In one more indication of deep problems, Tony Thompson's nontraded real estate investment trust said Tuesday it was cutting its dividend.
Because of loan compliance issues with its lenders, TNP Strategic Retail Trust Inc., will not pay a dividend in the first quarter of 2013 and may not pay any type of distribution for 2013, the company said Tuesday in a filing with the Securities and Exchange Commission.
Short-term liquidity issues, including an accelerated maturity date of loans, lender fees and the cost of potential litigation with lenders, are the cause of the cut in distributions for the REIT, which has $272 million in assets.
“Although our board of directors will continue to evaluate our ability to resume paying distributions, given the uncertainties noted, stockholders should not assume a resumption of distribution payments during the remained of 2013,” the company said in the SEC filing.
Mr. Thompson, a longtime real estate dealmaker in the independent broker-dealer marketplace, did not return a phone call or e-mail to comment.
Meanwhile, one of the REIT's lenders, Torchlight Investors LLC, is blocking the REIT from naming a new adviser, Glenborough LLC. The REIT, which is negotiating a forbearance agreement with its revolving credit facility, has about $67.2 million in debt to two lenders, according to the SEC filing.
Just a few months ago, Mr. Thompson was touting TNP's rising value.
In January, Mr. Thompson sent a note to broker-dealers promoting the REIT, stating that its net asset value was 6% higher than its share price. Such a discrepancy between a REIT's selling price and its NAV could be dilutive to shareholders and provide brokers with a strong sales pitch.
Mr. Thompson, who launched the REIT at the nadir of the real estate crash in 2009, is facing numerous troubles. In 2008 and 2009, Mr. Thompson raised money for his newest venture, Thompson National Properties LLC but last year, the company defaulted on $21.5 million of the private notes from that offering. Last month, the Financial Industry Regulatory Authority Inc. said it was investigating Mr. Thompson and his broker-dealer, TNP Securities LLC, for failing to turn over documents, thus potentially breaking Finra rules.