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Filed Pursuant to Rule 424(b)(3)
Registration No. 333-77229
T REIT, INC.
Supplement No. 4, dated December 6, 2000
to the Prospectus, dated February 22, 2000
This Supplement No. 4 supplements, modifies and supersedes some of the
information contained in our prospectus, dated February 22, 2000, and
supplements the information in Supplement No. 2 dated November 3, 2000 and
Supplement No. 3 dated November 29, 2000, and you should read it in conjunction
with the prospectus. References in this Supplement No. 4 to "the prospectus"
mean the prospectus of T REIT, Inc., dated February 22, 2000. Unless we define
a term in this Supplement No. 4, you should rely on the prospectus for the
meaning of any defined terms. References in this Supplement No. 4 to "us,"
"we," or "our company" mean T REIT, Inc. and T REIT L.P., our operating
partnership, unless the context other 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 and in
Supplement Nos. 1, 2 and 3. We commenced operations on June 29, 2000, upon the
acceptance of subscriptions for the minimum offering amount of $1,000,000 and
the escrow of subscriptions (other than funds received from Pennsylvania
investors) terminated. Our offering will terminate on the earlier of February
22, 2002, or the date on which we have sold the maximum offering.
As of December 6, 2000, we had sold 615,508 shares, including 22,090 shares
issued to our advisor, Triple Net Properties, LLC, and 3,489.4652 shares issued
to current shareholders under our dividend reinvestment program, resulting in
gross proceeds of $6,127,918 (excluding funds from Pennsylvania investors).
After the acquisition of Thousand Oaks Center described in this Supplement No.
4 and payment of selling commissions and marketing support and due diligence
reimbursement fees, we had approximately $6,159,497.42 to invest in properties
as of December 6, 2000.
Subsequent State Registrations
We are in the process of registering in Idaho and New Mexico.
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. The
dealer manager will not receive any selling commissions for shares sold under
our dividend reinvestment program. As of December 6, 2000, we had incurred
$469,532 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. The dealer
manager will not receive any warrants for shares sold under our dividend
reinvestment plan. Each warrant entitles the holder to purchase one share of
our common stock at a price of $12.00. As of December 6, 2000, there were
4,931.1425 warrants outstanding.
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
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reimbursements, bonuses and incentive compensation and volume discounts and
generally to 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 December 6, 2000, we had incurred
$88,037.19 in marketing support and due diligence reimbursement fees to the
dealer manager, a portion of which has been reallowed to participating broker-
dealers.
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 December 6, 2000, we had incurred $153,198 in other
organizational and offering expenses.
Thousand Oaks Center--San Antonio, Texas
On December 6, 2000, T REIT L.P., a Virginia limited partnership, whose
general partner is T REIT, Inc. purchased Thousand Oaks Center. The property
was purchased from CMF Capital Company, L.L.C., a Delaware limited liability
company, and a subsidiary of GE Capital Real Estate, under an Agreement for
Purchase and Sale Agreement dated October 26, 2000. The seller was not an
affiliate of our company or our advisor. We paid a total of $13,000,000 for
this property. In addition, we paid approximately $9,732 for acquisition
expenses such as attorneys' fees, recording fees and other closing costs, which
represents $.06 per square foot of leasable space.
In connection with the purchase of Thousand Oaks Center, Fair Oak, LLC, a
Delaware limited liability company provided a short-term acquisition loan in
the amount of $10,837,500. The promissory note evidencing the loan provides
that the Company shall pay to the lender interest only accrued at the Contract
Rate Index (as hereinafter defined) for the period from the date hereof through
and including December 31, 2000. Beginning February 1, 2001 and continuing
through June 1, 2001, the Company shall pay to lender interest only accrued at
the Contract Index Rate for the preceding calendar month on the first day of
each month. A final payment of the principal amount of the Note, together with
all accrued but unpaid interest thereon, late charges, if any, shall be paid on
June 4, 2001.
The promissory note evidencing the loan provides for monthly interest only
payments commencing January 1, 2001, at a rate of 3.5% over the GECC Composite
Commercial Paper Rate, currently 6.47%. The note is due and payable in June,
2001 and is prepayable without penalty in whole or in part upon 10 days prior
written notice. The note 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 purchaser.
Under the terms of the note, the GECC Composite Commercial Paper Rate is the
average interest expense on the principal amount of the GECC Composite
Commercial Paper outstanding for General Electric Capital Corporation's full
fiscal month preceding the interest billing month. Fair Oaks will determine the
GECC Composite Commercial Paper Rate and evidence the rate by a certificate
issued by an authorized employee of Fair Oak.
GECC Composite Commercial Paper is General Electric Capital Corporation's
outstanding commercial paper for terms of 12 months or less from sources within
the United States but excluding the current portion of General Electric Capital
Corporation's long term debt and its borrowings and interest expense. Average
interest expense is the percentage obtained by dividing the interest expense on
the GECC Composite Commercial Paper for the current fiscal month by the average
daily principal amount of GECC Composite Commercial Paper outstanding during
that fiscal month divided by the actual number of days in the fiscal month and
multiplied by the actual number of days in the calendar year.
The purchase of the property was unanimously approved by our board of
directors, including our independent directors.
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Thousand Oaks Center is a Class "A' neighborhood center, located in San
Antonio, Texas, containing 162,864 net rentable square feet. As of December 6,
2000, Thousand Oaks Center was anchored by H.E.B. Food Store and approximately
89% occupied with numerous other national tenants, including Bealls Department
Store, Blockbuster Video, Taco Cabana, Papa John's Pizza, GNC, Fantastic Sam's,
and Factory 2U, as well as various local tenants. Approximately 75% of the
leases will expire during the next five years. The center is anchored by H.E.B.
Food Store
Thousand Oaks Center is located at 2915 Thousand Oaks Drive at the northeast
corner of Thousand Oaks and Jones Maltsberger Road in San Antonio, Texas. The
property was built in 1986 and consists of an "L" shaped configuration of one
story interconnected retail buildings on approximately 16.956 acres. In
addition, there is a pad site that is ground leased by Taco Cabana. The site is
rectangular shaped with four access drives, two each on Thousand Oaks Drive and
Jones Maltsberger Road. The site does not include the immediate corner which is
occupied by a bank and two restaurants. Thousand Oaks Center has approximately
1,100 parking stalls, including 14 that are designated for handicap use, which
is within the ADA guidelines.
The property is anchored by H.E.B. Food Store, which occupies more than 40%
of the total rentable square footage. As of December 6, 2000, the shopping
center was approximately 89% occupied with 6 vacant spaces.
A total of 145,402 square feet was leased to 16 tenants at this property as
of December 6, 2000. The following table provides certain information with
respect to the leases at this property with these tenants.
<TABLE>
<CAPTION>
Changes to
Rentable Current Base Rent per Rent per
Lessee Square Feet Lease Ends Annual Rent Square Foot Square Foot
------ ----------- --------------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C>
Slater White Cleaner.... 1,008 April, 2002 $ 12,600 $12.50 N/A
Luisalon................ 1,278 March, 2004 $ 17,253 $13.50 4/02-$14.00
GNC..................... 1,441 August, 2005 $ 21,615 $15.00 9/01-$15.25
9/02-$15.50
9/03-$15.75
9/04-$16.00
Wolf Camera............. 1,455 January, 2001 $ 23,280 $16.00 N/A
Mail Boxes etc.......... 1,518 October, 2004 $ 24,288 $16.00 N/A
Robert Chaffin, DDS..... 1,607 January, 2007 $ 23,141 $14.40 1/05-$15.75
Fantastic Sam's......... 1,740 September, 2004 $ 26,970 $15.50 9/01-$16.50
9/02-$17.50
Pet Care Center......... 2,400 November, 2003 $ 33,600 $14.00 N/A
Taco Cabana............. 3,345 September, 2014 $105,800 $31.63 9/04-$36.37
9/09-$41.83
Papa John's Pizza....... 3,348 July, 2001 $ 40,176 $12.00 N/A
Allison's Hallmark...... 4,182 January, 2001 $ 50,184 $12.00 N/A
Blockbuster Video....... 5,916 June, 2005 $ 68,034 $11.50 N/A
Christian Faith Center.. 13,209 September, 2002 $ 99,180 $ 7.51 9/01-$ 8.00
Factory 2U.............. 15,143 February, 2005 $117,358 $ 7.75 3/03-$ 9.00
Beall's................. 22,131 January, 2010 $154,917 $ 7.00 2/05-$ 7.50
HEB Food Store.......... 65,681 August, 2014 $478,158 $ 7.28 N/A
</TABLE>
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The following table provides certain information with respect to lease
expirations over the next 10 years at this shopping center.
<TABLE>
<CAPTION>
Rentable Percent of Total Building Percent of
Number of Sq. Ft. of Base Annual Rentable Sq. Ft. Gross Annual Base Rent
Leases Expiring Rent of Represented by Represented by
Year Ending December 31, Expiring Leases Expiring Leases(1) Expiring Leases (%) Expiring Leases (%)(1)
------------------------ --------- ---------- ------------------ ------------------------- ----------------------
<S> <C> <C> <C> <C> <C>
2001.................... 3 8,985 $113,640 6% 9%
2002.................... 2 14,217 $111,780 10% 9%
2003.................... 1 2,400 $ 33,600 2% 3%
2004.................... 3 4,536 $ 68,511 5% 5%
2005.................... 3 22,500 $207,007 15% 17%
2006.................... 0 0 $ 0 0% 0%
2007.................... 1 1,607 $ 23,141 1% 2%
2008.................... 0 0 $ 0 0% 0%
2009.................... 0 0 $ 0 0% 0%
2010.................... 1 22,131 $154,917 15% 12%
</TABLE>
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(1) These amounts are based on the respective property's current base annual
rent, which may increase under the terms of the lease applicable to the
respective property.
We do not anticipate making any additional significant repairs or
improvements to this property over the next few years. However, if we were to
make any repairs, the majority of the tenants would be obligated to pay for
such improvements under the provisions of their respective leases.
For federal income tax purposes, our depreciable basis in this property will
be approximately $10,400,000. When we calculate depreciation expense for tax
purposes, we will use the straight-line method. We depreciate buildings and
improvements on estimated useful lives of 40 and 15 years, respectively. The
real estate tax rate for the year ended December 31, 1999 was approximately
2.967178% and real estate taxes on the property were approximately $203,251.70.
We have retained Triple Net Properties Realty, Inc. to provide supervisory
management services at the property. We will pay Triple Net Properties Realty,
Inc. a property management fee equal to 5% of gross income from the property
(currently $7,406.00 per month based on current gross income at the property).
Under the terms of a sub-management agreement, Triple Net Properties Realty,
Inc. has retained Trammell Crow Company to provide local management services,
including leasing and managing the property. Triple Net Properties Realty, Inc.
will pay Trammell Crow a property management fee equal to 3.5% of gross income
from the property. Trammell Crow is not affiliated with our company or our
advisor.
Fees Paid in Connection with the Acquisition of Thousand Oaks Center
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 December 6, 2000, we
had incurred $30,639.59 in acquisition fees payable to our advisor.
Property Management Fee
We will pay Triple Net Properties Realty, Inc. a property management fee
equal to 5% of the gross income from Thousand Oaks Center. This fee will be
paid monthly. As of December 6, 2000, we had not incurred any property
management fees.
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Real Estate Commission
The seller of Thousand Oaks Center paid a real estate commission of $250,000
to Triple Net Properties Realty, Inc.
Compensation for Services
We will pay our advisor or an affiliate of 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 December 6, 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 December 6, 2000, we had not incurred any reimbursable expenses
payable to our advisor.
San Antonio, Texas
The San Antonio MSA includes Bexar, Comal, Guadalupe, and Wilson Counties,
covering 3,338 square miles in south central Texas. Located approximately 200
miles west of Houston and 275 miles southwest of Dallas, San Antonio is the
county seat of Bexar County, which is home to approximately 88% of the MSA's
1.5 million residents. San Antonio has continued to experience an average
population growth of approximately 2% per year over the past 20 years.
San Antonio's economy is fueled by a thriving tourist industry, a developing
telecommunications industry, a sustained military presence, and a growing
corporate headquarters industry. Nonagricultural employment in San Antonio rose
3.9% in 1998, compared with a statewide growth rate of 3.1% and a national rate
of 7.4%. The service industry also showed significant growth, with a 6.3%
increase in jobs.
San Antonio's retail market continues to experience steady improvement with
increasing occupancy and healthy absorption totals. Retail space inventory
totals over 29.1 million square feet including 8 million square feet in San
Antonio's 9 regional malls. Overall occupancy was recorded at just under 90% at
year-end 1998. One of the strongest submarkets in terms of occupancy is the
north central section, which is 93% occupied. Net absorption totaled 711,000
square feet during 1998. Although below the 1997 level, 1998 absorption
reflects a steady market demand.
San Antonio's major grocery chains are: H.E.B. Food Stores (54% market
share), Albertson's (13% market share) and Handy Andy (13% market share).
Albertson's continues its entrance into the metro with several stores currently
underway and others proposed.
There are 3 other properties, which compete with Thousand Oaks Center,
including King Plaza, Five Courts and Adobe Creek Shopping Center. King Plaza
is also anchored by a H.E.B. Food Store. The other competitors do not have
anchor stores.
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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.
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