Silver Star Properties’ CEO Resigns | May Recover Investor Losses

Silver Star Properties’ CEO Resigns | Goodman & Nekvasil P.A., May Recover Investor Losses

Silver Star Properties Investigation

Silver Star Properties’ CEO resigns after just seven months, according to FactRight, a due diligence site for alternative investments.

Mark Torok was reportedly appointed as CEO one month after Silver Star closed on the purchase of the executive’s former firm, Southern Star Self-Storage.

Torok reportedly sign a three-year employment agreement, which included a base salary of $550,000 per year and approximately $1.3 million performance units per year. The company has appointed an interim CEO until they can fill the position permanently.  

Silver Star Properties REIT Inc changed its name from Hartman Short term Properties XX, in an attempt at “maximizing shareholder value,” as we previously reported.  

Silver Star reportedly acquired Southern Star Self-Storage Investment Company in April 2023 for $3 million in cash and 301,659 restricted stock units.  

Silver Star Properties Suspended Distributions

Silver Star Properties REIT suspended distributions to common stockholders to “focus on strengthening its balance sheet and preserving cash.” The company reported at the time it would like to swap out certain floating rate debts for fixed rate debts.   

In a Form 10-K  for the period ending March 31, 2022, the company expressed doubt in its ability to continue as a “going concern.” 

Silver Star Properties reportedly owns a portfolio of 44 office, retail and industrial properties located primarily in the Houston and San Antonio. The company recently reported a NAV per share of $6.25 as of the fourth quarter of 2022. The original offering price was $10 per share. Office REITs are facing difficulty in 2023 due to the ever-increasing interest rates and lower occupancy rates post-pandemic.      

Silver Star Properties and the Risks of Non-traded REITs   

Many investors are not fully aware of the problems and risks associated with illiquid, high risk, non-traded REITs before purchasing them.  

Real estate investment trusts (REITs) are complex and inherently risky products. Compared to traditional investments, such as stocks, bonds and mutual funds, REITs are significantly more complex and often better suited for sophisticated and institutional investors.  

Liquidity Issues  

Non-traded Real Estate Investment Trusts (REITs) can face several liquidity issues due to their unique characteristics and structure. They don’t trade on a public exchange like traditional stocks. As a result, there is no established secondary market for these investments, making it difficult for investors to sell their shares before the REIT’s liquidation event, which typically occurs after several years.  

Another problem often associated with REIT recommendations is the high sales commissions brokers typically earn for selling them. Brokers have an obligation to make investment recommendations that are consistent with their clients risk tolerance, net worth, investment objectives and experience in the market.  

Unfortunately, in many cases, the high sales commission may influence unsuitable investment recommendations.  

Broker Due Diligence  

Broker dealers are required to perform adequate due diligence on any investment they recommend and to ensure that all recommendations are suitable for the investor. Firms that fail to do so may be held responsible for any losses in a FINRA arbitration claim. 

If you believe that the investments may have been unsuitable or otherwise improper for you, we would like to discuss the possibility of your retaining our firm to represent you in an arbitration action.

There is no charge for an evaluation of your case. We handle our cases on a contingency fee basis. If we don’t recover money for you, we charge no attorney’s fee.

Goodman & Nekvasil, P.A. has recovered more than $400 million on behalf of victimized investors. If you lost money on investments in unsuitable investments and would like your case evaluated by a securities attorney, please contact us.

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