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Filed Pursuant to Rule 424(b)(3)
Registration No. 333-77229
T REIT, INC.
Supplement No. 1, dated September 28, 2000
to the Prospectus, dated February 22, 2000
This document supplements, and you should read it in conjunction with, our
prospectus, dated February 22, 2000. References in this supplement to "the
prospectus" mean the prospectus of T REIT, Inc., dated February 22, 2000.
Unless we define a term in this supplement, you should rely on the prospectus
for the meaning of any defined terms. References in this supplement to "us,"
"we," or "our company" mean T REIT, Inc. and T REIT, L.P., our operating
partnership, unless the context otherwise requires.
STATUS OF OUR OFFERING
General
On May 17, 2000 we commenced our offering of a maximum of 10 million shares
and a minimum of 100,000 shares of our common stock at an offering price of
$10.00 per share to the residents of the states listed in the prospectus. Our
offering will terminate on the earlier of February 22, 2002, or the date on
which we have sold the maximum offering.
As of September 26, 2000, we had sold 363,869 shares, including 22,090
shares issued to our advisor, Triple Net Properties, LLC, resulting in gross
proceeds of $3,663,842 (excluding funds from Pennsylvania investors) which
exceeded the minimum offering amount of $1,000,000 and the escrow of
subscriptions (other than funds received from Pennsylvania investors) has
terminated. After payment of selling commission, marketing support and due
diligence reimbursement fees we had approximately $3,111,408 to invest in
properties at September 26, 2000.
Subsequent State Registrations
After the date of the prospectus, we registered the offering in Louisiana
and Oklahoma. As a result, we now offer and sell shares of our common stock to
residents of these states in addition to those listed in the prospectus.
Fees and Expenses Paid in Connection with Our Offering
Selling Commissions
NNN Capital Corp., the dealer manager, will receive 8% of the gross proceeds
of this offering, or $0.80 for each share sold, and may reallow a portion of
the selling commissions to broker-dealers participating in this offering. As of
September 26, 2000, we had incurred $274,167 in selling commissions due to the
dealer manager, a portion of which has been paid to participating broker-
dealers as commissions.
The prospectus also provides that the dealer manager will receive one
warrant for every 40 shares of common stock sold in this offering in states
other than Arizona, Missouri, Ohio or Tennessee, and may reallow a portion of
the warrants to broker-dealers participating in this offering. As of September
26, 2000, no warrants were outstanding. However, we are obligated to issue
7,514 warrants to the dealer manager and participating broker-dealers. We
expect to issue these warrants prior to the end of the third quarter of 2000.
Marketing Support and Due Diligence Reimbursement Fee
We will pay the dealer manager an amount up to 1.5% of the gross proceeds of
this offering, or up to $0.15 for each share sold, to pay expenses associated
with marketing fees, wholesaling fees, expense reimbursements, bonuses and
incentive compensation and volume discounts and to generally reimburse the
dealer manager for due diligence expenses. We will not require the dealer
manager to account for spending of amounts comprising this fee. The dealer
manager may reallow a portion of this fee to broker-dealers participating in
this offering. As of September 26, 2000, we had incurred $51,406 in marketing
support and due diligence reimbursement fees to the dealer manager, a portion
of which has been reallowed to participating broker-dealers.
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Other Organizational and Offering Expenses
Our advisor may advance, and we will reimburse it for, organization and
offering expenses incurred on our behalf in connection with this offering,
including legal and accounting fees, filing fees, printing costs and selling
expenses. As of September 26, 2000, we had incurred $224,002 in other
organizational and offering expenses to our advisor.
PROPERTY ACQUISITIONS
Christie Street Office Building, Lufkin, Texas
On September 26, 2000, we purchased the Christie Street Office Building, a
17,141 square foot Class C office building in Lufkin, Texas from Robert C.
Parker and Carolyn de la Fuente Parker under an agreement of sale and purchase.
The sellers are not affiliated with our company or our advisor. We paid a total
of $1,250,000 for the office building, and approximately $1,839 in additional
acquisition expenses such as attorneys' fees, recording fees and other closing
costs. Our acquisition cost represents approximately $73.00 per square foot of
leasable space.
As of September 26, 2000, this property was 100% occupied by the State of
Texas Department of Human Services, which provides welfare, child and family
protection services. The State has leased the property since 1984 on a short-
term lease (two years or less). The current lease commenced on September 1,
2000 and terminates on August 31, 2002. The current rent is $20,000 per month
during the lease term. The Department of Human Services is not empowered by the
State to execute a lease with a term exceeding two years.
The Department of Human Services may terminate the lease if it loses state
funding or if the landlord does not cure covenant defaults after 30 days notice
by the Department of Human Services or if the building does not conform to the
provisions of the Americans with Disabilities Act of 1990, which requirement we
believe has been met. The Department of Human Services pays for utilities and
janitorial services associated with the property.
Due to the short-term lease with the Department of Human Services, the
property cannot be readily financed with a traditional lender. The sellers
agreed to finance a portion of the purchase price by delivery to the sellers of
a note in the principal amount of $750,000. The note bears interest at 9%, is
fully amortized over 20 years and is secured by a first mortgage on the
property. There are no loan fees or similar costs attached with the loan. The
loan may not be assumed by any future owner and there is no discount for an
early payoff. The monthly payment is $6,748 with a late fee of 5% after 10
days. The payment includes escrows for taxes and insurance.
The purchase of the property was unanimously approved by our board of
directors, including our independent directors.
The Christie Street Office Building, which was built in 1984 for the State
of Texas, consists of a single one-story building containing approximately
20,000 gross square feet on two parcels of land totalling 1.78 acres.
Approximately 5,000 square feet were constructed by the State of Texas in 1990.
The building includes approximately 17,141 square feet of leasable space. The
property has approximately 95 parking stalls with 6 handicap-parking spaces and
is located in flood zone C, an area of minimal flooding. The office building is
located on the northwest corner of Christie Street and route 287, the major
business loop for Lufkin. The office building is located approximately .5 miles
from the major shopping area in Lufkin at the corner of route 287 and highway
59. Adjoining land use consists of various commercial and service users. A
funeral home is located across the street, a medical clinic is next door along
with the police and fire departments.
Lufkin, Texas is the commercial hub of a 12 county rural market region,
serving over 300,000 residents. Lufkin has a population of 30,791 and is
located approximately 100 miles northeast of Houston and approximately 150
miles southeast of Dallas.
We have retained Triple Net Properties Realty, Inc., an affiliate of our
advisor, to manage and lease the property. We will pay Triple Net Properties
Realty, Inc. a property management fee equal to 5% of the gross
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income from the property (currently $1,000 per month) in addition to
compensation for property-level services, including leasing fees, loan
origination and servicing fees and property tax reduction fees.
Potential Property Acquisitions
We currently are considering several potential property acquisitions. Our
decision to acquire one or more of these properties will generally depend upon:
. our receipt of a satisfactory environmental survey and property appraisal
for each property;
. no material adverse change occurring in the properties, the tenants or in
the local economic conditions; and
. our receipt of sufficient financing, either through the net proceeds from
this offering or satisfactory debt financing.
There can be no assurance that any or all of the conditions will be
satisfied or, if satisfied, that we will acquire any additional properties.
Fees Paid in Connection with the Acquisition of Properties
Acquisition Expenses
We will reimburse our advisor for costs and expenses of selecting,
evaluating and acquiring properties, whether or not actually acquired,
including surveys, appraisals, title insurance and escrow fees, legal and
accounting fees and expenses, architectural and engineering reports,
environmental and asbestos audits, travel and communication expenses,
nonrefundable option payments on properties not acquired and other related
expenses payable to our advisor and its affiliates. As of September 26, 2000,
we had incurred $2,857 in acquisition fees payable to our advisor.
Property Management Fee
We will pay our advisor a property management fee equal to 5% of the gross
income from our properties. This fee will be paid monthly. As of September 26,
2000, we had not incurred any property management fees.
Compensation for Services
We will pay our advisor for other property-level services including leasing
fees, construction management fees, loan origination and servicing fees,
property tax reduction fees and risk management fees. Such compensation will
not exceed the amount which would be paid to unaffiliated third parties
providing such services. As of September 26, 2000 we had not incurred any fees
for such services.
Reimbursable Expenses
We will reimburse our advisor for:
. the cost to our advisor or its affiliates of goods and services used for
and by us and obtained from unaffiliated parties, and
. administrative services related to such goods and services limited to
ministerial services such as typing, record keeping, preparing and
disseminating company reports, preparing and maintaining records
regarding shareholders, record keeping and administration of our dividend
reinvestment program, preparing and disseminating responses to
shareholder inquiries and other communications with shareholders and any
other record keeping required.
As of September 26, 2000, we had incurred $645 in reimbursable expenses
payable to our advisor.
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INDEPENDENT ACCOUNTANTS
We were notified on July 11, 2000, by Haskell & White, LLP, our independent
accountant, that it has resigned as our independent accountant. Haskell & White
provided an independent auditors report on our balance sheet dated as of
December 31, 1999, and Haskell & White's report is included in our registration
statement on Form S-11 declared effective by the Securities & Exchange
Commission on February 22, 2000. Haskell & White's report on that balance sheet
did not contain an adverse opinion or disclaimer of opinion and was not
qualified or modified as to uncertainty, audit scope or accounting principles.
We do not have, and have not had, any disagreements with Haskell & White on any
matter of accounting principles or practices, financial statement disclosure or
auditing scope or procedure. In addition, Haskell & White has informed us in
writing they did not have any disagreements with us on any matter of accounting
principles or practices, financial statement disclosure or auditing scope or
procedure.
On September 18, 2000, we engaged Squar, Milner, Reehl & Williamson, LLP as
our independent accountant and Squar Milner accepted such appointment. The
decision to engage Squar Milner was approved by our board of directors on the
recommendation of its audit committee.
We had no relationship with Squar Milner during the two years ended December
31, 1999 and 1998, or the subsequent interim periods prior to and including
September 18, 2000.
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