10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

__________

FORM 10-Q

____________

☒ Quarterly report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended March 31, 2020

☐ Transition report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934

Commission File Number 000-53912

__________

HARTMAN SHORT TERM INCOME PROPERTIES XX, INC.

(Exact name of registrant as specified in its charter)

Maryland	26-3455189
(State of Organization)	(I.R.S. Employer Identification Number)
2909 Hillcroft
Suite 420
Houston
Texas	77057
(Address of principal executive offices)	(Zip Code)

_______________

(713) 467-2222

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer ☒ Smaller reporting company ☒ Emerging Growth Company ☒

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☒

As of June 1, 2020, there were 18,417,687 shares of the Registrant’s common stock issued and outstanding, 19,000 of which were held by an affiliate of the Registrant.

Hartman Short Term Income Properties XX, Inc. and Subsidiaries

Table of Contents

PART I   FINANCIAL INFORMATION
Item 1.	Financial Statements	2
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	30
Item 4.	Controls and Procedures	30
PART II  OTHER INFORMATION
Item 1.	Legal Proceedings	32
Item 1A.	Risk Factors	32
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	32
Item 3.	Defaults Upon Senior Securities	32
Item 4.	Mine Safety Disclosures	32
Item 5.	Other Information	32
Item 6.	Exhibits	33
	SIGNATURES

EXPLANATORY NOTE:

Reliance on Securities and Exchange Commission Order

Hartman Short Term Income Properties XX, Inc. and Subsidiaries (the “Company”) is filing its Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2020 (the “Report”) pursuant to the Securities and Exchange Commission (the “SEC”) Order dated March 4, 2020 (Release No. 34-88318) under Section 36 of the Exchange Act Granting Exemptions from Specified Provisions of the Exchange Act and Certain Rules Thereunder, as superseded by SEC Order Modifying Exemptions from the Reporting and Proxy Delivery Requirements for Public Companies dated March 25, 2020 (Release No. 34-88465) (together, the “Order”) to delay the filing of the Report due to circumstances related to the coronavirus pandemic (“COVID-19”). On May 14, 2020, the Company filed a Current Report on Form 8-K stating that it is relying on the Order to delay the filing of the Report by up to 45 days. As result of the global outbreak of the COVID-19 virus and out of an abundance of caution, members of the Company’s advisor, property manager and certain other employees, including financial reporting staff, began working remotely on or about March 17, 2020. The Company has been following the recommendations of local government and health authorities to minimize exposure risk for its employees, including the temporary closures of some of its offices and having employees work remotely. The Company’s operations and business have experienced disruption due to the unprecedented conditions surrounding the COVID-19 pandemic that has spread throughout the United States and the world. The Company’s business was abruptly and dramatically impacted by the COVID-19 pandemic as the Company’s commercial real estate properties, headquarters, property management operations and other services offices located in Texas counties, which were under stay-at-home orders resulting in staffing and work-from-home challenges which caused significant disruptions in communications and delayed completion of the audit. These disruptions to the process of preparing the Company’s financial statements as a result of the COVID-19 virus, are causing the Company’s Form 10-Q for the quarterly period ended March 31, 2020 which was due on May 15, 2020 to be delayed. Consequently, the Company was unable to timely file the Report without the extension provided for by the Order.

1

PART I

FINANCIAL INFORMATION

Item 1. Financial Statements

HARTMAN SHORT TERM INCOME PROPERTIES XX, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
	March 31, 2020		December 31, 2019
	(Unaudited)
ASSETS
Real estate assets, at cost	$	597,501	$	594,569
Accumulated depreciation and amortization	(124,634)		(117,652)
Real estate assets, net	472,867		476,917
Cash and cash equivalents	35		1,033
Restricted cash	18,400		26,078
Accrued rent and accounts receivable, net	14,232		12,576
Notes receivable - related party	16,538		17,288
Deferred leasing commission costs, net	11,448		10,790
Goodwill	250		250
Prepaid expenses and other assets	392		735
Due from related parties	3,409		2,130
Investment in affiliate	8,978		8,978
Total assets	$	546,549	$	556,775
LIABILITIES AND EQUITY
Liabilities:
Notes payable, net	$	306,682	$	303,039
Accounts payable and accrued expenses	12,982		23,444
Tenants' security deposits	5,356		5,286
Total liabilities	325,020		331,769
Commitments and contingencies
Stockholders' equity:
Preferred stock, $0.001 par value, 200,000,000 convertible, non-voting shares authorized, 1000 shares issued and outstanding at March 31, 2020 and December 31, 2019, respectively	—		—
Common stock, $0.001 par value, 750,000,000 authorized, 18,417,687 shares issued and outstanding at March 31, 2020 and December 31, 2019, respectively	18		18
Additional paid-in capital	174,019		174,019
Accumulated distributions and net loss	(111,461)		(109,406)
Total stockholders' equity	62,576		64,631
Noncontrolling interests in subsidiary	158,953		160,375
Total equity	221,529		225,006
Total liabilities and equity	$	546,549	$	556,775

The accompanying notes are an integral part of these consolidated financial statements.

2

HARTMAN SHORT TERM INCOME PROPERTIES XX, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, in thousands, except per share data)
	Three Months Ended March 31,
	2020		2019
Revenues
Rental revenues	$	18,720	$	18,229
Tenant reimbursements and other revenues	4,419		5,080
Total revenues	23,139		23,309
Expenses (income)
Property operating expenses	6,945		7,751
Asset management fees	440		440
Real estate taxes and insurance	3,170		3,157
Depreciation and amortization	6,982		7,030
General and administrative	1,177		1,177
Interest expense	3,018		3,669
Interest and dividend income	(477)		(275)
Total expenses, net	21,255		22,949
Net Income	1,884		360
Net Income attributable to noncontrolling interests	716		25
Net Income attributable to common stockholders	$	1,168	$	335
Net Income attributable to common stockholders per share	$	0.06	$	0.02
Weighted average number of common shares outstanding, basic and diluted	18,418		17,837
The accompanying notes are an integral part of these consolidated financial statements.

3

HARTMAN SHORT TERM INCOME PROPERTIES XX, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EQUITY
(Unaudited, in thousands)
	Preferred Stock			Common Stock
	Shares	Amount		Shares	Amount		Additional Paid-In Capital		Accumulated Distributions and Net Loss		Total Stockholders' Equity		Noncontrolling Interests		Total Equity
Balance, December 31, 2018	1	$	—	17,712	$	18	$	165,084	$	(95,162)	$	69,940	$	178,541	$	248,481
Issuance of common shares	—	—		6	—		76		—		76		—		76
Purchase of non-controlling interest	—	—		700	—		8,896				8,896		(8,858)		38
Dividends and distributions (cash)	—	—		—	—		—		(3,141)		(3,141)		(2,147)		(5,288)
Net income	—	—		—	—		—		335		335		25		360
Balance, March 31, 2019	1	—		18,418	18		174,056		(97,968)		76,106		167,561		243,667
	Preferred Stock			Common Stock
	Shares	Amount		Shares	Amount		Additional Paid-In Capital		Accumulated Distributions and Net Loss		Total Stockholders' Equity		Noncontrolling Interests		Total Equity
Balance, December 31, 2019	1	$	—	18,418	$	18	$	174,019	$	(109,406)	$	64,631	$	160,375	$	225,006
Dividends and distributions (cash)	—	—		—	—		—		(3,223)		(3,223)		(2,138)		(5,361)
Net income	—	—		—	—		—		1,168		1,168		716		1,884
Balance, March 31, 2020	1	$	—	18,418	$	18	$	174,019	$	(111,461)	$	62,576	$	158,953	$	221,529

The accompanying notes are an integral part of these consolidated financial statements.

4

HARTMAN SHORT TERM INCOME PROPERTIES XX, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in thousands)
	Three Months Ended March 31,
	2020		2019
Cash flows from operating activities:
Net income (Loss)	$	1,884	$	360
Adjustments to reconcile net income to net cash used in operating activities:
Stock based compensation	19		19
Depreciation and amortization	6,982		7,030
Deferred loan and lease commission costs amortization	609		885
Bad debt provision, net	44		775
Changes in operating assets and liabilities:
Accrued rent and accounts receivable	(1,700)		(3,163)
Deferred leasing commissions	(1,013)		(951)
Prepaid expenses and other assets	343		(1,654)
Accounts payable and accrued expenses	(10,481)		(10,643)
Due to/from related parties	(1,279)		1,221
Tenants' security deposits	70		43
Net cash used in operating activities	(4,522)		(6,078)
Cash flows from investing activities:
Acquisition deposits	—		529
Repayment of note receivable from affiliate	750		—
Investment in affiliate - related party	—		(10,546)
Lender required reserves	—		10,273
Additions to real estate	(2,932)		(2,753)
Net cash used in investing activities	(2,182)		(2,497)
Cash flows from financing activities:
Distributions to common stockholders	(3,223)		(3,141)
Distributions to non-controlling interest	(2,138)		(2,147)
Borrowing from affiliate	3,800		—
Repayments under term loan notes	(411)		(7,492)
Borrowings under insurance premium finance note	—		1,421
Payments of deferred loan costs	—		(71)
Net cash used in financing activities	(1,972)		(11,430)
Net change in cash and cash equivalents and restricted cash	(8,676)		(20,005)
Cash and cash equivalents and restricted cash, beginning of period	27,111		51,477
Cash and cash equivalents and restricted cash, end of period	$	18,435	$	31,472
Supplemental cash flow information:
Cash paid for interest	$	2,960	$	3,322
Supplemental disclosures of non-cash investing and financing activities:
Value of director's stock compensation shares issued	$	—	$	76
Value of common shares issued to acquire non-controlling interest	$	—	$	8,896
Acquisition of non-controlling interest	$	—	$	(8,858)
The accompanying notes are an integral part of these consolidated financial statements.

5

HARTMAN SHORT TERM INCOME PROPERTIES XX, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1 - Organization and Business

Hartman Short Term Income Properties XX, Inc. (the “Company”), is a Maryland corporation formed on February 5, 2009.  The Company elected to be treated as a real estate investment trust (“REIT”) beginning with the taxable year ending December 31, 2011. As used herein, the “Company,” “we,” “us,” or “our”refer to Hartman Short Term Income Properties XX, Inc. and its consolidated subsidiaries, including Hartman XX Limited Partnership, a Texas limited partnership (the “Operating Partnership”), except where context otherwise requires.

On July 19, 2018, we entered into a limited liability company agreement with our affiliates Hartman Income REIT, Inc. (“HIREIT”), Hartman Short Term Income Properties XIX, Inc. (“Hartman XIX”) and Hartman vREIT XXI, Inc. (“vREIT XXI”) to form Hartman SPE, LLC ("SPE LLC"), a special purpose entity.

On October 1, 2018, SPE LLC, as borrower, and Goldman Sachs Mortgage Company entered into a term loan agreement pursuant to which the lender made a term loan to SPE LLC in the principal amount of $259,000,000.

Contemporaneously therewith and together with our affiliates HIREIT, Hartman XIX and vREIT XXI, we contributed a total of 39 commercial real estate properties ("Properties") to SPE, LLC, subject to the then existing mortgage indebtedness encumbering the Properties, in exchange for membership interests in SPE LLC. Proceeds of the Loan were immediately used to extinguish the existing mortgage indebtedness encumbering the Properties.

Substantially all of our business is conducted through our wholly owned subsidiary, the Operating Partnership, and SPE LLC. Our wholly-owned subsidiary, Hartman XX REIT GP LLC, a Texas limited liability company, is the sole general partner of the Operating Partnership. We are the sole limited partner of the Operating Partnership. Our wholly-owned subsidiary, Hartman SPE Management, LLC ("SPE Management") is the manager of SPE LLC. Our single member interests in our limited liability company subsidiaries are owned by the Operating Partnership or its wholly owned subsidiaries.

Subject to certain restrictions and limitations, Hartman Advisors LLC ("Advisor") is responsible for managing our affairs on a day-to-day basis and for identifying and making acquisitions and investments on our behalf pursuant to an advisory agreement (the “Advisory Agreement”) by and among the Company and Advisor. Management of the Company’s properties and the Properties, is provided pursuant to property management agreements with Hartman Income REIT Management, Inc. (the "Property Manager"), a wholly-owned subsidiary of HIREIT.

As of March 31, 2020 and 2019, the Company owned 43 commercial properties comprising approximately 6.7 million square feet plus three pad sites, all located in Texas. As of March 31, 2020 and 2019, the Company owned 15 properties located in Richardson, Arlington and Dallas, Texas, 25 properties located in Houston, Texas and three properties located in San Antonio, Texas.

On July 21, 2017, the Company and Hartman Short Term Income Properties XIX, Inc. (“Hartman XIX”), entered into an agreement and plan of merger (the “XIX Merger Agreement”). On July 21, 2017, as subsequently modified on May 8 2018, the Company, the Operating Partnership, Hartman Income REIT, Inc. (“HIREIT”) and Hartman Income REIT Operating Partnership LP, the operating partnership of HIREIT, (“HIROP”), entered into an agreement and plan of merger (the “HIREIT Merger Agreement,” and together with the XIX Merger Agreement, the “Merger Agreements”).

On May 14, 2020, the Merger Agreements were approved by the respective company shareholders. The effective date of the Mergers is expected to be July 1, 2020.

6

HARTMAN SHORT TERM INCOME PROPERTIES XX, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 2 — Summary of Significant Accounting Policies

Basis of Presentation

The accompanying consolidated financial statements included in this report are unaudited; however, amounts presented in the consolidated balance sheet as of December 31, 2019 are derived from our audited consolidated financial statements as of that date. The unaudited consolidated financial statements as of March 31, 2020 have been prepared by the Company in accordance with accounting principles generally accepted in the United States (“GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission, including Form 10-Q and Regulation S-X, on a basis consistent with the annual audited consolidated financial statements. The consolidated financial statements presented herein reflect all adjustments (consisting of normal recurring accruals and adjustments), which are, in the opinion of management, necessary to fairly present the financial position of the Company as of March 31, 2020, and the results of consolidated operations for the three months ended March 31, 2020 and 2019, the consolidated statements of stockholders’ equity for the three months ended March 31, 2020 and 2019 and the consolidated statements of cash flows for the three months ended March 31, 2020 and 2019. The results of the three months ended March 31, 2020 are not necessarily indicative of the results to be expected for the year ending December 31, 2020.

The consolidated financial statements herein are condensed and should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.

These unaudited consolidated financial statements include the accounts of the Company, the Operating Partnership and its subsidiaries, and Hartman SPE, LLC.  All significant intercompany balances and transactions have been eliminated.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.

Cash and Cash Equivalents

Cash and cash equivalents on the accompanying consolidated balance sheets include all cash and liquid investments with maturities of three months or less. Cash and cash equivalents as of March 31, 2020 and December 31, 2019 consisted of demand deposits at commercial banks. We maintain accounts which may from time to time exceed federally insured limits. We have not experienced any losses in these accounts and believe that the Company is not exposed to any significant credit risk and regularly monitors the financial stability of these financial institutions.

Restricted Cash

Restricted cash on the accompanying consolidated balance sheets consists of amounts escrowed for future real estate taxes, insurance, capital expenditures and debt service, as required by certain of our mortgage debt agreements.

Financial Instruments

The accompanying consolidated balance sheets include the following financial instruments: cash and cash equivalents, accrued rent and accounts receivable, accounts payable and accrued expenses and balances due to/due from related parties, as well as related party notes receivable. The Company considers the carrying value of these financial instruments to approximate their respective fair values due to their short-term nature. Disclosure about the fair value of financial instruments is based on relevant information available as of March 31, 2020 and December 31, 2019.

7

HARTMAN SHORT TERM INCOME PROPERTIES XX, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Revenue Recognition

The Company’s leases are accounted for as operating leases. Certain leases provide for tenant occupancy during periods for which no rent is due and/or for increases or decreases in the minimum lease payments over the terms of the leases.  Revenue is recognized on a straight-line basis over the terms of the individual leases. Revenue recognition under a lease begins when the tenant takes possession of or controls the physical use of the leased space. When the Company acquires a property, the term of existing leases is considered to commence as of the acquisition date for purposes of this calculation. The Company’s accrued rents are included in accrued rent and accounts receivable, net. The Company will defer the recognition of contingent rental income, such as percentage rents, until the specific target that triggers the contingent rental income is achieved. Additionally, cost recoveries from tenants are included in the tenant reimbursements and other revenues line item in the consolidated statements of operations in the period the related costs are incurred.

Allocation of Purchase Price of Acquired Assets

Upon the acquisition of real properties, it is the Company’s policy to allocate the purchase price of properties to acquired tangible assets, consisting of land and buildings, and identified intangible assets and liabilities, consisting of the value of above-market and below-market leases, other value of in-place leases and leasehold improvements and value of tenant relationships, based in each case on their fair values. The Company utilizes internal valuation methods to determine the fair values of the tangible assets of an acquired property (which includes land and buildings).

The fair values of above-market and below-market in-place lease values, including below-market renewal options for which renewal has been determined to be reasonably assured, are recorded based on the present value (using an interest rate which reflects the risks associated with the leases acquired) of the difference between (a) the contractual amounts to be paid pursuant to the in-place leases and (b) an estimate of fair market lease rates for the corresponding in-place leases and below-market renewal options, which is generally obtained from independent appraisals, measured over a period equal to the remaining non-cancelable term of the lease. The above-market and below-market lease and renewal option values are capitalized as intangible lease assets or liabilities and amortized as an adjustment to rental revenues over the remaining expected terms of the respective leases.

The fair values of in-place leases include direct costs associated with obtaining a new tenant, opportunity costs associated with lost rentals which are avoided by acquiring an in-place lease, and tenant relationships. Direct costs associated with obtaining a new tenant include commissions, tenant improvements, and other direct costs and are estimated based on independent appraisals and management’s consideration of current market costs to execute a similar lease. These direct costs are included in intangible lease assets and are amortized to expense over the remaining terms of the respective leases. The value of opportunity costs is calculated using the contractual amounts to be paid pursuant to the in-place leases over a market absorption period for a similar lease. Customer relationships are valued based on expected renewal of a lease or the likelihood of obtaining a particular tenant for other locations. These intangibles are included in real estate assets in the consolidated balance sheets and are being amortized to expense over the remaining term of the respective leases.

The determination of the fair values of the assets and liabilities acquired requires the use of significant assumptions with regard to the current market rental rates, rental growth rates, discount rates and other variables. The use of inappropriate estimates would result in an incorrect assessment of the purchase price allocations, which could impact the amount of the Company’s reported net loss.

Real Estate Joint Ventures and Partnerships

To determine the method of accounting for partially owned real estate joint ventures and partnerships, management determines whether an entity is a VIE and, if so, determines which party is the primary beneficiary by analyzing whether we have both the power to direct the entity’s significant economic activities and the obligation to absorb potentially significant losses or receive potentially significant benefits. Significant judgments and assumptions inherent in this analysis include the design of the entity structure, the nature of the entity’s operations, future cash flow projections, the entity’s financing and capital structure, and contractual relationships and terms. We consolidate a VIE when we have determined that we are the primary beneficiary.

Primary risks associated with our involvement with our VIEs include the potential funding of the entities’ debt obligations or making additional contributions to fund the entities’ operations or capital activities.

8

HARTMAN SHORT TERM INCOME PROPERTIES XX, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Partially owned, non-variable interest real estate joint ventures and partnerships over which we have a controlling financial interest are consolidated in our consolidated financial statements. In determining if we have a controlling financial interest, we consider factors such as ownership interest, authority to make decisions, kick-out rights and substantive participating rights. Partially owned real estate joint ventures and partnerships where we do not have a controlling financial interest, but have the ability to exercise significant influence, are accounted for using the equity method.

Management continually analyzes and assesses reconsideration events, including changes in the factors mentioned above, to determine if the consolidation or equity method treatment remains appropriate.

Depreciation and amortization

Depreciation is computed using the straight-line method over the estimated useful lives of 5 to 39 years for buildings and improvements. Tenant improvements are depreciated using the straight-line method over the lesser of the life of the improvement or the remaining term of the lease. In-place leases are amortized using the straight-line method over the weighted average years’ remaining calculated on terms of all of the leases in-place when acquired.

Impairment

The Company reviews its real estate assets for impairment at least annually or whenever events or changes in circumstances indicate that the carrying amount of the assets, including accrued rental income, may not be recoverable through operations.  The Company determines whether an impairment in value has occurred by comparing the estimated future cash flows (undiscounted and without interest charges), including the estimated residual value of the property, with the carrying cost of the property.  If impairment is indicated, a loss will be recorded for the amount by which the carrying value of the property exceeds its fair value.  Management has determined that there is no impairment indicated in the carrying value of our real estate assets as of March 31, 2020 and December 31, 2019.

Accrued Rent and Accounts Receivable

Accrued rent and accounts receivable include base rents, tenant reimbursements and receivables attributable to recording rents on a straight-line basis. An allowance for the uncollectible portion of accrued rent and accounts receivable is determined based upon customer credit-worthiness (including expected recovery of our claim with respect to any tenants in bankruptcy), historical bad debt levels, and current economic trends.

Deferred Leasing Commission Costs

Leasing commissions are amortized using the straight-line method over the term of the related lease agreements.

Goodwill

GAAP requires the Company to test goodwill for impairment at least annually or more frequently whenever events or circumstances occur indicating goodwill might be impaired.  The Company applies a one-step quantitative test to determine if the estimated fair value is less than the carrying amount.  If the carrying amount exceeds the estimated fair value, the Company will record a goodwill impairment equal to such excess, not to exceed the total amount of goodwill. No goodwill impairment has been recognized in the accompanying consolidated financial statements.

Noncontrolling Interests

Noncontrolling interests is the portion of equity in a subsidiary not attributable to a parent.  The ownership interests not held by the parent are considered noncontrolling interests.  Accordingly, the Company has reported noncontrolling interests in equity on the consolidated balance sheets but separate from the Company's equity.  On the consolidated statements of operations, subsidiaries are reported at the consolidated amount, including both the amount attributable to the Company and noncontrolling interests. 

9

HARTMAN SHORT TERM INCOME PROPERTIES XX, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Stock-Based Compensation

The Company follows Accounting Standards Codification ("ASC") 718 - Compensation - Stock Compensation, with regard to issuance of stock in payment of services. ASC 718 requires that compensation cost relating to share-based payment transactions be recognized in the consolidated financial statements. The compensation cost is measured based on the estimated grant date fair value, as of the grant date of the Company’s common stock, of the equity or liability instruments issued. Stock-based compensation expense are recorded over the vesting period and is included in general and administrative expense in the accompanying consolidated statements of operations.

Income Taxes

The Company has elected to be treated as a REIT under the Internal Revenue Code of 1986, as amended, beginning with its taxable year ended December 31, 2011. To qualify as a REIT, the Company must meet certain organizational and operational requirements, including a requirement to distribute at least 90% of the Company’s annual REIT taxable income to stockholders (which is computed without regard to the dividends-paid deduction or net capital gain and which does not necessarily equal net income as calculated in accordance with GAAP).  As a REIT, the Company generally will not be subject to federal income tax on income that it distributes as dividends to its stockholders. If the Company fails to qualify as a REIT in any taxable year, it will be subject to federal income tax on its taxable income at regular corporate income tax rates and generally will not be permitted to qualify for treatment as a REIT for federal income tax purposes for the four taxable years following the year during which qualification is lost, unless the Internal Revenue Service grants the Company relief under certain statutory provisions. Such an event could materially and adversely affect the Company’s net income and net cash available for distribution to stockholders.  However, the Company believes that it is organized and will continue to operate in such a manner as to qualify for treatment as a REIT. 

For the three months ended March 31, 2020 and 2019, the Company incurred net income of $1,884,000 and $360,000. The Company formed a taxable REIT subsidiary which may generate future taxable income which may be offset by the net loss carry forward. The Company considers that any deferred tax benefit and corresponding deferred tax asset which may be recorded in light of the net loss carry forward would be properly offset by an equal valuation allowance. Accordingly, no deferred tax benefit or deferred tax asset has been recorded in the consolidated financial statements.

The Company is required to recognize in its consolidated financial statements the financial effects of a tax position only if it is determined that it is more likely than not that the tax position will not be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. Management has reviewed the Company’s tax positions and is of the opinion that material positions taken by the Company would more likely than not be sustained upon examination. Accordingly, the Company has not recognized a liability related to uncertain tax positions.

Income Per Share

The computations of basic and diluted income per common share are based upon the weighted average number of common shares outstanding and potentially dilutive securities. The Company’s potentially dilutive securities include preferred shares that are convertible into the Company’s common stock. As of March 31, 2020 and 2019, there were no shares issuable in connection with these potentially dilutive securities. These potentially dilutive securities were excluded from the computations of diluted net income per share for the three months ended March 31, 2020 and 2019 because no shares are issuable.

Concentration of Risk

The geographic concentration of the Company’s real estate assets makes it susceptible to adverse economic developments in the State of Texas. Any adverse economic or real estate developments in these markets, such as business layoffs or downsizing, relocation of businesses, increased competition or any other changes, could adversely affect the Company’s operating results and its ability to make distributions to stockholders.

Going Concern Evaluation

Pursuant to ASU 2014-15, “Presentation of Financial Statements – Going Concern,” management is required to evaluate the Company’s ability to continue as a going concern within one year after the date that these consolidated financial statements are issued. The Hartman SPE, LLC loan agreement (the “SASB Loan”) has an initial maturity date of October 9, 2020. The SASB Loan provides for three successive one-year maturity date extensions. In order to exercise each successive one-year

10

HARTMAN SHORT TERM INCOME PROPERTIES XX, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

extension options, the Hartman SPE, LLC must meet five conditions in order to extend the maturity date without any further qualification. One of the five conditions is that Hartman SPE must have a debt yield, as defined, of 12.5% or greater as of June 30, 2020.

As of December 31, 2019 and March 31, 2020, Hartman SPE has a debt yield of 13.29% and 12.95%, respectively. Management has concluded that there is substantial doubt about the Company's ability to continue as a going concern within one year of the issuance date of these consolidated financial statements due to the fact of the uncertainty regarding the loan maturity of the SPE Loan. Management believes that Hartman SPE will be able to extend the maturity date for one year which will mitigate the maturity date issue within one year of the issuance date of these consolidated financial statements.

Reclassification

Certain items in the comparative consolidated financial statements have been reclassified to conform to the presentation adopted in the current period. The Consolidated Statement of Cash Flows presented for the three months ended March 31, 2019 was adjusted to present cash and cash equivalents and restricted cash, as restricted cash was previously reported as part of prepaid expenses and other assets.

Recent Accounting Pronouncements Not Yet Adopted

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The updated guidance requires measurement and recognition of expected credit losses for financial assets, including trade and other receivables, held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. This is different from the current guidance as this will require immediate recognition of estimated credit losses expected to occur over the remaining life of many financial assets. Generally, the pronouncement requires a modified retrospective method of adoption. This guidance is effective for fiscal years and interim periods within those years beginning after January 2023, with early adoption permitted. The Company is currently evaluating the impact this guidance will have on the consolidated financial statements when adopted.

Note 3 — Real Estate

The Company’s real estate assets consisted of the following, in thousands:

	March 31, 2020		December 31, 2019
Land	$	145,050	$	145,050
Buildings and improvements	351,661		348,729
In-place lease value intangible	100,790		100,790
	597,501		594,569
Less: accumulated depreciation and amortization	(124,634)		(117,652)
Total real estate assets	$	472,867	$	476,917

       Depreciation expense for the three months ended March 31, 2020 and 2019 was $4,317,000 and $4,313,000, respectively. Amortization expense of in-place lease value intangible was $2,665,000 and $2,717,000 for the three months ended March 31, 2020 and 2019, respectively.

The Company identifies and records the value of acquired lease intangibles at the property acquisition date. Such intangibles include the value of acquired in-place leases and above and below-market leases. Acquired lease intangibles are amortized over the leases' remaining terms.  With respect to all properties owned by the Company, we consider all of the in-place leases to be market rate leases.

The amount of total in-place lease intangible asset and the respective accumulated amortization are as follows, in thousands:

	March 31, 2020		December 31, 2019
In-place lease value intangible	$	100,790	$	100,790
In-place leases – accumulated amortization	(71,549)		(68,884)
Acquired lease intangible assets, net	$	29,241	$	31,906

11

HARTMAN SHORT TERM INCOME PROPERTIES XX, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

As of March 31, 2020 and December 31, 2019, the Company owned 43 commercial properties comprising approximately 6.7 million square feet plus three pad sites, all located in Texas. As of March 31, 2020, the Company owned 15 properties located in Richardson, Arlington and Dallas, Texas, 25 properties located in Houston, Texas and three properties located in San Antonio, Texas.

Asset management fees incurred and paid to Advisor were $440,000 for the three months ended March 31, 2020 and 2019, respectively. Asset management and acquisition fees are captioned as such in the accompanying consolidated statements of operations.

Note 4 - Accrued Rent and Accounts Receivable, net

Accrued rent and accounts receivable, net, consisted of the following, in thousands:

	March 31, 2020		December 31, 2019
Tenant receivables	$	7,126	$	5,929
Accrued rent	9,747		9,244
Allowance for uncollectible accounts	(2,641)		(2,597)
Accrued rents and accounts receivable, net	$	14,232	$	12,576

As of March 31, 2020 and December 31, 2019, the Company had an allowance for uncollectible accounts of $2,641,000 and $2,597,000, respectively.  For the three months ended March 31, 2020 and 2019, the Company recorded bad debt expense in the amount of $44,000 and $775,000, respectively, related to tenant receivables that we have specifically identified as potentially uncollectible based on our assessment of each tenant’s credit-worthiness. For the three months ended March 31, 2020 and 2019, the Company did not record any write-offs. Bad debt expense and any related recoveries are included in property operating expenses in the accompanying consolidated statements of operations.

Note 5 — Deferred Leasing Commission Costs, net

Costs which have been deferred consist of the following, in thousands:

	March 31, 2020		December 31, 2019
Deferred leasing commissions costs	$	18,633	$	17,620
Less: accumulated amortization	(7,185)		(6,830)
Deferred leasing commission costs, net	$	11,448	$	10,790

Note 6 — Future Minimum Rents

The Company leases the majority of its properties under noncancellable operating leases which provide for minimum base rentals. A summary of minimum future rentals to be received (exclusive of renewals, tenant reimbursements, and contingent rentals) under noncancellable operating leases in existence at March 31, 2020 is as follows, in thousands:

March 31,	Minimum Future Rents
2020	$	70,520
2021	62,071
2022	49,589
2023	38,112
2024	26,036
Thereafter	39,345
Total	$	285,673

12

HARTMAN SHORT TERM INCOME PROPERTIES XX, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 7 — Notes Payable

The Operating Partnership is a party to four, cross-collateralized, term loan agreements with an insurance company. The term loans are secured by the Richardson Heights Property, the Cooper Street Property, the Bent Tree Green Property and the Mitchelldale Property. The loans require monthly payments of principal and interest due and payable on the first day of each month. Monthly payments are based on a 27-year loan amortization. Each of the loan agreements are subject to customary covenants, representations and warranties which must be maintained during the term of the loan agreements. Each of the loan agreements provides for a fixed interest rate of 4.61%. As of March 31, 2020, the Company was in compliance with all loan covenants, with respect to the loans above. Each of the loan agreements is secured by a deed of trust, assignment of licenses, permits and contracts, assignment and subordination of the management agreements and assignment of rents. The terms of the security instruments provide for the cross collateralization/cross default of the each of the loans. The outstanding balance of the four loans was $42,982,000 and $43,393,000 as of March 31, 2020 and December 31, 2019, respectively.

On October 1, 2018, the Company through Hartman SPE, LLC and Goldman Sachs Mortgage Company entered into a $259,000,000 term loan agreement (the "SASB Loan"). The Company together with its affiliates HIREIT, Hartman XIX and vREIT XXI, contributed a total of 39 commercial real estate properties to Hartman SPE, LLC in exchange for membership interests in Hartman SPE, LLC.

The term of the SASB Loan is five years, comprised of an initial two-year term with three one-year extension options. Each extension option shall be subject to certain conditions precedent including (i) no default then outstanding, (ii) 30 days prior written notice, (iii) the properties must have a specified in-place net operating income debt yield and (iv) purchase of an interest rate cap as described below for the exercised option term or terms.

The outstanding principal of the SASB Loan bears interest at the one-month LIBOR rate plus 1.8%. The SASB Loan is subject to an interest rate cap arrangement which caps LIBOR at 3.75% during the initial term of the SASB Loan.

The SASB Loan contains various customary covenants, including but not limited to financial covenants, covenants requiring monthly deposits in respect of certain property costs, such as taxes, insurance, tenant improvements, and leasing commissions, covenants imposing restrictions on indebtedness and liens, and restrictions on investments and participation in other asset disposition, merger or business combination or dissolution transactions.

The SASB Loan is secured by, among other things, mortgages on the properties. The Company, HIREIT and Hartman XIX, entered into a guaranty agreement in favor of the lender, whereby each guarantor unconditionally guaranties the full and timely performance of the obligations set forth in the loan agreement and all other loan documents, including the payment of all indebtedness and obligations due under the loan agreement.

The following is a summary of the Company’s notes payable, in thousands:

Property/Facility	Payment (1)	Maturity Date	Rate		March 31, 2020		December 31, 2019
Richardson Heights (2)	P&I	July 1, 2041	4.61	%	$	17,087	$	17,260
Cooper Street (2)	P&I	July 1, 2041	4.61	%	7,367		7,435
Bent Tree Green (2)	P&I	July 1, 2041	4.61	%	7,367		7,435
Mitchelldale (2)	P&I	July 1, 2041	4.61	%	11,161		11,263
Hartman SPE LLC	IO	October 9, 2020	2.79	%	259,000		259,000
Hartman XXI	IO	March 31, 2021	10.00	%	8,200		4,400
					310,182		306,793
Less: unamortized deferred loan costs					(3,500)		(3,754)
					$	306,682	$	303,039

(1) Principal and interest (P&I) or interest only (IO).  

(2) Each promissory note contains a call option wherein the holder of the promissory note may declare the outstanding balance due and payable on either July 1, 2024, July 1, 2029, July 1, 2034, or July 1, 2039.  

The Company's loan costs are amortized using the straight-line method over the terms of the loans, which approximates the interest method.  Costs which have been deferred consist of the following, in thousands:

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HARTMAN SHORT TERM INCOME PROPERTIES XX, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

	March 31, 2020		December 31, 2019
Deferred loan costs	$	7,155	$	7,155
Less:  deferred loan cost accumulated amortization	(3,655)		(3,401)
Total cost, net of accumulated amortization	$	3,500	$	3,754

Interest expense incurred for the three months ended March 31, 2020 and 2019 was $3,018,000 and $3,669,000, respectively, which includes amortization expense of deferred loan costs. Interest expense of $320,000 and $516,000 was payable as of March 31, 2020 and December 31, 2019, respectively, and is included in accounts payable and accrued expenses in the accompanying consolidated balance sheets.

The Company is required to provide audited financial statements for Hartman SPE, LLC within 120 days after the end of its fiscal year, which is December 31. The servicer for the lender has extended the time for delivery of the Hartman SPE, LLC audited annual financial statements.

Fair Value of Debt

The fair value of the Company’s fixed rate notes payable, variable rate notes payable and secured revolving credit facilities aggregates to $315,637,000 and $308,671,000 as compared to book value of $310,182,000 and $306,793,000 as of March 31, 2020 and December 31, 2019, respectively. The fair value of our debt instruments is estimated on a Level 2 basis, as provided by ASC 820, using a discounted cash flow analysis based on the borrowing rates currently available to the Company for loans with similar terms and maturities, discounting the future contractual interest and principal payments. Disclosure about the fair value of notes payable is based on relevant information available as of March 31, 2020 and December 31, 2019.

Note 8 — Income Per Share

Basic income per share is computed using net income attributable to common stockholders and the weighted average number of common shares outstanding.  Diluted weighted average shares outstanding reflect common shares issuable from the assumed conversion of convertible preferred stock into common shares. Only those items that have a dilutive impact on basic earnings per share are included in the diluted earnings per share.

	Three months ended March 31,
	2020		2019
Numerator:
Net income attributable to common stockholders (in thousands)	$	1,168	$	335
Denominator:
Weighted average number of common shares outstanding, basic and diluted (in thousands)	18,418		17,837
Basic and diluted income per common share:	$	0.06	$	0.02

Note 9 — Income Taxes

Federal income taxes are not provided for because we qualify as a REIT under the provisions of the Internal Revenue Code and because we have distributed and intend to continue to distribute all of our taxable income to our stockholders. Our stockholders include their proportionate taxable income in their individual tax returns. As a REIT, we must distribute at least 90% of our real estate investment trust taxable income to our stockholders and meet certain income sources and investment restriction requirements. In addition, REITs are subject to a number of organizational and operational requirements. If we fail to qualify as a REIT in any taxable year, we will be subject to federal income tax (including any applicable alternative minimum tax) on our taxable income at regular corporate tax rates. The Company’s federal income tax returns for the years ended December 31, 2015, 2016, 2017, 2018 and 2019 have not been examined by the Internal Revenue Service.The Company’s federal income tax return for the year ended December 31, 2015 may be examined on or before September 15, 2020.

The Company has formed a taxable REIT subsidiary which may generate future taxable income, which may be offset by the net loss carry forward.  The Company considers that any deferred tax benefit and corresponding deferred tax asset which may be recorded in light of the net loss carry forward would be properly offset by an equal valuation allowance.  Accordingly, no deferred tax benefit or deferred tax asset has been recorded in the accompanying consolidated financial statements.

14

HARTMAN SHORT TERM INCOME PROPERTIES XX, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The Company is required to recognize in its consolidated financial statements the financial effects of a tax position only if it is determined that it is more likely than not that the tax position will not be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. Management has reviewed the Company’s tax positions and is of the opinion that material positions taken by the Company would more likely than not be sustained upon examination. Accordingly, the Company has not recognized a liability related to uncertain tax positions.

Taxable income (loss) differs from net income (loss) for financial reporting purposes principally due to differences in the timing of recognition of interest, real estate taxes, depreciation and amortization and rental revenue.

Note 10 — Related Party Transactions

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, Inc. and Subsidiaries of which approximately 20% is owned by Allen R. Hartman who is the Chief Executive Officer and Chairman of the Board of Directors.

The Company pays acquisition fees and asset management fees to the Advisor in connection with the acquisition of properties and management of the Company. The Company pays property management and leasing commissions to the Property Manager in connection with the management and leasing of the Company’s properties. For the three months ended March 31, 2020 and 2019, the Company incurred property management fees and reimbursements of $2,069,000 and $1,953,000, respectively, and $1,013,000 and $950,000, respectively for leasing commissions owed to our Property Manager. We incurred asset management fees of $440,000 and $440,000, respectively, owed to the Advisor. 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 the Company does not own all or a majority of an asset. There were no acquisition fees incurred to the Advisor for the three months ended March 31, 2020 and 2019, respectively. Property management fees and reimbursements are included in property operating expense in the accompanying consolidated statements of operations. Asset management fees are captioned as such in the accompanying consolidated statements of operations.

The Company also pays construction management fees for the Property Manager in connection with the construction management of the Company's properties. For the three months ended March 31, 2020 and 2019, the Company incurred construction management fees of $166,000 and $267,000, respectively. Construction management fees are capitalized and included in real estate assets in the consolidated balance sheets.

The Company had a balance due to the Property Manager of $843,000 and $1,168,000 as of March 31, 2020 and December 31, 2019, respectively. The Company owed the Advisor $1,966,000 and $2,077,000 for asset management fees as of March 31, 2020 and December 31, 2019, respectively. The Company had a net balance due from other related parties of $8,125,000 and $5,375,000 as of March 31, 2020 and December 31, 2019, respectively.

The Company owns 1,561,523 shares of the common stock of HIREIT which it acquired for cash consideration of $8,978,000. The Company’s investment in HIREIT is accounted for under the cost method. The Company’s approximate 11% ownership interest in HIREIT is less than a controlling stake, and is reflected as “Investment in Affiliate” on the accompanying consolidated balance sheets. The Company received dividend distributions from HIREIT of $106,000 and $106,000 for the three months ended March 31, 2020 and 2019, respectively, which is included in interest and dividend income in the accompanying consolidated statements of operations.

During the fourth quarter of 2019, the Company borrowed under an unsecured promissory note payable to Hartman vREIT XXI, Inc., an affiliate of the Advisor and the Property Manager, in the face amount of $4,400,000. This note payable had an outstanding balance of $8,200,000 and $4,400,000 as of March 31, 2020 and December 31, 2019, respectively, which is included in Notes payable, net in the accompanying consolidated balance sheets. Interest has been accrued on the loan amount at an annual rate of 10%. The Company recognized interest expense on the affiliate note in the amount of $110,000 for the three months ended March 31, 2020, which is included in interest expense in the accompanying consolidated statements of operations.

In May 2016, the Company, through its taxable REIT subsidiary, Hartman TRS, Inc. (“TRS”), loaned $7,231,000 pursuant to a promissory note in the face amount of up to $8,820,000 to Hartman Retail II Holdings Company, Inc. (“Retail II Holdings”), an affiliate of the Advisor and the Property Manager, in connection with the acquisition of a retail shopping center

15

HARTMAN SHORT TERM INCOME PROPERTIES XX, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

by Hartman Retail II DST, a Delaware statutory trust sponsored by the Property Manager. Pursuant to the terms of the promissory note, TRS received a two percent (2%) origination fee of amounts advanced under the promissory note, and interest at ten percent (10%) per annum on the outstanding principal balance. The outstanding principal balance of the promissory note will be repaid as investor funds are raised by Hartman Retail II DST. The maturity date of the promissory note, as amended is December 31, 2020. This note receivable had an outstanding balance of $1,726,000 and $2,476,000 as of March 31, 2020 and December 31, 2019, respectively, which is included in Notes receivable – related party in the accompanying consolidated balance sheets. For the three months ended March 31, 2020 and 2019, respectively, the Company recognized interest income on this affiliate note in the amount of $43,000 and $61,000, respectively, which is included in interest and dividend income in the accompanying consolidated statements of operations.

The Company had a note receivable due from an affiliate, Hartman Short Term Income Properties XIX, Inc. (“Hartman XIX”), of $4,200,000 as of March 31, 2020 and December 31, 2019, respectively, which is included in Notes receivable - related party in the accompanying consolidated balance sheets. The face amount of the promissory note is $4,500,000. Interest has been accrued on the loan amount at an annual rate of six percent (6%). The Company recognized interest income on the affiliate note in the amount of $63,000 for the three months ended March 31, 2020 and 2019, respectively, which is included in interest and dividend income in the accompanying consolidated statements of operations.

In February 2019, the Company through TRS, loaned $6,782,455 pursuant to a promissory note in the face amount of up to $7,500,000 to Hartman Retail III Holdings Company, Inc. (“Retail III Holdings”), an affiliate of the Advisor and the Property Manager, in connection with the acquisition of a retail shopping center by Hartman Retail III DST, a Delaware statutory trust sponsored by the Advisor. This note receivable had an outstanding balance of $6,782,000 as of March 31, 2020 and December 31, 2019, respectively, which is included in Notes receivable – related party in the accompanying consolidated balance sheets. Pursuant to the terms of the promissory note, TRS receives a two percent (2%) origination fee of amounts advanced under the promissory note, and interest at ten percent (10%) per annum on the outstanding principal balance. The outstanding principal balance of the promissory note will be repaid as investor funds are raised by Hartman Retail III DST. The maturity date of the promissory note is February 29, 2021. The Company recognized interest income on this affiliate note in the amount of $169,000 for the three months ended March 31, 2020, which is included in interest and dividend income in the accompanying consolidated statements of operations.

In March 2019, the Company through TRS, loaned $3,829,711 pursuant to a promissory note in the face amount of up to $3,500,000 to Hartman Ashford Bayou, LLC (“Ashford Bayou”), an affiliate of the Advisor and the Property Manager, in connection with the acquisition of office building by Ashford Bayou, a wholly owned subsidiary of Hartman Total Return, Inc. This note receivable had an outstanding balance of $3,830,000 as of March 31, 2020 and December 31, 2019, respectively, which is included in Notes receivable – related party in the accompanying consolidated balance sheets. Pursuant to the terms of the promissory note, TRS receives a two percent (2%) origination fee of amounts advanced under the promissory note, and interest at ten percent (10%) per annum on the outstanding principal balance. The outstanding principal balance of the promissory note will be repaid as investor funds are raised by Hartman Total Return, Inc. The maturity date of the promissory note is March 31, 2021. The Company recognized interest income on this affiliate note in the amount of 95,000 for the three months ended March 31, 2020, which is included in interest and dividend income in the accompanying consolidated statements of operations.

Variable interest entities (“VIEs”) are defined as entities with a level of invested equity that is not sufficient to fund future operations on a stand-alone basis, or whose equity holders lack certain characteristics of a controlling financial interest. For identified VIEs, an assessment must be made to determine which party to the VIE, if any, has both the power to direct the activities of the VIE that most significantly impacts the performance of the VIE and the obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant to the VIE.

The Company is not deemed to be the primary beneficiary of Retail II Holdings, Retail III Holdings or Ashford Bayou, each of which qualifies as a VIE. Accordingly, the assets and liabilities and revenues and expenses of Retail II Holdings , Retail III Holdings and Ashford Bayou have not been included in the accompanying consolidated financial statements.

The Board of Directors voted to acquire an additional 3.42% ownership interest of Hartman SPE, LLC from Hartman vREIT XXI, Inc. in exchange for 700,302 shares of the Company’s common stock with a total value of $8,858,826 ($12.65 per share). The exchange increased the Company’s ownership interest in Hartman SPE, LLC from 32.74% to 36.16%. The transaction was effective March 1, 2019.

16

HARTMAN SHORT TERM INCOME PROPERTIES XX, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 11 - Stockholders’ Equity

Under the Company’s articles of incorporation, the Company has authority to issue 750,000,000 shares of common stock, $0.001 par value per share, and 200,000,000 shares of preferred stock, $0.001 par value per share.

Common Stock

Shares of common stock entitle the holders to one vote per share on all matters which stockholders are entitled to vote, to receive dividends and other distributions as authorized by the Company’s board of directors in accordance with the Maryland General Corporation Law and to all rights of a stockholder pursuant to the Maryland General Corporation Law.  The common stock has no preferences or preemptive, conversion or exchange rights.

Preferred Stock

Under the Company’s articles of incorporation, the Company’s board of directors has the authority to issue one or more classes or series of preferred stock, and prior to the issuance of such stock, the board of directors has the power to classify or reclassify, in one or more series, any unissued shares and designate the preferences, rights and privileges of such shares.  As of March 31, 2020, and December 31, 2019, respectively, the Company has issued 1,000 shares of convertible preferred stock to the Advisor at a price of $10.00 per share.

Common Stock Issuable Upon Conversion of Convertible Preferred Stock

The convertible preferred stock issued to the Advisor will convert to shares of the Company’s common stock if (1) the Company has made total distributions on then outstanding shares of the Company’s common stock equal to the issue price of those shares plus a 6% cumulative, non-compounded, annual return on the issue price of those outstanding shares, (2) the Company lists its common stock for trading on a national securities exchange if the sum of prior distributions on then outstanding shares of the Company’s common stock plus the aggregate market value of the Company’s common stock (based on the 30-day average closing meets the same 6% performance threshold, or  (3)  the Company’s advisory agreement with the Advisor expires without renewal or is terminated (other than because of a material breach by the Advisor), and at the time of such expiration or termination the Company is deemed to have met the foregoing 6% performance threshold based on the Company’s enterprise value and prior distributions and, at or subsequent to the expiration or termination, the stockholders actually realize such level of performance upon listing or through total distributions. In general, the convertible stock will convert into shares of common stock with a value equal to 15% of the excess of the Company’s enterprise value plus the aggregate value of distributions paid to date on then outstanding shares of common stock over the aggregate issue price of those outstanding shares plus a 6% cumulative, non-compounded, annual return on the issue price of those outstanding shares. With respect to conversion in connection with the termination of the advisory agreement, this calculation is made at the time of termination even though the actual conversion may occur later, or not at all.

Stock-Based Compensation

  The Company awards shares of restricted common stock to non-employee directors as compensation in part for their service as members of the board of directors of the Company. These shares are fully vested when granted.  These shares may not be sold while an independent director is serving on the board of directors. For the three months ended March 31, 2020 and 2019, respectively, the Company granted 1,500 shares of restricted common stock to independent directors as compensation for services and recognized $19,000 as stock-based compensation expense for each period. Share based compensation expense is based upon the estimated fair value per share.  Stock-based compensation expense is included in general and administrative expenses in the accompanying consolidated statements of operations.

17

HARTMAN SHORT TERM INCOME PROPERTIES XX, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Distributions

The following table reflects the total distributions the Company has paid, including the total amount paid, thousands, and amount paid per common share, in each indicated quarter:

Quarter Paid	Distributions per Common Share		Total Distributions
2020
1st Quarter	0.175		3,223
Total 2020 year to date	$	0.175	$	3,223
2019
4th Quarter	$	0.175	$	3,223
3rd Quarter	0.175		3,224
2nd Quarter	0.175		3,223
1st Quarter	0.171		3,141
Total 2019	$	0.696	$	12,811

Mergers

Subject to the terms and conditions of the XIX Merger Agreement, including the satisfaction of all closing conditions set forth in the Merger Agreements, Hartman XIX will merge with and into the Company, with the Company surviving the merger (the “Hartman XIX Merger”). Subject to the terms and conditions of the HIREIT Merger Agreement, (i) HIREIT will merge with and into the Company, with the Company surviving the merger (the “HIREIT Merger,” and together with the Hartman XIX Merger, the “REIT Mergers”), and (ii) HIROP will merge and with and into the Operating Partnership, with the Operating Partnership surviving the merger (the “Partnership Merger,” and together with the REIT Mergers, the “Mergers”). The REIT Mergers are intended to qualify as a “reorganization” under, and within the meaning of, Section 368(a) of the Internal Revenue Code of 1986, as amended (the “Code”), and the Partnership Merger is intended to be treated as a tax-deferred exchange under Section 721 of the Code.

Subject to the terms and conditions of the XIX Merger Agreement, (i) each share of common stock of Hartman XIX (the “XIX Common Stock”) issued and outstanding immediately prior to the Effective Time (as defined in the XIX Merger Agreement) will be automatically cancelled and retired and converted into the right to receive 9,171.98 shares of common stock, $0.01 par value per share, of the Company (“Company Common Stock”), (ii) each share of 8% cumulative preferred stock of Hartman XIX issued and outstanding immediately prior to the Effective Time will be automatically cancelled and retired and converted into the right to receive 1.238477 shares of Company Common Stock, and (iii) each share of 9% cumulative preferred stock of Hartman XIX issued and outstanding immediately prior to the Effective Time will be automatically cancelled and retired and converted into the right to receive 1.238477 shares of Company Common Stock.

Subject to the terms and conditions of the HIREIT Merger Agreement, (a) in connection with the HIREIT Merger, (i) each share of common stock of HIREIT (the “HIREIT Common Stock”) issued and outstanding immediately prior to the REIT Merger Effective Time (as defined in the HIREIT Merger Agreement) will be automatically cancelled and retired and converted into the right to receive 0.752222 shares of Company Common Stock, and (ii) each share of subordinate common stock of HIREIT will be automatically cancelled and retired and converted into the right to receive 0.863235 shares of Company Common Stock, and (b) in connection with the Partnership Merger, each unit of limited partnership interest in HIREIT Operating Partnership (“HIREIT OP Units”) issued and outstanding immediately prior to the Partnership Merger Effective Time (as defined in the HIREIT Merger Agreement) (other than any HIREIT OP Units held by HIREIT) will be automatically cancelled and retired and converted into the right to receive 0.752222 validly issued, fully paid and non-assessable units of limited partnership interests in XX Operating Partnership.

18

HARTMAN SHORT TERM INCOME PROPERTIES XX, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 12 - Incentive Award Plan

The Company has adopted an incentive plan (the “Omnibus Stock Incentive Plan” or the “Incentive Plan”) that provides for the grant of incentive stock options, non-qualified stock options, stock appreciation rights, deferred stock awards, restricted stock awards, dividend equivalent rights and other stock-based awards within the meaning of Internal Revenue Code Section 422, or any combination of the foregoing. The Company has initially reserved 5,000,000 shares of the Company’s common stock for the issuance of awards under the Company’s stock incentive plan, but in no event more than ten (10%) percent of the Company’s issued and outstanding shares. The number of shares reserved under the Company’s stock incentive plan is also subject to adjustment in the event of a stock split, stock dividend or other change in the Company’s capitalization. Generally, shares that are forfeited or canceled from awards under the Company’s stock incentive plan also will be available for future awards.  

 Incentive Plan compensation expense is included in general and administrative expenses in the accompanying consolidated statements of operations.

Note 13 - Commitments and Contingencies

Economic Dependency

      The Company is dependent on the Property Manager and the Advisor for certain services that are essential to the Company, including the identification, evaluation, negotiation, purchase and disposition of properties, management of the daily operations of the Company’s real estate portfolio, and other general and administrative responsibilities.  In the event that these companies are unable to provide the respective services, the Company will be required to obtain such services from other providers.

Litigation

The Company is subject to various claims and legal actions that arise in the ordinary course of business. Management of the Company believes that the final disposition of such matters will not have a material adverse effect on the financial position of the Company.

Note 14 - Subsequent Events

On May 14, 2020, the shareholders of the Company, Hartman XIX and HIREIT approved the previously proposed Merger Agreements. The target effective date of the mergers is July 1, 2020. Results of the special shareholder meetings was reported by the Company on its Current Report on Form 8-K filed with the SEC on May 20, 2020.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

       Unless the context otherwise requires, all references in this report to the “Company,” “we,” “us” or “our” are to Hartman Short Term Income Properties XX, Inc.

Forward-Looking Statements

          Certain statements included in this quarterly report on Form 10-Q (this “Quarterly Report”) that are not historical facts (including statements concerning investment objectives, other plans and objectives of management for future operations or economic performance, or assumptions, or forecasts related thereto) are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities and Exchange Act of 1934, as amended. These statements are only predictions. We caution that forward-looking statements are not guarantees. Actual events on our investments and results of operations could differ materially from those expressed or implied in any forward-looking statements. Forward-looking statements are typically identified by the use of terms such as “may,” “should,” “expect,” “could,” “intend,” “plan,” “anticipate,” “estimate,” “believe,” “continue,” “predict,” “potential” or the negative of such terms and other comparable terminology.

          Forward-looking statements included herein are based upon our current expectations, plans, estimates, assumptions and beliefs which involve numerous risks and uncertainties. Assumptions relating to the foregoing involve judgments with respect to, among other things, future economic, competitive and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond our control. Although we believe that the expectations reflected in such forward-looking statements are based on reasonable assumptions, our actual results and performance could differ materially from those set forth in the forward-looking statements. Factors that could have a material adverse effect on our operations and future prospects include, but are not limited to:

• the fact that we have had a net loss for each annual period since our inception;

• the risk that the pending Mergers will not be consummated within the expected time period or at all;

• the occurrence of any event, change or other circumstances that could give rise to the termination of the Merger Agreements;

• the failure to satisfy the conditions to completion of the pending Mergers;

• risks related to disruption of management’s attention from the ongoing business operations due to the pending Mergers;

• the effect of the announcement of the pending Mergers on our operating results and business generally;

• the outcome of any legal proceedings relating to the pending Mergers;

• the imposition of federal taxes if we fail to qualify as a REIT in any taxable year or forego an opportunity to ensure REIT status;

• uncertainties related to the national economy, the real estate industry in general and in our specific markets;

• legislative or regulatory changes, including changes to laws governing REITS;

• construction costs that may exceed estimates or construction delays;

• increases in interest rates;

• availability of credit or significant disruption in the credit markets;

• litigation risks;

• risks inherent to the real estate business, including tenant defaults, potential liability related to environmental matters and the lack of liquidity of real estate investments;

• inability to obtain new tenants upon the expiration of existing leases at our properties;

• inability to generate sufficient cash flows due to market conditions, competition, uninsured losses, changes in tax or other applicable laws;

• the impact of the global pandemic of the novel coronavirus that causes the disease known as coronavirus disease 2019 (“COVID-19”), and the measures taken in response to the pandemic, on the global economy and our real estate tenants;

• the potential need to fund tenant improvements or other capital expenditures out of operating cash flow;

• the fact that we pay fees and expenses to our advisor and its affiliates that were not negotiated on an arm’s length basis and the fact that the payment of these fees and expenses increases the risk that our stockholders will not earn a profit on their investment in us;

• our ability to generate sufficient cash flows to pay distributions to our stockholders;

• our ability to retain our executive officers and other key personnel of our advisor and other affiliates of our advisor; and

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• changes to generally accepted accounting principles, or GAAP.

          The forward-looking statements should be read in light of these factors and the factors identified in the “Risk Factors” section of our Annual Report on Form 10-K for the year ended December 31, 2019 as filed with the SEC on May 13, 2020.

The following discussion and analysis should be read in conjunction with the accompanying interim consolidated financial information.

Overview

We were formed as a Maryland corporation on February 5, 2009 to invest in and operate real estate and real estate-related assets on an opportunistic basis. We may acquire a wide variety of commercial properties, including office, industrial, retail, and other real properties. These properties may be existing, income-producing properties, newly constructed properties or properties under development or construction. In particular, we focus on acquiring properties with significant possibilities for short-term capital appreciation, such as those requiring development, redevelopment or repositioning or those located in markets with high growth potential. We also may invest in real estate-related securities and, to the extent that our advisor determines that it is advantageous, we may invest in mortgage loans.

On February 9, 2010, we commenced our initial public offering of up to $250,000,000 in shares of our common stock to the public at a price of $10.00 per share and up to $23,750,000 in shares of common stock to our stockholders pursuant to our distribution reinvestment plan at a price of $9.50 per share. On April 25, 2013, we terminated our initial public offering. As of the termination of our initial public offering on April 25, 2013, we had accepted subscriptions for and issued shares of our common stock, including shares of our common stock issued pursuant to our distribution reinvestment plan, resulting in aggregate gross offering proceeds of $43,943,731.

On July 16, 2013, we commenced our follow-on public offering, or our “follow-on offering,” of up to $200,000,000 in shares of our common stock to the public at a price of $10.00 per share and up to $19,000,000 in shares of our common stock to our stockholders pursuant to our distribution reinvestment plan at a price of $9.50 per share. Effective March 31, 2016, we terminated the offer and sale of our common shares to the public in our follow-on offering. Effective July 16, 2016, we terminated the sale of additional shares of our common stock to our stockholders pursuant to our distribution reinvestment plan. As of March 31, 2020, we had accepted subscriptions for, and issued shares of our common stock in our follow-on offering, including shares of our common stock issued pursuant to our distribution reinvestment plan, resulting in aggregate gross proceeds of $181,800,895.

As of March 31, 2020 we owned 43 commercial real properties comprising approximately 6.7 million square feet plus three pad sites, all located in Texas.

The SASB Loan outstanding as of March 31, 2020 has an initial maturity date of October 9, 2020, which is within one year of the date that this Quarterly Report was available to be issued. Management has considered whether there is substantial doubt about the Company's ability to continue as a going concern within one year of the issuance date of these consolidated financial statement due to the uncertainty regarding the SASB Loan maturity, as set forth in Accounting Standards Update (ASU) 2014-15, “Presentation of Financial Statements – Going Concern.”

Without limiting the foregoing, we believe that we will have sufficient capital to meet our existing debt service and other operating obligations for the next year and that we have adequate resources to fund our cash needs. However, our operations are subject to a variety of risks, including, but not limited to, changes in national economic conditions, the restricted availability of financing, changes in demographic trends and interest rates and declining real estate valuations. As a result of these uncertainties, there can be no assurance that we will meet our investment objectives or that the risks described above will not have an adverse effect on our properties or results of operations.

We operate under the direction of our board of directors, the members of which are accountable to us and our stockholders. We are externally managed by Hartman Advisors, LLC, which we refer to as our “advisor,” pursuant to an advisory agreement by and among us and our advisor, which we refer to as the “Advisory Agreement.” Subject to certain restrictions and limitations, our advisor manages our day-to-day operations and our portfolio of properties and real estate related assets. Our advisor sources and presents investment opportunities to our board of directors. Our advisor also provides investment management, marketing, investor relations and other administrative services on our behalf. The key personnel of our advisor are involved in the selection, acquisition, financing and disposition of our properties, and raising the capital to purchase properties. The key personnel of our advisor have extensive experience in selecting and operating commercial real estate and in

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operating investment entities that acquire commercial real estate.  Our affiliated property manager is Hartman Income REIT Management, Inc. which we refer to as our “property manager,” which is responsible for operating, leasing and maintaining our properties.  Our property manager is the wholly owned subsidiary of Hartman Income REIT, Inc. which we refer to as “HIREIT,” a real estate investment trust that has investment objectives that are similar to those that we employ.

Pending Mergers

On July 21, 2017, we entered into (i) an agreement and plan of merger (the “XIX Merger Agreement”) between us and Short Term Income Properties XIX, Inc. (“Hartman XIX”), and (ii) an agreement and plan of merger (the “HIREIT Merger Agreement,” and together with the XIX Merger Agreement, the “Merger Agreements”) by and among us, our operating partnership, Hartman Income REIT, Inc. (“HIREIT”), and Hartman Income REIT Operating Partnership LP, the operating partnership of HIREIT (“HIREIT Operating Partnership”).

Subject to the terms and conditions of the XIX Merger Agreement, Hartman XIX will merge with and into us, with our company surviving the merger (the “Hartman XIX Merger”). Subject to the terms and conditions of the HIREIT Merger Agreement, (i) HIREIT will merge with and into us, with our company surviving the merger (the “HIREIT Merger,” and together with the Hartman XIX Merger, the “REIT Mergers”), and (ii) HIREIT Operating Partnership will merge with and into our operating partnership, with our operating partnership surviving the merger (the “Partnership Merger,” and together with the REIT Mergers, the “Mergers”).

Subject to the terms and conditions of the XIX Merger Agreement, (i) each share of common stock of Hartman XIX (the “XIX Common Stock”) issued and outstanding immediately prior to the Effective Time (as defined in the XIX Merger Agreement) will be automatically canceled and retired and converted into the right to receive 9,171.98 shares of our common stock, (ii) each share of 8% cumulative preferred stock of Hartman XIX issued and outstanding immediately prior to the Effective Time will be automatically canceled and retired and converted into the right to receive 1.238477 shares of our common stock, and (iii) each share of 9% cumulative preferred stock of Hartman XIX issued and outstanding immediately prior to the Effective Time will be automatically canceled and retired and converted into the right to receive 1.238477 shares of our common stock.

Subject to the terms and conditions of the HIREIT Merger Agreement, (a) in connection with the HIREIT Merger, (i) each share of common stock of HIREIT (the “HIREIT Common Stock”) issued and outstanding immediately prior to the REIT Merger Effective Time (as defined in the HIREIT Merger Agreement) will be automatically cancelled and retired and converted into the right to receive 0.752222 shares of our common stock, and (ii) as provided in the HIREIT Merger Agreement, as amended May 8, 2018, each share of subordinate common stock of HIREIT will be automatically cancelled and retired and converted into the right to receive 0.863235 shares of our common stock, and (b) in connection with the Partnership Merger, each unit of limited partnership interest in HIREIT Operating Partnership (“HIREIT OP Units”) issued and outstanding immediately prior to the Partnership Merger Effective Time (as defined in the HIREIT Merger Agreement) (other than any HIREIT OP Units held by HIREIT) will be automatically cancelled and retired and converted into the right to receive 0.752222 validly issued, fully paid and non-assessable units of limited partnership interests in our operating partnership.

Impact of the COVID-19 Pandemic

Our business could be materially and adversely affected by the outbreak of a health epidemic or pandemic, including the coronavirus, particularly to the extent and degree to which the outbreak affects the U.S., state and local economies. Our revenues consist primarily of rental income and other tenant reimbursements derived from tenants of our commercial real estate properties. The effects of the COVID-19 coronavirus and other adverse public health developments could materially affect the financial viability of our tenants and their ability to pay rent. While it is premature to accurately predict the ultimate impact of these developments, our results for the quarter ended March 31, 2020 have not been significantly impacted; however, we do expect to be impacted with potentially continuing and possibly adverse impacts beyond March 31, 2020.

Our operations could be disrupted if any of our employees, employees of our vendors and business partners or employees of our tenants were to contract or be suspected of having any strain of flu or a coronavirus, since this could require us or vendors and business partners and tenants to quarantine some or all of any affected employees and or disinfect affected workspaces. We could also be adversely affected if government authorities impose mandatory closures, seek voluntary closures or impose restrictions on the operations of our business and the operations of our tenants’ businesses. Even if such measures are not implemented and a virus or other disease does not spread significantly, the perceived risk of infection or public health risk may adversely affect the business and operating results of our tenants and by extension affect our business and operating and results.

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Our collections as of June 2, 2020 of tenant rents, reimbursements and other income billed for the months of April and May 2020 were as follows:

Property type	April 2020		May 2020
Retail	66.6	%	65.0	%
Flex	96.5	%	100.0	%
Office	93.6	%	91.1	%
Industrial	97.9	%	85.3	%
Total	87.6	%	85.3	%

Investment Objectives and Strategy: Hartman Advantage

Our primary investment objectives are to:

• realize growth in the value of our investments;

• preserve, protect and return stockholders’ capital contributions; and

• grow net cash from operations and pay regular cash distributions to our stockholders.

We cannot assure our stockholders that we will achieve these objectives.

The cornerstone of our investment strategy is our advisor’s discipline in acquiring a portfolio of real estate properties, specifically properties that are located in Texas, that offer a blend of current and potential income based on in place occupancy plus relatively significant potential for growth in income and value from re-tenanting; repositioning or redevelopment. We refer to this strategy as “value add” or the “Hartman Advantage.”

We rely upon the value add or Hartman Advantage strategy to evaluate numerous potential commercial real estate acquisition and investment opportunities per completed acquisition or investment.

Effective March 31, 2016 we terminated our follow-on offering. Our board of directors continues to evaluate potential liquidity events to maximize the total potential return to our stockholders, including, but not limited to, a listing of our shares of common stock on a national securities exchange. However, our board of directors has not made a decision to pursue any specific liquidity event, and there can be no assurance that we will complete a liquidity event on the terms described above, or at all.

We do not anticipate that there will be any market for our shares of common stock unless they are listed on a national securities exchange. In the event that our shares of common stock are not listed or traded on an established securities exchange prior to the tenth anniversary of the termination of our initial public offering, which terminated on April 25, 2013, our charter requires that the board of directors must seek the approval of our stockholders of a plan to liquidate our assets, unless the board of directors has obtained the approval of our stockholders (1) to defer the liquidation of our assets or (2) of an alternate strategy.

We believe that we have sufficient capital to meet our existing debt service and other operating obligations for the next year and that we have adequate resources to fund our cash needs. However, our operations are subject to a variety of risks, including, but not limited to, changes in national economic conditions, the restricted availability of financing, changes in demographic trends and interest rates and declining real estate valuations. As a result of these uncertainties, there can be no assurance that we will meet our investment objectives or that the risks described above will not have an adverse effect on our properties or results of operations.

We elected under Section 856(c) of the Internal Revenue Code to be taxed as a REIT beginning with the taxable year ending December 31, 2011. As a REIT we generally are not subject to federal income tax on income that we distribute to our stockholders. If we fail to qualify as a REIT in any taxable year after the year in which we initially elected to be treated as a REIT, we will be subject to federal income tax on our taxable income at regular corporate rates and will not be permitted to qualify for treatment as a REIT for federal income tax purposes for four years following the year in which our qualification is denied. Such an event could materially and adversely affect our net income. However, we believe that we are organized and will operate in a manner that will enable us to qualify for treatment as a REIT for federal income tax purposes and we intend to operate so as to remain qualified as a REIT for federal income tax purposes.

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Our Real Estate Portfolio

As of March 31, 2020, we owned 43 commercial properties listed below.

Property Name	Location	Gross Leasable Area SF	Percent Occupied		Annualized Base Rental Revenue (in thousands)		Average Base Rental Revenue per Occupied SF		Average Net Effective Annual Base Rent per Occupied SF
Retail:
Promenade	Dallas	176,585	77	%	$	1,578	$	11.63	$	11.54
Prestonwood Park	Dallas	105,783	85	%	$	1,959	$	21.91	$	21.87
Richardson Heights	Dallas	201,433	78	%	$	3,066	$	19.56	$	19.56
Cooper Street	Dallas	127,696	100	%	$	1,649	$	12.92	$	12.95
One Mason SC	Houston	75,183	86	%	$	930	$	14.44	$	14.41
Chelsea Square SC	Houston	70,275	79	%	$	611	$	11.07	$	10.82
Mission Center SC	Houston	112,971	99	%	$	916	$	8.19	$	7.24
Garden Oaks SC	Houston	106,858	71	%	$	1,160	$	15.33	$	15.14
Harwin	Houston	38,813	93	%	$	372	$	10.35	$	10.39
Fondren	Houston	93,196	92	%	$	810	$	9.48	$	9.31
Northeast Square SC	Houston	40,525	73	%	$	395	$	13.29	$	13.33
Walzem Plaza SC	San Antonio	182,713	73	%	$	1,505	$	11.24	$	11.41
Total - Retail		1,332,031	83	%	$	14,951	$	13.57	$	13.45
Office:
North Central Plaza	Dallas	198,374	76	%	$	2,350	$	15.50	$	15.07
Gateway Tower	Dallas	266,412	66	%	$	2,780	$	15.85	$	15.16
Bent Tree Green	Dallas	139,609	81	%	$	2,088	$	18.50	$	18.25
Parkway Plaza I&II	Dallas	136,506	82	%	$	1,771	$	15.77	$	15.74
Hillcrest	Dallas	203,688	84	%	$	2,617	$	15.28	$	15.26
Skymark	Dallas	115,700	79	%	$	1,670	$	18.30	$	17.84
Corporate Park Place	Dallas	113,429	77	%	$	1,461	$	16.66	$	16.76
Westway One	Dallas	165,982	92	%	$	3,103	$	20.33	$	20.17
Three Forest Plaza	Dallas	366,549	77	%	$	5,478	$	19.32	$	19.27
Spring Valley	Dallas	94,304	76	%	$	892	$	12.48	$	12.56
Tower Pavilion	Houston	87,589	88	%	$	1,007	$	13.08	$	13.55
The Preserve	Houston	218,689	93	%	$	3,310	$	16.28	$	16.25
Westheimer Central	Houston	182,506	80	%	$	1,676	$	11.42	$	11.20
11811 N Freeway	Houston	156,362	79	%	$	1,971	$	15.90	$	15.85
Atrium I	Houston	118,461	76	%	$	1,314	$	14.52	$	14.35
3100 Timmons	Houston	111,265	82	%	$	1,379	$	15.15	$	15.47
Cornerstone	Houston	71,008	90	%	$	903	$	14.18	$	14.12
Northchase	Houston	128,981	85	%	$	1,552	$	14.21	$	13.92
616 FM 1960	Houston	142,194	47	%	$	1,237	$	18.37	$	18.19
601 Sawyer	Houston	88,258	76	%	$	1,100	$	16.35	$	15.80
Gulf Plaza	Houston	120,651	89	%	$	2,241	$	20.89	$	21.09
Timbercreek Atrium	Houston	51,035	78	%	$	685	$	17.15	$	17.51
Copperfield	Houston	42,621	95	%	$	744	$	18.45	$	18.45
400 N. Belt	Houston	230,872	58	%	$	1,519	$	11.41	$	11.44
Ashford Crossing	Houston	158,451	71	%	$	1,825	$	16.31	$	16.35
Regency Square	Houston	64,063	86	%	$	681	$	12.32	$	12.03
Energy Plaza	San Antonio	180,119	77	%	$	2,881	$	20.69	$	20.71
One Technology Ctr	San Antonio	196,348	96	%	$	4,680	$	24.79	$	24.73
Total -office		4,150,026	77	%	$	54,916	$	16.81	$	16.71
Industrial/Flex
Central Park	Dallas	73,099	88	%	$	574	$	8.94	$	8.84
Quitman	Houston	736,957	88	%	$	1,290	$	1.98	$	1.98
Mitchelldale	Houston	377,752	94	%	$	2,351	$	6.60	$	6.56
Total -Industrial/Flex		1,187,808	89	%	$	4,214	$	3.94	$	3.92
Grand Total		6,669,865	82	%	$	74,081	$	13.62	$	13.53

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CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Our results of operations and financial condition, as reflected in the accompanying consolidated financial statements and related notes, require us to make estimates and assumptions that are subject to management’s evaluation and interpretation of business conditions, changing capital market conditions and other factors related to the ongoing viability of our customers. With different estimates or assumptions, materially different amounts could be reported in our consolidated financial statements.  A summary of our critical accounting policies is included in our Annual Report on Form 10-K for the year ended December 31, 2019, as filed with the SEC on May 13, 2020, in the section titled "Management's Discussion and Analysis of Financial Condition and Results of Operations." There have been no significant changes to these policies during the three months ended March 31, 2020.  See also Note 2 to our consolidated financial statements in this Quarterly Report on Form 10-Q for a discussion of our significant accounting policies.

RESULTS OF OPERATIONS

Comparison of the three months ended March 31, 2020 versus March 31, 2019.

       As of March 31, 2020 and 2019, respectively, we owned 43 commercial properties comprising approximately 6.7 million square feet plus three pad sites, all located in Texas. As of March 31, 2020 and 2019, respectively, we owned 15 properties located in Richardson, Arlington, and Dallas, Texas, 25 properties located in Houston, Texas and three properties located in San Antonio, Texas.

Revenues - The primary source of our revenue is rental revenues and tenant reimbursements. For the three months ended March 31, 2020 and 2019 we had total rental revenues and tenant reimbursements of $23,139,000 and $23,309,000, respectively. Rental income increased $491,000. Tenant reimbursements decreased $528,000 net, including a reduction in prior year billing for operating expense reconciliation billings of $920,000.

Property operating expenses - Property operating expenses consist of contract services, repairs and maintenance, utilities, management fees and property level administrative expense including bad debt expense. For the three months ended March 31, 2020 and 2019, we had property operating expenses of $6,945,000 and $7,751,000, respectively. The decrease of $806,000 is primarily due to the decrease in bad debt expense of $732,000.

Asset management fees - We pay asset management fees to our advisor in connection with the management of our properties. Asset management fees incurred to our advisor were $440,000 for the three months ended March 31, 2020 and 2019, respectively.

Real estate taxes and insurance - Real estate taxes and insurance were $3,170,000 and $3,157,000 for the three months ended March 31, 2020 and 2019, respectively.

Depreciation and amortization - Depreciation and amortization were $6,982,000 and $7,030,000 for the three months ended March 31, 2020 and 2019, respectively. Depreciation and amortization decreased due to decrease for in-place lease value intangible amortization.

General and administrative expenses - General and administrative expenses consist primarily of audit fees, transfer agent fees, other professional fees, and independent director's compensation. General and administrative expenses were $1,177,000 for the three months ended March 31, 2020 and 2019, respectively.

Net income - We generated a net income of $1,884,000 and $360,000 for the three months ended March 31, 2020 and 2019, respectively. The increase in net income is primarily attributable to decrease in property operating expenses and interest expense, as well as an increase in interest and dividend income.

Funds From Operations and Modified Funds From Operations

Funds From Operations, or FFO, is a non-GAAP financial measure defined by the National Association of Real Estate Investment Trusts ("NAREIT"), an industry trade group, which we believe is an appropriate supplemental measure to reflect the operating performance of a real estate investment trust, or REIT in conjunction with net income. FFO is used by the REIT industry as a supplemental performance measure. FFO is not equivalent to our net income or loss as determined under GAAP.

We define FFO, a non-GAAP measure, consistent with the standards established by the White Paper on FFO approved by the Board of Governors of NAREIT, as revised in February 2004, or the White Paper. The White Paper defines FFO as net

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income or loss computed in accordance with GAAP, excluding gains or losses from sales of property and asset impairment write-downs, plus depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. Adjustments for unconsolidated partnerships and joint ventures are calculated to reflect FFO. Our FFO calculation complies with NAREIT’s policy described above.

We define MFFO, a non-GAAP measure, consistent with the IPA’s Guideline 2010-01, Supplemental Performance Measure for Publicly Registered, Non-Listed REITs: Modified Funds from Operations, or the Practice Guideline, issued by the IPA in November 2010. The Practice Guideline defines MFFO as FFO further adjusted for the following items, as applicable, included in the determination of GAAP net income: acquisition fees and expenses; amounts relating to deferred rent receivables and amortization of above and below market leases and liabilities (which are adjusted in order to reflect such payments from a GAAP accrual basis to a cash basis of disclosing the rent and lease payments); accretion of discounts and amortization of premiums on debt investments; mark-to-market adjustments included in net income; nonrecurring gains or losses included in net income from the extinguishment or sale of debt, hedges, foreign exchange, derivatives or securities holdings where trading of such holdings is not a fundamental attribute of the business plan, unrealized gains or losses resulting from consolidation from, or deconsolidation to, equity accounting, and after adjustments for consolidated and unconsolidated partnerships and joint ventures, with such adjustments calculated to reflect MFFO on the same basis. The accretion of discounts and amortization of premiums on debt investments, nonrecurring unrealized gains and losses on hedges, foreign exchange, derivatives or securities holdings, unrealized gains and losses resulting from consolidations, as well as other listed cash flow adjustments are adjustments made to net income in calculating the cash flows provided by operating activities and, in some cases, reflect gains or losses which are unrealized and may not ultimately be realized.

Presentation of this information is intended to provide useful information to investors as they compare the operating performance of different REITs, although it should be noted that not all REITs calculate FFO and MFFO the same way, so comparisons with other REITs may not be meaningful. FFO and MFFO are not necessarily indicative of cash flow available to fund cash needs and should not be considered as an alternative to net income (loss) or income (loss) from continuing operations as an indication of our performance, as an alternative to cash flows from operations as an indication of its liquidity, or indicative of funds available to fund its cash needs including its ability to make distributions to its stockholders. FFO and MFFO should be reviewed in conjunction with other GAAP measurements as an indication of our performance. MFFO is useful in assisting management and investors in assessing the sustainability of operating performance in future operating periods, and in particular, after the offering and acquisition stages are complete and net asset value is disclosed. FFO and MFFO are not useful measures in evaluating net asset value because impairments are taken into account in determining net asset value but not in determining FFO or MFFO.

Neither the SEC, NAREIT nor any other regulatory body has passed judgment on the acceptability of the adjustments that we use to calculate FFO or MFFO. In the future, the SEC, NAREIT, or another regulatory body may decide to standardize the allowable adjustments across the non-listed REIT industry and as a result we may have to adjust our calculation and characterization of FFO or MFFO.

The table below summarizes our calculation of FFO and MFFO for the three months ended March 31, 2020 and 2019 including a reconciliation of such non-GAAP financial performance measures to our net loss, in thousands.

	Three Months Ended March 31,
	2020		2019
Net Income	$	1,884	$	360
Depreciation and amortization of real estate assets	6,982		7,030
Funds from operations (FFO)	8,866		7,390
Modified funds from operations (MFFO)	$	8,866	$	7,390

Distributions

The following table summarizes the distributions we paid in cash and pursuant to our distribution reinvestment plan for the period from January 2011 (the month we first paid distributions) through March 31, 2020, in thousands:

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Period	Cash (1)		DRIP (2)(3)		Total
Year ending December 31, 2011	$	255	$	242	$	497
Year ending December 31, 2012	891		869		1,760
Year ending December 31, 2013	1,681		1,594		3,275
Year ending December 31, 2014	2,479		2,358		4,837
Year ending December 31, 2015	3,475		3,718		7,193
Year ending December 31, 2016	8,918		2,988		11,906
Year ending December 31, 2017	12,650		—		12,650
Year ending December 31, 2018	12,555		—		12,555
Year ending December 31, 2019	12,811		—		12,811
Quarter ending March 31, 2020	3,223		—		3,223
Total	$	58,938	$	11,769	$	70,707

(1)Distributions are paid on a monthly basis. Distributions for all record dates of a given month are paid approximately 20 days following the end of such month.

(2)Distributions accrued for the period from December 27, 2010 through December 31, 2010 were paid on January 20, 2011, the date we first paid a distribution.

(3)Amount of distributions paid in shares of common stock pursuant to our distribution reinvestment plan. Effective July 16, 2016, we terminated the sale of additional shares of our common stock to our stockholders pursuant to our distribution reinvestment plan.

Distributions to non-controlling interests were $2,138,000 and $2,147,000 for the three months ended March 31, 2020 and 2019, respectively.

For the three months ended March 31, 2020, we paid aggregate distributions of $3,223,000 in cash to common stockholders. During the same period, cash used in operating activities was $4,522,000 and our FFO was $8,866,000. For the three months ended March 31, 2020, 0% of distributions were paid from cash provided by operating activities and 100% from other proceeds. For the three months ended March 31, 2019, we paid aggregate distributions of $3,141,000. During the same period, cash used in operating activities was $6,078,000, and our FFO was $7,390,000. For the three months ended March 31, 2020, 0% of distributions were paid from cash provided by operating activities and 100% from other proceeds. 

Liquidity and Capital Resources

Our principal demands for funds are and will continue to be for real estate and real estate-related acquisitions, for the payment of operating expenses, for the payment of interest on our outstanding indebtedness, and for the payment of distributions. Generally, we expect to meet cash needs for items other than acquisitions from our cash flow from operations; provided, that some or all of our distributions have been and may continue to be paid from sources other than cash from operations (as discussed below). We expect to meet cash needs for acquisitions from the remaining net proceeds of our follow-on offering and from financings.

There may be a delay between the sale of our shares of common stock and the purchase of properties or other investments, which could result in a delay in our ability to make distributions to our stockholders. Some or all of our distributions have been and may continue to be paid from sources other than cash flow from operations, including proceeds of our public offerings, cash advances to us by our advisor, cash resulting from a waiver of asset management fees and borrowings secured by our assets in anticipation of future operating cash flow. We may have little, if any, cash flow from operations available for distribution until we make substantial investments and those investments stabilize. In addition, to the extent our investments are in development or redevelopment projects or in properties that have significant capital requirements, our ability to make distributions may be negatively impacted, especially during our early periods of operation.

We use, and intend to use in the future, secured and unsecured debt to acquire properties and make other investments. As of March 31, 2020, our outstanding secured debt is $301,982,000. There is no limitation on the amount we may invest in any single property or other asset or on the amount we can borrow for the purchase of any individual property or other investment. Under our charter, we are prohibited from borrowing in excess of 300% of our “net assets” (as defined by our charter) as of the date of any borrowing; however, we may exceed that limit if approved by a majority of our independent directors and if such excess is disclosed to the stockholders in the next quarterly report along with the explanation for such excess borrowings. Our board of directors has adopted a policy to limit our aggregate borrowings to approximately 50% of the aggregate value of our

28

assets unless substantial justification exists that borrowing a greater amount is in our best interests. Such limitation, however, does not apply to individual real estate assets and only will apply once we have ceased raising capital in our public offering and

invested substantially all of our capital. As a result, we expect to borrow more than 50% of the contract purchase price of each real estate asset we acquire to the extent our board of directors determines that borrowing these amounts is prudent.

Pursuant to ASU 2014-15, “Presentation of Financial Statements – Going Concern,” management is required to evaluate the Company’s ability to continue as a going concern within one year after the date that these consolidated financial statements are issued. The SPE Loan has an initial maturity date of October 9, 2020. The SPE Loan provides for three successive one-year maturity date extensions. In order to exercise each successive one-year extension options, the Hartman SPE must meet five conditions in order to extend the maturity date without any further qualification. One of the five conditions is that Hartman SPE must have a debt yield, as defined, of 12.5% or greater as of June 30, 2020.

As of March 31, 2020 and December 31, 2019, Hartman SPE has a debt yield of 12.91% and 13.29%, respectively. In response to the coronavirus outbreak and related economic disruption, the Company has undertaken cost reduction and avoidance measures which began in March 2020. Management expects the test period debt calculation to be 12.5% or greater which will allow the Company to exercise the extension option based solely on the terms of the loan agreement.

If the debt yield calculation as of the end of the June 30, 2020 test period is less than 12.5%, management believes that the lender will agree to a one-year extension, however, extension terms may be less favorable to the Company than as provided under the loan agreement. Any required modification of the loan agreement to conclude an extension of the maturity date may involve additional loan costs which would not otherwise be incurred.

Management has concluded that there is substantial doubt about the Company's ability to continue as a going concern within one year of the issuance date of these consolidated financial statements due to the fact of the uncertainty regarding the loan maturity of the SPE Loan. Management believes that Hartman SPE will be able to extend the maturity date for one year which will mitigate the maturity date issue within one year of the issuance date of these consolidated financial statements.

Our advisor may, but is not required to, establish capital reserves from gross offering proceeds, out of cash flow generated by operating properties and other investments or out of non-liquidating net sale proceeds from the sale of our properties and other investments. Capital reserves are typically utilized for non-operating expenses such as tenant improvements, leasing commissions and major capital expenditures. Alternatively, a lender may require its own formula for escrow of capital reserves.

Potential future sources of capital include proceeds from additional private or public offerings of our securities, secured or unsecured financings from banks or other lenders, proceeds from the sale of properties and undistributed funds from operations. If necessary, we may use financings or other sources of capital in the event of unforeseen significant capital expenditures.

The consolidated financial statements as of March 31, 2020 include the accounts of the Company, our operating partnership and its subsidiaries and Hartman SPE, LLC. Prior to October 1, 2018, our consolidated financial statements did not include Hartman SPE, LLC.

Cash Flows from Operating Activities

For the three months ended March 31, 2020 and 2019, net cash used in operating activities was $4,522,000 and $6,078,000, respectively.

Cash Flows from Investing Activities

For the three months ended March 31, 2020 and 2019, net cash used in investing activities was $2,182,000 and $2,497,000, respectively.

Cash Flows from Financing Activities

Net cash used in financing activities for the three months ended March 31, 2020 and 2019, respectively, was $1,972,000 and $11,430,000. The decrease in cash used in financing activities is primarily due to the retirement of the pre Hartman SPE Promenade loan and due to $3,800,000 funds received from an affiliate.

29

Contractual Commitments and Contingencies

We use, and intend to use in the future, secured and unsecured debt, as a means of providing additional funds for the acquisition of our properties and our real estate-related assets. We believe that the careful use of borrowings will help us achieve our diversification goals and potentially enhance the returns on our investments. Under our charter, we are prohibited from borrowing in excess of 300% of our net assets, which generally approximates to 75% of the aggregate cost of our assets. We may borrow in excess of this amount if such excess is approved by a majority of the independent directors and disclosed to stockholders in our next quarterly report, along with a justification for such excess. In such event, we will monitor our debt levels and take action to reduce any such excess as practicable. Our aggregate borrowings are reviewed by our board of directors at least quarterly. As of March 31, 2020, our borrowings were not in excess of 300% of the value of our net assets.

In addition to using our capital resources for investing purposes and meeting our debt obligations, we expect to use our capital resources to make certain payments to our advisor. We expect to make payments to our advisor or its affiliates in connection with the selection and origination or purchase of real estate and real estate-related investments, the management of our assets, the management of the development or improvement of our assets and costs incurred by our advisor in providing services to us.

As of March 31, 2020, we had notes payable totaling an aggregate principal amount of $306,682,000. For more information on our outstanding indebtedness, see Note 6 (Notes payable) to the consolidated financial statements included in this report.

Off-Balance Sheet Arrangements

As of March 31, 2020 and December 31, 2019, we had no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

Recent Accounting Pronouncements

Management does not believe that any recently issued, but not yet effective accounting standards, if currently adopted, would have a material effect on the accompanying consolidated financial statements. See Note 2 to the notes to the accompanying consolidated financial statements included in this quarterly report.

Related-Party Transactions and Agreements

We have entered into agreements with our advisor and its affiliates whereby we have paid, and may continue to pay, certain fees to, or reimburse certain expenses of, our advisor and its affiliates. See Item 13, “Certain Relationships and Related Transactions and Director Independence” in our Annual Report on Form 10-K for the year ended December 31, 2019 filed with the SEC on May 13, 2020, and Note 9 (Related Party Transactions) to the consolidated financial statements included in this Quarterly Report for a discussion of the various related-party transactions, agreements and fees.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

We will be exposed to interest rate changes primarily as a result of short and long-term debt used to acquire properties and make loans and other permitted investments. Our interest rate risk management objectives will be to limit the impact of interest rate changes on earnings and cash flows and to lower overall borrowing costs. To achieve these objectives, we expect to borrow primarily at fixed rates or variable rates with the lowest margins available and, in some cases, with the ability to convert variable rates to fixed rates. With regard to variable rate financing, we will assess interest rate cash flow risk by continually identifying and monitoring changes in interest rate exposures that may adversely impact expected future cash flows and by evaluating hedging opportunities.

30

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

In connection with the preparation of this Form 10-Q, as of March 31, 2020, an evaluation was performed under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). In performing this evaluation, management reviewed the selection, application and monitoring of our historical accounting policies. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that as of March 31, 2020, these disclosure controls and procedures were effective and designed to ensure that the information required to be disclosed in our reports filed with the SEC under the Exchange Act is recorded, processed, summarized and reported as and when required.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal controls over financial reporting that occurred during the quarter ended March 31, 2020 that have materially affected, or are reasonably likely to materially affect, our internal control over financing reporting.

31

PART II

OTHER INFORMATION

Item 1.  Legal Proceedings

None.

Item 1A. Risk Factors

Our stockholders will be diluted by the Mergers.

The Mergers will dilute the ownership position of our current stockholders and result in our stockholders (excluding stockholders affiliated with our advisor or sponsor) having an ownership stake in us that is smaller than their current stake in our company. In connection with the Mergers, we will issue up to approximately 19,192,000 shares of our common stock to the holders of shares of Hartman XIX and HIREIT capital stock, based on the exchange ratios set forth in the Merger Agreements and the shares of Hartman XIX and HIREIT capital stock issued and outstanding as of March 31, 2020. Our current stockholders (excluding stockholders affiliated with our advisor or sponsor) are expected to hold in the aggregate approximately 49% of the issued and outstanding shares of our common stock following the Mergers, based on the ownership of stock by shareholders of each of the Merger Parties and the conversion ratios established in the Merger Agreements and the approximately 18,117,000 shares of our common stock issued and outstanding as of March 31, 2020. In addition, approximately 979,000 units of limited partnership interest in our operating partnership are issuable in connection with the Partnership Merger. Consequently, our stockholders (excluding stockholders affiliated with our advisor or sponsor), as a general matter, will have less influence over the management and policies of us after the Mergers than they exercised over the management and policies of us immediately prior to the Mergers.

Following the consummation of the Mergers, we will assume certain potential liabilities relating to Hartman XIX and HIREIT.

When the Mergers are consummated, we will have assumed certain potential liabilities relating to Hartman XIX and HIREIT. These liabilities could have a material adverse effect on our business to the extent we have not identified such liabilities or have underestimated the amount of such liabilities.

The future results of the combined company will suffer if the combined company does not effectively integrate and manage its expanded operations following the Mergers.

Following the Mergers, we expect to continue to expand our operations through additional acquisitions and other strategic transactions, some of which may involve complex challenges. Our future success will depend, in part, upon our ability to manage expansion opportunities, which may pose substantial challenges to integrate new operations into our existing business in an efficient and timely manner, and upon our ability to successfully monitor our operations, costs, regulatory compliance and service quality, and to maintain other necessary internal controls. There is no assurance that our expansion or acquisition opportunities will be successful, or that we will realize the expected operating efficiencies, cost savings, revenue enhancements or other benefits.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3. Defaults Upon Senior Securities 

None.

Item 4.  Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

32

Item 6.  Exhibits

Exhibit	Description
3.1	First Articles of Amendment to Third Amended and Restated Articles of Incorporation of Hartman Short Term Income Properties XX, Inc. (incorporated by reference to Exhibit 3.1 to the Company’s Form 10-K filed on April 12, 2012)
3.2	Third Amended and Restated Articles of Incorporation of Hartman Short Term Income Properties XX, Inc. (incorporated by reference to Exhibit 1 to the Company’s registration statement on Form 8-A (SEC File No. 000-53912) filed on March 22, 2010)
3.3	Certificate of Correction - Hartman Short Term Income Properties XX, Inc. (incorporated by reference to Exhibit 3.3 to the Company's form 10-Q filed on May 11, 2018
3.4	Bylaws of Hartman Short Term Income Properties XX, Inc. (incorporated by reference to Exhibit 2 to the Company’s registration statement on Form 8-A (SEC File No. 000-53912) filed on March 22, 2010)
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 and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS*	XBRL Instance Document
101.SCH*	XBRL Taxonomy Extension Schema Document
101.CAL*	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*	XBRL Taxonomy Extension Label Linkbase Document
101.PRE*	XBRL Taxonomy Extension Presentation Linkbase Document

* Filed herewith

33

SIGNATURES

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.

Date:  June 15, 2020       

By: /s/ Allen R. Hartman

Allen R. Hartman,

Chairman of the Board and Chief Executive Officer

(Principal Executive Officer)

Date:  June 15, 2020       

By: /s/ Louis T. Fox, III

Louis T. Fox, III,

Chief Financial Officer,

(Principal Financial and Principal Accounting Officer)

34

EX-31.1

EXHIBIT 31.1

Certification of Principal Executive Officer Pursuant to

Section 302 of the Sarbanes-Oxley Act of 2002

I, Allen R. Hartman, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Hartman Short Term Income Properties XX, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: June 15, 2020

/s/ Allen R. Hartman

Allen R. Hartman

Chairman of the Board and Chief Executive Officer

(Principal Executive Officer)

EX-31.2

EXHIBIT 31.2

Certification of Principal Executive Officer Pursuant to

Section 302 of the Sarbanes-Oxley Act of 2002

I, Louis T. Fox, III, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Hartman Short Term Income Properties XX, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: June 15, 2020

/s/ Louis T. Fox, III

Louis T. Fox, III

Chief Financial Officer and Treasurer

(Principal Financial and Accounting Officer)

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906 OF THE

SARBANES-OXLEY ACT OF 2002

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and in connection with the quarterly report on Form 10-Q of Hartman Short Term Income Properties XX, Inc. (the “Company”) for the quarter ended March 31, 2020, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, the Chief Executive Officer and President of the Company and the Chief Financial Officer and Treasurer, certify, to their knowledge, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: June 15, 2020

/s/ Allen R. Hartman

Allen R. Hartman

Chairman of the Board and Chief Executive Officer

(Principal Executive Officer)

Date: June 15, 2020

/s/ Louis T. Fox, III

Louis T. Fox, III

Chief Financial Officer and Treasurer

(Principal Financial and Accounting Officer)

XML

Notes Payable - Summary of Notes Payable (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Debt Instrument [Line Items]
Long-term debt, gross	$ 310,182	$ 306,793
Less: unamortized deferred loan costs	(3,500)	(3,754)
Long-term debt	$ 306,682	303,039
Richardson Heights
Debt Instrument [Line Items]
Effective interest rate	4.61%
Long-term debt, gross	$ 17,087	17,260
Cooper Street
Debt Instrument [Line Items]
Effective interest rate	4.61%
Long-term debt, gross	$ 7,367	7,435
Bent Tree Green
Debt Instrument [Line Items]
Effective interest rate	4.61%
Long-term debt, gross	$ 7,367	7,435
Mitchelldale
Debt Instrument [Line Items]
Effective interest rate	4.61%
Long-term debt, gross	$ 11,161	11,263
Promenade
Debt Instrument [Line Items]
Effective interest rate	2.79%
Long-term debt, gross	$ 259,000	259,000
Hartman SPE, LLC
Debt Instrument [Line Items]
Effective interest rate	10.00%
Long-term debt, gross	$ 8,200	$ 4,400

XML

Real Estate - Assets (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Real Estate [Abstract]
Land	$ 145,050	$ 145,050
Buildings and improvements	351,661	348,729
In-place lease value intangible	100,790	100,790
Real estate assets, at cost	597,501	594,569
Less: accumulated depreciation and amortization	(124,634)	(117,652)
Real estate assets, net	$ 472,867	$ 476,917

XML

Accrued Rent and Accounts Receivable, net - Additional Information (Details) - USD ($)	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019	Dec. 31, 2019
Receivables [Abstract]
Allowance for uncollectible accounts	$ 2,641,000		$ 2,597,000
Bad debt expense	44,000	$ 775,000
Write off of debt issuance costs	$ 0	$ 0

XML

Related Party Transactions

3 Months Ended

Mar. 31, 2020

Related Party Transactions [Abstract]

Related Party Transactions

Related Party Transactions

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, Inc. and Subsidiaries of which approximately 20% is owned by Allen R. Hartman who is the Chief Executive Officer and Chairman of the Board of Directors.

The Company pays acquisition fees and asset management fees to the Advisor in connection with the acquisition of properties and management of the Company. The Company pays property management and leasing commissions to the Property Manager in connection with the management and leasing of the Company’s properties. For the three months ended March 31, 2020 and 2019, the Company incurred property management fees and reimbursements of $2,069,000 and $1,953,000, respectively, and $1,013,000 and $950,000, respectively for leasing commissions owed to our Property Manager. We incurred asset management fees of $440,000 and $440,000, respectively, owed to the Advisor. 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 the Company does not own all or a majority of an asset. There were no acquisition fees incurred to the Advisor for the three months ended March 31, 2020 and 2019, respectively. Property management fees and reimbursements are included in property operating expense in the accompanying consolidated statements of operations. Asset management fees are captioned as such in the accompanying consolidated statements of operations.

The Company also pays construction management fees for the Property Manager in connection with the construction management of the Company's properties. For the three months ended March 31, 2020 and 2019, the Company incurred construction management fees of $166,000 and $267,000, respectively. Construction management fees are capitalized and included in real estate assets in the consolidated balance sheets.

The Company had a balance due to the Property Manager of $843,000 and $1,168,000 as of March 31, 2020 and December 31, 2019, respectively. The Company owed the Advisor $1,966,000 and $2,077,000 for asset management fees as of March 31, 2020 and December 31, 2019, respectively. The Company had a net balance due from other related parties of $8,125,000 and $5,375,000 as of March 31, 2020 and December 31, 2019, respectively.

The Company owns 1,561,523 shares of the common stock of HIREIT which it acquired for cash consideration of $8,978,000. The Company’s investment in HIREIT is accounted for under the cost method. The Company’s approximate 11% ownership interest in HIREIT is less than a controlling stake, and is reflected as “Investment in Affiliate” on the accompanying consolidated balance sheets. The Company received dividend distributions from HIREIT of $106,000 and $106,000 for the three months ended March 31, 2020 and 2019, respectively, which is included in interest and dividend income in the accompanying consolidated statements of operations.

During the fourth quarter of 2019, the Company borrowed under an unsecured promissory note payable to Hartman vREIT XXI, Inc., an affiliate of the Advisor and the Property Manager, in the face amount of $4,400,000. This note payable had an outstanding balance of $8,200,000 and $4,400,000 as of March 31, 2020 and December 31, 2019, respectively, which is included in Notes payable, net in the accompanying consolidated balance sheets. Interest has been accrued on the loan amount at an annual rate of 10%. The Company recognized interest expense on the affiliate note in the amount of $110,000 for the three months ended March 31, 2020, which is included in interest expense in the accompanying consolidated statements of operations.

In May 2016, the Company, through its taxable REIT subsidiary, Hartman TRS, Inc. (“TRS”), loaned $7,231,000 pursuant to a promissory note in the face amount of up to $8,820,000 to Hartman Retail II Holdings Company, Inc. (“Retail II Holdings”), an affiliate of the Advisor and the Property Manager, in connection with the acquisition of a retail shopping center

by Hartman Retail II DST, a Delaware statutory trust sponsored by the Property Manager. Pursuant to the terms of the promissory note, TRS received a two percent (2%) origination fee of amounts advanced under the promissory note, and interest at ten percent (10%) per annum on the outstanding principal balance. The outstanding principal balance of the promissory note will be repaid as investor funds are raised by Hartman Retail II DST. The maturity date of the promissory note, as amended is December 31, 2020. This note receivable had an outstanding balance of $1,726,000 and $2,476,000 as of March 31, 2020 and December 31, 2019, respectively, which is included in Notes receivable – related party in the accompanying consolidated balance sheets. For the three months ended March 31, 2020 and 2019, respectively, the Company recognized interest income on this affiliate note in the amount of $43,000 and $61,000, respectively, which is included in interest and dividend income in the accompanying consolidated statements of operations.

The Company had a note receivable due from an affiliate, Hartman Short Term Income Properties XIX, Inc. (“Hartman XIX”), of $4,200,000 as of March 31, 2020 and December 31, 2019, respectively, which is included in Notes receivable - related party in the accompanying consolidated balance sheets. The face amount of the promissory note is $4,500,000. Interest has been accrued on the loan amount at an annual rate of six percent (6%). The Company recognized interest income on the affiliate note in the amount of $63,000 for the three months ended March 31, 2020 and 2019, respectively, which is included in interest and dividend income in the accompanying consolidated statements of operations.

In February 2019, the Company through TRS, loaned $6,782,455 pursuant to a promissory note in the face amount of up to $7,500,000 to Hartman Retail III Holdings Company, Inc. (“Retail III Holdings”), an affiliate of the Advisor and the Property Manager, in connection with the acquisition of a retail shopping center by Hartman Retail III DST, a Delaware statutory trust sponsored by the Advisor. This note receivable had an outstanding balance of $6,782,000 as of March 31, 2020 and December 31, 2019, respectively, which is included in Notes receivable – related party in the accompanying consolidated balance sheets. Pursuant to the terms of the promissory note, TRS receives a two percent (2%) origination fee of amounts advanced under the promissory note, and interest at ten percent (10%) per annum on the outstanding principal balance. The outstanding principal balance of the promissory note will be repaid as investor funds are raised by Hartman Retail III DST. The maturity date of the promissory note is February 29, 2021. The Company recognized interest income on this affiliate note in the amount of $169,000 for the three months ended March 31, 2020, which is included in interest and dividend income in the accompanying consolidated statements of operations.

In March 2019, the Company through TRS, loaned $3,829,711 pursuant to a promissory note in the face amount of up to $3,500,000 to Hartman Ashford Bayou, LLC (“Ashford Bayou”), an affiliate of the Advisor and the Property Manager, in connection with the acquisition of office building by Ashford Bayou, a wholly owned subsidiary of Hartman Total Return, Inc. This note receivable had an outstanding balance of $3,830,000 as of March 31, 2020 and December 31, 2019, respectively, which is included in Notes receivable – related party in the accompanying consolidated balance sheets. Pursuant to the terms of the promissory note, TRS receives a two percent (2%) origination fee of amounts advanced under the promissory note, and interest at ten percent (10%) per annum on the outstanding principal balance. The outstanding principal balance of the promissory note will be repaid as investor funds are raised by Hartman Total Return, Inc. The maturity date of the promissory note is March 31, 2021. The Company recognized interest income on this affiliate note in the amount of 95,000 for the three months ended March 31, 2020, which is included in interest and dividend income in the accompanying consolidated statements of operations.

Variable interest entities (“VIEs”) are defined as entities with a level of invested equity that is not sufficient to fund future operations on a stand-alone basis, or whose equity holders lack certain characteristics of a controlling financial interest. For identified VIEs, an assessment must be made to determine which party to the VIE, if any, has both the power to direct the activities of the VIE that most significantly impacts the performance of the VIE and the obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant to the VIE.

The Company is not deemed to be the primary beneficiary of Retail II Holdings, Retail III Holdings or Ashford Bayou, each of which qualifies as a VIE. Accordingly, the assets and liabilities and revenues and expenses of Retail II Holdings , Retail III Holdings and Ashford Bayou have not been included in the accompanying consolidated financial statements.

The Board of Directors voted to acquire an additional 3.42% ownership interest of Hartman SPE, LLC from Hartman vREIT XXI, Inc. in exchange for 700,302 shares of the Company’s common stock with a total value of $8,858,826 ($12.65 per share). The exchange increased the Company’s ownership interest in Hartman SPE, LLC from 32.74% to 36.16%. The transaction was effective March 1, 2019.

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Future Minimum Rents

3 Months Ended

Mar. 31, 2020

Leases [Abstract]

Future Minimum Rents

Future Minimum Rents

The Company leases the majority of its properties under noncancellable operating leases which provide for minimum base rentals. A summary of minimum future rentals to be received (exclusive of renewals, tenant reimbursements, and contingent rentals) under noncancellable operating leases in existence at March 31, 2020 is as follows, in thousands:

March 31,	Minimum Future Rents
2020	$	70,520
2021	62,071
2022	49,589
2023	38,112
2024	26,036
Thereafter	39,345
Total	$	285,673

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Deferred Leasing Commission Costs, net (Tables)

3 Months Ended

Mar. 31, 2020

Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]

Summary of Deferred Leasing Commission Costs

Costs which have been deferred consist of the following, in thousands:

	March 31, 2020		December 31, 2019
Deferred leasing commissions costs	$	18,633	$	17,620
Less: accumulated amortization	(7,185)		(6,830)
Deferred leasing commission costs, net	$	11,448	$	10,790

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Subsequent Events	3 Months Ended
	Mar. 31, 2020
Subsequent Events [Abstract]
Subsequent Events	Subsequent EventsOn May 14, 2020, the shareholders of the Company, Hartman XIX and HIREIT approved the previously proposed Merger Agreements.

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Stockholders' Equity (Tables)

3 Months Ended

Mar. 31, 2020

Equity [Abstract]

Summary of Distributions

The following table reflects the total distributions the Company has paid, including the total amount paid, thousands, and amount paid per common share, in each indicated quarter:

Quarter Paid	Distributions per Common Share		Total Distributions
2020
1st Quarter	0.175		3,223
Total 2020 year to date	$	0.175	$	3,223
2019
4th Quarter	$	0.175	$	3,223
3rd Quarter	0.175		3,224
2nd Quarter	0.175		3,223
1st Quarter	0.171		3,141
Total 2019	$	0.696	$	12,811

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Summary of Significant Accounting Policies

3 Months Ended

Mar. 31, 2020

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

Basis of Presentation

The accompanying consolidated financial statements included in this report are unaudited; however, amounts presented in the consolidated balance sheet as of December 31, 2019 are derived from our audited consolidated financial statements as of that date. The unaudited consolidated financial statements as of March 31, 2020 have been prepared by the Company in accordance with accounting principles generally accepted in the United States (“GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission, including Form 10-Q and Regulation S-X, on a basis consistent with the annual audited consolidated financial statements. The consolidated financial statements presented herein reflect all adjustments (consisting of normal recurring accruals and adjustments), which are, in the opinion of management, necessary to fairly present the financial position of the Company as of March 31, 2020, and the results of consolidated operations for the three months ended March 31, 2020 and 2019, the consolidated statements of stockholders’ equity for the three months ended March 31, 2020 and 2019 and the consolidated statements of cash flows for the three months ended March 31, 2020 and 2019. The results of the three months ended March 31, 2020 are not necessarily indicative of the results to be expected for the year ending December 31, 2020.

The consolidated financial statements herein are condensed and should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.

These unaudited consolidated financial statements include the accounts of the Company, the Operating Partnership and its subsidiaries, and Hartman SPE, LLC.  All significant intercompany balances and transactions have been eliminated.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.

Cash and Cash Equivalents

Cash and cash equivalents on the accompanying consolidated balance sheets include all cash and liquid investments with maturities of three months or less. Cash and cash equivalents as of March 31, 2020 and December 31, 2019 consisted of demand deposits at commercial banks. We maintain accounts which may from time to time exceed federally insured limits. We have not experienced any losses in these accounts and believe that the Company is not exposed to any significant credit risk and regularly monitors the financial stability of these financial institutions.

Restricted Cash

Restricted cash on the accompanying consolidated balance sheets consists of amounts escrowed for future real estate taxes, insurance, capital expenditures and debt service, as required by certain of our mortgage debt agreements.

Financial Instruments

The accompanying consolidated balance sheets include the following financial instruments: cash and cash equivalents, accrued rent and accounts receivable, accounts payable and accrued expenses and balances due to/due from related parties, as well as related party notes receivable. The Company considers the carrying value of these financial instruments to approximate their respective fair values due to their short-term nature. Disclosure about the fair value of financial instruments is based on relevant information available as of March 31, 2020 and December 31, 2019.

Revenue Recognition

The Company’s leases are accounted for as operating leases. Certain leases provide for tenant occupancy during periods for which no rent is due and/or for increases or decreases in the minimum lease payments over the terms of the leases.  Revenue is recognized on a straight-line basis over the terms of the individual leases. Revenue recognition under a lease begins when the tenant takes possession of or controls the physical use of the leased space. When the Company acquires a property, the term of existing leases is considered to commence as of the acquisition date for purposes of this calculation. The Company’s accrued rents are included in accrued rent and accounts receivable, net. The Company will defer the recognition of contingent rental income, such as percentage rents, until the specific target that triggers the contingent rental income is achieved. Additionally, cost recoveries from tenants are included in the tenant reimbursements and other revenues line item in the consolidated statements of operations in the period the related costs are incurred.

Allocation of Purchase Price of Acquired Assets

Upon the acquisition of real properties, it is the Company’s policy to allocate the purchase price of properties to acquired tangible assets, consisting of land and buildings, and identified intangible assets and liabilities, consisting of the value of above-market and below-market leases, other value of in-place leases and leasehold improvements and value of tenant relationships, based in each case on their fair values. The Company utilizes internal valuation methods to determine the fair values of the tangible assets of an acquired property (which includes land and buildings).

The fair values of above-market and below-market in-place lease values, including below-market renewal options for which renewal has been determined to be reasonably assured, are recorded based on the present value (using an interest rate which reflects the risks associated with the leases acquired) of the difference between (a) the contractual amounts to be paid pursuant to the in-place leases and (b) an estimate of fair market lease rates for the corresponding in-place leases and below-market renewal options, which is generally obtained from independent appraisals, measured over a period equal to the remaining non-cancelable term of the lease. The above-market and below-market lease and renewal option values are capitalized as intangible lease assets or liabilities and amortized as an adjustment to rental revenues over the remaining expected terms of the respective leases.

The fair values of in-place leases include direct costs associated with obtaining a new tenant, opportunity costs associated with lost rentals which are avoided by acquiring an in-place lease, and tenant relationships. Direct costs associated with obtaining a new tenant include commissions, tenant improvements, and other direct costs and are estimated based on independent appraisals and management’s consideration of current market costs to execute a similar lease. These direct costs are included in intangible lease assets and are amortized to expense over the remaining terms of the respective leases. The value of opportunity costs is calculated using the contractual amounts to be paid pursuant to the in-place leases over a market absorption period for a similar lease. Customer relationships are valued based on expected renewal of a lease or the likelihood of obtaining a particular tenant for other locations. These intangibles are included in real estate assets in the consolidated balance sheets and are being amortized to expense over the remaining term of the respective leases.

The determination of the fair values of the assets and liabilities acquired requires the use of significant assumptions with regard to the current market rental rates, rental growth rates, discount rates and other variables. The use of inappropriate estimates would result in an incorrect assessment of the purchase price allocations, which could impact the amount of the Company’s reported net loss.

Real Estate Joint Ventures and Partnerships

To determine the method of accounting for partially owned real estate joint ventures and partnerships, management determines whether an entity is a VIE and, if so, determines which party is the primary beneficiary by analyzing whether we have both the power to direct the entity’s significant economic activities and the obligation to absorb potentially significant losses or receive potentially significant benefits. Significant judgments and assumptions inherent in this analysis include the design of the entity structure, the nature of the entity’s operations, future cash flow projections, the entity’s financing and capital structure, and contractual relationships and terms. We consolidate a VIE when we have determined that we are the primary beneficiary.

Primary risks associated with our involvement with our VIEs include the potential funding of the entities’ debt obligations or making additional contributions to fund the entities’ operations or capital activities.

Partially owned, non-variable interest real estate joint ventures and partnerships over which we have a controlling financial interest are consolidated in our consolidated financial statements. In determining if we have a controlling financial interest, we consider factors such as ownership interest, authority to make decisions, kick-out rights and substantive participating rights. Partially owned real estate joint ventures and partnerships where we do not have a controlling financial interest, but have the ability to exercise significant influence, are accounted for using the equity method.

Management continually analyzes and assesses reconsideration events, including changes in the factors mentioned above, to determine if the consolidation or equity method treatment remains appropriate.

Depreciation and amortization

Depreciation is computed using the straight-line method over the estimated useful lives of 5 to 39 years for buildings and improvements. Tenant improvements are depreciated using the straight-line method over the lesser of the life of the improvement or the remaining term of the lease. In-place leases are amortized using the straight-line method over the weighted average years’ remaining calculated on terms of all of the leases in-place when acquired.

Impairment

The Company reviews its real estate assets for impairment at least annually or whenever events or changes in circumstances indicate that the carrying amount of the assets, including accrued rental income, may not be recoverable through operations.  The Company determines whether an impairment in value has occurred by comparing the estimated future cash flows (undiscounted and without interest charges), including the estimated residual value of the property, with the carrying cost of the property.  If impairment is indicated, a loss will be recorded for the amount by which the carrying value of the property exceeds its fair value.  Management has determined that there is no impairment indicated in the carrying value of our real estate assets as of March 31, 2020 and December 31, 2019.

Accrued Rent and Accounts Receivable

Accrued rent and accounts receivable include base rents, tenant reimbursements and receivables attributable to recording rents on a straight-line basis. An allowance for the uncollectible portion of accrued rent and accounts receivable is determined based upon customer credit-worthiness (including expected recovery of our claim with respect to any tenants in bankruptcy), historical bad debt levels, and current economic trends.

Deferred Leasing Commission Costs

Leasing commissions are amortized using the straight-line method over the term of the related lease agreements.

Goodwill

GAAP requires the Company to test goodwill for impairment at least annually or more frequently whenever events or circumstances occur indicating goodwill might be impaired.  The Company applies a one-step quantitative test to determine if the estimated fair value is less than the carrying amount.  If the carrying amount exceeds the estimated fair value, the Company will record a goodwill impairment equal to such excess, not to exceed the total amount of goodwill. No goodwill impairment has been recognized in the accompanying consolidated financial statements.

Noncontrolling Interests

Noncontrolling interests is the portion of equity in a subsidiary not attributable to a parent.  The ownership interests not held by the parent are considered noncontrolling interests.  Accordingly, the Company has reported noncontrolling interests in equity on the consolidated balance sheets but separate from the Company's equity.  On the consolidated statements of operations, subsidiaries are reported at the consolidated amount, including both the amount attributable to the Company and noncontrolling interests. 

Stock-Based Compensation

The Company follows Accounting Standards Codification ("ASC") 718 - Compensation - Stock Compensation, with regard to issuance of stock in payment of services. ASC 718 requires that compensation cost relating to share-based payment transactions be recognized in the consolidated financial statements. The compensation cost is measured based on the estimated grant date fair value, as of the grant date of the Company’s common stock, of the equity or liability instruments issued. Stock-based compensation expense are recorded over the vesting period and is included in general and administrative expense in the accompanying consolidated statements of operations.

Income Taxes

The Company has elected to be treated as a REIT under the Internal Revenue Code of 1986, as amended, beginning with its taxable year ended December 31, 2011. To qualify as a REIT, the Company must meet certain organizational and operational requirements, including a requirement to distribute at least 90% of the Company’s annual REIT taxable income to stockholders (which is computed without regard to the dividends-paid deduction or net capital gain and which does not necessarily equal net income as calculated in accordance with GAAP).  As a REIT, the Company generally will not be subject to federal income tax on income that it distributes as dividends to its stockholders. If the Company fails to qualify as a REIT in any taxable year, it will be subject to federal income tax on its taxable income at regular corporate income tax rates and generally will not be permitted to qualify for treatment as a REIT for federal income tax purposes for the four taxable years following the year during which qualification is lost, unless the Internal Revenue Service grants the Company relief under certain statutory provisions. Such an event could materially and adversely affect the Company’s net income and net cash available for distribution to stockholders.  However, the Company believes that it is organized and will continue to operate in such a manner as to qualify for treatment as a REIT. 

For the three months ended March 31, 2020 and 2019, the Company incurred net income of $1,884,000 and $360,000. The Company formed a taxable REIT subsidiary which may generate future taxable income which may be offset by the net loss carry forward. The Company considers that any deferred tax benefit and corresponding deferred tax asset which may be recorded in light of the net loss carry forward would be properly offset by an equal valuation allowance. Accordingly, no deferred tax benefit or deferred tax asset has been recorded in the consolidated financial statements.

The Company is required to recognize in its consolidated financial statements the financial effects of a tax position only if it is determined that it is more likely than not that the tax position will not be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. Management has reviewed the Company’s tax positions and is of the opinion that material positions taken by the Company would more likely than not be sustained upon examination. Accordingly, the Company has not recognized a liability related to uncertain tax positions.

Income Per Share

The computations of basic and diluted income per common share are based upon the weighted average number of common shares outstanding and potentially dilutive securities. The Company’s potentially dilutive securities include preferred shares that are convertible into the Company’s common stock. As of March 31, 2020 and 2019, there were no shares issuable in connection with these potentially dilutive securities. These potentially dilutive securities were excluded from the computations of diluted net income per share for the three months ended March 31, 2020 and 2019 because no shares are issuable.

Concentration of Risk

The geographic concentration of the Company’s real estate assets makes it susceptible to adverse economic developments in the State of Texas. Any adverse economic or real estate developments in these markets, such as business layoffs or downsizing, relocation of businesses, increased competition or any other changes, could adversely affect the Company’s operating results and its ability to make distributions to stockholders.

Going Concern Evaluation

Pursuant to ASU 2014-15, “Presentation of Financial Statements – Going Concern,” management is required to evaluate the Company’s ability to continue as a going concern within one year after the date that these consolidated financial statements are issued. The Hartman SPE, LLC loan agreement (the “SASB Loan”) has an initial maturity date of October 9, 2020. The SASB Loan provides for three successive one-year maturity date extensions. In order to exercise each successive one-year

extension options, the Hartman SPE, LLC must meet five conditions in order to extend the maturity date without any further qualification. One of the five conditions is that Hartman SPE must have a debt yield, as defined, of 12.5% or greater as of June 30, 2020.

As of December 31, 2019 and March 31, 2020, Hartman SPE has a debt yield of 13.29% and 12.95%, respectively. Management has concluded that there is substantial doubt about the Company's ability to continue as a going concern within one year of the issuance date of these consolidated financial statements due to the fact of the uncertainty regarding the loan maturity of the SPE Loan. Management believes that Hartman SPE will be able to extend the maturity date for one year which will mitigate the maturity date issue within one year of the issuance date of these consolidated financial statements.

Reclassification

Certain items in the comparative consolidated financial statements have been reclassified to conform to the presentation adopted in the current period. The Consolidated Statement of Cash Flows presented for the three months ended March 31, 2019 was adjusted to present cash and cash equivalents and restricted cash, as restricted cash was previously reported as part of prepaid expenses and other assets.

Recent Accounting Pronouncements Not Yet Adopted

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The updated guidance requires measurement and recognition of expected credit losses for financial assets, including trade and other receivables, held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. This is different from the current guidance as this will require immediate recognition of estimated credit losses expected to occur over the remaining life of many financial assets. Generally, the pronouncement requires a modified retrospective method of adoption. This guidance is effective for fiscal years and interim periods within those years beginning after January 2023, with early adoption permitted. The Company is currently evaluating the impact this guidance will have on the consolidated financial statements when adopted.

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CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Revenues
Rental revenues	$ 18,720	$ 18,229
Tenant reimbursements and other revenues	4,419	5,080
Total revenues	23,139	23,309
Expenses (income)
Property operating expenses	6,945	7,751
Asset management fees	440	440
Real estate taxes and insurance	3,170	3,157
Depreciation and amortization	6,982	7,030
General and administrative	1,177	1,177
Interest expense	3,018	3,669
Interest and dividend income	(477)	(275)
Total expenses, net	21,255	22,949
Net Income	1,884	360
Net Income attributable to noncontrolling interests	716	25
Net Income attributable to common stockholders	$ 1,168	$ 335
Net income attributable to common stockholders per share (in dollars per share)	$ 0.06	$ 0.02
Weighted average number of common shares outstanding, basic and diluted (in shares)	18,418	17,837

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Income Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Numerator:
Net income attributable to common stockholders	$ 1,168	$ 335
Denominator:
Weighted average number of common shares outstanding, basic and diluted (in shares)	18,418	17,837
Earnings Per Share, Basic and Diluted [Abstract]
Net income attributable to common stockholders per share (in dollars per share)	$ 0.06	$ 0.02

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Stockholders' Equity - Distributions (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended					12 Months Ended
	Mar. 31, 2020	Dec. 31, 2019	Sep. 30, 2019	Mar. 31, 2019	Jun. 30, 2018	Dec. 31, 2019
Equity [Abstract]
Distributions per Common Share (in dollars per share)	$ 0.175	$ 0.175	$ 0.175	$ 0.171	$ 0.175	$ 0.696
Total Distributions	$ 3,223	$ 3,223	$ 3,224	$ 3,141	$ 3,223	$ 12,811

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Organization and Business (Details) ft² in Millions	Mar. 31, 2020 ft² property	Dec. 31, 2019 ft²	Mar. 31, 2019 ft² property	Oct. 01, 2018 USD ($) property
Texas
Schedule of Equity Method Investments [Line Items]
Number of commercial properties	43		43
Number of real estate properties	3		3
Area of real estate property (in sq ft) | ft²	6.7	6.7	6.7
Richardson, Arlington And Dallas, Texas
Schedule of Equity Method Investments [Line Items]
Number of real estate properties	15		15
Houston, Texas
Schedule of Equity Method Investments [Line Items]
Number of real estate properties	25		25
San Antonio, Texas
Schedule of Equity Method Investments [Line Items]
Number of real estate properties	3		3
Hartman SPE, LLC
Schedule of Equity Method Investments [Line Items]
Number of real estate properties				39
Hartman SPE, LLC | Notes Payable to Banks
Schedule of Equity Method Investments [Line Items]
Debt instrument, face amount | $				$ 259,000,000

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Future Minimum Rents (Tables)

3 Months Ended

Mar. 31, 2020

Leases [Abstract]

Lessor, Operating Lease, Payments to be Received, Maturity

A summary of minimum future rentals to be received (exclusive of renewals, tenant reimbursements, and contingent rentals) under noncancellable operating leases in existence at March 31, 2020 is as follows, in thousands:

March 31,	Minimum Future Rents
2020	$	70,520
2021	62,071
2022	49,589
2023	38,112
2024	26,036
Thereafter	39,345
Total	$	285,673

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Summary of Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2020

Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation

The accompanying consolidated financial statements included in this report are unaudited; however, amounts presented in the consolidated balance sheet as of December 31, 2019 are derived from our audited consolidated financial statements as of that date. The unaudited consolidated financial statements as of March 31, 2020 have been prepared by the Company in accordance with accounting principles generally accepted in the United States (“GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission, including Form 10-Q and Regulation S-X, on a basis consistent with the annual audited consolidated financial statements. The consolidated financial statements presented herein reflect all adjustments (consisting of normal recurring accruals and adjustments), which are, in the opinion of management, necessary to fairly present the financial position of the Company as of March 31, 2020, and the results of consolidated operations for the three months ended March 31, 2020 and 2019, the consolidated statements of stockholders’ equity for the three months ended March 31, 2020 and 2019 and the consolidated statements of cash flows for the three months ended March 31, 2020 and 2019. The results of the three months ended March 31, 2020 are not necessarily indicative of the results to be expected for the year ending December 31, 2020.

The consolidated financial statements herein are condensed and should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.

These unaudited consolidated financial statements include the accounts of the Company, the Operating Partnership and its subsidiaries, and Hartman SPE, LLC.  All significant intercompany balances and transactions have been eliminated.

Use of Estimates

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.

Cash and Cash Equivalents

Cash and Cash Equivalents

Cash and cash equivalents on the accompanying consolidated balance sheets include all cash and liquid investments with maturities of three months or less. Cash and cash equivalents as of March 31, 2020 and December 31, 2019 consisted of demand deposits at commercial banks. We maintain accounts which may from time to time exceed federally insured limits. We have not experienced any losses in these accounts and believe that the Company is not exposed to any significant credit risk and regularly monitors the financial stability of these financial institutions.

Restricted Cash

Restricted CashRestricted cash on the accompanying consolidated balance sheets consists of amounts escrowed for future real estate taxes, insurance, capital expenditures and debt service, as required by certain of our mortgage debt agreements.

Financial Instruments

Financial Instruments

The accompanying consolidated balance sheets include the following financial instruments: cash and cash equivalents, accrued rent and accounts receivable, accounts payable and accrued expenses and balances due to/due from related parties, as well as related party notes receivable. The Company considers the carrying value of these financial instruments to approximate their respective fair values due to their short-term nature. Disclosure about the fair value of financial instruments is based on relevant information available as of March 31, 2020 and December 31, 2019.

Revenue Recognition

Revenue Recognition

The Company’s leases are accounted for as operating leases. Certain leases provide for tenant occupancy during periods for which no rent is due and/or for increases or decreases in the minimum lease payments over the terms of the leases.  Revenue is recognized on a straight-line basis over the terms of the individual leases. Revenue recognition under a lease begins when the tenant takes possession of or controls the physical use of the leased space. When the Company acquires a property, the term of existing leases is considered to commence as of the acquisition date for purposes of this calculation. The Company’s accrued rents are included in accrued rent and accounts receivable, net. The Company will defer the recognition of contingent rental income, such as percentage rents, until the specific target that triggers the contingent rental income is achieved. Additionally, cost recoveries from tenants are included in the tenant reimbursements and other revenues line item in the consolidated statements of operations in the period the related costs are incurred.

Real Estate

Allocation of Purchase Price of Acquired Assets

Upon the acquisition of real properties, it is the Company’s policy to allocate the purchase price of properties to acquired tangible assets, consisting of land and buildings, and identified intangible assets and liabilities, consisting of the value of above-market and below-market leases, other value of in-place leases and leasehold improvements and value of tenant relationships, based in each case on their fair values. The Company utilizes internal valuation methods to determine the fair values of the tangible assets of an acquired property (which includes land and buildings).

The fair values of above-market and below-market in-place lease values, including below-market renewal options for which renewal has been determined to be reasonably assured, are recorded based on the present value (using an interest rate which reflects the risks associated with the leases acquired) of the difference between (a) the contractual amounts to be paid pursuant to the in-place leases and (b) an estimate of fair market lease rates for the corresponding in-place leases and below-market renewal options, which is generally obtained from independent appraisals, measured over a period equal to the remaining non-cancelable term of the lease. The above-market and below-market lease and renewal option values are capitalized as intangible lease assets or liabilities and amortized as an adjustment to rental revenues over the remaining expected terms of the respective leases.

The fair values of in-place leases include direct costs associated with obtaining a new tenant, opportunity costs associated with lost rentals which are avoided by acquiring an in-place lease, and tenant relationships. Direct costs associated with obtaining a new tenant include commissions, tenant improvements, and other direct costs and are estimated based on independent appraisals and management’s consideration of current market costs to execute a similar lease. These direct costs are included in intangible lease assets and are amortized to expense over the remaining terms of the respective leases. The value of opportunity costs is calculated using the contractual amounts to be paid pursuant to the in-place leases over a market absorption period for a similar lease. Customer relationships are valued based on expected renewal of a lease or the likelihood of obtaining a particular tenant for other locations. These intangibles are included in real estate assets in the consolidated balance sheets and are being amortized to expense over the remaining term of the respective leases.

The determination of the fair values of the assets and liabilities acquired requires the use of significant assumptions with regard to the current market rental rates, rental growth rates, discount rates and other variables. The use of inappropriate estimates would result in an incorrect assessment of the purchase price allocations, which could impact the amount of the Company’s reported net loss.

Real Estate Joint Ventures and Partnerships

To determine the method of accounting for partially owned real estate joint ventures and partnerships, management determines whether an entity is a VIE and, if so, determines which party is the primary beneficiary by analyzing whether we have both the power to direct the entity’s significant economic activities and the obligation to absorb potentially significant losses or receive potentially significant benefits. Significant judgments and assumptions inherent in this analysis include the design of the entity structure, the nature of the entity’s operations, future cash flow projections, the entity’s financing and capital structure, and contractual relationships and terms. We consolidate a VIE when we have determined that we are the primary beneficiary.

Primary risks associated with our involvement with our VIEs include the potential funding of the entities’ debt obligations or making additional contributions to fund the entities’ operations or capital activities.

Partially owned, non-variable interest real estate joint ventures and partnerships over which we have a controlling financial interest are consolidated in our consolidated financial statements. In determining if we have a controlling financial interest, we consider factors such as ownership interest, authority to make decisions, kick-out rights and substantive participating rights. Partially owned real estate joint ventures and partnerships where we do not have a controlling financial interest, but have the ability to exercise significant influence, are accounted for using the equity method.

Management continually analyzes and assesses reconsideration events, including changes in the factors mentioned above, to determine if the consolidation or equity method treatment remains appropriate.

Depreciation and amortization

Depreciation is computed using the straight-line method over the estimated useful lives of 5 to 39 years for buildings and improvements. Tenant improvements are depreciated using the straight-line method over the lesser of the life of the improvement or the remaining term of the lease. In-place leases are amortized using the straight-line method over the weighted average years’ remaining calculated on terms of all of the leases in-place when acquired.

Impairment

The Company reviews its real estate assets for impairment at least annually or whenever events or changes in circumstances indicate that the carrying amount of the assets, including accrued rental income, may not be recoverable through operations.  The Company determines whether an impairment in value has occurred by comparing the estimated future cash flows (undiscounted and without interest charges), including the estimated residual value of the property, with the carrying cost of the property.  If impairment is indicated, a loss will be recorded for the amount by which the carrying value of the property exceeds its fair value.  Management has determined that there is no impairment indicated in the carrying value of our real estate assets as of March 31, 2020 and December 31, 2019.

Accrued Rent and Accounts Receivable

Accrued Rent and Accounts Receivable

Accrued rent and accounts receivable include base rents, tenant reimbursements and receivables attributable to recording rents on a straight-line basis. An allowance for the uncollectible portion of accrued rent and accounts receivable is determined based upon customer credit-worthiness (including expected recovery of our claim with respect to any tenants in bankruptcy), historical bad debt levels, and current economic trends.

Deferred Leasing Commission Costs

Deferred Leasing Commission CostsLeasing commissions are amortized using the straight-line method over the term of the related lease agreements.

Goodwill

GoodwillGAAP requires the Company to test goodwill for impairment at least annually or more frequently whenever events or circumstances occur indicating goodwill might be impaired.  The Company applies a one-step quantitative test to determine if the estimated fair value is less than the carrying amount.  If the carrying amount exceeds the estimated fair value, the Company will record a goodwill impairment equal to such excess, not to exceed the total amount of goodwill. No goodwill impairment has been recognized in the accompanying consolidated financial statements.

Noncontrolling Interests

Noncontrolling InterestsNoncontrolling interests is the portion of equity in a subsidiary not attributable to a parent.  The ownership interests not held by the parent are considered noncontrolling interests.  Accordingly, the Company has reported noncontrolling interests in equity on the consolidated balance sheets but separate from the Company's equity.  On the consolidated statements of operations, subsidiaries are reported at the consolidated amount, including both the amount attributable to the Company and noncontrolling interests.

Stock-Based Compensation

Stock-Based Compensation

The Company follows Accounting Standards Codification ("ASC") 718 - Compensation - Stock Compensation, with regard to issuance of stock in payment of services. ASC 718 requires that compensation cost relating to share-based payment transactions be recognized in the consolidated financial statements. The compensation cost is measured based on the estimated grant date fair value, as of the grant date of the Company’s common stock, of the equity or liability instruments issued. Stock-based compensation expense are recorded over the vesting period and is included in general and administrative expense in the accompanying consolidated statements of operations.

Income Taxes

Income Taxes

The Company has elected to be treated as a REIT under the Internal Revenue Code of 1986, as amended, beginning with its taxable year ended December 31, 2011. To qualify as a REIT, the Company must meet certain organizational and operational requirements, including a requirement to distribute at least 90% of the Company’s annual REIT taxable income to stockholders (which is computed without regard to the dividends-paid deduction or net capital gain and which does not necessarily equal net income as calculated in accordance with GAAP).  As a REIT, the Company generally will not be subject to federal income tax on income that it distributes as dividends to its stockholders. If the Company fails to qualify as a REIT in any taxable year, it will be subject to federal income tax on its taxable income at regular corporate income tax rates and generally will not be permitted to qualify for treatment as a REIT for federal income tax purposes for the four taxable years following the year during which qualification is lost, unless the Internal Revenue Service grants the Company relief under certain statutory provisions. Such an event could materially and adversely affect the Company’s net income and net cash available for distribution to stockholders.  However, the Company believes that it is organized and will continue to operate in such a manner as to qualify for treatment as a REIT. 

For the three months ended March 31, 2020 and 2019, the Company incurred net income of $1,884,000 and $360,000. The Company formed a taxable REIT subsidiary which may generate future taxable income which may be offset by the net loss carry forward. The Company considers that any deferred tax benefit and corresponding deferred tax asset which may be recorded in light of the net loss carry forward would be properly offset by an equal valuation allowance. Accordingly, no deferred tax benefit or deferred tax asset has been recorded in the consolidated financial statements.

The Company is required to recognize in its consolidated financial statements the financial effects of a tax position only if it is determined that it is more likely than not that the tax position will not be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. Management has reviewed the Company’s tax positions and is of the opinion that material positions taken by the Company would more likely than not be sustained upon examination. Accordingly, the Company has not recognized a liability related to uncertain tax positions.

Income Per Share

Income Per Share

The computations of basic and diluted income per common share are based upon the weighted average number of common shares outstanding and potentially dilutive securities. The Company’s potentially dilutive securities include preferred shares that are convertible into the Company’s common stock. As of March 31, 2020 and 2019, there were no shares issuable in connection with these potentially dilutive securities. These potentially dilutive securities were excluded from the computations of diluted net income per share for the three months ended March 31, 2020 and 2019 because no shares are issuable.

Concentration of Risk

Concentration of Risk

The geographic concentration of the Company’s real estate assets makes it susceptible to adverse economic developments in the State of Texas. Any adverse economic or real estate developments in these markets, such as business layoffs or downsizing, relocation of businesses, increased competition or any other changes, could adversely affect the Company’s operating results and its ability to make distributions to stockholders.

Going Concern Evaluation

Going Concern Evaluation

Pursuant to ASU 2014-15, “Presentation of Financial Statements – Going Concern,” management is required to evaluate the Company’s ability to continue as a going concern within one year after the date that these consolidated financial statements are issued. The Hartman SPE, LLC loan agreement (the “SASB Loan”) has an initial maturity date of October 9, 2020. The SASB Loan provides for three successive one-year maturity date extensions. In order to exercise each successive one-year

extension options, the Hartman SPE, LLC must meet five conditions in order to extend the maturity date without any further qualification. One of the five conditions is that Hartman SPE must have a debt yield, as defined, of 12.5% or greater as of June 30, 2020.

As of December 31, 2019 and March 31, 2020, Hartman SPE has a debt yield of 13.29% and 12.95%, respectively. Management has concluded that there is substantial doubt about the Company's ability to continue as a going concern within one year of the issuance date of these consolidated financial statements due to the fact of the uncertainty regarding the loan maturity of the SPE Loan. Management believes that Hartman SPE will be able to extend the maturity date for one year which will mitigate the maturity date issue within one year of the issuance date of these consolidated financial statements.

Reclassification

Reclassification

Certain items in the comparative consolidated financial statements have been reclassified to conform to the presentation adopted in the current period. The Consolidated Statement of Cash Flows presented for the three months ended March 31, 2019 was adjusted to present cash and cash equivalents and restricted cash, as restricted cash was previously reported as part of prepaid expenses and other assets.

Recent Accounting Pronouncements Not Yet Adopted

Recent Accounting Pronouncements Not Yet Adopted

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The updated guidance requires measurement and recognition of expected credit losses for financial assets, including trade and other receivables, held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. This is different from the current guidance as this will require immediate recognition of estimated credit losses expected to occur over the remaining life of many financial assets. Generally, the pronouncement requires a modified retrospective method of adoption. This guidance is effective for fiscal years and interim periods within those years beginning after January 2023, with early adoption permitted. The Company is currently evaluating the impact this guidance will have on the consolidated financial statements when adopted.

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Cover Page - shares	3 Months Ended
	Mar. 31, 2020	Jun. 01, 2020
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Mar. 31, 2020
Document Transition Report	false
Entity File Number	000-53912
Entity Registrant Name	HARTMAN SHORT TERM INCOME PROPERTIES XX, INC.
Entity Incorporation, State or Country Code	MD
Entity Tax Identification Number	26-3455189
Entity Address, Address Line One	2909 Hillcroft
Entity Address, Address Line Two	Suite 420
Entity Address, City or Town	Houston
Entity Address, State or Province	TX
Entity Address, Postal Zip Code	77057
City Area Code	713
Local Phone Number	467-2222
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Smaller Reporting Company	true
Emerging Growth Company	true
Entity Shell Company	false
Extended Transition Period	true
Entity Common Stock, Shares Outstanding		18,417,687
Amendment Flag	false
Entity Central Index Key	0001446687
Current Fiscal Year End Date	--12-31
Entity Filer Category	Non-accelerated Filer
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	Q1

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CONSOLIDATED STATEMENTS OF EQUITY - USD ($) shares in Thousands, $ in Thousands	Total	Preferred Stock	Common Stock	Additional Paid-in Capital	Accumulated Distributions and Net Loss	Parent	Noncontrolling Interest
Beginning balance (in shares) at Dec. 31, 2018		1	17,712
Beginning balance at Dec. 31, 2018	$ 248,481	$ 0	$ 18	$ 165,084	$ (95,162)	$ 69,940	$ 178,541
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common shares (in shares)			6
Issuance of common shares	76			76		76
Purchase of noncontrolling interest (in shares)			700
Purchase of non-controlling interest	38			8,896		8,896	(8,858)
Dividends and distributions (cash)	(5,288)				(3,141)	(3,141)	(2,147)
Net income (Loss)	360				335	335	25
Ending balance (in shares) at Mar. 31, 2019		1	18,418
Ending balance at Mar. 31, 2019	243,667	$ 0	$ 18	174,056	(97,968)	76,106	167,561
Beginning balance (in shares) at Dec. 31, 2019		1	18,418
Beginning balance at Dec. 31, 2019	225,006	$ 0	$ 18	174,019	(109,406)	64,631	160,375
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Dividends and distributions (cash)	(5,361)				(3,223)	(3,223)	(2,138)
Net income (Loss)	1,884				1,168	1,168	716
Ending balance (in shares) at Mar. 31, 2020		1	18,418
Ending balance at Mar. 31, 2020	$ 221,529	$ 0	$ 18	$ 174,019	$ (111,461)	$ 62,576	$ 158,953

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Real Estate

3 Months Ended

Mar. 31, 2020

Real Estate [Abstract]

Real Estate

Real Estate

The Company’s real estate assets consisted of the following, in thousands:

	March 31, 2020		December 31, 2019
Land	$	145,050	$	145,050
Buildings and improvements	351,661		348,729
In-place lease value intangible	100,790		100,790
	597,501		594,569
Less: accumulated depreciation and amortization	(124,634)		(117,652)
Total real estate assets	$	472,867	$	476,917

       Depreciation expense for the three months ended March 31, 2020 and 2019 was $4,317,000 and $4,313,000, respectively. Amortization expense of in-place lease value intangible was $2,665,000 and $2,717,000 for the three months ended March 31, 2020 and 2019, respectively.

The Company identifies and records the value of acquired lease intangibles at the property acquisition date. Such intangibles include the value of acquired in-place leases and above and below-market leases. Acquired lease intangibles are amortized over the leases' remaining terms.  With respect to all properties owned by the Company, we consider all of the in-place leases to be market rate leases.

The amount of total in-place lease intangible asset and the respective accumulated amortization are as follows, in thousands:

	March 31, 2020		December 31, 2019
In-place lease value intangible	$	100,790	$	100,790
In-place leases – accumulated amortization	(71,549)		(68,884)
Acquired lease intangible assets, net	$	29,241	$	31,906

As of March 31, 2020 and December 31, 2019, the Company owned 43 commercial properties comprising approximately 6.7 million square feet plus three pad sites, all located in Texas. As of March 31, 2020, the Company owned 15 properties located in Richardson, Arlington and Dallas, Texas, 25 properties located in Houston, Texas and three properties located in San Antonio, Texas.

Asset management fees incurred and paid to Advisor were $440,000 for the three months ended March 31, 2020 and 2019, respectively. Asset management and acquisition fees are captioned as such in the accompanying consolidated statements of operations.

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Notes Payable - Deferred Loan Costs (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Debt Disclosure [Abstract]
Deferred loan costs	$ 7,155	$ 7,155
Less:  deferred loan cost accumulated amortization	(3,655)	(3,401)
Total cost, net of accumulated amortization	$ 3,500	$ 3,754

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Stockholders' Equity - Narrative (Details) $ / shares in Units, $ in Thousands		3 Months Ended
	Jul. 21, 2017 $ / shares	Mar. 31, 2020 USD ($) vote $ / shares shares	Mar. 31, 2019 USD ($) shares	Dec. 31, 2019 $ / shares shares
Equity [Abstract]
Common stock, shares authorized (in shares) | shares		750,000,000		750,000,000
Common stock, par value (in dollars per share) | $ / shares		$ 0.001		$ 0.001
Preferred stock, shares authorized (in shares) | shares		200,000,000		200,000,000
Preferred stock, par value (in dollars per share) | $ / shares		$ 0.001		$ 0.001
Number or votes per share | vote		1
Class of Stock [Line Items]
Preferred stock, shares issued (in shares) | shares		1,000		1,000
Grants in period (shares) | shares		1,500	1,500
Stock-based compensation expense | $		$ 19	$ 19
Common stock, par value (in dollars per share) | $ / shares		$ 0.001		$ 0.001
XIX Merger Agreement
Equity [Abstract]
Common stock, par value (in dollars per share) | $ / shares	$ 0.01
Class of Stock [Line Items]
Conversion of stock, conversion ratio	9,171.98
Common stock, par value (in dollars per share) | $ / shares	$ 0.01
HIREIT Merger
Class of Stock [Line Items]
Conversion of stock, conversion ratio	0.752222
HIREIT Merger | Subordinated Common Stock
Class of Stock [Line Items]
Conversion of stock, conversion ratio	0.752222
HIREIT Merger | Common Stock
Class of Stock [Line Items]
Conversion of stock, conversion ratio	0.863235
Convertible Preferred Stock
Class of Stock [Line Items]
Preferred stock, shares issued (in shares) | shares		1,000		1,000
Share price (in dollars per share) | $ / shares		$ 10.00		$ 10.00
Conversion terms, cumulative annual return on issue price, percentage		6.00%
Conversion terms, performance threshold		6.00%
Conversion terms, percentage of excess enterprise value		15.00%
8% Cumulative Preferred Stock | XIX Merger Agreement
Class of Stock [Line Items]
Conversion of stock, conversion ratio	1.238477
Preferred stock, dividend rate	8.00%
9% Cumulative Preferred Stock | XIX Merger Agreement
Class of Stock [Line Items]
Conversion of stock, conversion ratio	1.238477
Preferred stock, dividend rate	9.00%
Restricted common stock
Class of Stock [Line Items]
Grants in period (shares) | shares		1,500	1,500
Stock-based compensation expense | $		$ 19

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Summary of Significant Accounting Policies (Details)		3 Months Ended		6 Months Ended	12 Months Ended
	Oct. 01, 2018 extension	Mar. 31, 2020 USD ($)	Mar. 31, 2019 USD ($)	Jun. 30, 2020	Dec. 31, 2019 USD ($)
Property, Plant and Equipment [Line Items]
Impairment of real estate		$ 0			$ 0
Goodwill impairment loss		0	$ 0
Net income (Loss)		$ 1,884,000	$ 360,000
Notes Payable to Banks | Hartman SPE, LLC
Property, Plant and Equipment [Line Items]
Number of extensions | extension	3
Extension term	1 year
Debt Instrument, Covenant, Debt Yield		12.95%			13.29%
Notes Payable to Banks | Hartman SPE, LLC | Scenario, Forecast
Property, Plant and Equipment [Line Items]
Debt instrument, covenant, debt yield, minimum				12.50%
Building and Building Improvements | Minimum
Property, Plant and Equipment [Line Items]
Estimated useful life		5 years
Building and Building Improvements | Maximum
Property, Plant and Equipment [Line Items]
Estimated useful life		39 years

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Accrued Rent and Accounts Receivable, net - Summary of Accounts Receivable (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Receivables [Abstract]
Tenant receivables	$ 7,126	$ 5,929
Accrued rent	9,747	9,244
Allowance for uncollectible accounts	(2,641)	(2,597)
Deferred leasing commission costs, net	$ 14,232	$ 12,576

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Notes Payable - Additional Information (Details)		3 Months Ended
	Oct. 01, 2018 USD ($) extension property	Mar. 31, 2020 USD ($) loan_outstanding	Mar. 31, 2019 USD ($)	Dec. 31, 2019 USD ($)
Short-term Debt [Line Items]
Outstanding balance		$ 310,182,000		$ 306,793,000
Interest expense		3,018,000,000	$ 3,669,000,000
Interest expense payable		320,000		516,000
Estimate of Fair Value Measurement
Short-term Debt [Line Items]
Debt instrument, fair value disclosure		$ 315,637,000		308,671,000
Hartman SPE, LLC
Short-term Debt [Line Items]
Number of real estate properties | property	39
Secured debt | Richardson Heights, Cooper Street, Bent Tree Green And Mitchelldale Property Loans
Short-term Debt [Line Items]
Number of cross-collateralized term loan agreements | loan_outstanding		4
Amortization term		27 years
Fixed interest rate		4.61%
Outstanding balance		$ 42,982,000		$ 43,393,000
Notes Payable to Banks | Hartman SPE, LLC
Short-term Debt [Line Items]
Debt instrument, face amount	$ 259,000,000
Term of loan	5 years
Initial term of loan	2 years
Number of extensions | extension	3
Extension term	1 year
Notes Payable to Banks | Minimum | Hartman SPE, LLC | London Interbank Offered Rate (LIBOR)
Short-term Debt [Line Items]
Basis spread	1.80%
Notes Payable to Banks | Maximum | Hartman SPE, LLC | London Interbank Offered Rate (LIBOR)
Short-term Debt [Line Items]
Basis spread	3.75%

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Stockholders' Equity

3 Months Ended

Mar. 31, 2020

Equity [Abstract]

Stockholders' Equity

Stockholders’ Equity

Under the Company’s articles of incorporation, the Company has authority to issue 750,000,000 shares of common stock, $0.001 par value per share, and 200,000,000 shares of preferred stock, $0.001 par value per share.

Common Stock

Shares of common stock entitle the holders to one vote per share on all matters which stockholders are entitled to vote, to receive dividends and other distributions as authorized by the Company’s board of directors in accordance with the Maryland General Corporation Law and to all rights of a stockholder pursuant to the Maryland General Corporation Law.  The common stock has no preferences or preemptive, conversion or exchange rights.

Preferred Stock

Under the Company’s articles of incorporation, the Company’s board of directors has the authority to issue one or more classes or series of preferred stock, and prior to the issuance of such stock, the board of directors has the power to classify or reclassify, in one or more series, any unissued shares and designate the preferences, rights and privileges of such shares.  As of March 31, 2020, and December 31, 2019, respectively, the Company has issued 1,000 shares of convertible preferred stock to the Advisor at a price of $10.00 per share.

Common Stock Issuable Upon Conversion of Convertible Preferred Stock

The convertible preferred stock issued to the Advisor will convert to shares of the Company’s common stock if (1) the Company has made total distributions on then outstanding shares of the Company’s common stock equal to the issue price of those shares plus a 6% cumulative, non-compounded, annual return on the issue price of those outstanding shares, (2) the Company lists its common stock for trading on a national securities exchange if the sum of prior distributions on then outstanding shares of the Company’s common stock plus the aggregate market value of the Company’s common stock (based on the 30-day average closing meets the same 6% performance threshold, or  (3)  the Company’s advisory agreement with the Advisor expires without renewal or is terminated (other than because of a material breach by the Advisor), and at the time of such expiration or termination the Company is deemed to have met the foregoing 6% performance threshold based on the Company’s enterprise value and prior distributions and, at or subsequent to the expiration or termination, the stockholders actually realize such level of performance upon listing or through total distributions. In general, the convertible stock will convert into shares of common stock with a value equal to 15% of the excess of the Company’s enterprise value plus the aggregate value of distributions paid to date on then outstanding shares of common stock over the aggregate issue price of those outstanding shares plus a 6% cumulative, non-compounded, annual return on the issue price of those outstanding shares. With respect to conversion in connection with the termination of the advisory agreement, this calculation is made at the time of termination even though the actual conversion may occur later, or not at all.

Stock-Based Compensation

  The Company awards shares of restricted common stock to non-employee directors as compensation in part for their service as members of the board of directors of the Company. These shares are fully vested when granted.  These shares may not be sold while an independent director is serving on the board of directors. For the three months ended March 31, 2020 and 2019, respectively, the Company granted 1,500 shares of restricted common stock to independent directors as compensation for services and recognized $19,000 as stock-based compensation expense for each period. Share based compensation expense is based upon the estimated fair value per share.  Stock-based compensation expense is included in general and administrative expenses in the accompanying consolidated statements of operations.

Distributions

The following table reflects the total distributions the Company has paid, including the total amount paid, thousands, and amount paid per common share, in each indicated quarter:

Quarter Paid	Distributions per Common Share		Total Distributions
2020
1st Quarter	0.175		3,223
Total 2020 year to date	$	0.175	$	3,223
2019
4th Quarter	$	0.175	$	3,223
3rd Quarter	0.175		3,224
2nd Quarter	0.175		3,223
1st Quarter	0.171		3,141
Total 2019	$	0.696	$	12,811

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Notes Payable

3 Months Ended

Mar. 31, 2020

Debt Disclosure [Abstract]

Notes Payable

Notes Payable

The Operating Partnership is a party to four, cross-collateralized, term loan agreements with an insurance company. The term loans are secured by the Richardson Heights Property, the Cooper Street Property, the Bent Tree Green Property and the Mitchelldale Property. The loans require monthly payments of principal and interest due and payable on the first day of each month. Monthly payments are based on a 27-year loan amortization. Each of the loan agreements are subject to customary covenants, representations and warranties which must be maintained during the term of the loan agreements. Each of the loan agreements provides for a fixed interest rate of 4.61%. As of March 31, 2020, the Company was in compliance with all loan covenants, with respect to the loans above. Each of the loan agreements is secured by a deed of trust, assignment of licenses, permits and contracts, assignment and subordination of the management agreements and assignment of rents. The terms of the security instruments provide for the cross collateralization/cross default of the each of the loans. The outstanding balance of the four loans was $42,982,000 and $43,393,000 as of March 31, 2020 and December 31, 2019, respectively.

On October 1, 2018, the Company through Hartman SPE, LLC and Goldman Sachs Mortgage Company entered into a $259,000,000 term loan agreement (the "SASB Loan"). The Company together with its affiliates HIREIT, Hartman XIX and vREIT XXI, contributed a total of 39 commercial real estate properties to Hartman SPE, LLC in exchange for membership interests in Hartman SPE, LLC.

The term of the SASB Loan is five years, comprised of an initial two-year term with three one-year extension options. Each extension option shall be subject to certain conditions precedent including (i) no default then outstanding, (ii) 30 days prior written notice, (iii) the properties must have a specified in-place net operating income debt yield and (iv) purchase of an interest rate cap as described below for the exercised option term or terms.

The outstanding principal of the SASB Loan bears interest at the one-month LIBOR rate plus 1.8%. The SASB Loan is subject to an interest rate cap arrangement which caps LIBOR at 3.75% during the initial term of the SASB Loan.

The SASB Loan contains various customary covenants, including but not limited to financial covenants, covenants requiring monthly deposits in respect of certain property costs, such as taxes, insurance, tenant improvements, and leasing commissions, covenants imposing restrictions on indebtedness and liens, and restrictions on investments and participation in other asset disposition, merger or business combination or dissolution transactions.

The SASB Loan is secured by, among other things, mortgages on the properties. The Company, HIREIT and Hartman XIX, entered into a guaranty agreement in favor of the lender, whereby each guarantor unconditionally guaranties the full and timely performance of the obligations set forth in the loan agreement and all other loan documents, including the payment of all indebtedness and obligations due under the loan agreement.

The following is a summary of the Company’s notes payable, in thousands:

Property/Facility	Payment (1)	Maturity Date	Rate		March 31, 2020		December 31, 2019
Richardson Heights (2)	P&I	July 1, 2041	4.61	%	$	17,087	$	17,260
Cooper Street (2)	P&I	July 1, 2041	4.61	%	7,367		7,435
Bent Tree Green (2)	P&I	July 1, 2041	4.61	%	7,367		7,435
Mitchelldale (2)	P&I	July 1, 2041	4.61	%	11,161		11,263
Hartman SPE LLC	IO	October 9, 2020	2.79	%	259,000		259,000
Hartman XXI	IO	March 31, 2021	10.00	%	8,200		4,400
					310,182		306,793
Less: unamortized deferred loan costs					(3,500)		(3,754)
					$	306,682	$	303,039

(1) Principal and interest (P&I) or interest only (IO).  

(2) Each promissory note contains a call option wherein the holder of the promissory note may declare the outstanding balance due and payable on either July 1, 2024, July 1, 2029, July 1, 2034, or July 1, 2039.  

The Company's loan costs are amortized using the straight-line method over the terms of the loans, which approximates the interest method.  Costs which have been deferred consist of the following, in thousands:

	March 31, 2020		December 31, 2019
Deferred loan costs	$	7,155	$	7,155
Less:  deferred loan cost accumulated amortization	(3,655)		(3,401)
Total cost, net of accumulated amortization	$	3,500	$	3,754

Interest expense incurred for the three months ended March 31, 2020 and 2019 was $3,018,000 and $3,669,000, respectively, which includes amortization expense of deferred loan costs. Interest expense of $320,000 and $516,000 was payable as of March 31, 2020 and December 31, 2019, respectively, and is included in accounts payable and accrued expenses in the accompanying consolidated balance sheets.

The Company is required to provide audited financial statements for Hartman SPE, LLC within 120 days after the end of its fiscal year, which is December 31. The servicer for the lender has extended the time for delivery of the Hartman SPE, LLC audited annual financial statements.

Fair Value of Debt

The fair value of the Company’s fixed rate notes payable, variable rate notes payable and secured revolving credit facilities aggregates to $315,637,000 and $308,671,000 as compared to book value of $310,182,000 and $306,793,000 as of March 31, 2020 and December 31, 2019, respectively. The fair value of our debt instruments is estimated on a Level 2 basis, as provided by ASC 820, using a discounted cash flow analysis based on the borrowing rates currently available to the Company for loans with similar terms and maturities, discounting the future contractual interest and principal payments. Disclosure about the fair value of notes payable is based on relevant information available as of March 31, 2020 and December 31, 2019.

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Income Per Share (Tables)

3 Months Ended

Mar. 31, 2020

Earnings Per Share [Abstract]

Schedule of Earnings Per Share

Diluted weighted average shares outstanding reflect common shares issuable from the assumed conversion of convertible preferred stock into common shares. Only those items that have a dilutive impact on basic earnings per share are included in the diluted earnings per share.

	Three months ended March 31,
	2020		2019
Numerator:
Net income attributable to common stockholders (in thousands)	$	1,168	$	335
Denominator:
Weighted average number of common shares outstanding, basic and diluted (in thousands)	18,418		17,837
Basic and diluted income per common share:	$	0.06	$	0.02

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Accrued Rent and Accounts Receivable, net (Tables)

3 Months Ended

Mar. 31, 2020

Receivables [Abstract]

Schedule of Acquired Indefinite-lived Intangible Assets

Accrued rent and accounts receivable, net, consisted of the following, in thousands:

	March 31, 2020		December 31, 2019
Tenant receivables	$	7,126	$	5,929
Accrued rent	9,747		9,244
Allowance for uncollectible accounts	(2,641)		(2,597)
Accrued rents and accounts receivable, net	$	14,232	$	12,576

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Income Taxes (Details) - USD ($)	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019	Dec. 31, 2019
Income Tax Disclosure [Abstract]
Deferred tax benefit	$ 0	$ 0
Deferred tax asset	$ 0		$ 0

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Incentive Award Plan (Details)	3 Months Ended
	Mar. 31, 2020 shares
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Shares reserved for issuance (in shares)	5,000,000
Percentage of outstanding stock maximum	10.00%

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CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Mar. 31, 2020	Dec. 31, 2019
Statement of Financial Position [Abstract]
Preferred stock, par value (in dollars per share)	$ 0.001	$ 0.001
Convertible, non-voting shares authorized (in shares)	200,000,000	200,000,000
Preferred stock, shares issued (in shares)	1,000	1,000
Preferred stock, shares outstanding (in shares)	1,000	1,000
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized (in shares)	750,000,000	750,000,000
Common stock, shares issued (in shares)	18,417,687	18,417,687
Common stock, shares outstanding (in shares)	18,417,687	18,417,687

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Organization and Business

3 Months Ended

Mar. 31, 2020

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Organization and Business

Organization and Business

Hartman Short Term Income Properties XX, Inc. (the “Company”), is a Maryland corporation formed on February 5, 2009.  The Company elected to be treated as a real estate investment trust (“REIT”) beginning with the taxable year ending December 31, 2011. As used herein, the “Company,” “we,” “us,” or “our”refer to Hartman Short Term Income Properties XX, Inc. and its consolidated subsidiaries, including Hartman XX Limited Partnership, a Texas limited partnership (the “Operating Partnership”), except where context otherwise requires.

On July 19, 2018, we entered into a limited liability company agreement with our affiliates Hartman Income REIT, Inc. (“HIREIT”), Hartman Short Term Income Properties XIX, Inc. (“Hartman XIX”) and Hartman vREIT XXI, Inc. (“vREIT XXI”) to form Hartman SPE, LLC ("SPE LLC"), a special purpose entity.

On October 1, 2018, SPE LLC, as borrower, and Goldman Sachs Mortgage Company entered into a term loan agreement pursuant to which the lender made a term loan to SPE LLC in the principal amount of $259,000,000.

Contemporaneously therewith and together with our affiliates HIREIT, Hartman XIX and vREIT XXI, we contributed a total of 39 commercial real estate properties ("Properties") to SPE, LLC, subject to the then existing mortgage indebtedness encumbering the Properties, in exchange for membership interests in SPE LLC. Proceeds of the Loan were immediately used to extinguish the existing mortgage indebtedness encumbering the Properties.

Substantially all of our business is conducted through our wholly owned subsidiary, the Operating Partnership, and SPE LLC. Our wholly-owned subsidiary, Hartman XX REIT GP LLC, a Texas limited liability company, is the sole general partner of the Operating Partnership. We are the sole limited partner of the Operating Partnership. Our wholly-owned subsidiary, Hartman SPE Management, LLC ("SPE Management") is the manager of SPE LLC. Our single member interests in our limited liability company subsidiaries are owned by the Operating Partnership or its wholly owned subsidiaries.

Subject to certain restrictions and limitations, Hartman Advisors LLC ("Advisor") is responsible for managing our affairs on a day-to-day basis and for identifying and making acquisitions and investments on our behalf pursuant to an advisory agreement (the “Advisory Agreement”) by and among the Company and Advisor. Management of the Company’s properties and the Properties, is provided pursuant to property management agreements with Hartman Income REIT Management, Inc. (the "Property Manager"), a wholly-owned subsidiary of HIREIT.

As of March 31, 2020 and 2019, the Company owned 43 commercial properties comprising approximately 6.7 million square feet plus three pad sites, all located in Texas. As of March 31, 2020 and 2019, the Company owned 15 properties located in Richardson, Arlington and Dallas, Texas, 25 properties located in Houston, Texas and three properties located in San Antonio, Texas.

On July 21, 2017, the Company and Hartman Short Term Income Properties XIX, Inc. (“Hartman XIX”), entered into an agreement and plan of merger (the “XIX Merger Agreement”). On July 21, 2017, as subsequently modified on May 8 2018, the Company, the Operating Partnership, Hartman Income REIT, Inc. (“HIREIT”) and Hartman Income REIT Operating Partnership LP, the operating partnership of HIREIT, (“HIROP”), entered into an agreement and plan of merger (the “HIREIT Merger Agreement,” and together with the XIX Merger Agreement, the “Merger Agreements”).

On May 14, 2020, the Merger Agreements were approved by the respective company shareholders. The effective date of the Mergers is expected to be July 1, 2020.

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Income Taxes

3 Months Ended

Mar. 31, 2020

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

Federal income taxes are not provided for because we qualify as a REIT under the provisions of the Internal Revenue Code and because we have distributed and intend to continue to distribute all of our taxable income to our stockholders. Our stockholders include their proportionate taxable income in their individual tax returns. As a REIT, we must distribute at least 90% of our real estate investment trust taxable income to our stockholders and meet certain income sources and investment restriction requirements. In addition, REITs are subject to a number of organizational and operational requirements. If we fail to qualify as a REIT in any taxable year, we will be subject to federal income tax (including any applicable alternative minimum tax) on our taxable income at regular corporate tax rates. The Company’s federal income tax returns for the years ended December 31, 2015, 2016, 2017, 2018 and 2019 have not been examined by the Internal Revenue Service.The Company’s federal income tax return for the year ended December 31, 2015 may be examined on or before September 15, 2020.

The Company has formed a taxable REIT subsidiary which may generate future taxable income, which may be offset by the net loss carry forward.  The Company considers that any deferred tax benefit and corresponding deferred tax asset which may be recorded in light of the net loss carry forward would be properly offset by an equal valuation allowance.  Accordingly, no deferred tax benefit or deferred tax asset has been recorded in the accompanying consolidated financial statements.

The Company is required to recognize in its consolidated financial statements the financial effects of a tax position only if it is determined that it is more likely than not that the tax position will not be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. Management has reviewed the Company’s tax positions and is of the opinion that material positions taken by the Company would more likely than not be sustained upon examination. Accordingly, the Company has not recognized a liability related to uncertain tax positions.

Taxable income (loss) differs from net income (loss) for financial reporting purposes principally due to differences in the timing of recognition of interest, real estate taxes, depreciation and amortization and rental revenue.

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Deferred Leasing Commission Costs, net

3 Months Ended

Mar. 31, 2020

Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]

Deferred Leasing Commission Costs, net

Deferred Leasing Commission Costs, net

Costs which have been deferred consist of the following, in thousands:

	March 31, 2020		December 31, 2019
Deferred leasing commissions costs	$	18,633	$	17,620
Less: accumulated amortization	(7,185)		(6,830)
Deferred leasing commission costs, net	$	11,448	$	10,790

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Commitments and Contingencies

3 Months Ended

Mar. 31, 2020

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

Economic Dependency

      The Company is dependent on the Property Manager and the Advisor for certain services that are essential to the Company, including the identification, evaluation, negotiation, purchase and disposition of properties, management of the daily operations of the Company’s real estate portfolio, and other general and administrative responsibilities.  In the event that these companies are unable to provide the respective services, the Company will be required to obtain such services from other providers.

Litigation

The Company is subject to various claims and legal actions that arise in the ordinary course of business. Management of the Company believes that the final disposition of such matters will not have a material adverse effect on the financial position of the Company.

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Real Estate - Additional Information (Details) $ in Thousands, ft² in Millions	3 Months Ended
	Mar. 31, 2020 USD ($) ft² property	Mar. 31, 2019 USD ($) ft² property	Dec. 31, 2019 ft²
Subsidiary of Limited Liability Company or Limited Partnership [Line Items]
Depreciation | $	$ 4,317	$ 4,313
Amortization expense of in-place lease value intangible | $	2,665	2,717
Asset management fees paid to Advisor | $	$ 440	$ 440
Texas
Subsidiary of Limited Liability Company or Limited Partnership [Line Items]
Number of commercial properties	43	43
Area of real estate property (in sq ft) | ft²	6.7	6.7	6.7
Number of real estate properties	3	3
Richardson, Arlington And Dallas, Texas
Subsidiary of Limited Liability Company or Limited Partnership [Line Items]
Number of real estate properties	15	15
Houston, Texas
Subsidiary of Limited Liability Company or Limited Partnership [Line Items]
Number of real estate properties	25	25
San Antonio, Texas
Subsidiary of Limited Liability Company or Limited Partnership [Line Items]
Number of real estate properties	3	3

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Deferred Leasing Commission Costs, net (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]
Deferred leasing commissions costs	$ 18,633	$ 17,620
Less: accumulated amortization	(7,185)	(6,830)
Deferred leasing commission costs, net	$ 11,448	$ 10,790

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Incentive Award Plan

3 Months Ended

Mar. 31, 2020

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Incentive Award Plan

Incentive Award Plan

The Company has adopted an incentive plan (the “Omnibus Stock Incentive Plan” or the “Incentive Plan”) that provides for the grant of incentive stock options, non-qualified stock options, stock appreciation rights, deferred stock awards, restricted stock awards, dividend equivalent rights and other stock-based awards within the meaning of Internal Revenue Code Section 422, or any combination of the foregoing. The Company has initially reserved 5,000,000 shares of the Company’s common stock for the issuance of awards under the Company’s stock incentive plan, but in no event more than ten (10%) percent of the Company’s issued and outstanding shares. The number of shares reserved under the Company’s stock incentive plan is also subject to adjustment in the event of a stock split, stock dividend or other change in the Company’s capitalization. Generally, shares that are forfeited or canceled from awards under the Company’s stock incentive plan also will be available for future awards.  

 Incentive Plan compensation expense is included in general and administrative expenses in the accompanying consolidated statements of operations.

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Income Per Share

3 Months Ended

Mar. 31, 2020

Earnings Per Share [Abstract]

Income Per Share

Income Per Share

Basic income per share is computed using net income attributable to common stockholders and the weighted average number of common shares outstanding.  Diluted weighted average shares outstanding reflect common shares issuable from the assumed conversion of convertible preferred stock into common shares. Only those items that have a dilutive impact on basic earnings per share are included in the diluted earnings per share.

	Three months ended March 31,
	2020		2019
Numerator:
Net income attributable to common stockholders (in thousands)	$	1,168	$	335
Denominator:
Weighted average number of common shares outstanding, basic and diluted (in thousands)	18,418		17,837
Basic and diluted income per common share:	$	0.06	$	0.02

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Accrued Rent and Accounts Receivable, net

3 Months Ended

Mar. 31, 2020

Receivables [Abstract]

Accrued Rent and Accounts Receivable, net

Accrued Rent and Accounts Receivable, net

Accrued rent and accounts receivable, net, consisted of the following, in thousands:

	March 31, 2020		December 31, 2019
Tenant receivables	$	7,126	$	5,929
Accrued rent	9,747		9,244
Allowance for uncollectible accounts	(2,641)		(2,597)
Accrued rents and accounts receivable, net	$	14,232	$	12,576

As of March 31, 2020 and December 31, 2019, the Company had an allowance for uncollectible accounts of $2,641,000 and $2,597,000, respectively.  For the three months ended March 31, 2020 and 2019, the Company recorded bad debt expense in the amount of $44,000 and $775,000, respectively, related to tenant receivables that we have specifically identified as potentially uncollectible based on our assessment of each tenant’s credit-worthiness. For the three months ended March 31, 2020 and 2019, the Company did not record any write-offs. Bad debt expense and any related recoveries are included in property operating expenses in the accompanying consolidated statements of operations.

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Real Estate - In-place Intangible Assets (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Real Estate [Abstract]
In-place lease value intangible	$ 100,790	$ 100,790
In-place leases – accumulated amortization	(71,549)	(68,884)
Acquired lease intangible assets, net	$ 29,241	$ 31,906

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Future Minimum Rents (Details) $ in Thousands	Mar. 31, 2020 USD ($)
Leases [Abstract]
2020	$ 70,520
2021	62,071
2022	49,589
2023	38,112
2024	26,036
Thereafter	39,345
Total	$ 285,673

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Notes Payable (Tables)

3 Months Ended

Mar. 31, 2020

Debt Disclosure [Abstract]

Summary of Notes Payable

The following is a summary of the Company’s notes payable, in thousands:

Property/Facility	Payment (1)	Maturity Date	Rate		March 31, 2020		December 31, 2019
Richardson Heights (2)	P&I	July 1, 2041	4.61	%	$	17,087	$	17,260
Cooper Street (2)	P&I	July 1, 2041	4.61	%	7,367		7,435
Bent Tree Green (2)	P&I	July 1, 2041	4.61	%	7,367		7,435
Mitchelldale (2)	P&I	July 1, 2041	4.61	%	11,161		11,263
Hartman SPE LLC	IO	October 9, 2020	2.79	%	259,000		259,000
Hartman XXI	IO	March 31, 2021	10.00	%	8,200		4,400
					310,182		306,793
Less: unamortized deferred loan costs					(3,500)		(3,754)
					$	306,682	$	303,039

(1) Principal and interest (P&I) or interest only (IO).  

(2) Each promissory note contains a call option wherein the holder of the promissory note may declare the outstanding balance due and payable on either July 1, 2024, July 1, 2029, July 1, 2034, or July 1, 2039.

Summary of Deferred Loan Costs

The Company's loan costs are amortized using the straight-line method over the terms of the loans, which approximates the interest method.  Costs which have been deferred consist of the following, in thousands:

	March 31, 2020		December 31, 2019
Deferred loan costs	$	7,155	$	7,155
Less:  deferred loan cost accumulated amortization	(3,655)		(3,401)
Total cost, net of accumulated amortization	$	3,500	$	3,754

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Real Estate (Tables)

3 Months Ended

Mar. 31, 2020

Real Estate [Abstract]

Schedule of Real Estate Assets

The Company’s real estate assets consisted of the following, in thousands:

	March 31, 2020		December 31, 2019
Land	$	145,050	$	145,050
Buildings and improvements	351,661		348,729
In-place lease value intangible	100,790		100,790
	597,501		594,569
Less: accumulated depreciation and amortization	(124,634)		(117,652)
Total real estate assets	$	472,867	$	476,917

Schedule of Intangible Assets Acquired

The amount of total in-place lease intangible asset and the respective accumulated amortization are as follows, in thousands:

	March 31, 2020		December 31, 2019
In-place lease value intangible	$	100,790	$	100,790
In-place leases – accumulated amortization	(71,549)		(68,884)
Acquired lease intangible assets, net	$	29,241	$	31,906

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Related Party Transactions (Details) - USD ($)			1 Months Ended			3 Months Ended
	Mar. 01, 2019	Feb. 28, 2019	Mar. 31, 2019	Feb. 28, 2019	May 31, 2016	Mar. 31, 2020	Mar. 31, 2019	Dec. 31, 2019	Sep. 30, 2019	Feb. 26, 2019
Related Party Transaction [Line Items]
Property management fees and reimbursements due						$ 1,013,000	$ 950,000
Payments for leasing commissions						440,000	440,000
Due to the property manager						843,000		$ 1,168,000
Due from other related parties						$ (8,125,000)		(5,375,000)
Hartman SPE, LLC
Related Party Transaction [Line Items]
Share price (in dollars per share)	$ 12.65
Common Stock | Hartman SPE, LLC
Related Party Transaction [Line Items]
Stock issued in exchange for ownership (in shares)	700,302
Value of shares issued	$ 8,858,826
Chief Executive Officer
Related Party Transaction [Line Items]
Ownership percentage						20.00%
Allen R Hartman | Affiliated Entity
Related Party Transaction [Line Items]
Ownership percentage						70.00%
Property Manager | Affiliated Entity
Related Party Transaction [Line Items]
Ownership percentage						30.00%
Texas Limited Liability Company | Affiliated Entity | Asset Management Fees Payable
Related Party Transaction [Line Items]
Expenses from transactions with related party						$ 2,069,000	1,953,000
Due to related parties						$ 1,966,000		2,077,000
Due to related parties, monthly fees, percentage of asset cost or value						0.0625%
Texas Limited Liability Company | Affiliated Entity | Construction Management Fees Payable
Related Party Transaction [Line Items]
Expenses from transactions with related party						$ 166,000	267,000
Hartman XIX | Affiliated Entity | Loan from Company to related party
Related Party Transaction [Line Items]
Loans receivable, face amount						$ 4,500,000
Loans receivable, interest rate						6.00%
Interest income, related parties						$ 63,000	63,000
Hartman XIX | Affiliated Entity | Loan From Company To Related Party Hartman Retail II Holdings Co
Related Party Transaction [Line Items]
Loans receivable						$ 4,200,000		4,200,000
HIREIT, Inc. | Affiliated Entity | Acquisition Of Related Party Common Stock
Related Party Transaction [Line Items]
Ownership percentage						11.00%
HIREIT, Inc. | Affiliated Entity | Acquisition Of Related Party Common Stock | Common Stock
Related Party Transaction [Line Items]
Shares acquired (in shares)						1,561,523
Shares acquired, value						$ 8,978,000
Hartman TRS, Inc. | Affiliated Entity | Loan from Company to related party
Related Party Transaction [Line Items]
Loans receivable			$ 106,000			106,000	106,000
Hartman TRS, Inc. | Affiliated Entity | Loan From Company To Related Party Hartman Retail II Holdings Co
Related Party Transaction [Line Items]
Loans receivable					$ 7,231,000	1,726,000		2,476,000
Loans receivable, face amount					$ 8,820,000
Loans receivable, interest rate					10.00%
Interest income, related parties						43,000	61,000
Origination fees					2.00%
Hartman TRS, Inc. | Affiliated Entity | Loan From Company To Related Party Hartman Retail III Holdings Co
Related Party Transaction [Line Items]
Loans receivable						6,782,000		6,782,000		$ 6,782,455
Loans receivable, face amount		$ 7,500,000		$ 7,500,000
Loans receivable, interest rate				10.00%
Interest income, related parties						169,000
Origination fees		2.00%		2.00%
Hartman TRS, Inc. | Affiliated Entity | Loan from Company to related party
Related Party Transaction [Line Items]
Loans receivable			3,829,711			3,830,000	3,829,711	$ 3,830,000
Loans receivable, face amount			$ 3,500,000				$ 3,500,000
Loans receivable, interest rate			10.00%
Interest income, related parties						95,000
Origination fees									2.00%
Hartman vREIT XXI [Member] | Affiliated Entity | Loan From Related Party To Company
Related Party Transaction [Line Items]
Notes payable, related party						4,400,000
Interest expense, related party						$ 110,000
Debt instrument, stated interest rate						10.00%
Variable Interest Entity, Not Primary Beneficiary | Hartman SPE, LLC
Related Party Transaction [Line Items]
Additional ownership	3.42%
Ownership interest	36.16%	32.74%

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CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
ASSETS
Real estate assets, at cost	$ 597,501	$ 594,569
Accumulated depreciation and amortization	(124,634)	(117,652)
Real estate assets, net	472,867	476,917
Cash and cash equivalents	35	1,033
Restricted cash	18,400	26,078
Accrued rent and accounts receivable, net	14,232	12,576
Notes receivable - related party	16,538	17,288
Deferred leasing commission costs, net	11,448	10,790
Goodwill	250	250
Prepaid expenses and other assets	392	735
Due from related parties	3,409	2,130
Investment in affiliate	8,978	8,978
Total assets	546,549	556,775
Liabilities:
Notes payable, net	306,682	303,039
Accounts payable and accrued expenses	12,982	23,444
Tenants' security deposits	5,356	5,286
Total liabilities	325,020	331,769
Commitments and contingencies
Stockholders' equity:
Preferred stock, $0.001 par value, 200,000,000 convertible, non-voting shares authorized, 1000 shares issued and outstanding at March 31, 2020 and December 31, 2019, respectively	0	0
Common stock, $0.001 par value, 750,000,000 authorized, 18,417,687 shares issued and outstanding at March 31, 2020 and December 31, 2019, respectively	18	18
Additional paid-in capital	174,019	174,019
Accumulated distributions and net loss	(111,461)	(109,406)
Total stockholders' equity	62,576	64,631
Noncontrolling interests in subsidiary	158,953	160,375
Total equity	221,529	225,006
Total liabilities and equity	$ 546,549	$ 556,775

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CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Cash flows from operating activities:
Net income (Loss)	$ 1,884	$ 360
Adjustments to reconcile net income to net cash used in operating activities:
Stock based compensation	19	19
Depreciation and amortization	6,982	7,030
Deferred loan and lease commission costs amortization	609	885
Bad debt provision, net	44	775
Changes in operating assets and liabilities:
Accrued rent and accounts receivable	(1,700)	(3,163)
Deferred leasing commissions	(1,013)	(951)
Prepaid expenses and other assets	343	(1,654)
Accounts payable and accrued expenses	(10,481)	(10,643)
Due to/from related parties	(1,279)	1,221
Tenants' security deposits	70	43
Net cash used in operating activities	(4,522)	(6,078)
Cash flows from investing activities:
Acquisition deposits	0	529
Repayment of note receivable from affiliate	750	0
Investment in affiliate - related party	0	(10,546)
Lender required reserves	0	10,273
Additions to real estate	(2,932)	(2,753)
Net cash used in investing activities	(2,182)	(2,497)
Cash flows from financing activities:
Distributions to common stockholders	(3,223)	(3,141)
Distributions to non-controlling interest	(2,138)	(2,147)
Borrowing from affiliate	3,800	0
Repayments under term loan notes	(411)	(7,492)
Borrowings under insurance premium finance note	0	1,421
Payments of deferred loan costs	0	(71)
Net cash used in financing activities	(1,972)	(11,430)
Net change in cash and cash equivalents and restricted cash	(8,676)	(20,005)
Cash and cash equivalents and restricted cash, beginning of period	27,111	51,477
Cash and cash equivalents and restricted cash, end of period	18,435	31,472
Supplemental cash flow information:
Cash paid for interest	2,960	3,322
Supplemental disclosures of non-cash investing and financing activities:
Value of director's stock compensation shares issued	0	76
Value of common shares issued to acquire non-controlling interest	0	8,896
Acquisition of non-controlling interest	$ 0	$ (8,858)