Silver Star Properties offloaded a Houston office building as part of its effort to liquidate most of its legacy assets and pivot to self-storage.
The Houston-based investor — which went through bankruptcy after former CEO Alan Hartman was ousted for alleged mismanagement — sold 3100 Timmons Lane for about $10.5 million, CEO Gerald Haddock said in a recorded statement for investors.
The five-story building spans 136,000 square feet, making the sale price just over $77 per square foot.
The building was constructed in 1975 and renovated in 2019. It’s located in the city’s northwest quadrant, just south of the city’s prestigious River Oaks neighborhood. The location provides easy access to Interstate 69 and Loop 610.
Hartman SPE, a Silver Star subsidiary, purchased the property in 2018.
News of the sale was part of an update Haddock provided on Sept. 2 about the firm’s strategy.
He said Silver Star has sold 28 of its 47 legacy assets and intends to sell another 11 before the end of the year. The proceeds of these sales were used to pay down $340 million in debt, Haddock said.
In addition, the firm is considering retaining its legacy properties worth between $74 and $85 million, including four in Houston, one in Dallas and one in San Antonio.
It’s also beginning to buy self-storage properties. So far, Silver Star has 13, totalling more than 550,000 square feet.
The firm is pivoting to self-storage to address financial woes allegedly caused by Hartman. Previously, it had a portfolio of office, industrial and retail properties.
The Silver Star board fired Hartman amid allegations that he borrowed millions in unauthorized debt and accused him of nepotism involving his daughter Margaret Hartman. This alleged mismanagement culminated in the firm defaulting on a $259 million CMBS loan from Goldman Sachs tied to 39 properties last October, the board claims.
Hartman has denied the allegations.
The SEC opened an inquiry into the firm in February. The national office market may have already hit bottom, as high-interest rates and remote-work trends have taken a toll over the past few years. While real estate prices are not typically disclosed in Texas, $77 per square foot is near some of the lowest prices seen in Chicago, for example, where local firm R2 paid $60 million for 150 North Michigan Avenue in January.
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