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SECURITIES AND EXCHANGE COMMISSION

Form 10-K

Commission file number: 0-49782

T REIT, Inc.

1551 N. Tustin Avenue, Suite 200

(877) 888-7348

Securities registered pursuant to Section 12(b) of the Act:

Securities registered pursuant to Section 12(g) of the Act:

     Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes þ          No o

     Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.     þ

     The aggregate market value of common stock held by non-affiliates of the registrant was approximately $46,723,590 as of June 30, 2003 (based on the price for which each share was sold).

     Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act)     Yes o          No þ

     As of April 9, 2004, there were 4,646,085 shares of common stock of T REIT, Inc. outstanding.

T REIT, INC.

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PART I

Description of Business

      T REIT, Inc. (the “Company”) was formed as a Virginia corporation in December 1998 and has qualified and elected to be taxed as a real estate investment trust, or REIT, for federal income tax purposes. The Company was organized to acquire, manage and invest in a diversified portfolio of real estate composed of office, industrial, retail and service properties located primarily in the following focus states: Alaska, Florida, Iowa, Michigan, Minnesota, Nevada, North Carolina, South Carolina, South Dakota, Tennessee, Texas, Virginia, Washington, Wisconsin and Wyoming.

      The Company conducts business and owns properties through its operating partnership, T REIT, L.P., which was formed as a Virginia limited partnership in December 1998. The Company is the sole general partner of its operating partnership and has control over the affairs of its operating partnership.

      The Company’s day to day operations are managed by Triple Net Properties, LLC (the “Advisor”), under an advisory agreement (the “Advisory Agreement”). The Advisor engages affiliated entities, including Triple Net Properties Realty, Inc. (“Realty”), a real estate brokerage and management company, to provide various services for the properties. The Advisor and its affiliated property manager were formed in 1998 to serve as an asset and property manager for real estate investment trusts, syndicated real estate limited partnerships, limited liability companies and similar real estate entities.

      The Company’s principal executive offices are located at 1551 N. Tustin Avenue, Suite 200, Santa Ana, California 92705 and its telephone number is (877) 888-7348.

Developments During 2003

      During 2003:

	•	the Company invested approximately $9,000,000 to purchase a retail center and $5,500,000 to purchase interests in two unconsolidated properties;
	•	the Company sold three retail properties for a total gross sales price of approximately $39,000,000; and
	•	the Company continued to pay monthly distributions to our shareholders at an annual rate of 8.25% (based on a $10.00 per share purchase price).

Investment Objectives & Policies

General

      The Company’s primary investment objective is to obtain current income from investments in real estate. The Company intends to:

	•	invest in income producing real property generally through equity investments in a manner which permits it to continue to qualify as a REIT for federal income tax purposes;
	•	generate cash available for distribution to its shareholders;
	•	preserve and protect shareholder capital; and
	•	realize capital appreciation upon the ultimate sale of its properties.

To the extent feasible, the Company will strive to invest in a diversified portfolio of properties, in terms of geography, type of property and types of tenants, that will satisfy its investment objectives. However, the Company cannot assure you that it will attain these objectives or that shareholder capital will not decrease.

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Acquisition Strategies

      The Company primarily acquires, through wholly owned subsidiaries of its operating partnership, fee simple and undivided tenant in common interests in office, industrial, retail and service properties. The Company seeks to acquire properties leased by creditworthy tenants under net leases. The Company may acquire properties through a joint venture or the acquisition of substantially all of the interests of an entity which in turn owns the real property. In connection with the purchase of undivided tenant in common interests in real properties, the Company may purchase tenant in common interests in properties where the other tenants in common are participating in tax-free exchanges arranged by the Advisor. Such transactions will earn the Advisor or its affiliates commissions on the tax-free exchanges, and may impact the extent to which the Company participates in such acquisitions. The Company may also enter into sale and leaseback transactions, under which it will purchase a property from an entity and lease the property back to such entity under a net lease.

      The Company primarily acquires properties with cash and mortgage or other debt, but may acquire some properties free and clear of permanent mortgage indebtedness by paying the entire purchase price for such property in cash or in units of limited partnership interest in its operating partnership. With properties purchased on an all-cash basis, the Company may later incur mortgage indebtedness by obtaining loans secured by selected properties, if favorable financing terms are available. The proceeds from such loans would be used to acquire additional properties and increase its cash flow. Although not required by the Company’s Articles of Incorporation or Bylaws, the Company does not intend to incur indebtedness in excess of 70% of the aggregate fair market value of all its properties, as determined at the end of each calendar year. In addition, the Company does not intend to incur secured indebtedness on a specific property in excess of approximately 80% of such property’s fair market value

      A majority of properties acquired will be at least 75% leased on the acquisition date. Management expects that most of the Company’s leases will be “net” leases with terms of 10 to 15 years, but generally not less than 5 years, usually providing for a base minimum annual rent with periodic increases. “Net” leases typically require that tenants pay all or a majority of the operating expenses, including real estate taxes, special assessments, utilities, insurance and building repairs related to the property, in addition to lease payments.

      In acquiring a property, the Company may enter into arrangements with the seller of a property in support of minimum cash flow requirements from the property, obtain an option on a property or commit to purchase a property subject to completion of remodeling or construction.

      To assist the Company, the Advisor and its affiliates may purchase properties in their own name, assume loans in connection with the purchase of properties and temporarily hold title to such properties for the purpose of facilitating the acquisition of such property, borrowing money or obtaining financing, completing construction of the property or for any other purpose related to its business. The Company may also acquire properties from entities advised by the Advisor. Such acquisitions must be approved by a majority of the Company’s Directors, including a majority of the independent Directors.

Acquisition Standards

      Based on the Advisor’s prior real estate experience, the Company believes its Advisor has the ability to identify properties capable of meeting its investment objectives. In evaluating potential acquisitions, the primary factor considered is the property’s current and projected cash flow. The Company also considers a number of other factors, including a property’s:

	•	geographic location and type;
	•	construction quality and condition;
	•	potential for capital appreciation;
	•	lease terms and rent roll, including the potential for rent increases;

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	•	potential for economic growth in the tax and regulatory environment of the community in which the property is located;
	•	potential for expanding the physical layout of the property;
	•	occupancy and demand by tenants for properties of a similar type in the same geographic vicinity;
	•	prospects for liquidity through sale, financing or refinancing of the property;
	•	competition from existing properties and the potential for the construction of new properties in the area; and
	•	treatment under applicable federal, state and local tax and other laws and regulations.

Operating Strategies

      The Company’s primary operating strategy is to acquire suitable properties and to enhance the performance and value of those properties through management strategies designed to address the needs of current and prospective tenants. Management strategies include:

	•	managing costs and seeking to minimize operating expenses by centralizing management, leasing, marketing, financing, accounting, renovation and data processing activities;
	•	improving rental income and cash flow by aggressively marketing rentable space and raising rents when feasible;
	•	emphasizing regular maintenance and periodic renovation to meet the needs of tenants and to maximize long-term returns;
	•	re-positioning properties, for example, shifting from single to multi-tenant use in order to maximize desirability and utility for prospective tenants; and
	•	financing acquisitions and refinancing properties when favorable financing terms are available to increase its cash flow.

Tax Status

      The Company qualified and elected to be taxed as a REIT for federal income tax purposes under Sections 856 through 860 of the Internal Revenue Code (the “Code”). As long as the Company qualifies for taxation as a REIT, it generally will not be subject to federal income tax to the extent it distributes at least 90% of its REIT taxable income to the Company’s shareholders. If the Company fails to qualify as a REIT in any taxable year, it will be subject to federal income tax (including any applicable alternative minimum tax) on its taxable income at regular corporate rates. Unless entitled to relief under specific statutory provisions, the Company will also be disqualified for taxation as a REIT for the four taxable years following the year in which it loses its qualification. Even if the Company qualifies as a REIT, it may be subject to certain state and local taxes on its income and property and to federal income and excise taxes on its undistributed income.

Competition

      In seeking new investment opportunities, the Company competes with other real estate investors, including pension funds, insurance companies, foreign investors, real estate partnerships, other public and private real estate investment trusts, private individuals and other domestic real estate companies, many of which have greater financial and other resources than the Company. With respect to properties presently owned or to be owned by the Company, it competes with other owners of like properties for tenants.

Government Regulations

      Many laws and governmental regulations are applicable to the Company’s properties and changes in these laws and regulations, or their interpretation by agencies and the courts, occur frequently.

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      Costs of Compliance with the Americans with Disabilities Act. Under the Americans with Disabilities Act of 1990, or ADA, all public accommodations must meet federal requirements for access and use by disabled persons. Although the Company believes that it is in substantial compliance with present requirements of the ADA, none of its properties have been audited, nor have investigations of its properties been conducted to determine compliance. The Company may incur additional costs in connection with the ADA. Additional federal, state and local laws also may require modifications to the Company’s properties or restrict the Company’s ability to renovate its properties. Management cannot predict the cost of compliance with the ADA or other legislation. If the Company incurs substantial costs to comply with the ADA or any other legislation, its financial condition, results of operations, cash flow and ability to satisfy its debt service obligations and pay distributions could be adversely affected.

      Costs of Government Environmental Regulation and Private Litigation. Environmental laws and regulations hold the Company liable for the costs of removal or remediation of certain hazardous or toxic substances on its properties. These laws could impose liability without regard to whether the Company is responsible for the presence or release of the hazardous materials. Government investigations and remediation actions may have substantial costs and the presence of hazardous substances on a property could result in personal injury or similar claims by private plaintiffs. Various laws also impose liability on persons who arrange for the disposal or treatment of hazardous or toxic substances for the cost of removal or remediation of hazardous substances at the disposal or treatment facility. These laws often impose liability whether or not the person arranging for the disposal ever owned or operated the disposal facility. As the owner and operator of its properties, the Company may be deemed to have arranged for the disposal or treatment of hazardous or toxic substances.

      Use of Hazardous Substances by Some of the Company’s Tenants. Some of the Company tenants routinely handle hazardous substances and wastes on our properties as part of their routine operations. Environmental laws and regulations subject these tenants, and potentially the Company, to liability resulting from such activities. The Company requires its tenants, in their leases, to comply with these environmental laws and regulations and to indemnify it for any related liabilities. Management is unaware of any material noncompliance, liability or claim relating to hazardous or toxic substances or petroleum products in connection with any of the Company’s properties.

      Other Federal, State and Local Regulations. The Company’s properties are subject to various federal, state and local regulatory requirements, such as state and local fire and life safety requirements. If the Company fails to comply with these various requirements, it may incur governmental fines or private damage awards. While management believes that its properties are currently in material compliance with all of these regulatory requirements, management does not know whether existing requirements will change or whether future requirements will require us to make significant unanticipated expenditures that will adversely affect its ability to make distributions to the Company’s shareholders. Management believes, based in part on engineering reports which are generally obtained at the time the properties are acquired, that all of its properties comply in all material respects with current regulations. However, if the Company was required to make significant expenditures under applicable regulations, its financial condition, results of operations, cash flow and ability to satisfy its debt service obligations and to pay distributions could be adversely affected.

Significant Tenants

      As of December 31, 2003, none of the Company’s tenants accounted for 10% or more of the aggregate annual rental income.

Employees

      The Company has no employees and the Company’s executive officers are all employees of the Company’s Advisor. Substantially all work of the Company is performed by employees of the Advisor and its affiliates.

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Financial Information About Industry Segments

      The Company is in the business of owning, managing, operating, leasing, acquiring, developing, investing in and disposing of office, industrial and service properties. The Company internally evaluates all properties as one industry segment and accordingly does not report segment information.

Real Estate Investments

      As of December 31, 2003, the Company owned interests in 10 properties including two consolidated properties and eight unconsolidated properties. The Company’s interests in the unconsolidated properties are held either as a tenant in common in the property or as a member of a limited liability company that owns a tenant in common interest in the property. The consolidated properties have an aggregate GLA of approximately 403,000 square feet. During the year ended December 31, 2003, the Company purchased one consolidated property and two interests in unconsolidated properties and it sold three consolidated properties.

      The following table presents certain additional information about the Company’s properties at December 31, 2003:

(1)	Annualized rental income based on contractual base rent from leases in force at December 31, 2003.
(2)	Physical occupancy at December 31, 2003.
(3)	Average effective annual rent per square foot at December 31, 2003.

      The following information generally applies to the Company’s properties:

	•	The Company believes all of the properties are adequately covered by insurance and are suitable for their intended purposes.
	•	The Company has no plans for any material renovations, improvements or development of the properties.
	•	The Company’s properties are located in markets where it is subject to competition for attracting new and retaining current tenants.
	•	Depreciation is provided on a straight-line basis over the estimated useful lives of the buildings and improvements, ranging primarily from 15 to 39 years.

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Lease Expiration Table

      The following schedule presents the sensitivity of our annual base rent due to lease expirations for the next ten years at the Company’s consolidated properties as of December 31, 2003, by number, percentage of total aggregate GLA and annual base rent.

Indebtedness

      At December 31, 2003, the Company had secured mortgage loans outstanding on its consolidated properties representing aggregate indebtedness of approximately $9,250,000. See Note 8 to the financial statements included with this report.

      On February 11, 2004, Clearview Properties filed a petition in the District Court of the 270^th Judicial District, Harris County, Texas against Property Texas SC One Corporation, Clarion Partners, LLC, Granite Partners I, LLC, three unaffiliated entities, and the Advisor, Realty and the Company. The complaint alleges that Property Texas breached an Agreement of Sale and Purchase to sell Clearview certain real property located in Houston, Texas. Only one of the complaint’s eight separate counts alleges the involvement of the Company, the Advisor and Realty. That count alleges that the Company, the Advisor and Realty and/or the other defendants willfully and intentionally interfered with the contract between Clearview and Property Texas and that such interference proximately caused Clearview’s injury and sufferance of actual damages. The maximum exposure to the Company is uncertain, as Clearview has failed to specifically allege a monetary amount of loss as the result of our alleged involvement. The Company believes that there is no substantive merit to the claims made by Clearview with respect to the Company, the Advisor or Realty and it intends to vigorously defend the action. However, if Clearview were to prevail in this action, it could have a material adverse effect upon the Company’s financial condition, results of operations and cash flows.

      Other than the above, to the Company’s knowledge there are no material pending legal proceedings, other than routine litigation incidental to the business, to which the Company is a party to or of which any of its properties is the subject.

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      No matters were submitted to a vote of security holders during the fourth quarter of 2003.

PART II

Market Information

      There is no established public trading market for the Company’s shares of common stock.

      Effective May 24, 2001 the Company adopted the Share Repurchase Plan (the “Repurchase Plan”), which provides eligible shareholders with limited liquidity by enabling them to sell their common stock back to the Company subject to the sole discretion of the Board of Directors. To be eligible to participate in the Repurchase Plan, a shareholder must offer for resale at least 25% of the total number of his shares of common stock and he must have owned such shares for at least one year.

      The price paid by the Company per repurchased share of common stock is $9.05. Repurchases are effected by the Company on or about the last day of each calendar quarter. Funding for the Repurchase Plan comes from the proceeds received by the Company from operating revenues.

Shareholders

      As of April 9, 2004, there were 2,053 shareholders of record of the Company.

Distributions

      The Company paid monthly distributions on its common stock from August 1, 2000 through April 1, 2001 at an annual rate of $0.800 per share (8.00% based on a $10.00 purchase price). Effective April 1, 2001, the Board of Directors approved an increase in the annual distribution to $0.825 per share (8.25% based on a $10.00 purchase price). Monthly distributions were paid during 2003 at the $0.825 per share annual rate.

      The continued payment of distributions will depend primarily on the Company’s ability to generate positive cash flow from operations. The Company cannot assure you that it will continue to pay distributions at the current rate or at all.

Equity Compensation Plan Information

      The Company’s equity compensation plan information is as follows:

(1)	Each of the Independent Director and Officer/Employee Stock Option Plans was approved at the Company’s annual shareholders meeting held on June 28, 2003.

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SELECTED FINANCIAL DATA

(1)	The selected financial data should be read in conjunction with the consolidated financial statements and related notes appearing elsewhere in this report. Certain amounts in the prior years have been reclassified as discontinued operations related to properties disposed of in 2003.
(2)	Net income (loss) and distributions per share are based upon the weighted average number of common shares outstanding. Distributions by the Company of its current and accumulated earnings and profits for federal income tax purposes are taxable to shareholders as ordinary income. Distributions in excess of these earnings and profits generally are treated as a non-taxable reduction of the shareholder’s basis in the shares to the extent thereof (a return of capital for tax purposes), and thereafter as taxable gain. These distributions in excess of earnings and profits will have the effect of deferring taxation of the distributi