Hartman Short Term Income Properties XX, Inc

Hartman Short Term Income
Properties XX, Inc
A “Value-Added” Real Estate Investment Trust (REIT)
Presented By:
Richard Zimmerman
National Director of Sales
Hartman Income REIT
(818) 209-8071
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Hartman Short Term Income Properties XX, Inc.
Important Information
This is neither an offer to sell, nor a solicitation of an offer to buy securities described herein. An
offering is made only by prospectus. This literature must be preceded or accompanies by a current
prospectus. As such, a copy of the current prospectus must be made available to you in connections
with this offering. You should read the prospectus in order to understand fully all of the implications
and risks of the offering of securities to which it relates. An investment in the Hartman Short Term
Income Properties XX, Inc. should be made only after a careful review of the prospectus in its entirety.
Neither the Attorney General, or the any other state securities regulator has passed on or endorsed
the merits of any offering of Hartman. Any representation to the contrary is unlawful.
REITs are not suitable for all investors. Investors should consult with their financial advisor prior to
making any investment decision. Past performance is not an indication of future results.
Investment in real estate entails significant risks many of which lie outside the control of the sponsor.
These include but are not limited to: lack of liquidity, devaluation of holdings due to adverse
economic conditions, supply and demand laws, tenant turnover, changes in interest rates (including
period or high rates), availability of mortgage funds, variable operating expenses and insurance
expenses. As such, an investment in a REIT is suitable only for certain investors as part of an overall
diversified investment strategy and for investors able to withstand a total loss of investment.
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Hartman Short Term Income Properties XX, Inc.
Important Information (Cont.)
Hartman has structured its investment offering in accordance with the securities and tax laws
governing REITs and believes the offering is organized and operates in a manner that qualifies for REIT
tax status; however, this will not eliminate all taxes. If REIT requirements are not met in the future,
the cash available for distribution to shareholders would be significantly reduced and distributions
would be taxable as ordinary income to the shareholders. This tax increase would reduce investor
returns. Hartman qualified this offering for REIT tax status in 2011.
References to indexes and NCREIF and other benchmarks are hypothetical illustrations of aggregate
returns and do not reflect the performance of any actual investment. Investors cannot invest in an
index.
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Hartman Short Term Income Properties XX, Inc.
Hartman’s History
•
•
•
•
Established in 1982
Sponsored 20 Texas-Centric programs
18 full-cycle offerings
Acquired 79 properties
($500MM Asset Value)
• No legacy asset issues
• “Value-Added” sponsor
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Hartman Short Term Income Properties XX, Inc.
Hartman’s Strengths
• Integrated “in-house” operation
•
•
•
•
Acquisitions / Dispositions
Leasing / Marketing
Property Management
Energy Conservation
• 3 decade history of increasing values
through “value-added” strategies
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Hartman Short Term Income Properties XX, Inc.
Full-Cycle Track Record
Inception to
Distributions
Received
Internal Rate of
Liquidation2
Equity
Invested
Bissonnet Beltway Plaza, LTD 1
I-10 Office Warehouse, LTD
West Belt Plaza, LTD
Houston R.E. Income Properties VII, LTD
Houston R.E. Income Properties VIII, LTD
Houston R.E. Income Properties IX, LTD
Houston R.E. Income Properties X, LTD
Houston R.E. Income Properties XI, LTD
Houston R.E. Income Properties XII, LTD
Houston R.E. Income Properties XIV, LTD
Houston R.E. Income Properties XV, LTD
1986-1999
1986-1999
1988-1999
1990-2000
1991-2002
1992-2002
1992-2002
1994-2002
1995-2000
1997-2002
1998-2002
$ 500,000
$ 1,377,000
$ 1,013,125
$ 2,028,000
$ 2,210,000
$ 2,550,000
$ 4,770,000
$ 4,810,000
$ 9,982,000
$10,000,000
$ 9,997,323
$
$
$
$
$
$
$
$
$
$
$
689,048
1,057,851
1,153,374
2,216,317
2,144,987
3,307,069
3,193,550
5,378,055
4,349,200
4,817,756
3,060,619
$
$
$
$
$
$
$
$
$
$
$
1,045,565
2,139,047
1,686,088
3,428,835
3,921,339
4,524,621
6,484,820
5,362,742
11,159,876
12,609,031
11,146,168
14%
9%
14%
16%
13%
17%
13%
16%
14%
15%
12%
Hartman Commercial Properties REIT 3, 4
Houston R.E. Income Properties XVI, LTD
Houston R.E. Income Properties XVII LTD
Hartman R.E. Income Properties XVIII, LTD
1999-2006
2002-2008
2003-2008
2004-2008
$53,771,471
$25,000,000
$25,000,000
$25,000,000
$
$
$
$
16,300,822
11,824,459
9,081,828
3,690,434
$
$
$
$
64,418,157
40,488,487
40,873,466
30,038,106
17%
19%
22%
15%
Offering
Terminal Value 5
Weighted Average Return
Return 6
16.7%
1 Bissonnet Beltway Plaza through Hartman XIV were consolidated into Hartman Commercial properties
2 Funds were consolidated in 1999, 2001,and 2002 in which non accredited investors and others who chose the cash option were liquidated.
3 Hartman Commercial Properties consists of two offerings (Reg D offering in 1999 & Public offering in 2004)
4 Terminal Value for the HCP REIT is equal to $10 per share times the sum of the number of shares sold in the 1999-2000 Red. D (adjusted for the 2004
stock split) and the 2004-2006 IPO offering. HCP REIT shares were offered at $10 per share as of the termination of the offering.
5 Terminal value indicates when Fund was sold/consolidated
6 IRR includes fees and closing costs.
* Chart excludes Holly Knight, Woodedge Plaza, and Kempwood Plaza as investors were bought out by Allen Hartman prior to consolidation.
** Past Performance is no guarantee of future results.
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Hartman Short Term Income Properties XX, Inc.
Hartman’s Prior REIT
XIX REIT Performance
NAV
Annual
Distribution
Initial
Offering Period
$10.00 / share
7.00%
As of Oct. 2012
$11.84 / share
7.25%
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Hartman Short Term Income Properties XX, Inc.
REIT Overview
• $250,000,000 publicly registered,
non-traded REIT
• Investment Objectives
•
•
•
•
Preserve capital
Growth potential
Generate “tax-deferred” cash distributions
Offer liquidity by 2017
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Hartman Short Term Income Properties XX, Inc.
REIT Overview (cont.)
• Min. Investment 1: $10,000
($5,000 qualified retirement plan)
•
•
•
•
Price / share: $10.002
Dividends paid monthly
Dividend Reinvestment Plan: $9.50/ share
Term: Liquidity event 2017 (anticipated)
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Hartman Short Term Income Properties XX, Inc.
REIT Benefits
• Monthly, tax-deferred income
• Professional Management
• Non-correlation to stocks /bonds
• Diversification reduces
portfolio volatility
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Hartman Short Term Income
Properties XX, Inc.
Value-Added Strategy
• Source properties from distressed/motivated
sellers.
• Purchase at 50% - 60%
of replacement cost.
• Proactively manage to increase occupancy &
operating income
• Exploit market inefficiencies with
local real estate knowledge
• Mitigate risk with prudent use of leverage
(50% max.)
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Hartman Short Term Income Properties XX, Inc.
Value-Added vs. CORE
Market Returns
Wealth Creation
CORE
Value-Added
• Routine re-leasing
• Increase Occupancy
• Improving rents
• Property Renovation
• Pot’l Cap rate
compression
• Improved utility
• Increase space
• Repositioning strategies
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Hartman Short Term Income Properties XX, Inc.
As a “value-added”
real estate operating
company, Hartman
relies heavily on its
world-class team of
property managers,
leasing agents,
engineers and
development experts.
Hartman’s Executive Team
Al Hartman, Pres. &
Ross Donahue,
CEO
COO
Dave Wheeler, EVP
Jennifer Rabon,
Acquisitions & Finance
Picture
Lou Fox, CFO
Leasing
Picture
Dan Clayton, VP
Construction / Engineering
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Hartman Short Term Income Properties XX, Inc.
Share Redemption Program
(Sell shares back to Hartman)
YEAR
REDEMPTION VALUE
(as pct. of purchase price)
•
1
90.0%
2
92.5%
3
95.0%
4
97.5%
5
100.0%
Death or Disability = 100%
NOTE: The “Share Redemption Program” is at the discretion of the Board of Directors and is limited annually to no more than 5% of the weighted average number of
shares outstanding for the 12 month period immediately prior to the date of the redemption. The minimum number of shares presented for redemption shall be at
least 25% of the shareholder’s shares. As of May 1, 2013 there have been only 4 requests for redemption and Hartman has honored 100% of said requests.
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Hartman Short Term Income Properties XX, Inc.
Liquidity at REIT Termination 1
• 2017 Year-End - Anticipated liquidation
• Two Options
1) Cash-out at Net Asset Value (NAV) or
2) A non-taxable exchange of stock for Hartman’s Consolidation REIT.
1.
Market conditions and other factors could cause our shareholders to approve a proposal to delay the commencement of our liquidation or to delay the listing of our shares on a
national securities exchange beyond the anticipated liquidation date. Even after we decide to liquidate, we would attempt to conclude our liquidation in a prudent manner
depending on real estate and financial markets, economic conditions of the areas in which the properties are located and federal income tax effects on stockholders that may prevail
I the future. After commencing liquidation, we would continue in existence until all properties are sold and our other assets are liquidated.
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Hartman Short Term Income Properties XX, Inc.
Property Acquisitions
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Hartman Short Term Income Properties XX, Inc.
Property Acquisition Focus
•
•
•
•
•
•
•
Retail, Office, Light Industrial
Located in Texas
$5-$20 million (middle market “sweet spot”)
55% - 70% occupancy
Multi-Tenant (3-10 year leases)
Staggered lease terminations
Low leverage (40%-50% max.)
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Hartman Short Term Income Properties XX, Inc.
Property 1 – Richardson Heights
•
Type: Shopping Center (201,433 SF)
•
Cost: $19,150,000 ($95.07/SF)
•
Occupancy: 53% / 68% (as of Dec. 2012)
•
LTV: 50%
•
Anchor Tenants:
•
Alamo Draft House
•
TJ Maxx
•
Payless Shoes
•
McDonalds
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Hartman Short Term Income Properties XX, Inc.
Richardson Heights
Shopping Center
Richardson Heights, TX
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Hartman Short Term Income Properties XX, Inc.
Property 2 – Cooper Street
•
Type: Shopping Center (127,696 SF)
•
Cost: $10,500,000 ($82.08/SF)
•
Occupancy: 91% / 91% (as of Dec. 2012)
•
LTV: 50%
•
Anchor Tenants:
•
Home Depot Garden Center
•
OfficeMax
•
TGIF Friday’s
•
K&G Fashion
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Hartman Short Term Income Properties XX, Inc.
Cooper Street Plaza
Arlington, TX
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Hartman Short Term Income Properties XX, Inc.
Property 3 – Bent Tree Green
•
Type: Class “A” Office (139,609 SF)
•
Cost: $12,012,500 ($86.05/SF)
•
Occupancy: 62% / 70% (as of Dec. 2012)
•
LTV: 50%
•
Anchor Tenants:
•
Purdy-McGuire, Inc
•
Behringer Harvard
•
Dental One
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Hartman Short Term Income Properties XX, Inc.
Bent Tree Green
Dallas, TX
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Hartman Short Term Income Properties XX, Inc.
Property 4 – Parkway Plaza I & II
•
Type: Class “B+” Office (136,320 SF)
•
Cost: $9,940,000 ($69.62/SF)
•
Occupancy: 62% / 70% (as of Dec. 2012)
•
LTV: 31%
•
Anchor Tenants:
•
Chase Bank
•
Elite Healthcare
•
O’Boyle Properties
•
McCue-Pauley & Associates
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Hartman Short Term Income Properties XX, Inc.
Parkway Plaza
I & II
Dallas, TX
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Hartman Short Term Income Properties XX, Inc.
Proforma Yields and Occupancies1
Proforma Leveraged Yield from Operations
(yield at proforma occupancy)
Acquisition
Year
Yield/Occupancy
at Acquisition
2013 Proforma
Yield
Est. Yield at
Stabilized
Occupancy1
Richardson Heights
2011
6.9% @ 56%
9.6%
13.5%
Cooper Street Plaza
2012
13.0% @ 92%
13.0%
14.3%
Bent Tree Green
2012
3.49% @ 62%
5.1%
10.8%
Parkway Plaza I&II
2013
3.5% @ 68%
3.9%
10.7%
The projections and the anticipated yields are only estimates based on specific assumptions utilized by the Sponsor based on current market rental rates and
trends, local demand for similar space, absorption rates, and economic data. There is no guarantee that the assumptions used in these projections will be
achieved.
The proforma yields are based on Hartman’s best projections of anticipated occupancy, rental rate, and expense calculations. Hartman typically purchases
properties with 30% to 50% vacancy with the assumption that stabilization of the property at a 90% (physical occupancy) can be achieved by the end of the 3rd
year. These numbers take into account that the economic occupancy of these buildings will typically be 5% to 10% less than the physical occupancy. There is
no guarantee that these yields will be attained.
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Hartman Short Term Income Properties XX, Inc.
Why Texas
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Hartman Short Term Income Properties XX, Inc.
Texas Centric Focus
Click on Map To Learn About Texas
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Hartman Short Term Income Properties XX, Inc.
Why Texas?
Tort
Reform
Business
Friendly
No State
Income Tax
Top Rated
School System
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Stable
Economy
29
Hartman Short Term Income Properties XX, Inc.
Why Texas?
Jobs
Population
Occupancy
Lease Rates
Source: U.S. Census, Texaplex, Colliers International, and CBRE MarketView.
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Hartman Short Term Income Properties XX, Inc.
Why Texas?
Commercial Property
Prices Are Rising
Source: Real Capital Analytics-June 2012. Costar
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Hartman Short Term Income Properties XX, Inc.
Why Invest Now?
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Hartman Short Term Income Properties XX, Inc.
Investment Timing
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Hartman Short Term Income Properties XX, Inc.
Why Invest Now
• Economic cycle in recovery
• Invest prior to
increase in share price
• Higher yields than bonds
• Lower volatility than stocks
• Public pension fund acquisitions
driving up property prices
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Hartman Short Term Income Properties XX, Inc.
REIT Risks (read prospectus for full list)
•
Illiquid / Long-Term
•
No public markets
•
No guarantees
•
Dependency on advisor
•
Market conditions
•
Tenant quality
•
Use of debt
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Hartman Short Term Income Properties XX, Inc.
A Case for Including REITs
in a Well Diversified Portfolio
Adding Value Through Active Management
A Case for Including REITs
in a Well Diversified Portfolio
Comparative Income Returns
(2000-2010)
Sources: NCREIF, S&P, Barclays Capital, Clarion Partners Research & Investment Strategy. Data as of December 31st, 2010
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A Case for Including REITs
in a Well Diversified Portfolio
Total Return Of Private Market
Institutional Quality Real Estate Assets
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A Case for Including REITs
in a Well Diversified Portfolio
Growth of a $1 million
Private Real Estate Investment
(1979-2013)
16,000,000
14,000,000
12,000,000
10,000,000
8,000,000
6,000,000
4,000,000
Investment Value
2,000,000
Source: NCREIF Core Real Estate Index
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
0
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A Case for Including REITs
in a Well Diversified Portfolio
Risk Adjusted Return Ratios
(1978-2010)
Sources: NCREIF, NAREIT, Russell, Barclays Capital, and MSCL, Clarion Partners Research & Investment Strategy. NOTE: Average returns are calculated
using annual returns from 1079-2010. Standard deviations are based on annual returns.
NOTE: The risk adjusted return ratio is calculated by dividing the average return by the standard deviation of each asset class for the analyzed period.
The higher the ratio the lower the risk of the asset class relative to the average return.
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A Case for Including REITs
in a Well Diversified Portfolio
Correlation by Asset Class
(2001-2010)
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A Case for Including REITs
in a Well Diversified Portfolio
Multi-Asset Portfolio Efficient Frontier
(1978-2010)
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A Case for Including REITs
in a Well Diversified Portfolio
Enhancing Your Portfolio With Real Estate
(1978-2010)
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Thank you
Hartman Income REIT
2209 Hillcroft Street, Ste. 420
Houston, TX 77057
Headquarters: (800) 880-2212
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