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 September 30, 2022

☐ 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 or Other Jurisdiction of Incorporation or 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)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
None	None	None

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 every Interactive Data File required to be submitted 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 such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a 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 ☐

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. ☐

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

As of November 1, 2022, there were 34,975,377 shares of the Registrant’s common stock issued and outstanding.

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	24
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	33
Item 4.	Controls and Procedures	33
PART II  OTHER INFORMATION
Item 1.	Legal Proceedings	34
Item 1A.	Risk Factors	34
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	35
Item 3.	Defaults Upon Senior Securities	35
Item 4.	Mine Safety Disclosures	35
Item 5.	Other Information	35
Item 6.	Exhibits	35
	SIGNATURES

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)
	September 30, 2022		December 31, 2021
ASSETS	(Unaudited)
Real estate assets, at cost	$	633,285	$	620,585
Accumulated depreciation and amortization	(192,948)		(173,040)
Real estate assets, net	440,337		447,545
Cash and cash equivalents	462		285
Restricted cash	17,949		18,972
Accrued rent and accounts receivable, net	13,247		13,238
Note receivable - related party	1,726		1,726
Deferred leasing commission costs, net	10,114		10,487
Goodwill	250		250
Prepaid expenses and other assets	4,902		2,100
Real estate held for development	10,403		10,403
Due from related parties, net	1,246		115
Investment in affiliate	201		201
Total assets	$	500,837	$	505,322
LIABILITIES AND EQUITY
Liabilities:
Notes payable, net	$	298,729	$	297,765
Notes payable - related party	17,168		6,012
Accounts payable and accrued expenses	39,542		38,471
Tenants' security deposits	6,088		5,756
Total liabilities	361,527		348,004
Stockholders' equity:
Preferred stock, $0.001 par value, 200,000,000 convertible, non-voting shares authorized, 1,000 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively	—		—
Common stock, $0.001 par value, 750,000,000 authorized, 34,975,377 shares and 35,110,421 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively	35		35
Additional paid-in capital	296,153		297,335
Accumulated distributions and net loss	(178,223)		(162,355)
Total stockholders' equity	117,965		135,015
Noncontrolling interests in subsidiaries	21,345		22,303
Total equity	139,310		157,318
Total liabilities and equity	$	500,837	$	505,322

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 September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Revenues
Rental revenues	$	22,467	$	21,567	$	66,953	$	66,391
Management and advisory income	1,014		1,561		3,049		3,767
Total revenues	23,481		23,128		70,002		70,158
Expenses (income)
Property operating expenses	7,748		7,046		20,797		26,483
Organization and offering costs	6		27		29		56
Real estate taxes and insurance	3,589		3,008		10,555		10,069
Depreciation and amortization	6,856		6,918		19,908		20,033
Management and advisory expenses	2,911		4,066		9,749		9,503
Debt issuance costs write off	1,018		—		1,018		—
General and administrative	3,413		2,524		9,916		8,378
Interest expense	3,789		2,133		8,527		6,296
Interest and dividend income	(45)		(44)		(132)		(131)
Total expenses, net	29,285		25,678		80,367		80,687
Net loss	(5,804)		(2,550)		(10,365)		(10,529)
Net (loss) income attributable to noncontrolling interests	(64)		(88)		26		(551)
Net loss attributable to common stockholders	$	(5,740)	$	(2,462)	$	(10,391)	$	(9,978)
Net loss attributable to common stockholders per share	$	(0.16)	$	(0.07)	$	(0.30)	$	(0.28)
Weighted average number of common shares outstanding, basic and diluted	34,976		35,134		35,005		35,188

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 in Subsidiaries		Total Equity
Balance at June 30, 2021	1	$	—	35,138	$	35	$	297,560	$	(149,594)	$	148,001	$	23,513	$	171,514
Redemptions of common shares	—	—		(51)	—		(530)		—		(530)		—		(530)
Dividends and distributions (cash)	—	—		—	—		—		(3,966)		(3,966)		(232)		(4,198)
Net loss	—	—		—	—		—		(2,462)		(2,462)		(88)		(2,550)
Balance at September 30, 2021	1	$	—	35,087	$	35	$	297,030	$	(156,022)	$	141,043	$	23,193	$	164,236
	Preferred Stock			Common Stock
	Shares	Amount		Shares	Amount		Additional Paid-In Capital		Accumulated Distributions and Net Loss		Total Stockholders' Equity		Noncontrolling Interests in Subsidiaries		Total Equity
Balance at June 30, 2022	1	$	—	34,976	$	35	$	296,153	$	(172,483)	$	123,705	$	21,486	$	145,191
Dividends and distributions (cash)	—	—		—	—		—		—		—		(77)		(77)
Net loss	—	—		—	—		—		(5,740)		(5,740)		(64)		(5,804)
Balance at September 30, 2022	1	$	—	34,976	$	35	$	296,153	$	(178,223)	$	117,965	$	21,345	$	139,310

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 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 in Subsidiaries		Total Equity
Balance, December 31, 2020	1	$	—	35,318	$	35	$	299,375	$	(135,633)	$	163,777	$	24,365	$	188,142
Redemptions of common shares	—	—		(231)			(2,345)		—		(2,345)		—		(2,345)
Dividends and distributions (cash)	—	—		—	—		—		(10,411)		(10,411)		(621)		(11,032)
Net loss	—	—		—	—		—		(9,978)		(9,978)		(551)		(10,529)
Balance at September 30, 2021	1	$	—	35,087	$	35	$	297,030	$	(156,022)	$	141,043	$	23,193	$	164,236
	Preferred Stock			Common Stock
	Shares	Amount		Shares	Amount		Additional Paid-In Capital		Accumulated Distributions and Net Loss		Total Stockholders' Equity		Noncontrolling Interests in Subsidiaries		Total Equity
Balance, December 31, 2021	1	$	—	35,111	$	35	$	297,335	$	(162,355)	$	135,015	$	22,303	$	157,318
Redemptions of common shares	—	—		(135)	—		(1,182)		—		(1,182)		—		(1,182)
Dividends and distributions (cash)	—	—		—	—		—		(5,477)		(5,477)		(984)		(6,461)
Net (loss) income	—	—		—	—		—		(10,391)		(10,391)		26		(10,365)
Balance at September 30, 2022	1	$	—	34,976	$	35	$	296,153	$	(178,223)	$	117,965	$	21,345	$	139,310

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

5

HARTMAN SHORT TERM INCOME PROPERTIES XX, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in thousands)
	Nine Months Ended September 30,
	2022		2021
Cash flows from operating activities:
Net loss	$	(10,365)	$	(10,529)
Adjustments to reconcile net loss to net cash provided by operating activities:
Stock based compensation	298		150
Depreciation and amortization	19,908		20,033
Deferred loan and lease commission costs amortization	1,850		1,849
Bad debt expense	1,685		1,115
Straight-line rent	776		(976)
Changes in operating assets and liabilities:
Accrued rent and accounts receivable	(2,470)		(1,812)
Deferred leasing commissions	(787)		(944)
Prepaid expenses and other assets	(2,802)		(1,296)
Accounts payable and accrued expenses	3,611		6,090
Due to/from related parties	(3,666)		(2,126)
Tenants' security deposits	332		217
Net cash provided by operating activities	8,370		11,771
Cash flows from investing activities:
Additions to real estate	(12,700)		(9,906)
Net cash used in investing activities	(12,700)		(9,906)
Cash flows from financing activities:
Distributions to common stockholders	(8,458)		(9,990)
Distributions to non-controlling interests	(966)		(621)
Repayments to affiliates	(2,417)		—
Borrowings from affiliate	15,312		5,163
Repayments under insurance premium finance note	(1,973)		(2,519)
Borrowings under insurance premium finance note	2,892		3,019
Borrowings under term loan	2,645		—
Repayments under term loan notes	(2,327)		(978)
Redemptions of common stock	(1,182)		(2,345)
Payment of deferred loan costs	(43)		(19)
Net cash provided by (used in) financing activities	3,483		(8,290)
Net change in cash and cash equivalents and restricted cash	(846)		(6,425)
Cash and cash equivalents and restricted cash, beginning of period	19,257		24,176
Cash and cash equivalents and restricted cash, end of period	$	18,411	$	17,751
Supplemental cash flow information:
Cash paid for interest	$	6,762	$	5,212
Supplemental disclosure of non-cash activities:
Decrease in interest payable from Hartman XXI settlement	$	795	$	—
Decrease in due from related parties from Hartman XXI settlement	$	2,535	$	—
Decrease in borrowing from affiliate from Hartman XXI settlement	$	1,740	$	—

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

6

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 (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" or the "SASB Loan Borrower"), a special purpose entity.

On October 1, 2018, the SASB Loan Borrower, 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 subsidiaries, 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. 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.

On July 21, 2017, the Company and 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, 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 for financial reporting was July 1, 2020.

Prior to July 1, 2020 and subject to certain restrictions and limitations, Hartman Advisors LLC ("Advisor") was 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. 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"), formerly a wholly-owned subsidiary of HIREIT and effective July 1, 2020, our wholly owned subsidiary. Effective with the Mergers and the acquisition of the 70% interest of Advisor not acquired as part of the Mergers, we are a self-advised and self-managed REIT.

As of September 30, 2022 and 2021, respectively, the Company owned 44 commercial properties comprising approximately 6.8 million square feet plus four pad sites and two land developments, all located in Texas. As of September 30, 2022 and 2021, the Company owned 15 properties located in Richardson, Arlington and Dallas, Texas, 26 properties located in Houston, Texas and three properties located in San Antonio, Texas.

The Board of Directors (the "Board") of the Company established a share redemption program (the "Redemption Plan"), which permitted stockholders to sell their shares back to the Company, subject to certain significant conditions and limitations. On July 8, 2022, the Board voted to suspend the Redemption Plan to support the long-term fiscal health of the Company.

The Company does not anticipate that there will be any market for its shares of common stock unless they are listed on a national securities exchange. In the event that Company shares of common stock are not listed or traded on an established securities exchange prior to the tenth anniversary of the completion or termination of the Company's initial public offering, which terminated on April 25, 2013, the Company's charter requires that the board of directors must seek the approval of the

7

HARTMAN SHORT TERM INCOME PROPERTIES XX, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

stockholders of a plan to liquidate assets, unless the board of directors has obtained the approval of the stockholders (1) to defer the liquidation of our assets or (2) of an alternate strategy.

The independent directors of the Company’s board of directors have begun a strategic review process to identify, examine, and consider a range of strategic alternatives available to the Company with the objective of maximizing shareholder value. As a part of its strategic review, the independent directors engaged a third party to serve as a strategic advisor to the Board. On October 14, 2022, the Company’s board of directors formed a new Executive Committee whose duties include, among other items, the continuation of the review of strategic alternatives with the objective of maximizing shareholder value.

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, 2021 are derived from our audited consolidated financial statements as of that date. The unaudited consolidated financial statements as of September 30, 2022 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 September 30, 2022, and the results of consolidated operations, consolidated statements of equity and consolidated statement of cash flows for the three and nine months ended September 30, 2022 and 2021. The results of the three and nine months ended September 30, 2022 are not necessarily indicative of the results to be expected for the year ending December 31, 2022.

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, 2021.

These unaudited consolidated financial statements include the accounts of the Company and its subsidiaries, 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 September 30, 2022 and December 31, 2021 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. As of September 30, 2022 and December 31, 2021 the Company had a bank overdraft of $4,902,000 and $2,710,000, respectively.

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. As of September 30, 2022 and December 31, 2021, the Company had a restricted cash balance of $17,949,000 and $18,972,000, respectively.

Financial Instruments

8

HARTMAN SHORT TERM INCOME PROPERTIES XX, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The accompanying consolidated balance sheets include the following financial instruments: cash and cash equivalents, restricted cash, 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, other than notes payable, net, to approximate the fair value of these financial instruments based on the short duration between origination of the instruments and their expected realization. Disclosure about the fair value of financial instruments is based on relevant information available as of September 30, 2022 and December 31, 2021.

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 terms of existing leases are considered to commence as of the acquisition date for the purposes of this calculation. The Company's accrued rents are included in accrued rent and accounts receivable, net. The Company defers the recognition of contingent rental income, such as percentage rents, until the specific target that triggers the contingent rental income is achieved.

The Company’s revenue is primarily derived from leasing activities, which is specifically excluded from ASC 606, Revenue from Contracts with Customers ("ASC 606"). The Company’s rental revenue is also comprised of tenant reimbursements for real estate taxes, insurance, common area maintenance, and operating expenses. Reimbursements from real estate taxes and certain other expenses are also excluded from ASC 606 and accounted for under ASC 842 - Leases. The Company elected to utilize the practical expedient provided by Accounting Standards Update (“ASU”) 2018-11 related to the separation of lease and non-lease components and as a result, rental revenues related to leases are reported on one line in the presentation within the consolidated statements of operations.

In addition to our rental income, the Company also earns fee revenues by providing certain management and advisory services to related parties. These fees are accounted for within the scope of ASC 606 and are recorded as management and advisory income on the consolidated statements of operations. These services primarily include asset management and advisory, operating and leasing of properties, and construction management. These services are currently provided under various combinations of advisory agreements, property management agreements, and other service agreements (the "Management Agreements"). The wide variety of duties within the Management Agreements makes determining the performance obligations within the contracts a matter of judgment. We have concluded that each of the separately disclosed fee types in the below table represents a separate performance obligation within the Management Agreements.

9

HARTMAN SHORT TERM INCOME PROPERTIES XX, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Fee	Performance Obligation Satisfied	Timing of Payment	Description
Property Management	Over time	Due monthly	The Company provides property management services on a contractual basis for owners of and investors in office and retail properties. The Company is compensated for our services through a monthly management fee earned based on a percentage of effective gross revenue of the managed property. We are also often reimbursed for our administrative and payroll costs directly attributable to the properties under management. Revenue is recognized at the end of each month.
Property Leasing and Property Acquisition Services	Point in time (upon close of a transaction)	Upon completion	The Company provides strategic advice and execution for owners, investors, and occupiers of real estate in connection with the leasing of office and retail space. The Company is compensated for our services in the form of a commission and, in some instances may earn various forms of variable incentive consideration. Commission is paid upon the occurrence of certain contractual event. For leases, the Company typically satisfies its performance obligation at a point in time when control is transferred. Revenue is recognized in an amount equal to the fees charged by unaffiliated persons rendering comparable services. For acquisitions, our commission is typically paid at the closing date of sale, which represents transfer of control of services to the customer.
Asset Management	Over time	Due monthly	The Company earns asset management advisory fees on a recurring, monthly basis for certain properties. The Company is compensated on a monthly basis based on a fixed percentage of respective asset value.
Construction Management	Point in time (upon close of project)	Upon completion	Construction management services are performed on a contractual basis for owners of an investors in office and retail properties. The Company is compensated for its services upon completion of a project, when its performance obligation has been completed.

Due to the nature of the services being provided under our Management Agreements, each performance obligation has a variable component. Therefore, when we determine the transaction price for the contracts, we are required to constrain our estimate to an amount that is not probable of significant revenue reversal. For most of these fee types, such as acquisition fees and leasing commissions, compensation only occurs if a transaction takes place and the amount of compensation is dependent upon the terms of the transaction. For our property and asset management fees, due to the large number and broad range of possible consideration amounts, we calculate the amount earned at the end of each month.

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

10

HARTMAN SHORT TERM INCOME PROPERTIES XX, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

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 income (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 variable interest entity ("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.

Fair Value Measurement

Fair value measures are classified into a three-tiered fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

Level 1: Observable inputs such as quoted prices in active markets.

Level 2: Directly or indirectly observable inputs, other than quoted prices in active markets.

Level 3: Unobservable inputs in which there is little or no market data, which require a reporting entity to

develop its own assumptions.

11

HARTMAN SHORT TERM INCOME PROPERTIES XX, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Assets and liabilities measured at fair value are based on one or more of the following valuation techniques:

Market approach: Prices and other relevant information generated by market transactions involving identical or

comparable assets or liabilities.

Cost approach:    Amount required to replace the service capacity of an asset (replacement cost).

Income approach:  Techniques used to convert future amounts to a single amount based on market

expectations (including present-value, option-pricing, and excess-earnings models).

The Company’s estimates of fair value were determined using available market information and appropriate valuation methods. Considerable judgment is necessary to interpret market data and develop estimated fair value. The use of different market assumptions or estimation methods may have a material effect on the estimated fair value amounts. The Company classifies assets and liabilities in the fair value hierarchy based on the lowest level of input that is significant to the fair value measurement.

Recurring fair value measurements:

For our disclosure of debt instrument fair value in Note 7, we use a discounted cash flow analysis based on borrowing rates currently available to the Company for loans with similar terms and maturities, discounting the future contractual interest and principal payments (categorized within Level 2 of the fair value hierarchy).

Nonrecurring fair value measurements:

Property Impairments

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. Our estimated fair values are determined by utilizing cash flow models, market capitalization rates and market discount rates, or by obtaining third-party broker valuation estimates or appraisals (categorized within Level 3 of the fair value hierarchy).

Impairment

The Company determines whether an impairment in value may have 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. During the nine months ended September 30, 2022 and 2021, the Company concluded there were no such events or changes in circumstances requiring review of the Company's real estate assets.

Accrued Rent and Accounts Receivable, net

       Accrued rent and accounts receivable includes 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.

12

HARTMAN SHORT TERM INCOME PROPERTIES XX, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

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 is 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 September 30, 2022 and 2021, the Company incurred net loss of $5,804,000 and $2,550,000, respectively. For the nine months ended September 30, 2022 and 2021, the Company incurred net loss of $10,365,000 and $10,529,000, respectively. The Company formed a taxable REIT subsidiary which may generate future taxable income which may 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.

13

HARTMAN SHORT TERM INCOME PROPERTIES XX, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Income (Loss) Per Share

The computations of basic and diluted income (loss) 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 September 30, 2022 and 2021, there were no shares issuable in connection with these potentially dilutive securities. These potentially dilutive securities were excluded from the computations of diluted net loss per share for the three and nine months ended September 30, 2022 and 2021 because no shares were 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 ASC 205-40, “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”) had an initial maturity date of October 9, 2020. The SASB Loan provides for three successive one-year maturity date extensions. On October 9, 2022, SPE LLC executed the third and final maturity date extension agreement to extend the maturity to October 9, 2023.

The October 9, 2023 SASB Loan maturity date is within one year of the issuance of these consolidated financial statements. Uncertainty as to the Company's ability to obtain financing to satisfy the existing SASB Loan obligation requires management to conclude, in accordance with guidance provided by ASU 2014-15, that there is a 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. Management believes that the SASB Loan Borrower will be able to obtain financing to replace the SASB Loan prior to the October 9, 2023 maturity date.

Recent Accounting Pronouncements Not Yet Adopted

In June 2016, the FASB issued ASU 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.

In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. ASU 2020-04 provides optional expedients for a limited period of time to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting. ASU 2020-04 provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The standard is effective for all entities as of March 12, 2020 through December 31, 2022. An entity can elect to apply the amendments as of any date from the beginning of an interim period that includes or is subsequent to March 12, 2020, or prospectively from a date within an interim period that includes or is subsequent to March 12, 2020, up to that date that the financial statements are available to be issued. The Company is currently evaluating the impact this guidance will have on the consolidated financial statements when adopted.

14

HARTMAN SHORT TERM INCOME PROPERTIES XX, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Reclassification

An item in the operating activities section of the comparative consolidated statement of cash flows has been reclassified to conform to the presentation adopted in the current period. Straight-line rent totaling $976,000 has been reclassified from the change in accrued rent and accounts receivable line item to a separate line item as an adjustment to reconcile net loss to net cash provided by operating activities.

Note 3 — Real Estate

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

	September 30, 2022		December 31, 2021
Land	$	146,056	$	146,056
Buildings and improvements	385,568		372,868
In-place lease value intangible	101,661		101,661
	633,285		620,585
Less: accumulated depreciation and amortization	(192,948)		(173,040)
Total real estate assets	$	440,337	$	447,545

Depreciation expense for the three months ended September 30, 2022 and 2021 was $5,063,000 and $4,900,000, respectively. Depreciation expense for the nine months ended September 30, 2022 and 2021 was $14,519,000 and $13,911,000, respectively. Amortization expense of in-place lease value intangible was $1,793,000 and $2,018,000 for the three months ended September 30, 2022 and 2021, respectively. Amortization expense of in-place lease value intangible was $5,389,000 and $6,122,000 for the nine months ended September 30, 2022 and 2021, 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:

	September 30, 2022		December 31, 2021
In-place lease value intangible	$	101,661	$	101,661
In-place leases – accumulated amortization	(92,997)		(87,608)
Acquired lease intangible assets, net	$	8,664	$	14,053

As of September 30, 2022 and 2021, respectively, the Company owned 44 commercial properties comprising approximately 6.8 million square feet plus four pad sites and two land developments, all located in Texas. As of September 30, 2022 and 2021, respectively, the Company owned 15 properties located in Richardson, Arlington and Dallas, Texas, 26 properties located in Houston, Texas and three properties located in San Antonio, Texas.

Note 4 - Accrued Rent and Accounts Receivable, net

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

	September 30, 2022		December 31, 2021
Tenant receivables	$	9,116	$	6,652
Accrued rent	10,577		11,355
Allowance for uncollectible accounts	(6,446)		(4,769)
Accrued rents and accounts receivable, net	$	13,247	$	13,238

15

HARTMAN SHORT TERM INCOME PROPERTIES XX, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

As of September 30, 2022 and December 31, 2021, the Company had an allowance for uncollectible accounts of $6,446,000 and $4,769,000, respectively. For the three months ended September 30, 2022 and 2021, the Company recorded bad debt expense in the amount of $924,000 and $806,000, 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 nine months ended September 30, 2022 and 2021, the Company recorded bad debt expense in the amount of $1,685,000 and $1,115,000, respectively. 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:

	September 30, 2022		December 31, 2021
Deferred leasing commissions costs	$	21,134	$	20,347
Less: accumulated amortization	(11,020)		(9,860)
Deferred leasing commission costs, net	$	10,114	$	10,487

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 September 30, 2022 is as follows, in thousands:

September 30,	Minimum Future Rents
2022	$	66,991
2023	54,799
2024	40,244
2025	27,545
2026	20,172
Thereafter	29,788
Total	$	239,539

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%. Each of the loan agreements are 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 $39,699,000 and $40,724,000 as of September 30, 2022 and December 31, 2021, respectively.

On October 1, 2018, the Company, through the SASB Loan Borrower, and Goldman Sachs Mortgage Company entered into the $259,000,000 SASB 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 the SASB Loan Borrower in exchange for membership interests in the SASB Loan Borrower.

The term of the SASB Loan is comprised of an initial two-year term with three one-year extension options. Each extension option is 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.

16

HARTMAN SHORT TERM INCOME PROPERTIES XX, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

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 and any extensions of the SASB Loan.

On October 9, 2022, the SASB Loan Borrower exercised the third and final one-year maturity date extension agreement to extend the maturity date to October 9, 2023. 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 is the sole guarantor.

On February 10, 2022, the Company executed a $2,645,000 promissory note with East West Bank, resulting in net proceeds of $2,528,000. The promissory note is secured by the Company's 17 acre development site located in Fort Worth, Texas and is payable in monthly installments of principal and interest until the maturity date of February 25, 2023.

Refer to Note 11 (Related Party Transactions) and Note 16 (Subsequent Events) for information regarding the Company's unsecured promissory note with Hartman vREIT XXI, Inc.

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

Property/Facility	Payment	Maturity Date	Rate		September 30, 2022		December 31, 2021
Richardson Heights (1)	P&I	July 1, 2041	4.61	%	$	15,713	$	16,144
Cooper Street (1)	P&I	July 1, 2041	4.61	%	6,826		6,995
Bent Tree Green (1)	P&I	July 1, 2041	4.61	%	6,826		6,995
Mitchelldale (1)	P&I	July 1, 2041	4.61	%	10,334		10,590
Hartman SPE LLC (2)	IO	October 9, 2023	4.94	%	259,000		259,000
Hartman XXI	IO	October 31, 2022	10.00	%	17,168		6,012
Fort Worth - EWB	P&I	February 25, 2023	4.25	%	1,343		—
					$	317,210	$	305,736
Less: unamortized deferred loan costs					(1,313)		(1,959)
					$	315,897	$	303,777

(1)    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.  

(2)    On October 9, 2022, the Company executed the third and final one-year maturity date extension to October 9, 2023.

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:

	September 30, 2022		December 31, 2021
Deferred loan costs	$	5,443	$	5,399
Less:  deferred loan cost accumulated amortization	(4,130)		(3,440)
Total cost, net of accumulated amortization	$	1,313	$	1,959

Interest expense incurred for the three months ended September 30, 2022 and 2021 was $3,789,000 and $2,133,000, respectively, which includes amortization expense of deferred loan costs. Interest expense incurred for the nine months ended September 30, 2022 and 2021 was $8,527,000 and $6,296,000, respectively, which includes amortization expense of deferred loan costs. Interest expense of $596,000 and $315,000 was payable as of September 30, 2022 and December 31, 2021, respectively, and is included in accounts payable and accrued expenses in the accompanying consolidated balance sheets.

Fair Value of Debt

17

HARTMAN SHORT TERM INCOME PROPERTIES XX, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The fair value of the Company’s fixed rate notes payable, variable rate notes payable and secured revolving credit facilities aggregates to $308,358,000 and $310,271,000 as compared to book value of $317,210,000 and $305,736,000 as of September 30, 2022 and December 31, 2021, 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 September 30, 2022 and December 31, 2021.

Note 8 — Income (Loss) Per Share

Basic income (loss) per share is computed using net income (loss) 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 September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Numerator:
Net loss attributable to common stockholders (in thousands)	$	(5,740)	$	(2,462)	$	(10,391)	$	(9,978)
Denominator:
Weighted average number of common shares outstanding, basic and diluted (in thousands)	34,976		35,134		35,005		35,188
Basic and diluted loss per common share:
Net loss attributable to common stockholders per share	$	(0.16)	$	(0.07)	$	(0.30)	$	(0.28)

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, 2016, 2017, 2018, 2019, and 2020 have not been examined by the Internal Revenue Service. The Company’s federal income tax return for the year ended December 31, 2016 may be examined on or before September 15, 2022.

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.

18

HARTMAN SHORT TERM INCOME PROPERTIES XX, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 10 — Real Estate Held for Development

The Company’s investment in real estate assets held for development consists of (i) an approximately 17-acre land parcel located in Fort Worth, Texas, (ii) a 10-acre land development located in Grand Prairie, Texas, and which was previously held for disposition by Hartman XIX, and (iii) one pad site development acquired from HIREIT.

Note 11 — Related Party Transactions

Hartman Advisors LLC ("Advisor"), is a Texas limited liability company. Advisor is the sole member of Hartman vREIT XXI Advisor, LLC ("XXI Advisor"), which is the advisor for vREIT XXI. vREIT XXI pays acquisition fees and asset management fees to the XXI Advisor in connection with the acquisition of properties and management of the Company. vREIT XXI pays property management and leasing commissions to the Property Manager in connection with the management and leasing of vREIT XXI's properties.

The table below shows the related party balances the Company owes to and is owed by, in thousands:

	September 30, 2022		December 31, 2021
Due to vREIT XXI	$	(11)	$	—
Due from other related parties	1,257		115
Total due from related parties, net	$	1,246	$	115

During the fourth quarter of 2019, the Company borrowed under an unsecured promissory note payable to vREIT XXI in the face amount of $10,000,000 with an interest rate of 10% annually. This unsecured promissory note had an outstanding balance of $10,000,000 and $6,012,000 as of September 30, 2022 and December 31, 2021, respectively. In addition to the balance due under this note, the Company received advances from vREIT XXI totaling $7,168,000 which were outstanding as of September 30, 2022 and which were not covered by the unsecured promissory note referred to herein. The total balance of $17,168,000 as of as of September 30, 2022 has been included in Notes Payable - related party on the accompanying balance sheets. The Company recognized interest expense on the affiliate balance in the amount of $439,000 and $262,000 for the three months ended September 30, 2022 and 2021, respectively. For the nine months ended September 30, 2022 and 2021, the Company recognized interest expense on the affiliate balance in the amount of $795,000 and $400,000, respectively which is included in interest expense in the accompanying consolidated statements of operations. Refer to Note 16 (Subsequent Events) regarding the lapsed maturity of the unsecured promissory note.

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 Company, 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, 2022. This note receivable had an outstanding balance of $1,726,000 as of September 30, 2022 and December 31, 2021, respectively, which is included in notes receivable – related party in the accompanying consolidated balance sheets. For the three months ended September 30, 2022 and 2021, the Company recognized interest income on this affiliate note in the amounts of $44,000. For the nine months ended September 30, 2022 and 2021, the Company recognized interest income on this affiliate note in the amounts of $130,000.

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 Company is a covenant guarantor for the secured mortgage indebtedness of each of the VIEs in the total amount of $24,587,000 as of

19

HARTMAN SHORT TERM INCOME PROPERTIES XX, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

September 30, 2022. There have been no claims on the covenants and management does not expect any claims or financial obligations with respect to the covenant guarantees.

On March 29, 2021, Hartman Income REIT Property Holdings, LLC, a wholly owned subsidiary of Hartman XX Operating Partnership, LP, was added, by means of a joinder agreement, to a master credit facility agreement where vREIT XXI is the guarantor. The Company’s Atrium II office property was added to the collateral security for the master credit facility agreement where the borrowing base of the facility increased by $1,625,000.

vREIT XXI owns 1,198,228 shares of the Company's common stock and a 2.47% ownership interest in Hartman SPE, LLC.

For the nine months ended September 30, 2022, the Company, the Advisor, and the Property Manager (collectively the "Settlement Parties") settled amounts owed to Hartman vREIT XXI with amounts owed by Hartman vREIT XXI to the Settlement Parties. The settlement resulted in the reduction of $795,000 of interest payable and reduction of $1,740,000 in principal of the unsecured promissory note from Hartman vREIT XXI in exchange for the reduction of $2,535,000 in unpaid advisory and management fees owed from Hartman vREIT XXI.

Note 12 - 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 September 30, 2022 and December 31, 2021, respectively, the Company has 1,000 shares of convertible preferred stock issued and outstanding.

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.

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HARTMAN SHORT TERM INCOME PROPERTIES XX, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Stock-Based Compensation

On July 26, 2022, the Board approved of cash payments totaling $400,000 in lieu of unissued shares due to non-employee directors under the non-employee director's compensation plan. The Incentive Plan that provides for the issuance of the restricted common stock awards to non-employee director has expired and requires stockholder approval for modification or reinstatement. All non-employee director compensation will be cash based until incentive stock is available.

Distributions

The following table reflects the total distributions the Company has paid in cash (in thousands, except per share amounts) and the amount paid per common share, in each indicated quarter:

Quarter Paid	Distributions per Common Share		Total Distributions
2022
1st Quarter	$	0.112	$	3,958
2nd Quarter	0.128		4,500
3rd Quarter	—		—
Total 2022 year to date	$	0.240	$	8,458
2021
4th Quarter	$	0.112	$	3,927
3rd Quarter	0.104		3,662
2nd Quarter	0.092		3,246
1st Quarter	0.087		3,082
Total 2021	$	0.395	$	13,917

On July 8, 2022, the board of directors approved the suspension of the payment of distributions to the Company's stockholders.

Note 13 - Incentive Award Plan

The Company previously adopted an incentive plan, called the Omnibus Stock Incentive Plan, (the “Incentive Plan”) that provided 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 Incentive Plan has expired pursuant to its terms and requires stockholder approval for modification or reinstatement. The Board approved the payment of accrued director's fees in cash, as stock compensation was not available.

21

Note 14 - Commitments and Contingencies

Litigation

During February 2021, the state of Texas experienced a severe winter storm, unofficially referred to as Winter Storm Uri, which resulted in power outages and electrical grid failures across the state. Wholesale prices for electricity increased significantly during this period. As a result, the Company experienced a substantial increase in electricity billings for a number of our properties during the month of and after the storm.

On May 26, 2021, Summer Energy LLC (“Summer”) filed a lawsuit against Hartman Income REIT Management, Inc. (the “Property Manager”), a wholly owned subsidiary of the Company that manages our properties, in state court in Harris County, Texas. In this lawsuit, Summer seeks to collect approximately $8,400,000 from the Property Manager that Summer claims that the Property Manager owes Summer under one or more electricity sales agreements (“Agreements”) related to Winter Storm Uri. Of the approximately $8,400,000 claimed in the lawsuit, approximately $7,600,000 relates to wholly owned properties of the Company. Under the Agreements, Summer provided electricity to buildings managed by the Property Manager at indexed prices.

On March 24, 2022, the court entered a judgment in favor of Summer against the Property Manager in the amount of $7,871,000 plus customary pre- and post-judgment interest and attorney's fees. The Property Manager continues to dispute the amount of liability to Summer and has appealed the judgment. The outcome of the appeal is subject to significant uncertainty and we cannot provide any assurance that the Property Manager will ultimately prevail. Even if the Property Manager is ultimately successful in its appeal, it may take considerable time to resolve the matter. The Company had recognized the share of the judgment amount applicable to wholly owned properties of the Company, approximately $6,731,000, within the Company's consolidated statement of operations for fiscal year 2021. The Company has also recognized $370,000 of pre-judgment interest and attorney fees. Many of the Company’s leases contain provisions that require tenants to pay their allocable share of operating expenses, including utilities. At this time, the Company is unable to reasonably estimate an amount expected to be recovered from our tenants.

On April 25, 2022, the Property Manager filed its supersedeas surety bond totaling $2,197,000 in order to suspend enforcement the judgment for the duration of the Property Manager's appeal. The share of the supersedeas surety bond applicable to wholly owned properties of the Company totaled $2,001,000 and is recorded in prepaid expenses and other assets on the Company's consolidated balance sheets.

Contingencies

Events related to the COVID-19 pandemic and the actions taken to contain it have created substantial uncertainty for all businesses, including the Company. The Company’s consolidated financial statements as of and for the three and nine months ended September 30, 2022 have been prepared in light of these circumstances.

Proposed merger with Hartman XXI

The Company is continuing to evaluate the timing for a proposed merger with vREIT XXI. The Company believes that the achievable synergy resulting from the merger is compelling and intends to pursue the merger at the appropriate time.

Charter provision regarding liquidity or liquidation

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

The independent directors of the Company’s board of directors have begun a strategic review process to identify, examine, and consider a range of strategic alternatives available to the Company with the objective of maximizing shareholder value. On October 14, 2022, the Company’s board of directors formed a new Executive Committee to continue the review of strategic alternatives with the objective of maximizing shareholder value.

22

Note 15 - Defined Contribution Plan

The Company sponsors a defined contribution pension plan, the Hartman 401(k) Profit Sharing Plan, covering substantially all of its full-time employees who are at least 21 years of age. Participants may annually contribute up to 100% of pretax annual compensation and any applicable catch-up contributions, as defined in the plan and subject to deferral limitations as set forth in Section 401(k) of the Internal Revenue Code. Participants may also contribute amounts representing distributions from other qualified benefit or defined contribution plans. The Company may make discretionary matching contributions. For the three months ended September 30, 2022 and 2021, the Company matched $99,000 and $98,000, respectively. For the nine months ended September 30, 2022 and 2021, the Company matched $298,000 and $199,000, respectively. The Company had a stock match plan liability of $1,911,000 and $1,613,000 as of September 30, 2022 and December 31, 2021, respectively.

Note 16 - Subsequent Events

On October 19, 2022, the SASB Loan Borrower received a notice from the loan servicer of the SASB Loan in connection with an event of default due to the noncompliance with the loan agreement's insurance requirements relating to a single property. The event of default was previously waived for the sole purpose of exercising the option to extend the SASB Loan term. The event of default triggers the cash management provisions under the SASB Loan agreement, however, cash management has not yet been implemented. Management is working to obtain coverage that is acceptable to the lender and cure the event of default.

The Company's unsecured promissory note payable to Hartman vREIT XXI, Inc., which has a maturity date of October 31, 2022, remains unpaid and is currently in maturity default. Management intends to pursue a waiver of the maturity date. The loan parties are in negotiations to address the unsecured promissory note. It is uncertain when an agreement will be reached.

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

• the extent to which the ongoing COVID-19 pandemic impacts our financial condition, results of operations and cash flows depends on future developments, which are highly uncertain and cannot be predicted with confidence, including the scope, severity and duration of the pandemic and its impact on the U.S. economy and potential changes in customer behavior that could adversely affect the use of and demand for office space;

• the financial condition of our customers could deteriorate or further worsen, which could be further exacerbated by the COVID-19 pandemic;

• our assumptions regarding potential losses related to customer financial difficulties due to the COVID-19 pandemic or otherwise could prove incorrect;

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

• changes in global, national, regional or local economic, demographic or capital market conditions, including volatility as a result of the current ongoing conflict between Russia and Ukraine and the rapidly evolving measures in response;

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

• construction costs that may exceed estimates or construction delays;

• increases in interest rates;

• our ability to obtain financing on acceptable terms, satisfy our existing debt service obligations and negotiate maturity date extensions or other modifications to the terms of our existing financing arrangements to the extent necessary (see Note 2 - Summary of Significant Accounting Policies - Going Concern Evaluation, to the consolidated financial statements included in this Quarterly Report;

• foreclosure or other actions initiated by lenders in response to defaults on loans secured by our assets;

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

• litigation risks, including without limitation the outcome of our appeal related to the pricing of electricity provided to certain of our properties during the severe winter weather experienced in Texas (see Part II- Item 1.Legal Proceedings and Note 14 - Commitments and Contingencies, to the consolidated financial statements included in this Quarterly Report);

• 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;

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

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

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

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

• changes to generally accepted accounting principles in the United States of America (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 (referred to herein as our Annual Report) for the year ended December 31, 2021.

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 we determine 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 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. We 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 September 30, 2022 we owned 44 commercial real properties comprising approximately 6.8 million square feet plus four pad sites and two land developments, all located in Texas.

The SASB Loan outstanding as of September 30, 2022 has a final extended maturity date of October 9, 2023, 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 Codification (ASC) 205-40, “Presentation of Financial Statements – Going Concern.”

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.

The current economic slowdown, rising interest rate environment, and inflation, have had a negative impact on the office real estate market and our Company. See Liquidity and Capital Resource section below.

On July 8, 2022, our board of directors approved the suspension of the payment of distributions to our stockholders, effective immediately. Our board of directors, in consultation with management, will continue to monitor our operations and

25

intends to resume distributions at a time and level determined to be prudent in relation to our other cash requirements or in order to maintain our REIT status for federal income tax purposes. However, it is impossible to predict if or when we will be able to resume the payment of distributions.

We operate under the direction of our board of directors, the members of which are accountable to us and our stockholders. We are internally managed by our subsidiary, Hartman Income REIT Management, Inc. Our property manager is responsible for operating, leasing and maintaining our properties.

Impact of the COVID-19 Pandemic

Since the first quarter of 2020, the COVID-19 pandemic has significantly impacted the global and U.S. economies. The Company’s properties are all located in Texas in the metropolitan areas of Houston, Dallas and San Antonio. The COVID-19 pandemic continues to be one of the most significant risks and uncertainties facing the real estate industry generally, and in particular REITs like ours that own office property. We cannot predict to what extent economic activity, including the use of and demand for office space, will return to pre-pandemic levels. During 2021 and for the first three quarters of 2022, the physical occupancy of our office properties remained lower than pre-pandemic levels. Even after the pandemic has ceased to be active, potential changes in customer behavior, such as the continued social acceptance, desirability and perceived economic benefits of work-from-home arrangements, resulting from the COVID-19 pandemic, could materially and negatively impact the future demand for office space, resulting in slower overall leasing and an adverse impact to our operations. See previously disclosed Risk Factors for a discussion of the potential adverse impact of COVID-19 on our business, results of operations and financial condition.

Investment Objectives and Strategy

We have invested in a diverse portfolio of real estate investments. As of September 30, 2022, we owned 29 office properties, 12 retail properties, and 3 industrial/flex properties. Historically, we have relied on a value add acquisition and development strategy, focused specifically properties located in Texas, to realize growth in the value of our investments, grow net cash from operations, and pay regular cash distributions to our stockholders.

The current economic slowdown, rising interest rate environment, inflation, and the COVID-19 pandemic have had a negative impact on our Company. Effective July 8, 2022, we have suspended the payment of distributions and seek to preserve capital to secure the Company's financial health on an ongoing basis.

We have changed our investment objectives and strategy to preserve the long-term health of the Company, and we do not anticipate acquiring any properties in the near future. Management and the Executive Committee of our Board of Directors are in the process of identifying, examining, and evaluating a range of strategic alternatives with the objective of maximizing shareholder value.

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 BOD agenda has obtained the approval of our stockholders (1) to defer the liquidation of our assets or (2) of an alternate strategy.

We elected to be taxed as a REIT under the Internal Revenue Code 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 September 30, 2022, we owned 44 commercial properties listed below.

Property Name	Location	Gross Leasable Area SF	Percent Occupied		Annualized Base Rental Revenue (in thousand)		Average Base Rental Revenue per Occupied SF		Average Net Effective Annual Base Rent per Occupied SF
Retail:
Promenade	Dallas	176,585	75	%	$	1,560	$	11.81	$	11.79
Prestonwood Park	Dallas	105,783	84	%	$	1,779	$	19.96	$	19.57
Richardson Heights	Dallas	201,433	76	%	$	2,696	$	17.56	$	17.56
Cooper Street	Dallas	127,696	100	%	$	1,625	$	12.73	$	12.75
One Mason SC	Houston	75,183	91	%	$	1,047	$	15.24	$	15.26
Chelsea Square SC	Houston	70,275	66	%	$	534	$	11.49	$	12.00
Mission Center SC	Houston	112,971	90	%	$	953	$	9.38	$	9.43
Garden Oaks SC	Houston	106,858	99	%	$	1,835	$	17.30	$	17.33
Harwin	Houston	38,813	99	%	$	384	$	9.95	$	9.52
Fondren	Houston	93,196	92	%	$	911	$	10.66	$	10.75
Northeast Square SC	Houston	40,525	85	%	$	469	$	13.68	$	13.52
Walzem Plaza SC	San Antonio	182,713	72	%	$	1,589	$	12.00	$	12.00
Total - Retail		1,332,031	84	%	$	15,382	$	13.78	$	13.77
Office:
North Central Plaza	Dallas	198,374	69	%	$	2,038	$	14.95	$	14.96
Gateway Tower	Dallas	266,412	60	%	$	2,103	$	13.20	$	13.32
Bent Tree Green	Dallas	139,609	70	%	$	2,024	$	20.58	$	20.47
Parkway Plaza I&II	Dallas	136,506	79	%	$	1,678	$	15.55	$	15.45
Hillcrest	Dallas	203,688	81	%	$	2,265	$	13.69	$	13.71
Skymark	Dallas	115,700	88	%	$	1,863	$	18.23	$	18.20
Corporate Park Place	Dallas	113,429	80	%	$	1,096	$	12.01	$	11.81
Westway One	Dallas	165,982	72	%	$	2,183	$	18.34	$	18.20
Three Forest Plaza	Dallas	366,549	78	%	$	5,070	$	17.76	$	17.60
Spring Valley	Dallas	94,304	72	%	$	905	$	13.36	$	13.50
Tower Pavilion	Houston	87,589	88	%	$	730	$	9.44	$	9.34
The Preserve	Houston	218,689	91	%	$	2,792	$	13.99	$	13.94
Westheimer Central	Houston	182,506	82	%	$	1,624	$	10.90	$	11.28
11811 N Freeway	Houston	156,362	75	%	$	1,719	$	14.63	$	14.65
Atrium I	Houston	118,461	85	%	$	1,417	$	14.02	$	14.21
Atrium II	Houston	111,853	96	%	$	1,212	$	11.16	$	11.48
3100 Timmons	Houston	111,265	86	%	$	1,576	$	16.48	$	16.52
Cornerstone	Houston	71,008	65	%	$	550	$	11.84	$	11.76
Northchase	Houston	128,981	65	%	$	1,057	$	12.55	$	12.67
616 FM 1960	Houston	142,194	63	%	$	1,158	$	12.90	$	12.88
601 Sawyer	Houston	88,258	90	%	$	1,326	$	16.70	$	16.53
Gulf Plaza	Houston	120,651	82	%	$	1,966	$	19.89	$	20.29
Timbercreek Atrium	Houston	51,035	79	%	$	476	$	11.85	$	11.75
Copperfield	Houston	42,621	99	%	$	626	$	14.76	$	14.56
400 N. Belt	Houston	230,872	41	%	$	1,120	$	11.89	$	12.20
Ashford Crossing	Houston	158,451	87	%	$	2,070	$	15.03	$	15.14
Regency Square	Houston	64,063	94	%	$	572	$	9.52	$	9.51
Energy Plaza	San Antonio	180,119	94	%	$	3,523	$	20.89	$	20.86
One Technology Ctr	San Antonio	196,348	89	%	$	4,468	$	25.46	$	25.50
Total -office		4,261,879	77	%	51,207		15.52		15.54
Industrial/Flex
Central Park	Dallas	73,099	91	%	$	573	$	8.61	$	9.83
Quitman	Houston	736,957	88	%	$	1,353	$	2.08	$	2.08
Mitchelldale	Houston	377,752	95	%	$	2,434	$	6.79	$	6.84
Total -Industrial/Flex		1,187,808	91	%	$	4,360	$	4.06	$	4.15
Grand Total		6,781,718	81	%	$	70,949	$	12.92	$	12.95

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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, 2021, as filed with the SEC on March 31, 2022 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 nine months ended September 30, 2022. See also Note 2 (Summary of Significant Accounting Policies) 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 and nine months ended September 30, 2022 versus September 30, 2021.

As of September 30, 2022 and 2021, respectively, we owned 44 commercial properties comprising approximately 6.8 million square feet plus four pad sites and two land developments, all located in Texas. As of September 30, 2022 and 2021, respectively, we owned 15 properties located in Richardson, Arlington and Dallas, Texas, 26 properties located in Houston, Texas and three properties located in San Antonio, Texas.

Revenues - The primary source of our revenue is rental revenues. For the three and nine months ended September 30, 2022 and 2021, we had total revenues of $23,481,000 and $23,128,000, and $70,002,000 and $70,158,000, respectively. Revenue was consistent period over period with an increase in overall occupancy from 79% to 81% offset with a decrease in average net effective base rent per occupied square foot from $13.10 to $12.95.

Property operating expenses - Property operating expenses consist of contract services, repairs and maintenance, utilities and management fees and property level administrative expenses including bad debt expense. For the three and nine months ended September 30, 2022 and 2021, we incurred property operating expenses of $7,748,000 and $7,046,000, and $20,797,000 and $26,483,000, respectively. The decrease in property operating expenses over the nine month period is primarily due to the increase in electricity expenses as a direct result of the severe winter storm during February 2021, also known as Winter Storm Uri. See Part II - Item 1. Legal Proceedings and Note 14 - (Commitments and Contingencies) for additional information regarding Winter Storm Uri. Electric utility expense for the nine months ended September 30, 2022 was $6,666,000 compared to $13,221,000 for the nine months ended September 30, 2021. The increase in property operating expenses over the three month period is primarily due to increase in electricity expenses as a result of inflation creating upward pressure on energy costs. Electricity costs for the three months ended September 30, 2022 was $2,907,000 compared to $1,883,000 for the three months ended September 30, 2021.

Real estate taxes and insurance - Real estate taxes and insurance for the three months ended September 30, 2022 and 2021 were $3,589,000 and $3,008,000, and $10,555,000 and $10,069,000, for the nine months ended September 30, 2022 and 2021, respectively. The increase in real estate taxes and insurance is primarily due to higher insurance premiums on our annual renewal during the second quarter of 2022.

Depreciation and amortization - Depreciation and amortization expense for the three months ended September 30, 2022 and 2021 was $6,856,000 and $6,918,000, respectively. For the nine months ended September 30, 2022 and 2021, depreciation and amortization expense was $19,908,000 and $20,033,000, respectively.

Debt issuance costs write off - During the second and third quarters of 2022, the Company undertook refinancing efforts which were not successful. Professional fees incurred associated with the refinancing efforts totaled $1,018,000 and were expensed during the three months ended September 30, 2022.

General and administrative expenses - General and administrative expenses consist primarily of audit fees, transfer agent fees, other professional fees, and independent director compensation. General and administrative expenses for the three months ended September 30, 2022 and 2021 were $3,413,000 and $2,524,000, respectively. For the nine months ended September 30, 2022 and 2021, General and administrative expenses were $9,916,000 and $8,378,000, respectively. We incurred additional legal expenses from Summer Energy litigation. Legal fees totaled $550,000 for nine months ended September 30, 2022 compared to $140,000 for the nine months ended September 30, 2021.

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Interest expense - Interest expense for the three months ended September 30, 2022 and 2021, was $3,789,000 and $2,133,000, respectively. For the nine months ended September 30, 2022 and 2021, interest expense was $8,527,000 and $6,296,000, respectively. The increase is due to overall increase in notes payable from $305,859,000 to $315,897,000 during the comparative periods. Further, the interest rate on the Company's variable rate debt increased from 1.95% to 4.94% as of September 30, 2021 and 2022, respectively.

Net loss - We generated a net loss of $5,804,000 and $2,550,000 for the three months ended September 30, 2022 and 2021, respectively. For the nine months ended September 30, 2022 and 2021, we generated net loss $10,365,000 and $10,529,000.

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 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 Modified Funds From Operations, or 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.

Our MFFO calculation complies with the IPA’s Practice Guideline described above. In calculating MFFO, we exclude acquisition related expenses. We do not currently exclude amortization of above and below market leases, fair value adjustments of derivative financial instruments, deferred rent receivables and the adjustments of such items related to noncontrolling interests. Under GAAP, acquisition fees and expenses are characterized as operating expenses in determining operating net income. These expenses are paid in cash by us, and therefore such funds will not be available to distribute to investors. All paid and accrued acquisition fees and expenses negatively impact our operating performance during the period in which properties are acquired and will have negative effects on returns to investors, the potential for future distributions, and cash flows generated by us, unless earnings from operations or net sales proceeds from the disposition of other properties are generated to cover the purchase price of the property, these fees and expenses and other costs related to such property. Accordingly, MFFO may not be an accurate indicator of our operating performance, especially during periods in which properties are being acquired. MFFO that excludes such costs and expenses would only be comparable to non-listed REITs that have completed their acquisition activities and have similar operating characteristics to us. Further, under GAAP, certain contemplated non-cash fair value and other non-cash adjustments are considered operating non-cash adjustments to net income in determining cash flow from operating activities. In addition, we view fair value adjustments of derivatives and gains and losses from dispositions of assets as non-recurring items or items which are unrealized and may not ultimately be realized, and which are not reflective of on-going operations and are therefore typically adjusted for when assessing operating performance. The purchase of properties, and the corresponding expenses associated with that process, is a key operational feature of our business plan to generate operational income and cash flows in order to make distributions to investors.

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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 and nine months ended September 30, 2022 and 2021, including a reconciliation of such non-GAAP financial performance measures to our net loss, in thousands.

	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Net loss	$	(5,804)	$	(2,550)	$	(10,365)	$	(10,529)
Depreciation and amortization of real estate assets	6,856		6,918		19,908		20,033
Funds from operations (FFO)	1,052		4,368		9,543		9,504
Organization and offering costs	6		27		29		56
Modified funds from operations (MFFO)	$	1,058	$	4,395	$	9,572	$	9,560

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 September 30, 2022, in thousands:

Period	Cash (1)		DRIP (2)(3)		Total
Year ended December 31, 2011	$	255	$	242	$	497
Year ended December 31, 2012	891		869		1,760
Year ended December 31, 2013	1,681		1,594		3,275
Year ended December 31, 2014	2,479		2,358		4,837
Year ended December 31, 2015	3,475		3,718		7,193
Year ended December 31, 2016	8,918		2,988		11,906
Year ended December 31, 2017	12,650		—		12,650
Year ended December 31, 2018	12,555		—		12,555
Year ended December 31, 2019	12,811		—		12,811
Year ended December 31, 2020	15,797		—		15,797
Year ended December 31, 2021	13,668		—		13,668
Quarter ended March 31, 2022	3,958		—		3,958
Quarter ended June 30, 2022	4,500		—		4,500
Quarter ended September 30, 2022	—		—		—
Total	$	93,638	$	11,769	$	105,407

(1)Distributions are paid on a monthly basis. Distributions for all record dates of a given month are paid approximately 40

30

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 $77,000 and $232,000 for the three months ended September 30, 2022 and 2021, respectively. For the nine months ended September 30, 2022 and 2021, distributions to non-controlling interests were $984,000 and $621,000, respectively. For the nine months ended September 30, 2022, we paid aggregate distributions of $8,458,000 in cash to common stockholders. During the same period, cash provided by operating activities was $8,370,000 and our FFO was $9,543,000.

On July 8, 2022, the board of directors approved the suspension of the payment of distributions to the Company's stockholders.

Liquidity and Capital Resources

Our principal demands for funds during the short and long-term are and will be for the payment of operating expenses, for payments under our debt obligations, and, to the extent we elect to resume the payment of distributions, for the payment of distributions. Generally, we expect to meet cash needs for items from our cash flow from our real estate and real estate-related investments, debt financing, and proceeds from the sale of our real estate properties and real estate-related investments; 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).

The current economic slowdown, rising interest rate environment, inflation, and the COVID-19 pandemic have had a negative impact on our Company, as discussed in the cash flows section below. We have experienced higher operating and financing costs which has resulted in working capital constraints and negatively impacted our free cash flow. In response to these market conditions, we have implemented cost saving measures to reduce discretionary spending and preserve capital. As a result, we believe that our cash flow from operations, anticipated proceeds from asset sales, and anticipated financing activities are sufficient to meet our liquidity needs for the foreseeable future.

We use, and intend to use in the future, secured and unsecured debt to acquire properties and make other investments. As of September 30, 2022, our outstanding secured debt is $300,042,000. 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 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. We may borrow more than 50% of the contract purchase price of a real estate asset we acquire to the extent our board of directors determines that borrowing these amounts is prudent.

Pursuant to ASC 205-40, “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 the consolidated financial statements included in the Quarterly Report are issued. The SASB Loan has a currently extended maturity date of October 9, 2023. On October 9, 2022, SPE LLC executed the third and final maturity date extension agreement to extend the maturity to October 9, 2023.

The October 9, 2023 SASB Loan maturity date is within one year of the issuance of these consolidated financial statements. Uncertainty as to the Company's ability to obtain financing to satisfy the existing SASB Loan obligation, requires require management to conclude, in accordance with guidance provided by ASU 2014-15, that there is a substantial doubt about the Company's ability to continue as a going concern within one year of the issuance date of the consolidated financial statements included in the Quarterly Report. Management believes that SPE LLC will be able to obtain financing to replace the SASB Loan prior to the October 9, 2023 maturity date.

Increases in the cost of financing due to higher interest rates will prevent us from refinancing debt obligations at terms as favorable as the terms of existing indebtedness. Further, increases in interest rates would increase the amount of our debt payments on our variable rate debt to the extent the interest rates on such debt are not limited through interest rate cap

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agreements. Increases in interest rates will have an adverse effect on our financial condition and results of operations and will impair our ability to resume the payment of distributions.

The consolidated financial statements as of September 30, 2022 include the accounts of the Company, our operating partnership and its subsidiaries, Hartman SPE, LLC, HIREIT, Advisor and Hartman XIX. Prior to October 1, 2018, our consolidated financial statements did not include Hartman SPE, LLC. Prior to July 1, 2020, our consolidated financial statements did not include HIREIT, Advisor or Hartman XIX.

Cash Flows from Operating Activities

For the nine months ended September 30, 2022 and 2021, net cash provided by operating activities was $8,370,000 versus $11,771,000, respectively. The decrease in cash is primarily due to payment of supersedeas surety bond totaling $2,001,000 and recorded in prepaid expenses and other current assets. Further, we have has incurred higher property operating costs and interest expense during the nine months ended September 30, 2022 as described in the Results of Operations section above.

Cash Flows from Investing Activities

For the nine months ended September 30, 2022 and 2021, net cash used in investing activities was $12,700,000 versus $9,906,000, respectively. All cash used in investing activities is applicable to our investment in real estate related to tenant improvements and other capital expenditures.

Cash Flows from Financing Activities

For the nine months ended September 30, 2022 and 2021, net cash provided by (used in) financing activities was $3,483,000 and $(8,290,000), respectively. The increase in cash provided by financing activities is primarily due to an increase in net borrowing from affiliate. Net cash provided under our note payable to related party affiliate increased by $12,895,000 over the nine months ended September 30, 2022. The capital provided by related party financing was used to aid funding of capital expenditures of $5,045,000 during the second quarter of 2022, the share of the supersedeas surety bond applicable to wholly owned properties of our company totaling $2,001,000, insurance premium payments of $1,252,000, and loan fees of $772,000.

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 September 30, 2022, our borrowings were not in excess of 300% of the value of our net assets.

As of September 30, 2022, we had notes payable totaling an aggregate principal amount of $317,210,000. For more information on our outstanding indebtedness, see Note 7 (Notes Payable) to the consolidated financial statements included in this report.

Off-Balance Sheet Arrangements

As of September 30, 2022 and December 31, 2021, 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.

We are a covenant guarantor for the secured mortgage indebtedness of VIEs in the total amount of $24,587,000 and $24,748,000 as of September 30, 2022 and December 31, 2021, respectively. We are is not deemed to be the primary beneficiary of the VIEs. See Note 11 (Related Party Transactions).

Recent Accounting Pronouncements

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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 (Summary of Significant Accounting Policies) to the notes to the accompanying consolidated financial statements included in this quarterly report.

Related-Party Transactions and Agreements

We have entered into management and advisory agreements with our 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, 2021 filed with the SEC on March 31, 2022 and Note 11 (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.

Subsequent Events

Refer to Note 16 (Subsequent Events) to the consolidated financial statements included in this Quarterly Report for information regarding subsequent events.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

We will be exposed to interest rate changes primarily as a result of 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.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

In connection with the preparation of this Form 10-Q, as of September 30, 2022, 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 Securities Exchange Act of 1934, as amended). 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 September 30, 2022, 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 September 30, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II

OTHER INFORMATION

Item 1.  Legal Proceedings

During February 2021, the state of Texas experienced a severe winter storm, unofficially referred to as Winter Storm Uri, which resulted in power outages and electrical grid failures across the state. Wholesale prices for electricity increased significantly during this period. As a result, we experienced a substantial increase in electricity billings for a number of our properties during the month of and after the storm.

On May 26, 2021, Summer Energy LLC (“Summer”) filed a lawsuit against Hartman Income REIT Management, Inc. (the “Property Manager”), a wholly owned subsidiary of the Company that manages our properties, in state court in Harris County, Texas. In this lawsuit, Summer seeks to collect approximately $8.4 million from the Property Manager that Summer claims that the Property Manager owes Summer under one or more electricity sales agreements (“Agreements”) related to Winter Storm Uri. Of the approximately $8.4 million claimed in the lawsuit, approximately $7.6 million relates to wholly owned properties of the Company. Under the Agreements, Summer provided electricity to buildings managed by the Property Manager at indexed prices.

On March 24, 2022, the court entered a judgment in favor of Summer against the Property Manager in the amount of $7,871,000 plus customary pre- and post-judgment interest and attorney's fees. The Property Manager continues to dispute the amount of liability to Summer and has appealed the judgment. The outcome of the appeal is subject to significant uncertainty and we cannot provide any assurance that the Property Manager will ultimately prevail. Even if the Property Manager is ultimately successful in its appeal, it may take considerable time to resolve the matter. The Company had recognized the share of the judgment amount applicable to wholly owned properties of the Company, approximately $6,731,000, within the Company's consolidated statement of operations for fiscal year 2021. The Company has also recognized $370,000 of pre-judgment interest and attorney fees. Many of the Company’s leases contain provisions that require tenants to pay their allocable share of operating expenses, including utilities. At this time, the Company is unable to reasonably estimate an amount expected to be recovered from our tenants.

On April 25, 2022, the Property Manager filed its supersedeas surety bond totaling $2,197,000 in order to suspend enforcement the judgment for the duration of the Property Manager's appeal. The share of the supersedeas surety bond applicable to wholly owned properties of the Company totaled $2,001,000 and is recorded in prepaid expenses and other assets on the Company's consolidated balance sheet.

Item 1A. Risk Factors

The ongoing conflict between Russia and Ukraine has caused severe disruptions in the U.S. and global economy and may have an adverse impact on our financial performance.

On February 24, 2022, Russian troops began a full-scale invasion of Ukraine and the countries remain in active armed conflict. Around the same time, the United States, the United Kingdom, the European Union, and several other nations announced a broad array of new or expanded sanctions, export controls, and other measures against Russia, Russia-backed separatist regions in Ukraine, and certain banks, companies, government officials, and other individuals in Russia and Belarus. The ongoing conflict and the rapidly evolving measures in response could be expected to have a negative impact on the economy and business activity globally (including the United States), and therefore could adversely affect the performance of our investments. The severity and duration of the conflict and its impact on global economic and market conditions are impossible to predict, and as a result, could present material uncertainty and risk with respect to us and the performance of our investments and operations, and our ability of to achieve our investment objectives. Similar risks will exist to the extent that any investments, service providers, vendors or certain other parties have material operations or assets in Russia, Ukraine, Belarus, or the immediate surrounding areas.

We may not have sufficient funds to pay interest payments if interest rates increase significantly.

Mortgage loans we have or may in the future obtain may have variable interest rates. In response to the last global economic recession, extraordinary monetary policy actions of the U.S. Federal Reserve and other central banking institutions, including the utilization of quantitative easing, were taken to create and maintain a low interest rate environment. However, the U.S. Federal Reserve raised its benchmark interest rate nine times between December 2015 and the end of 2020, including four times in 2018, each time by a quarter of a percentage point, before reducing interest rates three times in 2019 and twice in 2020. The U.S. Federal Reserve reduced its benchmark interest rate to 0% in March 2020 before voting in November 2020 to keep short-term interest rates anchored in a range between 0% and 0.25%. Further, the U.S. Federal Reserve has signaled that it will

34

raise interest rates in 2022 and increased rates 0.25% in March 2022, 0.5% in May 2022, 0.75% in June 2022, 0.75% in July 2022 and 0.75% in September 2022. Any change in the fiscal policies or stated target interest rates of the U.S. Federal Reserve or other central banking institutions, or market expectations of such change, are difficult to predict and may result in significantly higher long-term interest rates. Such a transition may be abrupt and may, among other things, reduce the availability and/or increase the costs of obtaining new debt and refinancing existing indebtedness.

In the event that the interest rate on any mortgage loan increases significantly, we may not have sufficient funds to pay the required interest payments. In such event, our continued ownership of the applicable property that secures such loan may be threatened. Further, an increase in interest rates and adverse changes in fiscal policy or credit market conditions could have an adverse effect on consumer spending, which could impact our revenues.

Distributions

We have suspended the payment of distributions to our stockholders indefinitely. While our board of directors, in consultation with management, will continue to identify a prudent time to resume distributions, it is impossible to predict if or when we will be able to resume the payment of distributions.

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

None.

Item 3. Defaults Upon Senior Securities    

Refer to Note 16 (Subsequent Events) for a description of an occurrence of an event of default related to the SASB Loan.

Item 4.  Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

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 pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2*	Certification of 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

35

* Filed herewith

36

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: November 14, 2022                                                   

By: /s/ Mark T. Torok

Mark T. Torok

Chief Executive Officer

(Principal Executive Officer)

Date: November 14, 2022                                               

By: /s/ Louis T. Fox, III

Louis T. Fox, III,

Chief Financial Officer,

(Principal Financial and Principal Accounting Officer)

37

EX-31.1

EXHIBIT 31.1

Certification of Principal Executive Officer Pursuant to

Section 302 of the Sarbanes-Oxley Act of 2002

I, Mark T. Torok, 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: November 14, 2022

/s/ Mark T. Torok

Mark T. Torok

Chief Executive Officer

(Principal Executive Officer)

EX-31.2

EXHIBIT 31.2

Certification of Principal Financial 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: November 14, 2022

/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 September 30, 2022, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, the Chief Executive Officer of the Company, 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: November 14, 2022

/s/ Mark T. Torok

Mark T. Torok

Chief Executive Officer

(Principal Executive Officer)

EX-32.2

EXHIBIT 32.2

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 September 30, 2022, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, 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: November 14, 2022

/s/ Louis T. Fox, III

Louis T. Fox, III

Chief Financial Officer and Treasurer

(Principal Financial and Accounting Officer)

XML

Cover Page - shares	9 Months Ended
	Sep. 30, 2022	Nov. 01, 2022
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Sep. 30, 2022
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
Entity Filer Category	Non-accelerated Filer
Smaller Reporting Company	true
Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding (in shares)		34,975,377
Amendment Flag	false
Entity Central Index Key	0001446687
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2022
Document Fiscal Period Focus	Q3

XML

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
ASSETS
Real estate assets, at cost	$ 633,285	$ 620,585
Accumulated depreciation and amortization	(192,948)	(173,040)
Real estate assets, net	440,337	447,545
Cash and cash equivalents	462	285
Restricted cash	17,949	18,972
Accrued rent and accounts receivable, net	13,247	13,238
Note receivable - related party	1,726	1,726
Deferred leasing commission costs, net	10,114	10,487
Goodwill	250	250
Prepaid expenses and other assets	4,902	2,100
Real estate held for development	10,403	10,403
Due from related parties, net	1,246	115
Investment in affiliate	201	201
Total assets	500,837	505,322
Liabilities:
Notes payable, net	298,729	297,765
Notes payable - related party	17,168	6,012
Accounts payable and accrued expenses	39,542	38,471
Tenants' security deposits	6,088	5,756
Total liabilities	361,527	348,004
Stockholders' equity:
Preferred stock, $0.001 par value, 200,000,000 convertible, non-voting shares authorized, 1,000 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively	0	0
Common stock, $0.001 par value, 750,000,000 authorized, 34,975,377 shares and 35,110,421 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively	35	35
Additional paid-in capital	296,153	297,335
Accumulated distributions and net loss	(178,223)	(162,355)
Total stockholders' equity	117,965	135,015
Noncontrolling interests in subsidiaries	21,345	22,303
Total equity	139,310	157,318
Total liabilities and equity	$ 500,837	$ 505,322

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CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Sep. 30, 2022	Dec. 31, 2021
Statement of Financial Position [Abstract]
Preferred stock, par value (in USD 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 USD per share)	$ 0.001	$ 0.001
Common stock, shares authorized (in shares)	750,000,000	750,000,000
Common stock, shares issued (in shares)	34,975,377	35,110,421
Common stock, shares outstanding (in shares)	34,975,377	35,110,421

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CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Revenues
Rental revenues	$ 22,467	$ 21,567	$ 66,953	$ 66,391
Management and advisory income	1,014	1,561	3,049	3,767
Total revenues	23,481	23,128	70,002	70,158
Expenses (income)
Property operating expenses	7,748	7,046	20,797	26,483
Organization and offering costs	6	27	29	56
Real estate taxes and insurance	3,589	3,008	10,555	10,069
Depreciation and amortization	6,856	6,918	19,908	20,033
Management and advisory expenses	2,911	4,066	9,749	9,503
Debt issuance costs write off	1,018	0	1,018	0
General and administrative	3,413	2,524	9,916	8,378
Interest expense	3,789	2,133	8,527	6,296
Interest and dividend income	(45)	(44)	(132)	(131)
Total expenses, net	29,285	25,678	80,367	80,687
Net loss	(5,804)	(2,550)	(10,365)	(10,529)
Net (loss) income attributable to noncontrolling interests	(64)	(88)	26	(551)
Net loss attributable to common stockholders, basic	(5,740)	(2,462)	(10,391)	(9,978)
Net loss attributable to common stockholders, diluted	$ (5,740)	$ (2,462)	$ (10,391)	$ (9,978)
Net loss attributable to common stockholders, basic ( in USD per share)	$ (0.16)	$ (0.07)	$ (0.30)	$ (0.28)
Net loss attributable to common stockholders , diluted ( in USD per share)	$ (0.16)	$ (0.07)	$ (0.30)	$ (0.28)
Weighted average number of common shares outstanding, basic (in shares)	34,976	35,134	35,005	35,188
Weighted average number of common shares outstanding, diluted (in shares)	34,976	35,134	35,005	35,188

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CONSOLIDATED STATEMENTS OF EQUITY - USD ($) $ in Thousands	Total	Total Stockholders' Equity	Preferred Stock	Common Stock	Additional Paid-In Capital	Accumulated Distributions and Net Loss	Noncontrolling Interests in Subsidiaries
Preferred stock, shares outstanding, beginning balance (in shares) at Dec. 31, 2020			1,000
Beginning balance at Dec. 31, 2020	$ 188,142	$ 163,777	$ 0	$ 35	$ 299,375	$ (135,633)	$ 24,365
Common stock, shares outstanding, beginning balance (in shares) at Dec. 31, 2020				35,318,000
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Redemptions of common shares (in shares)				(231,000)
Redemptions of common shares	(2,345)	(2,345)			(2,345)
Dividends and distributions (cash)	(11,032)	(10,411)				(10,411)	(621)
Net income (loss)	(10,529)	(9,978)				(9,978)	(551)
Preferred stock, shares outstanding, ending balance (in shares) at Sep. 30, 2021			1,000
Ending balance at Sep. 30, 2021	164,236	141,043	$ 0	$ 35	297,030	(156,022)	23,193
Common stock, shares outstanding, ending balance (in shares) at Sep. 30, 2021				35,087,000
Preferred stock, shares outstanding, beginning balance (in shares) at Jun. 30, 2021			1,000
Beginning balance at Jun. 30, 2021	171,514	148,001	$ 0	$ 35	297,560	(149,594)	23,513
Common stock, shares outstanding, beginning balance (in shares) at Jun. 30, 2021				35,138,000
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Redemptions of common shares (in shares)				(51,000)
Redemptions of common shares	(530)	(530)			(530)
Dividends and distributions (cash)	(4,198)	(3,966)				(3,966)	(232)
Net income (loss)	(2,550)	(2,462)				(2,462)	(88)
Preferred stock, shares outstanding, ending balance (in shares) at Sep. 30, 2021			1,000
Ending balance at Sep. 30, 2021	$ 164,236	141,043	$ 0	$ 35	297,030	(156,022)	23,193
Common stock, shares outstanding, ending balance (in shares) at Sep. 30, 2021				35,087,000
Preferred stock, shares outstanding, beginning balance (in shares) at Dec. 31, 2021	1,000		1,000
Beginning balance at Dec. 31, 2021	$ 157,318	135,015	$ 0	$ 35	297,335	(162,355)	22,303
Common stock, shares outstanding, beginning balance (in shares) at Dec. 31, 2021	35,110,421			35,111,000
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Redemptions of common shares (in shares)				(135,000)
Redemptions of common shares	$ (1,182)	(1,182)			(1,182)
Dividends and distributions (cash)	(6,461)	(5,477)				(5,477)	(984)
Net income (loss)	$ (10,365)	(10,391)				(10,391)	26
Preferred stock, shares outstanding, ending balance (in shares) at Sep. 30, 2022	1,000		1,000
Ending balance at Sep. 30, 2022	$ 139,310	117,965	$ 0	$ 35	296,153	(178,223)	21,345
Common stock, shares outstanding, ending balance (in shares) at Sep. 30, 2022	34,975,377			34,976,000
Preferred stock, shares outstanding, beginning balance (in shares) at Jun. 30, 2022			1,000
Beginning balance at Jun. 30, 2022	$ 145,191	123,705	$ 0	$ 35	296,153	(172,483)	21,486
Common stock, shares outstanding, beginning balance (in shares) at Jun. 30, 2022				34,976,000
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Dividends and distributions (cash)	(77)	0				0	(77)
Net income (loss)	$ (5,804)	(5,740)				(5,740)	(64)
Preferred stock, shares outstanding, ending balance (in shares) at Sep. 30, 2022	1,000		1,000
Ending balance at Sep. 30, 2022	$ 139,310	$ 117,965	$ 0	$ 35	$ 296,153	$ (178,223)	$ 21,345
Common stock, shares outstanding, ending balance (in shares) at Sep. 30, 2022	34,975,377			34,976,000

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CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021
Cash flows from operating activities:
Net income (loss)	$ (10,365)	$ (10,529)
Adjustments to reconcile net loss to net cash provided by operating activities:
Stock based compensation	298	150
Depreciation and amortization	19,908	20,033
Deferred loan and lease commission costs amortization	1,850	1,849
Bad debt expense	1,685	1,115
Straight-line rent	776	(976)
Changes in operating assets and liabilities:
Accrued rent and accounts receivable	(2,470)	(1,812)
Deferred leasing commissions	(787)	(944)
Prepaid expenses and other assets	(2,802)	(1,296)
Accounts payable and accrued expenses	3,611	6,090
Due to/from related parties	(3,666)	(2,126)
Tenants' security deposits	332	217
Net cash provided by operating activities	8,370	11,771
Cash flows from investing activities:
Additions to real estate	(12,700)	(9,906)
Net cash used in investing activities	(12,700)	(9,906)
Cash flows from financing activities:
Distributions to common stockholders	(8,458)	(9,990)
Distributions to non-controlling interests	(966)	(621)
Repayments to affiliates	(2,417)	0
Borrowings from affiliate	15,312	5,163
Repayments under insurance premium finance note	(1,973)	(2,519)
Borrowings under insurance premium finance note	2,892	3,019
Borrowings under term loan	2,645	0
Repayments under term loan notes	(2,327)	(978)
Redemptions of common stock	(1,182)	(2,345)
Payment of deferred loan costs	(43)	(19)
Net cash provided by (used in) financing activities	3,483	(8,290)
Net change in cash and cash equivalents and restricted cash	(846)	(6,425)
Cash and cash equivalents and restricted cash, beginning of period	19,257	24,176
Cash and cash equivalents and restricted cash, end of period	18,411	17,751
Supplemental cash flow information:
Cash paid for interest	6,762	5,212
Supplemental disclosure of non-cash activities:
Decrease in interest payable from Hartman XXI settlement	795	0
Decrease in due from related parties from Hartman XXI settlement	2,535	0
Decrease in borrowing from affiliate from Hartman XXI settlement	$ 1,740	$ 0

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Organization and Business

9 Months Ended

Sep. 30, 2022

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 (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" or the "SASB Loan Borrower"), a special purpose entity.

On October 1, 2018, the SASB Loan Borrower, 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 subsidiaries, 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. 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.

On July 21, 2017, the Company and 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, 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 for financial reporting was July 1, 2020.

Prior to July 1, 2020 and subject to certain restrictions and limitations, Hartman Advisors LLC ("Advisor") was 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. 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"), formerly a wholly-owned subsidiary of HIREIT and effective July 1, 2020, our wholly owned subsidiary. Effective with the Mergers and the acquisition of the 70% interest of Advisor not acquired as part of the Mergers, we are a self-advised and self-managed REIT.

As of September 30, 2022 and 2021, respectively, the Company owned 44 commercial properties comprising approximately 6.8 million square feet plus four pad sites and two land developments, all located in Texas. As of September 30, 2022 and 2021, the Company owned 15 properties located in Richardson, Arlington and Dallas, Texas, 26 properties located in Houston, Texas and three properties located in San Antonio, Texas.

The Board of Directors (the "Board") of the Company established a share redemption program (the "Redemption Plan"), which permitted stockholders to sell their shares back to the Company, subject to certain significant conditions and limitations. On July 8, 2022, the Board voted to suspend the Redemption Plan to support the long-term fiscal health of the Company.

The Company does not anticipate that there will be any market for its shares of common stock unless they are listed on a national securities exchange. In the event that Company shares of common stock are not listed or traded on an established securities exchange prior to the tenth anniversary of the completion or termination of the Company's initial public offering, which terminated on April 25, 2013, the Company's charter requires that the board of directors must seek the approval of the

stockholders of a plan to liquidate assets, unless the board of directors has obtained the approval of the stockholders (1) to defer the liquidation of our assets or (2) of an alternate strategy.

The independent directors of the Company’s board of directors have begun a strategic review process to identify, examine, and consider a range of strategic alternatives available to the Company with the objective of maximizing shareholder value. As a part of its strategic review, the independent directors engaged a third party to serve as a strategic advisor to the Board. On October 14, 2022, the Company’s board of directors formed a new Executive Committee whose duties include, among other items, the continuation of the review of strategic alternatives with the objective of maximizing shareholder value.

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Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2022

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, 2021 are derived from our audited consolidated financial statements as of that date. The unaudited consolidated financial statements as of September 30, 2022 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 September 30, 2022, and the results of consolidated operations, consolidated statements of equity and consolidated statement of cash flows for the three and nine months ended September 30, 2022 and 2021. The results of the three and nine months ended September 30, 2022 are not necessarily indicative of the results to be expected for the year ending December 31, 2022.

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, 2021.

These unaudited consolidated financial statements include the accounts of the Company and its subsidiaries, 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 September 30, 2022 and December 31, 2021 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. As of September 30, 2022 and December 31, 2021 the Company had a bank overdraft of $4,902,000 and $2,710,000, respectively.

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. As of September 30, 2022 and December 31, 2021, the Company had a restricted cash balance of $17,949,000 and $18,972,000, respectively.

Financial Instruments

The accompanying consolidated balance sheets include the following financial instruments: cash and cash equivalents, restricted cash, 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, other than notes payable, net, to approximate the fair value of these financial instruments based on the short duration between origination of the instruments and their expected realization. Disclosure about the fair value of financial instruments is based on relevant information available as of September 30, 2022 and December 31, 2021.

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 terms of existing leases are considered to commence as of the acquisition date for the purposes of this calculation. The Company's accrued rents are included in accrued rent and accounts receivable, net. The Company defers the recognition of contingent rental income, such as percentage rents, until the specific target that triggers the contingent rental income is achieved.

The Company’s revenue is primarily derived from leasing activities, which is specifically excluded from ASC 606, Revenue from Contracts with Customers ("ASC 606"). The Company’s rental revenue is also comprised of tenant reimbursements for real estate taxes, insurance, common area maintenance, and operating expenses. Reimbursements from real estate taxes and certain other expenses are also excluded from ASC 606 and accounted for under ASC 842 - Leases. The Company elected to utilize the practical expedient provided by Accounting Standards Update (“ASU”) 2018-11 related to the separation of lease and non-lease components and as a result, rental revenues related to leases are reported on one line in the presentation within the consolidated statements of operations.

In addition to our rental income, the Company also earns fee revenues by providing certain management and advisory services to related parties. These fees are accounted for within the scope of ASC 606 and are recorded as management and advisory income on the consolidated statements of operations. These services primarily include asset management and advisory, operating and leasing of properties, and construction management. These services are currently provided under various combinations of advisory agreements, property management agreements, and other service agreements (the "Management Agreements"). The wide variety of duties within the Management Agreements makes determining the performance obligations within the contracts a matter of judgment. We have concluded that each of the separately disclosed fee types in the below table represents a separate performance obligation within the Management Agreements.

Fee	Performance Obligation Satisfied	Timing of Payment	Description
Property Management	Over time	Due monthly	The Company provides property management services on a contractual basis for owners of and investors in office and retail properties. The Company is compensated for our services through a monthly management fee earned based on a percentage of effective gross revenue of the managed property. We are also often reimbursed for our administrative and payroll costs directly attributable to the properties under management. Revenue is recognized at the end of each month.
Property Leasing and Property Acquisition Services	Point in time (upon close of a transaction)	Upon completion	The Company provides strategic advice and execution for owners, investors, and occupiers of real estate in connection with the leasing of office and retail space. The Company is compensated for our services in the form of a commission and, in some instances may earn various forms of variable incentive consideration. Commission is paid upon the occurrence of certain contractual event. For leases, the Company typically satisfies its performance obligation at a point in time when control is transferred. Revenue is recognized in an amount equal to the fees charged by unaffiliated persons rendering comparable services. For acquisitions, our commission is typically paid at the closing date of sale, which represents transfer of control of services to the customer.
Asset Management	Over time	Due monthly	The Company earns asset management advisory fees on a recurring, monthly basis for certain properties. The Company is compensated on a monthly basis based on a fixed percentage of respective asset value.
Construction Management	Point in time (upon close of project)	Upon completion	Construction management services are performed on a contractual basis for owners of an investors in office and retail properties. The Company is compensated for its services upon completion of a project, when its performance obligation has been completed.

Due to the nature of the services being provided under our Management Agreements, each performance obligation has a variable component. Therefore, when we determine the transaction price for the contracts, we are required to constrain our estimate to an amount that is not probable of significant revenue reversal. For most of these fee types, such as acquisition fees and leasing commissions, compensation only occurs if a transaction takes place and the amount of compensation is dependent upon the terms of the transaction. For our property and asset management fees, due to the large number and broad range of possible consideration amounts, we calculate the amount earned at the end of each month.

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 income (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 variable interest entity ("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.

Fair Value Measurement

Fair value measures are classified into a three-tiered fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

Level 1: Observable inputs such as quoted prices in active markets.

Level 2: Directly or indirectly observable inputs, other than quoted prices in active markets.

Level 3: Unobservable inputs in which there is little or no market data, which require a reporting entity to

develop its own assumptions.

Assets and liabilities measured at fair value are based on one or more of the following valuation techniques:

Market approach: Prices and other relevant information generated by market transactions involving identical or

comparable assets or liabilities.

Cost approach:    Amount required to replace the service capacity of an asset (replacement cost).

Income approach:  Techniques used to convert future amounts to a single amount based on market

expectations (including present-value, option-pricing, and excess-earnings models).

The Company’s estimates of fair value were determined using available market information and appropriate valuation methods. Considerable judgment is necessary to interpret market data and develop estimated fair value. The use of different market assumptions or estimation methods may have a material effect on the estimated fair value amounts. The Company classifies assets and liabilities in the fair value hierarchy based on the lowest level of input that is significant to the fair value measurement.

Recurring fair value measurements:

For our disclosure of debt instrument fair value in Note 7, we use a discounted cash flow analysis based on borrowing rates currently available to the Company for loans with similar terms and maturities, discounting the future contractual interest and principal payments (categorized within Level 2 of the fair value hierarchy).

Nonrecurring fair value measurements:

Property Impairments

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. Our estimated fair values are determined by utilizing cash flow models, market capitalization rates and market discount rates, or by obtaining third-party broker valuation estimates or appraisals (categorized within Level 3 of the fair value hierarchy).

Impairment

The Company determines whether an impairment in value may have 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. During the nine months ended September 30, 2022 and 2021, the Company concluded there were no such events or changes in circumstances requiring review of the Company's real estate assets.

Accrued Rent and Accounts Receivable, net

       Accrued rent and accounts receivable includes 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 is 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 September 30, 2022 and 2021, the Company incurred net loss of $5,804,000 and $2,550,000, respectively. For the nine months ended September 30, 2022 and 2021, the Company incurred net loss of $10,365,000 and $10,529,000, respectively. The Company formed a taxable REIT subsidiary which may generate future taxable income which may 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 (Loss) Per Share

The computations of basic and diluted income (loss) 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 September 30, 2022 and 2021, there were no shares issuable in connection with these potentially dilutive securities. These potentially dilutive securities were excluded from the computations of diluted net loss per share for the three and nine months ended September 30, 2022 and 2021 because no shares were 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 ASC 205-40, “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”) had an initial maturity date of October 9, 2020. The SASB Loan provides for three successive one-year maturity date extensions. On October 9, 2022, SPE LLC executed the third and final maturity date extension agreement to extend the maturity to October 9, 2023.

The October 9, 2023 SASB Loan maturity date is within one year of the issuance of these consolidated financial statements. Uncertainty as to the Company's ability to obtain financing to satisfy the existing SASB Loan obligation requires management to conclude, in accordance with guidance provided by ASU 2014-15, that there is a 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. Management believes that the SASB Loan Borrower will be able to obtain financing to replace the SASB Loan prior to the October 9, 2023 maturity date.

Recent Accounting Pronouncements Not Yet Adopted

In June 2016, the FASB issued ASU 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.

In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. ASU 2020-04 provides optional expedients for a limited period of time to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting. ASU 2020-04 provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The standard is effective for all entities as of March 12, 2020 through December 31, 2022. An entity can elect to apply the amendments as of any date from the beginning of an interim period that includes or is subsequent to March 12, 2020, or prospectively from a date within an interim period that includes or is subsequent to March 12, 2020, up to that date that the financial statements are available to be issued. The Company is currently evaluating the impact this guidance will have on the consolidated financial statements when adopted.

Reclassification

An item in the operating activities section of the comparative consolidated statement of cash flows has been reclassified to conform to the presentation adopted in the current period. Straight-line rent totaling $976,000 has been reclassified from the change in accrued rent and accounts receivable line item to a separate line item as an adjustment to reconcile net loss to net cash provided by operating activities.

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Real Estate

9 Months Ended

Sep. 30, 2022

Real Estate [Abstract]

Real Estate

Real Estate

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

	September 30, 2022		December 31, 2021
Land	$	146,056	$	146,056
Buildings and improvements	385,568		372,868
In-place lease value intangible	101,661		101,661
	633,285		620,585
Less: accumulated depreciation and amortization	(192,948)		(173,040)
Total real estate assets	$	440,337	$	447,545

Depreciation expense for the three months ended September 30, 2022 and 2021 was $5,063,000 and $4,900,000, respectively. Depreciation expense for the nine months ended September 30, 2022 and 2021 was $14,519,000 and $13,911,000, respectively. Amortization expense of in-place lease value intangible was $1,793,000 and $2,018,000 for the three months ended September 30, 2022 and 2021, respectively. Amortization expense of in-place lease value intangible was $5,389,000 and $6,122,000 for the nine months ended September 30, 2022 and 2021, 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:

	September 30, 2022		December 31, 2021
In-place lease value intangible	$	101,661	$	101,661
In-place leases – accumulated amortization	(92,997)		(87,608)
Acquired lease intangible assets, net	$	8,664	$	14,053

As of September 30, 2022 and 2021, respectively, the Company owned 44 commercial properties comprising approximately 6.8 million square feet plus four pad sites and two land developments, all located in Texas. As of September 30, 2022 and 2021, respectively, the Company owned 15 properties located in Richardson, Arlington and Dallas, Texas, 26 properties located in Houston, Texas and three properties located in San Antonio, Texas.Real Estate Held for DevelopmentThe Company’s investment in real estate assets held for development consists of (i) an approximately 17-acre land parcel located in Fort Worth, Texas, (ii) a 10-acre land development located in Grand Prairie, Texas, and which was previously held for disposition by Hartman XIX, and (iii) one pad site development acquired from HIREIT.

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Accrued Rent and Accounts Receivable, net

9 Months Ended

Sep. 30, 2022

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:

	September 30, 2022		December 31, 2021
Tenant receivables	$	9,116	$	6,652
Accrued rent	10,577		11,355
Allowance for uncollectible accounts	(6,446)		(4,769)
Accrued rents and accounts receivable, net	$	13,247	$	13,238

As of September 30, 2022 and December 31, 2021, the Company had an allowance for uncollectible accounts of $6,446,000 and $4,769,000, respectively. For the three months ended September 30, 2022 and 2021, the Company recorded bad debt expense in the amount of $924,000 and $806,000, 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 nine months ended September 30, 2022 and 2021, the Company recorded bad debt expense in the amount of $1,685,000 and $1,115,000, respectively. Bad debt expense and any related recoveries are included in property operating expenses in the accompanying consolidated statements of operations.

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Deferred Leasing Commission Costs, net

9 Months Ended

Sep. 30, 2022

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:

	September 30, 2022		December 31, 2021
Deferred leasing commissions costs	$	21,134	$	20,347
Less: accumulated amortization	(11,020)		(9,860)
Deferred leasing commission costs, net	$	10,114	$	10,487

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Future Minimum Rents

9 Months Ended

Sep. 30, 2022

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 September 30, 2022 is as follows, in thousands:

September 30,	Minimum Future Rents
2022	$	66,991
2023	54,799
2024	40,244
2025	27,545
2026	20,172
Thereafter	29,788
Total	$	239,539

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Notes Payable

9 Months Ended

Sep. 30, 2022

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%. Each of the loan agreements are 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 $39,699,000 and $40,724,000 as of September 30, 2022 and December 31, 2021, respectively.

On October 1, 2018, the Company, through the SASB Loan Borrower, and Goldman Sachs Mortgage Company entered into the $259,000,000 SASB 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 the SASB Loan Borrower in exchange for membership interests in the SASB Loan Borrower.

The term of the SASB Loan is comprised of an initial two-year term with three one-year extension options. Each extension option is 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 and any extensions of the SASB Loan.

On October 9, 2022, the SASB Loan Borrower exercised the third and final one-year maturity date extension agreement to extend the maturity date to October 9, 2023. 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 is the sole guarantor.

On February 10, 2022, the Company executed a $2,645,000 promissory note with East West Bank, resulting in net proceeds of $2,528,000. The promissory note is secured by the Company's 17 acre development site located in Fort Worth, Texas and is payable in monthly installments of principal and interest until the maturity date of February 25, 2023.

Refer to Note 11 (Related Party Transactions) and Note 16 (Subsequent Events) for information regarding the Company's unsecured promissory note with Hartman vREIT XXI, Inc.

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

Property/Facility	Payment	Maturity Date	Rate		September 30, 2022		December 31, 2021
Richardson Heights (1)	P&I	July 1, 2041	4.61	%	$	15,713	$	16,144
Cooper Street (1)	P&I	July 1, 2041	4.61	%	6,826		6,995
Bent Tree Green (1)	P&I	July 1, 2041	4.61	%	6,826		6,995
Mitchelldale (1)	P&I	July 1, 2041	4.61	%	10,334		10,590
Hartman SPE LLC (2)	IO	October 9, 2023	4.94	%	259,000		259,000
Hartman XXI	IO	October 31, 2022	10.00	%	17,168		6,012
Fort Worth - EWB	P&I	February 25, 2023	4.25	%	1,343		—
					$	317,210	$	305,736
Less: unamortized deferred loan costs					(1,313)		(1,959)
					$	315,897	$	303,777

(1)    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.  

(2)    On October 9, 2022, the Company executed the third and final one-year maturity date extension to October 9, 2023.

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:

	September 30, 2022		December 31, 2021
Deferred loan costs	$	5,443	$	5,399
Less:  deferred loan cost accumulated amortization	(4,130)		(3,440)
Total cost, net of accumulated amortization	$	1,313	$	1,959

Interest expense incurred for the three months ended September 30, 2022 and 2021 was $3,789,000 and $2,133,000, respectively, which includes amortization expense of deferred loan costs. Interest expense incurred for the nine months ended September 30, 2022 and 2021 was $8,527,000 and $6,296,000, respectively, which includes amortization expense of deferred loan costs. Interest expense of $596,000 and $315,000 was payable as of September 30, 2022 and December 31, 2021, respectively, and is included in accounts payable and accrued expenses in the accompanying consolidated balance sheets.

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 $308,358,000 and $310,271,000 as compared to book value of $317,210,000 and $305,736,000 as of September 30, 2022 and December 31, 2021, 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 September 30, 2022 and December 31, 2021.

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Income ( Loss) Per Share

9 Months Ended

Sep. 30, 2022

Earnings Per Share [Abstract]

Income (Loss ) Per Share

Income (Loss) Per Share

Basic income (loss) per share is computed using net income (loss) 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 September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Numerator:
Net loss attributable to common stockholders (in thousands)	$	(5,740)	$	(2,462)	$	(10,391)	$	(9,978)
Denominator:
Weighted average number of common shares outstanding, basic and diluted (in thousands)	34,976		35,134		35,005		35,188
Basic and diluted loss per common share:
Net loss attributable to common stockholders per share	$	(0.16)	$	(0.07)	$	(0.30)	$	(0.28)

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Income Taxes

9 Months Ended

Sep. 30, 2022

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, 2016, 2017, 2018, 2019, and 2020 have not been examined by the Internal Revenue Service. The Company’s federal income tax return for the year ended December 31, 2016 may be examined on or before September 15, 2022.

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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Real Estate Held for Development

9 Months Ended

Sep. 30, 2022

Real Estate [Abstract]

Real Estate Held for Development

Real Estate

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

	September 30, 2022		December 31, 2021
Land	$	146,056	$	146,056
Buildings and improvements	385,568		372,868
In-place lease value intangible	101,661		101,661
	633,285		620,585
Less: accumulated depreciation and amortization	(192,948)		(173,040)
Total real estate assets	$	440,337	$	447,545

Depreciation expense for the three months ended September 30, 2022 and 2021 was $5,063,000 and $4,900,000, respectively. Depreciation expense for the nine months ended September 30, 2022 and 2021 was $14,519,000 and $13,911,000, respectively. Amortization expense of in-place lease value intangible was $1,793,000 and $2,018,000 for the three months ended September 30, 2022 and 2021, respectively. Amortization expense of in-place lease value intangible was $5,389,000 and $6,122,000 for the nine months ended September 30, 2022 and 2021, 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:

	September 30, 2022		December 31, 2021
In-place lease value intangible	$	101,661	$	101,661
In-place leases – accumulated amortization	(92,997)		(87,608)
Acquired lease intangible assets, net	$	8,664	$	14,053

As of September 30, 2022 and 2021, respectively, the Company owned 44 commercial properties comprising approximately 6.8 million square feet plus four pad sites and two land developments, all located in Texas. As of September 30, 2022 and 2021, respectively, the Company owned 15 properties located in Richardson, Arlington and Dallas, Texas, 26 properties located in Houston, Texas and three properties located in San Antonio, Texas.Real Estate Held for DevelopmentThe Company’s investment in real estate assets held for development consists of (i) an approximately 17-acre land parcel located in Fort Worth, Texas, (ii) a 10-acre land development located in Grand Prairie, Texas, and which was previously held for disposition by Hartman XIX, and (iii) one pad site development acquired from HIREIT.

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Related Party Transactions

9 Months Ended

Sep. 30, 2022

Related Party Transactions [Abstract]

Related Party Transactions

Related Party Transactions

Hartman Advisors LLC ("Advisor"), is a Texas limited liability company. Advisor is the sole member of Hartman vREIT XXI Advisor, LLC ("XXI Advisor"), which is the advisor for vREIT XXI. vREIT XXI pays acquisition fees and asset management fees to the XXI Advisor in connection with the acquisition of properties and management of the Company. vREIT XXI pays property management and leasing commissions to the Property Manager in connection with the management and leasing of vREIT XXI's properties.

The table below shows the related party balances the Company owes to and is owed by, in thousands:

	September 30, 2022		December 31, 2021
Due to vREIT XXI	$	(11)	$	—
Due from other related parties	1,257		115
Total due from related parties, net	$	1,246	$	115

During the fourth quarter of 2019, the Company borrowed under an unsecured promissory note payable to vREIT XXI in the face amount of $10,000,000 with an interest rate of 10% annually. This unsecured promissory note had an outstanding balance of $10,000,000 and $6,012,000 as of September 30, 2022 and December 31, 2021, respectively. In addition to the balance due under this note, the Company received advances from vREIT XXI totaling $7,168,000 which were outstanding as of September 30, 2022 and which were not covered by the unsecured promissory note referred to herein. The total balance of $17,168,000 as of as of September 30, 2022 has been included in Notes Payable - related party on the accompanying balance sheets. The Company recognized interest expense on the affiliate balance in the amount of $439,000 and $262,000 for the three months ended September 30, 2022 and 2021, respectively. For the nine months ended September 30, 2022 and 2021, the Company recognized interest expense on the affiliate balance in the amount of $795,000 and $400,000, respectively which is included in interest expense in the accompanying consolidated statements of operations. Refer to Note 16 (Subsequent Events) regarding the lapsed maturity of the unsecured promissory note.

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 Company, 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, 2022. This note receivable had an outstanding balance of $1,726,000 as of September 30, 2022 and December 31, 2021, respectively, which is included in notes receivable – related party in the accompanying consolidated balance sheets. For the three months ended September 30, 2022 and 2021, the Company recognized interest income on this affiliate note in the amounts of $44,000. For the nine months ended September 30, 2022 and 2021, the Company recognized interest income on this affiliate note in the amounts of $130,000.

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 Company is a covenant guarantor for the secured mortgage indebtedness of each of the VIEs in the total amount of $24,587,000 as of

September 30, 2022. There have been no claims on the covenants and management does not expect any claims or financial obligations with respect to the covenant guarantees.

On March 29, 2021, Hartman Income REIT Property Holdings, LLC, a wholly owned subsidiary of Hartman XX Operating Partnership, LP, was added, by means of a joinder agreement, to a master credit facility agreement where vREIT XXI is the guarantor. The Company’s Atrium II office property was added to the collateral security for the master credit facility agreement where the borrowing base of the facility increased by $1,625,000.

vREIT XXI owns 1,198,228 shares of the Company's common stock and a 2.47% ownership interest in Hartman SPE, LLC.

For the nine months ended September 30, 2022, the Company, the Advisor, and the Property Manager (collectively the "Settlement Parties") settled amounts owed to Hartman vREIT XXI with amounts owed by Hartman vREIT XXI to the Settlement Parties. The settlement resulted in the reduction of $795,000 of interest payable and reduction of $1,740,000 in principal of the unsecured promissory note from Hartman vREIT XXI in exchange for the reduction of $2,535,000 in unpaid advisory and management fees owed from Hartman vREIT XXI.

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Stockholders' Equity

9 Months Ended

Sep. 30, 2022

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 September 30, 2022 and December 31, 2021, respectively, the Company has 1,000 shares of convertible preferred stock issued and outstanding.

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

On July 26, 2022, the Board approved of cash payments totaling $400,000 in lieu of unissued shares due to non-employee directors under the non-employee director's compensation plan. The Incentive Plan that provides for the issuance of the restricted common stock awards to non-employee director has expired and requires stockholder approval for modification or reinstatement. All non-employee director compensation will be cash based until incentive stock is available.

Distributions

The following table reflects the total distributions the Company has paid in cash (in thousands, except per share amounts) and the amount paid per common share, in each indicated quarter:

Quarter Paid	Distributions per Common Share		Total Distributions
2022
1st Quarter	$	0.112	$	3,958
2nd Quarter	0.128		4,500
3rd Quarter	—		—
Total 2022 year to date	$	0.240	$	8,458
2021
4th Quarter	$	0.112	$	3,927
3rd Quarter	0.104		3,662
2nd Quarter	0.092		3,246
1st Quarter	0.087		3,082
Total 2021	$	0.395	$	13,917

On July 8, 2022, the board of directors approved the suspension of the payment of distributions to the Company's stockholders.

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Incentive Award Plan	9 Months Ended
	Sep. 30, 2022
Share-Based Payment Arrangement [Abstract]
Incentive Award Plan	Incentive Award PlanThe Company previously adopted an incentive plan, called the Omnibus Stock Incentive Plan, (the “Incentive Plan”) that provided 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 Incentive Plan has expired pursuant to its terms and requires stockholder approval for modification or reinstatement. The Board approved the payment of accrued director's fees in cash, as stock compensation was not available.

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Commitments and Contingencies

9 Months Ended

Sep. 30, 2022

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

Litigation

During February 2021, the state of Texas experienced a severe winter storm, unofficially referred to as Winter Storm Uri, which resulted in power outages and electrical grid failures across the state. Wholesale prices for electricity increased significantly during this period. As a result, the Company experienced a substantial increase in electricity billings for a number of our properties during the month of and after the storm.

On May 26, 2021, Summer Energy LLC (“Summer”) filed a lawsuit against Hartman Income REIT Management, Inc. (the “Property Manager”), a wholly owned subsidiary of the Company that manages our properties, in state court in Harris County, Texas. In this lawsuit, Summer seeks to collect approximately $8,400,000 from the Property Manager that Summer claims that the Property Manager owes Summer under one or more electricity sales agreements (“Agreements”) related to Winter Storm Uri. Of the approximately $8,400,000 claimed in the lawsuit, approximately $7,600,000 relates to wholly owned properties of the Company. Under the Agreements, Summer provided electricity to buildings managed by the Property Manager at indexed prices.

On March 24, 2022, the court entered a judgment in favor of Summer against the Property Manager in the amount of $7,871,000 plus customary pre- and post-judgment interest and attorney's fees. The Property Manager continues to dispute the amount of liability to Summer and has appealed the judgment. The outcome of the appeal is subject to significant uncertainty and we cannot provide any assurance that the Property Manager will ultimately prevail. Even if the Property Manager is ultimately successful in its appeal, it may take considerable time to resolve the matter. The Company had recognized the share of the judgment amount applicable to wholly owned properties of the Company, approximately $6,731,000, within the Company's consolidated statement of operations for fiscal year 2021. The Company has also recognized $370,000 of pre-judgment interest and attorney fees. Many of the Company’s leases contain provisions that require tenants to pay their allocable share of operating expenses, including utilities. At this time, the Company is unable to reasonably estimate an amount expected to be recovered from our tenants.

On April 25, 2022, the Property Manager filed its supersedeas surety bond totaling $2,197,000 in order to suspend enforcement the judgment for the duration of the Property Manager's appeal. The share of the supersedeas surety bond applicable to wholly owned properties of the Company totaled $2,001,000 and is recorded in prepaid expenses and other assets on the Company's consolidated balance sheets.

Contingencies

Events related to the COVID-19 pandemic and the actions taken to contain it have created substantial uncertainty for all businesses, including the Company. The Company’s consolidated financial statements as of and for the three and nine months ended September 30, 2022 have been prepared in light of these circumstances.

Proposed merger with Hartman XXI

The Company is continuing to evaluate the timing for a proposed merger with vREIT XXI. The Company believes that the achievable synergy resulting from the merger is compelling and intends to pursue the merger at the appropriate time.

Charter provision regarding liquidity or liquidation

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

The independent directors of the Company’s board of directors have begun a strategic review process to identify, examine, and consider a range of strategic alternatives available to the Company with the objective of maximizing shareholder value. On October 14, 2022, the Company’s board of directors formed a new Executive Committee to continue the review of strategic alternatives with the objective of maximizing shareholder value.

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Defined Contribution Plan	9 Months Ended
	Sep. 30, 2022
Retirement Benefits [Abstract]
Defined Contribution Plan	Defined Contribution PlanThe Company sponsors a defined contribution pension plan, the Hartman 401(k) Profit Sharing Plan, covering substantially all of its full-time employees who are at least 21 years of age. Participants may annually contribute up to 100% of pretax annual compensation and any applicable catch-up contributions, as defined in the plan and subject to deferral limitations as set forth in Section 401(k) of the Internal Revenue Code. Participants may also contribute amounts representing distributions from other qualified benefit or defined contribution plans. The Company may make discretionary matching contributions. For the three months ended September 30, 2022 and 2021, the Company matched $99,000 and $98,000, respectively. For the nine months ended September 30, 2022 and 2021, the Company matched $298,000 and $199,000, respectively. The Company had a stock match plan liability of $1,911,000 and $1,613,000 as of September 30, 2022 and December 31, 2021, respectively.

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Subsequent Events

9 Months Ended

Sep. 30, 2022

Subsequent Events [Abstract]

Subsequent Events

Subsequent Events

On October 19, 2022, the SASB Loan Borrower received a notice from the loan servicer of the SASB Loan in connection with an event of default due to the noncompliance with the loan agreement's insurance requirements relating to a single property. The event of default was previously waived for the sole purpose of exercising the option to extend the SASB Loan term. The event of default triggers the cash management provisions under the SASB Loan agreement, however, cash management has not yet been implemented. Management is working to obtain coverage that is acceptable to the lender and cure the event of default.

The Company's unsecured promissory note payable to Hartman vREIT XXI, Inc., which has a maturity date of October 31, 2022, remains unpaid and is currently in maturity default. Management intends to pursue a waiver of the maturity date. The loan parties are in negotiations to address the unsecured promissory note. It is uncertain when an agreement will be reached.

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Summary of Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2022

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, 2021 are derived from our audited consolidated financial statements as of that date. The unaudited consolidated financial statements as of September 30, 2022 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 September 30, 2022, and the results of consolidated operations, consolidated statements of equity and consolidated statement of cash flows for the three and nine months ended September 30, 2022 and 2021. The results of the three and nine months ended September 30, 2022 are not necessarily indicative of the results to be expected for the year ending December 31, 2022.

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, 2021.

These unaudited consolidated financial statements include the accounts of the Company and its subsidiaries, 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 September 30, 2022 and December 31, 2021 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. As of September 30, 2022 and December 31, 2021 the Company had a bank overdraft of $4,902,000 and $2,710,000, respectively.

Restricted Cash

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. As of September 30, 2022 and December 31, 2021, the Company had a restricted cash balance of $17,949,000 and $18,972,000, respectively.

Financial Instruments

Financial InstrumentsThe accompanying consolidated balance sheets include the following financial instruments: cash and cash equivalents, restricted cash, 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, other than notes payable, net, to approximate the fair value of these financial instruments based on the short duration between origination of the instruments and their expected realization. Disclosure about the fair value of financial instruments is based on relevant information available as of September 30, 2022 and December 31, 2021.

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 terms of existing leases are considered to commence as of the acquisition date for the purposes of this calculation. The Company's accrued rents are included in accrued rent and accounts receivable, net. The Company defers the recognition of contingent rental income, such as percentage rents, until the specific target that triggers the contingent rental income is achieved.

The Company’s revenue is primarily derived from leasing activities, which is specifically excluded from ASC 606, Revenue from Contracts with Customers ("ASC 606"). The Company’s rental revenue is also comprised of tenant reimbursements for real estate taxes, insurance, common area maintenance, and operating expenses. Reimbursements from real estate taxes and certain other expenses are also excluded from ASC 606 and accounted for under ASC 842 - Leases. The Company elected to utilize the practical expedient provided by Accounting Standards Update (“ASU”) 2018-11 related to the separation of lease and non-lease components and as a result, rental revenues related to leases are reported on one line in the presentation within the consolidated statements of operations.

In addition to our rental income, the Company also earns fee revenues by providing certain management and advisory services to related parties. These fees are accounted for within the scope of ASC 606 and are recorded as management and advisory income on the consolidated statements of operations. These services primarily include asset management and advisory, operating and leasing of properties, and construction management. These services are currently provided under various combinations of advisory agreements, property management agreements, and other service agreements (the "Management Agreements"). The wide variety of duties within the Management Agreements makes determining the performance obligations within the contracts a matter of judgment. We have concluded that each of the separately disclosed fee types in the below table represents a separate performance obligation within the Management Agreements.

Fee	Performance Obligation Satisfied	Timing of Payment	Description
Property Management	Over time	Due monthly	The Company provides property management services on a contractual basis for owners of and investors in office and retail properties. The Company is compensated for our services through a monthly management fee earned based on a percentage of effective gross revenue of the managed property. We are also often reimbursed for our administrative and payroll costs directly attributable to the properties under management. Revenue is recognized at the end of each month.
Property Leasing and Property Acquisition Services	Point in time (upon close of a transaction)	Upon completion	The Company provides strategic advice and execution for owners, investors, and occupiers of real estate in connection with the leasing of office and retail space. The Company is compensated for our services in the form of a commission and, in some instances may earn various forms of variable incentive consideration. Commission is paid upon the occurrence of certain contractual event. For leases, the Company typically satisfies its performance obligation at a point in time when control is transferred. Revenue is recognized in an amount equal to the fees charged by unaffiliated persons rendering comparable services. For acquisitions, our commission is typically paid at the closing date of sale, which represents transfer of control of services to the customer.
Asset Management	Over time	Due monthly	The Company earns asset management advisory fees on a recurring, monthly basis for certain properties. The Company is compensated on a monthly basis based on a fixed percentage of respective asset value.
Construction Management	Point in time (upon close of project)	Upon completion	Construction management services are performed on a contractual basis for owners of an investors in office and retail properties. The Company is compensated for its services upon completion of a project, when its performance obligation has been completed.

Due to the nature of the services being provided under our Management Agreements, each performance obligation has a variable component. Therefore, when we determine the transaction price for the contracts, we are required to constrain our estimate to an amount that is not probable of significant revenue reversal. For most of these fee types, such as acquisition fees and leasing commissions, compensation only occurs if a transaction takes place and the amount of compensation is dependent upon the terms of the transaction. For our property and asset management fees, due to the large number and broad range of possible consideration amounts, we calculate the amount earned at the end of each month.

Real Estate

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 income (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 variable interest entity ("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.

Fair Value Measurement

Fair Value Measurement

Fair value measures are classified into a three-tiered fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

Level 1: Observable inputs such as quoted prices in active markets.

Level 2: Directly or indirectly observable inputs, other than quoted prices in active markets.

Level 3: Unobservable inputs in which there is little or no market data, which require a reporting entity to

develop its own assumptions.

Assets and liabilities measured at fair value are based on one or more of the following valuation techniques:

Market approach: Prices and other relevant information generated by market transactions involving identical or

comparable assets or liabilities.

Cost approach:    Amount required to replace the service capacity of an asset (replacement cost).

Income approach:  Techniques used to convert future amounts to a single amount based on market

expectations (including present-value, option-pricing, and excess-earnings models).

The Company’s estimates of fair value were determined using available market information and appropriate valuation methods. Considerable judgment is necessary to interpret market data and develop estimated fair value. The use of different market assumptions or estimation methods may have a material effect on the estimated fair value amounts. The Company classifies assets and liabilities in the fair value hierarchy based on the lowest level of input that is significant to the fair value measurement.

Recurring fair value measurements:

For our disclosure of debt instrument fair value in Note 7, we use a discounted cash flow analysis based on borrowing rates currently available to the Company for loans with similar terms and maturities, discounting the future contractual interest and principal payments (categorized within Level 2 of the fair value hierarchy).

Nonrecurring fair value measurements:

Property Impairments

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. Our estimated fair values are determined by utilizing cash flow models, market capitalization rates and market discount rates, or by obtaining third-party broker valuation estimates or appraisals (categorized within Level 3 of the fair value hierarchy).

Impairment

ImpairmentThe Company determines whether an impairment in value may have 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. During the nine months ended September 30, 2022 and 2021, the Company concluded there were no such events or changes in circumstances requiring review of the Company's real estate assets.

Accrued Rent and Accounts Receivable, net

Accrued Rent and Accounts Receivable, net

       Accrued rent and accounts receivable includes 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 Costs       Leasing 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 is 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 September 30, 2022 and 2021, the Company incurred net loss of $5,804,000 and $2,550,000, respectively. For the nine months ended September 30, 2022 and 2021, the Company incurred net loss of $10,365,000 and $10,529,000, respectively. The Company formed a taxable REIT subsidiary which may generate future taxable income which may 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 (loss) Per Share

Income (Loss) Per Share

The computations of basic and diluted income (loss) 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 September 30, 2022 and 2021, there were no shares issuable in connection with these potentially dilutive securities. These potentially dilutive securities were excluded from the computations of diluted net loss per share for the three and nine months ended September 30, 2022 and 2021 because no shares were 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 ASC 205-40, “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”) had an initial maturity date of October 9, 2020. The SASB Loan provides for three successive one-year maturity date extensions. On October 9, 2022, SPE LLC executed the third and final maturity date extension agreement to extend the maturity to October 9, 2023.

The October 9, 2023 SASB Loan maturity date is within one year of the issuance of these consolidated financial statements. Uncertainty as to the Company's ability to obtain financing to satisfy the existing SASB Loan obligation requires management to conclude, in accordance with guidance provided by ASU 2014-15, that there is a 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. Management believes that the SASB Loan Borrower will be able to obtain financing to replace the SASB Loan prior to the October 9, 2023 maturity date.

Recently Accounting Pronouncements Not Yet Adopted

Recent Accounting Pronouncements Not Yet Adopted

In June 2016, the FASB issued ASU 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.

In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. ASU 2020-04 provides optional expedients for a limited period of time to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting. ASU 2020-04 provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The standard is effective for all entities as of March 12, 2020 through December 31, 2022. An entity can elect to apply the amendments as of any date from the beginning of an interim period that includes or is subsequent to March 12, 2020, or prospectively from a date within an interim period that includes or is subsequent to March 12, 2020, up to that date that the financial statements are available to be issued. The Company is currently evaluating the impact this guidance will have on the consolidated financial statements when adopted.

Reclassification

Reclassification

An item in the operating activities section of the comparative consolidated statement of cash flows has been reclassified to conform to the presentation adopted in the current period. Straight-line rent totaling $976,000 has been reclassified from the change in accrued rent and accounts receivable line item to a separate line item as an adjustment to reconcile net loss to net cash provided by operating activities.

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Summary of Significant Accounting Policies (Tables)

9 Months Ended

Sep. 30, 2022

Accounting Policies [Abstract]

Revenue Recognition Schedule of Fee Types

We have concluded that each of the separately disclosed fee types in the below table represents a separate performance obligation within the Management Agreements.

Fee	Performance Obligation Satisfied	Timing of Payment	Description
Property Management	Over time	Due monthly	The Company provides property management services on a contractual basis for owners of and investors in office and retail properties. The Company is compensated for our services through a monthly management fee earned based on a percentage of effective gross revenue of the managed property. We are also often reimbursed for our administrative and payroll costs directly attributable to the properties under management. Revenue is recognized at the end of each month.
Property Leasing and Property Acquisition Services	Point in time (upon close of a transaction)	Upon completion	The Company provides strategic advice and execution for owners, investors, and occupiers of real estate in connection with the leasing of office and retail space. The Company is compensated for our services in the form of a commission and, in some instances may earn various forms of variable incentive consideration. Commission is paid upon the occurrence of certain contractual event. For leases, the Company typically satisfies its performance obligation at a point in time when control is transferred. Revenue is recognized in an amount equal to the fees charged by unaffiliated persons rendering comparable services. For acquisitions, our commission is typically paid at the closing date of sale, which represents transfer of control of services to the customer.
Asset Management	Over time	Due monthly	The Company earns asset management advisory fees on a recurring, monthly basis for certain properties. The Company is compensated on a monthly basis based on a fixed percentage of respective asset value.
Construction Management	Point in time (upon close of project)	Upon completion	Construction management services are performed on a contractual basis for owners of an investors in office and retail properties. The Company is compensated for its services upon completion of a project, when its performance obligation has been completed.

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Real Estate (Tables)

9 Months Ended

Sep. 30, 2022

Real Estate [Abstract]

Schedule of Real Estate Assets

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

	September 30, 2022		December 31, 2021
Land	$	146,056	$	146,056
Buildings and improvements	385,568		372,868
In-place lease value intangible	101,661		101,661
	633,285		620,585
Less: accumulated depreciation and amortization	(192,948)		(173,040)
Total real estate assets	$	440,337	$	447,545

Schedule of Total In-place Lease Intangible Assets and Accumulated Amortization

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

	September 30, 2022		December 31, 2021
In-place lease value intangible	$	101,661	$	101,661
In-place leases – accumulated amortization	(92,997)		(87,608)
Acquired lease intangible assets, net	$	8,664	$	14,053

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Accrued Rent and Accounts Receivable, net (Tables)

9 Months Ended

Sep. 30, 2022

Receivables [Abstract]

Schedule of Accrued Rent and Accounts Receivable

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

	September 30, 2022		December 31, 2021
Tenant receivables	$	9,116	$	6,652
Accrued rent	10,577		11,355
Allowance for uncollectible accounts	(6,446)		(4,769)
Accrued rents and accounts receivable, net	$	13,247	$	13,238

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Deferred Leasing Commission Costs, net (Tables)

9 Months Ended

Sep. 30, 2022

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

Schedule of Deferred Leasing Commission Costs

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

	September 30, 2022		December 31, 2021
Deferred leasing commissions costs	$	21,134	$	20,347
Less: accumulated amortization	(11,020)		(9,860)
Deferred leasing commission costs, net	$	10,114	$	10,487

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Future Minimum Rents (Tables)

9 Months Ended

Sep. 30, 2022

Leases [Abstract]

Schedule of Minimum Future Lease Rentals To Be Received

A summary of minimum future rentals to be received (exclusive of renewals, tenant reimbursements, and contingent rentals) under noncancellable operating leases in existence at September 30, 2022 is as follows, in thousands:

September 30,	Minimum Future Rents
2022	$	66,991
2023	54,799
2024	40,244
2025	27,545
2026	20,172
Thereafter	29,788
Total	$	239,539

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Notes Payable (Tables)

9 Months Ended

Sep. 30, 2022

Debt Disclosure [Abstract]

Mortgage Notes Payable

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

Property/Facility	Payment	Maturity Date	Rate		September 30, 2022		December 31, 2021
Richardson Heights (1)	P&I	July 1, 2041	4.61	%	$	15,713	$	16,144
Cooper Street (1)	P&I	July 1, 2041	4.61	%	6,826		6,995
Bent Tree Green (1)	P&I	July 1, 2041	4.61	%	6,826		6,995
Mitchelldale (1)	P&I	July 1, 2041	4.61	%	10,334		10,590
Hartman SPE LLC (2)	IO	October 9, 2023	4.94	%	259,000		259,000
Hartman XXI	IO	October 31, 2022	10.00	%	17,168		6,012
Fort Worth - EWB	P&I	February 25, 2023	4.25	%	1,343		—
					$	317,210	$	305,736
Less: unamortized deferred loan costs					(1,313)		(1,959)
					$	315,897	$	303,777

(1)    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.  

(2)    On October 9, 2022, the Company executed the third and final one-year maturity date extension to October 9, 2023.

Amortize Loan Cost

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:

	September 30, 2022		December 31, 2021
Deferred loan costs	$	5,443	$	5,399
Less:  deferred loan cost accumulated amortization	(4,130)		(3,440)
Total cost, net of accumulated amortization	$	1,313	$	1,959

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Income ( Loss) Per Share (Tables)

9 Months Ended

Sep. 30, 2022

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 September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Numerator:
Net loss attributable to common stockholders (in thousands)	$	(5,740)	$	(2,462)	$	(10,391)	$	(9,978)
Denominator:
Weighted average number of common shares outstanding, basic and diluted (in thousands)	34,976		35,134		35,005		35,188
Basic and diluted loss per common share:
Net loss attributable to common stockholders per share	$	(0.16)	$	(0.07)	$	(0.30)	$	(0.28)

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Related Party Transactions (Tables)

9 Months Ended

Sep. 30, 2022

Related Party Transactions [Abstract]

Schedule of Related Party Transactions

The table below shows the related party balances the Company owes to and is owed by, in thousands:

	September 30, 2022		December 31, 2021
Due to vREIT XXI	$	(11)	$	—
Due from other related parties	1,257		115
Total due from related parties, net	$	1,246	$	115

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Stockholders' Equity (Tables)

9 Months Ended

Sep. 30, 2022

Equity [Abstract]

Summary of Distributions

The following table reflects the total distributions the Company has paid in cash (in thousands, except per share amounts) and the amount paid per common share, in each indicated quarter:

Quarter Paid	Distributions per Common Share		Total Distributions
2022
1st Quarter	$	0.112	$	3,958
2nd Quarter	0.128		4,500
3rd Quarter	—		—
Total 2022 year to date	$	0.240	$	8,458
2021
4th Quarter	$	0.112	$	3,927
3rd Quarter	0.104		3,662
2nd Quarter	0.092		3,246
1st Quarter	0.087		3,082
Total 2021	$	0.395	$	13,917

On July 8, 2022, the board of directors approved the suspension of the payment of distributions to the Company's stockholders.

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Organization and Business (Details) ft² in Millions	Sep. 30, 2022 property	Sep. 30, 2022 ft²	Sep. 30, 2022 padSite	Sep. 30, 2022 landDevelopment	Sep. 30, 2021 property	Sep. 30, 2021 ft²	Sep. 30, 2021 padSite	Sep. 30, 2021 landDevelopment	Jul. 01, 2020	Oct. 01, 2018 USD ($) property
Schedule of Equity Method Investments [Line Items]
Number of real estate properties										39
Texas
Schedule of Equity Method Investments [Line Items]
Number of real estate properties			4	2			4	2
Number of commercial properties	44				44
Area of real estate property (in square feet) | ft²		6.8				6.8
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	26				26
San Antonio, Texas
Schedule of Equity Method Investments [Line Items]
Number of real estate properties	3				3
Advisor
Schedule of Equity Method Investments [Line Items]
Ownership percentage acquired									70.00%
Hartman SPE, LLC | Variable Interest Entity, Primary Beneficiary
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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Summary of Significant Accounting Policies (Details)	3 Months Ended		9 Months Ended
	Sep. 30, 2022 USD ($)	Sep. 30, 2021 USD ($)	Sep. 30, 2022 USD ($) extension shares	Sep. 30, 2021 USD ($) shares	Dec. 31, 2021 USD ($)
Property, Plant and Equipment [Line Items]
Bank overdraft	$ 4,902,000		$ 4,902,000		$ 2,710,000
Restricted cash	17,949,000		17,949,000		$ 18,972,000
Goodwill impairment			0	$ 0
Net income (loss)	$ (5,804,000)	$ (2,550,000)	$ (10,365,000)	$ (10,529,000)
Antidilutive securities (in shares) | shares			0	0
Straight-line rent			$ 776,000	$ (976,000)
Hartman SPE LLC Loan Agreement
Property, Plant and Equipment [Line Items]
Number of extensions | extension			3
Extension term			1 year
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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Real Estate - Assets (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
Real Estate [Abstract]
Land	$ 146,056	$ 146,056
Buildings and improvements	385,568	372,868
In-place lease value intangible	101,661	101,661
Total gross real estate assets	633,285	620,585
Less: accumulated depreciation and amortization	(192,948)	(173,040)
Real estate assets, net	$ 440,337	$ 447,545

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Real Estate - In-place Intangible Assets (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
Real Estate [Abstract]
In-place lease value intangible	$ 101,661	$ 101,661
In-place leases – accumulated amortization	(92,997)	(87,608)
Acquired lease intangible assets, net	$ 8,664	$ 14,053

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Real Estate - Narrative (Details) $ in Thousands, ft² in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2022 USD ($) property	Sep. 30, 2021 USD ($) property	Sep. 30, 2022 USD ($) property	Sep. 30, 2021 USD ($) property	Sep. 30, 2022 ft²	Sep. 30, 2022 padSite	Sep. 30, 2022 landDevelopment	Sep. 30, 2021 ft²	Sep. 30, 2021 padSite	Sep. 30, 2021 landDevelopment	Oct. 01, 2018 property
Subsidiary of Limited Liability Company or Limited Partnership [Line Items]
Depreciation expense | $	$ 5,063	$ 4,900	$ 14,519	$ 13,911
Amortization expense | $	$ 1,793	$ 2,018	$ 5,389	$ 6,122
Number of real estate properties											39
Texas
Subsidiary of Limited Liability Company or Limited Partnership [Line Items]
Number of commercial properties	44	44	44	44
Area of real estate property (in square feet) | ft²					6.8			6.8
Number of real estate properties						4	2		4	2
Richardson, Arlington And Dallas, Texas
Subsidiary of Limited Liability Company or Limited Partnership [Line Items]
Number of real estate properties	15	15	15	15
Houston, Texas
Subsidiary of Limited Liability Company or Limited Partnership [Line Items]
Number of real estate properties	26	26	26	26
San Antonio, Texas
Subsidiary of Limited Liability Company or Limited Partnership [Line Items]
Number of real estate properties	3	3	3	3

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Accrued Rent and Accounts Receivable, net (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021	Dec. 31, 2021
Receivables [Abstract]
Tenant receivables	$ 9,116		$ 9,116		$ 6,652
Accrued rent	10,577		10,577		11,355
Allowance for uncollectible accounts	(6,446)		(6,446)		(4,769)
Accrued rents and accounts receivable, net	13,247		13,247		$ 13,238
Bad debt expense	$ 924	$ 806	$ 1,685	$ 1,115

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Deferred Leasing Commission Costs, net (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]
Deferred leasing commissions costs	$ 21,134	$ 20,347
Less: accumulated amortization	(11,020)	(9,860)
Deferred leasing commission costs, net	$ 10,114	$ 10,487

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Future Minimum Rents (Details) $ in Thousands	Sep. 30, 2022 USD ($)
Leases [Abstract]
2022	$ 66,991
2023	54,799
2024	40,244
2025	27,545
2026	20,172
Thereafter	29,788
Total	$ 239,539

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Notes Payable - Narrative (Details)			3 Months Ended		9 Months Ended		12 Months Ended
	Feb. 10, 2022 USD ($) a	Oct. 01, 2018 USD ($) property extension	Sep. 30, 2022 USD ($) a	Sep. 30, 2021 USD ($)	Sep. 30, 2022 USD ($) a loan	Sep. 30, 2021 USD ($)	Dec. 31, 2021 USD ($) loan
Short-term Debt [Line Items]
Outstanding balance			$ 317,210,000		$ 317,210,000		$ 305,736,000
Number of real estate properties | property		39
Interest expense incurred			3,789,000	$ 2,133,000	8,527,000	$ 6,296,000
Interest expense payable			$ 596,000		$ 596,000		315,000
Fort Worth, Texas
Short-term Debt [Line Items]
Area of real estate property (in square feet) | a	17		17		17
Estimate of Fair Value Measurement
Short-term Debt [Line Items]
Debt instrument, fair value disclosure			$ 308,358,000		$ 308,358,000		310,271,000
Hartman SPE, LLC
Short-term Debt [Line Items]
Outstanding balance			$ 259,000,000		$ 259,000,000		$ 259,000,000
Secured debt | Richardson Heights, Cooper Street, Bent Tree Green And Mitchelldale Property Loans
Short-term Debt [Line Items]
Number of term loans outstanding | loan					4		4
Amortization term					27 years
Fixed interest rate			4.61%		4.61%
Outstanding balance			$ 39,699,000		$ 39,699,000		$ 40,724,000
Notes Payable to Banks | Hartman SPE, LLC
Short-term Debt [Line Items]
Debt instrument, face amount		$ 259,000,000
Initial term of debt instrument		2 years
Number of extensions | extension		3
Extension term		1 year
Notes Payable to Banks | 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%
Secured Promissory Notes | East West Bank
Short-term Debt [Line Items]
Outstanding balance	$ 2,645,000
Proceeds from loans	$ 2,528,000

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Notes Payable - Summary of Mortgage Notes Payable (Details) $ in Thousands	Oct. 01, 2018 extension	Sep. 30, 2022 USD ($)	Dec. 31, 2021 USD ($)
Debt Instrument [Line Items]
Long-term debt, gross		$ 317,210	$ 305,736
Less: unamortized deferred loan costs		(1,313)	(1,959)
Long-term debt		$ 315,897	303,777
Notes Payable to Banks | Hartman SPE, LLC
Debt Instrument [Line Items]
Number of extensions | extension	3
Extension term	1 year
Richardson Heights
Debt Instrument [Line Items]
Rate		4.61%
Long-term debt, gross		$ 15,713	16,144
Cooper Street
Debt Instrument [Line Items]
Rate		4.61%
Long-term debt, gross		$ 6,826	6,995
Bent Tree Green
Debt Instrument [Line Items]
Rate		4.61%
Long-term debt, gross		$ 6,826	6,995
Mitchelldale
Debt Instrument [Line Items]
Rate		4.61%
Long-term debt, gross		$ 10,334	10,590
Hartman SPE, LLC
Debt Instrument [Line Items]
Rate		4.94%
Long-term debt, gross		$ 259,000	259,000
Hartman XXI
Debt Instrument [Line Items]
Rate		10.00%
Long-term debt, gross		$ 17,168	6,012
Fort Worth - EWB
Debt Instrument [Line Items]
Rate		4.25%
Long-term debt, gross		$ 1,343	$ 0

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Notes Payable - Amortization of Loan Costs (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
Debt Disclosure [Abstract]
Deferred loan costs	$ 5,443	$ 5,399
Less:  deferred loan cost accumulated amortization	(4,130)	(3,440)
Total cost, net of accumulated amortization	$ 1,313	$ 1,959

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Income (Loss ) Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Numerator:
Net loss attributable to common stockholders, basic	$ (5,740)	$ (2,462)	$ (10,391)	$ (9,978)
Net loss attributable to common stockholders, diluted	$ (5,740)	$ (2,462)	$ (10,391)	$ (9,978)
Denominator:
Weighted average number of common shares outstanding, basic ( in shares )	34,976	35,134	35,005	35,188
Weighted average number of common shares outstanding, diluted (in shares)	34,976	35,134	35,005	35,188
Basic and diluted loss per common share:
Net loss attributable to common stockholders, basic ( in USD per share)	$ (0.16)	$ (0.07)	$ (0.30)	$ (0.28)
Net loss attributable to common stockholders , diluted ( in USD per share)	$ (0.16)	$ (0.07)	$ (0.30)	$ (0.28)

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Income Taxes (Details) - USD ($)	9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Dec. 31, 2021
Income Tax Disclosure [Abstract]
Deferred tax benefit	$ 0	$ 0
Deferred tax asset	$ 0		$ 0

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Real Estate Held for Development (Details)	Sep. 30, 2022 a padSite	Feb. 10, 2022 a	Oct. 01, 2018 property
Real Estate [Line Items]
Number of real estate properties | property			39
HIREIT Acquisition
Real Estate [Line Items]
Number of real estate properties | padSite	1
Fort Worth, Texas
Real Estate [Line Items]
Area of real estate (in acres)	17	17
Grand Prairie, Texas
Real Estate [Line Items]
Area of real estate (in acres)	10

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Related Party Transactions - Schedule of Related Party Transactions (Details) - Affiliated Entity - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
Related Party Transaction [Line Items]
Total due from related parties, net	$ 1,246	$ 115
Due to vREIT XXI
Related Party Transaction [Line Items]
Total due from related parties, net	(11)	0
Due from other related parties
Related Party Transaction [Line Items]
Total due from related parties, net	$ 1,257	$ 115

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Related Party Transactions - Narrative (Details) - USD ($) $ in Thousands	1 Months Ended	3 Months Ended		9 Months Ended
	May 31, 2016	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021	Jun. 30, 2022	Dec. 31, 2021	Jun. 30, 2021	Mar. 29, 2021	Dec. 31, 2020	Dec. 31, 2019
Related Party Transaction [Line Items]
Notes payable - related party		$ 17,168		$ 17,168			$ 6,012
Stated interest rate											10.00%
Long-term debt, gross		317,210		317,210			$ 305,736
Intercompany advances		7,168		7,168
Interest expense		3,789	$ 2,133	8,527	$ 6,296
Variable interest entity, reporting entity involvement, maximum loss exposure, amount		$ 24,587		$ 24,587
Common stock, shares outstanding (in shares)		34,975,377		34,975,377			35,110,421
Common Stock
Related Party Transaction [Line Items]
Common stock, shares outstanding (in shares)		34,976,000	35,087,000	34,976,000	35,087,000	34,976,000	35,111,000	35,138,000		35,318,000
Hartman SPE, LLC | Common Stock
Related Party Transaction [Line Items]
Common stock, shares outstanding (in shares)		1,198,228		1,198,228
Ownership interest				2.47%
Hartman vREIT XXI | Revolving Credit Facility | East West Bank Master Credit Facility Agreement II
Related Party Transaction [Line Items]
Increase in credit facility, modification									$ 1,625
Hartman vREIT XXI
Related Party Transaction [Line Items]
Notes payable - related party		$ 17,168		$ 17,168
Long-term debt, gross							$ 6,012
Hartman vREIT XXI | Affiliated Entity | Loan From Related Party To Company
Related Party Transaction [Line Items]
Notes payable - related party		10,000		10,000
Interest expense, related party		439	$ 262
Interest expense				795	$ 400
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	1,726		1,726			$ 1,726
Loans receivable, face amount	$ 8,820
Hartman TRS, Inc. | Affiliated Entity | Loan from Company to related party
Related Party Transaction [Line Items]
Origination fees, percentage	2.00%
Loans receivable, interest rate	10.00%
Hartman TRS, Inc. | Affiliated Entity | Loan from Company to Related Party
Related Party Transaction [Line Items]
Interest income, related parties		$ 44	$ 44	$ 130	$ 130

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Stockholders' Equity - Narrative (Details) $ / shares in Units, $ in Thousands		9 Months Ended
	Jul. 26, 2022 USD ($)	Sep. 30, 2022 votePerShare $ / shares shares	Dec. 31, 2021 $ / shares shares
Class of Stock [Line Items]
Common stock, shares authorized (in shares)		750,000,000	750,000,000
Common stock, par value (in USD per share) | $ / shares		$ 0.001	$ 0.001
Preferred stock, shares authorized (in shares)		200,000,000	200,000,000
Preferred stock, par value (in USD per share) | $ / shares		$ 0.001	$ 0.001
Number or (votes per share) | votePerShare		1
Preferred stock, shares issued (in shares)		1,000	1,000
Preferred stock, shares outstanding (in shares)		1,000	1,000
Share-Based Payment Arrangement, Nonemployee
Class of Stock [Line Items]
Stock-based compensation expense | $	$ 400
Convertible Preferred Stock
Class of Stock [Line Items]
Preferred stock, shares issued (in shares)		1,000	1,000
Preferred stock, shares outstanding (in shares)		1,000	1,000
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%

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Stockholders' Equity - Distributions (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended							9 Months Ended	12 Months Ended
	Sep. 30, 2022	Jun. 30, 2022	Mar. 31, 2022	Dec. 31, 2021	Sep. 30, 2021	Jun. 30, 2021	Mar. 31, 2021	Sep. 30, 2022	Dec. 31, 2021
Equity [Abstract]
Distributions per Common Share	$ 0	$ 0.128	$ 0.112	$ 0.112	$ 0.104	$ 0.092	$ 0.087	$ 0.240	$ 0.395
Total Distributions	$ 0	$ 4,500	$ 3,958	$ 3,927	$ 3,662	$ 3,246	$ 3,082	$ 8,458	$ 13,917

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Commitments and Contingencies (Details) - USD ($) $ in Thousands				9 Months Ended	12 Months Ended
	Apr. 25, 2022	Mar. 24, 2022	May 26, 2021	Sep. 30, 2022	Dec. 31, 2021
Loss Contingencies [Line Items]
Loss contingency, damages awarded in settlement		$ 7,871
Loss related to litigation					$ 6,731
Legal fees				$ 370
Surety Bond
Loss Contingencies [Line Items]
Amount sought by plaintiff in litigation	$ 2,197
Loss contingency, damages awarded in settlement	$ 2,001
Pending Litigation
Loss Contingencies [Line Items]
Amount sought by plaintiff in litigation			$ 8,400
Litigation amount sought related to wholly owned properties of the Company			$ 7,600

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Defined Contribution Plan (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021	Dec. 31, 2021
Retirement Benefits [Abstract]
Discretionary contribution amount	$ 99	$ 98	$ 298	$ 199
Stock matching contribution, liability	$ 1,911		$ 1,911		$ 1,613