Cover Page
Cover Page - shares | 3 Months Ended | |
Mar. 31, 2020 | Jun. 01, 2020 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Mar. 31, 2020 | |
Document Transition Report | false | |
Entity File Number | 000-53912 | |
Entity Registrant Name | HARTMAN SHORT TERM INCOME PROPERTIES XX, INC. | |
Entity Incorporation, State or Country Code | MD | |
Entity Tax Identification Number | 26-3455189 | |
Entity Address, Address Line One | 2909 Hillcroft | |
Entity Address, Address Line Two | Suite 420 | |
Entity Address, City or Town | Houston | |
Entity Address, State or Province | TX | |
Entity Address, Postal Zip Code | 77057 | |
City Area Code | 713 | |
Local Phone Number | 467-2222 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Smaller Reporting Company | true | |
Emerging Growth Company | true | |
Entity Shell Company | false | |
Extended Transition Period | true | |
Entity Common Stock, Shares Outstanding | 18,417,687 | |
Amendment Flag | false | |
Entity Central Index Key | 0001446687 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Non-accelerated Filer | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q1 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
ASSETS | ||
Real estate assets, at cost | $ 597,501 | $ 594,569 |
Accumulated depreciation and amortization | (124,634) | (117,652) |
Real estate assets, net | 472,867 | 476,917 |
Cash and cash equivalents | 35 | 1,033 |
Restricted cash | 18,400 | 26,078 |
Accrued rent and accounts receivable, net | 14,232 | 12,576 |
Notes receivable - related party | 16,538 | 17,288 |
Deferred leasing commission costs, net | 11,448 | 10,790 |
Goodwill | 250 | 250 |
Prepaid expenses and other assets | 392 | 735 |
Due from related parties | 3,409 | 2,130 |
Investment in affiliate | 8,978 | 8,978 |
Total assets | 546,549 | 556,775 |
Liabilities: | ||
Notes payable, net | 306,682 | 303,039 |
Accounts payable and accrued expenses | 12,982 | 23,444 |
Tenants' security deposits | 5,356 | 5,286 |
Total liabilities | 325,020 | 331,769 |
Commitments and contingencies | ||
Stockholders' equity: | ||
Preferred stock, $0.001 par value, 200,000,000 convertible, non-voting shares authorized, 1000 shares issued and outstanding at March 31, 2020 and December 31, 2019, respectively | 0 | 0 |
Common stock, $0.001 par value, 750,000,000 authorized, 18,417,687 shares issued and outstanding at March 31, 2020 and December 31, 2019, respectively | 18 | 18 |
Additional paid-in capital | 174,019 | 174,019 |
Accumulated distributions and net loss | (111,461) | (109,406) |
Total stockholders' equity | 62,576 | 64,631 |
Noncontrolling interests in subsidiary | 158,953 | 160,375 |
Total equity | 221,529 | 225,006 |
Total liabilities and equity | $ 546,549 | $ 556,775 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Mar. 31, 2020 | Dec. 31, 2019 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Convertible, non-voting shares authorized (in shares) | 200,000,000 | 200,000,000 |
Preferred stock, shares issued (in shares) | 1,000 | 1,000 |
Preferred stock, shares outstanding (in shares) | 1,000 | 1,000 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized (in shares) | 750,000,000 | 750,000,000 |
Common stock, shares issued (in shares) | 18,417,687 | 18,417,687 |
Common stock, shares outstanding (in shares) | 18,417,687 | 18,417,687 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Revenues | ||
Rental revenues | $ 18,720 | $ 18,229 |
Tenant reimbursements and other revenues | 4,419 | 5,080 |
Total revenues | 23,139 | 23,309 |
Expenses (income) | ||
Property operating expenses | 6,945 | 7,751 |
Asset management fees | 440 | 440 |
Real estate taxes and insurance | 3,170 | 3,157 |
Depreciation and amortization | 6,982 | 7,030 |
General and administrative | 1,177 | 1,177 |
Interest expense | 3,018 | 3,669 |
Interest and dividend income | (477) | (275) |
Total expenses, net | 21,255 | 22,949 |
Net Income | 1,884 | 360 |
Net Income attributable to noncontrolling interests | 716 | 25 |
Net Income attributable to common stockholders | $ 1,168 | $ 335 |
Net income attributable to common stockholders per share (in dollars per share) | $ 0.06 | $ 0.02 |
Weighted average number of common shares outstanding, basic and diluted (in shares) | 18,418 | 17,837 |
CONSOLIDATED STATEMENTS OF EQUI
CONSOLIDATED STATEMENTS OF EQUITY - USD ($) shares in Thousands, $ in Thousands | Total | Preferred Stock | Common Stock | Additional Paid-in Capital | Accumulated Distributions and Net Loss | Parent | Noncontrolling Interest |
Beginning balance (in shares) at Dec. 31, 2018 | 1 | 17,712 | |||||
Beginning balance at Dec. 31, 2018 | $ 248,481 | $ 0 | $ 18 | $ 165,084 | $ (95,162) | $ 69,940 | $ 178,541 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Issuance of common shares (in shares) | 6 | ||||||
Issuance of common shares | 76 | 76 | 76 | ||||
Purchase of noncontrolling interest (in shares) | 700 | ||||||
Purchase of non-controlling interest | 38 | 8,896 | 8,896 | (8,858) | |||
Dividends and distributions (cash) | (5,288) | (3,141) | (3,141) | (2,147) | |||
Net income (Loss) | 360 | 335 | 335 | 25 | |||
Ending balance (in shares) at Mar. 31, 2019 | 1 | 18,418 | |||||
Ending balance at Mar. 31, 2019 | 243,667 | $ 0 | $ 18 | 174,056 | (97,968) | 76,106 | 167,561 |
Beginning balance (in shares) at Dec. 31, 2019 | 1 | 18,418 | |||||
Beginning balance at Dec. 31, 2019 | 225,006 | $ 0 | $ 18 | 174,019 | (109,406) | 64,631 | 160,375 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Dividends and distributions (cash) | (5,361) | (3,223) | (3,223) | (2,138) | |||
Net income (Loss) | 1,884 | 1,168 | 1,168 | 716 | |||
Ending balance (in shares) at Mar. 31, 2020 | 1 | 18,418 | |||||
Ending balance at Mar. 31, 2020 | $ 221,529 | $ 0 | $ 18 | $ 174,019 | $ (111,461) | $ 62,576 | $ 158,953 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Cash flows from operating activities: | ||
Net income (Loss) | $ 1,884 | $ 360 |
Adjustments to reconcile net income to net cash used in operating activities: | ||
Stock based compensation | 19 | 19 |
Depreciation and amortization | 6,982 | 7,030 |
Deferred loan and lease commission costs amortization | 609 | 885 |
Bad debt provision, net | 44 | 775 |
Changes in operating assets and liabilities: | ||
Accrued rent and accounts receivable | (1,700) | (3,163) |
Deferred leasing commissions | (1,013) | (951) |
Prepaid expenses and other assets | 343 | (1,654) |
Accounts payable and accrued expenses | (10,481) | (10,643) |
Due to/from related parties | (1,279) | 1,221 |
Tenants' security deposits | 70 | 43 |
Net cash used in operating activities | (4,522) | (6,078) |
Cash flows from investing activities: | ||
Acquisition deposits | 0 | 529 |
Repayment of note receivable from affiliate | 750 | 0 |
Investment in affiliate - related party | 0 | (10,546) |
Lender required reserves | 0 | 10,273 |
Additions to real estate | (2,932) | (2,753) |
Net cash used in investing activities | (2,182) | (2,497) |
Cash flows from financing activities: | ||
Distributions to common stockholders | (3,223) | (3,141) |
Distributions to non-controlling interest | (2,138) | (2,147) |
Borrowing from affiliate | 3,800 | 0 |
Repayments under term loan notes | (411) | (7,492) |
Borrowings under insurance premium finance note | 0 | 1,421 |
Payments of deferred loan costs | 0 | (71) |
Net cash used in financing activities | (1,972) | (11,430) |
Net change in cash and cash equivalents and restricted cash | (8,676) | (20,005) |
Cash and cash equivalents and restricted cash, beginning of period | 27,111 | 51,477 |
Cash and cash equivalents and restricted cash, end of period | 18,435 | 31,472 |
Supplemental cash flow information: | ||
Cash paid for interest | 2,960 | 3,322 |
Supplemental disclosures of non-cash investing and financing activities: | ||
Value of director's stock compensation shares issued | 0 | 76 |
Value of common shares issued to acquire non-controlling interest | 0 | 8,896 |
Acquisition of non-controlling interest | $ 0 | $ (8,858) |
Organization and Business
Organization and Business | 3 Months Ended |
Mar. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Business | 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. As used herein, the “Company,” “we,” “us,” or “our”refer to Hartman Short Term Income Properties XX, Inc. and its consolidated subsidiaries, including Hartman XX Limited Partnership, a Texas limited partnership (the “Operating Partnership”), except where context otherwise requires. On July 19, 2018, we entered into a limited liability company agreement with our affiliates Hartman Income REIT, Inc. (“HIREIT”), Hartman Short Term Income Properties XIX, Inc. (“Hartman XIX”) and Hartman vREIT XXI, Inc. (“vREIT XXI”) to form Hartman SPE, LLC ("SPE LLC"), a special purpose entity. On October 1, 2018, SPE LLC, as borrower, and Goldman Sachs Mortgage Company entered into a term loan agreement pursuant to which the lender made a term loan to SPE LLC in the principal amount of $259,000,000. Contemporaneously therewith and together with our affiliates HIREIT, Hartman XIX and vREIT XXI, we contributed a total of 39 commercial real estate properties ("Properties") to SPE, LLC, subject to the then existing mortgage indebtedness encumbering the Properties, in exchange for membership interests in SPE LLC. Proceeds of the Loan were immediately used to extinguish the existing mortgage indebtedness encumbering the Properties. Substantially all of our business is conducted through our wholly owned subsidiary, the Operating Partnership, and SPE LLC. Our wholly-owned subsidiary, Hartman XX REIT GP LLC, a Texas limited liability company, is the sole general partner of the Operating Partnership. We are the sole limited partner of the Operating Partnership. Our wholly-owned subsidiary, Hartman SPE Management, LLC ("SPE Management") is the manager of SPE LLC. Our single member interests in our limited liability company subsidiaries are owned by the Operating Partnership or its wholly owned subsidiaries. Subject to certain restrictions and limitations, Hartman Advisors LLC ("Advisor") is responsible for managing our affairs on a day-to-day basis and for identifying and making acquisitions and investments on our behalf pursuant to an advisory agreement (the “Advisory Agreement”) by and among the Company and Advisor. Management of the Company’s properties and the Properties, is provided pursuant to property management agreements with Hartman Income REIT Management, Inc. (the "Property Manager"), a wholly-owned subsidiary of HIREIT. As of March 31, 2020 and 2019, the Company owned 43 commercial properties comprising approximately 6.7 million square feet plus three pad sites, all located in Texas. As of March 31, 2020 and 2019, the Company owned 15 properties located in Richardson, Arlington and Dallas, Texas, 25 properties located in Houston, Texas and three properties located in San Antonio, Texas. On July 21, 2017, the Company and Hartman Short Term Income Properties XIX, Inc. (“Hartman XIX”), entered into an agreement and plan of merger (the “XIX Merger Agreement”). On July 21, 2017, as subsequently modified on May 8 2018, the Company, the Operating Partnership, Hartman Income REIT, Inc. (“HIREIT”) and Hartman Income REIT Operating Partnership LP, the operating partnership of HIREIT, (“HIROP”), entered into an agreement and plan of merger (the “HIREIT Merger Agreement,” and together with the XIX Merger Agreement, the “Merger Agreements”). On May 14, 2020, the Merger Agreements were approved by the respective company shareholders. The effective date of the Mergers is expected to be July 1, 2020. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2020 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Basis of Presentation The accompanying consolidated financial statements included in this report are unaudited; however, amounts presented in the consolidated balance sheet as of December 31, 2019 are derived from our audited consolidated financial statements as of that date. The unaudited consolidated financial statements as of March 31, 2020 have been prepared by the Company in accordance with accounting principles generally accepted in the United States (“GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission, including Form 10-Q and Regulation S-X, on a basis consistent with the annual audited consolidated financial statements. The consolidated financial statements presented herein reflect all adjustments (consisting of normal recurring accruals and adjustments), which are, in the opinion of management, necessary to fairly present the financial position of the Company as of March 31, 2020, and the results of consolidated operations for the three months ended March 31, 2020 and 2019, the consolidated statements of stockholders’ equity for the three months ended March 31, 2020 and 2019 and the consolidated statements of cash flows for the three months ended March 31, 2020 and 2019. The results of the three months ended March 31, 2020 are not necessarily indicative of the results to be expected for the year ending December 31, 2020. The consolidated financial statements herein are condensed and should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019. These unaudited consolidated financial statements include the accounts of the Company, the Operating Partnership and its subsidiaries, and Hartman SPE, LLC. All significant intercompany balances and transactions have been eliminated. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and 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. Cash and Cash Equivalents Cash and cash equivalents on the accompanying consolidated balance sheets include all cash and liquid investments with maturities of three months or less. Cash and cash equivalents as of March 31, 2020 and December 31, 2019 consisted of demand deposits at commercial banks. We maintain accounts which may from time to time exceed federally insured limits. We have not experienced any losses in these accounts and believe that the Company is not exposed to any significant credit risk and regularly monitors the financial stability of these financial institutions. Restricted Cash Restricted cash on the accompanying consolidated balance sheets consists of amounts escrowed for future real estate taxes, insurance, capital expenditures and debt service, as required by certain of our mortgage debt agreements. 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 balances due to/due from related parties, as well as related party notes receivable. The Company considers the carrying value of these financial instruments to approximate their respective fair values due to their short-term nature. Disclosure about the fair value of financial instruments is based on relevant information available as of March 31, 2020 and December 31, 2019. Revenue Recognition The Company’s 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 purposes of this calculation. The Company’s accrued rents are included in accrued rent and accounts receivable, net. 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. Additionally, cost recoveries from tenants are included in the tenant reimbursements and other revenues line item in the consolidated statements of operations in the period the related costs are incurred. 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 to rental revenues 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. Real Estate Joint Ventures and Partnerships To determine the method of accounting for partially owned real estate joint ventures and partnerships, management determines whether an entity is a VIE and, if so, determines which party is the primary beneficiary by analyzing whether we have both the power to direct the entity’s significant economic activities and the obligation to absorb potentially significant losses or receive potentially significant benefits. Significant judgments and assumptions inherent in this analysis include the design of the entity structure, the nature of the entity’s operations, future cash flow projections, the entity’s financing and capital structure, and contractual relationships and terms. We consolidate a VIE when we have determined that we are the primary beneficiary. Primary risks associated with our involvement with our VIEs include the potential funding of the entities’ debt obligations or making additional contributions to fund the entities’ operations or capital activities. Partially owned, non-variable interest real estate joint ventures and partnerships over which we have a controlling financial interest are consolidated in our consolidated financial statements. In determining if we have a controlling financial interest, we consider factors such as ownership interest, authority to make decisions, kick-out rights and substantive participating rights. Partially owned real estate joint ventures and partnerships where we do not have a controlling financial interest, but have the ability to exercise significant influence, are accounted for using the equity method. Management continually analyzes and assesses reconsideration events, including changes in the factors mentioned above, to determine if the consolidation or equity method treatment remains appropriate. 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 average years’ remaining calculated on terms of all of the leases in-place when acquired. Impairment The Company reviews its 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. The Company determines 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 is no impairment indicated in the carrying value of our real estate assets as of March 31, 2020 and December 31, 2019. Accrued Rent and Accounts Receivable Accrued rent and accounts receivable include base rents, tenant reimbursements and receivables attributable to recording rents on a straight-line basis. An allowance for the uncollectible portion of accrued rent 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. Deferred Leasing Commission Costs Leasing commissions are amortized using the straight-line method over the term of the related lease agreements. Goodwill GAAP requires 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 applies a one-step quantitative test to determine if the estimated fair value is less than the carrying amount. If the carrying amount exceeds the estimated fair value, the Company will record a goodwill impairment equal to such excess, not to exceed the total amount of goodwill. No goodwill impairment has been recognized in the accompanying consolidated financial statements. Noncontrolling Interests Noncontrolling interests is the portion of equity in a subsidiary not attributable to a parent. The ownership interests not held by the parent are considered noncontrolling interests. Accordingly, the Company has reported noncontrolling interests in equity on the consolidated balance sheets but separate from the Company's equity. On the consolidated statements of operations, subsidiaries are reported at the consolidated amount, including both the amount attributable to the Company and noncontrolling interests. Stock-Based Compensation The Company follows Accounting Standards Codification ("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 estimated grant date fair value, as of the grant date of the Company’s common stock, of the equity or liability instruments issued. Stock-based compensation expense are recorded over the vesting period and is included in general and administrative expense in the accompanying consolidated statements of operations. Income Taxes The Company has elected to be treated as a REIT under the Internal Revenue Code of 1986, as amended, beginning with its 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 continue to operate in such a manner as to qualify for treatment as a REIT. For the three months ended March 31, 2020 and 2019, the Company incurred net income of $1,884,000 and $360,000. The Company formed a taxable REIT subsidiary which may generate 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. 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. Income Per Share The computations of basic and diluted income 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 March 31, 2020 and 2019, there were no shares issuable in connection with these potentially dilutive securities. These potentially dilutive securities were excluded from the computations of diluted net income per share for the three months ended March 31, 2020 and 2019 because no shares are issuable. Concentration of Risk The geographic concentration of the Company’s real estate assets makes it susceptible to adverse economic developments in the State of Texas. Any adverse economic or real estate developments in these markets, such as business layoffs or downsizing, relocation of businesses, increased competition or any other changes, could adversely affect the Company’s operating results and its ability to make distributions to stockholders. Going Concern Evaluation Pursuant to ASU 2014-15, “Presentation of Financial Statements – Going Concern,” management is required to evaluate the Company’s ability to continue as a going concern within one year after the date that these consolidated financial statements are issued. The Hartman SPE, LLC loan agreement (the “SASB Loan”) has an initial maturity date of October 9, 2020. The SASB Loan provides for three successive one one extension options, the Hartman SPE, LLC must meet five conditions in order to extend the maturity date without any further qualification. One of the five conditions is that Hartman SPE must have a debt yield, as defined, of 12.5% or greater as of June 30, 2020. As of December 31, 2019 and March 31, 2020, Hartman SPE has a debt yield of 13.29% and 12.95%, respectively. Management has concluded that there is substantial doubt about the Company's ability to continue as a going concern within one year of the issuance date of these consolidated financial statements due to the fact of the uncertainty regarding the loan maturity of the SPE Loan. Management believes that Hartman SPE will be able to extend the maturity date for one year which will mitigate the maturity date issue within one year of the issuance date of these consolidated financial statements. Reclassification Certain items in the comparative consolidated financial statements have been reclassified to conform to the presentation adopted in the current period. The Consolidated Statement of Cash Flows presented for the three months ended March 31, 2019 was adjusted to present cash and cash equivalents and restricted cash, as restricted cash was previously reported as part of prepaid expenses and other assets. Recent Accounting Pronouncements Not Yet Adopted In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments . The updated guidance requires measurement and recognition of expected credit losses for financial assets, including trade and other receivables, held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. This is different from the current guidance as this will require immediate recognition of estimated credit losses expected to occur over the remaining life of many financial assets. Generally, the pronouncement requires a modified retrospective method of adoption. This guidance is effective for fiscal years and interim periods within those years beginning after January 2023, with early adoption permitted. The Company is currently evaluating the impact this guidance will have on the consolidated financial statements when adopted. |
Real Estate
Real Estate | 3 Months Ended |
Mar. 31, 2020 | |
Real Estate [Abstract] | |
Real Estate | Real Estate The Company’s real estate assets consisted of the following, in thousands: March 31, 2020 December 31, 2019 Land $ 145,050 $ 145,050 Buildings and improvements 351,661 348,729 In-place lease value intangible 100,790 100,790 597,501 594,569 Less: accumulated depreciation and amortization (124,634) (117,652) Total real estate assets $ 472,867 $ 476,917 Depreciation expense for the three months ended March 31, 2020 and 2019 was $4,317,000 and $4,313,000, respectively. Amortization expense of in-place lease value intangible was $2,665,000 and $2,717,000 for the three months ended March 31, 2020 and 2019, respectively. The Company identifies and records 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 are as follows, in thousands: March 31, 2020 December 31, 2019 In-place lease value intangible $ 100,790 $ 100,790 In-place leases – accumulated amortization (71,549) (68,884) Acquired lease intangible assets, net $ 29,241 $ 31,906 As of March 31, 2020 and December 31, 2019, the Company owned 43 commercial properties comprising approximately 6.7 million square feet plus three pad sites, all located in Texas. As of March 31, 2020, the Company owned 15 properties located in Richardson, Arlington and Dallas, Texas, 25 properties located in Houston, Texas and three properties located in San Antonio, Texas. Asset management fees incurred and paid to Advisor were $440,000 for the three months ended March 31, 2020 and 2019, respectively. Asset management and acquisition fees are captioned as such in the accompanying consolidated statements of operations. |
Accrued Rent and Accounts Recei
Accrued Rent and Accounts Receivable, net | 3 Months Ended |
Mar. 31, 2020 | |
Receivables [Abstract] | |
Accrued Rent and Accounts Receivable, net | Accrued Rent and Accounts Receivable, net Accrued rent and accounts receivable, net, consisted of the following, in thousands: March 31, 2020 December 31, 2019 Tenant receivables $ 7,126 $ 5,929 Accrued rent 9,747 9,244 Allowance for uncollectible accounts (2,641) (2,597) Accrued rents and accounts receivable, net $ 14,232 $ 12,576 As of March 31, 2020 and December 31, 2019, the Company had an allowance for uncollectible accounts of $2,641,000 and $2,597,000, respectively. For the three months ended March 31, 2020 and 2019, the Company recorded bad debt expense in the amount of $44,000 and $775,000, respectively, related to tenant receivables that we have specifically identified as potentially uncollectible based on our assessment of each tenant’s credit-worthiness. For the three months ended March 31, 2020 and 2019, the Company did not record any write-offs. Bad debt expense and any related recoveries are included in property operating expenses in the accompanying consolidated statements of operations. |
Deferred Leasing Commission Cos
Deferred Leasing Commission Costs, net | 3 Months Ended |
Mar. 31, 2020 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Deferred Leasing Commission Costs, net | Deferred Leasing Commission Costs, net Costs which have been deferred consist of the following, in thousands: March 31, 2020 December 31, 2019 Deferred leasing commissions costs $ 18,633 $ 17,620 Less: accumulated amortization (7,185) (6,830) Deferred leasing commission costs, net $ 11,448 $ 10,790 |
Future Minimum Rents
Future Minimum Rents | 3 Months Ended |
Mar. 31, 2020 | |
Leases [Abstract] | |
Future Minimum Rents | Future Minimum Rents The Company leases the majority of its properties under noncancellable 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 noncancellable operating leases in existence at March 31, 2020 is as follows, in thousands: March 31, Minimum Future Rents 2020 $ 70,520 2021 62,071 2022 49,589 2023 38,112 2024 26,036 Thereafter 39,345 Total $ 285,673 |
Notes Payable
Notes Payable | 3 Months Ended |
Mar. 31, 2020 | |
Debt Disclosure [Abstract] | |
Notes Payable | Notes Payable The Operating Partnership is a party to four, cross-collateralized, term loan agreements with an insurance company. The term loans are secured by the Richardson Heights Property, the Cooper Street Property, the Bent Tree Green Property and the Mitchelldale Property. The loans require monthly payments of principal and interest due and payable on the first day of each month. Monthly payments are based on a 27-year loan amortization. Each of the loan agreements are subject to customary covenants, representations and warranties which must be maintained during the term of the loan agreements. Each of the loan agreements provides for a fixed interest rate of 4.61%. As of March 31, 2020, the Company was in compliance with all loan covenants, with respect to the loans above. Each of the loan agreements is secured by a deed of trust, assignment of licenses, permits and contracts, assignment and subordination of the management agreements and assignment of rents. The terms of the security instruments provide for the cross collateralization/cross default of the each of the loans. The outstanding balance of the four loans was $42,982,000 and $43,393,000 as of March 31, 2020 and December 31, 2019, respectively. On October 1, 2018, the Company through Hartman SPE, LLC and Goldman Sachs Mortgage Company entered into a $259,000,000 term loan agreement (the "SASB Loan"). The Company together with its affiliates HIREIT, Hartman XIX and vREIT XXI, contributed a total of 39 commercial real estate properties to Hartman SPE, LLC in exchange for membership interests in Hartman SPE, LLC. The term of the SASB Loan is five years, comprised of an initial two one The outstanding principal of the SASB Loan bears interest at the one-month LIBOR rate plus 1.8%. The SASB Loan is subject to an interest rate cap arrangement which caps LIBOR at 3.75% during the initial term of the SASB Loan. The SASB Loan contains various customary covenants, including but not limited to financial covenants, covenants requiring monthly deposits in respect of certain property costs, such as taxes, insurance, tenant improvements, and leasing commissions, covenants imposing restrictions on indebtedness and liens, and restrictions on investments and participation in other asset disposition, merger or business combination or dissolution transactions. The SASB Loan is secured by, among other things, mortgages on the properties. The Company, HIREIT and Hartman XIX, entered into a guaranty agreement in favor of the lender, whereby each guarantor unconditionally guaranties the full and timely performance of the obligations set forth in the loan agreement and all other loan documents, including the payment of all indebtedness and obligations due under the loan agreement. The following is a summary of the Company’s notes payable, in thousands: Property/Facility Payment (1) Maturity Date Rate March 31, 2020 December 31, 2019 Richardson Heights (2) P&I July 1, 2041 4.61 % $ 17,087 $ 17,260 Cooper Street (2) P&I July 1, 2041 4.61 % 7,367 7,435 Bent Tree Green (2) P&I July 1, 2041 4.61 % 7,367 7,435 Mitchelldale (2) P&I July 1, 2041 4.61 % 11,161 11,263 Hartman SPE LLC IO October 9, 2020 2.79 % 259,000 259,000 Hartman XXI IO March 31, 2021 10.00 % 8,200 4,400 310,182 306,793 Less: unamortized deferred loan costs (3,500) (3,754) $ 306,682 $ 303,039 (1) Principal and interest (P&I) or interest only (IO). (2) Each promissory note contains a call option wherein the holder of the promissory note may declare the outstanding balance due and payable on either July 1, 2024, July 1, 2029, July 1, 2034, or July 1, 2039. The Company's loan costs are amortized using the straight-line method over the terms of the loans, which approximates the interest method. Costs which have been deferred consist of the following, in thousands: March 31, 2020 December 31, 2019 Deferred loan costs $ 7,155 $ 7,155 Less: deferred loan cost accumulated amortization (3,655) (3,401) Total cost, net of accumulated amortization $ 3,500 $ 3,754 Interest expense incurred for the three months ended March 31, 2020 and 2019 was $3,018,000 and $3,669,000, respectively, which includes amortization expense of deferred loan costs. Interest expense of $320,000 and $516,000 was payable as of March 31, 2020 and December 31, 2019, respectively, and is included in accounts payable and accrued expenses in the accompanying consolidated balance sheets. The Company is required to provide audited financial statements for Hartman SPE, LLC within 120 days after the end of its fiscal year, which is December 31. The servicer for the lender has extended the time for delivery of the Hartman SPE, LLC audited annual financial statements. Fair Value of Debt The fair value of the Company’s fixed rate notes payable, variable rate notes payable and secured revolving credit facilities aggregates to $315,637,000 and $308,671,000 as compared to book value of $310,182,000 and $306,793,000 as of March 31, 2020 and December 31, 2019, respectively. The fair value of our debt instruments is estimated on a Level 2 basis, as provided by ASC 820, using a discounted cash flow analysis based on the borrowing rates currently available to the Company for loans with similar terms and maturities, discounting the future contractual interest and principal payments. Disclosure about the fair value of notes payable is based on relevant information available as of March 31, 2020 and December 31, 2019. |
Income Per Share
Income Per Share | 3 Months Ended |
Mar. 31, 2020 | |
Earnings Per Share [Abstract] | |
Income Per Share | Income Per Share Basic income per share is computed using net income 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 per share are included in the diluted earnings per share. Three months ended March 31, 2020 2019 Numerator: Net income attributable to common stockholders (in thousands) $ 1,168 $ 335 Denominator: Weighted average number of common shares outstanding, basic and diluted (in thousands) 18,418 17,837 Basic and diluted income per common share: $ 0.06 $ 0.02 |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 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, 2015, 2016, 2017, 2018 and 2019 have not been examined by the Internal Revenue Service.The Company’s federal income tax return for the year ended December 31, 2015 may be examined on or before September 15, 2020. The Company has formed a taxable REIT subsidiary which may generate 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. Accordingly, no deferred tax benefit or deferred tax asset has been recorded in the accompanying 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. Taxable income (loss) differs from net income (loss) for financial reporting purposes principally due to differences in the timing of recognition of interest, real estate taxes, depreciation and amortization and rental revenue. |
Related Party Transactions
Related Party Transactions | 3 Months Ended |
Mar. 31, 2020 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | 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. The Company pays acquisition fees and asset management fees to the Advisor in connection with the acquisition of properties and management of the Company. The Company pays property management and leasing commissions to the Property Manager in connection with the management and leasing of the Company’s properties. For the three months ended March 31, 2020 and 2019, the Company incurred property management fees and reimbursements of $2,069,000 and $1,953,000, respectively, and $1,013,000 and $950,000, respectively for leasing commissions owed to our Property Manager. We incurred asset management fees of $440,000 and $440,000, respectively, owed to the Advisor. 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 the Company does not own all or a majority of an asset. There were no acquisition fees incurred to the Advisor for the three months ended March 31, 2020 and 2019, respectively. Property management fees and reimbursements are included in property operating expense in the accompanying consolidated statements of operations. Asset management fees are captioned as such in the accompanying consolidated statements of operations. The Company also pays construction management fees for the Property Manager in connection with the construction management of the Company's properties. For the three months ended March 31, 2020 and 2019, the Company incurred construction management fees of $166,000 and $267,000, respectively. Construction management fees are capitalized and included in real estate assets in the consolidated balance sheets. The Company had a balance due to the Property Manager of $843,000 and $1,168,000 as of March 31, 2020 and December 31, 2019, respectively. The Company owed the Advisor $1,966,000 and $2,077,000 for asset management fees as of March 31, 2020 and December 31, 2019, respectively. The Company had a net balance due from other related parties of $8,125,000 and $5,375,000 as of March 31, 2020 and December 31, 2019, respectively. The Company owns 1,561,523 shares of the common stock of HIREIT which it acquired for cash consideration of $8,978,000. The Company’s investment in HIREIT is accounted for under the cost method. The Company’s approximate 11% ownership interest in HIREIT is less than a controlling stake, and is reflected as “Investment in Affiliate” on the accompanying consolidated balance sheets. The Company received dividend distributions from HIREIT of $106,000 and $106,000 for the three months ended March 31, 2020 and 2019, respectively, which is included in interest and dividend income in the accompanying consolidated statements of operations. During the fourth quarter of 2019, the Company borrowed under an unsecured promissory note payable to Hartman vREIT XXI, Inc., an affiliate of the Advisor and the Property Manager, in the face amount of $4,400,000. This note payable had an outstanding balance of $8,200,000 and $4,400,000 as of March 31, 2020 and December 31, 2019, respectively, which is included in Notes payable, net in the accompanying consolidated balance sheets. Interest has been accrued on the loan amount at an annual rate of 10%. The Company recognized interest expense on the affiliate note in the amount of $110,000 for the three months ended March 31, 2020, which is included in interest expense in the accompanying consolidated statements of operations. In May 2016, the Company, through its taxable REIT subsidiary, Hartman TRS, Inc. (“TRS”), loaned $7,231,000 pursuant to a promissory note in the face amount of up to $8,820,000 to Hartman Retail II Holdings Company, Inc. (“Retail II Holdings”), an affiliate of the Advisor and the Property Manager, in connection with the acquisition of a retail shopping center by Hartman Retail II DST, a Delaware statutory trust sponsored by the Property Manager. Pursuant to the terms of the promissory note, TRS received a two percent (2%) origination fee of amounts advanced under the promissory note, and interest at ten percent (10%) per annum on the outstanding principal balance. The outstanding principal balance of the promissory note will be repaid as investor funds are raised by Hartman Retail II DST. The maturity date of the promissory note, as amended is December 31, 2020. This note receivable had an outstanding balance of $1,726,000 and $2,476,000 as of March 31, 2020 and December 31, 2019, respectively, which is included in Notes receivable – related party in the accompanying consolidated balance sheets. For the three months ended March 31, 2020 and 2019, respectively, the Company recognized interest income on this affiliate note in the amount of $43,000 and $61,000, respectively, which is included in interest and dividend income in the accompanying consolidated statements of operations. The Company had a note receivable due from an affiliate, Hartman Short Term Income Properties XIX, Inc. (“Hartman XIX”), of $4,200,000 as of March 31, 2020 and December 31, 2019, respectively, which is included in Notes receivable - related party in the accompanying consolidated balance sheets. The face amount of the promissory note is $4,500,000. Interest has been accrued on the loan amount at an annual rate of six percent (6%). The Company recognized interest income on the affiliate note in the amount of $63,000 for the three months ended March 31, 2020 and 2019, respectively, which is included in interest and dividend income in the accompanying consolidated statements of operations. In February 2019, the Company through TRS, loaned $6,782,455 pursuant to a promissory note in the face amount of up to $7,500,000 to Hartman Retail III Holdings Company, Inc. (“Retail III Holdings”), an affiliate of the Advisor and the Property Manager, in connection with the acquisition of a retail shopping center by Hartman Retail III DST, a Delaware statutory trust sponsored by the Advisor. This note receivable had an outstanding balance of $6,782,000 as of March 31, 2020 and December 31, 2019, respectively, which is included in Notes receivable – related party in the accompanying consolidated balance sheets. Pursuant to the terms of the promissory note, TRS receives a two percent (2%) origination fee of amounts advanced under the promissory note, and interest at ten percent (10%) per annum on the outstanding principal balance. The outstanding principal balance of the promissory note will be repaid as investor funds are raised by Hartman Retail III DST. The maturity date of the promissory note is February 29, 2021. The Company recognized interest income on this affiliate note in the amount of $169,000 for the three months ended March 31, 2020, which is included in interest and dividend income in the accompanying consolidated statements of operations. In March 2019, the Company through TRS, loaned $3,829,711 pursuant to a promissory note in the face amount of up to $3,500,000 to Hartman Ashford Bayou, LLC (“Ashford Bayou”), an affiliate of the Advisor and the Property Manager, in connection with the acquisition of office building by Ashford Bayou, a wholly owned subsidiary of Hartman Total Return, Inc. This note receivable had an outstanding balance of $3,830,000 as of March 31, 2020 and December 31, 2019, respectively, which is included in Notes receivable – related party in the accompanying consolidated balance sheets. Pursuant to the terms of the promissory note, TRS receives a two percent (2%) origination fee of amounts advanced under the promissory note, and interest at ten percent (10%) per annum on the outstanding principal balance. The outstanding principal balance of the promissory note will be repaid as investor funds are raised by Hartman Total Return, Inc. The maturity date of the promissory note is March 31, 2021. The Company recognized interest income on this affiliate note in the amount of 95,000 for the three months ended March 31, 2020, which is included in interest and dividend income in the accompanying consolidated statements of operations. Variable interest entities (“VIEs”) are defined as entities with a level of invested equity that is not sufficient to fund future operations on a stand-alone basis, or whose equity holders lack certain characteristics of a controlling financial interest. For identified VIEs, an assessment must be made to determine which party to the VIE, if any, has both the power to direct the activities of the VIE that most significantly impacts the performance of the VIE and the obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant to the VIE. The Company is not deemed to be the primary beneficiary of Retail II Holdings, Retail III Holdings or Ashford Bayou, each of which qualifies as a VIE. Accordingly, the assets and liabilities and revenues and expenses of Retail II Holdings , Retail III Holdings and Ashford Bayou have not been included in the accompanying consolidated financial statements. The Board of Directors voted to acquire an additional 3.42% ownership interest of Hartman SPE, LLC from Hartman vREIT XXI, Inc. in exchange for 700,302 shares of the Company’s common stock with a total value of $8,858,826 ($12.65 per share). The exchange increased the Company’s ownership interest in Hartman SPE, LLC from 32.74% to 36.16%. The transaction was effective March 1, 2019. |
Stockholders' Equity
Stockholders' Equity | 3 Months Ended |
Mar. 31, 2020 | |
Equity [Abstract] | |
Stockholders' Equity | Stockholders’ Equity Under the Company’s articles of incorporation, the Company has authority to issue 750,000,000 shares of common stock, $0.001 par value per share, and 200,000,000 shares of preferred stock, $0.001 par value per share. 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. Preferred Stock Under the Company’s 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 has 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 March 31, 2020, and December 31, 2019, respectively, the Company has issued 1,000 shares of convertible preferred stock to the Advisor at a price of $10.00 per share. Common Stock Issuable Upon Conversion of Convertible Preferred Stock The convertible preferred stock issued to the Advisor will convert to shares of the Company’s 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 the Company’s common stock plus the aggregate market value of the Company’s common stock (based on the 30-day average closing meets the same 6% performance threshold, or (3) the Company’s advisory agreement with the Advisor expires without renewal or is terminated (other than because of a material breach by the 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 stockholders 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 The Company awards shares of restricted common stock 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 three months ended March 31, 2020 and 2019, respectively, the Company granted 1,500 shares of restricted common stock to independent directors as compensation for services and recognized $19,000 as stock-based compensation expense for each period. Share based compensation expense is based upon the estimated fair value per share. Stock-based compensation expense is included in general and administrative expenses in the accompanying consolidated statements of operations. Distributions The following table reflects the total distributions the Company has paid, including the total amount paid, thousands, and amount paid per common share, in each indicated quarter: Quarter Paid Distributions per Common Share Total Distributions 2020 1 st Quarter 0.175 3,223 Total 2020 year to date $ 0.175 $ 3,223 2019 4 th Quarter $ 0.175 $ 3,223 3 rd Quarter 0.175 3,224 2 nd Quarter 0.175 3,223 1 st Quarter 0.171 3,141 Total 2019 $ 0.696 $ 12,811 |
Incentive Award Plan
Incentive Award Plan | 3 Months Ended |
Mar. 31, 2020 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Incentive Award Plan | Incentive Award 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. The Company has initially reserved 5,000,000 shares of the Company’s common stock for the issuance of awards under the Company’s stock incentive plan, but in no event more than ten (10%) percent of the Company’s issued and outstanding shares. The number of shares reserved under the Company’s stock incentive plan is also subject to adjustment in the event of a stock split, stock dividend or other change in the Company’s capitalization. Generally, shares that are forfeited or canceled from awards under the Company’s stock incentive plan also will be available for future awards. Incentive Plan compensation expense is included in general and administrative expenses in the accompanying consolidated statements of operations. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Economic Dependency The Company is dependent on the Property Manager and the Advisor for certain services that are essential to the Company, including 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. |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent EventsOn May 14, 2020, the shareholders of the Company, Hartman XIX and HIREIT approved the previously proposed Merger Agreements. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2020 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying consolidated financial statements included in this report are unaudited; however, amounts presented in the consolidated balance sheet as of December 31, 2019 are derived from our audited consolidated financial statements as of that date. The unaudited consolidated financial statements as of March 31, 2020 have been prepared by the Company in accordance with accounting principles generally accepted in the United States (“GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission, including Form 10-Q and Regulation S-X, on a basis consistent with the annual audited consolidated financial statements. The consolidated financial statements presented herein reflect all adjustments (consisting of normal recurring accruals and adjustments), which are, in the opinion of management, necessary to fairly present the financial position of the Company as of March 31, 2020, and the results of consolidated operations for the three months ended March 31, 2020 and 2019, the consolidated statements of stockholders’ equity for the three months ended March 31, 2020 and 2019 and the consolidated statements of cash flows for the three months ended March 31, 2020 and 2019. The results of the three months ended March 31, 2020 are not necessarily indicative of the results to be expected for the year ending December 31, 2020. The consolidated financial statements herein are condensed and should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019. These unaudited consolidated financial statements include the accounts of the Company, the Operating Partnership and its subsidiaries, and Hartman SPE, LLC. All significant intercompany balances and transactions have been eliminated. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and 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. |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash and cash equivalents on the accompanying consolidated balance sheets include all cash and liquid investments with maturities of three months or less. Cash and cash equivalents as of March 31, 2020 and December 31, 2019 consisted of demand deposits at commercial banks. We maintain accounts which may from time to time exceed federally insured limits. We have not experienced any losses in these accounts and believe that the Company is not exposed to any significant credit risk and regularly monitors the financial stability of these financial institutions. |
Restricted Cash | Restricted CashRestricted cash on the accompanying consolidated balance sheets consists of amounts escrowed for future real estate taxes, insurance, capital expenditures and debt service, as required by certain of our mortgage debt agreements. |
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 balances due to/due from related parties, as well as related party notes receivable. The Company considers the carrying value of these financial instruments to approximate their respective fair values due to their short-term nature. Disclosure about the fair value of financial instruments is based on relevant information available as of March 31, 2020 and December 31, 2019. |
Revenue Recognition | Revenue Recognition The Company’s 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 purposes of this calculation. The Company’s accrued rents are included in accrued rent and accounts receivable, net. 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. Additionally, cost recoveries from tenants are included in the tenant reimbursements and other revenues line item in the consolidated statements of operations 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 to rental revenues 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. Real Estate Joint Ventures and Partnerships To determine the method of accounting for partially owned real estate joint ventures and partnerships, management determines whether an entity is a VIE and, if so, determines which party is the primary beneficiary by analyzing whether we have both the power to direct the entity’s significant economic activities and the obligation to absorb potentially significant losses or receive potentially significant benefits. Significant judgments and assumptions inherent in this analysis include the design of the entity structure, the nature of the entity’s operations, future cash flow projections, the entity’s financing and capital structure, and contractual relationships and terms. We consolidate a VIE when we have determined that we are the primary beneficiary. Primary risks associated with our involvement with our VIEs include the potential funding of the entities’ debt obligations or making additional contributions to fund the entities’ operations or capital activities. Partially owned, non-variable interest real estate joint ventures and partnerships over which we have a controlling financial interest are consolidated in our consolidated financial statements. In determining if we have a controlling financial interest, we consider factors such as ownership interest, authority to make decisions, kick-out rights and substantive participating rights. Partially owned real estate joint ventures and partnerships where we do not have a controlling financial interest, but have the ability to exercise significant influence, are accounted for using the equity method. Management continually analyzes and assesses reconsideration events, including changes in the factors mentioned above, to determine if the consolidation or equity method treatment remains appropriate. 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 average years’ remaining calculated on terms of all of the leases in-place when acquired. Impairment |
Accrued Rent and Accounts Receivable | Accrued Rent and Accounts Receivable Accrued rent and accounts receivable include base rents, tenant reimbursements and receivables attributable to recording rents on a straight-line basis. An allowance for the uncollectible portion of accrued rent 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. |
Deferred Leasing Commission Costs | Deferred Leasing Commission CostsLeasing commissions are amortized using the straight-line method over the term of the related lease agreements. |
Goodwill | GoodwillGAAP requires 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 applies a one-step quantitative test to determine if the estimated fair value is less than the carrying amount. If the carrying amount exceeds the estimated fair value, the Company will record a goodwill impairment equal to such excess, not to exceed the total amount of goodwill. No goodwill impairment has been recognized in the accompanying consolidated financial statements. |
Noncontrolling Interests | Noncontrolling InterestsNoncontrolling interests is the portion of equity in a subsidiary not attributable to a parent. The ownership interests not held by the parent are considered noncontrolling interests. Accordingly, the Company has reported noncontrolling interests in equity on the consolidated balance sheets but separate from the Company's equity. On the consolidated statements of operations, subsidiaries are reported at the consolidated amount, including both the amount attributable to the Company and noncontrolling interests. |
Stock-Based Compensation | Stock-Based Compensation The Company follows Accounting Standards Codification ("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 estimated grant date fair value, as of the grant date of the Company’s common stock, of the equity or liability instruments issued. Stock-based compensation expense are recorded over the vesting period and is included in general and administrative expense in the accompanying consolidated statements of operations. |
Income Taxes | Income Taxes The Company has elected to be treated as a REIT under the Internal Revenue Code of 1986, as amended, beginning with its 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 continue to operate in such a manner as to qualify for treatment as a REIT. For the three months ended March 31, 2020 and 2019, the Company incurred net income of $1,884,000 and $360,000. The Company formed a taxable REIT subsidiary which may generate 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. 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. |
Income Per Share | Income Per Share The computations of basic and diluted income 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 March 31, 2020 and 2019, there were no shares issuable in connection with these potentially dilutive securities. These potentially dilutive securities were excluded from the computations of diluted net income per share for the three months ended March 31, 2020 and 2019 because no shares are issuable. |
Concentration of Risk | Concentration of Risk The geographic concentration of the Company’s real estate assets makes it susceptible to adverse economic developments in the State of Texas. Any adverse economic or real estate developments in these markets, such as business layoffs or downsizing, relocation of businesses, increased competition or any other changes, could adversely affect the Company’s operating results and its ability to make distributions to stockholders. |
Going Concern Evaluation | Going Concern Evaluation Pursuant to ASU 2014-15, “Presentation of Financial Statements – Going Concern,” management is required to evaluate the Company’s ability to continue as a going concern within one year after the date that these consolidated financial statements are issued. The Hartman SPE, LLC loan agreement (the “SASB Loan”) has an initial maturity date of October 9, 2020. The SASB Loan provides for three successive one one extension options, the Hartman SPE, LLC must meet five conditions in order to extend the maturity date without any further qualification. One of the five conditions is that Hartman SPE must have a debt yield, as defined, of 12.5% or greater as of June 30, 2020. As of December 31, 2019 and March 31, 2020, Hartman SPE has a debt yield of 13.29% and 12.95%, respectively. Management has concluded that there is substantial doubt about the Company's ability to continue as a going concern within one year of the issuance date of these consolidated financial statements due to the fact of the uncertainty regarding the loan maturity of the SPE Loan. Management believes that Hartman SPE will be able to extend the maturity date for one year which will mitigate the maturity date issue within one year of the issuance date of these consolidated financial statements. |
Reclassification | Reclassification Certain items in the comparative consolidated financial statements have been reclassified to conform to the presentation adopted in the current period. The Consolidated Statement of Cash Flows presented for the three months ended March 31, 2019 was adjusted to present cash and cash equivalents and restricted cash, as restricted cash was previously reported as part of prepaid expenses and other assets. |
Recent Accounting Pronouncements Not Yet Adopted | Recent Accounting Pronouncements Not Yet Adopted In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments . The updated guidance requires measurement and recognition of expected credit losses for financial assets, including trade and other receivables, held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. This is different from the current guidance as this will require immediate recognition of estimated credit losses expected to occur over the remaining life of many financial assets. Generally, the pronouncement requires a modified retrospective method of adoption. This guidance is effective for fiscal years and interim periods within those years beginning after January 2023, with early adoption permitted. The Company is currently evaluating the impact this guidance will have on the consolidated financial statements when adopted. |
Real Estate (Tables)
Real Estate (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Real Estate [Abstract] | |
Schedule of Real Estate Assets | The Company’s real estate assets consisted of the following, in thousands: March 31, 2020 December 31, 2019 Land $ 145,050 $ 145,050 Buildings and improvements 351,661 348,729 In-place lease value intangible 100,790 100,790 597,501 594,569 Less: accumulated depreciation and amortization (124,634) (117,652) Total real estate assets $ 472,867 $ 476,917 |
Schedule of Intangible Assets Acquired | The amount of total in-place lease intangible asset and the respective accumulated amortization are as follows, in thousands: March 31, 2020 December 31, 2019 In-place lease value intangible $ 100,790 $ 100,790 In-place leases – accumulated amortization (71,549) (68,884) Acquired lease intangible assets, net $ 29,241 $ 31,906 |
Accrued Rent and Accounts Rec_2
Accrued Rent and Accounts Receivable, net (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Receivables [Abstract] | |
Schedule of Acquired Indefinite-lived Intangible Assets | Accrued rent and accounts receivable, net, consisted of the following, in thousands: March 31, 2020 December 31, 2019 Tenant receivables $ 7,126 $ 5,929 Accrued rent 9,747 9,244 Allowance for uncollectible accounts (2,641) (2,597) Accrued rents and accounts receivable, net $ 14,232 $ 12,576 |
Deferred Leasing Commission C_2
Deferred Leasing Commission Costs, net (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Summary of Deferred Leasing Commission Costs | Costs which have been deferred consist of the following, in thousands: March 31, 2020 December 31, 2019 Deferred leasing commissions costs $ 18,633 $ 17,620 Less: accumulated amortization (7,185) (6,830) Deferred leasing commission costs, net $ 11,448 $ 10,790 |
Future Minimum Rents (Tables)
Future Minimum Rents (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Leases [Abstract] | |
Lessor, Operating Lease, Payments to be Received, Maturity | A summary of minimum future rentals to be received (exclusive of renewals, tenant reimbursements, and contingent rentals) under noncancellable operating leases in existence at March 31, 2020 is as follows, in thousands: March 31, Minimum Future Rents 2020 $ 70,520 2021 62,071 2022 49,589 2023 38,112 2024 26,036 Thereafter 39,345 Total $ 285,673 |
Notes Payable (Tables)
Notes Payable (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Debt Disclosure [Abstract] | |
Summary of Notes Payable | The following is a summary of the Company’s notes payable, in thousands: Property/Facility Payment (1) Maturity Date Rate March 31, 2020 December 31, 2019 Richardson Heights (2) P&I July 1, 2041 4.61 % $ 17,087 $ 17,260 Cooper Street (2) P&I July 1, 2041 4.61 % 7,367 7,435 Bent Tree Green (2) P&I July 1, 2041 4.61 % 7,367 7,435 Mitchelldale (2) P&I July 1, 2041 4.61 % 11,161 11,263 Hartman SPE LLC IO October 9, 2020 2.79 % 259,000 259,000 Hartman XXI IO March 31, 2021 10.00 % 8,200 4,400 310,182 306,793 Less: unamortized deferred loan costs (3,500) (3,754) $ 306,682 $ 303,039 (1) Principal and interest (P&I) or interest only (IO). |
Summary of Deferred Loan Costs | The Company's loan costs are amortized using the straight-line method over the terms of the loans, which approximates the interest method. Costs which have been deferred consist of the following, in thousands: March 31, 2020 December 31, 2019 Deferred loan costs $ 7,155 $ 7,155 Less: deferred loan cost accumulated amortization (3,655) (3,401) Total cost, net of accumulated amortization $ 3,500 $ 3,754 |
Income Per Share (Tables)
Income Per Share (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Earnings Per Share [Abstract] | |
Schedule of Earnings Per Share | 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 per share are included in the diluted earnings per share. Three months ended March 31, 2020 2019 Numerator: Net income attributable to common stockholders (in thousands) $ 1,168 $ 335 Denominator: Weighted average number of common shares outstanding, basic and diluted (in thousands) 18,418 17,837 Basic and diluted income per common share: $ 0.06 $ 0.02 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Equity [Abstract] | |
Summary of Distributions | The following table reflects the total distributions the Company has paid, including the total amount paid, thousands, and amount paid per common share, in each indicated quarter: Quarter Paid Distributions per Common Share Total Distributions 2020 1 st Quarter 0.175 3,223 Total 2020 year to date $ 0.175 $ 3,223 2019 4 th Quarter $ 0.175 $ 3,223 3 rd Quarter 0.175 3,224 2 nd Quarter 0.175 3,223 1 st Quarter 0.171 3,141 Total 2019 $ 0.696 $ 12,811 |
Organization and Business (Deta
Organization and Business (Details) ft² in Millions | Mar. 31, 2020ft²property | Dec. 31, 2019ft² | Mar. 31, 2019ft²property | Oct. 01, 2018USD ($)property |
Texas | ||||
Schedule of Equity Method Investments [Line Items] | ||||
Number of commercial properties | 43 | 43 | ||
Number of real estate properties | 3 | 3 | ||
Area of real estate property (in sq ft) | ft² | 6.7 | 6.7 | 6.7 | |
Richardson, Arlington And Dallas, Texas | ||||
Schedule of Equity Method Investments [Line Items] | ||||
Number of real estate properties | 15 | 15 | ||
Houston, Texas | ||||
Schedule of Equity Method Investments [Line Items] | ||||
Number of real estate properties | 25 | 25 | ||
San Antonio, Texas | ||||
Schedule of Equity Method Investments [Line Items] | ||||
Number of real estate properties | 3 | 3 | ||
Hartman SPE, LLC | ||||
Schedule of Equity Method Investments [Line Items] | ||||
Number of real estate properties | 39 | |||
Hartman SPE, LLC | Notes Payable to Banks | ||||
Schedule of Equity Method Investments [Line Items] | ||||
Debt instrument, face amount | $ | $ 259,000,000 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Details) | Oct. 01, 2018extension | Mar. 31, 2020USD ($) | Mar. 31, 2019USD ($) | Jun. 30, 2020 | Dec. 31, 2019USD ($) |
Property, Plant and Equipment [Line Items] | |||||
Impairment of real estate | $ 0 | $ 0 | |||
Goodwill impairment loss | 0 | $ 0 | |||
Net income (Loss) | $ 1,884,000 | $ 360,000 | |||
Notes Payable to Banks | Hartman SPE, LLC | |||||
Property, Plant and Equipment [Line Items] | |||||
Number of extensions | extension | 3 | ||||
Extension term | 1 year | ||||
Debt Instrument, Covenant, Debt Yield | 12.95% | 13.29% | |||
Notes Payable to Banks | Hartman SPE, LLC | Scenario, Forecast | |||||
Property, Plant and Equipment [Line Items] | |||||
Debt instrument, covenant, debt yield, minimum | 12.50% | ||||
Building and Building Improvements | Minimum | |||||
Property, Plant and Equipment [Line Items] | |||||
Estimated useful life | 5 years | ||||
Building and Building Improvements | Maximum | |||||
Property, Plant and Equipment [Line Items] | |||||
Estimated useful life | 39 years |
Real Estate - Assets (Details)
Real Estate - Assets (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Real Estate [Abstract] | ||
Land | $ 145,050 | $ 145,050 |
Buildings and improvements | 351,661 | 348,729 |
In-place lease value intangible | 100,790 | 100,790 |
Real estate assets, at cost | 597,501 | 594,569 |
Less: accumulated depreciation and amortization | (124,634) | (117,652) |
Real estate assets, net | $ 472,867 | $ 476,917 |
Real Estate - Additional Inform
Real Estate - Additional Information (Details) $ in Thousands, ft² in Millions | 3 Months Ended | ||
Mar. 31, 2020USD ($)ft²property | Mar. 31, 2019USD ($)ft²property | Dec. 31, 2019ft² | |
Subsidiary of Limited Liability Company or Limited Partnership [Line Items] | |||
Depreciation | $ | $ 4,317 | $ 4,313 | |
Amortization expense of in-place lease value intangible | $ | 2,665 | 2,717 | |
Asset management fees paid to Advisor | $ | $ 440 | $ 440 | |
Texas | |||
Subsidiary of Limited Liability Company or Limited Partnership [Line Items] | |||
Number of commercial properties | 43 | 43 | |
Area of real estate property (in sq ft) | ft² | 6.7 | 6.7 | 6.7 |
Number of real estate properties | 3 | 3 | |
Richardson, Arlington And Dallas, Texas | |||
Subsidiary of Limited Liability Company or Limited Partnership [Line Items] | |||
Number of real estate properties | 15 | 15 | |
Houston, Texas | |||
Subsidiary of Limited Liability Company or Limited Partnership [Line Items] | |||
Number of real estate properties | 25 | 25 | |
San Antonio, Texas | |||
Subsidiary of Limited Liability Company or Limited Partnership [Line Items] | |||
Number of real estate properties | 3 | 3 |
Real Estate - In-place Intangib
Real Estate - In-place Intangible Assets (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Real Estate [Abstract] | ||
In-place lease value intangible | $ 100,790 | $ 100,790 |
In-place leases – accumulated amortization | (71,549) | (68,884) |
Acquired lease intangible assets, net | $ 29,241 | $ 31,906 |
Accrued Rent and Accounts Rec_3
Accrued Rent and Accounts Receivable, net - Summary of Accounts Receivable (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Receivables [Abstract] | ||
Tenant receivables | $ 7,126 | $ 5,929 |
Accrued rent | 9,747 | 9,244 |
Allowance for uncollectible accounts | (2,641) | (2,597) |
Deferred leasing commission costs, net | $ 14,232 | $ 12,576 |
Accrued Rent and Accounts Rec_4
Accrued Rent and Accounts Receivable, net - Additional Information (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Receivables [Abstract] | |||
Allowance for uncollectible accounts | $ 2,641,000 | $ 2,597,000 | |
Bad debt expense | 44,000 | $ 775,000 | |
Write off of debt issuance costs | $ 0 | $ 0 |
Deferred Leasing Commission C_3
Deferred Leasing Commission Costs, net (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||
Deferred leasing commissions costs | $ 18,633 | $ 17,620 |
Less: accumulated amortization | (7,185) | (6,830) |
Deferred leasing commission costs, net | $ 11,448 | $ 10,790 |
Future Minimum Rents (Details)
Future Minimum Rents (Details) $ in Thousands | Mar. 31, 2020USD ($) |
Leases [Abstract] | |
2020 | $ 70,520 |
2021 | 62,071 |
2022 | 49,589 |
2023 | 38,112 |
2024 | 26,036 |
Thereafter | 39,345 |
Total | $ 285,673 |
Notes Payable - Additional Info
Notes Payable - Additional Information (Details) | Oct. 01, 2018USD ($)extensionproperty | Mar. 31, 2020USD ($)loan_outstanding | Mar. 31, 2019USD ($) | Dec. 31, 2019USD ($) |
Short-term Debt [Line Items] | ||||
Outstanding balance | $ 310,182,000 | $ 306,793,000 | ||
Interest expense | 3,018,000,000 | $ 3,669,000,000 | ||
Interest expense payable | 320,000 | 516,000 | ||
Estimate of Fair Value Measurement | ||||
Short-term Debt [Line Items] | ||||
Debt instrument, fair value disclosure | $ 315,637,000 | 308,671,000 | ||
Hartman SPE, LLC | ||||
Short-term Debt [Line Items] | ||||
Number of real estate properties | property | 39 | |||
Secured debt | Richardson Heights, Cooper Street, Bent Tree Green And Mitchelldale Property Loans | ||||
Short-term Debt [Line Items] | ||||
Number of cross-collateralized term loan agreements | loan_outstanding | 4 | |||
Amortization term | 27 years | |||
Fixed interest rate | 4.61% | |||
Outstanding balance | $ 42,982,000 | $ 43,393,000 | ||
Notes Payable to Banks | Hartman SPE, LLC | ||||
Short-term Debt [Line Items] | ||||
Debt instrument, face amount | $ 259,000,000 | |||
Term of loan | 5 years | |||
Initial term of loan | 2 years | |||
Number of extensions | extension | 3 | |||
Extension term | 1 year | |||
Notes Payable to Banks | Minimum | Hartman SPE, LLC | London Interbank Offered Rate (LIBOR) | ||||
Short-term Debt [Line Items] | ||||
Basis spread | 1.80% | |||
Notes Payable to Banks | Maximum | Hartman SPE, LLC | London Interbank Offered Rate (LIBOR) | ||||
Short-term Debt [Line Items] | ||||
Basis spread | 3.75% |
Notes Payable - Summary of Note
Notes Payable - Summary of Notes Payable (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Debt Instrument [Line Items] | ||
Long-term debt, gross | $ 310,182 | $ 306,793 |
Less: unamortized deferred loan costs | (3,500) | (3,754) |
Long-term debt | $ 306,682 | 303,039 |
Richardson Heights | ||
Debt Instrument [Line Items] | ||
Effective interest rate | 4.61% | |
Long-term debt, gross | $ 17,087 | 17,260 |
Cooper Street | ||
Debt Instrument [Line Items] | ||
Effective interest rate | 4.61% | |
Long-term debt, gross | $ 7,367 | 7,435 |
Bent Tree Green | ||
Debt Instrument [Line Items] | ||
Effective interest rate | 4.61% | |
Long-term debt, gross | $ 7,367 | 7,435 |
Mitchelldale | ||
Debt Instrument [Line Items] | ||
Effective interest rate | 4.61% | |
Long-term debt, gross | $ 11,161 | 11,263 |
Promenade | ||
Debt Instrument [Line Items] | ||
Effective interest rate | 2.79% | |
Long-term debt, gross | $ 259,000 | 259,000 |
Hartman SPE, LLC | ||
Debt Instrument [Line Items] | ||
Effective interest rate | 10.00% | |
Long-term debt, gross | $ 8,200 | $ 4,400 |
Notes Payable - Deferred Loan C
Notes Payable - Deferred Loan Costs (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Debt Disclosure [Abstract] | ||
Deferred loan costs | $ 7,155 | $ 7,155 |
Less: deferred loan cost accumulated amortization | (3,655) | (3,401) |
Total cost, net of accumulated amortization | $ 3,500 | $ 3,754 |
Income Per Share (Details)
Income Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Numerator: | ||
Net income attributable to common stockholders | $ 1,168 | $ 335 |
Denominator: | ||
Weighted average number of common shares outstanding, basic and diluted (in shares) | 18,418 | 17,837 |
Earnings Per Share, Basic and Diluted [Abstract] | ||
Net income attributable to common stockholders per share (in dollars per share) | $ 0.06 | $ 0.02 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | |||
Deferred tax benefit | $ 0 | $ 0 | |
Deferred tax asset | $ 0 | $ 0 |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) | Mar. 01, 2019 | Feb. 28, 2019 | Mar. 31, 2019 | Feb. 28, 2019 | May 31, 2016 | Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | Sep. 30, 2019 | Feb. 26, 2019 |
Related Party Transaction [Line Items] | ||||||||||
Property management fees and reimbursements due | $ 1,013,000 | $ 950,000 | ||||||||
Payments for leasing commissions | 440,000 | 440,000 | ||||||||
Due to the property manager | 843,000 | $ 1,168,000 | ||||||||
Due from other related parties | $ (8,125,000) | (5,375,000) | ||||||||
Hartman SPE, LLC | ||||||||||
Related Party Transaction [Line Items] | ||||||||||
Share price (in dollars per share) | $ 12.65 | |||||||||
Common Stock | Hartman SPE, LLC | ||||||||||
Related Party Transaction [Line Items] | ||||||||||
Stock issued in exchange for ownership (in shares) | 700,302 | |||||||||
Value of shares issued | $ 8,858,826 | |||||||||
Chief Executive Officer | ||||||||||
Related Party Transaction [Line Items] | ||||||||||
Ownership percentage | 20.00% | |||||||||
Allen R Hartman | Affiliated Entity | ||||||||||
Related Party Transaction [Line Items] | ||||||||||
Ownership percentage | 70.00% | |||||||||
Property Manager | Affiliated Entity | ||||||||||
Related Party Transaction [Line Items] | ||||||||||
Ownership percentage | 30.00% | |||||||||
Texas Limited Liability Company | Affiliated Entity | Asset Management Fees Payable | ||||||||||
Related Party Transaction [Line Items] | ||||||||||
Expenses from transactions with related party | $ 2,069,000 | 1,953,000 | ||||||||
Due to related parties | $ 1,966,000 | 2,077,000 | ||||||||
Due to related parties, monthly fees, percentage of asset cost or value | 0.0625% | |||||||||
Texas Limited Liability Company | Affiliated Entity | Construction Management Fees Payable | ||||||||||
Related Party Transaction [Line Items] | ||||||||||
Expenses from transactions with related party | $ 166,000 | 267,000 | ||||||||
Hartman XIX | Affiliated Entity | Loan from Company to related party | ||||||||||
Related Party Transaction [Line Items] | ||||||||||
Loans receivable, face amount | $ 4,500,000 | |||||||||
Loans receivable, interest rate | 6.00% | |||||||||
Interest income, related parties | $ 63,000 | 63,000 | ||||||||
Hartman XIX | Affiliated Entity | Loan From Company To Related Party Hartman Retail II Holdings Co | ||||||||||
Related Party Transaction [Line Items] | ||||||||||
Loans receivable | $ 4,200,000 | 4,200,000 | ||||||||
HIREIT, Inc. | Affiliated Entity | Acquisition Of Related Party Common Stock | ||||||||||
Related Party Transaction [Line Items] | ||||||||||
Ownership percentage | 11.00% | |||||||||
HIREIT, Inc. | Affiliated Entity | Acquisition Of Related Party Common Stock | Common Stock | ||||||||||
Related Party Transaction [Line Items] | ||||||||||
Shares acquired (in shares) | 1,561,523 | |||||||||
Shares acquired, value | $ 8,978,000 | |||||||||
Hartman TRS, Inc. | Affiliated Entity | Loan from Company to related party | ||||||||||
Related Party Transaction [Line Items] | ||||||||||
Loans receivable | $ 106,000 | 106,000 | 106,000 | |||||||
Hartman TRS, Inc. | Affiliated Entity | Loan From Company To Related Party Hartman Retail II Holdings Co | ||||||||||
Related Party Transaction [Line Items] | ||||||||||
Loans receivable | $ 7,231,000 | 1,726,000 | 2,476,000 | |||||||
Loans receivable, face amount | $ 8,820,000 | |||||||||
Loans receivable, interest rate | 10.00% | |||||||||
Interest income, related parties | 43,000 | 61,000 | ||||||||
Origination fees | 2.00% | |||||||||
Hartman TRS, Inc. | Affiliated Entity | Loan From Company To Related Party Hartman Retail III Holdings Co | ||||||||||
Related Party Transaction [Line Items] | ||||||||||
Loans receivable | 6,782,000 | 6,782,000 | $ 6,782,455 | |||||||
Loans receivable, face amount | $ 7,500,000 | $ 7,500,000 | ||||||||
Loans receivable, interest rate | 10.00% | |||||||||
Interest income, related parties | 169,000 | |||||||||
Origination fees | 2.00% | 2.00% | ||||||||
Hartman TRS, Inc. | Affiliated Entity | Loan from Company to related party | ||||||||||
Related Party Transaction [Line Items] | ||||||||||
Loans receivable | 3,829,711 | 3,830,000 | 3,829,711 | $ 3,830,000 | ||||||
Loans receivable, face amount | $ 3,500,000 | $ 3,500,000 | ||||||||
Loans receivable, interest rate | 10.00% | |||||||||
Interest income, related parties | 95,000 | |||||||||
Origination fees | 2.00% | |||||||||
Hartman vREIT XXI [Member] | Affiliated Entity | Loan From Related Party To Company | ||||||||||
Related Party Transaction [Line Items] | ||||||||||
Notes payable, related party | 4,400,000 | |||||||||
Interest expense, related party | $ 110,000 | |||||||||
Debt instrument, stated interest rate | 10.00% | |||||||||
Variable Interest Entity, Not Primary Beneficiary | Hartman SPE, LLC | ||||||||||
Related Party Transaction [Line Items] | ||||||||||
Additional ownership | 3.42% | |||||||||
Ownership interest | 36.16% | 32.74% |
Stockholders' Equity - Narrativ
Stockholders' Equity - Narrative (Details) $ / shares in Units, $ in Thousands | Jul. 21, 2017$ / shares | Mar. 31, 2020USD ($)vote$ / sharesshares | Mar. 31, 2019USD ($)shares | Dec. 31, 2019$ / sharesshares |
Equity [Abstract] | ||||
Common stock, shares authorized (in shares) | shares | 750,000,000 | 750,000,000 | ||
Common stock, par value (in dollars per share) | $ / shares | $ 0.001 | $ 0.001 | ||
Preferred stock, shares authorized (in shares) | shares | 200,000,000 | 200,000,000 | ||
Preferred stock, par value (in dollars per share) | $ / shares | $ 0.001 | $ 0.001 | ||
Number or votes per share | vote | 1 | |||
Class of Stock [Line Items] | ||||
Preferred stock, shares issued (in shares) | shares | 1,000 | 1,000 | ||
Grants in period (shares) | shares | 1,500 | 1,500 | ||
Stock-based compensation expense | $ | $ 19 | $ 19 | ||
Common stock, par value (in dollars per share) | $ / shares | $ 0.001 | $ 0.001 | ||
XIX Merger Agreement | ||||
Equity [Abstract] | ||||
Common stock, par value (in dollars per share) | $ / shares | $ 0.01 | |||
Class of Stock [Line Items] | ||||
Conversion of stock, conversion ratio | 9,171.98 | |||
Common stock, par value (in dollars per share) | $ / shares | $ 0.01 | |||
HIREIT Merger | ||||
Class of Stock [Line Items] | ||||
Conversion of stock, conversion ratio | 0.752222 | |||
HIREIT Merger | Subordinated Common Stock | ||||
Class of Stock [Line Items] | ||||
Conversion of stock, conversion ratio | 0.752222 | |||
HIREIT Merger | Common Stock | ||||
Class of Stock [Line Items] | ||||
Conversion of stock, conversion ratio | 0.863235 | |||
Convertible Preferred Stock | ||||
Class of Stock [Line Items] | ||||
Preferred stock, shares issued (in shares) | shares | 1,000 | 1,000 | ||
Share price (in dollars per share) | $ / shares | $ 10 | $ 10 | ||
Conversion terms, cumulative annual return on issue price, percentage | 6.00% | |||
Conversion terms, performance threshold | 6.00% | |||
Conversion terms, percentage of excess enterprise value | 15.00% | |||
8% Cumulative Preferred Stock | XIX Merger Agreement | ||||
Class of Stock [Line Items] | ||||
Conversion of stock, conversion ratio | 1.238477 | |||
Preferred stock, dividend rate | 8.00% | |||
9% Cumulative Preferred Stock | XIX Merger Agreement | ||||
Class of Stock [Line Items] | ||||
Conversion of stock, conversion ratio | 1.238477 | |||
Preferred stock, dividend rate | 9.00% | |||
Restricted common stock | ||||
Class of Stock [Line Items] | ||||
Grants in period (shares) | shares | 1,500 | 1,500 | ||
Stock-based compensation expense | $ | $ 19 |
Stockholders' Equity - Distribu
Stockholders' Equity - Distributions (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | ||||
Mar. 31, 2020 | Dec. 31, 2019 | Sep. 30, 2019 | Mar. 31, 2019 | Jun. 30, 2018 | Dec. 31, 2019 | |
Equity [Abstract] | ||||||
Distributions per Common Share (in dollars per share) | $ 0.175 | $ 0.175 | $ 0.175 | $ 0.171 | $ 0.175 | $ 0.696 |
Total Distributions | $ 3,223 | $ 3,223 | $ 3,224 | $ 3,141 | $ 3,223 | $ 12,811 |
Incentive Award Plan (Details)
Incentive Award Plan (Details) | 3 Months Ended |
Mar. 31, 2020shares | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Shares reserved for issuance (in shares) | 5,000,000 |
Percentage of outstanding stock maximum | 10.00% |