real_Estate_Inplace_lease_valu1
Real Estate: In-place lease value intangible (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Details | ' | ' |
Intangible Assets, Gross (Excluding Goodwill) | $10,756,483 | $8,404,504 |
In-place leases - accumulated amortization | -4,253,233 | -1,689,202 |
Acquired lease intangible assets, net | $6,503,250 | $6,715,302 |
Real_Estate_Inplace_lease_amor1
Real Estate: In-place lease amortization in the future (Details) (USD $) | 12 Months Ended | |||||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Details | ' | ' | ' | ' | ' | ' |
Amortization expense on in-place lease | $538,699 | $1,607,195 | $1,683,670 | $2,673,686 | $2,564,031 | $1,424,470 |
Real_Estate_Assets_Held_For_Di2
Real Estate Assets Held For Disposition: Income (loss) from discontinued operations (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Details | ' | ' |
Total property revenues | $65,115 | $113,948 |
Property operating expenses | 53,745 | 60,227 |
Discontinued Real estate taxes and insurance | 18,772 | 80,974 |
Gain on sale of property | 174,043 | ' |
Income (loss) from discontinued operations | $166,641 | ($27,253) |
Accrued_Rent_and_Accounts_Rece1
Accrued Rent and Accounts Receivable, net (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Details | ' | ' |
Tenant receivables | $312,218 | $257,665 |
Accrued Rent, Current | 467,544 | 81,796 |
Allowance for Doubtful Accounts Receivable | -260,885 | -163,302 |
Accrued Rents and Accounts Receivable, net | $518,877 | $176,159 |
Deferred_Loan_and_Leasing_Comm3
Deferred Loan and Leasing Commission Costs: Deferred loan costs (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Details | ' | ' |
Deferred loan costs | $475,688 | $427,537 |
Less: deferred loan cost accumulated amortization | -304,617 | -186,083 |
Total cost, net of accumulated amortization | $171,071 | $241,454 |
Deferred_Loan_and_Leasing_Comm4
Deferred Loan and Leasing Commission Costs: Deferred Leasing Commissions (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Details | ' | ' |
Deferred Leasing Commissions | $908,869 | $660,888 |
Less: Deferred leasing commissions accumulated amortization | -84,412 | -304 |
Total cost, net of accumulated amortization | $824,457 | $660,584 |
Future_Minimum_Lease_Income_Fu1
Future Minimum Lease Income: Future Minimum Lease Income Schedule (Details) (USD $) | 12 Months Ended | ||||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Details | ' | ' | ' | ' | ' |
Minimum Future Rents | $3,111,670 | $3,790,832 | $4,812,604 | $5,256,170 | $5,721,230 |
Related_Party_Transactions_Det
Related Party Transactions (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Hartman Income REIT | ' | ' |
property management fees | $272,799 | $170,491 |
Leasing Commissions Expense | 247,981 | 660,888 |
Balance due to (from) | -578,919 | 188,660 |
Hartman Advisor | ' | ' |
Asset management fees | 156,870 | 649,005 |
Acquisition fees | ' | 80,380 |
Balance due to (from) | 488,502 | 111,973 |
Hartmen Short Term Property XIX | ' | ' |
Balance due to (from) | $158,068 | $364,278 |
Stockholders_Equity_Details
Stockholders' Equity (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Details | ' | ' |
Common Stock, Shares Authorized | 750,000,000 | ' |
Common Stock, No Par Value | $0.00 | ' |
Preferred Stock, Shares Authorized | 200,000,000 | ' |
Preferred Stock, Par or Stated Value Per Share | $0.00 | ' |
Shares issued to non-employee directors compensation | 6,750 | 6,000 |
Stockholders_Equity_Distributi1
Stockholders' Equity: Distributions Table (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Details | ' | ' |
Distributions per common share | $0.70 | $0.70 |
Distribution total paid | $3,275,491 | $1,759,516 |
Incentive_Awards_Plan_Details
Incentive Awards Plan (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Details | ' | ' |
Stock-based incentive compensation | $20,000 | $20,000 |