Silver Star Properties puts Hartman unit into Chapter 11 bankruptcy

By Sarah Lizee

Olympia, Wash., Sept. 13 – Silver Star Properties REIT, Inc. indirect subsidiary Hartman SPE, LLC filed Chapter 11 bankruptcy on Wednesday in the U.S. Bankruptcy Court for the District of Delaware.

Silver Star said in a press release that Hartman, which owns legacy office, retail and industrial properties, recently sold its Prestonwood property for $25 million, and that it has filed Chapter 11 to conduct an orderly sale of its remaining legacy assets.

Doing so will allow it to pay its undisputed creditors in full, complete the refinance of its maturing senior debt and maximize capital available for Silver Star's redeployment into the self-storage asset class, Silver Star said.

The parent company also said this will allow Hartman to complete property sales without “external interference by a dissident minority holder.”

“The filing comes after failed efforts amicably to resolve intercompany ownership matters, a process that has been ongoing since December 2022, involving negotiations between the company and Hartman vREIT XXI, Inc., which is under the control of Allen Hartman,” Silver Star said in the release.

“The company has diligently pursued mediation and sought legal remedies in response to Allen Hartman's efforts to secure more favorable terms through the use of controversial legal tactics.

“The company believes that the filing represents a viable and constructive avenue to obtain the necessary relief to prove its ownership of the SPE's properties, thereby safeguarding and enhancing shareholder value.”

In its petition, Hartman listed 200 to 999 creditors, $100 million to $500 million in assets and $100 million to $500 million in liabilities.

No creditors were listed with unsecured claims of $1 million or more.

Silver Star is a self-managed real estate investment trust based in Houston. Hartman’s Chapter 11 bankruptcy case number is 23-11452.

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