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November Letter from Al Hartman

Al HartmanDear Hartman Team Members,

I hope you all enjoyed your Thanksgiving holiday with your families. 2020 has been an unexpected year! Despite the obstacles in the road and the challenges we have had to overcome, I am proud of the many achievements you have all had this year. Equally as exciting is the foundation we have built. I believe that we are taking great momentum into 2021. In 30 years, I have not seen a market opportunity quite like the one I see ahead of us. Our company is well-positioned to capitalize and deliver incredible value to our shareholders from pent up leasing demand and distressed assets for us to acquire.

Our year-to-date FFO Yield is slightly over budget at 10.6% vs 7.2%.  The year-to-date occupancy at the end of October was 79.14%. If we include leases projected to sign in December, we will end the year at nearly 81%. We began 2020 at 81.22%, considering the tenants who have downsized, gone out of business, or decided to work from home; it is a victory to end the year right where we started!

We are in the final sprint of the year, and our marketing and leasing teams are working diligently to increase occupancy with several new initiatives that are gaining traction, particularly with brokers. This month we resumed broker events in small settings to promote our new incentive programs and are already seeing several resulting leads. As the country continues back to normalcy and positive news of several promising COVID-19 vaccines, we will continue our leadership in bringing workforces back to the office and are planning to proactively offer more in-person events (with appropriate safety measures) next year. This year was unprecedented, and the entire Hartman team has come together to keep our occupancy stable for our investors. I am so proud of you all. There is much to look forward to next year, and we have a terrific looking pipeline to begin the New Year strong.

I have great confidence next year will be an excellent year for our Investment Solutions Division. We have rolled out new, highly desirable products for investors. Hartman Retail III, DST owns the Colony Retail property in Dallas that is 100% leased. Our other two products, Total Return and Last Mile, are private real estate offerings for institutional and high net worth investors. Total Return’s objective is to diversify our portfolio with $100 million in assets of assorted property types in markets with high growth potential. Last Mile’s objective is to invest $150 million in existing or developed industrial office/warehouse properties less than 500,000 square feet in Texas metro areas. In 2021 we will be diligently working on getting selling agreements through key accounts and conferences. We will also be expanding our marketing efforts to include a website redesign, printed materials, digital kits, and the development of thought leadership content, including videos and articles.

As we finalize 2021 budgets, continue to shape our company to meet our markets’ demands, and execute our vision to grow the company to $2 billion in assets by 2025, terrific opportunities are being created for our investors and all of you as team members.

2020 saw many great achievements. We had over 80 new team members join us, bringing a wealth of knowledge and diverse skillsets to our respective teams. Our construction team has deployed over $6.8 million in capital improvement projects across our portfolio this year.  Our FINCOM team saved over $1 million in taxes for the company. Our HR team implemented our new Christian 401k plan and our new health plan with Sedera with great success. Our Property Management and Leasing teams worked together to retain tenants and help them receive small business resources to ensure their businesses could stay open throughout the COVID-19 pandemic. Of course, the company also rolled out its employee profit-sharing plan this year.

In closing, as we reach the holiday season, I want to ask each of you to pray on the true meaning of this season and to celebrate the joy that we are given through Jesus. Give thanks for the blessings in our lives! As stated in Encouraging the Heart, “Celebrations infuse life with passion and purpose… They bond people together and connect us to shared values…”

“I will give thanks to you, Lord, with all my heart; I will tell of all your wonderful deeds.” – Psalm 9:1

God Bless you all!

Sincerely,
Al Hartman

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