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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
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FORM 8-K
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CURRENT REPORT
PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES AND EXCHANGE ACT of 1934
September 26, 2000
Date of Report
T REIT, INC.
(Exact name of registrant as specified in its charter)
Virginia 333-77229 52-2140299
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(State or other (Commission File No.) (I.R.S. Employer
jurisdiction of Identification No.)
incorporation)
1551 N. Tustin Avenue
Suite 650
Santa Ana, California 92705
(Address of principal executive offices)
(877) 888-7348
(Registrant's telephone number, including area code)
N/A
(former name or former address, if changed since last report)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
PROPERTY ACQUISITION
Christie Street Office Building, Lufkin, Texas
On September 26, 2000, T REIT, Inc. 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,
Triple Net Properties, LLC. 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
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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
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
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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.
Real Estate Commission
The seller of the Christie Street Office Building paid a real estate
commission of $50,000 to an affiliate of our advisor.
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.
ITEM 5. OTHER EVENTS.
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
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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.
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
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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.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(a) Financial Statements: The financial statements required by Form 8-K and
Regulation S-X will be filed within 60 days of the filing of the 8-K.
It is not practical to provide the required financial statements at this
time. Such financial statements will be filed as an amendment to this report on
Form 8-K no later than 60 days after the deadline for filing this Form 8-K.
(c) Exhibits.
None
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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 hereunto duly authorized.
T REIT, INC.
Date: October 10, 2000 By: /s/ Anthony W. Thompson
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Anthony W. Thompson
President and Chief Executive Officer
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