Silver Star unit Hartman files Chapter 11 plan of reorganization

By Sarah Lizee

Olympia, Wash., Jan. 2 – Silver Star Properties REIT, Inc. indirect subsidiary Hartman SPE, LLC filed a Chapter 11 plan of reorganization and disclosure statement Friday with the U.S. Bankruptcy Court for the District of Delaware.

As of the Sept. 13 petition date, the debtor held title to 35 properties that included office, retail and industrial properties with an estimated value of over $400 million. Since the petition date, the debtors sold seven properties for total gross sales price of about $80.7 million. Sales will continue during the pendency of the Chapter 11 case, Hartman said.

Prior to bankruptcy, the debtor began the process of transitioning its properties from office, retail and industrial assets into self-storage properties. On the effective date, the debtor will transfer its remaining properties to Silver Star CRE, LLC, which is wholly owned by Silver Star Mezzanine Borrower, LLC.

After the effective date, the reorganized debtor will be the sole member of Silver Star Mezzanine Borrower, which will, in turn, be the sole member of Silver Star CRE. Thus, Silver Star Borrower will be the owner of the debtor’s properties remaining on the effective date and will continue to transition those properties into self-storage assets.

Holders of $271.28 million of class 1 prepetition lender secured claims will receive a full recovery under the plan. The claims will be paid at closing with proceeds of an exit facility, which will consist of one or more first-lien senior secured mortgage loans and associated first-priority senior secured mezzanine loans.

Also, the $3.23 million of other secured claims and the $20.12 million of general unsecured claims will be paid in full.

Interests will be reinstated.

The company is seeking a Feb. 7 confirmation hearing.

Silver Star is a self-managed real estate investment trust based in Houston. Hartman SPE filed bankruptcy on Sept. 13 under Chapter 11 case number 23-11452.

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