Silver Star Properties Files for Chapter 11, Disclosing Four Defaulted Loans and Foreclosure Threat
Silver Star Properties REIT, a publicly registered nontraded real estate investment trust formerly known as Hartman Short Term Income Properties XX Inc., has filed for Chapter 11 bankruptcy protection, disclosing this week that its May 28 bankruptcy filing constitutes a default on four guaranteed loan agreements totaling more than $65 million and that a fifth defaulted loan has already resulted in a storage property being posted for foreclosure.
The Fort Worth, Texas–based company filed its voluntary Chapter 11 petition in the U.S. Bankruptcy Court for the Northern District of Texas. In a press release issued June 5, Silver Star said the filing was made “in an abundance of caution” to “preserve and protect the value” of its assets while it completes a previously announced liquidation and repositioning strategy.
The company said its financial position reflects approximately $100 million in assets against approximately $75 million in liabilities, and warned shareholders explicitly that “existing equity may be impaired or cancelled” under the Chapter 11 proceeding.
Silver Star disclosed four loan agreements on which it is the guarantor and which are currently in default:
- A $57.5 million facility among a portfolio of entities collectively identified as the Walgreens Borrowers and lender Greyhawk Silver Star LLC, successor in interest to BSPRT CRE Finance LLC, with approximately $24.6 million in outstanding principal;
- A $15.53 million loan between Silver Star Delray LLC and FBRED BDC Finance LLC, with $15.53 million outstanding;
- A $17 million loan agreement between Cooper Street SPE LLC and HSRE-ADV VII LLC, with the entirety of the loan outstanding; and
- An $8.1 million commercial mortgage-backed loan between Hartman Retail III DST and Wells Fargo N.A. as trustee, with $8.1 million outstanding.
A fifth defaulted obligation – a $5.75 million promissory note from Ashton Gaskins Storage LLC to Silver Star Virginia Parkway LLC, the company’s McKinney, Texas, self-storage subsidiary – matured June 7, and the lender posted the property for foreclosure on June 2. The McKinney subsidiary also filed a separate Chapter 11 petition on May 28. That property had been among Silver Star’s most frequently cited performance successes in shareholder communications leading up to last year’s proxy fight.
Silver Star’s bankruptcy is the final chapter in one of the more contentious sagas in the nontraded REIT sector. The company, founded by Allen R. Hartman and originally launched as Hartman Short Term Income Properties XX, raised capital from retail investors through broker-dealers across Texas and beyond, eventually merging several affiliated Hartman REITs, including Hartman Short Term Income Properties XIX Inc. and Hartman Income REIT Inc., into a combined entity with roughly $655 million in assets at its peak.
The company’s troubles accelerated in 2022 and 2023. Distributions were suspended. Net asset value per share fell 48%, from $12.08 to $6.25, amid allegations of inflated property valuations, deferred maintenance, and unpaid vendors. In late 2022, the company rebranded to Silver Star Properties, announcing a plan to pivot away from office, retail, and industrial assets toward self-storage.
In March 2023, Silver Star’s board removed Hartman as executive chairman, launching what would become a years-long public and legal battle between the company’s current leadership and its founder. Hartman accused Silver Star’s board of selling nearly $400 million in income-generating assets without returning proceeds to shareholders. Silver Star, in turn, blamed Hartman for the company’s financial deterioration, including what it described as a failed refinancing strategy that led to the default on a $259 million Goldman Sachs CMBS loan in October 2023.
A Silver Star subsidiary, Hartman SPE LLC, filed its own Chapter 11 in September 2023 to manage that debt, eventually emerging with $135 million in replacement financing as property sales continued.
Proxy War and Shareholder Vote
Even as Silver Star worked to execute its self-storage pivot, the governance dispute consumed significant management bandwidth and legal resources. In April 2025, a Maryland court issued a mixed ruling in the ongoing case between the parties, finding that Silver Star had failed to comply with its charter obligation to either list its shares or obtain stockholder approval to defer liquidation by 2023. The court ordered a shareholder meeting at which investors would choose between liquidation and the board’s self-storage strategy.
The lead-up to that meeting grew increasingly contentious. Silver Star executed a shareholder rights plan that tripled share counts for most stockholders, effectively diluting Hartman’s voting influence. Hartman, who retained approximately 7.76% of outstanding shares, accused the company of illegal proxy solicitation and financial malpractice. Hartman was ultimately removed from the board after a shareholder vote, once courts cleared the way for the tally to proceed.
A shareholder meeting eventually took place in August 2025, delayed multiple times from its original June 30 date, offering a binary vote on liquidation or the self-storage pivot. By mid-2025, Silver Star shares were trading on the secondary market at $0.42 per share against a stated NAV of $2.01. In March 2025, Silver Star had already eliminated nearly 90% of its workforce as part of what it described as a strategic turnaround.
What It Means for Shareholders
For retail investors who purchased shares at $10 through broker-dealers, many of them at the recommendation of financial advisers during the REIT’s active offering period, the Chapter 11 filing represents a near-total loss. Silver Star said explicitly that “existing equity may be impaired or cancelled” under the restructuring process, and the bankruptcy petition filed on May 28 indicates that no funds will be available for distribution to unsecured creditors after administrative expenses are paid.
Silver Star said it intends to continue pursuing asset sales, resolution of liabilities, and the potential creation of a new holding entity, referred to as “NewCo,” to hold remaining self-storage assets and litigation rights. All such actions are now subject to court approval.
Investors who purchased shares through broker-dealers may have grounds for FINRA arbitration claims against those firms, according to securities attorneys who have been investigating the REIT. The NAV collapse, distribution suspension, and serial defaults are among the factors cited.
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