Ducking default, nontraded REIT sponsor cuts interest payments

Nov 18, 2012 @ 12:01 am

By Bruce Kelly

Thompson National Properties LLC has ducked a default on one of its note programs, but investors will be getting less of a payout than they were promised, the company said. The real estate firm is the sponsor of a nontraded real estate investment trust, TNP Strategic Retail Trust Inc.

In a filing with the Securities and Exchange Commission on Nov. 9, the REIT reported that a majority of note holders in the program voted to modify the terms, moving it out of default.

The TNP 12% Notes Program LLC suspended interest payments to investors in July but said that it intended to restart them next year.

Investors will see “significantly” lower interest payments, however, and the notes' maturity was extended until 2016, according to the SEC filing.

In addition, Thompson National Properties is facing a federal lawsuit in Colorado from two investors in the note program. The investors, Doug and Sheryl Hitchens, filed a complaint in September in U.S. District Court in Colorado alleging damages from the company's breach of a guarantee on the note, failure to pay interest on the note and refusal to redeem the note. In 2008, the couple purchased a note of $100,000 from Thompson.

The investor vote waived “any prior defaults under the note program,” the filing states. Meanwhile, “the interest rate has been significantly reduced.”

Thompson National Properties is the latest venture of Tony Thompson, one of the best-known real estate investors in the independent-broker-dealer industry. He launched the firm in 2008 and is its chief executive. Previously, he founded Triple Net Properties LLC, which packaged real estate investments known as tenant-in-common exchanges, which were sold through independent broker-dealers.

In an e-mail to InvestmentNews, Mr. Thompson did not comment about the changes in the note program but said he believes that the Colorado lawsuit has been or is very close to being resolved.

The TNP 12% Notes Program raised $21.5 million from 418 investors in 2008 and 2009. The purpose of the notes was to meet general obligations of the sponsor.

In July, Thompson National Properties said that it would pay investors the remaining interest and principal on or before the maturity date of June 2013.

Thompson National Properties' largest investment program is its REIT, TNP Strategic Retail Trust, which has assets valued at close to $300 million. Last Tuesday, the REIT said that its board of directors had increased the estimated per-share value of the company's common stock to $10.60 per share as of Nov. 9. Previously, the estimated per-share value had been $10.40 per share.

bkelly@investmentnews.com Twitter: @bdnewsguy

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