Related Party Disclosures

12 Months Ended

Dec. 31, 2011

Related Party Disclosures

Related Party Transactions Disclosure [Text Block]

Note 13 — Related Party Transactions

The Company initially issued 100 shares of the Company’s common stock to Hartman XX Holdings, Inc. (“Holdings”) for $1,000.  Holdings, is a Texas corporation wholly owned by Allen R. Hartman.  Holdings, was formed solely for the purpose of facilitating the organization and offering of the initial offering of the Company’s shares.  Effective October 15, 2009 the Company issued an additional 18,900 shares to Holdings for $189,000.  Holdings contributed a related party liability in the amount of $189,000 to the Company in exchange for the issuance of an additional 18,900 common shares of the Company.  The transaction resulted in a total of 19,000 common shares issued since inception for total consideration of $190,000.

The Company issued the Advisor, Hartman Advisors LLC, 1,000 shares of non-voting convertible preferred stock for $100.  Effective October 15, 2009 the Company received additional consideration of $9,900 with respect to the non-voting convertible preferred stock.  The Advisor contributed a related party liability in the amount of $9,900 to the Company as donated capital related to the convertible common stock previously issued by the Company to the Advisor.  Accordingly, the overall issue price for the 1,000 convertible preferred shares is $10,000 or $10 per share.  Upon the terms described below, these shares may be converted into shares of the Company’s common stock, resulting in dilution of the stockholders’ interest in the Company.

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 of which Allen R. Hartman is the Chief Executive Officer and Chairman of the Board of Directors.

       As of December 31, 2011 and 2010, respectively, the Company had a balance due to an affiliated entity, the Property Manager of $556,698 and $355,739. The Property Manager has paid various organization and offering expenses on behalf of the Advisor for the Company. The Advisor will reimburse Hartman Income REIT Management, Inc., for expenses paid on behalf of the Company from proceeds of the offering.  The Company ultimately may not incur or make reimbursement for offering and organization expenses in excess of 1.5% of gross offering proceeds.  Any amount in excess will be reimbursed to the Company by the Advisor.

The Company owed the Advisor $56,356 and $0 for asset management fees for the years ended December 31, 2011 and 2010, respectively.  These fees are monthly fees equal to one-twelfth of 0.75% of the sum of the higher of the cost or value of each asset. The asset management fee will be based only on the portion of the cost or value attributable to the Company’s investment in an asset, if we do not own all or a majority of an asset.

The Company will pay the Dealer Manager up to 7.0% of the gross proceeds of the primary offering for any selling commissions on sales of shares from participating retail broker-dealers, except those issued under the distribution reinvestment plan.  The Company will also pay the Dealer Manager up to 2.5% of its dealer manager fees to participating broker-dealers.  At December 31, 2011 and 2010, respectively, the Company owed the Dealer Manager $15,019 and $10,850 for selling commissions and dealer management fees.