In its recently filed quarterly report with the Securities and Exchange Commission, Silver Star Properties REIT Inc., a publicly registered non-traded real estate investment trust formerly known as Hartman Short Term Income Properties XX Inc., included a warning regarding its ability to continue as a going concern.
According to the filing, the company has a $259 million that had an initial maturity date of Oct. 9, 2020. The loan provides for three successive one-year maturity date extensions with have all been executed.
According to the filing, “uncertainty as to the company’s ability to obtain financing to satisfy the existing SASB Loan obligation requires management to conclude, in accordance with guidance provided by ASU 2014-15, that there is a substantial doubt about the company’s ability to continue as a going concern within one year of the issuance date of these consolidated financial statements.”
On October 19, 2022, Silver Star says they received a notice from the loan servicer of the SASB loan in connection with an event of default due to the noncompliance with the loan agreement’s insurance requirements relating to a single property. According to the filing, the event of default was previously waived for the sole purpose of exercising the final one-year extension option to the SASB loan term. The default triggers cash management provisions under the SASB Loan agreement, which was implemented in November 2022.
According to Silver Star, cash management implementation has restricted access to tenant receipts and limited the amount of cash available to meet their operating obligations.
In May, Silver Star also announced that their recently appointed chief executive officer, Mark Torok, resigned.