Tony Thompson exits nontraded REIT business

Noted real estate investor gets $1.07M for shares in disputed REIT, proxy fight ends

Jan 24, 2014 @ 1:30 pm

By Bruce Kelly

Noted real estate investor Tony Thompson is out of the nontraded REIT business.

The nontraded real estate investment trust he launched and controlled until recently, the $270 million Strategic Realty Trust Inc., said Thursday it bought out Mr. Thompson's 133,333 shares of the REIT as part of an agreement to end a proxy battle, which Mr. Thompson and several industry allies launched in October.

At $8 per share, Mr. Thompson will be paid $1.07 million as part of the agreement. He will resign as a director of the REIT and the committee that launched the proxy battle will be dissolved, according to a filing with the Securities and Exchange Commission.

An affiliate of the REIT's adviser, Glenborough, will buy Mr. Thompson's shares, according to the filing.

Those are all Mr. Thompson's shares, said Andrew Batinovich, the REIT's chief executive, who added that the price per share paid doesn't mean that the REIT has a current value of $8 per share.

“The $8 per share is a negotiated transaction price and not necessarily a valuation of the shares,” Mr. Batinovich said. “We felt it was important to take out his shares as part of this transaction. We do intend to get a third party [net asset valuation] after the March quarter closes.” He declined to comment about the REIT's potential valuation.

“We are happy to have this thing behind us,” Mr. Batinovich said. “This allows us to start thinking about the future of the company as opposed to a proxy contest.”

The REIT also will start paying investors a 20-cent-per-share annual distribution, or dividend, starting this month, he said, adding the company's goal is eventually to increase that payment to investors.

Mr. Thompson last year closed his broker-dealer, TNP Securities, and handed in his registration with the Financial Industry Regulatory Authority Inc. He lost control in August of the Strategic Realty Trust when the board removed him as co-CEO and president. Weeks later, he launched the proxy fight.

His lack of any presence in the retail securities industry is a stunning turnaround for Mr. Thompson, who is perhaps best known for a 2007 merger of one of his former holdings, tenant-in-common packager NNN Realty Advisors Inc., with Grubb & Ellis Co. Burdened by debt, that once-iconic commercial real estate company filed for bankruptcy protection in 2012 and then sold its remaining assets for $30 million.

Mr. Thompson did not return a call for comment. In an e-mail to InvestmentNews, he said he would talk next month about the proxy fight.

As part of the agreement to cease the proxy fight, the board of the REIT, formerly dubbed the TNP Strategic Retail Trust Inc., agreed to appoint a Thompson supporter, Todd Spitzer, to the board. He replaces retiring chairman Jack Maier, who will be named chairman emeritus. Mr. Batinovich will resign as CFO of the REIT and be replaced by Terri Garnick, who is a senior vice president at Glenborough.

Mr. Thompson still has a Finra complaint hanging over his head. Last summer, the Financial Industry Regulatory Authority Inc. alleged that he deceived and defrauded investors who bought $50 million in high-yield promissory notes sponsored by Thompson National Properties.

Finra's complaint focuses on the level of disclosure of financial difficulties at Thompson National Properties in the private-placement memoranda, Mr. Thompson's lawyer, Thomas Fehn, said in August. Those difficulties were appropriately disclosed, he said.

“We're going to defend” the complaint, Mr. Fehn said. “It's a matter of opinion what is state-of-the-art disclosure. And we're going to find out.”

“We're taking the position that” financial difficulties at Thompson National Properties were disclosed, he said. “It was artfully done under the circumstances and we'll see where we end up.”

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