Silver Star Closes $135M Loan Package in Shift to Self Storage
Silver Star Properties REIT has borrowed $135 million to pay off creditors and liquidate a 4.2 million-square-foot legacy portfolio with office, retail and industrial assets as it repositions solely into the self storage sector.
Hartman SPE LLC, an indirect subsidiary which owns the legacy office, retail and industrial properties, and lenders Benefit Street Partners and RMWC closed on the exit facility on March 27th. The closing allows Hartman SPE to fund its Chapter 11 Plan of Reorganization, which was approved by the U.S. Bankruptcy Court for the District of Delaware on Feb. 26. The Chapter 11 plan provides for payment in full to all unsecured creditors and tenants and the full reinstatement of all interests without impairment. Hartman SPE filed for Chapter 11 bankruptcy in September.
BSP, a New York-based credit-focused alternative asset manager, provided a $120 million two-year floating-rate senior loan with no extension options. RMWC, a New York-based boutique private lender, provided a $15 million co-terminus second mortgage loan.
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The portfolio totals 27 properties across multiple asset classes through the Dallas, Houston and San Antonio MSAs. There are 24 office assets in the portfolio as well as two retail properties and one industrial property. When all the sales are completed, Silver Star expects to have approximately $370 million in available funds.
A giant step forward
For Silver Star, which announced its plan to shift its investment focus to self storage last April, finalizing the loans was a major move.
Silver Star began that pivot with the April 2023 acquisition of Southern Star Self-Storage Investment Co., according to Multi-Housing News, the sister publication of Commercial Property Executive. Southern Star Self Storage owned a portfolio of nine self-storage properties totaling 2,526 units and 321,291 rentable square feet. At the time of acquisition, the company had two assets under contract, adding 208,220 rentable square feet to its portfolio. In December, MHN reported Silver Star had acquired two self-storage facilities in Houston totaling 115,126 rentable square feet from Harrison Street Real Estate Capital.
At the beginning of 2023, Houston-based Silver Star owned more than 40 office, retail and industrial properties with about 7 million square feet of space. By Dec. 31, the company owned 33 commercial properties comprising about 4.6 million square feet.
The company has been selling properties since last year, including Cooper Street Plaza, a four-building, 127,696-square-foor retail center in Arlington, Texas, in July through a 1031 tax-free exchange. It also sold several office properties including the 170,000-square-foot Westway One in Irving, Texas; the 139,600-square-foot Bent Tree Green, the 10-story North Central Plaza I and the 15-story Gateway Tower, all in North Dallas, according to The Real Deal.
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