Silver Star Properties Files for Chapter 11, Disclosing Four Defaulted Loans and Foreclosure Threat
Editor’s Note: On June 10, this story was updated to acknowledge the discrepancy between Silver Star Property REIT’s reported assets. The company said in a press release that its financial position included approximately $100 million in assets while it reported $1.55 million in total assets listed in sworn bankruptcy schedules filed the same day.
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 filing with the U.S. Securities and Exchange Commission and press release, Silver Star said the bankruptcy was made “in an abundance of caution” and pledged to “preserve and protect the value” of its assets while completing a previously announced liquidation and repositioning strategy.
The company said in its press release that its financial position reflects approximately $100 million in assets against approximately $75 million in liabilities. That figure diverges sharply from the $1.55 million in total assets listed in sworn bankruptcy schedules filed the same day. The company 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.
Silver Star’s bankruptcy is the final chapter in one of the more contentious restructurings 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 after that. Distributions were suspended in 2022. Net asset value per share fell 48%, from $12.08 to $6.25 in 2023, 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.
- At the time of his departure, Hartman said he proposed an asset disposition strategy designed to reduce leverage and position the portfolio for refinancing, but none of those proposals were implemented.
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.
As the meeting approached, the dispute continued to escalate. 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 and continues to challenge these events. Nonetheless, Hartman was ultimately removed from the board after a shareholder vote in January 2024, once courts cleared the way for the tally to proceed.
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.
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. The NAV collapse, distribution suspension, and serial defaults are among the factors securities attorneys say they are reviewing in connection with the REIT.
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