Silver Star Announces Occupancy Gains as Proxy Battle Wages On With Former CEO
Silver Star Properties REIT, a publicly registered non-traded real estate investment trust formerly known as Hartman Short Term Income Properties XX Inc., announced updated performance highlights for several properties, including those in McKinney, Texas.; Delray Beach, Fla.; and other key markets, all while the ongoing feud with former chief executive officer Allen R. Hartman continues.
According to Silver Star, the McKinney property “continues to exceed expectations,” and increased in occupancy from 73% to 89%. The Delray Beach property reportedly increased occupancy from 89% to 93% over 10 months, with a Plano, Texas, property reporting occupancy gains of 8%. Other properties were also reported to be improving in occupancy.
The company also stated that all Silver Star storage facilities are managed internally and that Silver Star is working through a refinance that will significantly enhance cash flow while also using the latest technology to optimize revenue management. According to Silver Star, the portfolio now spans 13 assets across Texas, Colorado, North Carolina, and Florida.
Silver Star additionally emphasized the accomplishments of current CEO Gerald Haddock, including a comprehensive refinancing deal that, according to Silver Star, will save the company approximately $6 million annually.
“History is behind us. Our focus now is on building a strong, stable, income-generating platform,” Haddock said.
Despite Haddock’s stated focus, the proxy battle with Hartman, which has been ongoing since at least March 2023 when Silver Star announced the removal of Hartman as executive chairman, continues. In a recent letter to Silver Star shareholders, Hartman cited “Silver Star’s failed New Direction Plan,” claiming that, under the leadership of Haddock and his team, Silver Star’s NAV has fallen from $412 million to $134 million as of June 30, 2024, along with a sharp decline in occupancy rates, the sale of $395 million in legacy assets below cost, and several other accusations.
“Silver Star Properties REIT’s so-called ‘New Direction Plan’ has failed. Not just quietly or gradually – but completely, publicly, and catastrophically,” Hartman wrote in his letter.
As the court-ordered shareholder vote approaches, the back-and-forth between the two sides has increased in intensity. In another letter to shareholders, Silver Star noted that a judge in a Maryland court had noted Hartman’s alleged “dishonesty” and described him as “not credible.” Silver Star also claims that Hartman’s liquidation plan would result in no return for shareholders.
Hartman has pushed back aggressively. In a series of letters, he has accused the Silver Star leadership team of causing $278 million in lost equity and refusing to deliver critical financial information, while, according to Hartman, Haddock has paid himself an “outsized executive compensation.”
Hartman has also repeatedly called out Silver Star’s use of a “poison pill,” a legal tactic used to dilute voting influence by issuing additional shares. In this case, shareholders, with the exception of Hartman and his affiliates, have received two extra shares for their original share, effectively tripling their vote count. Hartman has previously pledged to honor this split in his own tabulation.
A shareholder vote is scheduled for Aug. 29 at 10 a.m., CT. The meeting will be held virtually and will include a binary vote as ordered by the court. Shareholders must choose between liquidating the company’s assets, as supported by Hartman, or continuing with the board’s proposed pivot into the self-storage sector, as supported by Haddock and his team. Shareholders of record as of June 20 are eligible to vote.
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