Silver Star Properties REIT, Inc. was a non-traded real estate investment trust that sold roughly 4.45 million shares to individual investors at about $10 per share. What began as a Houston-area commercial property portfolio ended in a Chapter 11 bankruptcy filing, multiple loan defaults, and a net asset value collapse that left shareholders with equity worth a fraction of what they paid. Haselkorn & Thibaut, P.A., operating as Investment Fraud Lawyers, explains what happened and what investors can do now.
What was silver star properties reit?
Silver Star Properties REIT, Inc. was a Maryland corporation that operated as a non-traded REIT. It was originally known as Hartman Short Term Income Properties XX, Inc. The REIT focused on office, retail, and industrial properties in the Houston area before attempting a strategic pivot into self-storage around 2022-2023.
By the time the company stopped selling shares on April 25, 2013, it had sold approximately 4,445,678 shares at roughly $10 per share. This means investors contributed about $44.5 million in common equity. That capital has since been largely impaired.
The net asset value collapse
Net asset value per share tells investors what their shares are worth based on the underlying properties minus debt. Silver Star’s NAV tells a dramatic story of decline:
| Date | Reported NAV per share | Decline from $10 offering price |
|---|---|---|
| 2021 | $12.08 | +20.8% |
| 2022 | $6.25 | -37.5% |
| December 2023 | $2.70 | -73.0% |
| June 2024 | $2.01 | -79.9% |
| July 2025 (secondary market) | ~$0.42 | -95.8% |
The NAV dropped from $12.08 to $6.25 between 2021 and 2022 alone, a roughly 48% decline in a single year. By mid-2024, the REIT acknowledged inflated property valuations, unpaid vendors, and loan defaults that forced repeated markdowns.
Loan defaults and debt distress
Silver Star’s financial troubles were not limited to falling property values. The company disclosed multiple loan defaults and serious debt problems:
| Obligation | Amount | Status |
|---|---|---|
| Outstanding debt (Hartman SPE subsidiary, 2023) | ~$217 million | Subject to Chapter 11 restructuring |
| REIT-level assets at May 2024 filing | ~$100 million | Under Chapter 11 protection |
| REIT-level liabilities at May 2024 filing | ~$75 million | Under Chapter 11 protection |
| Promissory note on self-storage property | $5.75 million | In foreclosure as of June 2, 2024 |
| Additional loans in default (disclosed June 2024) | 4 loans | Defaulted |
In its June 5, 2024 shareholder update filed with the U.S. Securities and Exchange Commission (SEC), Silver Star disclosed four loans in default plus a $5.75 million promissory note on a self-storage property that had moved into foreclosure. The company cited tight finances, lending constraints, and blocked property sales as factors that prevented debt reduction.
The two bankruptcies
Silver Star’s collapse involved not one but two Chapter 11 filings:
Hartman SPE subsidiary bankruptcy (2023-2024). Hartman SPE, LLC, a major operating subsidiary that held most of the office properties, filed for Chapter 11 bankruptcy. The filing was described as necessary to address maturing debt and the impact of lis pendens recorded by former CEO Allen R. Hartman on multiple properties. These lis pendens placed the company in technical default and jeopardized refinancing efforts. In February 2024, Hartman SPE emerged from Chapter 11 after securing a $135 million exit facility from two New York-based lenders. At that point, Hartman SPE held 35 properties while the parent REIT directly owned only three income-generating assets.
REIT-level Chapter 11 (May 2024). Silver Star Properties REIT, Inc. itself filed for Chapter 11 bankruptcy protection on May 28, 2024. The stated objective was to reorganize obligations and preserve assets rather than liquidate immediately. At filing, the REIT reported about $100 million in assets and $75 million in liabilities. The company warned in its June 5, 2024 SEC filing that bankruptcy proceedings might cancel any equity shareholders would otherwise have had.
The failed pivot to self-storage
Around 2022-2023, Silver Star announced plans to exit its legacy office, retail, and industrial holdings and pivot into self-storage. In 2023, it acquired Southern Star Self-Storage, a portfolio of nine self-storage properties. Management initially promoted this acquisition as a path to increased net operating income and occupancy.
The plan was to liquidate or reposition office assets and use proceeds plus new financing to support the self-storage portfolio. However, litigation and the lis pendens filed by founder Allen Hartman interfered with asset sales and put some loans into technical default. As the company marketed assets post-bankruptcy, buyers uncovered deferred maintenance, unpaid vendors, and other issues that forced downward price adjustments. Higher interest rates and blocked dispositions prevented the pivot from stabilizing the business.
SEC investigation and regulatory issues
In November 2023, Silver Star disclosed that the SEC had opened a formal investigation following earlier document requests and a litigation hold notice. The company later disclosed that the SEC investigation concluded without further enforcement action.
Additional regulatory issues surfaced during the original stock offering. A Maryland Business and Technology Court opinion noted that Silver Star failed to file a post-effective amendment to its prospectus, which placed it in violation of SEC regulations and caused the company to stop selling stock on April 25, 2013.
Due to missed financial reporting benchmarks, Charles Schwab ceased custodianship of Silver Star shares in December 2024.
Governance disputes and fraud allegations
The collapse also involved significant governance disputes between Silver Star’s current leadership and founder Allen R. Hartman:
In a 2023 lawsuit in Texas, Silver Star accused Hartman of fraud, breach of fiduciary duty, and illegal meddling in connection with proposed asset sales and the corporate pivot. Silver Star’s leadership also accused Hartman of mismanagement during his tenure, including financial practices they say contributed to the NAV collapse and debt problems.
Hartman, in turn, has alleged that the current board sold nearly $400 million of income-generating assets without distributing proceeds to shareholders. He has criticized a “poison pill” Rights Agreement that diluted or blocked his and his affiliates’ voting power. He has also alleged illegal proxy solicitation, claiming company representatives contacted shareholders without proper authorization.
In Alan R. Hartman, et al. v. Silver Star Properties REIT, Inc., the Maryland Business and Technology Court held that Silver Star’s charter required it to either list its shares or seek shareholder approval for certain actions.
What this means for investors
Investors who purchased Silver Star shares at or near the $10 offering price have seen their holdings lose roughly 95% of stated value based on secondary market quotes near $0.42 per share by mid-2025. The REIT-level Chapter 11 filing creates a real risk that common equity could be wiped out entirely.
Investors who relied on broker-dealer recommendations to purchase Silver Star shares may have grounds to pursue recovery. The Financial Industry Regulatory Authority (FINRA) requires broker-dealers to perform reasonable due diligence on non-traded REIT offerings and to ensure recommendations are suitable for the investor’s financial profile and risk tolerance. Non-traded REITs carry specific risks including illiquidity, limited transparency, and potential conflicts of interest that must be disclosed.
Broker-dealers that failed to adequately investigate Silver Star’s financial condition, debt levels, or the suitability of the investment for retail clients may face liability. Similarly, firms that collected high commissions while downplaying risks may be accountable for resulting losses.
How we can help
Haselkorn & Thibaut, P.A., operating as Investment Fraud Lawyers, has helped investors recover losses from failed REITs, non-traded products, and unsuitable brokerage recommendations. Our partners are former Wall Street defense attorneys who use that insider knowledge to fight for individual investors.
If you invested in Silver Star Properties REIT and suffered losses, contact our firm for a confidential consultation. Call 1-888-885-7162 or visit our website. We handle cases on a contingency basis: no recovery, no fee.
The information provided here is for educational purposes and does not constitute legal advice. Each case is unique, and outcomes depend on specific facts and circumstances. Past results do not guarantee future outcomes.