Silver Star pays $27M for Delray Beach self-storage facility as part of company-wide pivot

Silver Star Properties paid $26.5 million for a Delray Beach self-storage facility as part of a company reorganization.

Silver Star, led by co-CEOs David Wheeler and Gerald Haddock, acquired a two-building complex leased to Public Storage at 14810 Hagen Ranch Road, records and real estate database Vizzda show.  The buyer obtained a $15.5 million loan that matures in 2026 from Franklin BSP Trust. 

The embattled Houston-based Real Estate Investment Trust, or REIT, has been shedding shopping centers and office buildings in recent months as it pivots to only self-storage and single tenant properties. The Delray Beach site is the fourth self-storage facility Silver Star has acquired since the REIT announced its pivot strategy earlier this year, according to a press release. 

The seller, a joint venture between People’s Trust Insurance and JWR Construction Services, built the Public Storage-leased complex with 907 units in 2020, two years after paying $1.9 million for the 3.3-acre site, records show. 

This month, Silver Star sold a Dallas shopping center for $40.5 million, and in January sold an office building in Richardson, Texas, for $6.6 million. Silver Star has reduced significant chunks of its 7 million-square-foot commercial portfolio across the U.S. since it emerged from Chapter 11 bankruptcy last year. 

In February, the U.S. Securities and Exchange Commission opened an inquiry into Silver Star, and the company is also embroiled in a nasty legal battle with former CEO Alan Hartman. Silver Star terminated Hartman following allegations that he mismanaged the company, including taking out loans without approval from the board of directors. 

The Palm Beach County industrial submarket has remained flat year-over-year, according to a recent JLL report. In the second quarter, the median asking rent hit $14.70 per square foot, a slight increase compared to $14.07 a square foot during the same period of last year. The vacancy rate rose slightly to 3.9 percent in the second quarter, compared to 3.7 percent during the same period of last year.