Registration No. 333-                

Washington, D.C. 20549

(Exact Name of Registrant as Specified in Its Governing Instruments)
_______________________________

						Proposed Maximum				Proposed Maximum
		Amount Being				Offering Price Per				Aggregate Offering				Amount of
Title of Securities Being Registered		Registered				Share				Price				Registration Fee
Common Shares of Beneficial Interest, par value $.001 per share			10,000,000			$	10.00			$	100,000,000			$	8,090.00
Common Shares of Beneficial Interest, par value $.001 per share (1)			1,000,000			$	9.50			$	9,500,000			$	768.55

---

(1)

Represents shares issuable pursuant to our dividend reinvestment plan.

TABLE OF CONTENTS

The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities, and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

		Per Share				Total Minimum				Total Maximum
Primary Offering
Price to Public		$	10.00			$	2,000,000			$	100,000,000
Selling Commissions*			.35				70,000				3,500,000
Dealer Manager Fee			.25				50,000				2,500,000
Proceeds to Us		$	9.40			$	1,880,000			$	94,000,000
Dividend Reinvestment Plan
Price to Public		$	9.50				—			$	9,500,000
Selling Commissions*			.25				—				237,500
Dealer Manager Fee			.10				—				95,000
Proceeds to Us		$	9.15				—			$	9,167,500

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SUITABILITY STANDARDS					1
QUESTIONS AND ANSWERS ABOUT THIS OFFERING					1
PROSPECTUS SUMMARY					9
	Hartman Commercial Properties REIT				9
	Our Advisor				9
	Our Management				9
	Terms of The Offering				10
	Summary Risk Factors				10
	Description of Properties, Investments and Borrowing				11
	Estimated Use of Proceeds of This Offering				11
	Investment Objectives				12
	Dividend Policy				12
	Conflicts of Interest				12
	Prior Offering Summary				14
	Compensation to Hartman Management and Its Affiliates				14
	Listing				15
	Dividend Reinvestment Plan				15
	Share Redemption Program				15
	Hartman REIT Operating Partnership, L.P.				16
	ERISA Considerations				16
	Description of Shares				16
RISK FACTORS					17
	Risks Related to an Investment in Hartman Commercial Properties REIT				17
		There is no public trading market for your shares; therefore, it will be difficult for you to sell your shares			17
		If we, through Hartman Management, are unable to find suitable investments, then we may not be able to achieve our investment objectives or pay dividends			17
		We may suffer from delays in locating suitable investments, which could adversely affect the return on your investment			17
		You will not have the opportunity to evaluate our investments before we make them			18
		If we are unable to raise substantial funds, we will be limited in the number and type of investments we may make and the value of your investment in us will fluctuate with the performance of the specific investments we make			18
		Because of the lack of geographic diversification of our portfolio, an economic downturn in the Houston and San Antonio, Texas metropolitan areas could adversely impact our operations and ability to pay dividends to our shareholders			18
		This is the first publicly offered REIT sponsored by Mr. Hartman, and the prior performance of private real estate investment programs sponsored by affiliates of Mr. Hartman may not be an indication of our future results			18
		If we lose or are unable to obtain key personnel, our ability to implement our investment strategies could be delayed or hindered			19
		Our rights, and the rights of our shareholders, to recover claims against our officers, trustees and our advisor are limited			19
		We may need to incur borrowings to meet REIT minimum distribution requirements			19
		An increase in market interest rates may have an adverse effect on our ability to sell shares in this offering			20
		We expect to acquire or develop several properties with the proceeds of this offering that, if unsuccessful, could adversely impact our ability to pay dividends to our shareholders			20
		Our use of borrowings to fund acquisitions and improvements on properties could result in foreclosures and unexpected debt service expenses upon refinancing			21
		We operate in a competitive business and many of our competitors have greater resources and operating flexibility than we do			21
		Approximately 45.0% of our gross leasable area is subject to leases that expire prior to December 31, 2005			21
		We depend on tenants for our revenue and on anchor tenants to attract non-anchor tenants			21

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		The bankruptcy or insolvency of major tenants would adversely impact our operations			22
		We may be subject to risks as the result of joint ownership of real estate with third parties			22
		We may have difficulty selling our real estate investments, which may have an adverse impact on our ability to pay dividends			22
		You will not have the benefit of an independent due diligence review in connection with this offering			22
		We established the offering price on an arbitrary basis			22
		Provisions in our charter may discourage a takeover attempt			23
		You may experience immediate dilution and could suffer additional dilution as the result of the conversion of OP Units and issuances of additional shares			23
		Complying with REIT requirements may cause us to forego otherwise attractive opportunities			24
		Complying with REIT requirements may force us to liquidate otherwise attractive investments			24
	Risks Related to Conflicts of Interest				24
		Hartman Management will face conflicts of interest relating to the purchase and leasing of properties, and such conflicts may not be resolved in our favor			24
		Our advisor may face a conflict of interest when allocating personnel and resources between our operations and the operations of other entities it manages			24
		Certain of our officers and trustees face conflicts of interests relating to the positions they hold with other entities			25
		Allen R. Hartman controls other entities that compete with us for his time as well as tenants and acquisition opportunities			25
		Hartman Management will face conflicts of interest relating to joint ventures, which could result in a disproportionate benefit to a Hartman program or third party other than us			25
		Hartman Management will face conflicts of interest relating to the incentive fee structure under our advisory agreement, which could result in actions that are not necessarily in the long-term best interests of our shareholders			26
		There is no separate counsel for our affiliates and us, which could result in conflicts of interest			26
		Our UPREIT structure may result in potential conflicts of interest			26
		We have acquired a majority of our properties from entities controlled by Mr. Hartman			27
	Risks Related to Our Business in General				27
		Our charter permits our board of trustees to issue capital shares with terms that may subordinate the rights of the holders of our current common shares or discourage a third party from acquiring us			27
		Maryland law prohibits certain business combinations, which may make it more difficult for us to be acquired			27
		Your investment return may be reduced if we are required to register as an investment company under the Investment Company Act			28
		You are bound by the majority vote on matters on which you are entitled to vote			29
		Shareholders have limited control over changes in our policies and operations			29
		You are limited in your ability to sell your shares pursuant to our share redemption program			29
		If you are able to resell your shares to us pursuant to our redemption program, you will likely receive substantially less than the fair market value for your shares			29
		Payment of fees to Hartman Management and its affiliates will reduce cash available for investment and dividends			30
		There can be no assurance that we will be able to pay or maintain cash dividends or that dividends will increase over time			30
		Adverse economic and geopolitical conditions could negatively affect our returns and profitability			30
		We are uncertain of our sources for funding of future capital needs, which could adversely affect the value of our investments			30
	General Risks Related to Investments in Real Estate				31
		Your investment will be directly affected by general economic and regulatory factors we cannot control or predict			31

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		Properties that have significant vacancies could be difficult to sell, which could diminish the return on your investment			31
		If we set aside insufficient working capital or are unable to secure funds for future tenant improvements, we may be required to defer necessary property improvements, which could adversely impact our ability to pay cash dividends to our shareholders			31
		Uninsured losses relating to real property or excessively expensive premiums for insurance coverage may adversely affect your returns			32
		Our operating results may be negatively affected by potential development and construction delays and resultant increased costs and risks			32
		Uncertain market conditions relating to the future disposition of properties could adversely affect the return on your investment			32
		The costs of compliance with environmental laws and other governmental laws and regulations may adversely affect our income and the cash available for any dividends			33
		Discovery of previously undetected environmentally hazardous conditions may adversely affect our operating results			33
		Our properties may contain or develop harmful mold, which could lead to liability for adverse health effects and costs of remediating the problem			33
		Our costs associated with complying with the Americans with Disabilities Act may affect cash available for dividends			34
		If we sell properties by providing financing to purchasers, we will bear the risk of default by the purchaser			34
	Risks Associated with Debt Financing				34
		We may incur mortgage indebtedness and other borrowings, which may increase our business risks			34
		If mortgage debt is unavailable at reasonable rates, we may not be able to finance the properties, which could reduce the number of properties we can acquire and the amount of cash dividends we can make			35
		Lenders may require us to enter into restrictive covenants relating to our operations, which could limit our ability to pay dividends to our shareholders			35
		If we enter into financing arrangements involving balloon payment obligations, it may adversely affect our ability to pay dividends			35
	Risks Associated with Section 1031 Exchange Transactions				35
		We may have increased exposure to liabilities from litigation as a result of any participation by us in Section 1031 Exchange Transactions			35
		We will be subject to risks associated with co-tenancy arrangements that otherwise may not be present in a real estate investment			35
		Actions by a co-tenant might have the result of subjecting the property to liabilities in excess of those contemplated and may have the effect of reducing your returns			36
		Our participation in the Section 1031 Exchange Transactions may limit our ability to borrow funds in the future, which could adversely affect the value of our investments			36
	Federal Income Tax Risks				36
		If we failed to qualify as a REIT, our operations and dividends to shareholders would be adversely impacted			36
		If Hartman OP was classified as a “publicly-traded partnership” under the Internal Revenue Code, our operations and dividends to shareholders could be adversely affected			37
		Dividends to tax-exempt investors may be classified as unrelated business tax income			37
		Investors subject to ERISA must address special consideration when determining whether to acquire common shares			37
		Certain fees paid to Hartman OP may affect our REIT status			38
		Recharacterization of the Section 1031 Exchange Transactions may result in taxation of income from a prohibited transaction, which would diminish our cash dividends to our shareholders			38
		You may have tax liability on dividends that you elect to reinvest in our common shares			38
		In certain circumstances, we may be subject to federal and state income taxes as a REIT, which would reduce our cash available for payment of dividends to our shareholders			38
		We may be subject to adverse legislative or regulatory tax changes that could adversely impact our ability to sell shares in this offering			38

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		There are special considerations that apply to pension or profit-sharing trusts or IRAs investing in our shares			39
		Equity participation in mortgage loans may result in taxable income and gains from these properties, which could adversely impact our REIT status			39
	Forward-Looking Statements				39
ESTIMATED USE OF PROCEEDS					41
DILUTION					43
MANAGEMENT					44
	General Information About Us				44
	Committees of the Board of Trustees				46
	Audit Committee				46
	Compensation Committee				46
	Conflicts Committee				46
	Executive Officers and Trustees				46
	Compensation of Trustees				48
	Provisions Applicable to Our Equity Compensation Plans				48
	Limited Liability and Indemnification of Trustees, Officers, Employees and Other Agents				49
	The Advisor and Property Manager				50
	The Advisory Agreement				51
	The Property Management Agreement				52
	The Dealer Manager				53
	Management Decisions				54
MANAGEMENT COMPENSATION					55
OWNERSHIP OF SHARES					59
CONFLICTS OF INTEREST					60
	Interests in Other Real Estate Programs				60
	Property Acquisitions From Entities Controlled by Mr. Hartman				60
	Certain Relationships and Related Transactions				62
		Relationships and Related Transactions with Mr. Hartman			62
		Private Placement			62
		Advisory Agreement			63
		Property Management			63
		Partnership Management			63
	Competition in Acquiring Properties				63
	Affiliated Dealer Manager				64
	Affiliated Property Manager				64
	Lack of Separate Representation				64
	Joint Ventures with Affiliates of Hartman Management				64
	Receipt of Fees and Other Compensation by Hartman Management and Its Affiliates				64
	No Arm’s-Length Agreements				65
	Indebtedness of Management				65
	Additional Conflicts of Interest				65
	Certain Conflict Resolution Procedures				66
		Conflicts Committee			66
		Other Charter Provisions Relating to Conflicts of Interest			66
INVESTMENT OBJECTIVES AND CRITERIA					68
	General				68
	Acquisition and Investment Policies				68
	Development and Construction of Properties				71
	Affiliate Transaction Policy				71
	Terms of Leases and Tenant Creditworthiness				72
	Joint Venture Investments				73
	Making Loans and Investments in Mortgages				73
	Section 1031 Exchange Transactions				75
	Borrowing Policies				76
	Disposition Policies				77
	Securities of or Interests in Persons Primarily Engaged in Real Estate Activities and Other Issuers				78
	Equity Capital				78

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	Other Investments				78
	Investment Limitations				78
	Change in Investment Objectives and Limitations				79
	Real Property Investments				79
	Certain Other Policies				80
DESCRIPTION OF REAL ESTATE AND OPERATING DATA					81
	General Physical Attributes				82
	General Economic Attributes				83
	Major Tenants				85
	Lease Expirations				86
	Depreciation and Tax Items				86
	Recent Developments				87
	Competition				87
	Insurance				87
	Employees				87
	Regulations				87
SELECTED FINANCIAL DATA					88
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS					89
	Overview				89
	Critical Accounting Policies				89
		Basis of Consolidation			90
		Real Estate			90
		Purchase Price Allocation			90
		Revenue Recognition			91
	Liquidity and Capital Resources				91
	Comparison of Quarter Ended September 30, 2003 to Quarter Ended September 30, 2002				96
	Comparison of Nine Months Ended September 30, 2003 to Nine Months Ended September 30, 2002				97
	Comparison of Year Ended December 31, 2002 to Year Ended December 31, 2001				98
	Comparison of Year Ended December 31, 2001 to Year Ended December 31, 2000				99
	Taxes				100
	Inflation				100
	Environmental Matters				101
	Recent Accounting Pronouncements				101
	Quantitative and Qualitative Disclosures About Market Risk				102
	Controls and Procedures				102
PRIOR PERFORMANCE SUMMARY					103
	Prior Investment Programs				103
	Summary Information				103
FEDERAL INCOME TAX CONSIDERATIONS					106
	General				106
	Opinion of Counsel				106
	Taxation of the Trust				107
	Requirements for Qualification as a REIT				107
	Failure to Qualify as a REIT				111
	Sale-Leaseback Transactions				112
	Taxation of United States Shareholders				112
	Treatment of Tax-Exempt Shareholders				113
	Special Tax Considerations for Non-United States Shareholders				114
	Statement of Share Ownership				116
	State and Local Taxation				116
	Tax Aspects of Our Operating Partnership				116
INVESTMENT BY TAX-EXEMPT ENTITIES AND ERISA CONSIDERATIONS					120
	General				120
	Minimum Distribution Requirements — Plan Liquidity				120
	Annual Valuation Requirement				121
	Fiduciary Obligations — Prohibited Transactions				121
	Plan Assets — Definition				121

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	Publicly Offered Securities Exemption				122
	Real Estate Operating Company Exemption				122
	Consequences of Holding Plan Assets				123
	Prohibited Transactions				123
	Prohibited Transactions – Consequences				123
DESCRIPTION OF SHARES					125
	General				125
	Common Shares				125
	Power to Reclassify Our Shares				125
	Power to Issue Additional Common Shares and Preferred Shares				125
	Meetings and Special Voting Requirements				126
	Restrictions on Transfer				126
	Dividends				128
	Share Redemption Program				131
	Registrar and Transfer Agent				132
	Restrictions on Roll-Up Transactions				132
	Provisions of Maryland Law and of Our Charter and Bylaws				133
		Board of Trustees			133
		Business Combinations			133
		Control Share Acquisitions			134
		Subtitle 8			134
		Advance Notice of Trustee Nominations and New Business			135
		Anti-Takeover Effect of Certain Provisions of Maryland Law and of the Declaration of Trust and Bylaws			135
SUMMARY OF DIVIDEND REINVESTMENT PLAN					136
	Eligibility				136
	Election to Participate				136
	Share Purchases				136
	Account Statements				136
	Fees and Commissions				137
	Voting				137
	Tax Consequences of Participation				137
	Termination of Participation				137
	Amendment or Termination of Plan				137
THE OPERATING PARTNERSHIP AGREEMENT					138
	General				138
	Capital Contributions				138
	Operations				138
	Distributions and Allocations of Profits and Losses				138
	Rights, Obligations and Powers of the General Partner				139
	Exchange Rights				139
	Change in General Partner				140
	Amendment to the Limited Partnership Agreement				140
PLAN OF DISTRIBUTION					141
	The Offering				141
	Compensation We Will Pay for the Sale of Our Shares				141
	Subscription Procedures				143
	Suitability Standards				143
	Minimum Purchase Requirements				144
	Special Notice to Pennsylvania Investors				144
	Special Notice to New York Investors				145
SUPPLEMENTAL SALES MATERIAL					145
LEGAL MATTERS					145
EXPERTS					145
ADDITIONAL INFORMATION					145
FINANCIAL INFORMATION					F-1
APPENDIX A: PRIOR PERFORMANCE TABLES					A-1
APPENDIX B: SUBSCRIPTION AGREEMENT					B-1
APPENDIX C: DIVIDEND REINVESTMENT PLAN					C-1

SUITABILITY STANDARDS

      An investment in our company involves significant risk and is only suitable for persons who have adequate financial means, desire a relatively long-term investment and who will not need immediate liquidity from their investment.

      In consideration of these factors, we have established suitability standards for investors in this offering and subsequent purchasers of our shares. These suitability standards require that a purchaser of shares have, excluding the value of a purchaser’s home, furnishings and automobiles, either:

•

a net worth of at least $150,000; or

•

a gross annual income of at least $45,000 and a net worth of at least $45,000.

      Please see the “Plan of Distribution – Suitability Standards” section of this prospectus for more detailed information about the suitability requirements of specific states.

QUESTIONS AND ANSWERS ABOUT THIS OFFERING

      Below we have provided answers to some of the more frequently asked questions relating to an offering of this type. Please see the remainder of this prospectus for more detailed information about this offering.

Q: What is a REIT?

A:

In general, a REIT is an entity that:

•

combines the capital of many investors to acquire or provide financing for real properties;

•

enables individual investors to invest in a diversified real estate portfolio under professional management;

•

provided certain income tax requirements are satisfied, avoids the “double taxation” treatment of income that generally results from investments in a corporation because a REIT is not generally subject to federal corporate income taxes on that portion of its income distributed to shareholders; and

•

pays dividends to investors of at least 90.0% of its taxable income.

Q: What is Hartman Commercial Properties REIT?

A:

Hartman Commercial Properties REIT is a Maryland real estate investment trust that was formed in 1998 to acquire and manage retail, industrial and office properties in the Houston and San Antonio metropolitan areas. We owned 33 commercial properties on December 16, 2003, primarily consisting of retail centers, industrial and office properties.

Q: What is the experience of your executive officers and trustees?

A:

Allen R. Hartman has been our president, secretary and member of our board of trustees since our formation in 1998. He is also the sole limited partner of our advisor and property manager, Hartman Management, L.P. (Hartman Management), as well as the President, Secretary, sole trustee and sole shareholder of the general partner of Hartman Management. Since 1984, Mr. Hartman, as an individual general partner, has been the sponsor of 17 private limited and general partnerships that have invested in commercial real estate in Houston, Texas. Mr. Hartman has over 30 years of experience in the commercial real estate industry. From 1978 to 1983, Mr. Hartman owned and operated residential rental properties.

Robert W. Engel has been our chief financial officer and a member of our board of trustees since 2000, and is the controller of Hartman Management. Mr. Engel is a graduate from the University of Texas with a BBA with highest honors with a major in Accounting. Mr. Engel is a CPA and holds memberships in

the American Institute of Certified Public Accountants, and the Texas Society of Certified Public Accountants. Mr. Engel is also a CPM, with membership in the Institute of Real Estate Management, and a CCIM as a member of the CCIM Institute. He is a licensed real estate broker in the State of Texas. From 1991 to 1999, Mr. Engel served as vice president and controller for Reignquest/Fred Rizk Construction Company.

Chand Vyas has been a member of our board of trustees since 2002. Mr. Vyas is the Chairman and Chief Executive Officer of EPS Technology, a global information technology and business process outsourcing company that he founded in 2000. From 1982 until 1998, Mr. Vyas served as Chief Executive Officer of Ziegler Coal Holding Company, where he led a buyout of Ziegler from its parent company, Houston Natural Gas, in 1985. In subsequent years, under Mr. Vyas’ leadership, Ziegler grew many fold through acquisitions including the purchase of Old Ben Coal from British Petroleum as well as Shell Mining Company from Shell Oil. Ziegler Coal Holding Company went public in 1994 with the largest initial public offering underwritten during that year’s third quarter.

Jack L. Mahaffey has been a member of our board of trustees since 2000. Mr. Mahaffey served as the President of Shell Mining Co. from 1984 until 1991. Since his retirement in 1991, Mr. Mahaffey has managed his personal investments. Mr. Mahaffey graduated from Ohio State University with a B.S. and M.S. in Petroleum Engineering and served in the United States Air Force. He is a former board member of the National Coal Association and the National Coal Council.

Samuel C. Hathorn has been a member of our board of trustees since 2000. Mr. Hathorn has been in the home building and land development business for over thirty years. He has held both divisional and senior management positions with three different large publicly held home builders/developers during his real estate career. For the last twenty-one years, Mr. Hathorn has been a senior executive with Weyerhaeuser Real Estate Company (WRECO), a wholly owned subsidiary of Weyerhaeuser Company (NYSE). Since 1984, Mr. Hathorn has been President and Chief Executive Officer of Trendmaker Homes, the Houston, Texas based home building and land development subsidiary of WRECO. Mr. Hathorn is a licensed CPA in the State of California and holds a Bachelor of Science degree in accounting. He currently serves as a director of National Beverage Corp. (AMEX).

Chris A. Minton has been a member of our board of trustees since 2000. Mr. Minton was employed by Lockheed Martin for 35 years and was a Vice-President of Lockheed’s Technology Services Group from 1993 until 1995. While employed at Lockheed, he supervised the business operations of six operating companies that employed over 30,000 people. Since his retirement from Lockheed in 1995, Mr. Minton has managed his personal investments and served as a consultant to a privately held aircraft mechanics school and to a Lockheed Martin subsidiary company. Mr. Minton graduated from Villanova University with a Bachelors Degree, and he is a licensed C.P.A. (retired status) in the State of Texas. He has been awarded the Gold Knight of Management award for achievements as a professional manager by the National Management Association.

Q: Who is Hartman Management, L.P.?

A:

Hartman Management is our advisor and property manager. Hartman Management was organized as a Texas corporation in 1990 and reorganized as a Texas limited partnership in 2001. Hartman Management manages our day-to-day operations and our portfolio of properties. As of November 30, 2003, Hartman Management had sponsored or advised private real estate programs that had raised approximately $120 million from approximately 1,100 investors, including investors in us, and that owned and operated more than 4.5 million square feet of commercial real estate properties.

Q: In what types of real property will you invest?

A:

We generally will seek to use the offering proceeds available for investment after the payment of fees and expenses to acquire commercial retail, office and industrial properties that we intend to hold for a period of seven to ten years from the date of acquisition. We will seek to invest in commercial properties in major metropolitan cities in the United States, principally in the Southern United States. We may invest in other property types or geographic areas in order to reduce overall portfolio risk or enhance overall portfolio returns if our advisor determines that it would be advantageous to do so.

Q: May you invest in anything other than real property?

A:

Yes. We anticipate there will be opportunities to acquire some or all of the ownership interests of unaffiliated enterprises having real property investments consistent with those we intend to acquire directly. In addition, if our advisor determines that, due to the state of the real estate market or in order to diversify our investment portfolio, it would be advantageous to us, we may also provide mortgage loans to owners of commercial retail, office or industrial properties or purchase such mortgage loans or participations in mortgage loans from other mortgage lenders. Because there are significant limitations on the amount of non-real estate assets that a REIT may own without losing its status as a REIT, we will be significantly limited as to ownership of non-real estate investments. These limitations may limit our ability to maximize profits.

Q: How are you different from your competitors who offer unlisted REIT shares to the public?

A:

We plan to list our shares within twelve years of the completion of this offering, in order to provide liquidity for our shareholders. We have a track record of acquiring properties for prices that provide us the ability to add value. The REIT has experienced growth and intends to continue that trend. One very important difference is that we use Hartman Management, our advisor, to lease and manage our properties. Hartman Management only manages properties in various Hartman programs. Other third-party managers work for multiple, unrelated owners. We believe Hartman Management is able to provide us more individualized service.

Q: Who will choose the investments you make?

A:

Hartman Management is our advisor and makes recommendations on all investments to our board of trustees. Hartman Management is wholly owned by Allen R. Hartman, who is our President and a member of our board of trustees. Mr. Hartman has extensive experience investing in commercial real estate. In addition, various other officers and key employees of Hartman Management have extensive experience in the areas of commercial property management, leasing, development or investment. The officers, trustees and key employees of Hartman Management are Terry L. Henderson, Robert W. Engel, John Crossin and Valarie L. King, and they will assist Mr. Hartman in making property acquisition recommendations on behalf of Hartman Management to our board of trustees. Our board of trustees, including a majority of our independent trustees, must approve all of our investments.

Q: How will Hartman Management select potential properties for acquisition?

A:

Hartman Management will generally seek to acquire good quality retail, office and industrial buildings located in major metropolitan cities in the United States, principally in the Southern United States, and leased to creditworthy companies. Current tenants of our existing properties include Kroger Food Stores, National Oilwell, 99 Cents Only Stores Texas, Bally Total Fitness, Sears Homestore, Circuit City, Michael’s, PETsMART and Carrier. Some of the properties may be acquired from affiliated entities, such as the private real estate programs sponsored or advised by Hartman Management.

To find properties that best meet our selection criteria for investment, Hartman Management’s property acquisition team will study regional demographics and market conditions and interview local brokers to gain practical knowledge of the regional economic and market dynamics. An experienced commercial construction engineer will inspect the structural soundness and the operating systems of each building, and an environmental firm will investigate all environmental issues to help ensure that each property meets our quality specifications.

Q: How many properties do you currently own?

A:

As of December 16, 2003, we owned 33 commercial properties. These properties are retail, industrial and office properties located in the Houston and San Antonio metropolitan areas. We expect to use substantially all of the net proceeds from this offering to acquire and operate retail, office and industrial properties located in major metropolitan cities in the United States, principally in the Southern United States. We will seek to invest in good quality income-producing retail, office and industrial properties leased to creditworthy tenants. We may also invest in entities that make similar investments. Because

we have not identified any specific properties to acquire with the proceeds from this offering, we are considered to be a partial blind pool.

Q: Do you intend to acquire some of your properties in joint ventures?

A:

We may want to acquire properties in joint ventures if we determine it necessary in order to diversify our portfolio of properties in terms of geographic region, property type or tenant industry group. Also, a joint venture may enable us to invest net proceeds from this offering sooner than would be possible otherwise, since the amount of gross proceeds raised in the early stages of this offering may be insufficient to acquire title to all of a real property targeted for investment. Such joint ventures may be with our affiliates or with third parties. We may also make or invest in mortgage loans secured by properties owned by such joint ventures.

Q: What steps do you take to make sure you invest in environmentally compliant property?

A:

We will obtain a Phase I environmental assessment of each property purchased. In addition, we expect that in most cases we will obtain a representation from the seller that, to its knowledge, the property is not contaminated with hazardous materials.

Q: What will be the terms of your leases?

A:

We will seek to secure leases with creditworthy tenants before or at the time we acquire a property. We expect that our leases generally will be economically net leases, which means that the tenant would be responsible for the cost of repairs, maintenance, property taxes, utilities, insurance and other operating costs. In most of these leases, we will probably be responsible for the replacement of specific structural components of a property, such as the roof of the building or the parking lot. We expect that our leases generally will have terms of three to five or more years, some of which may have renewal options.

Q: How will you own your real estate properties?

A:

As an “UPREIT,” we expect to own substantially all of our real estate properties through Hartman REIT Operating Partnership, L.P., which we refer to as Hartman OP. We organized Hartman OP to own, operate and manage real properties on our behalf. We are the sole general partner and own 53.37% of the outstanding units of partnership interest of Hartman OP. We may, however, own investments directly or through other entities.

Q: What is an “UPREIT”?

A:

UPREIT stands for Umbrella Partnership Real Estate Investment Trust. We use this structure because a sale of property directly to the REIT is generally a taxable transaction to the selling property owner. In an UPREIT structure, a seller of a property who desires to defer taxable gain on the sale of his property may transfer the property to the UPREIT in exchange for limited partnership units in the UPREIT and defer taxation of gain until the seller later exchanges his UPREIT units on a one-for-one basis for REIT shares. If the REIT shares are publicly traded, the former property owner will achieve liquidity for his investment. Using an UPREIT structure gives us an advantage in acquiring desired properties from persons who may not otherwise sell their properties because of unfavorable tax results.

Q: What commissions and fees will you pay in connection with this offering?

A:

If our dealer manager places any shares sold to the public without the participation of any other broker-dealer, we will not pay any sales commissions in connection with such sales. Therefore, with respect to these types of sales, amounts we would otherwise be required to pay to unaffiliated broker-dealers will be available to us for investment in real properties or for working capital purposes. We will also use unaffiliated broker-dealers to sell our shares to the public. With respect to sales of shares through such broker-dealers, we will pay our dealer manager a 7.0% commission that it will reallow in its entirety to the broker-dealers selling such shares to the public. We expect the selling commissions will be reduced or waived from time-to-time in connection with certain categories of sales, such as sales through investment advisers or banks acting as trustees or fiduciaries and volume purchases, and such sales will

be made at a reduced purchase price reflecting a discount for the reduction or waiver of the selling commissions. Our dealer manager also will be paid a fee of 2.5% of gross offering proceeds, all or a portion of which may be reallowed to the broker-dealers for reimbursable marketing and due diligence expenses. We will also pay our dealer manager a fee of 2.5% of gross proceeds to cover organization and offering expenses. The expenses will not be required to be accounted for. Our advisor will be paid a fee of 2.0% of gross proceeds of the offering for acquisition of the properties.

We will also pay our advisor a quarterly asset management fee of one-fourth of 0.25% of the gross asset value of our real estate portfolio. In connection with the sale of properties, we may pay our advisor a fee of 1.0% of the contract sales price of the properties. This fee, when combined with other real estate commissions paid to our advisor, its affiliates and unaffiliated third parties, may not exceed 6.0% of the contract sales price. Hartman Management may also receive a subordinated 15.0% share of the net sales proceeds from the sale of our portfolio if our shareholders have received a 7.0% cumulative non-compounded return for a similar success-based fee if our shares trade at prices reflecting such a return (taking prior dividends into account) upon their listing on a national securities exchange or the Nasdaq Stock Market. See “Management Compensation” and “Plan of Distribution” for a more detailed description of the fees and expenses payable to our advisor, our dealer manager and their affiliates.

Q: If I buy shares, will I receive dividends and how often?

A:

Provided we have sufficient cash flow to pay dividends, we intend to declare dividends to our shareholders on a quarterly basis and to pay the dividends on a monthly basis during the following quarter. We have paid cash dividends ever since our operations commenced in 1999. Our board of trustees will make the determination of whether to declare a dividend and the amount thereof consistent with its fiduciary duties. We will not pay a dividend when we are unable to pay our debts as they become due in the usual course of business. However, in order to maintain our qualification as a REIT, we must make aggregate annual distributions equal to at least 90.0% of our taxable income (which does not necessarily equal net income as calculated in accordance with accounting principles generally accepted in the United States (GAAP)).

Q: How do you calculate the payment of dividends to shareholders?

A:

We intend to calculate our dividends on a monthly basis to shareholders of record. As a result, any dividend payments will begin to accrue immediately upon our monthly admission of new shareholders. Such dividends will be paid to new shareholders beginning with the dividend payment made on the third month following their acquisition of our common shares.

Q: May I reinvest my dividends in shares of Hartman Commercial Properties REIT?

A:

Yes. You may participate in our dividend reinvestment plan by checking the appropriate box on the subscription agreement or by filling out an enrollment form, which we will provide to you at your request. The purchase price for shares purchased under the dividend reinvestment plan will be $9.50.

Q: Will the dividends I receive be taxable as ordinary income?

A:

Generally, dividends that you receive, including dividends that are reinvested pursuant to our dividend reinvestment plan, will be taxed as ordinary income to the extent they are from current or accumulated earnings and profits. We expect that some portion of your dividends may not be subject to tax in the year in which they are received because depreciation expense reduces the amount of taxable income but does not reduce cash available for distribution to our shareholders. The portion of your dividend that is not subject to tax immediately is considered a return of capital for tax purposes and will reduce the tax basis of your investment. This, in effect, can defer a portion of your tax until your investment is sold or we are liquidated, at which time you will be taxed at capital gains rates. Any dividend or distribution that we properly designate as a capital gain distribution generally will be treated as long-term capital gain without regard to the period for which you have held your shares. However, because each investor’s tax considerations are different, we suggest that you consult with your tax advisor. You should also review the section of this prospectus entitled “Federal Income Tax Considerations.”

Q: What will you do with the money raised in this offering?

A:

We intend to use substantially all of the net proceeds from this offering to acquire and operate commercial real estate primarily consisting of retail, office and industrial properties leased to creditworthy companies. Assuming that approximately one-half of the shares we sell in this offering are sold by our dealer manager without the payment of commissions, we estimate that approximately $8.95 of per share proceeds will be available for the purchase of real estate, with the remaining proceeds to pay fees and expenses of this offering and an acquisition fee to our advisor.

Until we invest the proceeds of this offering in real estate, we may invest in short-term, highly liquid or other authorized investments. Such short-term investments will not earn as high of a return as we expect to earn on our real estate investments, and we may not be able to invest the proceeds in real estate promptly.

Holders of interests in Hartman OP have the right to exchange those interests for our shares. We expect few, if any, of the holders of interests in Hartman OP will elect to exchange such interests during this offering and that the loss of cash proceeds from any such exchange will be immaterial. See “The Operating Partnership Agreement — Exchange Rights” for a summary of these rights.

Q: What kind of offering is this?

A:

We are offering to the public up to 10,000,000 common shares of beneficial interest on a “best efforts” basis. We are also offering up to 1,000,000 common shares of beneficial interest to be issued pursuant to our dividend reinvestment plan.

Q: How does a “best efforts” offering work?

A:

When shares are offered on a “best efforts” basis, the broker-dealers participating in the offering are only required to use their best efforts to sell the shares and have no firm commitment or obligation to purchase any of the shares. Therefore, we may not sell all or any of the shares that we are offering.

Q: How long will this offering last?

A:

The offering will not last beyond               , 2006.

Q: Who can buy shares?

A:

An investment in our company is only suitable for persons who have adequate financial means and who will not need immediate liquidity from their investment. Residents of most states can buy shares in this offering provided that they have either (1) a net worth of at least $45,000 and an annual gross income of at least $45,000, or (2) a net worth of at least $150,000. For this purpose, net worth does not include your home, home furnishings and automobiles. These minimum levels may be higher in certain states, so you should carefully read the more detailed description in the “Plan of Distribution – Suitability Standards” section of this prospectus.

Q: May I make an investment through my IRA, SEP or other tax-deferred account?

A:

Yes. You may make an investment through your individual retirement account (IRA), a simplified employee pension (SEP) plan or other tax-deferred account. In making these investment decisions, decision makers should, at a minimum, consider (1) whether the investment is in accordance with the documents and instruments governing such IRA, plan or other account, (2) whether the investment satisfies the fiduciary requirements associated with such IRA, plan or other account, (3) whether the investment will generate unrelated business taxable income (UBTI) to such IRA, plan or other account, (4) whether there is sufficient liquidity for such investment under such IRA, plan or other account, (5) the need to value the assets of such IRA, plan or other account annually or more frequently, and (6) whether such investment would constitute a prohibited transaction under applicable law.

Q: Have you arranged for a custodian for investments made through IRA, SEP or other tax-deferred accounts?

A:

Yes. Resources Trust Company has agreed to serve as custodian for investments made through IRA, SEP and certain other tax-deferred accounts. We will pay the fees related to the establishment of investor accounts with Resources Trust Company, and we will also pay the fees related to the maintenance of any such account for the first year following its establishment. Thereafter, Resources Trust Company has agreed to provide this service to our shareholders with annual maintenance fees charged at their standard rate. Resources Trust Company is a member of the Fiserv, Inc. family of financial services companies. Fiserv, Inc. is a publicly traded financial services company based in Brookfield, Wisconsin.

Q: Is there any minimum investment required?

A:

Yes. Generally, you must invest at least $1,000. Thereafter, you may purchase additional shares in $250 increments. Investors who already own our shares can make purchases for less than the minimum investment. These minimum investment levels may be higher in certain states, so you should carefully read the more detailed description of the minimum investment requirements appearing in the “Plan of Distribution – Suitability Standards” section of this prospectus.

Q: How do I subscribe for shares?

A:

If you choose to purchase shares in this offering, you will need to complete and sign a subscription agreement, like the one contained in this prospectus as Appendix B, for a specific number of shares and pay for the shares at the time you subscribe. Your payment will be placed into an escrow account with             , where your funds will be held, along with those of other subscribers, until we sell at least 200,000 shares and, for sales thereafter, until we admit new investors, which we expect to do monthly. Separate escrow accounts will be established for subscriptions of residents of New York and Pennsylvania. See the section of this prospectus captioned “Plan of Distribution – Subscription Procedures” for a detailed discussion of how to subscribe for shares.

Q: What happens if you don’t sell at least 200,000 shares?

A:

If we do not sell at least 200,000 shares, or $2.0 million, before             , 2005, we will terminate the offering and stop selling shares. In such event, within ten days after termination of the offering, the escrow agent will return all invested funds, including interest. Different escrow procedures apply to Pennsylvania and New York investors. See “Plan of Distribution – Special Notice to Pennsylvania Investors” and “Plan of Distribution – Special Notice to New York Investors.”

Q: If I buy shares in this offering, how may I later sell them?

A:

At the time you purchase the shares, they will not be listed for trading on any securities exchange or over-the-counter market. In fact, we cannot be sure that any public market will ever develop for the shares. As a result, you may find it difficult to find a buyer for your shares. If you are able to find a buyer for your shares, you may sell your shares to that buyer only if the buyer satisfies the suitability standards applicable to him or her, or unless such sale would cause the buyer to own more than 9.8% of the outstanding common shares. See the “Suitability Standards,” “Plan of Distribution – Suitability Standards” and “Description of Shares – Restrictions on Transfer” sections of this prospectus.

In addition, after you have held your shares for at least one year, you may be able to have your shares repurchased by us pursuant to our share redemption program. Subject to the limitations described in this prospectus, we will also redeem shares upon the request of the estate, heir or beneficiary of a deceased shareholder. Redemption of shares, when requested, will be made quarterly on a first-come, first-served basis with a priority given to redemptions upon death of a shareholder. See the “Description of Shares – Share Redemption Program” section of this prospectus.

Q: What are your exit strategies?

A:

We will seek to return your investment to you by listing our shares on a national exchange within twelve years from the termination of this offering or, if we do not obtain such a listing, by making an orderly disposition of our properties and distributing the net proceeds from such sales to you.

Q: Who is the transfer agent?

A:

American Stock Transfer and Trust Co. 59 Maiden Lane New York, New York 10038 (212) 936-5100

To ensure that any account changes are made promptly and accurately, all account changes, including your address, ownership type and distribution mailing address, should be directed to us.

Q: Will I be notified of how my investment is doing?

A:

Yes. We will provide you with periodic updates on the performance of your investment with us, including:

•

monthly newsletters or dividend reports;

•

three quarterly financial reports, which are filed with the Securities and Exchange Commission and will be distributed to you upon request;

•

an annual report; and

•

an annual IRS Form 1099-DIV, if required; and

•

supplements to this prospectus.

We will provide this information to you via one or more of the following methods, in our discretion and with your consent, if necessary:

•

United States mail or other courier;

•

facsimile;

•

electronic delivery; and

•

posting on our affiliated website, at www.hartmanmgmt.com.

Q: When will I receive my detailed tax information?

A:

Your Form 1099 tax information will be placed in the mail by January 31 of each year.

Q: Who can help answer my questions?

A:

If you have more questions about the offering or if you would like additional copies of this prospectus, you should contact your registered representative or contact:

1450 West Sam Houston Parkway North, Suite 100
Houston, Texas 77043
(713) 467-2222

PROSPECTUS SUMMARY

       This prospectus summary highlights selected information contained elsewhere in this prospectus. Because it is a summary, this section does not contain all of the information that is important to your decision whether to invest in our common shares. To understand this offering fully, you should read the entire prospectus carefully, including the “Risk Factors” section and the financial statements.

Hartman Commercial Properties REIT

      Hartman Commercial Properties REIT is a Maryland real estate investment trust. We invest in and operate retail, industrial and office properties located primarily in the Houston and San Antonio metropolitan areas. We intend to expand our investments to retail, office and industrial properties located in major metropolitan cities in the United States, principally in the Southern United States. We conduct substantially all of our operations and activities through Hartman REIT Operating Partnership, L.P., which we refer to elsewhere in this prospectus as Hartman OP. We are the sole general partner of Hartman OP and, as of December 16, 2003, we owned 4,654,065.51 OP Units in Hartman OP, which represented 53.37% of all outstanding OP Units on such date. The term “OP Units” refers to the units of partnership interest of Hartman OP. We owned 33 commercial properties as of December 16, 2003, primarily consisting of retail centers, industrial and office properties. Our properties are typically leased to a variety of tenants under long-term leases. Some tenants are national companies; others are local businesses. Our business and properties are more fully described in the “Description of Real Estate and Operating Data” section of this prospectus.

      We have made an election to be taxed as a REIT. Consequently, we generally are not subject to federal income tax on income that we distribute to our shareholders. Under the Internal Revenue Code of 1986, as amended, REITs are subject to numerous organizational and operational requirements, including a requirement that they distribute at least 90% of their taxable income for all future years beginning with 2001. We refer to the Internal Revenue Code of 1986, as amended, as the “Internal Revenue Code” in this prospectus. If we fail to qualify for taxation as a REIT in any year, our income will be taxed at regular corporate rates, and we may be precluded from qualifying for treatment as a REIT for the four-year period following our failure to qualify. Even if we continue to qualify as a REIT for federal income tax purposes, we may still be subject to state and local taxes on our income and property and to federal income and excise taxes on our undistributed income. We encourage you to read the section of this prospectus titled “Federal Income Tax Considerations” for more information about how we are taxed.

      Our office is located at 1450 West Sam Houston Parkway North, Suite 100, Houston, Texas 77043. Our telephone number is (713) 467-2222.

Our Advisor

      Our advisor is Hartman Management, a Texas limited partnership. Hartman Management manages our day-to-day operations and identifies acquisitions and investments on our behalf. Hartman Management also manages our portfolio of properties. We sometimes refer to Hartman Management as our property manager in this prospectus.

Our Management

      We operate under the direction of our board of trustees, the members of which are accountable to our shareholders and us as fiduciaries. Our board of trustees, including a majority of our independent trustees, must approve certain matters set forth in our First Amended and Restated Declaration of Trust (sometimes referred to herein as the “charter” or the “Declaration of Trust”). We have six members on our board of trustees. Four of the trustees are independent of Hartman Management and have responsibility for reviewing its performance. Our trustees are elected annually by our shareholders. Although we have executive officers who will manage our operation, we do not have any paid employees. Hartman Management has employees whom it compensates out of the fees we pay to it. Except with respect to share purchase rights and options to purchase common shares that may be granted to our executive officers, only our non-employee trustees are compensated for their services to us.

Terms of The Offering

      We are offering up to 10,000,000 common shares of beneficial interest to the public at $10.00 per share. We are also offering up to 1,000,000 shares pursuant to our dividend reinvestment plan at $9.50 per share. We plan to offer common shares of beneficial interest until the earlier of                     , 2006 or the date we sell all 11,000,000 shares in this offering. However, we may terminate this offering at any time prior to such termination date. This offering must be registered, or exempt from registration, in every state in which we offer or sell shares. Generally, such registrations are for a period of one year. Therefore, we may have to stop selling shares in any state in which the registration is not renewed annually. If 200,000 shares are not sold by                     , 2005, this offering will be terminated and subscribers’ funds, plus interest, will be returned promptly. Funds in escrow will be invested in short-term, highly liquid or other authorized investments that can be readily sold or otherwise disposed of for cash without any dissipation of the offering proceeds invested. After the initial 200,000 shares are sold, subscription proceeds will continue to be held in escrow until investors are admitted as shareholders, except that subscribers residing in Pennsylvania may not be admitted until subscriptions have been received and accepted for $5,475,000 and subscribers residing in New York may not be admitted until subscriptions have been received for $2,500,000. We intend to admit new shareholders monthly. Each time new investors are admitted, we will hold such investment proceeds in our account until we withdraw funds for the acquisition of investments, or the payment of fees and expenses.

Summary Risk Factors

      An investment in our common shares is subject to significant risks that are described in more detail in the “Risk Factors” and “Conflicts of Interest” sections of this prospectus, which begin on pages 17 and 60, respectively. If we are unable to effectively manage the impact of these risks, we may not meet our investment objectives and, therefore, you may lose some or all of your investment. The following is a summary of the risks that we believe are most relevant to an investment in our common shares:

•

There is no public trading market for the shares, and we cannot assure you that one will ever develop. Until the shares are publicly traded, you will have difficulty selling your shares, and even if you are able to sell your shares, you will likely have to sell them at a substantial discount.

•

All of our properties are located in the Houston and San Antonio metropolitan areas. Because of the lack of geographic diversification of our portfolio, an economic downturn in the Houston and San Antonio metropolitan areas could adversely impact our operations and ability to pay dividends to our shareholders.

•

We have not identified any investments that we will make with the proceeds of this offering. You will not have the opportunity to evaluate our investments prior to our making them. You must rely totally upon Hartman Management’s ability to select our investments.

•

The number of properties that we will acquire and the diversification of our investments will be reduced to the extent that we sell less than all of the 11,000,000 shares being offered. If we do not sell substantially more than the minimum offering of 200,000 shares, we may buy only one property with the proceeds of this offering and the value of your investment may fluctuate more widely with the performance of the specific investment. There is a greater risk that you will lose money in your investment if we cannot diversify our portfolio of investments by geographic location and property type.

•

Our ability to achieve our investment objectives and to pay dividends depends on the performance of Hartman Management, our advisor, for the day-to-day management of our business and the selection of our real estate properties, mortgage loans and other investments.

•

We will pay significant fees to Hartman Management and its affiliates, some of which are payable based upon factors other than the quality of services provided to us.

•

We may incur substantial debt. Loans we obtain will be secured by some of our properties, which will put those properties at risk of forfeiture if we are unable to pay our debts and could hinder our ability to pay dividends to our shareholders in the event that income on such properties, or their value, falls.

•

We may not remain qualified as a REIT for federal income tax purposes, which would subject us to the payment of tax on our income at corporate rates and reduce the amount of funds available for payment of dividends to our shareholders.

•

We depend on tenants for our revenue and on anchor tenants to attract non-anchor tenants. We cannot predict what the occupancy level will be in a particular building or that any tenant will remain solvent. We also cannot predict the future value of our properties. Accordingly, we cannot guarantee that you will receive cash dividends or appreciation of your investment.

•

To ensure that we continue to qualify as a REIT, our charter prohibits any shareholder from owning more than 9.8% of our outstanding common shares.

•

You will not have preemptive rights as a shareholder, so any shares that we issue in the future may dilute your interest in our company.

•

Approximately 45.0% of our gross leasable area is subject to leases that expire prior to December 31, 2005.

•

If we do not obtain listing of our common shares on a national exchange by the twelfth anniversary of the termination of the offering, our charter provides that we must liquidate our assets unless a majority of our board of trustees, including a majority of our independent trustees, shall approve otherwise.

•

The vote of shareholders owning a majority of our shares will bind all of the shareholders as to certain matters such as the election of trustees and any amendment to our charter.

•

Potential liability as the result of environmental matters could adversely affect our operations.

•

Allen R. Hartman controls other entities that compete with us for his time as well as for tenants and acquisition opportunities. Accordingly, Mr. Hartman will face conflicts of interest resulting from his duties to these other entities.

•

We have acquired a majority of our properties from entities owned, in whole or in part, by Allen R. Hartman.

Description of Properties, Investments and Borrowing

      As of December 16, 2003, we owned 33 commercial properties. We have not contracted to acquire any investments with the proceeds of this offering, nor has our advisor identified any assets in which there is a reasonable probability that we will invest. Although all of our properties are retail, industrial or office properties located in the Houston and San Antonio, Texas metropolitan areas, we will seek to invest in retail, office and industrial properties located in major metropolitan cities throughout the United States, principally in the Southern United States. All acquisitions of properties will be evaluated for tenant creditworthiness and the reliability and stability of the properties’ future income and capital appreciation within a seven to ten-year holding period. In addition, we may acquire interests in other entities with similar real property investments. Our properties may be acquired, developed and operated by us alone or jointly with another party. We may enter into one or more joint ventures for the acquisition of properties with certain of our affiliates, other third parties, including the present and future real estate limited partnerships sponsored by our advisor. We may also serve as mortgage lender to these joint ventures or other Hartman real estate programs.

      Our charter permits us to incur indebtedness of up to 300.0% of our net asset value as of the date of any borrowing. However, our board of trustees has adopted a policy that we will generally limit our aggregate borrowing to 50.0% of the aggregate value of our assets as of the date of any borrowing, unless substantial justification exists that borrowing a greater amount is in our best interests. Our policy limitation does not apply to individual properties. As a result, it can be expected that, with respect to the acquisition of one or more of our properties, we may incur indebtedness of more than 50.0% of the asset value of the property acquired. We expect to borrow up to 50.0% of our aggregate asset value if interest rates and loan terms are favorable. Our board of trustees must review our aggregate borrowing at least quarterly. Our charter further provides that we may borrow in excess of 300.0% of our aggregate asset value only if approved by our independent trustees, in which event we must disclose the justification for such excess borrowing in our next quarterly report to shareholders.

Estimated Use of Proceeds of This Offering

      We estimate that we will use at least 89.5% of the proceeds of this offering to invest in properties and for general working capital purposes, but our estimate is based on the number of shares we sell in this offering through our dealer manager without the involvement of participating broker-dealers since the commissions that would

otherwise be payable for such sales will be retained and used to invest in properties. If actual sales are a lower proportion of total shares sold, then the percentage of the proceeds that will be so available will be lower. On the date of this prospectus, we had not identified any particular properties that we intend to acquire with the proceeds of this offering. We will use the remainder of the offering proceeds to pay selling commissions, fees and expenses related to this offering and fees and expenses related to the selection and acquisition of properties. You should read the “Estimated Use of Proceeds” section of this prospectus for further detail regarding the use of the proceeds of this offering.

Investment Objectives

      Our investment objectives are:

•

to maximize cash dividends paid to you;

•

to obtain and preserve long-term capital appreciation in the value of our properties to be realized upon our ultimate sale of such properties; and

•

to provide you with a return of your investment by listing the shares on a national exchange within twelve years of the termination of this offering or, if we do not obtain listing of the shares within twelve years of the termination of this offering, by making an orderly disposition of our properties and distributing the cash to you.

      To achieve these objectives, we intend to increase net income from our operations through selective acquisitions and sophisticated and professional management of our properties. We intend to hold our properties until we determine that they should be sold, which we expect to be generally seven to ten years from the date of acquisition. To the extent that any of our properties are sold, we may reinvest the net proceeds of such sale in additional properties or distribute such net proceeds to equity holders. See the “Investment Objectives and Criteria” section of this prospectus for a more complete description of our business and objectives.

Dividend Policy

      We have paid regular dividends to our shareholders since our inception, and we intend to continue to pay regular dividends. Dividends will be determined by our board of trustees and will be dependent upon a number of factors. To maintain our qualification to be taxed as a REIT, we are required to distribute at least 90% of our taxable income. We expect to continue to pay dividends on a monthly basis, and to pay such dividends to investors in this offering after we have sold the minimum offering amount and have admitted our initial investors. Please see the “Description of Shares — Dividends” section of this prospectus for a description of our dividend policy and a table showing all dividends we made prior to December 31, 2003.

Conflicts of Interest

      We have no paid employees. Hartman Management directs, supervises and manages our day-to-day activities in accordance with an advisory agreement. Hartman Management also supervises our property acquisitions. Allen R. Hartman is the president and sole owner of Hartman Management. Mr. Hartman is also our president and is a member of our board of trustees.

      Hartman Management, as our advisor, will experience conflicts of interest in connection with the management of our business affairs, including the following:

•

Our board of trustees oversees our operations. We have six members on our board of trustees. Four of our trustees are independent of Hartman Management and have responsibility for reviewing its performance.

•

We pay Hartman Management significant compensation for services it performs, the majority of which is not dependent on the quality of the service provided to us. We also reimburse Hartman Management for expenses it pays on our behalf.

•

Hartman Management will experience conflicts of interest in connection with the management of our business and properties, such as:

-

Mr. Hartman and other employees of Hartman Management will need to allocate their time between our operations and the operations of other companies managed by Hartman Management that are affiliated with Mr. Hartman.

-

We compete for tenants with other companies affiliated with Mr. Hartman also managed by Hartman Management.

-

We may acquire properties from entities affiliated with Mr. Hartman but otherwise not affiliated with us.

-

Hartman Management must determine which properties we should acquire and which properties should be acquired by another Hartman program.

-

Hartman Management will receive fees in connection with transactions involving the purchase, management and sale of our properties regardless of the quality of the property acquired or service provided to us.

      See the “Conflicts of Interest” section of this prospectus for a detailed discussion of the various conflicts of interest relating to your investment, as well as the procedures that we have established to resolve a number of these potential conflicts.

      The following chart shows the ownership structure of the various Hartman entities that are affiliated with Hartman Management:

(1)		Allen R. Hartman owns 3.37% of the issued and outstanding common shares of Hartman Commercial Properties REIT. Units of Hartman REIT Operating Partnership, L.P. may be converted into common shares of Hartman Commercial Properties REIT. Assuming Mr. Hartman makes such a conversion, and assuming that he is deemed the beneficial owner of Houston R. E. Income Properties XIV, Mr. Hartman will own 19.66% of the issued and outstanding common shares of Hartman Commercial Properties REIT.

(2)

Hartman Commercial Properties REIT is the 53% owner and the general partner of Hartman REIT Operating Partnership, L.P.

(3)

Hartman REIT Operating Partnership II, L.P. is a wholly owned subsidiary of Hartman REIT Operating Partnership, L.P. and was formed in order to secure a loan from GMAC.

Prior Offering Summary

      Our founder, Allen R. Hartman, has previously sponsored 17 privately offered real estate limited partnerships over the last 20 years. As of November 30, 2003, Mr. Hartman had raised approximately $120 million from approximately 1,100 investors in these real estate programs. Neither Mr. Hartman, nor any of our other affiliates, have previously sponsored or organized a publicly offered REIT. The “Prior Performance Summary” section of this prospectus contains a discussion of the programs sponsored by Mr. Hartman from January 1, 1995 to date. Certain statistical data relating to such programs with investment objectives similar to ours is also provided in the “Prior Performance Tables” included as Appendix A to this prospectus. Our prior performance, and the prior performance of the other programs previously sponsored by Mr. Hartman, are not necessarily indicative of the results that we will achieve. Therefore, you should not assume that you will experience returns, if any, comparable to those experienced by our shareholders in the past or by investors in other prior Hartman real estate programs.

Compensation to Hartman Management and Its Affiliates

      Hartman Management and its affiliates will receive compensation and fees for services relating to this offering and the investment and management of our assets. The most significant items of compensation are summarized in the following table: