Attached files

file filename
EX-99.1 - Hartman Short Term Income Properties XX, Inc.benttreepressrelease.htm
EX-10.2 - Hartman Short Term Income Properties XX, Inc.promissorynote10162012.htm
EX-10.1 - Hartman Short Term Income Properties XX, Inc.loanmodification10162012.htm
EX-10.3 - Hartman Short Term Income Properties XX, Inc.propertymanagementagreementb.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549


FORM 8-K

CURRENT REPORT


Pursuant to Section 13 Or 15(d) of

The Securities Exchange Act of 1934


Date of Report (Date of earliest event reported) October 19, 2012


HARTMAN SHORT TERM INCOME PROPERTIES XX, INC..

(Exact name of registrant as specified in charter)


 

 

 

 

 

 

Maryland

 

333-154750

 

26-3455189

(State or other jurisdiction

of incorporation)

 

(Commission File Number)

 

(IRS Employer Identification No.)


 

 

 

 

2909 Hillcroft, Suite 420, Houston, Texas

 

77057

(Address of principal executive offices)

 

(Zip Code)


Registrant's telephone number, including area code: (713) 467-2222

 

 

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

 

[ ]

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[ ]

Soliciting material pursuant to Rule #14a-12 under the Exchange Act (17 CFR 240.14a-12)

[ ]

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[ ]

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

















Item 1.01   Entry into a Material Definitive Agreement.


Property Acquisition


The information set forth under Items 2.01 and 2.03 of this Current Report on Form 8-K is hereby incorporated by reference into this Item 1.01


Item 2.01   Completion of Acquisition of Disposition of Assets.


On October 16, 2012, Hartman Short Term Income Properties XX, Inc. (the “Company”) acquired a fee simple interest in a 139,609 square foot office building located in Dallas, Texas commonly known as Bent Tree Green (the “Bent Tree Green Property”) through Hartman Bent Tree Green, LLC (“Bent Tree LLC”), a wholly owned subsidiary of the Company.


Bent Tree LLC acquired the Bent Tree Green Property from Behringer Harvard Bent Tree, LP, an unrelated third party seller, for a purchase price of $12,012,500, exclusive of closing costs.  Bent Tree LLC financed the payment of the purchase price for the Bent Tree Green with (1) proceeds from the Company’s ongoing public offering and (2) loan proceeds drawn under a revolving loan agreement (the “Loan Agreement”) provided by Texas Capital Bank, NA (the “Lender”).  The terms of the Loan Agreement are discussed at Item 2.03 below.


The Bent Tree Green Property was constructed in 1983.  The Bent Tree Green Property is 61% occupied.  Major tenants are Behringer Harvard, Dental One, Inc., Scott & Reid General Contractors, Inc., and Purdy-McGuire, Inc.


An acquisition fee of approximately $300,000 was earned by Hartman Advisors LLC, the Company’s advisor (the “Advisor”), in connection with the purchase of the Bent Tree Green Property.  The acquisition fee is payable to the Advisor pursuant to the terms of the advisory agreement between the Company and the Advisor.


The material terms of the agreements regarding the acquisition of the Bent Tree Green Property described herein are qualified in their entirety by the agreements attached as Exhibits 10.1 and 10.2 to the Current Report on Form 8-K filed by the Company on October 9, 2012 and are incorporated herein by reference.


Property Management


On October 16, 2012, Bent Tree LLC and Hartman Income REIT Management, Inc. (the “Property Manager”), an affiliate of the Company, entered into a Real Property Management Agreement (the “Management Agreement”), pursuant to which the property manager will manage and be the exclusive leasing agent for the Bent Tree Green Property.  Pursuant to the terms of the Management Agreement, Bent Tree LLC will pay the Property Manager a monthly management fee of 3% of the effective gross revenue (as defined in the Management Agreement).  Bent Tree LLC will also pay a leasing fee (as defined in the Management Agreement and subject to the further terms contained therein) in an amount equal to the leasing fees charged by unaffiliated persons rendering comparable services in the same geographic location of the applicable property for new leases and for the renewal of existing leases.  The Management Agreement has an initial term of one year and will be automatically extended on an annual basis unless either party gives 30 days prior written notice of its desire to terminate the Management Agreement.  Bent Tree LLC or the Property Manager may terminate the Management Agreement in the event of default by the other party if such default is not cured within ten (10) days after written notice from the other party, provided that if the default cannot be reasonably cured within the ten (10) day period, the cure period shall be reasonably extended provided the party obligated to cure such default endeavors with diligence to do so.  Bent Tree LLC may terminate the Management Agreement at any time upon written notice in the event of the Property Manager’s fraud, gross malfeasance, gross negligence or willful misconduct.





The material terms of the Management Agreement described herein are qualified in their entirety by the Management Agreement, a copy of which is attached as Exhibit 10.3 to this Current Report on Form 8-K and incorporated herein by reference.


Item 2.03   Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet

     Arrangement of a Registrant.


Loan Agreement


In connection with the acquisition of the Bent Tree Green Property, Bent Tree LLC became a party to a revolving loan agreement dated May 11, 2012 among the Company and its wholly owned subsidiaries; Hartman Richardson Heights Properties, LLC (“Richardson Heights LLC”), Hartman Cooper Street Plaza, LLC (“Cooper Street LLC”) and Texas Capital Bank, National Association (as modified and amended the “Loan Agreement”) to provide up to $30 million of loan proceeds.  The initial borrowing base for the Loan Agreement was $14 million.  The Loan Agreement is secured by the Bent Tree Green Property, the Cooper Street Property and the Richardson Heights Shopping Center (the “Richardson Heights Property”) owned by Richardson Heights LLC.  In connection with the Bent Tree Green Property acquisition the borrowing base under the Loan Agreement is increased to $20 million with $2 million reserved for certain redevelopment costs to be incurred for the Richardson Heights Property.  Proceeds of the Loan Agreement were used to partially fund the purchase price of the Bent Tree Green Property.  As of October 16, 2012, the closing date for the purchase of the Bent Tree Green Property, the outstanding principal balance of the Loan Agreement was $18 million.


The Loan Agreement has a maturity date of May 10, 2015.  Interest on the outstanding principal balance of the Loan Agreement accrues at the Loan Rate (as defined in the promissory note given in connection with the Loan Agreement) which is the base rate quoted from time to time by the Lender and designated as its Base Rate plus one percent (1.0%), but never less than five percent (5.0%) per annum.  Interest is payable monthly.  The Loan Agreement provides for an unused facility fee of one-half of one percent (0.5%) per annum payable quarterly in arrears on the difference between the borrowing base and the outstanding principal borrowed under the Loan Agreement.


Each of the Company and its wholly owned subsidiaries Bent Tree LLC, Cooper Street LLC and Richardson Heights LLC are borrowers under the Loan Agreement.  The Loan Agreement is subject to customary covenants, representations and warranties which must be maintained during the term of the Loan Agreement.  The Loan Agreement is secured by deeds of trust; assignment of licenses, permits and contracts; assignment and subordination of the management agreements; and assignment of rents for each of the Bent Tree Green Property, the Cooper Street Property and the Richardson Heights Property.


In connection with the Loan Agreement, the Company has absolutely, unconditionally and irrevocably guaranteed to the Lender, the full and prompt payment when due of all amounts owing under the Loan Agreement and the loan documents.  The covenant guarantor is Allen Hartman.


The material terms of the Loan Agreement described herein are qualified in their entirety by the agreement attached as Exhibits 10.1 to this Current Report on Form 8-K and incorporated herein by reference.


Item 7.01   Regulation FD Disclosure


On October 18, 2012, the Company distributed a press release announcing the completion of the acquisition of the Cooper Street Property.  The full text of the press release is attached as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated by reference into this Item 7.01


The information furnished under Item 7.01 of this Current Report on Form 8-K, including Exhibit 99.1, shall not be deemed “filed” for the purposes of Section 18 of Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section.





Item 9.01   Financial Statements and Exhibits.


(a) Financial Statements of Business Acquired.

Because it is impractical to provide the required financial statements for the acquisition of the real property described above at the time of this filing, and no financial statements (audited or unaudited) are available at this time, the Company hereby confirms that the required financial statements will be filed as an amendment to this Current Report on Form 8-K no later than 71 days after the deadline for filing this Current Report on Form 8-K.


(b) Pro Forma Financial Information

See Paragraph (a) above.


(d) Exhibits.


Exhibit

 

Description

10.1

 

Loan Modification Agreement, dated October 16, 2012, by and among Texas Capital Bank, NA and Hartman Bent Tree Green, LLC; Hartman Richardson Heights Properties, LLC, Hartman Short Term Income Properties XX, Inc., and Hartman Cooper Street Plaza, LLC.

10.2

 

Promissory Note, dated October 16, 2012, by Hartman Bent Tree Green, LLC; Hartman Richardson Heights Properties, LLC, Hartman Short Term Income Properties XX, Inc., and Hartman Cooper Street Plaza, LLC in favor of Texas Capital Bank, NA

10.3

 

Real Property Management Agreement, dated as of October 16, 2012, by and among Hartman Bent Tree Green, LLC and Hartman Income REIT Management, Inc.

99.1

 

Press release of Hartman Income REIT, dated October 18, 2012

 

 

 



___________________________________________________________________


SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


  

HARTMAN SHORT TERM INCOME PROPERTIES XX, INC.

 

(Registrant)

Date: October 19, 2012

By:  

/s/  Louis T. Fox, III

  

Louis T. Fox, III

  

Chief Financial Officer


___________________________________________________________________


EXHIBIT INDEX


Exhibit

 

Description

10.1

 

Loan Modification Agreement, dated October 16, 2012, by and among Texas Capital Bank, NA and Hartman Bent Tree Green, LLC; Hartman Richardson Heights Properties, LLC, Hartman Short Term Income Properties XX, Inc., and Hartman Cooper Street Plaza, LLC.

10.2

 

Promissory Note, dated October 16, 2012, by Hartman Bent Tree Green, LLC; Hartman Richardson Heights Properties, LLC, Hartman Short Term Income Properties XX, Inc., and Hartman Cooper Street Plaza, LLC in favor of Texas Capital Bank, NA

10.3

 

Real Property Management Agreement, dated as of October 16, 2012, by and among Hartman Bent Tree Green, LLC and Hartman Income REIT Management, Inc.

99.1

 

Press release of Hartman Income REIT, dated October 18, 2012