Hartman vREIT XXI Amends 10-K, Cites Material Weaknesses

TL;DR

**Hartman vREIT XXI's 10-K/A reveals serious internal control failures, making its financial reporting unreliable and signaling a 'sell' until remediation is proven effective.**

AI Summary

Hartman vREIT XXI, Inc. filed a 10-K/A on August 28, 2025, to amend its Annual Report for the fiscal year ended December 31, 2022. The primary purpose of this amendment is to revise Item 9A, 'Controls and Procedures,' to reflect updated disclosures regarding material weaknesses in internal control over financial reporting. Specifically, management identified four material weaknesses as of December 31, 2022: insufficient controls for related party transaction review and disclosure, ineffective investment policy and procedures for affiliate loans lacking Board approval, ineffective controls for Form 10-K review to ensure accurate disclosures, and a lack of controls for appropriate recording and impairment of investments. The company is actively implementing remediation efforts, including enhancing policies for related party transactions with increased Audit Committee oversight, revising investment policies to require formal Board authorization for affiliate loans, strengthening disclosure controls, and formalizing impairment review procedures, including engaging independent third-party specialists. The independent registered public accounting firm concurred with management's assessment of these material weaknesses as of December 31, 2022. The amendment also corrected the signing date of the Independent Registered Public Accounting Firm's Report from August 22, 2025, to August 21, 2025.

Why It Matters

This 10-K/A filing signals significant internal control deficiencies at Hartman vREIT XXI, Inc., which could erode investor confidence and impact the company's valuation. The identified material weaknesses, particularly concerning related party transactions and affiliate loans, raise red flags about corporate governance and potential conflicts of interest. For investors, this means increased risk regarding the reliability of financial statements and the integrity of investment decisions. Competitively, companies with robust internal controls are often viewed more favorably, potentially putting Hartman vREIT XXI at a disadvantage in attracting capital or partners until these issues are fully resolved and demonstrated effective.

Risk Assessment

Risk Level: high — The filing explicitly states that management concluded disclosure controls and procedures were 'not effective' as of December 31, 2022, due to 'material weaknesses in internal control over financial reporting.' Specific deficiencies include a lack of Board approval for affiliate loans and inadequate controls for related party transactions and investment impairment, indicating a high risk of financial misstatement and potential governance issues.

Analyst Insight

Investors should exercise extreme caution and consider reducing exposure to Hartman vREIT XXI, Inc. until the company demonstrates concrete evidence that its remediation efforts have effectively resolved the identified material weaknesses and that its financial reporting is reliable. Potential investors should defer any investment decisions.

Key Numbers

• 9,167,334 — Shares held by non-affiliates (As of June 30, 2022, indicating public float.)
• 9,245,980 — Total common shares outstanding (As of August 21, 2025, showing a slight increase from June 30, 2022.)
• 4 — Number of material weaknesses identified (As of December 31, 2022, highlighting significant control deficiencies.)
• 2022 — Fiscal year end (The period for which the internal control weaknesses were identified.)
• 2025-08-28 — Amendment filing date (Date the 10-K/A was filed, indicating the timing of the updated disclosure.)

Key Players & Entities

• Hartman vREIT XXI, Inc. (company) — Registrant
• SEC (regulator) — Securities and Exchange Commission
• Allen R. Hartman (person) — Executive Chairman, Chief Executive Officer, Chief Financial Officer
• Audit Committee (company) — Oversight body for related party transactions
• Board of Directors (company) — Approval body for investment decisions
• $11.31 (dollar_amount) — Most recent sales price per share of Class A common stock as of June 30, 2022
• $10.55 (dollar_amount) — Most recent sales price per share of Class S common stock as of June 30, 2022
• $10.17 (dollar_amount) — Most recent sales price per share of Class I common stock as of June 30, 2022
• $10.83 (dollar_amount) — Most recent sales price per share of Class T common stock as of June 30, 2022
• 9,245,980 (dollar_amount) — Total common shares issued and outstanding as of August 21, 2025

FAQ

Risk Factors

• Material Weaknesses in Internal Control [high — operational]: The company disclosed four material weaknesses as of December 31, 2022, including insufficient controls for related party transactions, ineffective investment policies for affiliate loans lacking Board approval, weak controls for Form 10-K review, and a lack of controls for investment impairment. These deficiencies indicate significant gaps in financial reporting and operational oversight.
• Sarbanes-Oxley Act Compliance [medium — regulatory]: The filing includes certifications from the Principal Executive and Financial Officers under Section 302 and Section 906 of the Sarbanes-Oxley Act. While these certifications are standard, the underlying material weaknesses raise concerns about the effectiveness of the controls these officers are attesting to.

Industry Context

Hartman vREIT XXI, Inc. operates within the Real Estate Investment Trust (REIT) sector, which is sensitive to interest rate changes, economic cycles, and real estate market conditions. The company's focus on specific property types (though not detailed here) would further define its competitive landscape. The identified control weaknesses could impact investor confidence and the ability to execute strategic initiatives effectively in this dynamic industry.

Regulatory Implications

The disclosure of material weaknesses in internal controls triggers heightened scrutiny from regulators like the SEC and can lead to increased compliance costs. Investors will be closely monitoring the remediation efforts to ensure compliance with SOX requirements and the accuracy of future financial reporting.

What Investors Should Do

1. Monitor Remediation Progress
2. Evaluate Impact on Financial Reporting Accuracy
3. Assess Management's Commitment to Internal Controls

Key Dates

• 2022-12-31: Fiscal Year End and Material Weakness Identification — This date marks the period for which the company identified four material weaknesses in its internal controls over financial reporting.
• 2025-08-21: Independent Registered Public Accounting Firm's Report Date — This is the corrected date of the auditor's report, indicating the completion of their review of the financial statements and internal controls for the period.
• 2025-08-28: 10-K/A Filing Date — This is the date the amended annual report was filed, providing updated disclosures on internal controls and financial reporting.

Glossary

10-K/A

An amended annual report filed with the SEC to correct or supplement information previously filed in a Form 10-K. (This filing is an amendment to the company's 2022 annual report, specifically addressing internal control deficiencies.)

Material Weakness

A deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company's annual or interim financial statements will not be prevented or detected on a timely basis. (The company identified four material weaknesses, indicating significant risks to the accuracy of its financial reporting.)

Sarbanes-Oxley Act of 2002 (SOX)

A federal law that mandates certain practices in financial record keeping and reporting for all public companies. (The filing includes certifications required by SOX, and the identified material weaknesses relate to the effectiveness of internal controls mandated by SOX.)

Internal Control Over Financial Reporting (ICFR)

A process designed by, and under the supervision of, the company's principal executive and principal financial officers, or persons performing similar functions, and effected by the company's board of directors, management, and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. (The core of the amendment concerns deficiencies in the company's ICFR, specifically identifying material weaknesses.)

Year-Over-Year Comparison

This filing is an amendment to the 2022 annual report, not a comparison to a prior year's full filing. The primary change is the updated disclosure of four material weaknesses in internal controls as of December 31, 2022, which were not previously detailed or were presented differently. The amendment also corrects the auditor's report date, indicating a refinement in the reporting timeline rather than a change in fundamental financial performance metrics from a prior period's complete filing.

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

Filing Documents

• a10qa2022.htm (10-K/A) — 32KB
• a311.htm (EX-31.1) — 8KB
• a312.htm (EX-31.2) — 8KB
• a321.htm (EX-32.1) — 3KB
• hartmanxxi-20250531_g1a.jpg (GRAPHIC) — 7KB
• 0001654948-25-000022.txt ( ) — 61KB

Controls and Procedures

Item 9A. Controls and Procedures Management, with the participation of principal executive officer and principal financial officer, evaluated the effectiveness of our disclosure controls and procedures as of December 31, 2022. Based on this evaluation, management concluded that our disclosure controls and procedures were not effective due to the existence of certain material weaknesses in internal control over financial reporting. As of December 31, 2022, management identified that following deficiencies existed in the Company's internal control as material weaknesses 1. Controls related to the review, approval, and disclosure of related party transactions were not sufficiently designed or in operation. 2. The Company's investment policy and procedures related to investments by the Company in loans to affiliates were not effective due to a design deficiency in the control. The design of the control lacks an approval attribute by the Board of Directors in investment decisions. 3. Controls relating to the review and approval of the Form 10-K to ensure accurate, complete, and timely disclosures were not operating effectively for the year-ended December 31, 2022. 4. The Company lacked controls to ensure the appropriate recording of investments, and related impairment, during the year. Remediation Efforts Management is actively implementing corrective actions to address these issues, including Enhancing policies and procedures for related party transactions with increased Audit Committee oversight. Revising the Company's investment policy to require formal Board authorization of loans and investments in affiliates, supported by improved documentation and review protocols Strengthening disclosure controls through enhanced internal review procedures and executive oversight of financial reporting Formalizing impairment review procedures, including engaging independent third-party specialists to support accurate and timely evaluations. Management engaged an indepe

Exhibits and Financial Statement Schedules

Item 15. Exhibits and Financial Statement Schedules The following exhibits are filed as part of this Amendment 31.1 Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 31.2 Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 32.1 Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

SIGNATURES

SIGNATURES Pursuant to the requirements of Section 13 or 15(d) 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. HARTMAN vREIT XXI, INC. By s Allen R. Hartman Allen R. Hartman Executive Chairman, Chief Executive Officer Chief Financial Officer (Principal Executive Officer and Principal Financial Officer) Date August 28, 2025

View Full Filing

View this 10-K/A filing on SEC EDGAR