Hartman: The Power of Proven Results

the ofPOWER
PROVEN RESULTS
By Al Hartman

one of what is described in this book could have been accomplished without the hard
work and dedication and focus of the employees. I want to thank each one of them for
their passionate commitment to their respective roles. Passion is the driving force that
enables people to attain far more than they ever imagined. It energizes the company and is
contagious. Our employees care deeply about what they do, and it is translated into a
commitment to excellence. It is excellence that we have achieved through their hard work
and dedication. Thank you all!
- Al Hartman
N

Contents
Foreword: 6
Hartman Income REIT Inc.: 8
Hartman Properties: 10
Hartman Vision and Mission Statement: 12
Hartman Core Values: 13
Strategies: 24
10X Leaders: 24
Safety: 27
20 Mile March: 32
Testing the Market: 33
Common Sense Leadership: 34
“Bubbling Up”: 46
Mastering a One-Page Strategic Plan: 52
Tribal Leadership: 57
Why Hartman is a Breakthrough Company: 64
Communications: 76
Customer Service: 77
Hartman in the Community: 82
Company Divisions: 83
Our Founder and CEO: 83
Board of Directors: 94
Summary: 101

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WESTHEIMER CENTRAL – HOUSTON, TEXAS

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Foreword
ive God the Glory, for all good things come from Him. We work to glorify God in the
workplace by operating with excellence. If we operate poorly, sloppily, and without integrity,
then the company cannot be a shining city on the hill and glorify God. Our company is performing
better than ever because of its exemplary employees. We’re seeing the results of their high
performance with eye-popping yields on our properties (good acquisitions, good execution of
leasing and follow up), high productivity per employee, low turnover, great training and superb
morale.
It was not always this way. Over the years, there were times when we experienced high turnover,
mistakes, low productivity, and negativity. We were able to improve over time and achieve
exceptional performance through a two-pronged process of godly intervention and applying
principles and best practices taught through CEO organizations I attend, Vistage and C12. Vistage
brings in expert speakers every month who we utilize to apply different strategies and processes.
C12 is an organization that endorses “How to bring God into the Workplace.” In this book you will
read many examples of how we have taken ideas from these experts and applied them to enhance
operational excellence and how we employ Biblical principles in the workplace to make the
company a “bright, shining city on a hill.” What I especially enjoy and appreciate is that the
company’s performance keeps improving, employees keep getting better, my job keeps getting
G

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easier and there is more joy and enthusiasm in the workplace. We are able to do more to proclaim
God’s Kingdom than we have ever been able to do. God bless. I hope you get a lot out of this book,
and my prayer is that this book will help you run a more effective company while simultaneously
lifting up Christ in the workplace.
Blessings,
Al Hartman
I will proclaim your great deeds and disclose your mighty acts. − Psalm 145: 6
Thanks be to God who always leads us to triumph in You and through us spreads everywhere the
fragrance of the knowledge of you. − 2 Corinthians 2:14

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Hartman Income REIT Inc.
artman Income REIT Inc. (HI-REIT) is a Houston based private Real Estate Investment Trust
that owns and operates office, retail, and industrial property throughout Texas. Hartman
Income REIT was formed through consolidations of existing real estate funds and through the
direct contribution of several properties that were individually owned. HI-REIT currently owns 21
properties, encompassing a total of nearly 3 million square feet while producing annual revenues
in excess of $25,000,000.
In addition to HI-REIT, Hartman manages two investment programs, Hartman Short Term Income
Properties XIX, Inc. and Hartman Short Term Income Properties XX, Inc., comprising 13 properties
and approximately 1.7 million square feet in the aggregate.
Hartman is currently moving toward two significant liquidity events which we expect to take place
by 2016. We anticipate a consolidation of our Hartman XIX and XX programs with Hartman Income
REIT, creating a REIT with close to $500 MM in total assets, and we expect to stage an Initial Public
Offering around 2016 that should price our combined asset value at, or close to, $750,000,000.
The strategic purpose of combining HI-REIT, XIX and XX is a first step toward creating a business
enterprise with sufficient critical mass and earnings growth capable of achieving investor liquidity
and a growing stock price. The combined HI-REIT/XIX/XX entity would comprise a viable REIT
H

9
sponsor, property manager, advisor and dealer manager. With these components, the combined
company would continue to sponsor, distribute, manage and operate future real estate related
offerings. In order to maximize value for shareholders, Management’s goal for the 2014-2016
period is to increase occupancy in the portfolios to between 85% and 90% in order for the parties
involved in the proposed business combination to be fairly and comparably valued, while creating
continued earnings growth in the combined entity. Our employees have been tasked and
incentivized to make this happen, and we are confident that occupancy levels necessary to provide
our investors with a crowning IPO will be attained.

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Hartman Properties
Scattered throughout this book are a number of the premier
properties within the Hartman portfolio. Hartman manages
buildings in Houston, Dallas and San Antonio, Texas. These
are just a few of the many high quality and attractive assets
that our investors own and we manage.
the POWER of
PROVEN RESULTS
HARTMAN

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PARK CENTRAL - DALLAS, TEXAS

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HARTMAN VISION AND MISSION STATEMENT
Hartman Vision – “Bust A Billion”
We will retain our standing as one of the top performing REITs in the country by buying
commercial real estate that is under-performing and create value by improving the properties and
then leasing them up. We will grow the company to $1 billion in assets by 2018. Through this
process, we will glorify God by being a faithful steward of all that is entrusted to us.
Hartman Mission
Raise capital with confidence knowing we have one of the best track records in the country for
non-traded REITs.
Invest in the type of commercial real estate in which we can add value for the investor.
Serve our employees and their families by establishing a work environment and company policies
that build culture, strengthen individuals, and nurture families.
Earn the highest possible investment yield by creating value in commercial real estate and being a
faithful steward of all that God has entrusted to us.

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Hartman Core Values
CORE VALUES:
1.) We create value for Investors by:
• Structuring transactions that favor investors and motivate employees to succeed;
• Creating consistency in yield, safety, and growth so the investor has peace of mind and
expectations are met;
• Maintaining track records of overall yields in the mid-teens, with relatively low leverage;
• Treating Hartman dollars as our own and working constantly to improve our under-standing
of how we make money for our investors;
• Obsessively recognizing that profit is our business;
• Building benefits with tenants to create value so our profit margin is not eroded;
• Challenging fellow employees to quantify how they are adding value; and
• Understanding that Hartman’s profit is a measure of the value created for our customers and
that only through creating profits can we bring our vision to reality.

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2.) We recognize that the growth and development of
people is the highest calling of leadership.
• Leaders add value by serving others and by putting
others first.
• The most important ingredient in leadership is to
operate with integrity.
• The true measure of leadership is influence. Leaders
influence by connecting with their subordinates and
peers, by touching their hearts and finding out what is
important to them and inspiring them to do better
work.
• Leadership effectiveness is measured by how well we
develop our most appreciable asset: our people.
• Leaders find a way to win by creating buy-in from
staff and creating momentum in the organization.

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3.) We play to win.
• We are obsessed with performance improvement.
• We recognize that real success must be measured.
• We recognize that setting goals creates focus.
• We recognize that sharing goals creates teamwork.
• We recognize that accountability comes from measuring performance.
• We hold ourselves, our peers, and our supervisors accountable.
• We understand that everyone deserves honest feedback, good or bad.
4.) We care about the customer.
• We believe in keeping the customers we have – they are sacred.
• We bend over backward to do what the customer wants. We are excellent in problem
resolution – whoever gets the problem owns the problem.
• We empathize when a customer suffers a loss as a result of our product or service and avoid
dissatisfied customers.

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• We spend time adding value to
the customer’s value rather than
just selling to the customer.
• Our employees always respond
100% on time to customer
inquiries. We want our product to
be defect free. Most importantly,
we deliver exemplary customer
service because we care about the
customer.
5) We are accountable and we
honor commitments.
• We create an environment where no “surprises” are allowed. We keep our word at all times.
• We neither give nor accept excuses, do not make promises we are unable to keep, and
consistently meet deadlines.
• We define our working relationship with Hartman as a contribution toward Hartman’s goals.

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• We acknowledge the impact the quality of our own work and working relationships have on
others within Hartman—and beyond—and we will work days, nights, and weekends to keep
our word.
• We take responsibility for our actions and accept the outcome of those actions, positive or
negative.
• We model total accountability.
• Our employees understand that propagating rumors leads to destructive behaviors, and they
treat such behaviors as unacceptable.
6.) We recognize and celebrate our achievements.
• We recognize the contributions of others.
• We look to appreciate others more than to be recognized ourselves.
• We participate in company activities out of joy, not obligation.
• We understand that success is meant to be shared.
• We are always looking for opportunities to recognize our peers publicly.
• We remember that we took on our professions out of joy, and joy comes from helping others
celebrate their success.

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• We recognize that all good things come from God; we do all we can to give God the credit for
our success, and we continue to glorify Him in the process.
7.) We honor God in all we do by operating the company in a manner consistent with Biblical
principles.
• We share God’s blessing with our employees through company-sponsored Bible studies,
chaplain service, discipleship, and prayer.
• We share God’s blessing by supporting a variety of faith-based organizations.
• We strive to be a faithful steward by assisting the disadvantaged through financial assistance
or assisting in service projects to help them.
• We give 10% of what we earn to God to support furthering His kingdom.
To highlight the importance that faith plays in our workplace, we share a brief story from our
Controller, Alex Li:
Hartman is the best company I have worked for. Among the many great things Hartman has done
for me and my family, I am especially grateful for the two doors Hartman has opened for us. First,
Hartman has sponsored us during the green card process so that my wife, my daughter, and I can
work, study and live in the United States. Second, due to my employment at Hartman, my wife has

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become a Christian. Hartman is a place where both employees and their families are encouraged
to grow, not only professionally, but also spiritually. I was baptized in 2005. My wife, however, had
a hard time accepting Jesus as the Savior. Every time I tried to bring up the issue, she would just
cover up her ears.
In 2011, I started working for Hartman. I told my family about our library, our Bible study, and the
many programs the company had conducted for the employees. One day my wife asked me, “Alex,
I have noticed that you are so happy every day going to work. We have lived and worked in China,
Canada, Australia, and the United States. You have never been like this, so what caused this
change?”
I scratched my head and smiled. I told her this company was very different from the ones I had
worked with before. I felt accepted, recognized, and valued. Moreover, I liked the working
environment immensely. The next day, I brought several books from the company library, and I
suggested she start reading them. She liked them and her reading list slowly grew. One day, I saw
her reading my Bible. However, just as I became excited about her progress, her reading list
stopped growing and she went back to her old self. I knew she needed some help.
Not long after being hired, Mr. and Mrs. Hartman invited my family to their church and even to a
dinner. During the meeting, Mr. and Mrs. Hartman taught us how to grow in our faith in Jesus and
become stronger Christians. They were excellent. They understood my wife, a person just beginning

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to seek the truth but experiencing so much frustration on the path of belief. My wife listened very
carefully. Now and then, she asked questions and nodded at the answers. On our way home, my
wife said she liked the message Mr. Hartman delivered to her: believing is a process, but she had to
start working on it; otherwise, she would stay where she was and her faith would not grow.
So, she started the process. She found a local church and attended the Bible studies. She has
developed a prayer diary and has been studying the Bible diligently. She has a long way to go. She
is happy she has started. If it were not for Hartman, she would still be lost. We are so blessed.
Praise the Lord!

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PROMENADE – DALLAS, TEXAS

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STRATEGIES
10X Leaders
ur company subscribes and adheres to the “Great by Choice” business principles *** (see
footnote at end of section). At Hartman, we know we control our own destiny. We preach
fanatical discipline among our employees and require they attack each business day with
tremendous zeal and energy. Our people are bright and creative, and we constantly solicit ideas
and suggestions as to how we can improve our operations and performance. We expect our
employees to be empirically creative and productively paranoid because those are the traits of
10X leaders (leaders who build companies that outperform their industry peers by 10 times).
We’ve discovered that 10Xers channel their egos and intensities into something larger and more
enduring than themselves. They are ambitious to be sure, but for a purpose beyond themselves.
Our goal is to build a staff of people who are interested in doing something great in their lives,
whether it be building a great company, changing the world, or achieving some great objective
that is ultimately not about themselves. We try to teach our people not to define themselves by
money or power, but to define themselves by impact, contribution and purpose. The best leaders
are more disciplined, more empirical and more paranoid, and they have the ability to scale
O

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innovation and blend creativity with discipline, which helps transcend a chaotic and uncertain
world.

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Specific, Methodical, & Consistent
As such, we’ve put in place a durable operating practice that creates and replicates a consistent
success formula. We call this a “SMaC” system, which stands for Specific, Methodical and
Consistent. This is our operating code for turning strategic concepts into reality; it is a set of
practices more enduring than mere tactics. Tactics change from situation to situation, whereas
“SMaC” practices can last for decades and apply across a wide range of circumstances. The clarity
and specificity of a SMaC recipe helps people keep their bearings and sustain high performance
during extreme conditions. One of the ways our 10Xers deal with a world of big, fast-moving
forces and unrelenting uncertainty is by religiously adhering to our SMaC principles. Here are
Hartman’s core practices:
• Continue to buy value added properties in order to maintain double-digit returns to
investors.
• Continue to focus on Texas until we can’t buy more properties in Texas at a good value.
• Simultaneously, start looking in other states, such as contiguous states to Texas, and at
selected growth markets such as Atlanta, Denver, and Phoenix.
• Develop a line of 1031 products to meet the growing demand for 1031 investments.

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• Ground up development of new properties, either industrial or office space, in Dallas or
Houston.
• Continue to raise money through the broker dealer community; add selling agreements to
increase the velocity of funds raised.
• Develop the RIA market to attract “net” investors and potential institutional investors.
• Lease the properties up to 90% occupancy through a series of marketing efforts, including
internet marketing, increased commissions, and tenant concessions.
• Continue best practices to develop and retain employees through training, career potential
and soft benefits, and by doing so, we will keep turnover low and productivity high.
Safety
At Hartman, we retain a certain paranoia—despite our track record of success—by always
maintaining ample cash reserves and buffers, analyzing risk, and remaining vigilant to constantly
changing conditions. We understand that our people cannot reliably and consistently predict
future events, so we prepare obsessively ahead of time for what we cannot possibly predict. We
know that it’s what you do before the storm hits – the decisions and disciplines, and the buffers
and shock absorbers already in place – that matters most in determining whether your enterprise
pulls ahead, falls behind or dies when the storm hits.

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10Xers build buffers and shock absorbers far beyond the norm of what others do. 10X companies
carry 3 – 5 times the ratio of cash to assets relative to the median of what most companies carry
and maintain more conservative balance sheets than their competitors. 10Xers zoom out then
zoom in. They focus on their objectives and sense changes in their environment; they push for
perfect execution and adjust to changing conditions. At Hartman, we cushion our investment with
lower leverage than most. While the industry norm is to utilize 50% leverage or higher when
acquiring and managing properties, we prefer to exercise a more disciplined and protective
approach by limiting our exposure to 35%-40%. This conservative philosophy has served us well
over the years, especially during rough economic downturns.
Rapid change does not call for abandoning disciplined thought and action. Rather, it calls for
upping the intensity to zoom out for fast yet rigorous decision making and zoom in for fast, yet
superb execution. 10X companies don’t have a greater bias for speed than competitors. Taking the
time available, whether short or long, to make a rigorous and deliberate decision before the risk
profile changes, produces a better outcome than rushing a decision.

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RICHARDSON HEIGHTS – DALLAS, TEXAS

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20-Mile March
Our people are strictly focused on one overriding goal – hitting stepwise performance markers
with great consistency over a long period of time – what we call the “20-Mile March.” Employees
are defined and recognized by their impact, contribution and purpose, and we have put in place
concrete, clear, intelligent and rigorous performance mechanisms that keep everyone on track
(see section “Bubbling Up”).
The 20-Mile March is more than a philosophy. It is designed to create two types of self-imposed
discomfort: (1) the discomfort of unwavering commitment to high performance in difficult
conditions, and (2) the discomfort of holding back in good conditions. Our 20-Mile March has the
following seven characteristics:
1. Clear performance markers
2. Self-imposed constraints
3. Appropriate to the specific enterprise
4. Largely within the company’s control to achieve
5. A proper timeframe long enough to manage, yet short enough to have teeth
6. Imposed by the company upon itself
7. Achieved with high consistency

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Our 20-Mile March is designed to build confidence and exert self-control in an out-of-control
environment. Our 10X winners set their own 20-Mile March appropriate to their own enterprise.
They don’t let outside pressures define it for them, and it gives our people an edge in volatile
environments. The more turbulent the world, the more you need to be a 20-Mile Marcher.
Testing the Market
We have an intriguing approach to testing new processes and procedures. We call it firing bullets
vs. cannon balls. A bullet is an empirical test aimed at learning what works. Bullets can continue to
be fired with little risk and cost until the sight line to the target has been validated. Once the
target has been acquired and taken out, cannon balls can be substituted to achieve even more
dramatic successes. At Hartman we fire small bullets on a regular basis to learn what works and
what does not. Once we learn what works, we throw significant resources (cannon balls) at the
objective, helping us create large returns from concentrated bets. It is this approach that has
helped turn our company into a well-honed juggernaut of a machine.
• A “fire bullets, then cannon balls” approach better explains the success of 10X companies
than big-leap innovations and predictive genius.
• A bullet is a low-cost, low-risk, and low distraction test or experiment. 10Xers use bullets to
empirically validate what will actually work.

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• Our 10Xers fire a significant number of bullets that never hit anything.
• There are two types of cannonballs: calibrated and uncalibrated. A calibrated cannonball
has confirmation based on actual experience—empirical validation that a big bet will likely
prove successful. Launching an uncalibrated cannonball means placing a big bet without
empirical validation.
• Uncalibrated cannonballs can lead to calamity.
• Failure to fire cannonballs, once calibrated, leads to mediocre results.
• The difficult task is to marry relentless discipline with creativity, neither letting discipline
inhibit creativity nor letting creativity erode discipline.
**Hartman Income REIT is a devotee of author Jim Collins and his successful book series, Good to
Great and Great by Choice. We have chosen to follow the principles, guidelines and terminology
laid out by Collins in his studies, and we give him full credit for being a major inspiration to our
company.
Common Sense Leadership
Core values are a significant component of every company and every individual. At Hartman our
core values are: create value; develop people; play to win; care about the customer; honor

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commitments; recognize and celebrate our achievements and honor God. Leadership is the
opportunity to demonstrate our dedication to the core values through our strength of character,
values, and professionalism. We know that while you only have one first impression, you often
have the opportunity to create a lasting, positive impression on many of the people you meet. We
know the importance of managing relationships, and we spend considerable time and resources
modeling our programs from many industry leaders.
Our employees are devotees of the book, Creating Magic: 10 Common Sense Leadership Strategies
from a Life at Disney by Lee Cockerel** (see footnote at the end of this section). As Lee says…“It’s
not the magic that makes it work; it’s the way we work that makes it magic. The secret for creating
‘magic’ in our careers, our organizations, and our lives is simple: outstanding leadership—the kind
that inspires employees, delights customers, and achieves extraordinary business results.” At
Hartman we adhere to all of Lee’s strategies listed in this chapter:
Strategy #1: Remember, Everyone is Important
• Listen to understand
• Communicate clearly, directly, and honestly
• Stand up for the excluded
• Forget about the chain of command

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• Don’t micromanage
• Design your culture
• Treat people as you would want your customers to be treated
Strategy #2: Break the Mold
• Be clear who’s responsible for what
• Remember that responsibility and authority go hand in hand
• Make every position count
• Get as flat as you can
• Eliminate overwork
• Rethink the meeting structure
• Anyone can take responsibility for change
• Be prepared to take risks
• Expect resistance
• Don’t try to win every battle
• You’re never really done

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Strategy #3: Make Your People Your Brand
• Check out candidates personally
• Ask revealing questions
• Use structured interviews when possible
• Find out what really matters to your applicants
• If possible, have candidates demonstrate their expertise
• Select the best candidate, not the best one available
• Look for people to nurture and promote
• Constantly evaluate performance
• Recognize when the job doesn’t fit the talent
• Terminate quickly and kindly
• Don’t lose touch with those you lose
Strategy #4: Create Magic Through Training
• Give people a purpose, not just a job
• Take your role as a teacher seriously
• Become a coach

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• Teach by example
• Teach the principles of great service
• Train people for magical moments
• Teach them how and where to spend their time
• Communicate constantly
• Give feedback immediately and effectively
• Prepare them for the unexpected
Strategy #5: Eliminate Hassles
• Ask what rather than who
• Listen to your customers
• Learn firsthand what’s working and what’s not
• Constantly query people
• Harvest process solutions from employees
• Stay technically up-to-date
• Think ahead
• Look at your personal processes

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• Expect resistance
• Periodically evaluate the changes you make
Strategy #6: Learn the Truth
• Get out and about routinely
• Get a ground-level view
• Meet regularly with direct reports
• Assemble small groups
• Make them feel safe
• Probe for the whole story
• Answer the tough questions
• Get formal feedback about yourself
• Constantly evaluate your spending
Strategy #7: Burn the Free Fuel
• Spend meaningful time with employees
• Recognize employees by name
• Catch them doing something right

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• Make it public
• Include their families
• Recognize and encourage good ideas
• Watch your language
Strategy #8: Stay Ahead of the Pack
• Be a knowledgeable sponge
• Fill in your gaps
• Master business fundamentals
• Learn from the best
• Learn from your competitors
• Keep up with your colleagues
• Study your customer base
• Follow the compass
• Expand your horizons
• Keep the people you lead ahead of the pack

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Strategy #9: Be Careful What You Say and Do
• Demonstrate a passionate commitment to your role
• Do what it takes to get the job done
• Set high standards
• Have a positive attitude
• Look and carry yourself like a professional
• Be a full-time professional—even when the curtain is down
• Model personal ownership
• Don’t lose your sense of humor
• Be a great partner
• Stay humble
Strategy #10: Develop Character
• Anticipate ethical dilemmas
• Live your values
• Train for character, not just skill
• Teach your values

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“A perfect example of Hartman departments pulling together and exercising true leadership occurred in
the summer of 2014 when Hartman personnel had to close on two significant projects, both occurring on
the same day. One involved the purchase and closing of the second largest commercial property
acquisition in our company’s history, and the other involved a $48 million dollar loan refinancing of
properties inside one of our investment portfolios. In order to make this unprecedented confluence of
events happen on schedule, our legal, acquisitions and finance teams had to work together as one unit. It
took 16-hour days from everyone, including some Sundays to put in the man-hours necessary to
accomplish this Herculean task. Managers and staff came in early, left late and did what it took to get the
job done on both fronts. As a result, our entire customer base of investors, tenants and financial
professionals were rewarded with the value and benefits that both successful closings brought to our
organization.”
Lee’s book emphasizes using common sense, honoring the experience of individuals in making
informed decisions, giving people a purpose, and making people comfortable with your brand.
This practice of inclusion and listening to all associates has been embraced and supported at
Hartman for many years. We have weekly meetings to review company progress toward company
goals and the performance of our operating procedures. All executives, managers, engineers, sales
staff and administrators are welcome to provide input at these meetings.

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Inclusion of comments and suggestions from the entire staff allows the company to keep in touch
with every aspect of business operations. When changes are necessary we move quickly to
improve efficiency and overall performance. Hartman recognizes that the strength of any
customer service program is the people behind it. To ensure we hire the best service-minded
people, we define these traits in a customer service profile and test, interview and review the
accomplishments of individuals we want to represent our brand. After their hiring, each candidate
is given 90 days to learn our culture, become oriented with their position, and to decide if the
culture, company and position fit their own personal and career goals. With character traits
confirmed, Hartman and the associate begin the path to excellence.
**Hartman Income REIT is a devotee of author, executive and former CEO Lee Cockerell and his
successful book covering leadership and delivering excellent customer service. We have chosen to
follow the principles, guidelines and terminology laid out by Cockerell in his book, and we give him
full credit for being a major inspiration to our company.

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3100 WESLAYAN – HOUSTON, TEXAS

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ONE MASON PLAZA – KATY, TEXAS

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“BUBBLING UP”
t is up to the company to set the vision so that people have an idea of where the company is
headed. To achieve that vision, all processes bubble up from the bottom and rise to the top.
Each day our employees follow a well-defined schedule that provides maximum efficiency and use
of time and resources. Every morning our various departments participate in “Huddles,” allowing
all staff members to discuss their “Top 6” items for that day. At the end of each day, all employees
take 15-30 minutes for their own personal Strategic Planning Appointment (or “SPA”) to review
production for that business day and to plan for all that must be accomplished the next day. This
daily planning helps the company maximize production while keeping focus squarely on the key
goals that must be accomplished.
Hartman believes in open and regular communication between employees and their managers,
and we utilize the concept of a one-on-one meeting throughout all inter-company departments.
Each manager sets an agenda for the meeting, and the fundamental goal of each one-on-one
meeting is open dialogue about:
• Your current work product
• Any problems that haven’t been discovered or need to be solved
• Resources that need to be obtained
I

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• Any instructions or goals not
clear
• Any issues that have come
up since the last one-on-one
• Any questions the manager
needs to answer
We also use these bi-monthly
one-on-ones to provide updates
on the employee’s progress,
while trying to impart advice,
support, motivation and even
inspiration to each departmental team member.
Departmental managers and employees create “Scorecards” for each employee, agreeing on
quarterly goals and incentivizing the employee through a cash bonus awarded for attaining those
goals. Employees who grade out with high scores are recognized at the quarterly company-wide
meetings and are thus recognized by peers while being financially rewarded for superior
performance. Annual pay raises are based on the scorecard’s consolidated scores for the year.
Depending on the total score, annual pay raises can range from 0%-20%.

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Our quarterly meetings are the source for most of the new and innovative ideas that each
department utilizes to increase efficiency and productivity.
During these one-to-two day strategic planning sessions, employees from the various departments
meet to discuss improvements and tweaks and upgrades needed to deliver optimum
performance. We have brought in experts like Jim Bandrowski, President of Strategic Action
Associates, who help us focus on brainstorming and “deep diving” processes that employ wave
thinking to achieve remarkable results. Well trained facilitators (typically department heads) help
their departments unleash out-of-the-box thnking and brainstorming which assists the company in
executing our critical mission and stretch goals to reach our vision.

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Out of every quarterly group session emerges a “DART” schedule of goals. Dart is an acronym for:
elivery,D
ccountability,A
esponsibility, andR
iming.T
Teams of three employees are assigned responsi-bility for the various D.A.R.T. goals that they
developed, and each objective is assigned a timetable for delivery and implementation. Employees
are account-able for their specifically assigned tasks, and they report weekly all progress made
through the quarter. As you can see from the diagram on the opposite page, the work creativity
and energy flow up from the bottom. The vision is set, and all of the activities flow into making the
vision become a reality.

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MASTERING A ONE-PAGE STRATEGIC PLAN
hanks to global competition, the rise of e-commerce and the ever-quickening pace of
innovation, clear communication of an effective strategy is absolutely essential to survival. To
become and remain competitive, our organization utilizes these three building blocks:
1. A framework that identifies and supports our corporate strategy,
2. A common language in which to express that strategy, and
3. A well-developed habit of using this framework and language to continually evaluate our
strategic progress *** (see footnote at end of section)
The pyramid on the opposite page graphically conveys to everyone how the various pieces—
values, purpose, targets, goals, actions, schedules and accountabilities—align, establishing a
common strategic language that is easy to use and helps eliminate confusion.
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The template for our one-page strategic plan is shown here, with the top half on this page and the
bottom half on the opposite page for clarity:

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This process is 1% vision and
99% alignment. The lion’s
share of our effort must go, not
into meeting, talking and
wordsmithing, but toward
getting our people aligned to
do what needs to be done. We
use our One-Page Strategic
Plan daily, weekly, quarterly
and annually to “Do the right
thing!”
***Hartman Income REIT is a devotee of author Vern Harnish and his successful book, Mastering
the Rockefeller Habits. We have chosen to follow the principles, guidelines and terminology laid
out by Harnish in his studies, and we give him full credit for being a major inspiration to our
company.

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TRIBAL LEADERSHIP
t Hartman, we believe in creating the right road map for building a powerful culture. We’ve
studied how people interact, what makes a successful employee, and we’ve incorporated
those observations into a blueprint for optimizing organizational productivity. Our leaders listen
for the specific cultures that exist within their departments and upgrade the quality of those
cultures using clearly defined leverage points.
We have studied and recognize the five stages of “Leadership,” and we make every effort to
nurture and train our employees to reach, at a minimum, the highest two tiers. Stages One, Two
and Three incorporate about 76% of all corporate employees nationwide, leaving a small minority
of those who can attain the most qualified levels. We are proud to say that Hartman employees (in
general) have attained Stage Four levels, and we are constantly working to help each of them
reach the highest rung. By operating at a Level Four culture, the company is rewarded with loyalty,
hard work, innovation and collaboration. The end result - our company gets higher quality work
done in less time.
A recent example of this process in play concerns our current Chief Information Officer, Daniel
Robinson. Daniel started at the company in 2002 as an administrative assistant and has worked his
way up to become the executive in charge of the company’s Information Technology division.
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Daniel exhibited strong leadership and problem solving skills early on in his career, and as a result
we gave him a defined career path to advance and succeed. Along the way we’ve exposed him to
training and access to some of the brightest minds in the field. As Daniel said, “Hartman has given
me the opportunity to learn, grow my skill set and let me do something I am passionate about.”
We measure our success through various markers that may not be apparent to the casual
observer. A spontaneous “life is good” comment or a departmental clustering of employees
working together to engineer something new and special are simple examples of the signposts we
use to verify that we are properly shaping our future corporate leaders. When “coins” (usually a
$25 or $50 gift card recognizing employee excellence in performance) are distributed liberally by
both managers and peers, it creates a “feel good” culture where employees are encouraging each
other.
We don’t wrap up our quarterly strategy meetings until all top priorities have been distilled into
specific, measurable initiatives and action plans, ones that have both a deadline and a person
responsible. If members from each of Hartman’s major departments and regions have participated
in the creation of the strategy, it can be relatively easy for them to break up into their
departmental groups and reflect on how their departmental priorities should be reordered as a
result of the meeting. To stimulate their thinking, we generally ask each department to reflect on
the following question:

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“Given the strategy we have just created (or adapted), what are the 20% of the activities in your
department that are likely to create 80% of the results?” The heads of those departments are then
asked to lead the creation of detailed 90-day action plans that reflects the new strategic priorities.
When we see ideas “bubbling up” during our quarterly strategic planning sessions, people take
ownership of these ideas and have a strong desire to carry these out, and they take the initiative

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to do so. When we see employees volunteer for service projects on their own time and take the
initiative to put together and carry out these projects, which often correspond to the employees
personal vision, we see employees who are also engaged and motivated in carrying out the
company’s vision. The intense satisfaction that our employees feel in both their personal and
professional lives is a key ingredient as to why we significantly outpace our competitors.
Hartman deeply cares about its employees. We take the time to celebrate our success and socialize
together. When one of us endures hardship or pain, the others rally around that employee to lift
his/her spirits and support them through their tough time. Recently, Patty Baird, our Accounts
Payable Specialist, had two of her sons deployed overseas. One son was stationed in the
Mediterranean on the USS Virginia, and the other (in the army) was deployed to Afghanistan. Both
sons’ tours of duty were for 6 months, and as any parent would be, Patty was concerned about
their safety. Hartman personnel, including Mr. Hartman, decided to lift her spirits by sending “care
packages” to both men. Each package contained a wide array of food, games, tapes, books and
personal messages from Hartman employees. Patty said, “This was an extremely thoughtful
gesture on the part of all Hartman employees, and the support meant so much to me and my
boys.”

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NORTH CENTRAL PLAZA – DALLAS, TEXAS

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3100 TIMMONS – HOUSTON, TEXAS

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Why Hartman is a Breakthrough Company
t doesn’t happen often, but sometimes an everyday company breaks through to become
extraordinary. We, at Hartman, have studied the attributes of “Breakthrough Companies” **
(see footnote at the end of this section) and have implemented many of these characteristics in
our training. We utilize strategies that give our employees the best possible chances for success in
any kind of environment.
What are some of the attributes that we look for in our people? First and foremost, we want
people who are determined to build something bigger than themselves, i.e. “crowning the
company.” You do this by:
(i) crowning the customer first;
(ii) aiming high;
(iii) avoiding the trappings of corporate royalty;
(iv) shifting leadership style from “commander” to “coach”;
(v) making sure they don’t let loyalty become a liability; and
(vi) cutting people in on the action.
We’ve learned over the years that there is no substitute for doing what you say you are going to
do. Aligning words and deeds is the single most important building block in creating strong
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company character, and breakthrough companies are built on a bedrock of company character.
Values refer to what people in a company purport to believe, while character is more important;
character refers to how people in an organization really operate. A company’s view of people is an
unmistakable reflection of its organizational character. If it sees people as selfish, lazy and
unmotivated – that’s the kind of people it will attract. If it believes in the potential of people to do
great things, and has competent leadership, its people will rise to the occasion. Breakthrough
companies pride themselves on finding ways to cut costs in areas that don’t matter much, but
generously ladle resources into areas they know will give them an edge.
Virtually every breakthrough company shares the same five characteristics:
(i) give folks a fair deal;
(ii) believe in people;
(iii) be a strategic miser;
(iv) make your word count; and
(v) be led by a charismatic leader.
There are three places a leader can have the greatest impact on an organization: strategy, people
and execution.

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Strategy: The real value of strategy isn’t the plan itself but rather the process, which, if managed
correctly, teaches an organization how to triage issues. To achieve its full potential, a strategy
process should be dynamic and closely linked to execution, involve people from a variety of areas
of the firm, and focus on both the velocity and the quality of learning. It is interesting to note how
quickly people at all levels of a business can grasp the key dimensions of strategy and can begin
contributing meaningfully to strategic decisions. Top performing companies are able to keep their
teams together for long periods of time, and at Hartman we are no different. Many of our key
executives have been with the company for over ten years, and the company experiences below
industry turnover rates.
In 2008, Danyale Johnson came to Hartman on a temporary assignment, filling in as a receptionist.
By the end of the day she was recruited by a property manager to work as her administrative
assistant. One day turned into six years and counting. She is now responsible for the administration
of three key properties in the portfolio. She feels blessed by the opportunities that Hartman has
provided her, and she loves the women’s employee Bible study program. As she said, “I am grateful
to be part of a team where I do not have to compromise my personal beliefs and values.”
People: Ordinary people can do extraordinary things. Many companies fall victim to symptoms of
the “grass is greener” complex, where they look outside to fill key roles rather than develop the
talent they already possess in-house. We believe that the most neglected skill in business today is

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coaching, and the number one job of a leader is to be a good coach and to get the best out of
every one on your team. You must focus on growing your people, and that is why our company
follows the principles laid out by basketball coaching legend John Wooden. We subscribe to Coach
Wooden’s philosophy, which concerns developing the people you have as opposed to spending
too much time on finding the “right” people. Here are two such examples of Hartman’s
commitment to advancing the careers of its people:
Matthew Calvano is a Senior Property Manager in Dallas. In 2014, Matthew fought a series of
significant life-threatening health issues, and he comments on what Hartman has meant to him
during this difficult period: “Until recently if you had asked me what I like best about working at
Hartman, I would have said that the opportunity for advancement and being part of a growing
organization with a clear vision were the most important factors. During my five plus years at
Hartman I have been promoted and given the opportunity to increase my income and invest in the
company. I have also been entrusted with leading the Dallas PM team and growing our Dallas
presence. These are all wonderful reasons to be really excited about working for this organization;
however, they are not the most important parts of being part of the Hartman organization.
In mid-January of this year I had a heart attack while at the office. At the time I didn’t know I was
having a heart attack, although everyone around me (including Mr. Hartman) seemed to know
that something was seriously wrong with me. I refused help from everyone and, foolishly, tried to

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drive myself home. Well, the end result was that I had to call an ambulance from the highway and
was admitted to the hospital and spent 10 days in ICU. Not only did I have the heart attack and
subsequent surgical procedures, I also lost my transplanted kidney that I had received 22 years
ago. This required that I go back on dialysis.
The reason that I tell this story is that during this terribly unfortunate, life-changing event, my
employer, of all things, helped get me through it. From personal calls from Al and Lisa Hartman,
daily texts from Ross Donahue and well wishes from all my co-workers, I was reminded how much
Hartman is like a family – my work family. With everyone praying for my recovery and contacting
me about my well-being I was able to focus on getting better and not worry about “work.”
Everyone from the top on down made me feel as though I didn’t need to concern myself about my
job or the properties or anything except getting better. I was shown that the company cared about
me as a person, an individual, not just an employee. That may not sound like a revelation, but it
was really wonderful for me and my family. Not having to worry about my job being there or how I
would get paid was a real blessing to me and my family.
I especially appreciate how Ross and Kimberly worked with me to transition back to work and
helped to insure that all the attendant issues were not overwhelming at such a difficult time. I also
cannot express how wonderful everyone on my Dallas team, especially my assistant, Bethany, was
during my absence – from stepping to make sure that everything was covered to reaching out to

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me to see if they could do anything for me or my family. Words cannot express how much I
appreciate the personal messages and phone calls I received from Mr. Hartman – never once
mentioning work, always focused on how I was doing. He prayed with me on the phone and told
me that he and Lisa were praying daily for my recovery – I truly believe I recovered more quickly
because of this.
So, now if you ask me what I like best about working at Hartman, I will tell you that it isn’t the
opportunity for advancement or the great vision or being part of a vibrant, growing company.
Don’t get me wrong, these are all great reasons to work at Hartman, but they are not the best
reason. The best reason is that when you work at Hartman you are truly part of a family. At
Hartman, everyone from the CEO to day porters care about you as a person, and that is something
no amount of money can replace. It is truly a blessing to work here, and I thank God every day that
he led me to this organization. I consider Hartman my home, and it would be my honor to work
here for the rest of my career.”
Execution: By instituting a dynamic approach to strategy, we believe we can more closely link
strategy and execution. Web-based collaboration tools have helped us stay focused on the 20% of
the activities that, if executed effectively, will produce 80% of the results. In addition to focusing
on finding new customers, Hartman has built robust systems that focus on monitoring customer

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relationships and anticipating customer needs. Hartman has built speed and responsiveness into
its structure as it has grown and become more complex.
A prime example of our ability to execute came in 2008 when Hurricane Ike, with its nearly 100 mph
winds, headed for a direct hit on Houston. During critical periods of the storm, Hartman had personnel
stationed at virtually every property in our Houston portfolio. We knew that power would likely be lost
at most, if not all of the buildings, and significant structural damage was possible. Our focus was to
immediately survey the after effects of the storm and get customers back in business as quickly as
possible.
As Ross Donahue, our C.O.O. states…“ Prior to Hurricane Ike making landfall, Hartman, like many other
property owners, prepared for upcoming issues and challenges that typically arise from natural
disasters. Personnel were assigned, supplies were on hand, appropriate training was completed and a
crisis recovery strategy was ready to go. We soon learned that preparation is only part of the total
response. Torrential rain, wind, traffic jams, flooding, downed trees, and the loss of power created
significant obstacles in responding to even minor issues.
When Ike first hit on September 13, 2008, its winds were not exceptionally strong; however, the storm
surge in Galveston was categorized as a 5 and caused tremendous damage. Many waves reached
heights of 13 feet or greater. Damage in Houston was primarily the result of wind combined with 10
inches of rain. Loss of power was widespread and impacted traffic flow, creating significant backups

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and hazardous driving conditions. Within the Hartman portfolio, most buildings were minimally
damaged, the major exception being our Westheimer Central Plaza office property.
This building had wall panels blown off of the rooftop elevator penthouse and suffered a partial
removal of the roof, which resulted in exposure of the entire building to the persistent rain that
accompanied the storm. Hartman executive staff and engineers were called to the property by one of
our building engineers, who, along with his family, rode out the storm at that location. Our executive
staff was the first to arrive at the building and quickly discovered the extent of the damage. This set in
play our “crisis response program,” and calls were immediately placed to personnel assigned to this
location. The building’s property manager, our engineers, and other staff members who had safely
arrived on site moved to immediately contact clean-up and construction vendors. Within 24 hours, over
50 people were on site writing contracts, calling tenants, conducting inspections of the building and
removing debris from the premises. This rapid response was critical in making temporary repairs that
saved both landlord and customer property from further damage. Additionally, our staff cleaned up
and salvaged customer furniture and other equipment from various locations throughout the property.
Hampering our efforts was the complete loss of power, making every task significantly more difficult.
Lack of elevators, water, lights, air conditioning, and rest rooms made even the simplest of tasks
formidable. Conditions inside were hot, humid and most uncomfortable, and each of the ten stories in
the building could only be accessed by stairwells. Every piece of equipment, debris, and all materials
had to be carried by hand for days. The C.E.O., managers and I spent countless hours in the following

72
days assisting our recovery teams in overseeing the complete regeneration of the property. Hartman
staff worked an average of 15 hours per day in order to get repairs made.
When we were hit by the outer rain bands of the hurricane the following evening, teams that had
already been on the property for over 24 hours remained in place throughout the night to help protect
vulnerable property. After the last wave of rain subsided, we needed to find temporary roofing
materials. This required waiting in line for hours, as tens of thousands of people across the city were
trying to purchase materials to repair homes and businesses. Many retail stores did not have power, so
purchasing such materials could only be done with cash. Fortunately, Hartman staff pooled together
their own cash to buy the necessary materials. I am proud to say that Hartman employee
perseverance, dedication and resilience allowed the building and the tenants to return to operation
after just one lost workday of access.
Longer-term repairs to the building included replacing the elevator operating system, the roof, carpet
and wall covering on two floors, as well as the extraction of water which came in through the roof,
walls and elevator shaft. We ended up saving approximately $1,200,000 in repairs by taking such
prompt corrective action. After the storm, it was revealed that many buildings in Houston with similar
damage were down for weeks and months, with several mid-rises reported as a complete write off by
the insurance carrier. This down time left many tenants at competitor properties without offices to
conduct business. We are very proud that the time, resources, and physical endurance our team
demonstrated at Westheimer allowed our tenants to be back up and running far more quickly than

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most. It also showed our customers how important they are to us and that we truly care for their well-
being.
Al and I were both extremely proud of our staff during this storm. Never once did anyone ask for
compensation, even though managers and several employees pooled $2,000 of their own cash to
protect the company’s assets. We can say with certainty our people are truly a blessing to the
business.”
**Hartman Income REIT is a devotee of author Keith McFarland and his successful book, The
Breakthrough Company: How Everyday Companies Become Extraordinary Performers. We have
chosen to follow the principles, guidelines and terminology laid out by McFarland, and we give him
full credit for being a major inspiration to our company.

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NORTHCHASE – HOUSTON, TEXAS

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TOWER PAVILION – HOUSTON TEXAS

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Communications
artman Income REIT excels at communicating with its employees. Our executive team
recognizes that frequent and unfettered communication with management is a critical
element in raising efficiency, increasing production and reducing turnover. Among the many
communication initiatives we’ve put into place are the following:
• Semi-monthly employee-wide informational conference call including Q&A with the CEO;
• Daily departmental team huddles with a discussion of each employee’s top six tasks;
• Semi-monthly executive meetings;
• Semi-monthly managers’ meetings;
• Regularly scheduled one-on-one’s with immediate supervisor;
• Weekly Department meetings;
• Shared departmental calendars;
• Quarterly company-wide all day meetings; and
• Semi-monthly newsletters.
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Customer Service
ustomer service is a growing and significant responsibility for all businesses, and this is
especially true for the real estate industry. It is one of the most important measures that
tenants use in determining the quality of services provided by the landlord. Customer service
affects the percentage of renewing tenants, the renewal rate, and the reputation of the manager,
property, and ownership. Without superb customer service and a strongly developed customer
relations department, profitability of any business is in jeopardy. To meet this business need it is
important that effective leaders be trained and developed with an awareness of interpersonal
relationship skills. Service programs involving individuals, groups, and communities must also be
prepared as part of annual budgets and strategic plans.
As a company Hartman understands relationship management and the importance of how
relationships affect the bottom line. We know that every individual impacts how the company is
perceived in the market place and has an effect on the brand. We also know that the way we treat
employees is often manifested in the way our employees treat customers. Therefore, we structure
our training, benefits, and rewards to be among the best in the industry.
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At Hartman we equate customer service with leadership. We know that the better the leader the
greater the influence that person has on others and the greater the progress we all make toward
achieving our vision. Hartman prides itself on hiring talented people and then training them to
take leadership roles in the company. Every manager is given access to training programs taught
by the senior staff and industry leaders. This training on core competencies for managers includes
knowledge of financial statements, marketing plans, business plans and maintenance plans. All are
a prerequisite of professionalism and must be mastered before being considered for a leadership
position. Without basic technical knowledge a leader cannot gain the trust necessary to have
followers. After core competency has been achieved each person meets with an advisor to discuss
continued training and leadership development.
Many managers must learn additional skills to be competent with relationship management of
staff, customers, and vendors. In developing leaders, each person, no matter what their position in
the company, must develop those attributes. That includes taking into consideration their own set
of strengths, weaknesses, and personality traits. Hartman uses human resource professionals to
test and assist with the assessment of individual personality traits. Once diagnosed, a plan of
developing positive traits can be structured for each staff member. The plan is intended to
overcome negative dominate personality traits by emphasizing positive interpersonal relations. It
is the purpose of the Personal Development Plan (PDP) to individually address those areas that are
either not covered in the group training or require more intensive training. The PDP also addresses

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management skill competencies to provide ongoing training as necessary. These plans are
reviewed quarterly, progress is measured and it becomes part of the quarterly bonus program.
We believe each person can become skilled at relationship management by practicing those
behaviors that contribute to overall effectiveness. Often, this change or improvement in behavior
needs nurturing by the coach along with deliberate steady dedication by the staff person. Personal
awareness needs to be developed. The style is not a “learned” behavior; rather, it is developed by
the individual and must be kept true to their personality. It is generally the sum total of all their
life experiences combined with training they receive at Hartman. The employee develops a style
that fits them exclusively and it is unique to them. Often, young leaders may look to others for a
particular style to emulate, and this is a good starting point, but it is important that they always
know their limitations and strengths. As an example, a very serious person may have difficulty with
humor and should use it sparingly. A very light-hearted person may want to limit humor to project
a professional attitude. Either way, it is important that the individual develops a style that allows
them to be themselves while being effective.

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ATRIUM 1 – HOUSTON, TEXAS

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ATRIUM II – HOUSTON, TEXAS

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Hartman in the Community
ver the last 30 years, Hartman has demonstrated a strong commitment to the Houston and
Dallas communities. We're devoted to the communities in which our employees work and
raise their families. Our charitable and community programs support innovative and important
projects that are focused on making a difference in people’s lives.
Our people believe in giving back for several key reasons:
• We can help our neighbors while gaining valuable skills at the same time.
• We can make an impact on people's lives – both locally and regionally.
• We can energize our own lives and have fun while doing something worthwhile.
Among the local and regional charities that Hartman and its employees have assisted in recent
months are: Covenant House, Star of Hope Mission, The Houston Food Bank, American Cancer
Society, Dallas and Houston Blood Banks, Packages to US Troops, Feed the Children, The Salvation
Army, Step out: Walk to Stop Diabetes, Operation Kindness and Mobile Mammograms.
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Company Divisions
Our Founder and CEO – Al Hartman
t age 27 in 1978, Al Hartman started his career selling home improvements door to door. He
was making so much money that he wanted to shelter his income, so he read several books
about how to make money in real estate. He soon found out that one way to do so was to start
buying residential properties. In a short period of time, he had bought a house, a duplex, 11
houses on one street, and a 16-unit apartment complex near a university. He was able to improve
all of the properties, fix them up, turn them around, and eventually sold each of them for a profit.
Hartman then moved full time into the real estate business and began buying commercial income-
producing properties, the first one in 1983.
Houston at that time was known as the “Golden Buckle” on the Sunbelt. The city was growing 10%
per year in 1981 when he started looking for properties to buy. Houston’s economy was at its peak
by November of 1981, but the boom began to turn to a bust as the price of oil fell from $40/barrel
to $10/barrel just a few years later. Contributing to the economic weakness in Texas in the mid-
1980s was the 1986 tax law change and the infamous S&L debacle, where most every S&L in Texas
went out of business. Even many large “money center” banks failed at that time. The confluence
of all of these events put Texas flat on its back. In many ways, this down turn was worse than the
Great Depression. Houston became known as the “See Through City” because you could see right
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through the buildings. There were no tenants, no build outs, just shell space, so you could see
right through the buildings. It was in that down turn that Hartman started buying properties. This
decline was the longest downward cycle that this country had seen in many years, and it was
perhaps the worst in Texas’ history. It lasted from the peak in 1981 to the trough in 1991, when
the FDIC and FSLIC were liquidating properties. Al raised $200,000 to buy his first property during
this time, and each investor was required to contribute $3,300 a year for two years. These early
purchases were based on the tax savings to be derived, so very high leverage of 90 – 95% was
utilized. In spite of the down turn and high leverage, he kept the properties leased up, kept the
investors happy, and Hartman was able to guide the portfolios through the most severe parts of
the crisis. During the market’s downward acceleration, he made the strategic decision to start
buying foreclosures. He bought about 20 foreclosures in a row through the late 80s and early 90s,
with each investment performing exceedingly well.
Hartman has sponsored a total of 20 programs, each program raising more funds than the prior
one. The second program raised $351,000, the third raised $500,000 and the next one totaled $1.2
million. Hartman single-handedly raised about $100 million in his first 18 programs, simply by
sitting across the table from clients and selling his vision on a one-to-one basis. Over the last ten
years, Hartman has slowed down on his direct selling, as the company has developed strong ties
and strategic partnerships with the Broker-Dealer community. Hartman now brings in tens of
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The secret to Al Hartman’s success is his discipline, and this discipline was tested like never before
in the period leading up to the “Great Recession” of 2008-2009. Hartman’s acquisitions team has
always had very strict guidelines and criteria that must be met for a property to be considered for
purchase, and they will not stray from a formula that has worked so well for 30 years. In the years
leading up to the recent economic crisis, commercial property values in Texas skyrocketed and cap
rates dropped precipitously. Property after property was presented to the Hartman team in 2006-
2007, yet Hartman’s financial modeling indicated that at those prices, there was no way to deliver
proper returns to investors. Hartman refused to budge and would not commit investor funds to
this rampant speculative bubble. For almost two years, in the face of some criticism and pushback,
the company was not able to approve any acquisitions. This was not an easy thing to do, especially
when you have millions of investor dollars sitting in a bank earning low rates of interest.
As the country sank into the economic crisis of 2008-2009, it became apparent that the company
had once again protected its customers by refusing to yield to the temptation of chasing
rampaging property prices. Not only had this discipline provided capital preservation for investors,
but also just as important, it allowed the company to have the financial wherewithal to snatch up
attractive properties when the market became full of bargains. Today, the investors in
partnerships formed during the crisis continue to benefit from this wise patience and restraint.

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OUR SECRET SAUCE:
How We Make Money
Hartman’s two primary divisions are broadly defined as Acquisitions and Operations. Our two
longest serving executives (along with the founder and CEO) run these divisions. It is from these
areas that Hartman has developed one of the top track records for non-traded REITS in the
country and fortifies its relationships with customers and investors.
If you buy the properties for just the right price and are able to lease up the properties and
maintain low leverage, it makes for a successful, winning formula. Hartman has purchased and
sold over 80 properties in Texas and has done exceedingly well by staying within this formula.
Acquisitions Department
Our acquisitions team of five employees actively maintains relationships throughout the region
with all investment sale brokers, so as to stay abreast of everything that becomes available. This
puts us in a unique position to review over 1,000 properties per year to find the best opportunities
for investors. Like a funnel, we work our way through each opportunity by reviewing Argus runs,
interviewing professionals familiar with those locations, performing statistical analysis and
conducting in-depth due diligence. We stack-rank our acquisition opportunities on a weekly basis
to prioritize focus and to insure that the best opportunities receive the most attention. Eventually,

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the pool of acquisition candidates is whittled down to the most attractive three to four properties
that meet our criteria, and then we submit offers and negotiate in a determined manner. We sell
our ability to perform quickly on an all cash basis. Our ability to quickly inspect and close often
differentiates us from the buying competition in our market space and can allow us to successfully
acquire at a price lower than the highest offered. As they say in our business, “you make your
money when you buy the property…you want to buy low and sell high,” and at Hartman, that is
exactly what we do.
We conduct a thorough due-diligence process with cross checks by third party vendors and
detailed tenant interviews. This allows us to negotiate price during the inspection period for any
defects or deficiencies of which we were not aware. It also facilitates a responsive and informed
post-closing operational plan by property management and leasing. To conduct tenant interviews,
we team with property management to visit every tenant of an acquisition during due diligence,
so that customer needs and comments receive priority during transition and post-closing. We
understand that it is essential for our customers to meet the operation staff early and for our staff
to understand the needs of our new customer operations.
The Acquisitions department is headed by David Wheeler, our Chief Investment Officer. Dave has
over twenty-eight years’ experience in the acquisition, disposition, finance and leasing of
commercial real estate investments. His responsibilities range from sourcing investment

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opportunities—including shopping centers, office buildings and warehouses—to closing and
ownership transition. He oversees the sourcing of permanent debt as well as our disposition and
tax protesting processes. Dave joined Hartman Management in January 2003, following 16-year
tenure with CB Richard Ellis in investment property sales. At that firm, he successfully completed
the sale of over $400 million in commercial real estate.
Leasing and Operations Department
The second component of our success is our ability to lease the properties. If you buy the
properties at a good price, and if you are able to lease them up successfully, it creates a good
return for the investor.
Hartman has enjoyed tremendous Leasing success over the years as a result of extensive training,
exceptional customer service, attractive pricing options and an intense focus on customer needs
and requirements. Hartman has developed a special relationship with leading commercial brokers
throughout Texas through sponsored events, ease of doing business and branded marketing. We
are active members in industry trade organizations such as HOLBA (Houston Office Leasing Brokers
Association), NAIOP (National Association of Industrial and Office Properties), ICSC (International
Council of Shopping Centers) and CREW (Commercial Real Estate Women’s Network). Hartman’s
leasing staff in both Houston and Dallas meets weekly as a team to discuss performance and

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expectations, to undergo extensive training (role-playing, review of SOP’s) and to focus on DART
items scheduled to be completed during the current quarter.
Our Dallas marketing and business development activities are very similar to Houston’s. Just like
Houston, the Dallas’s team does everything they can to get in front of brokers via net-working
events, lunches, professional organizations, and leasing incentives. Dallas has a variety of
organizations where Hartman is an active participant, including The North Texas Commercial
Associations of Realtors (NTCAR), Real Estate Council, NTCAR’s Young Professional Form (NTCAR
YPF), Real Estate Council Young Guns, and Commercial Real Estate Women (CREW). Through these
relationships, Hartman is always on top of current market trends and conditions.
Generating direct leads is another focus for the leasing personnel. Direct business usually comes
through advertising, through tenant referrals, from signage calls and from internet marketing.
Also, having an on-site leasing office makes it easy and convenient for prospects to inquire about
vacant space.
Our Operations division is headed by R. Ross Donahue, who also serves as Chief Operating Officer
of HI-REIT. Ross has over 30 years’ experience in the management of office buildings, retail centers
and office warehouse space. Ross previously served as a Regional Manager at PM Realty Group
and worked as a Manager for Gerald Hines Interests. Ross has been with Hartman since 2002.

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Ross oversees a department of 30 individuals, including Building Engineers, Porters, Administrative
Assistants and Property Managers, each of whom excels in all facets of property management.
Ross provides his team with regularly scheduled advanced level training and five-year personal
development plans. He oversees the department’s nine-step career path track. Managers are paid
based on both their actual performance and the performance of their portfolio of properties.
Hartman also created a shared savings program reward system which rewards outstanding
operational and energy savings by awarding the management team 25% of the savings created.
Tenant retention is one of our greatest attributes at Hartman. Our attrition rate is less than 10%
annually, and we have many tenants who have been with us for decades. Hartman maintains such
a positive relationship with our customers because we focus on listening to customer needs and
executing with unparalleled proficiency. Serving all customers all the time is a tall order, and
anticipating the needs and desires of customers is impossible—unless you ask. At Hartman, we’ve
built a tenant relations program that requires regular communications with tenants to gather
valuable insight. We commence discussion at initial contact and never let up throughout the term
of the lease. We regularly survey our customers about leasing performance, quality and timeliness
of construction, the attentiveness and problem solving capabilities of our property management
team, and the ability of the property to meet the customers’ requirements.

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In addition to surveys, a very proactive program of tenant and vendor visits, telephone calls, and
social gatherings are planned at every location and with every tenant. The phone calls and visits
are designed to gather information about company performance, customer plans for the future,
and a current assessment of services. We also find that intra-property socials are a very useful tool
in creating a community “feel” at each location.
Information gathered from these meetings, along with statistical data collected from tenant
service calls through our “Landport” internet program portal, gives us an accurate picture of the
performance of both the physical property and Hartman service teams. This data is reviewed
weekly to ensure that issues are being addressed in a timely manner and that reasonable
expectations are being met. On a longer-term basis, the data collected is used to complete annual
operating and capital budgets for the upcoming year and to provide additional training for staff
where necessary.
We’ve learned through our 30+ years in business that asking customers is a great way to meet
expectations, but it is our constant striving to be better that truly makes the difference in
exceeding expectations. By encouraging “out-of-the-box” thinking and looking for better ways to
utilize existing tools, we have distinguished ourselves from the competition. Many small
innovations cost little and can provide significant relief or savings. LED signs, improved vending
areas, tenant lounges, free advertising on cable television at every company property, and listings

92
on the property newsletters are examples of minor concessions to tenants that can be done for
little or no cost and provide great customer satisfaction.
We also are pioneers in the area of efficiency and energy savings. Hartman Properties rank among
the top 5% of all commercial properties that participate in the BOMA 360 awards program, a
program that has become a distinguished designation to indicate a building is operating at the
highest standards of excellence. In addition, numerous Hartman properties have won the coveted
Energy Star designation, indicating that our buildings save money and reduce greenhouse gas
emissions by virtue of their energy efficiency.

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11811 NORTH FREEWAY – HOUSTON TEXAS

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Our Board of Directors
artman is honored to have four Independent Directors on our three Boards. Each gentleman
serves with distinction and is dedicated to the best interests of our shareholders. Below
please find a brief bio on each of these independent directors:
Jack Tomkins has served since 1998 as Chairman & CEO of ARTA Equity Advisors, L.L.C., which was
formed to engage in various entrepreneurial opportunities. Mr. Tompkins began his career with
Arthur Young & Co., working as a certified public accountant there for three years before joining
Arthur Andersen, L.L.P., where he was elected to the partnership in 1981 and served until 1988.
From 1988 until October 1996, Mr. Tompkins served as Chief Financial Officer, Senior Vice
President and Chief Information, Administrative & Accounting Officer of a large publicly traded
energy company. Mr. Tompkins served as Chairman & CEO of Automotive Realty Trust Company of
America from its inception in 1997 until its sale to a publicly traded REIT in January 1999. From
March to September of 1999, Mr. Tompkins served as interim Executive Vice President and CFO of
Crescent Real Estate Equities.
Jack Cardwell founded Petro Truck Stops, a national chain of Truck Stops, and built the chain up to
40 units. Over a period of time he sold the company to Travel Centers of America for $725 million.
Jack also served on the board of one of the largest apartment REITs before it was sold to a private
H

95
equity firm. Jack is currently owner of C & R Distributing, a fuel and lubricants distributer in El
Paso, Texas.
Rick Ruskey is a Due Diligence Officer at a Midwestern broker-dealer. Rick began his career as an
accountant with Peat Marwick Mitchell & Co. in 1978. In 1983, he joined the firm of Deloitte,
Haskins and Sells as Manager in the Tax department. In 1986, he transitioned into the Securities
Industry, where he has worked ever since. Rick has sold Hartman investment programs to his
clients for over 20 years. He has extensive knowledge of the REIT industry and reviews many
investment products for advisors who are affiliated with his firm. Rick brings expertise to the
board based on his knowledge of the industry and his extensive experience in the broker-dealer
community.
John Ostroot was president of EGC Corporation and 3P USA Inc., subsidiaries of Plastic Omnium,
Inc., a French-owned global leader in the processing of fluoropolymers and other high-
performance resins plastics, from September 1994 until he retired in January 2000. Presently, Mr.
Ostroot is serving on the Fluoropolymers Division Executive Committee as Past Chairman. In April
2005, Mr. Ostroot received the Whitney Bro Lifetime Achievement Award from the DuPont
Company for his more than 45 years in the fluoropolymer industry.

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Executive and Staff Training
Hartman calls on a myriad of professionals and experts from all walks of life to help our employees
learn and grow. Over the past three decades we’ve provided our employees regular access to
dynamic and proven speakers. Our main training and education comes from two large and well-
known organizations, Vistage and C-12, and a brief description of each organization follows below.
Vistage is the world's leading CEO advisory membership organization which specializes in assisting
executives to become better leaders, solve their business challenges, and get better results.
Vistage utilizes third party experts in various business fields to fine tune departmental
performance. Hartman brings in Vistage experts on a regular basis and institutes many of the
strategies and procedures perfected over the years by those experts, many of whom are ex-CEO’s
and best-selling authors. Many of the operating procedures discussed throughout this book have
come to us via Vistage and its network of leaders.
Vistage members are a special group of leaders who are qualified to provide valuable insight
advice based on their extraordinary achievements. This unique peer group is a mix of experts with
varying professional backgrounds, allowing members to tap into different perspectives and solve
difficult challenges. That expertise gives members a tremendous sense of trust in the capabilities
of the Vistage peer group. Vistage members control businesses with annual sales ranging from $1
million to over $1 billion, representing the most vital component of the economy. Around the

97
world, Vistage-member companies generate nearly $300 billion in annual revenue and employ
approximately 1.8 million people.
Chief executives and small business owners thrive on knowledge and fresh insight to keep their
companies moving forward. Vistage’s expert speakers are thought leaders who inspire new ideas,
strategies and perspectives, focusing on the most relevant solutions business leaders can
immediately implement in their companies. The focus of the speaker workshops is not on why an
idea is important, but rather how to apply those ideas, and how doing so will make a difference
and drive results now.
Vistage’s world-class lineup of speakers offers Hartman personnel:
• Dynamic presentations on the topics that matter most to business leaders;
• Specific strategies and resources that executives can apply immediately;
• Customized presentations tailored to the needs of our company; and
• Small-group workshop settings where interaction is highly encouraged.
C-12 Many Christian business leaders find themselves ‘stuck’ in a situation which provides a solid
income but not much of a true ‘living.’ You are at the pinnacle, living the ‘American dream,’ yet
realizing that there must be more significance to be found in your life under the Lordship of Christ.
C-12 has worked with well over a thousand Christian business leaders over the past 20 years to

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help facilitate and equip them toward greater integration, excellence and fulfillment in the life the
Lord has called them to lead.
C12 hopes to serve those the Lord has already called to lead their life, including their Christian
businesses, for His purposes. C-12 provides broad support and leadership to all members through:
• A standing high-quality board of Christian CEO advisors and expert coaching;
• Staying ‘on focus’ and being held accountable for strategic leadership;
• Providing one good idea gained per month via relevant MBA-caliber resources;
• Saving lives for eternity through our business;
• Avoiding major mistakes or temptations;
• An enhanced day-to-day ability to apply timeless Biblical wisdom to our business;
• Helping CEO’s finding the balance and joy which God desires for their life, family and
Christian business; and
• A disciplined process providing one day per month of mental/physical/spiritual renewal and
refreshment focused on the most important areas in the participant’s life.

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In 2006, The Business Roundtable studied the performance of 350 mid-sized American leadership
companies from 1995-2005. In comparison, long-term C12 Group members, with annual sales
ranging from $2-800 million, outperformed this group by growing their topline revenue and
bottom-line profits more than three times faster. Between 1995-2005, the median C12 company
grew from $3 to $12 million and from roughly breakeven to nearly 10% pretax profit - while
enjoying superior annual productivity gains versus the overall market.
A December 2013 study of C12 members revealed that during the weak economy of 2008-2013,
they sharply outperformed their markets with 79% outpacing their peers and just 1%
underperforming the competition. C12's uncommon focus on life-long learning and the
fundamentals of planning, execution, organizational development, stewardship, and finishing
strong - no matter the God-given circumstances - enables members to be resilient during difficult
periods. In fact, 7% of C12 members attribute their company's survival to C12's impact.

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601 SAWYER – HOUSTON, TEXAS

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Summary
n summary, Hartman is a company that embraces the vision, mission and core values of bright,
creative and energetic 10Xers. Our employees share the common purpose of building something
bigger than themselves, and they relish group dynamics when creating deliverable and actionable
objectives. Our success is a direct result of each employee’s contributions from the ground floor to
the executive management team, and we are proud that our best ideas “bubble up” from the
ranks during our quarterly company-wide meetings. We maintain a Specific, Methodical and
Consistent approach to business which helps our people maintain their bearings and sustain high
performance. Our Stage Four leaders are loyal, hardworking, and innovative, and we strive to
create strong company character by doing what we say we are going to do. We celebrate
achievements, we honor commitments and we care about our customers, all while honoring God
and operating with Biblical principles.
I

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616 FM 1960 WEST – HOUSTON, TEXAS

103
GATEWAY TOWER – DALLAS, TEXAS

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