Hartman vREIT XXI Suspends Redemptions, Distributions Amid Market Headwinds

TL;DR

**Hartman vREIT XXI is a high-risk bet, with suspended redemptions and distributions signaling deep liquidity issues and a challenging path to profitability in a tough commercial real estate market.**

AI Summary

Hartman vREIT XXI, Inc., a Maryland corporation formed in 2015, focuses on acquiring and operating value-oriented commercial properties, primarily office, retail, industrial, and warehouse properties in Texas. As of December 31, 2022, the company had issued 8,706,919 Class A Shares, 38,198 Class I Shares, 19,708 Class S Shares, and 503,255 Class T Shares, generating aggregate gross proceeds of $91,699,487 from its public offerings. A significant operational change occurred on April 17, 2023, when the company terminated its advisory agreement with Hartman XXI Advisors, LLC and property management agreement with Hartman Income REIT Management, Inc., subsequently engaging Hartman Advisors II, LLC as its new advisor and REIT Property Management, LLC as its property manager. Allen R. Hartman is the sole member of Hartman Advisors II, LLC. The company elected REIT status for federal income tax purposes starting December 31, 2017. Key risks include illiquidity of common stock, with the share redemption program indefinitely suspended on November 28, 2022, and distributions suspended since December 16, 2022, due to rising interest costs, inflation, and recession uncertainty. The company also faces risks related to its significant debt, with a major credit facility maturing in July 2027, and a decrease in demand for office space, particularly for its Class B office assets in Houston and San Antonio suburban submarkets.

Why It Matters

Hartman vREIT XXI's indefinite suspension of its share redemption program and distributions since late 2022 signals significant liquidity challenges for investors, directly impacting their ability to exit positions or receive income. The company's reliance on Class B office assets in Texas suburban markets, while somewhat insulated from 'work from home' trends, still faces broader market risks like rising interest rates and potential decreases in demand for commercial space, which could affect property valuations and rental income. This situation highlights the inherent illiquidity and valuation complexities of non-traded REITs, urging investors to scrutinize management's ability to navigate debt maturities, especially the July 2027 credit facility, and maintain REIT compliance amidst a challenging real estate financing environment. The change in advisors to Hartman Advisors II, LLC, solely owned by Allen R. Hartman, also raises questions about potential conflicts of interest and governance.

Risk Assessment

Risk Level: high — The risk level is high due to the indefinite suspension of the share redemption program on November 28, 2022, and the suspension of distributions since December 16, 2022, directly impacting investor liquidity and return. Furthermore, the company explicitly states there is no established public market for its common equity, making it difficult for stockholders to sell shares, likely at a substantial discount. The filing also highlights significant debt risk, specifically mentioning the largest credit facility maturing in July 2027, which poses a material refinancing challenge given the current unfavorable debt market for office assets.

Analyst Insight

Investors should consider this a distressed asset given the suspended redemptions and distributions, indicating severe liquidity constraints. Do not expect near-term liquidity or income. Potential investors should avoid, and current holders should evaluate the long-term viability of the underlying real estate portfolio and management's ability to navigate significant debt maturities, particularly the July 2027 facility, in a challenging market.

Key Numbers

• $91.7M — Aggregate Gross Proceeds (Generated from public offerings as of December 31, 2022, reflecting capital raised.)
• 9,245,980 — Common Shares Outstanding (As of August 20, 2025, indicating the total equity base.)
• 8,684,819 — Class A Common Stock Shares (Largest class of common stock outstanding as of August 20, 2025.)
• $11.31 — Class A Common Stock Price (Most recent sales price known to the registrant as of June 30, 2022, highlighting illiquidity and potential valuation issues.)
• July 2027 — Largest Credit Facility Maturity (A critical near-term debt obligation that needs to be addressed.)

Key Players & Entities

• Hartman vREIT XXI, Inc. (company) — registrant
• Hartman Advisors II, LLC (company) — new advisor
• REIT Property Management, LLC (company) — new property manager
• Allen R. Hartman (person) — sole member of Hartman Advisors II, LLC
• $91,699,487 (dollar_amount) — aggregate gross proceeds from public offerings as of December 31, 2022
• December 31, 2022 (date) — fiscal year end and date for share issuance data
• July 2027 (date) — maturity date of largest credit facility
• November 28, 2022 (date) — date share redemption program was suspended
• December 16, 2022 (date) — date distributions were suspended
• April 17, 2023 (date) — effective date of new advisory and property management agreements

FAQ

Risk Factors

• Inability to Obtain Financing and Satisfy Debt Obligations [high — financial]: The company faces significant risks related to its ability to obtain financing on acceptable terms and satisfy existing debt service obligations. A major credit facility is set to mature in July 2027, posing a critical near-term challenge for continued operations.
• Decreased Demand for Office Space [medium — market]: There is a noted decrease in demand for office space, particularly impacting the company's Class B office assets in Houston and San Antonio suburban submarkets. This trend could lead to lower occupancy rates and reduced rental income.
• Suspension of Share Redemptions and Distributions [high — financial]: The share redemption program has been indefinitely suspended since November 28, 2022, and distributions have been suspended since December 16, 2022. This is attributed to rising interest costs, inflation, and recession uncertainty, indicating financial strain and reduced investor liquidity.
• Reliance on Related Parties for Advisory and Management Services [medium — operational]: The company recently terminated its advisory and property management agreements with Hartman XXI Advisors, LLC and Hartman Income REIT Management, Inc., respectively. New agreements were established with Hartman Advisors II, LLC and REIT Property Management, LLC, both affiliated with Allen R. Hartman. This concentration of related-party services could present governance and operational risks.
• Failure to Qualify as a REIT [high — regulatory]: The company elected REIT status for federal income tax purposes starting December 31, 2017. Failure to maintain this status in any taxable year could result in the imposition of federal taxes, significantly impacting profitability and financial performance.

Industry Context

Hartman vREIT XXI, Inc. operates in the value-oriented commercial real estate sector, focusing on office, retail, industrial, and warehouse properties primarily in Texas. The industry is characterized by its sensitivity to economic cycles, interest rate fluctuations, and evolving tenant demands, particularly in the office sector. Competition comes from other REITs, private equity firms, and individual investors seeking income and capital appreciation from real estate assets.

Regulatory Implications

The company's election of REIT status subjects it to specific IRS regulations regarding income, asset diversification, and distribution requirements. Failure to comply could result in significant tax liabilities. Additionally, as a publicly offered entity, it must adhere to SEC regulations concerning disclosures and investor protection.

What Investors Should Do

1. Monitor the company's ability to refinance or repay its major credit facility maturing in July 2027, as this is a critical liquidity event.
2. Assess the impact of the suspended share redemption program and distributions on the company's financial health and future prospects.
3. Evaluate the risks associated with the recent change in advisory and property management, particularly the reliance on related parties.
4. Consider the ongoing challenges in the office real estate market, especially for Class B assets in suburban submarkets, and their potential effect on occupancy and rental income.
5. Review the company's compliance with REIT status requirements to avoid potential tax penalties.

Key Dates

• 2015-09-03: Company Formation — Marks the inception of Hartman vREIT XXI, Inc. as a Maryland corporation focused on commercial real estate acquisition and operation.
• 2017-12-31: REIT Election — The company elected REIT status for federal income tax purposes, impacting its tax obligations and operational structure.
• 2022-11-28: Suspension of Share Redemption Program — Indefinite suspension of the share redemption program significantly reduces liquidity for shareholders.
• 2022-12-16: Suspension of Distributions — Cessation of distributions to shareholders due to financial pressures, signaling potential financial distress.
• 2023-01-14: Follow-on Offering End Date — Concludes a period of capital raising through public offerings.
• 2023-04-17: Termination of Advisory and Property Management Agreements — Significant change in operational management, with new related-party agreements established.
• 2027-07-01: Largest Credit Facility Maturity — A critical debt maturity date that requires refinancing or repayment, posing a significant financial risk.

Glossary

REIT

Real Estate Investment Trust. A company that owns, operates, or finances income-generating real estate. REITs provide a way for individual investors to earn dividends from real estate investments. (Hartman vREIT XXI, Inc. has elected REIT status, which has specific tax implications and operational requirements.)

Class A Shares, Class I Shares, Class S Shares, Class T Shares

Different classes of common stock issued by the company, likely with varying fees, rights, or dividend structures. (These represent the different types of equity ownership in the company, with Class A being the most prevalent.)

Distribution Reinvestment Plan (DRIP)

A plan that allows investors to automatically reinvest their cash dividends into additional shares or units of the same stock or fund. (The company has issued shares under its DRIP, indicating a mechanism for existing shareholders to increase their holdings.)

Sponsor

In the context of a REIT or similar investment vehicle, the sponsor is typically the entity that organizes and manages the offering and operations, often having an ongoing management role. (REIT Property Management, LLC is identified as the Sponsor, highlighting a relationship with the company's management.)

Aggregate Gross Proceeds

The total amount of money raised from the sale of securities before deducting any expenses or fees. (Indicates the total capital raised by the company through its public offerings as of a specific date.)

Year-Over-Year Comparison

Information comparing key metrics to the previous year, such as revenue growth, margin changes, and new risks, is not available in the provided text. The filing details significant operational changes, including the termination of prior advisory and management agreements and the establishment of new ones with related parties, as well as the suspension of share redemptions and distributions, indicating a shift in the company's financial and operational landscape.

Key Financial Figures

• $11.31 — les prices known to the registrant were $11.31 per share of Class A common stock, $10.
• $10.55 — 1.31 per share of Class A common stock, $10.55 per share of Class S common stock, $10.
• $10.17 — 0.55 per share of Class S common stock, $10.17 per share of Class I common stock, and
• $10.83 — per share of Class I common stock, and $10.83 per share of Class T common stock. As
• $0.01 — fied as Class A common stock, par value $0.01 per share ("Class A Shares"), 280,000,0
• $269,000,000 — blic offering in which we offered up to $269,000,000 in shares of our common stock, which at
• $180,000,000 — nuary 14, 2020, we began offering up to $180,000,000 in any combination of Class A Shares an
• $5,000,000 — Class T Shares to the public and up to $5,000,000 in Class Shares and Class T Shares to s
• $91,699,487 — esulting in aggregate gross proceeds of $91,699,487. We have used, and intend to continue t
• $10,261,000 — the sale of Richardson Tech Center for $10,261,000. The property was acquired in March 201
• $5,040,000 — property was acquired in March 2018 for $5,040,000. Proceeds from the sale were used to pa

Filing Documents

• fil-20221231.htm (10-K) — 1453KB
• exhibit211subsidiaries2022.htm (EX-21.1) — 3KB
• a311xxi2022.htm (EX-31.1) — 6KB
• a312xxi2022.htm (EX-31.2) — 6KB
• a321xxi2022.htm (EX-32.1) — 3KB
• fil-20221231_g1.jpg (GRAPHIC) — 7KB
• 0001654948-25-000019.txt ( ) — 6029KB
• fil-20221231.xsd (EX-101.SCH) — 55KB
• fil-20221231_cal.xml (EX-101.CAL) — 70KB
• fil-20221231_def.xml (EX-101.DEF) — 238KB
• fil-20221231_lab.xml (EX-101.LAB) — 533KB
• fil-20221231_pre.xml (EX-101.PRE) — 379KB
• fil-20221231_htm.xml (XML) — 603KB

Business

Business 5 Item 1A.

Risk Factors

Risk Factors 9 Item 1B. Unresolved Staff Comments 34 Item 2.

Properties

Properties 35 Item 3.

Legal Proceedings

Legal Proceedings 36 Item 4. Mine Safety Disclosures 37 PART II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 38 Item 6. Reserved 39 Item 7.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 40 Item 7A.

Quantitative and Qualitative Disclosures about Market Risks

Quantitative and Qualitative Disclosures about Market Risks 51 Item 8.

Financial Statements and Supplementary Data

Financial Statements and Supplementary Data 51 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 51 Item 9A.

Controls and Procedures

Controls and Procedures 52 Item 9B. Other Information 54 Item 9C. Disclosures Regarding Foreign Jurisdictions that Prevent Inspections 54 PART III Item 10. Directors, Executive Officers and Corporate Governance 55 Item 11.

Executive Compensation

Executive Compensation 57 Item 12.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 58 Item 13. Certain Relationships and Related Transactions, and Director Independence 60 Item 14. Principal Accounting Fees and Services 63 PART IV Item 15. Exhibits and Financial Statement Schedules 65 Item 16. Form 10-K Summary 68 Index to Consolidated Financial Statements Cautionary Note Regarding Forward-Looking Statements As used herein, the terms "the Company" "we," "us" or "our" refer to Hartman vREIT XXI, Inc. and, as required by context, Hartman vREIT XXI Operating Partnership L.P., which we refer to as our "operating partnership," and their respective subsidiaries. Certain statements included in this annual report on Form 10-K (this "Annual Report") that are not historical facts (including statements concerning investment objectives, other plans and objectives of management for future operations or economic performance, or assumptions, or forecasts related thereto) are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). These statements are only predictions. We caution that forward-looking statements are not guarantees. Actual events our investments and results of operations could differ materially from those expressed or implied in any forward-looking statements. Forward-looking statements are typically identified by the use of terms such as "may," "should," "expect," "could," "intend," "plan," "anticipate," "estimate," "believe," "continue," "predict," "potential" or the negative of such terms and other comparable terminology. The forward-looking statements included herein are based upon our current expectations, plans, estimates, assumptions and beliefs which involve numerous risks and uncertainties. Assumptions relating to the foregoing involve judgments with respect to, among other things, f

Business

Item 1. Business We were formed as a Maryland corporation on September 3, 2015 to acquire, develop and operate a diverse portfolio of value-oriented commercial properties, including office, retail, industrial and warehouse properties, located primarily in Texas. We intend to acquire properties in which there is a significant potential for growth in income and value from re-tenanting, repositioning, redevelopment, and operational enhancements. We believe that real estate, and in particular commercial real estate, provides an excellent investment for those investors looking for diversification, income and wealth preservation and growth in their portfolio. We believe that we have significant experience in acquiring and managing these types of properties, largely through our relationships with REIT Property Management, LLC, which is our Sponsor, and other affiliates. Our charter authorizes the Company to issue 950,000,000 shares of capital stock, of which 270,000,000 are classified as Class A common stock, par value $0.01 per share ("Class A Shares"), 280,000,000 are classified as shares of Class I common stock, par value $0.01 per share ("Class I Shares"), 280,000,000 are classified as shares of Class S common stock, par value $0.01 per share ("Class S Shares"), 70,000,000 are classified as shares of Class T common stock, par value $0.01 per share ("Class T Shares"), and 50,000,000 are classified as shares of preferred stock without par value. On June 24, 2016, we commenced our initial public offering in which we offered up to $269,000,000 in shares of our common stock, which at the time was unclassified. On January 9, 2017, we amended our charter to (1) create the Class A Shares and the Class T Shares and (2) convert each share of our common stock outstanding as of that date into one Class A Share. On February 6, 2017, we revised our initial public offering to allow the offer and sale of up to $269,000,000 in Class A Shares and Class T Shares. In a follow-on offer

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