SC 14D9

As filed with the Securities and Exchange Commission on December 2, 2019

____________________________________________________________________________

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

__________________

SCHEDULE 14D-9

(Rule 14d-101)

SOLICITATION/RECOMMENDATION STATEMENT UNDER

SECTION 14(d)(4) OF THE SECURITIES EXCHANGE ACT OF 1934

__________________

HARTMAN SHORT TERM INCOME PROPERTIES XX, INC.

(Name of Subject Company)

Hartman Short Term Income Properties XX, Inc.

(Name of Person(s) Filing Statement)

Common Stock, par value $0.001 per share

(Title of Class of Securities)

(CUSIP Number of Class of Securities)

__________________

Allen R. Hartman

Chief Executive Officer and President

2909 Hillcroft, suite 420

Houston, Texas 77057

(713) 467-2222

(Name, Address and Telephone Number of Person Authorized

to Receive Notices and Communications on Behalf of the Person(s) Filing Statement)

__________________

With a Copy to:

Rosemarie A. Thurston

Alston & Bird LLP

1201 West Peachtree Street

Atlanta, Georgia 30309

(404) 881-7000

☐ Check the box if the filing relates solely to preliminary communications made before the commencement of a tender offer.

Item 1. Subject Company Information.

(a) Name and Address. The name of the subject company is Hartman Short Term Income Properties XX, Inc., a Maryland corporation (the “Company”). The address and telephone number of the principal executive offices of the Company are 2909 Hillcroft, Suite 420, Houston, Texas 77057, (713) 467-2222.

(b) Securities. The class of equity securities to which this Solicitation/Recommendation Statement on Schedule 14D-9 (this “Schedule 14D-9”) relates is the Company’s common stock, par value $0.001 per share (the “Shares”). As of November 30, 2019, there were approximately 18,417,687 Shares outstanding.

Item 2. Identity and Background of Filing Person.

(a) Name and Address. The Company is the filing person. The name, address and telephone number of the Company are set forth in Item 1(a) above.

(b) Tender Offer. This Schedule 14D-9 relates to the cash tender offer by Everest REIT Investors I, LLC (“Everest”) to purchase up to 925,000 Shares at a purchase price equal to $9.00 per Share, subject to the conditions set forth in the Offer to Purchase dated November 18,2019, and amended on November 27, 2019 (the “Offer to Purchase”) and the related Transfer Agreement (together with the Offer to Purchase, the “Everest Offer”), as set forth in Everest’s Tender Offer Statement on Schedule TO, filed with the Securities and Exchange Commission (the “SEC”) on November 18, 2019 and November 27, 2019 (the “Schedule TO”).

According to the Schedule TO, the address and principal executive offices of Everest are Everest REIT Properties, LLC, 199 S. Los Robles Ave., Suite 200, Pasadena, California 91101 and its telephone number is (626) 585-5920.

Item 3. Past Contacts, Transactions, Negotiations and Agreements.

As of the date of this Schedule 14D-9, there are no material agreements, arrangements or understandings or actual or potential conflicts of interest between the Company or its affiliates and (i) Everest and its executive officers, directors or affiliates or (ii) the Company’s executive officers, directors or affiliates, except for agreements, arrangements or understandings or actual or potential conflicts of interest discussed in the sections entitled “Directors, Executive Officers and Corporate Governance,” “Executive Compensation,” “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters” and “Certain Relationships and Related Transactions and Director Independence” in the Company’s Annual Report on Form 10-K filed with the SEC on April 8, 2019and incorporated herein by reference. The Company’s Annual Report on Form 10-K was previously made available to stockholders and is available free of charge on the SEC’s website at www.sec.gov.

Item 4. The Solicitation or Recommendation.

(a) Recommendation. The information set forth in the letter to stockholders, dated December 2, 2019 (the “Letter to Stockholders”), a copy of which is filed as Exhibit (a)(1) to this Schedule 14D-9, is incorporated herein by reference.

(b) Reasons. The information set forth in the Letter to Stockholders, a copy of which is filed as Exhibit (a)(1) to this Schedule 14D-9, is incorporated herein by reference.

(c) Intent to Tender. After reasonable inquiry and to the best knowledge of the Company, none of the Company’s executive officers, directors, affiliates or subsidiaries intends to tender or sell Shares held of record or beneficially owned by them pursuant to the Everest Offer.

Item 5. Person/Assets, Retained, Employed, Compensated or Used.

 To the knowledge of the Company, neither the Company nor any person acting on its behalf has, directly or indirectly, employed, retained or compensated, or intends to employ, retain or compensate, any person or class of persons to make solicitations or recommendations to the stockholders in connection with the Everest Offer.

Item 6. Interest in Securities of the Subject Company.

During the past 60 days prior to the filing of this Schedule 14D-9, no transactions with respect to the Shares have been effected by the Company or, to the knowledge of the Company, its executive officers, directors, affiliates or subsidiaries.

Item 7. Purposes of the Transaction and Plans or Proposals.

(a) Except as set forth in this Schedule 14D-9, the Company is not undertaking and is not engaged in any negotiations in response to the Everest Offer that relate to a tender offer or other acquisition of the Shares by the Company, any subsidiary of the Company or any other person.

(b) Except as set forth in this Schedule 14D-9, the Company is not undertaking and is not engaged in any negotiations in response to the Everest Offer that relate to, or would result in, (i) any extraordinary transaction, such as a merger, reorganization or liquidation, involving the Company or any subsidiary of the Company; (ii) any purchase, sale or transfer of a material amount of assets of the Company or any subsidiary of the Company; or (iii) any material change in the present dividend rate or policy, indebtedness or capitalization of the Company.

(c) Except as set forth in this Schedule 14D-9, there are no transactions, board resolutions, agreements in principle or signed contracts entered into in response to the Everest Offer that relate to one or more of the matters referred to in this Item 7.

Item 8. Additional Information.

As previously filed with the SEC on July 15, 2019 and incorporated by reference herein, the Company has filed Amendment No. 4 to the S-4 Registration Statement in which it outlined that it has entered binding merger agreements with Hartman Income REIT, Inc. and Hartman Short term Income Properties XIX, Inc. The Registration Statement and merger agreements set forth the terms and conditions upon which the Company proposes to acquire Hartman Income REIT, Inc. and Hartman Short Term Income Properties XIX, Inc. and their subsidiaries in a proposed merger. The Company did not enter into the merger agreements or engage in negotiations with respect thereto in response to the Everest Offer.

Cautionary Note Regarding Forward-Looking Statements

This Schedule 14D-9, including the information incorporated herein by reference, may contain forward-looking statements regarding, among other things, the Company and the future value of the Shares. Forward-looking statements include, but are not limited to, statements that represent the Company’s beliefs concerning future operations, strategies, financial results or other developments. Forward-looking statements can be identified by the use of forward-looking terminology such as, but not limited to, “may,” “should,” “expect,” “intend,” “anticipate,” “estimate,” “would be,” “believe,” or “continue” or the negative or other variations of comparable terminology. Because these forward-looking statements are based on estimates and assumptions that are subject to significant business, economic and competitive uncertainties, many of which are beyond the Company’s control or are subject to change, actual results could be materially different. Although the Company believes that its plans, intentions and expectations reflected in or suggested by these forward-looking statements are reasonable, it cannot guarantee that it will achieve or realize these plans, intentions or expectations. Factors that could cause the Company not to realize its plans, intentions or expectations include, but are not limited to, the risk that the Company and Hartman Income

REIT, Inc. and Hartman Short Term Income Properties XX, Inc. will not consummate the proposed merger, those discussed under the headings “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors” contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 and the Company’s Quarterly Reports on Form 10-Q for the quarters ended March 31, 2019, June 30, 2019 and September 30, 2019 and Amendment No. 4 to Form S-4 Registration Statement filed with the SEC. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date this Schedule 14D-9. Except as required by law, the Company does not undertake any obligation to update or revise any forward-looking statements contained in this Schedule 14D-9.

Item 9. Exhibits.

The information under the heading “Exhibit Index” appearing after the signature page of this Schedule 14D-9 is incorporated herein by reference.

SIGNATURE

After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.

	HARTMAN SHORT TERM INCOME PROPERTIES XX, INC.
Date: December 2, 2019	/s/ Allen R. Hartman
	Name:	Allen R. Hartman
	Title:	Chief Executive Officer and President

Exhibit Index

Exhibit No.	Description
(a)(1)*	Letter to Stockholders of the Company from Allen R. Hartman, Chief Executive Officer, President and Director of the Company, dated as of December 2, 2019.
(e)(1)	The information contained under the headings “Equity Compensation Plan Information,” “Security Ownership of Certain Beneficial Owners and Management,” “Compensation of Directors and Executive Officers” and “Certain Relationships and Related Transactions” in the Company’s Amendment No. 4 to Form S-4 Registration Statement and filed with the SEC on July 15, 2019 (incorporated herein by reference).
(a)(2)	Current report on Form 10-Q of the Company filed with the SEC on November 14, 2019 (incorporated herein by reference).
*	Included as the cover page to this Solicitation/Recommendation Statement on Schedule 14D-9 mailed to holders of Shares of the Company and filed herewith.

EX-99..(A)(1)

THE BOARD UNANIMOUSLY RECOMMENDS THAT YOU REJECT THE EVEREST OFFER AND NOT TENDER YOUR SHARES.

December 2, 2019

Dear Stockholder:

I am writing to you on behalf of the board of directors (the “Board”) of Hartman Short Term Income Properties XX, Inc. (the “Company”) to caution you about a tender offer being made for your shares by a third party at what we believe is an unreasonably low share price.

To REJECT the Everest Offer, simply ignore it. You do

not need to respond to anything.

Everest REIT Investors I, LLC (“Everest”) has made an unsolicited tender offer to holders of our common stock (the “Everest Offer”). You may have already received Everest’s offer materials and may also have seen that information on a Schedule TO filed by Everest with the Securities and Exchange Commission (the “SEC”) on November 18, 2019 (and amended November 27, 2019) . Everest is offering to purchase up to 925,000 shares of the Company’s common stock (the “Shares”) at a price of $9.00 per share (the “Offer Price”). Please note, we are not affiliated with Everest or their offer.

The Board has carefully evaluated the terms of the Everest Offer and believes that:

•      The price offered by Everest undervalues the long-term value of the Shares;

•     The Everest Offer represents an opportunistic attempt by Everest to catch current stockholders off-guard and to accept an unreasonably low price for their Shares; and

•       Everest is making the offer for investment purposes and with the intention of making a profit from the ownership of the Shares.

THE BOARD, TAKING INTO CONSIDERATION WHAT IT BELIEVES TO BE AN UNREASONABLY LOW OFFER PRICE FOR THE SHARES, UNANIMOUSLY RECOMMENDS THAT YOU REJECT THE EVEREST OFFER AND NOT TENDER YOUR SHARES. However, each stockholder must independently evaluate whether to tender its Shares to Everest pursuant to the Everest Offer and the Board recognizes that an individual stockholder may have liquidity needs that cannot be met in other ways that factor into his or her consideration as to whether to accept the Everest Offer. Set forth below are the material factors contributing to the Board’s decision to recommend that you reject the Everest Offer. You should consider these factors in deciding whether to accept or reject the Everest Offer. If you want to retain your Shares, no action on your part is necessary.

Material Factors Contributing to the Board’s Decision

to Recommend that You Reject the Everest Offer

The Company is required by the Securities Exchange Act of 1934, as amended, and the rules and regulations under it, to inform you of its position, if any, with respect to the Everest Offer. In reaching the

2909 Hillcroft Suite 420, Houston TX 77057

Main telephone number: 713-467-2222

conclusions and in making the recommendation described below, the Board: (1) consulted with members of the Company’s management; (2) reviewed the terms and conditions of the Everest Offer; (3) considered other information relating to the Company’s historical financial performance, portfolio of properties and future opportunities; and (4) evaluated various factors it deemed relevant in light of its knowledge of the Company’s business and financial condition. The following are the material factors contributing to the Board’s decision to recommend that you reject the Everest Offer:

(i)The tender offer undervalues both the current and potential long-term value of the Shares.

The Everest Offer Price is significantly less than the current and potential long-term value of the shares. As of December 31, 2018, the net asset value (“NAV”) per share of common stock was $12.61. The Everest Offer Price of $9.00 per share or approximately 29% less than the calculated NAV per share. The Board believes that the Everest Offer represents an opportunistic attempt by Everest to purchase Shares at a low share price and make a profit and, as a result, deprive the Company’s stockholders who tender their Shares of the potential opportunity to realize the long-term value of their investment in the Company or potential value of the shares of that the Company’s stockholders could achieve after the merger.

(ii)Everest intends to make a profit.

Everest states that the Everest Offer is being made “for investment purposes and witha view to making a profit for itself” and admits that it was “motivated to establish a price which might be acceptable” to some of the Company’s stockholders and is consistent with its objectives. Therefore, Everest acknowledges that the Offer Price was established based on Everest’s objectives and not based on what is in the best financial interest of the Company’s stockholders.

(iii)Everest’s Offer Price is arbitrary.

Everest acknowledges that it is not an appraiser of real estate and did not attempt to estimate specific values for specific properties owned by the Company. Everest explains that it considered the Company’s estimated per Share value as of December 31, 2018 of $12.61 per Share, and considered other factors when establishing the price, including the limited trading activity of the Shares, the discount to potential liquidation value that is acceptable to it given the illiquidity of the Shares, and its desire to set a price that will be acceptable to some of the Company’s stockholders but will also enable it to make a profit by holding on to the Shares until the Company is liquidated. Everest provides no analysis with respect to how it arrived at the liquidity discount to the current per Share value. The Board and the Company’s management believe this illustrates the lack of credibility of Everest’s valuation methods and the inadequacy of their Offer Price.

(iv)Shareholders who tender their shares will not be able to vote in the proposed merger, nor will they be able to take advantage of the benefits the merged company provides.

The Company believes it is in the final phases of obtaining clearance by the SEC of its registration and proxy materials and that a merger of the companies could occur as early as the end of the first quarter 2020. The Everest offer expires on January 3, 2020 (unless extended). Shareholders who tender their shares will not have the opportunity to participate in the merger voting, nor will they be shareholders after the mergers are complete. Shareholders would not have the opportunity to participate in any liquidity event that may be possible with a larger, more diverse company.

2909 Hillcroft Suite 420, Houston TX 77057

Main telephone number: 713-467-2222

(v)The Company’s Share Redemption Program is suspended during the time the Company is seeking SEC review of its registration and proxy materials and shareholders are considering the merger, but it is intended that the share redemption program will reopen after the mergers are complete.

The Company has a Share Redemption Program that allows stockholders to have their Shares repurchased at a price equal to the current estimated per Share value, subject to certain limitations, including the satisfaction of a one-year holding period a sliding discount to the purchase price for years 2-5 (10% to 0%, respectively), and a volume limitation. Since its inception, the Company repurchased a total of 875,076.9118 Shares pursuant to the Share Redemption Plan. However, in connection with the pending merger vote, the Board elected to suspend the Company’s Share Redemption Program. Thus, the Everest Offer, although substantially undervaluing the Shares, may provide the Company’s stockholders with immediate liquidity. Everest may see an opportunity to acquire Shares at a discount to current estimated per share value believing they will get liquidity through the Share Redemption Program, assuming the suspension is lifted. Shareholders who tender their shares will be doing so at a price well below the NAV and the price offered in the share redemption program, when it reopens.

(vi)The Company has been paying distributions.

The Company has previously paid distributions at a rate of $0.70 per Share annually, which equates to a 7.0% annualized distribution rate based on a purchase price of $10.00 per Share. If you tender your Shares to Everest in the Everest Offer, they will receive your dividends from and after the date they purchase your Shares.

(vii)Depositary for the Everest Offer is not independent.

Everest has engaged a depositary for the Everest Offer, Everest Financial, Inc., that is an affiliate of Everest. As a result, there is no independent third-party holding funds of Everest for payment of the Offer Price that can independently verify that such funds are available for payment, and Everest may have access to the Shares tendered by stockholders before all conditions to the Everest Offer have been satisfied and tendering holders have been paid

(viii)Everest Offer may not be completed.

There is no guarantee that the Everest Offer can or will be completed as soon as Everest contemplates in the Everest Offer. The Everest Offer does not initially expire until January 3, 2020 and this date may be extended by Everest, subject to compliance with applicable securities laws, in its sole discretion. Additionally, Everest may decline to purchase any of the Shares tendered and terminate the Everest Offer

(ix)Offer Price may change.

Everest expressly reserves the right to amend the terms of the Everest Offer, including by decreasing the Offer Price or by changing the number of Shares being sought or the type of consideration, at any time before the Everest Offer expires, subject to compliance with applicable securities laws

(x)Submission to jurisdiction in California.

The Everest Offer requires each stockholder to submit to the personal jurisdiction of the State of California and to arbitrate any disputes that may arise between any stockholder and Everest or the depositary. For most stockholders and their counsel, the use of California law and a mandatory California arbitration would impose unfamiliar law and an inconvenient forum. Additionally, in any dispute between a stockholder and Everest or the depositary, the prevailing party will be entitled to recover attorney fees and costs.

2909 Hillcroft Suite 420, Houston TX 77057

Main telephone number: 713-467-2222

There can be no assurance as to the actual long-term value of the Shares, or the potential benefits that the Company’s stockholders would receive in the Proposed Merger, as the benefits are dependent on a number of factors, including general economic conditions and other factors listed in the Company’s registration statement. In addition, due to the suspension of the Company’s Share Redemption Program and the lack of a trading market for the Shares, there can be no assurance with respect to future liquidity to the stockholders. However, based on the information currently available to it, the Board believes the Offer Price for the Shares to be unreasonably low and that acceptance of the Everest Offer could result in stockholders receiving less for their Shares than they otherwise might over time.

The Board understands that you must make your own independent decision whether to tender or refrain from tendering your Shares. We strongly urge you to carefully consider all aspects of the Everest Offer in light of your own circumstances, including (i) your investment objectives, (ii) your financial circumstances, including your tolerance for risk and need for immediate liquidity that cannot be satisfied by other means, (iii) other financial opportunities available to you, (iv) your own tax position and tax consequences, and (v) other factors you determine are relevant to your decision. You should carefully review all of the Everest Offer documents, as well as the Company’s publicly available annual, quarterly and other reports and the enclosed Solicitation/Recommendation Statement on Schedule 14D-9 that the Company filed with the SEC on December 12, 2019, and consult with your own financial, tax and other advisors in evaluating the Everest Offer before deciding whether to tender your Shares. Again, no action is required on your part unless you are interested in selling your Shares.

PLEASE CONSULT WITH YOUR TAX ADVISOR ABOUT THE IMPACT OF A SALE ON YOUR OWN PARTICULAR SITUATION.

Should you have any questions or need further information about your options, please feel free to contact Investor Services at (713) 467-2222.

Sincerely,

/s/ Allen R. Hartman
Name:	Allen R. Hartman
Title:	Chief Executive Officer and President

Cautionary Note Regarding Forward-Looking Statements

This letter may contain forward-looking statements regarding, among other things, the Company and the future value of the Shares. Forward-looking statements include, but are not limited to, statements that represent our beliefs concerning future operations, strategies, financial results or other developments. Forward-looking statements can be identified by the use of forward-looking terminology such as, but not limited to, “may,” “should,” “expect,” “intend,” “anticipate,” “estimate,” “would be,” “believe,” or “continue” or the negative or other variations of comparable terminology. Because these forward-looking statements are based on estimates and assumptions that are subject to significant business, economic and competitive uncertainties, many of which are beyond our control or are subject to change, actual results could be materially different. Although we believe that our plans, intentions and expectations reflected in or suggested by these forward-looking statements are reasonable, we cannot guarantee that we will achieve or realize these plans, intentions or expectations. Factors that could cause the Company not to realize its plans, intentions or expectations include those discussed under the headings “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors” contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 and the Company’s Quarterly Reports on Form 10-Q for the quarters ended March 31, 2019, June 30, 2019, and September 30, 2019 filed with the SEC. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this letter. Except as required by law, we do not undertake any obligation to update or revise any forward-looking statements contained in this letter.

2909 Hillcroft Suite 420, Houston TX 77057

Main telephone number: 713-467-2222