Silver Star Properties REIT, a publicly registered non-traded real estate investment trust formerly known as Hartman Short Term Income Properties XX Inc., recently issued an update to its shareholders concerning a potential disruption in custodial services and a revision to its net asset value.
According to the REIT, Charles Schwab has informed shareholders and their financial advisers that it will cease to act as custodian for Silver Star shares held within 401k and IRA accounts starting Dec. 2, 2024. Schwab attributes this decision to Silver Star’s failure to meet specific reporting benchmarks. The REIT cites previous legal hurdles, including “erroneous and improper” Lis Pendens actions filed by Allen R. Hartman, its former chief executive officer, and a subsequent U.S. Securities and Exchange Commission investigation, as contributing factors to the reporting delays. The REIT states that it has emerged from its bankruptcy proceeding, and the SEC has concluded its investigation without further action.
While Silver Star states that it is “working vigorously to complete the reporting requirements,” the reports have not been filed, and, as a consequence, Schwab has been compelled to default the value of Silver Star shares to zero until reporting is brought up to date. The REIT said that it aims to have the matter resolved before the end of the year.
Additionally, Silver Star provided an update on its NAV. Initially, a NAV of $6.25 per share had been approved, as of Dec. 31, 2022. However, a “flip-in” event triggered in early 2024 resulted in the issuance of 31,315,910 new shares.
This event necessitated a revision of the NAV to an estimated $3.36 per share on a pro forma basis. Furthermore, the company’s management recently estimated the NAV as of Dec. 31, 2023, to be $2.70 per share. Silver Star said that this estimate is still pending formal approval from the REIT’s board of directors.
This event is just the latest hurdle for Silver Star in their ongoing feud with former CEO Hartman. Earlier this month, the REIT continued to refute Hartman’s claims and defend its shift toward self-storage. The company has previously stated that it does not expect the issues with Hartman to be fully resolved until 2025.
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