Silver Star CEO Continues to Reject Hartman’s Claims Amidst Ongoing Feud
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The ongoing dispute 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 its former CEO, Allen R. Hartman, further escalated recently as the company’s current CEO, Gerald Haddock, issued a letter and video directed at shareholders, refuting recent criticisms from Hartman and defending the company’s shift towards self-storage.
Haddock’s latest salvo in the ongoing war of words, is a direct response to Hartman’s own letter, dated August 15, in which Hartman seems to restate several of his previous claims. As previously reported by The DI Wire, Hartman has accused Silver Star and its board of directors of denying shareholders’ calls for liquidity, putting shareholder capital at risk by pivoting to self-storage, and paying themselves outsized compensation, among other accusations.
Haddock vehemently disagrees with all of Hartman’s claims. Haddock states that shareholders were not ignored, and that the board, using its “business judgment,” transitioned into self-storage due to the potential for greater returns in the more robust asset class. Haddock also says that Silver Star’s strategy of methodically selling assets allows investors the opportunity for long-term tax deferral under IRS 1031 treatment. In the similar video, Haddock reports that the company has sold 28 of its 47 legacy assets for gross sales of approximately $340 million dollars, proceeds from which have been used to pay down debt left by Hartman.
Furthermore, Haddock defends his current salary of $300,000 annually as being concurrent with, or possibly even below, current market rates, and that it was, according to Haddock, Hartman who was using the company as his personal “piggy bank,” paying himself “unauthorized ‘distributions.’” Along the same lines, Haddock cited his experience in launching multiple IPOs, while Hartman often failed to deliver on his promise of an IPO.
Haddock concludes his letter by acknowledging declining occupancy rates in the company’s legacy portfolio, before again blaming the issues on Hartman’s “poor leadership and mismanagement” and finally reiterating his belief in Silver Star’s position and future.
Haddock’s letter will almost certainly receive a response from Hartman, as has been the case in the feud which has been ongoing since 2023. In March 2023, Silver Star removed Hartman as executive chairman while investigating “issues related to certain violations of fiduciary and other duties to the [c]ompany by Mr. Hartman.” The company would go on to file a lawsuit against Hartman in December 2023. Hartman would initiate his own legal proceedings and then fire back at “Silver Star’s rogue board of directors,” accusing them of ignoring Silver Star’s charter.
In January 2024, Silver Star’s executive committee alleged that Hartman was seeking “personal control” of the company. Hartman quickly responded with a shareholder address video, doubling down on his previous claims. In July 2024, Silver Star overcame a major litigation hurdle when the Circuit Court for Baltimore City signed an order denying Hartman’s motion for partial summary judgment, which sought to liquidate Silver Star. Silver Star has previously stated that it does not expect the issues with Hartman to be fully resolved until 2025.
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