HOUSTON, March 28,
2024 /PRNewswire/ -- Silver Star Properties REIT,
Inc. ("Silver Star" or the "Company") is a self-managed real estate
investment trust that is currently repositioning in an orderly
manner into the self-storage asset class. Hartman SPE, LLC (the
"SPE"), an indirect subsidiary, which owns legacy office, retail,
and industrial properties, and lenders Benefit Street Partners
("BSP") and RMWC ("RWMC") are pleased to announce that they
together successfully closed a $135
million exit facility (the "Exit Facility") on March 27, 2024, allowing SPE to go effective on
its Chapter 11 Plan of Reorganization today, March 28, 2024. BSP provided $120 million with RMWC providing $15 million of the Exit Facility.
Following intensive negotiations, the Company, BSP and RMWC have
solidified their commitment to working together through this Exit
Facility to achieve shared objectives. The closing continues and
solidifies the pivot strategy currently in progress for Silver
Star. Gerald Haddock, Executive
Chairman of the Executive Committee of Silver Star, stated, "We are
pleased to have finalized this agreement. The Exit Facility
represents a giant step forward for the Company, and we are
thankful to BSP and RMWC for their help in this regard."
On February 26, 2024, the
Bankruptcy Court entered an order confirming SPE's Chapter 11 Plan
of Reorganization. The Exit Facility will fund the Chapter 11 Plan,
which provides for payment in full to all unsecured creditors and
tenants and the full reinstatement of all interests without
impairment.
The closing of the Exit Facility paves the way for the Company
to complete their shift into to the self-storage sector where
Silver Star expects to have approximately $370 million in available funds, assuming a
loan-to-value ratio of 50%, for the Company's investment strategy.
This move comes as part of the Company's commitment to adapt to
evolving market dynamics, capitalizing on emerging opportunities,
and delivering 1031 tax savings from the sale of its assets to its
shareholders. Haddock stated, "Only by pivoting away from a pure
liquidation strategy toward self-storage investment will our
shareholders be able to realize on the 1031 tax savings. Without
this shift in strategy, the benefits of the tax savings will be
lost to our investors." The Company will continue in its ongoing
efforts to implement additional cost cutting initiatives and
strategies for the benefit of all constituents.
Silver Star's management has estimated the Company's net asset
value ("NAV") as of December 31, 2023
to be $2.70 per common share and OP
unit. The estimated NAV is subject to approval by the Company's
Board of Directors.
As of December 31, 2023, the Company owned 33 commercial
properties comprising approximately 4.6 million square feet located
in San Antonio, Richardson and Houston, Texas; including a 97.53% interest in
an affiliate special purpose entity which owns office, retail and
light industrial properties in Texas, plus two self-storage facilities
located in Houston, Texas and one
retail pad site development.
In determining the estimated NAV per common share and OP unit,
management relied upon information contained in a valuation report
(the "Valuation Report") prepared by LaPorte CPAs and Business
Advisors (the "Valuation Expert") engaged by management. To
calculate the estimated NAV per share, management used a
methodology pursuant to the provisions of Practice Guideline
2013-01, Valuations of Publicly Registered Non-Listed
REITs, issued by the Institute for Portfolio Alternatives in
April 2013. The Valuation Expert did not determine the NAV of
the Company's common shares.
The estimated NAV per share/OP unit is based on (x) the
estimated value of the Company's assets less the estimated value of
the Company's liabilities divided by (y) the number of outstanding
shares of the Company's common stock, and OP units all as of
December 31, 2023, after giving effect to common shares issued
in connection with the redemption of rights under the Company's
Rights Plan.
The estimated NAV per share/OP unit is based upon 36,625,710
shares of the Company's common stock and OP units issued and
outstanding as of December 31, 2023 and adjusting for the
Flip-In Event effective January 13, 2024 resulting in
issuance of approximately 31,315,910 shares of common stock.
Although the estimated NAV has been developed as a measure of value
as of a specific time, December 31, 2023, the estimated NAV
does not reflect a liquidity discount for the fact that the shares
are not currently traded on a national securities exchange or the
limited nature in which a shareholder may redeem shares under the
Company's share redemption program (if at all), a discount for the
non-assumability or prepayment obligations associated with certain
of the Company's debt, or a discount for the Company's corporate
level overhead.
Contact:
Investor and Media Relations
press@hi-reit.com
1-877-734-8876
Forward-Looking Statements: This press
release contains certain forward-looking statements. Because such
statements include risks, uncertainties, and contingencies, actual
results may differ materially from those expressed or implied by
such forward-looking statements, and you should not place undue
reliance on any such statements. Several important factors could
cause actual results to differ materially from the forward-looking
statements contained in this material. Forward-looking statements
in this press release speak only as of the date on which such
statements were made, and the company undertakes no obligation to
update any such statements that may become untrue because of
subsequent events. Such forward-looking statements are subject to
the safe harbor protection for forward-looking statements contained
in the Private Securities Litigation Reform Act of 1995.
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content:https://www.prnewswire.com/news-releases/hartman-spe-and-benefit-street-partners-close-on-exit-facility-allowing-hartman-spe-to-go-effective-on-chapter-11-plan-302102207.html
SOURCE Silver Star Properties REIT, Inc.