More Shots Fired in Silver Star/Hartman War; More Employees Quit Silver Star
With the latest shot in the ongoing battle between Silver Star Properties REIT, a publicly registered non-traded real estate investment trust formerly known as Hartman Short Term Income Properties XX Inc., and Allen Hartman, Silver Star’s former CEO, Silver Star responded to Hartman’s most recent allegations.
In a recent message to stockholders, Silver Star’s executive committee – comprised of board members Gerald Haddock, Jack Tompkins, and James Still – claimed that Hartman was seeking “personal control” of Silver Star and was attempting “to avoid paying for the damages that he has caused…” The committee also stated that “no one has been more responsible for the destruction of company value than Hartman…”
As recently reported by The DI Wire, Silver Star is seeking stockholder consent to re-elect three incumbent directors to the board of directors and thereafter reduce the number of directors from four to three, effectively removing Hartman from the board. The company is also planning to shift its focus to self-storage.
The Hartman Group, which includes Hartman along with several of his relatives and other affiliated parties, has encouraged Silver Star shareholders to not vote in the company’s consent solicitation, citing several reasons, including, according to Hartman’s accusations, ignoring Hartman’s demands for liquidation and placing shareholder capital at risk.
In the recent letter, Silver Star stated that they had not ignored Hartman’s demands for liquidation and that they believe “without question” that all the requirements of its charter have been satisfied. Silver Star reported that it worked actively with Raymond James, a nationally recognized independent financial advisor, and concluded shareholders would receive much greater value with a shift into self-storage assets versus liquidation.
Additionally, Silver Star’s committee accused Hartman of “heresy” in regards to board elections. Silver Star says that Hartman had not initiated nor permitted any board elections since 2013. They also blamed him for the drop in the company’s NAV per share and it’s recent Chapter 11 bankruptcy.
The report also claimed that while Hartman received no direct salary during his time with company, he did receive a substantial position in Silver Star stock, which has made him the largest shareholder. Silver Star also stated that Hartman received profits as the owner of Silver Star’s advisor and manager.
According to Hartman, he and his affiliates own 13.2% of the company’s common stock, making them the largest shareholder, while the remaining directors collectively own less than 0.25% of outstanding shares.
The war between the Hartman Group and Silver Star has been going on throughout 2023, and it seems poised to continue well into the new year.
In March, Hartman was removed as Silver Star’s executive chairman. Then, the Hartman Group initiated legal proceedings against the company for the alleged breach of Maryland law by not holding an annual stockholder meeting. Silver Star followed up with a lawsuit of its own.
In related news, Michael Racusin announced his resignation as Silver Star’s senior vice president, general counsel and corporate secretary, effective as of January 5th, 2024. The company did not announce his successor.
This follows a pattern of company resignations for Silver Star. CEO Mark Torok, resigned in May, just one month after reaching a long-term employment agreement with Silver Star. His replacement, Steve Treadwell was hired in August. Just two months later, Treadwell resigned.
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