NEWS RELEASE
Silver Star Properties Provides Update Regarding Southern Star
HOUSTON – April 30, 2024 – Silver Star Properties REIT, Inc. (“Silver Star” or the “Company”), a self-managed real estate investment trust currently repositioning into the self-storage asset class, announced today that it is providing an update regarding Southern Star Self Storage Investment Company (“Southern Star”), an investment made by Silver Star.
Effective April 15, 2024, monthly distributions to Southern Star sponsored DSTs have been suspended pending the Company’s further examination of the current operations of Southern Star and its sponsored DSTs. Each one of the DSTs was evaluated separately by Southern Star’s management in reaching the decisions that were made, recognizing that all of these decisions were made in the best interests of the respective Southern Star DSTs unit holders.
On April 15, 2024, the Company announced that it is continuing an examination of the current operations of Southern Star. Based on an initial review, and subject to more extensive review and analysis, Southern Star is experiencing operating, economic, declining economic conditions in its area, management difficulties and other difficulties and potential circumstances with respect to the operations of four Southern Star-sponsored Delaware Statutory Trusts (DSTs) that own income-producing self-storage assets. In connection with the Company’s acquisition of Southern Star on May 5, 2023, Southern Star was designed, at the behest of its management, to operate in a largely autonomous manner, notwithstanding the consolidated accounting treatment of its financial results with those of the Company.
The Company is now beginning to take charge of Southern Star’s day-to-day operations by placing David Wheeler, the Company’s President and Chief Operating Officer, in charge of those operations. Gerald Haddock, the Company’s CEO and Executive Chair, and the rest of Silver Star’s management team, together with Mr. Wheeler, will be conducting a strategic review of Southern Star and alternatives to maximize its value going forward. Subject to further review and analysis, the Company intends to consider various alternatives, including the possible sale of Southern Star, the sale of specific assets within individual DSTs and dissolution of the respective trusts, and/or the outsourcing of various aspects of Southern Star’s operations.
Mr. Haddock stated, “As soon as the Company develops information regarding the future direction and strategy for Southern Star, we will update investors as appropriate. Each decision relating to the operations of the DSTs will be made directly and separately for enhancing the best interests of the applicable unit holders of the pertinent DST; while contemporaneously fulfilling duties and responsibilities to all of our constituent interests”
As Silver Star continues its analysis, the goal is to determine the proper course of action for the respective DST unit holders. Under review and consideration is the operational turnaround of ongoing facilities management by Southern Star, reevaluation of outsourcing facilities management to a third party, or the sale of DST properties to the fullest extent practicable in an orderly fashion.
Contact:
Investor and Media Relations
1-877-734-8876
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Forward-Looking Statements: This press release contains a number of forward-looking statements. Because such statements include a number of risks, uncertainties, and contingencies, actual results may differ materially from those expressed or implied by such forward-looking statements, and investors should not place undue reliance on any such statements. Forward-looking statements can often be identified by words such as “continues,” “can,” expect,” “intend,” “will,” “anticipate,” “estimate,” “may,” “plan,” “believe” and similar expressions, and variations or negatives of these words. These forward-looking statements include, but are not limited to, statements regarding the Company’s search for a new auditor and its hope that a new auditor can be engaged in the near future and that its annual report on Form 10-K can be completed and publicly filed; the continuation of the examination of the current operations of Southern Star; the Company’s intent to consider various alternatives, including the possible sale of Southern Star, the sale of specific assets within individual DSTs and dissolution of the respective trusts, and/or the outsourcing of various aspects of Southern Star’s operations; the Company’s plan to update investors with respect to the status of Southern Star as appropriate; the Company’s expectations and beliefs regarding the Hartman litigation; the timing and ultimate resolution of the various litigation, fight for corporate control and other matters involving Hartman; the continued execution of the Company’s strategy of pivoting into the self-storage space; the Company’s continual evaluation of its legacy assets in order to maximize shareholder value; the Company’s policy to not dispose of any asset for less than its maximum determinable value and to maximize earnings and value; the implications to the Company of the assignment of an OTC trading symbol for its common stock; whether the Company may be subject to certain FINRA rules; any actions the Company may need to take to comply with any FINRA rules; the Company’s continual evaluation of various options to provide greater shareholder liquidity, including its intention to seek listing of its common stock on a securities exchange or admission to over-the-counter trading, a public offering, a listing of the common stock on an exchange or admission to OTC trading without a public offering, and merger and/or acquisition opportunities; the Company’s belief that further legal action could ensue to unwind the issuance of common shares under the Rights Plan if Hartman prevails in his efforts to set aside or invalidate the Rights Plan or to cause the dilutive issuance of additional common shares to Hartman, as well as any further action Hartman may take to prevent other Company shareholders from receiving benefits under the Rights Plan; and the timing and/or ultimate outcome of the SEC investigation. None of the foregoing are guarantees or assurances of future outcomes or results and all are subject to numerous risks, uncertainties and assumptions that could cause actual results to differ materially from those expressed in any forward-looking statement, including those described above and in our filings with the Securities and Exchange Commission, particularly those described in our most recent Annual Report on Form 10-K and our Quarterly Reports on Form 10-Q. A number of important factors could cause actual results to differ materially from the forward-looking statements contained in this material. Forward-looking statements in this press release speak only as of the date on which such statements were made, and the Company undertakes no obligation to update any such statements that may become untrue because of subsequent events. Such forward-looking statements are subject to the safe harbor protection for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.