(1) |
to
update the status of our offering of common shares of beneficial interest
in Hartman Commercial Properties REIT; |
(2) |
to
advise you of a recent change in our board of trustees and
management; |
(3) |
to
provide you with a copy of certain portions of our Proxy Statement for our
2005 Annual Meeting of Shareholders to be held on June 3, 2005, as filed
with the Securities and Exchange Commission on April 29, 2005, which amend
and supplement certain information contained in the prospectus, as further
described herein; and |
(4) |
to
provide you with a copy of our Quarterly Report on Form 10-Q for the
quarter ended March 31, 2005, as filed with the Securities and Exchange
Commission on May 13, 2005, which amends and supplements certain
information contained in the prospectus, as further described
herein. |
Number
of
Shares
Beneficially Owned(1)(2) |
Percent
|
||||||||||||
Name
of
Beneficial
Owner(3) |
Actual |
Assuming
Conversion
of All
OP Units |
Actual |
Assuming
Conversion
of
All OP Units |
|||||||||
Allen
R. Hartman(4)(5) |
270,003.42 |
2,561,862.61 |
3.57 |
% |
26.01 |
% | |||||||
Terry
L. Henderson |
- |
- |
- |
- |
|||||||||
Sam
Hathorn |
53,683.22 |
114,829.71 |
* |
1.51 |
|||||||||
Jack
L. Mahaffey |
68,499.50 |
100,442.18 |
* |
1.32 |
|||||||||
Chris
A. Minton |
41,356.74 |
71,587.53 |
* |
* |
|||||||||
Chand
Vyas |
142,857.00 |
142,857.00 |
1.89 |
1.89 |
|||||||||
All
trustees and executive officers as a Group (6 persons)………. |
576,399.89 |
2,991,579.04 |
7.63 |
30.00 |
* | Less than 1.0% |
(1) |
Beneficial
ownership is determined in accordance with the rules of the Securities and
Exchange Commission that deem shares to be beneficially owned by any
person or group who has or shares voting and investment power with respect
to such shares. Actual amounts do not take into account OP Units held by
the named person that are exchangeable for our common shares. Percentage
ownership assuming conversion of OP Units assumes only the named person
has converted his OP Units for our shares and does not give effect to any
conversion of OP Units by any other person. |
(2) |
Assumes
the shareholders listed do not purchase any shares in the
Offering. |
(3) |
Each
person listed has an address in care of Hartman Commercial Properties
REIT, 1450 West Sam Houston Parkway North, Suite 100, Houston, Texas
77043. |
(4) |
Includes
Hartman Partnership, L.P. (198,935.515 shares and 489,183.74 OP Units),
Hartman Partnership XII, L.P. (70,597.63 OP Units) and Hartman Partnership
XV, LLC (47.14 OP Units). |
(5) |
Includes
1,231,393.58 OP Units owned by Houston R.E. Income Properties XIV, LP. Mr.
Hartman does not own any limited partner interests in this partnership.
However, Mr. Hartman owns 100% of the equity of the general partner of
this partnership. As a result, Mr. Hartman may be deemed to be the
beneficial owner of the securities held by this partnership. Therefore,
the number of OP Units reported herein as beneficially owned by
Mr. Hartman includes the 1,231,393.58 OP Units owned by Houston R.E.
Income Properties XIV, LP. Consequently, for purposes of this table, Mr.
Hartman is deemed to beneficially own the 1,231,393.58 common shares into
which these OP Units are convertible. Mr. Hartman disclaims beneficial
ownership of these OP Units and, for the purposes of this table, all
common shares into which such OP Units are
convertible. |
Maryland |
76-0594970 |
(State
or other jurisdiction of |
(IRS
Employer |
incorporation
or organization) |
Identification
No.) |
Page | ||
PART I - FINANCIAL INFORMATION |
||
Item
1. |
2 | |
2 | ||
4 | ||
5 | ||
6 | ||
7 | ||
Item
2. |
20 | |
Item
3. |
30 | |
Item
4. |
30 | |
PART
II - OTHER INFORMATION |
||
Item
1. |
31 | |
Item
2. |
31 | |
Item
3. |
32 | |
Item
4. |
32 | |
Item
5. |
32 | |
Item
6. |
32 |
March
31,
2005 |
December
31
2004 |
||||||
(Unaudited) |
|||||||
Assets | |||||||
Real
estate |
|||||||
Land |
$ |
29,552,752 |
$ |
28,446,210 |
|||
Buildings
and improvements |
118,242,872 |
113,551,420 |
|||||
147,795,624 |
141,997,630 |
||||||
Less
accumulated depreciation |
(16,479,294 |
) |
(15,450,416 |
) | |||
Real
estate, net |
131,316,330 |
126,547,214 |
|||||
Cash
and cash equivalents |
1,397,755 |
631,978 |
|||||
Escrows
and acquisition deposits |
2,320,159 |
4,978,362 |
|||||
Note
receivable |
652,030 |
655,035 |
|||||
Receivables |
|||||||
Accounts
receivable, net of allowance for doubtful |
|||||||
accounts
of $510,675 and $342,690 as of March 31, 2005 |
|||||||
and
December 31, 2004, respectively |
1,098,392 |
1,008,621 |
|||||
Accrued
rent receivable |
2,609,683 |
2,594,933 |
|||||
Due
from affiliates |
3,213,160 |
3,300,202 |
|||||
Receivables,
net |
6,921,235 |
6,903,756 |
|||||
Deferred
costs, net |
2,726,154 |
2,797,294 |
|||||
Prepaid
expenses and other assets |
594,966 |
103,301 |
|||||
Total
assets |
$ |
145,928,629 |
$ |
142,616,940 |
March
31, 2005 |
December
31, 2004 |
||||||
(Unaudited) |
|||||||
Liabilities
and Shareholders’ Equity | |||||||
Liabilities |
|||||||
Notes
payable |
$ |
60,062,756 |
$ |
57,226,111 |
|||
Accounts
payable and accrued expenses |
1,369,042 |
3,354,610 |
|||||
Due
to affiliates |
310,845 |
675,861 |
|||||
Tenants’
security deposits |
1,101,119 |
1,066,147 |
|||||
Prepaid
rent |
302,604 |
254,765 |
|||||
Offering
proceeds escrowed |
1,137,690 |
1,471,696 |
|||||
Dividends
payable |
1,281,800 |
1,230,281 |
|||||
Other
liabilities |
1,026,914 |
1,019,363 |
|||||
Total
liabilities |
66,592,770 |
66,298,834 |
|||||
Minority
interests of unit holders in Operating Partnership; |
|||||||
5,808,337
units at March 31, 2005 |
|||||||
and
December 31, 2004 |
36,159,437 |
36,489,114 |
|||||
Commitments
and contingencies |
- |
- |
|||||
Shareholders’
equity |
|||||||
Preferred
shares, $0.001 par value per share; 50,000,000 |
|||||||
shares
authorized; none issued and outstanding |
|||||||
at
March 31, 2005 and December 31, 2004 |
- |
- |
|||||
Common
shares, $0.001 par value per share; 400,000,000 |
|||||||
shares
authorized; 7,443,420 and 7,010,146 issued and |
|||||||
outstanding
at March 31, 2005 and December 31, 2004 |
7,443 |
7,010 |
|||||
Additional
paid-in capital |
49,331,505 |
45,527,152 |
|||||
Accumulated
deficit |
(6,162,526 |
) |
(5,705,170 |
) | |||
Total
shareholders’ equity |
43,176,422 |
39,828,992 |
|||||
Total
liabilities and shareholders’ equity |
$ |
145,928,629 |
$ |
142,616,940 |
Three
Months Ended March 31, |
|||||||
2005 |
2004 |
||||||
Revenues |
|||||||
Rental
income |
$ |
4,777,193 |
$ |
4,431,851 |
|||
Tenants’
reimbursements |
1,359,938 |
917,700 |
|||||
Interest
and other income |
175,509 |
136,875 |
|||||
Total
revenues |
6,312,640 |
5,486,426 |
|||||
Expenses |
|||||||
Operation
and maintenance |
756,465 |
691,414 |
|||||
Interest
expense |
770,060 |
568,550 |
|||||
Real
estate taxes |
729,032 |
670,720 |
|||||
Insurance |
104,759 |
127,808 |
|||||
Electricity,
water and gas utilities |
219,610 |
185,866 |
|||||
Management
and partnership |
|||||||
management
fees to an affiliate |
359,003 |
324,138 |
|||||
General
and administrative |
317,439 |
353,328 |
|||||
Depreciation |
1,028,878 |
947,009 |
|||||
Amortization |
337,728 |
287,311 |
|||||
Bad
debt expense (recoveries) |
167,985 |
(54,525 |
) | ||||
Total
operating expenses |
4,790,959 |
4,101,619 |
|||||
Income
before minority interests |
1,521,681 |
1,384,807 |
|||||
Minority
interests in Operating Partnership |
(697,237 |
) |
(645,689 |
) | |||
Net
income |
$ |
824,444 |
$ |
739,118 |
|||
Net
income per common share |
$ |
0.114 |
$ |
0.105 |
|||
Weighted-average
shares outstanding |
7,247,162 |
7,010,146 |
|||||
Common
Stock |
Additional
Paid-in |
Accumulated |
||||||||||||||
Shares |
|
Amount |
|
Capital |
|
Deficit |
|
Total |
||||||||
Balance,
December 31, 2003 |
7,010,146 |
$ |
7,010 |
$ |
45,527,152 |
$ |
(4,218,178 |
) |
$ |
41,315,984 |
||||||
Net
income |
- |
- |
- |
3,423,619 |
3,423,619 |
|||||||||||
Dividends |
- |
- |
- |
(4,910,611 |
) |
(4,910,611 |
) | |||||||||
Balance,
December 31, 2004 |
7,010,146 |
7,010 |
45,527,152 |
(5,705,170 |
) |
39,828,992 |
||||||||||
Issuance
of common stock for |
||||||||||||||||
cash,
net of offering costs |
433,274 |
433 |
3,804,353 |
- |
3,804,786 |
|||||||||||
Net
income |
- |
- |
- |
824,444 |
824,444 |
|||||||||||
Dividends |
- |
- |
- |
(1,281,800 |
) |
(1,281,800 |
) | |||||||||
Balance,
March 31, 2005 |
7,443,420 |
$ |
7,443 |
$ |
49,331,505 |
$ |
(6,162,526 |
) |
$ |
43,176,422 |
Three
Months Ended March 31, |
|||||||
2005 |
2004 |
||||||
Cash
flows from operating activities: |
|||||||
Net
income |
$ |
824,444 |
$ |
739,118 |
|||
Adjustments
to reconcile net income to |
|||||||
net
cash provided by (used in) |
|||||||
operating
activities: |
|||||||
Depreciation |
1,028,878 |
947,009 |
|||||
Amortization |
337,728 |
287,311 |
|||||
Minority
interests in Operating Partnership |
697,237 |
645,689 |
|||||
Equity
in income of real estate partnership |
(12,038 |
) |
(95,943 |
) | |||
Bad
debt expense (recoveries) |
167,985 |
(54,525 |
) | ||||
Changes
in operating assets and liabilities: |
|||||||
Escrows
and acquisition deposits |
2,658,203 |
918,797 |
|||||
Receivables |
(272,506 |
) |
169,745 |
||||
Due
from affiliates |
(277,974 |
) |
86,373 |
||||
Deferred
costs |
(266,588 |
) |
(174,213 |
) | |||
Prepaid
expenses and other assets |
(187,488 |
) |
58,702 |
||||
Accounts
payable and accrued expenses |
(1,985,568 |
) |
(1,388,861 |
) | |||
Tenants’
security deposits |
34,972 |
(8,538 |
) | ||||
Prepaid
rent |
47,839 |
(99,990 |
) | ||||
Net
cash provided by operating
activities |
2,795,124 |
2,030,674 |
|||||
Cash
flows used in investing activities: |
|||||||
Additions
to real estate |
(5,797,994 |
) |
(262,549 |
) | |||
Purchase
of investment securities |
—
|
—
|
|||||
Investment
in real estate partnership |
—
|
(9,033,561 |
) | ||||
Distributions
received from real estate partnership |
9,743 |
—
|
|||||
Repayment
of note receivable |
3,005 |
645 |
|||||
Net
cash used in investing activities |
(5,785,246 |
) |
(9,295,465 |
) | |||
Cash
flows from financing activities: |
|||||||
Dividends
paid |
(1,230,281 |
) |
(1,226,777 |
) | |||
Distributions
paid to OP unit holders |
(1,019,363 |
) |
(1,016,460 |
) | |||
Proceeds
from issuance of common shares |
3,804,786 |
—
|
|||||
Proceeds
from stock offering escrowed |
(334,006 |
) |
—
|
||||
Proceeds
from notes payable |
4,200,000
|
10,356,818 |
|||||
Repayments
of notes payable |
(1,665,237 |
) |
(165,509 |
) | |||
Payments
of loan origination costs |
— |
(31,891 |
) | ||||
Net
cash provided by financing activities |
3,755,899 |
7,916,181 |
|||||
Net
increase in cash and
cash equivalents |
765,777 |
651,390 |
|||||
Cash
and cash equivalents at beginning of period |
631,978 |
578,687 |
|||||
Cash
and cash equivalents at end of period |
$ |
1,397,755 |
$ |
1,230,077 |
Note
1 - |
Summary
of Significant Accounting Policies
|
Hartman
Commercial Properties REIT (“HCP”) was formed as a real estate investment
trust, pursuant to the Texas Real Estate Investment Trust Act on August
20, 1998 to consolidate and expand the real estate investment strategy of
Allen R. Hartman (“Hartman”) in acquiring and managing office and retail
properties. In July 2004, HCP changed its state of organization from Texas
to Maryland pursuant to a merger of HCP directly with and into a Maryland
real estate investment trust formed for the sole purpose of the
reorganization and the conversion of each outstanding common share of
beneficial interest of the Texas entity into 1.42857 common shares of
beneficial interest of the Maryland entity (see Note 9). Hartman,
HCP’s Chairman of the Board of Trustees, has been engaged in the
ownership, acquisition, and management of commercial properties in the
Houston, Texas, metropolitan area for over 20 years. HCP serves as the
general partner of Hartman REIT Operating Partnership, L.P. (the
“Operating Partnership” or “HROP” or “OP”), which was formed on December
31, 1998 as a Delaware limited partnership. HCP and the Operating
Partnership are collectively referred to herein as the “Company.” HCP
currently conducts substantially all of its operations and activities
through the Operating Partnership. As the general partner of the Operating
Partnership, HCP has the exclusive power to manage and conduct the
business of the Operating Partnership, subject to certain customary
exceptions. Hartman Management, L.P. (the “Management Company”), a company
wholly-owned by Hartman, provides a full range of real estate services for
the Company, including leasing and property management, accounting, asset
management and investor relations. As
of March 31, 2005 and December 31, 2004, respectively, the Company owned
and operated 35 and 34 office and retail properties in and around Houston
and San Antonio, Texas. |
Basis
of consolidation |
Note
1 - |
Summary
of Significant Accounting Policies
(Continued) |
Basis
of accounting |
The
financial records of the Company are maintained on the accrual basis of
accounting whereby revenues are recognized when earned and expenses are
recorded when incurred. |
Cash
and cash equivalents |
The
Company considers all highly liquid debt instruments purchased with an
original maturity of three months or less to be cash equivalents. Cash and
cash equivalents at March 31, 2005 and December 31, 2004 consist of demand
deposits at commercial banks and money market
funds. |
Due
from affiliates |
Due
from affiliates include amounts owed to the Company from Hartman operated
limited partnerships and other entities. |
Escrows
and acquisition deposits |
Escrow
deposits include escrows established pursuant to certain mortgage
financing arrangements for real estate taxes, insurance, maintenance and
capital expenditures. Acquisition deposits include earnest money deposits
on future acquisitions. |
Real
estate |
Real
estate properties are recorded at cost, net of accumulated depreciation.
Improvements, major renovations and certain costs directly related to the
acquisition, improvement and leasing of real estate are capitalized.
Expenditures for repairs and maintenance are charged to operations as
incurred. Depreciation is computed using the straight-line method over the
estimated useful lives of 5 to 39 years for the buildings and
improvements. Tenant improvements are depreciated using the straight-line
method over the life of the lease. |
Note
1 - |
Summary
of Significant Accounting Policies
(Continued) |
|
|
Offering
costs include selling commissions, issuance costs, investor relations fees
and unit purchase discounts. These costs were incurred in the raising of
capital through the sale of common shares and are treated as a reduction
of shareholders’ equity. |
Revenue
recognition |
All
leases on properties held by the Company are classified as operating
leases, and the related rental income is recognized on a straight-line
basis over the terms of the related leases. Differences between rental
income earned and amounts due per the respective lease agreements are
capitalized or charged, as applicable, to accrued rent receivable.
Percentage rents are recognized as rental income when the thresholds upon
which they are based have been met. Recoveries from tenants for taxes,
insurance, and other operating expenses are recognized as revenues in the
period the corresponding costs are incurred. The Company provides an
allowance for doubtful accounts against the portion of tenant accounts
receivable which is estimated to be uncollectible.
|
Federal
income taxes |
The
preparation of financial statements in conformity with U.S. generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Significant estimates used by the Company
include the estimated useful lives for depreciable and amortizable assets
and costs, and the estimated allowance for doubtful accounts receivable.
Actual results could differ from those
estimates. |
Fair
value of financial instruments |
Note
1 - |
Summary
of Significant Accounting Policies
(Continued) |
Concentration
of risk |
Substantially
all of the Company’s revenues are obtained from office, office/warehouse
and retail locations in the Houston, Texas and San Antonio, Texas
metropolitan areas. |
The
Company maintains cash accounts in major financial institutions in the
United States. The terms of these deposits are on demand to minimize risk.
The balances of these accounts occasionally exceed the federally insured
limits, although no losses have been incurred in connection with such cash
balances. |
Comprehensive
income |
The
Company follows Statement of Financial Accounting Standards (“SFAS”) No.
130, “Reporting
Comprehensive Income,”
which establishes standards for reporting and display for comprehensive
income and its components. For the periods presented, the Company did not
have significant amounts of other comprehensive
income. |
Note
2 - |
Real
Estate |
Note
2 - |
Real
Estate (Continued) |
At
March 31, 2005 and December 31, 2004, the Company owned and operated 35
and 34 commercial properties in the Houston, Texas and San Antonio, Texas
areas comprising approximately 2,741,000 and 2,635,000 square feet of
gross leasable area, respectively. |
Note
3 - |
Investment
in Real Estate Partnership |
Note
4 - |
Note
Receivable |
In
January 2003, the Company partially financed the sale of a property it had
previously sold and for which it had taken a note receivable of $420,000
as part of the consideration. The Company advanced $290,000 and renewed
and extended the balance of $420,000 still due from the original
sale. |
The
original principal amount of the note receivable, dated January 10, 2003,
is $710,000. The note is payable in monthly installments of $6,382,
including interest at 7% per annum, for the first two years of the note.
Thereafter, monthly installments of $7,489 are due with interest at 10%
per annum. The note is fully amortizing with the final payment due January
10, 2018. |
Note
5 - |
Debt |
Mortgages
and other notes payable consist of the
following: |
March
31,
2005 |
December
31,
2004 |
||||||
Mortgages
and other notes payable |
$ |
40,410,874 |
$ |
40,526,111 |
|||
Revolving
loan secured by properties |
19,350,000 |
16,700,000 |
|||||
Insurance
premium finance note |
301,882 |
-
|
|||||
Total |
$ |
60,062,756 |
$ |
57,226,111 |
In
December 2002, the Company refinanced substantially all of its mortgage
debt with a $34,440,000 three-year floating rate mortgage loan
collateralized by 18 of the Company’s properties and having a maturity
date of January 1, 2006. The loan bears interest at 2.5% over a LIBOR rate
(5.22% and 4.79% at March 31, 2005 and December 31, 2004, respectively)
computed on the basis of a 360 day year and has a two-year extension
option. Interest only payments are due monthly for the first 30 month
period after the origination date, after which the loan may be repaid in
full or in $100,000 increments, with a final balloon payment due upon
maturity. Loan costs of $1,271,043 were capitalized and financed from the
proceeds of the refinancing. The security documents related to the
mortgage loan contain a covenant which requires Hartman REIT Operating
Partnership II, L.P., a wholly owned subsidiary of the Company, to
maintain adequate capital in light of its contemplated business
operations. This covenant and the other restrictions provided for in the
credit facility do not affect Hartman REIT Operating Partnership II,
L.P.’s ability to make distributions to the Company.
|
Note
5 - |
Debt
(Continued) |
Year
Ended
March
31, |
||||
2006 |
$ |
20,095,508 |
||
2007 |
39,967,248 |
|||
$ |
60,062,756 |
Supplemental
Cash Flow Information |
The
Company made cash payments for interest on debt of $770,060 and $633,400
for the three months ended March 31, 2005 and 2004,
respectively. |
Note
6 - |
Earnings
Per Share |
Basic
earnings per share is computed using net income available to common
shareholders and the weighted average number of common shares outstanding.
Diluted earnings per share reflects common shares issuable from the
assumed conversion of OP units convertible into common shares. Only those
items that have a dilutive impact on basic earnings per share are included
in the diluted earnings per share. Accordingly, because conversion of OP
units into common shares is antidilutive, no OP units were included in the
diluted earnings per share calculations. |
Three
Months Ended March 31, |
|||||||
2005 |
2004 |
||||||
Basic
and diluted earnings per share |
|||||||
Weighted
average common |
|||||||
shares
outstanding |
7,247,162 |
7,010,146 |
|||||
Basic
and diluted earnings per share |
$ |
0.114 |
$ |
0.105 |
|||
Net
income |
$ |
824,444 |
$ |
739,118 |
Note
7 - |
Federal
Income Taxes |
Federal
income taxes are not provided because the Company intends to and believes
it qualifies as a REIT under the provisions of the Internal Revenue Code.
Shareholders of the Company include their proportionate taxable income in
their individual tax returns. As a REIT, the Company must distribute at
least 90% of its ordinary taxable income to its shareholders and meet
certain income sources and investment restriction requirements. In
addition, REITs are subject to a number of organizational and operational
requirements. If the Company fails to qualify as a REIT in any taxable
year, the Company will be subject to federal income tax (including any
applicable alternative minimum tax) on its taxable income at regular
corporate tax rates. |
Taxable
income differs from net income for financial reporting purposes
principally due to differences in the timing of recognition of interest,
real estate taxes, depreciation and rental
revenue. |
For
Federal income tax purposes, the cash dividends distributed to
shareholders are characterized as follows for the year ended December 31,
2004: |
2004 |
||||
Ordinary
income (unaudited) |
67.7% |
|||
Return
of capital (unaudited) |
32.3% |
|||
Capital
gain distributions (unaudited) |
0.0% |
| ||
Total |
100.0% |
|
Note
8 - |
Related-Party
Transactions |
Note
8 - |
Related-Party
Transactions (Continued) |
Note
8 - |
Related-Party
Transactions (Continued) |
Note
9 - |
Shareholders’
Equity |
Note
9 - |
Shareholders’
Equity (Continued) |
Dividends
and distributions |
Note
9 - |
Shareholders’
Equity (Continued) |
HCP
Shareholders | ||||
Dividend/Distribution
per
Common Share |
Date
Dividend
Payable |
Total
Amount
Payable | ||
$0.0583 |
|
4/15/04 |
|
$408,762 |
0.0583 |
|
5/15/04 |
|
408,762 |
0.0584 |
|
6/15/04 |
|
409,253 |
0.0583 |
|
7/15/04 |
|
408,762 |
0.0583 |
|
8/15/04 |
|
408,762 |
0.0584 |
|
9/15/04 |
|
409,253 |
0.0583 |
|
10/15/04 |
|
408,692 |
0.0583 |
|
11/15/04 |
|
408,692 |
0.0584 |
|
12/15/04 |
|
409,392 |
0.0583 |
|
1/15/05 |
|
408,692 |
0.0583 |
|
2/15/05 |
|
408,692 |
0.0589 |
|
3/15/05 |
|
412,897 |
0.0589 |
|
4/15/05 |
|
412,931 |
0.0589 |
|
5/15/05 |
|
429,416 |
0.0590 |
|
6/15/05 |
|
439,453 |
OP
Unit Holders Including Minority Unit Holders | ||||
Dividend/Distribution
per
OP Unit |
Date
Dividend
Payable |
Total
Amount
Payable | ||
$0.0583 |
|
4/15/04 |
|
$726,368 |
0.0583 |
|
5/15/04 |
|
726,368 |
0.0584 |
|
6/15/04 |
|
727,240 |
0.0583 |
|
7/15/04 |
|
726,368 |
0.0583 |
|
8/15/04 |
|
726,368 |
0.0584 |
|
9/15/04 |
|
727,240 |
0.0583 |
|
10/15/04 |
|
726,243 |
0.0583 |
|
11/15/04 |
|
726,243 |
0.0584 |
|
12/15/04 |
|
727,488 |
0.0583 |
|
1/15/05 |
|
726,243 |
0.0583 |
|
2/15/05 |
|
726,243 |
0.0589 |
|
3/15/05 |
|
733,717 |
0.0589 |
|
4/15/05 |
|
733,748 |
0.0589 |
|
5/15/05 |
|
748,498 |
0.0590 |
|
6/15/05 |
|
758,154 |
Note
10 - |
Commitments
and Contingencies |
Note
11 - |
Segment
Information |
Retail |
Office/
Warehouse |
Office |
Other |
Total |
||||||||||||
2005 |
||||||||||||||||
Revenues |
$ |
3,558,815 |
$ |
2,136,840 |
$ |
538,652 |
$ |
78,333 |
$ |
6,312,640 |
||||||
Net
operating
income |
2,238,434 |
1,352,836 |
310,307 |
74,209 |
3,975,786 |
|||||||||||
Total
assets |
74,899,654 |
49,134,211 |
12,729,306 |
9,165,458 |
145,928,629 |
|||||||||||
Capital
expenditures |
143,530 |
82,464 |
5,572,000 |
-
- |
5,797,994 |
|||||||||||
2004 |
||||||||||||||||
Revenues |
$ |
2,861,699 |
2,094,660 |
$ |
420,492 |
$ |
109,575 |
$ |
5,486,426 |
|||||||
Net
operating
income |
1,900,008 |
1,322,807 |
216,610 |
101,580 |
3,541,005 |
|||||||||||
Total
assets |
66,118,555 |
49,972,314 |
7,285,913 |
22,125,863 |
145,502,645 |
|||||||||||
Capital
expenditures |
140,613 |
100,623 |
21,313 |
-
- |
262,549 |
|||||||||||
2005 |
2004 |
||||||
Total
segment operating income |
$ |
3,975,786 |
$ |
3,541,005 |
|||
Less: |
|||||||
Depreciation
and amortization |
1,366,606 |
1,234,320 |
|||||
Interest |
770,060 |
568,550 |
|||||
General
and administrative |
317,439 |
353,328 |
|||||
Income
before minority interests |
1,521,681 |
1,384,807 |
|||||
Minority
interests in Operating Partnership |
(697,237 |
) |
(645,689 | ) | |||
Net
income |
$ |
824,444 |
$ |
739,118 |
§ |
property
management fees in an amount not to exceed the fees customarily charged in
arm’s length transactions by others rendering similar services in the same
geographic area for similar properties as determined by a survey of
brokers and agents in such area. Generally, we expect these fees to be
between approximately two and four percent (2.0%-4.0%) of gross revenues
for the management of commercial office buildings and approximately five
percent (5.0%) of gross revenues for the management of retail and
industrial properties. |
§ |
for
the leasing of the properties, a separate fee for the leases of new
tenants and renewals of leases with existing tenants in an amount not to
exceed the fee customarily charged in arm’s length transactions by others
rendering similar services in the same geographic area for similar
properties as determined by a survey of brokers and agents in such area
(with such fees, at present, being equal to 6% of the effective gross
revenues from leases originated by the Management Company and 4% of the
effective gross revenues from expansions or renewals of existing leases,
as under the prior agreement). |
§ |
except
as otherwise specifically provided, all costs and expenses incurred by the
Management Company in fulfilling its duties for the account of and on
behalf of us. Such costs and expenses shall include the wages and salaries
and other employee-related expenses of all on-site and off-site employees
of the Management Company who are engaged in the operation, management,
maintenance and leasing or access control of our properties, including
taxes, insurance and benefits relating to such employees, and legal,
travel and other out-of-pocket expenses that are directly related to the
management of specific properties. |
§ |
a
management fee of 5% of our effective gross revenues to manage our
properties; |
§ |
a
leasing fee of 6% of the effective gross revenues from leases originated
by the Management Company and a fee of 4% of the effective gross revenues
from expansions or renewals of existing leases;
|
§ |
an
administrative fee of 1% of our effective gross revenues for day-to-day
supervisory and general administration services;
and |
§ |
the
reimbursement of all reasonable and necessary expenses incurred or funds
advanced in connection with the management and operation of our
properties, including expenses and costs relating to maintenance and
construction personnel incurred on behalf of our properties; provided,
however, that we will not reimburse the Management Company for its
overhead, including salaries and expenses of centralized employees other
than salaries of certain maintenance and construction
personnel. |
§ |
security
payments and deposits (unless and until such deposits have been applied to
the payment of current or past due rent);
and |
§ |
payments
received from tenants in reimbursement of the expense of repairing damage
caused by tenants. |
· |
acquire
additional material assets; |
· |
merge
or consolidate with any other entity; |
· |
engage
in any other business or activity other than the ownership, operation and
maintenance of the properties securing the
note; |
· |
make
certain investments; |
· |
incur,
assume or guarantee additional
indebtedness; |
· |
grant
certain liens; and |
· |
loan
money to others. |
· |
declare
or pay any distribution during the continuance of a default or event of
default; |
· |
acquire,
consolidate with or merge into any other
entity; |
· |
permit
a material change in the management group; |
· |
engage
in any other business or activity other than the ownership, operation and
maintenance of the properties securing the
note; |
· |
change
the general character of its business; |
· |
materially
change accounting practices, methods or
standards; |
· |
sell,
lease, transfer, convey or otherwise dispose of a material part of its
assets other than in the ordinary course of
business; |
· |
form
any new subsidiary or acquire all of the assets of a third
party; |
· |
permit
its net worth to be less than $70,000,000; |
· |
permit
the combined occupancy of the properties securing the loan to be less than
86%; |
· |
make
certain investments; |
· |
incur,
assume, guarantee or alter the terms of certain additional
indebtedness; |
· |
grant
certain liens; and |
· |
loan
money to others. |
Payment
due by period | ||||||||||
Contractual
Obligations |
Total |
Less
than
One
Year |
One
to
Three
Years |
Three
to
Five
Years |
More
than
Five
Years | |||||
Long-Term
Debt Obligations |
$60,062,756 |
$20,095,508 |
$39,967,248 |
— |
— | |||||
Capital
Lease Obligations |
— |
— |
— |
— |
— | |||||
Operating
Lease Obligations |
— |
— |
— |
— |
— | |||||
Purchase
Obligations |
— |
— |
— |
— |
— | |||||
Other
Long-Term Liabilities
Reflected
on the Registrant’s
Balance
Sheet under GAAP |
— |
— |
— |
— |
— | |||||
Total |
$60,062,756 |
$20,095,508 |
$39,967,248 |
— |
— |
Month
Paid or Payable |
Total
Amount of
Distributions
Paid or Payable |
Distributions
Per
Share | ||
April
2004 |
$408,762 |
$0.0583 | ||
May
2004 |
408,762
|
0.0583 | ||
June
2004 |
409,253 |
0.0584 | ||
July
2004 |
408,762 |
0.0583 | ||
August
2004 |
408,762 |
0.0583 | ||
September
2004 |
409,253 |
0.0584 | ||
October
2004 |
408,692 |
0.0583 | ||
November
2004 |
408,692 |
0.0583 | ||
December
2004 |
409,392 |
0.0584 | ||
January
2005 |
408,692 |
0.0583 | ||
February
2005 |
408,692 |
0.0583 | ||
March
2005 |
412,897 |
0.0589 | ||
April
2005 |
412,931 |
0.0589 | ||
May
2005 |
429,416 |
0.0589 | ||
June
2005 |
439,453 |
0.0590
| ||
Average
Per Quarter |
======
$0.17546 |
Tax
Status |
2004 |
2003 |
2002 |
2001 |
2000 | |||||
Ordinary
income |
67.7% |
24.8% |
85.1% |
70.5% |
75.9% | |||||
Return
of capital |
32.3% |
75.2% |
14.9% |
29.5% |
24.1% | |||||
Capital
gain |
- |
- |
- |
- |
- | |||||
Total |
100.0% |
100.0% |
100.0% |
100.0% |
100.0% |
Month
Paid or Payable |
Total
Amount of
Distributions
Paid or Payable |
Distributions
Per
Share | |||
April
2004 |
$726,368 |
$0.0583 | |||
May
2004 |
726,368 |
0.0583 | |||
June
2004 |
727,240 |
0.0584 | |||
July
2004 |
726,368 |
0.0583 | |||
August
2004 |
726,368 |
0.0583 | |||
September
2004 |
727,240 |
0.0584 | |||
October
2004 |
726,243 |
0.0583 | |||
November
2004 |
726,243 |
0.0583 | |||
December
2004 |
727,488 |
0.0584 | |||
January
2005 |
726,243 |
0.0583 | |||
February
2005 |
726,243 |
0.0583 | |||
March
2005 |
733,717 |
0.0589 | |||
April
2005 |
733,748 |
0.0589 | |||
May
2005 |
748,498 |
0.0589 | |||
June
2005 |
758,154 |
0.0590
| |||
Average
Per Quarter |
===== $0.17546 |
March
31, 2004 |
March
31, 2005 |
||||||
Number
of properties owned and operated |
33 |
35 |
|||||
Aggregate
gross leasable area (sq. ft.) |
2,540,031 |
2,741,232 |
|||||
Occupancy
rate |
87 |
% |
86 |
% | |||
Total
revenues |
$ |
5,486,426 |
$ |
6,312,640 |
|||
Total
expenses |
$ |
4,101,619 |
$ |
4,790,959 |
|||
Income
before minority interests |
$ |
1,384,807 |
$ |
1,521,681 |
|||
Minority
interests in the Operating Partnership |
($
645,689 |
) |
($
697,237 |
) | |||
Net
income |
$ |
739,118 |
$ |
824,444 |
Description
of Use of Offering Proceeds |
Amount
of
Proceeds
so
Utilized |
|||
Selling
Commissions paid to broker/
dealers
not affiliated with D.H. Hill
Securities
, LLP |
$ |
226,851 |
||
Selling
Discounts |
$ |
5,989 |
||
Dealer
Manager Fee paid to D.H. Hill
Securities
, LLP |
$ |
108,178 |
||
Offering
expense reimbursements paid
to
the Management Company |
$ |
108,178 |
||
Acquisition
Fees paid to the
Management
Company |
$ |
86,542 |
||
Repayment
of Line of Credit with Union
Planters
Bank |
$ |
1,550,000 |
||
Used
for Working Capital |
$ |
1,598,818 |
||
Amounts
temporarily invested in money
market
accounts pending final
application
of proceeds by the Company |
$ |
647,903 |
31.1* |
Certification
of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002. | |
31.2* |
Certification
of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002. | |
32.1* |
Certification
of Chief Executive Officer Pursuant to 18 U.S.C., Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. Pursuant to SEC
Release 34-47551 this Exhibit is furnished to the Securities and Exchange
Commission and shall not be deemed to be "filed" under the Securities and
Exchange Act of 1934. | |
32.2* |
Certification
of Chief Financial Officer Pursuant to 18 U.S.C., Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. Pursuant to SEC
Release 34-47551 this Exhibit is furnished to the Securities and Exchange
Commission and shall not be deemed to be "filed" under the Securities and
Exchange Act of 1934. |
Hartman Commercial
Properties REIT
(Registrant) | ||
|
|
|
Date: May 13, 2005 | By: | /s/ Terry L. Henderson |
Terry
L. Henderson
Chief
Financial Officer
(Authorized
officer of the registrant and principal financial
officer) |