In a twist of financial turmoil, Texas-headquartered real estate investment trust subsidiary Hartman SPE LLC has sought refuge under Chapter 11 protection in Delaware. This move comes as the company grapples with a staggering $217 million in secured debt, driven by a contentious ownership dispute that has cast a cloud of uncertainty over its vast property portfolio.
A Cloud Over Hartman’s Holdings
The storm began when a legal dispute erupted over a portion of Hartman’s real estate empire, triggered by a purported 2.47% minority member and company co-founder. This dispute, likened to an unexpected tempest, has disrupted the company’s efforts to raise much-needed cash through property sales. These funds were intended to cover a looming default and refinance the struggling business.
David Wheeler, the company manager, revealed that the minority member’s actions not only shook the confidence of title companies and potential buyers but also inflicted substantial legal fees on the debtor. Wheeler emphasized that these actions were particularly baffling as they appeared unrelated to the ownership of the contested properties.
Hartman $217M Debt : Debt Looms Large
Adding to the tumult, Hartman SPE received a distressing default notice last year on a hefty $259 million term loan provided by Goldman Sachs Mortgage, set to mature on October 9th. The Chapter 11 filing is seen as the lifeboat to clear the remaining $217 million mortgage debt and facilitate a transition from retail, office, and industrial properties to self-storage assets.
Hartman $217M Debt :Dueling Narratives
In this legal saga, Texas businessman Allen R. Hartman, founder of the debtor’s predecessors, presented a starkly different narrative. He accused the debtor’s indirect parent, Silver Star Properties, of excluding him from the business he once led.
