Current Report on Form 8-K
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
PURSUANT
TO SECTION 13 OR 15(D) OF THE
SECURITIES
EXCHANGE ACT OF 1934
Date
of Report (Date of earliest event reported): October 5, 2006 (October 2,
2006)
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Hartman
Commercial Properties REIT
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(Exact
Name of Registrant as Specified in Its
Charter)
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Maryland
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000-50256
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76-0594970
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(State
or other jurisdiction of incorporation
or
organization)
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(Commission
File Number)
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(I.R.S.
Employer
Identification
No.)
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1450
West Sam Houston Parkway North, Suite 100
Houston,
Texas 77043
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(Address
of principal executive offices)
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(Zip
Code)
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(713)
467-2222
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(Registrant’s
telephone number, including area code)
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(Former
name or former address, if changed since last
report)
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Check
the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
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¨
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Written
communications pursuant to Rule 425 under the Securities Act (17
CFR
230.425)
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¨
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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¨
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17
CFR
240.14d-2(b))
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¨
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17
CFR
240.13e-4(c))
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Item
1.02 Termination of a
Material Definitive Agreement
On
October 2, 2006 the Board of Trustees of Hartman Commercial Properties REIT
(the
“Company”) terminated the Amended and Restated Property Management Agreement
dated as of September 1, 2004, between the Company and Hartman Management,
L.P.
(“Hartman Management”) as well as the Property and Partnership Management
Agreement dated as of January 28, 1999 between the Company and Hartman
Management. The Board of Trustees of the Company determined that it was in
the
best interests of the Company and its shareholders to terminate the Amended
and
Restated Property Management Agreement and the Property and Partnership
Management Agreement because of numerous unresolved issues and conflicts of
interest between Allen R. Hartman, Hartman Management and the Company. In
addition, the Board of Trustees believed that it was in the best interests
of
the Company and its shareholders to move forward as a self-managed,
self-administered REIT with a new, fully integrated management team. The Company
is currently in litigation with Hartman Management and Allen R. Hartman
concerning the validity of the Amended and Restated Management Agreement among
other matters. The Company did not incur any material termination penalties
as a
result of the termination of the Amended and Restated Property Management
Agreement or the original Property and Partnership Management Agreement. In
addition, the Board elected not to renew an Advisory Agreement, dated as of
August 31, 2004, between the Company and Hartman Management, the current
payments under which had been extended on a month-to-month basis and ultimately
expired on September 30, 2006. The previously mentioned litigation also contests
the validity of the Advisory Agreement.
Pursuant
to the Management Agreement and the Advisory Agreement, Hartman Management
has
acted as the Company’s advisor and manager of the Company’s day-to-day
operations and portfolio of properties. Allen R. Hartman, formerly the Company’s
Chief Executive Officer, Secretary and Chairman of the Board of Trustees, is
the
sole limited partner of Hartman Management, as well as the president, secretary,
sole trustee and sole shareholder of the general partner of Hartman Management.
As described below, Mr. Hartman was removed by the Board of Trustees as
Chairman, Chief Executive Officer, and Secretary of the Company on October
2,
2006.
Item
5.02 Departure
of Directors or Principal Officers; Election of Directors; Appointment of
Principal Officers.
On
October 2, 2006, the independent members of the Board of Trustees of the Company
unanimously voted to remove Allen R. Hartman from his positions as Chief
Executive Officer, Secretary and Chairman of the Board of Trustees of the
Company. On the same day, the Board of Trustees appointed James C. Mastandrea,
age 63, to serve as the Company’s interim Chief Executive Officer and Chairman
of the Board of Trustees. Mr. Mastandrea has served as an independent member
of
the Company’s Board of Trustees since July 5, 2006, and is a member of the
Investment Committee of the Board of Trustees, which he chairs, and the newly
formed Executive Committee of the Board of Trustees, which is comprised of
Messrs. Vyas (Chair), Minton, Mahaffey and Mastandrea, and he will continue
to
serve as a member of the Board of Trustees and the above mentioned committees
with a term expiring at the Company’s 2007 Annual Meeting of Shareholders. There
are no arrangements or understandings between Mr. Mastandrea and any other
person pursuant to which Mr. Mastandrea was selected as an officer. Since the
beginning of the Company’s last fiscal year, Mr. Mastandrea has had no direct or
indirect interest in any transaction to which the Company was a party.
Mr.
Mastandrea has served as President and Chairman of the Board of Trustees of
Paragon Real Estate Equity and Investment Trust since March 4, 2003 and as
its
Chief Executive Officer since April 7, 2003. In May 1998, Mr. Mastandrea
returned as Chairman and Chief Executive Officer to MDC Realty Corporation,
Chicago, Illinois, which he founded in 1978 and had used for the development
of
over $500 million of real estate projects until 1993. From July 1993 to December
1993, Mr. Mastandrea was President of First Union Real Estate Investments,
a
NYSE listed real estate investment trust headquartered in Cleveland, Ohio.
From
January 1994 until his departure in May 1998, he was Chairman of the Board
of
Trustees and Chief Executive Officer of First Union. During his tenure at First
Union, Mr. Mastandrea and his management team substantially grew the assets
of
the company from $495 million at the beginning of 1994 to $934 million at the
end of 1997, along with commensurate growth in net operating income and funds
from operations. In 1999, Mr. Mastandrea formed Eagle’s Wings Aviation
Corporation, where he served as Chief Executive Officer, to purchase a troubled
aviation services business. At the time of the purchase, the business was in
default on its debt obligations. Following the September 11, 2001 terrorist
attacks, the business was further adversely affected. In March 2002, Eagle’s
Wings filed for protection under Chapter 11 of the federal bankruptcy laws.
Mr.
Mastandrea has been the general partner of Hampton Court Associates, L.P. since
its formation in 1983. Mr. Mastandrea is a director of Cleveland State
University Foundation Board and Chairman of the nominating committee, and a
director and a member of the real estate committee of University Circle Inc.,
Cleveland, Ohio. He is a member of National Association of Real Estate
Investment Trusts (NAREIT) and Pension Real Estate Association
(PREA).
On
October 2, 2006, the Board of Trustees also appointed John J. Dee, age 55,
as
Chief Operating Officer and Executive Vice President of Finance of the Company.
There are no arrangements or understandings between Mr. Dee and any other person
pursuant to which Mr. Dee was selected as an officer. Since the beginning of
the
Company’s last fiscal year, Mr. Dee has had no direct or indirect interest in
any transaction to which the Company was a party.
Mr.
Dee
has served as a trustee and Senior Vice President since March 4, 2003, and
as
Chief Financial Officer since April 7, 2003 of Paragon Real Estate Equity and
Investment Trust. Prior to Mr. Dee’s joining Paragon, from 2002 to 2003, he was
Senior Vice President and Chief Financial Officer of MDC Realty Corporation,
Cleveland, Ohio, an affiliate of MDC Realty Corporation, Chicago, Illinois.
From
2000 to 2002, Mr. Dee was Director of Finance and Administration for Frantz
Ward, LLP, Cleveland, Ohio, a Cleveland-based law firm with approximately 100
employees. From 1978 to 2000, Mr. Dee held various management positions with
First Union Real Estate Investments (NYSE), most recently as Senior Vice
President and Chief Accounting Officer from 1996 to 2000. Mr. Dee is licensed
as
a CPA (non-practicing) in the State of Ohio.
On
October 4, 2006, the Company issued a press release announcing the changes
described herein. A copy of the press release is furnished as Exhibit 99.1
to
this Current Report on Form 8-K.
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9.01 |
Financial
Statements and Exhibits.
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99.1 |
Press
Release, dated October 4, 2006.
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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 thereunto
duly authorized.
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HARTMAN
COMMERCIAL PROPERTIES REIT
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Dated:
October 5, 2006
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By:
/s/
James C.
Mastandrea
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Name:
James C. Mastandrea
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Title:Interim
Chief Executive Officer
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