In re Silver Star Properties REIT (Second Chapter 11 Filing)
Houston non-traded REIT Silver Star Properties filed its second Chapter 11 in four years after a failed office-to-self-storage pivot, with over $65M in guaranteed loans in default.
Houston-based non-traded REIT Silver Star Properties filed its second Chapter 11 petition in four years on May 28, following a failed pivot from office assets to self-storage. Four guaranteed loan agreements totaling over $65M are in default, and a separate $5.75M promissory note on a self-storage property moved to foreclosure on June 2. The filing follows an SEC inquiry and a settled internal fraud/fiduciary-duty suit against the REIT's ousted founder, Allen Hartman, tied to an earlier $259M Goldman Sachs CMBS loan default.
Why it matters: Illustrates how leadership litigation and governance disputes within a REIT can compound loan-covenant distress and precipitate repeat bankruptcy filings. Lenders and boards evaluating distressed CRE borrowers are increasingly treating unresolved founder/fiduciary-duty litigation as an independent credit risk factor, separate from asset-level performance, amid the broader wave of CRE loan maturities.
