A retail-focused investment fund run by Irvine-based Thompson National Properties LLC is facing loan troubles, and industry reports suggest it could soon be looking at a sale of some or all of its assets.
The company’s TNP Strategic Retail Trust Inc.—a nontraded real estate investment trust that invests in shopping centers and counted more than $230 million in real estate assets as of September—said last week that it was having trouble complying with terms on a pair of loans that combine for $67 million.
The company said it is “actively negotiating a forbearance agreement” for one of the loans, a $45 million revolving credit facility that it got from Cleveland-based KeyBank National Association in late 2010. The loan is tied to five properties.
The other problem loan, for $29 million, is tied to a shopping center that the trust bought last year in Hawaii. It could lead to litigation with the lender, Torchlight Investors LLC of New York.
Torchlight is attempting to add “commercially unreasonable amendments” to the loan in return for giving Thompson National a go-ahead to enlist a new adviser for the nontraded REIT, according to recent Securities and Exchange Commission filings by TNP Strategic Retail Trust.
The challenges on the two loans have forced the company to halt dividend payments for the nontraded REIT, which has raised about $110 million from investors since its launch in 2009.
“Given the uncertainties (on the loans), stockholders should not assume a resumption of distribution payments during the remainder of 2013,” the company said last week in an SEC filing.
Follow-on Off
Plans to raise another $900 million with a follow-on offering were abandoned earlier this month, according to regulatory filings. The company cited “market conditions” as the reason it opted not to go ahead with that offering.
A report in trade publication Investment News earlier this year suggested that a sale of the nontraded REIT could be forthcoming, although getting a read on its value remains unclear.
Shares of the nontraded REIT cost investors $10 each to buy. The company estimated that the value of those shares was worth $10.60 each as of November, although it also noted that its recent loan issues could affect the value.
TNP Strategic Retail Trust’s portfolio totaled 20 properties as of September, with those buildings running about 2 million square feet. None of the assets are in Orange County.
It is the only nontraded REIT run by Thompson National Properties, which was founded in 2008 by Tony Thompson, the former chairman of Grubb & Ellis Co., which last year was combined with Newmark Knight Frank to form Newmark Grubb Knight Frank.
Thompson National also buys real estate under other investment programs.
Grubb Deal
Thompson made his mark running Santa Ana-based Triple Net Properties LLC, a sponsor of tenant-in-common investment offerings.
An ill-fated merger announced in 2007 between Triple Net’s parent company, NNN Realty Advisors, and then Chicago-based Grubb & Ellis ultimately led to the brokerage’s bankruptcy last year.
Thompson stepped down as chairman of Grubb shortly after the merger with NNN was completed in early 2008; a later attempt to rejoin the company’s board was unsuccessful.
