<PAGE>
T REIT, INC.
Supplement No. 3, dated November 29, 2000
to the Prospectus, dated February 22, 2000
This Supplement No. 3 supplements, modifies and supersedes some of the
information contained in our prospectus, dated February 22, 2000, and
supersedes the information in Supplement No. 2 dated November 3, 2000, and you
should read it in conjunction with the prospectus. References in this
Supplement No. 3 to "the prospectus" mean the prospectus of T REIT, Inc., dated
February 22, 2000. Unless we define a term in this Supplement No. 3, you should
rely on the prospectus for the meaning of any defined terms. References in this
Supplement No. 3 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 and 2. 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 November 17, 2000, we had sold 573,590 shares, including 22,090 shares
issued to our advisor, Triple Net Properties, LLC, and 1,229 shares issued to
current shareholders under our dividend reinvestment program, resulting in
gross proceeds of $5,709,265 (excluding funds from Pennsylvania investors).
After the acquisition of Seguin Corners and the Plaza del Rey shopping centers
described in this Supplement No. 3 and payment of selling commissions and
marketing support and due diligence reimbursement fees, we had approximately
$3,007,443 to invest in properties as of November 17, 2000.
Subsequent State Registrations
After the date of the prospectus, we registered the offering in Mississippi
and 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 November 17, 2000, we had incurred
$436,439 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 November 17, 2000, there were
3,964.5 warrants outstanding.
<PAGE>
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 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 November 17, 2000, we had incurred $81,832 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 November 17, 2000, we had incurred $142,731.63 in other
organizational and offering expenses.
Plaza del Rey Shopping Center--Guadalupe County, Seguin, Texas
On November 17, 2000, TREIT--PDR, LLC, a Virginia limited liability company,
whose sole member is T REIT L.P., a Virginia limited partnership, whose general
partner is T REIT, Inc. purchased the Plaza del Ray Shopping Center and
simultaneously transferred an aggregate 83.5% undivided tenant in common
interest in the property to 2 other tenants in common, one of which is Lake Air
Mall--PDR, LLC, a Virginia limited liability company, whose sole member is NNN
Lake Air Mall, L.P., an affiliate of our advisor who purchased a 19% undivided
interest in the property. TREIT--PDR, LLC retained a 16.5% undivided tenant in
common interest in the property. The property was purchased from CMF Capital
Company L.L.C., a Delaware limited liability company under an Agreement for
Purchase and Sale Agreement dated November 6, 2000. The seller was not an
affiliate of our company or our advisor. We paid a total of $833,250 for our
16.5% undivided interest in the shopping center. The total purchase price for
the shopping center for all tenants in common was $5,050,000. In addition, we
paid approximately $3,396.55 for our share of the acquisition expenses such as
attorneys' fees, recording fees and other closing costs. The total acquisition
expenses for all of the tenants in common was $20,585.16, which represents $.16
per square foot of leasable space.
In connection with the purchase of Plaza del Rey, Fair Oak, LLC, an entity
affiliated with GE Capital Realty Group, Inc., provided a short-term
acquisition loan in the amount of $3,995,000. 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 December, 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.
2
<PAGE>
Plaza del Rey Shopping Center is a 126,322 square foot shopping center, in
Guadalupe County, City of Seguin, Texas, which is a suburb of San Antonio. As
of November 17, 2000, Plaza del Rey Shopping Center was approximately 75%
occupied, with numerous national tenants, including Subway, Goodwill, Heilig-
Meyers Furniture, Dollar General, Blockbuster Video, Merle Norman Cosmetics,
Kentucky Fried Chicken and Popeye's Chicken, as well as various local tenants.
All of the leases will expire during the next several years, with over 25%
of the leases expiring in 2007. The anchor tenants include Goodwill, Heilig-
Meyers Furniture and Dollar General. Goodwill leases 11,038 square feet and
their lease expires in June, 2009, Heilig-Meyers Furniture leases 23,408 square
feet and their lease expires in May, 2007 and Dollar General leases 10,000
square feet and their lease expires in September, 2002.
Plaza del Rey Shopping Center was built in 1975 and consists of one linear
shaped strip center building and three out-parcel buildings on 14.454 acres,
including one available pad site. The property has approximately 125,722 net
rentable square feet, which will increase to 126,322 net rentable square feet
once the Popeye's expansion is complete. The property has approximately 1,000
parking stalls, including 14 that are designated for handicap use. The property
is located at 130 State Highway 123 Bypass at the southwest corner of Court
Street (U.S. Highway 90) and State Highway 123 in Seguin, Texas.
The purchase of the property was unanimously approved by our board of
directors, including our independent directors.
The property has 29 tenant spaces and is anchored by Heilig-Meyers
Furniture, which is the only tenant occupying more than 18% of the total
rentable square footage. Only 8 of the tenants are national tenants. As of
November 17, 2000, the shopping center was approximately 75% occupied with 8
vacant spaces.
3
<PAGE>
A total of 94,518 square feet was leased to 21 tenants at this property as
of November 17, 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>
AMCO Auto Insurance..... 1,400 August, 2005 $14,259 $10.19 9/03-$11.20
9/04-$12.22
Blockbuster Video....... 6,500 September, 2005 $84,565 $13.01 N/A
Clark D. Colville....... 1,657 August, 2001 $21,541 $13.00 N/A
Dean Zincone, MD........ 2,400 February, 2001 $20,160 $ 8.40 N/A
Dollar General.......... 10,000 September, 2004 $30,000 $ 3.00 N/A
Edward D. Jones &
Company................ 900 October, 2005 $12,000 $13.33 11/01-$14.67
11/02-$16.00
Goodwill Industries..... 11,038 July, 2009 $44,152 $ 4.00 2/01-$ 6.00
Heilig Meyers
Furniture.............. 23,408 May, 2007 $55,945 $ 2.39 5/02-$ 2.63
Hills Jewelers.......... 1,830 October, 2005 $12,810 $ 7.00 11/01-$ 8.00
11/02-$ 9.00
11/03-$10.00
11/04-$11.00
Kentucky Fried Chicken.. 2,400 May, 2003 $36,000 $15.00 N/A
Merle Norman Cosmetics.. 600 August, 2004 $ 5,400 $ 9.00 11/02-$10.00
Mr. Gatti's Pizza....... 5,651 August, 2004 $45,736 $ 8.09 8/01-$ 8.60
8/03-$ 9.11
Popeyes Chicken......... 3,000 October, 2020 $58,320 $19.44 11/05-$21.84
11/10-$22.08
11/15-$26.50
Postal Plus............. 1,773 August, 2003 $15,957 $ 9.00 9/01-$10.00
Professional Therapy.... 1,293 July, 2001 $14,262 $11.03 N/A
Rent-Buy................ 6,200 April, 2004 $32,874 $ 5.30 5/01-$ 5.56
5/03-$ 5.84
Seguin Fitness.......... 8,645 June, 2001 $51,870 $ 6.00 N/A
Seguin Gift & Gourmet... 1,400 August, 2002 $15,120 $10.80 9/01-$13.44
Seguin Nail Salon....... 1,190 October, 2003 $10,710 $ 9.00 11/02-$10.00
Subway.................. 1,520 July, 2005 $15,808 $10.40 8/02-$11.37
Valerie's Hair Gallery.. 1,621 September, 2005 $16,956 $10.46 11/02-$11.47
11/03-$12.47
</TABLE>
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.................... 4 3,995 $107,833 11.08% 19.78%
2002.................... 1 1,400 $ 15,120 1.11% 2.77%
2003.................... 3 5,363 $ 62,667 4.24% 11.50%
2004.................... 3 21,851 $108,610 17.29% 19.93%
2005.................... 7 14,371 $161,798 11.37% 27.66%
2006.................... 0 0 $ 0.00 0% 0%
2007.................... 1 23,408 $ 55,945 18.53% 10.26%
2008.................... 0 0 $ 0.00 0% 0%
2009.................... 1 11,038 $ 44,152 8.74% 8.10%
2010.................... 0 0 $ 0.00 0% 0%
</TABLE>
--------
(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.
4
<PAGE>
The following table provides certain information with respect to year end
average rents and occupancy for the past five years:
<TABLE>
<CAPTION>
December December December December November 5-Year
1996 1997 1998 1999 2000 Average
-------- -------- -------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <C>
Average In-Place
Rent/SF................ $7.18 $7.23 $7.61 $7.77 $8.51 $7.66
Average Occupancy....... 75.1% 75.1% 77.0% 74.6% 72.2% 74.8%
</TABLE>
At the time we purchased the shopping center, the pad-site currently leased
by Popeye's was in the process of being enlarged. All associated costs of this
remodeling project will be paid for by Popeye's. 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 $667,048. 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
2.417% and real estate taxes on the property were approximately $79,357.51.
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 $2,750 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 Plaza Del Rey
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 November 17, 2000, we
had incurred $4,166 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 the Plaza del Rey Shopping Center. This
fee will be paid monthly. As of November 17, 2000, we had not incurred any
property management fees.
Real Estate Commission
The seller of the Plaza del Rey Shopping Center paid a real estate
commission of $350,000 to Triple Net Properties Realty, Inc., which reallowed
$114,000 of this amount to a non-affiliated third party.
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 November 17, 2000, we
had not incurred any fees for such services.
5
<PAGE>
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 November 17, 2000, we had not incurred any reimbursable expenses
payable to our advisor.
Seguin Corners Shopping Center--Seguin, Texas
On November 22, 2000, TREIT--Seguin, LLC, a Virginia limited liability
company, whose sole member is T REIT L.P., a Virginia limited partnership,
whose general partner is T REIT, Inc. purchased the Seguin Corners Shopping
Center and simultaneously transferred an aggregate 74% undivided interest to 2
other tenants in common, one of which is Lake Air Mall--Seguin, LLC, a Virginia
limited liability company, whose sole member is NNN Lake Air Mall, L.P., an
affiliate of our advisor who purchased a 10% interest in the property. TREIT--
Seguin, LLC retained a 26% undivided tenant in common interest in the property.
The property was purchased from S-SI Seguin, LP, a Texas limited partnership
under an Agreement for Purchase and Sale of Real Property and Escrow
Instructions dated October 6, 2000. The seller was not an affiliate of our
company or our advisor. We paid a total of $637,000 for our 26% undivided
interest in the shopping center. The total purchase price for the shopping
center for all tenants in common was $2,450,000. In addition, we paid
approximately $4,030 for our share of the acquisition expenses such as
attorneys' fees, recording fees and other closing costs. The total acquisition
expenses for all of the tenants in common was $15,500, which represents $0.72
per square foot of leasable space.
In connection with the purchase of the shopping center, Bank of America,
allowed a loan assumption of an existing loan in the original principal amount
of $1,735,000. The note was paid down at closing to $545,000 with no exit fee.
The note bears a floating interest rate priced at 215 basis points over the 30
day LIBOR rate with a loan maturity date of September 1, 2003. The current
interest rate is 8.77%
Seguin Corners Shopping Center is a 21,455 square foot neighborhood strip
retail center located in Seguin, Texas, a suburb of San Antonio. As of November
17, 2000, Seguin Corners Shopping Center was 100% occupied with ten tenants.
There are seven national tenants, including Dollar Tree, Bally's, Great Clips,
Friedman's, Bath & Body Works, Cato and H&R Block, which lease approximately
17,150 square feet. Additionally, there are three regional tenants, including
Oasis Tan, Cigarettes Cheaper and Premier Communications, which lease the
remaining space.
Six of the ten tenants signed five-year leases in 1999 and most of these
leases have two five-year extensions. Two of the tenants, Friedman's Jewelers
and Premier Communications have three year leases that expire in 2002. Bath and
Body Works, the third largest tenant, signed a ten year lease in 1999, with two
five year extensions. Cigarettes Cheaper signed a three year lease in early
2000 with three two-year extensions. The final tenant, H&R Block signed a five
year lease in early 2000 with two five year extensions.
Seguin Corners Shopping Center, which was built in 1999 for the previous
owners, SI Seguin, LP, a Texas limited partnership, consists of a single one-
story building, containing approximately 21,455 square feet on a 3.25 acre
parcel of land. The property has 118 parking stalls, including six that are
designated for handicap use. The property is located at 596 South 123 in
Seguin, Texas. The shopping center is positioned directly adjacent to the east
of the Wal-Mart Supercenter at the intersection of Highway 123 and State
Highway 466.
6
<PAGE>
The purchase of the property was unanimously approved by our board of
directors, including our independent directors.
The property has 10 tenant spaces with 7 of those parcels being leased by
national tenants, including Dollar Tree, Bally's, Great Clips, Friedman's, Bath
& Body Works, Cato and H&R Block, which collectively lease approximately 17,150
of the 21,455 square feet. As of November 17, 2000, the shopping center was
100% occupied. The following table provides certain information with respect to
the leases at this property with these tenants.
<TABLE>
<CAPTION>
Rentable Current Base Rent per
Lessee Square Feet Lease Ends Annual Rent Square Foot
------ ----------- -------------- ------------ -----------
<S> <C> <C> <C> <C>
Dollar Tree................ 4,200 October, 2004 $44,100 $10.50
Sally Beauty............... 1,400 October, 2004 $14,910 $10.65
Great Clips................ 1,400 November, 2004 $19,600 $14.00
Tanning Salon.............. 1,400 November, 2004 $19,600 $14.00
Friedman's Jewelers........ 1,400 November, 2002 $20,650 $14.75
Premier Communications..... 1,505 October, 2002 $13,125 $12.50
Bath & Body Works.......... 2,450 January, 2010 $26,950 $11.00
Cato....................... 3,640 January, 2004 $35,490 $ 9.75
H & R Block................ 2,660 December, 2005 $37,240 $14.00
Cigarettes Cheaper......... 1,400 July, 2003 $22,400 $16.00
</TABLE>
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 Percent of Gross
Number of Sq. Ft. of Base Annual Building Rentable Sq. Annual Base Rent
Leases Expiring Rent of Ft. Represented by Represented by
Year Ending December 31, Expiring Leases Expiring Leases(1) Expiring Leases (%) Expiring Leases (%)(1)
------------------------ --------- ---------- ------------------ --------------------- ----------------------
<S> <C> <C> <C> <C> <C>
2000.................... 0 0 $ 0.00 0% 0%
2001.................... 0 0 $ 0.00 0% 0%
2002.................... 2 2,905 $ 33,775 14% 13%
2003.................... 1 1,400 $ 22,400 7% 9%
2004.................... 5 12,040 $133,700 57% 53%
2005.................... 1 2,660 $ 37,240 13% 15%
2006.................... 0 0 $ 0.00 0% 0%
2007.................... 0 0 $ 0.00 0% 0%
2008.................... 0 0 $ 0.00 0% 0%
2009.................... 0 0 $ 0.00 0% 0%
2010.................... 1 2,450 $ 26,950 12% 11%
</TABLE>
--------
(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, all 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 $512,824. 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
.3823% and real estate taxes on the property were approximately $2,246. The
property was assessed as land only in 1999. We estimate that the taxes will be
approximately $62,842.50 based on a tax rate of 2.417%.
7
<PAGE>
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 $1,290 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 Seguin Corners
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 November 17, 2000, we
had incurred $3,185 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 the Seguin Corners Shopping Center. This
fee will be paid monthly. As of November 17, 2000, we had not incurred any
property management fees.
Real Estate Commission
The seller of the Seguin Corners Shopping Center paid a real estate
commission of $150,000 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 November 17, 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 November 17, 2000, we had not incurred any reimbursable expenses
payable to our advisor.
8
<PAGE>
Seguin, Texas
Seguin, Texas is a suburb of San Antonio, Texas, which is strategically
located in South Central Texas on Interstate Highway 10. San Antonio, the tenth
largest city in the United States, is thirty minutes west of Seguin via IH-10.
Austin, the state capital, is conveniently accessible 50 miles to the north by
State Highway 123 and Interstate Highway 35. The ports of Houston and Corpus
Christi are nearly equal distance from Seguin. The population of Seguin is
approximately 30,000 and includes a diverse work force. Major employers for the
area include Motorola, the Seguin ISD, Structural Metals, Tyson Foods, HEB Food
Stores and The Guadalupe Valley Hospital.
Seguin serves as a secondary market to the San Antonio MSA. Seguin has
experienced moderate growth over the past couple of years while the majority of
the growth has occurred outside the city limits. The four dominant shopping
centers in the area are King Plaza, Plaza del Rey, the Wal-Mart supercenter and
Seguin Corners. Because we are acquiring two of the four dominant shopping
centers, we will compete with ourselves for tenants.
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.
9
