Interest payments are suspended on private placement

Tony Thompson, one of the best-known real estate investors in the independent broker-dealer industry, faces a hurdle in his latest business venture.

That venture, Thompson National Properties LLC, has suspended interest payments to investors in a private placement designed to raise capital for the firm.

Clients have been informed that the private placement — called the TNP 12 Percent Notes Program LLC — will halt interest payments with the intention of restarting payments on the notes next year, according to Joe Miller, chief executive of Independent Financial Group LLC, an independent broker-dealer.

GENERAL OBLIGATIONS

The TNP 12 Percent Notes Program raised $21.5 million from 418 investors in 2008 and 2009, according to a filing with the Securities and Exchange Commission.

The purpose of the notes program was to meet general obligations of the sponsor, Thompson National Properties, Mr. Miller said.

A spokeswoman for Thompson National Properties, Jill Swartz, said last Tuesday that Mr. Thompson wasn't available for an interview.

But in an e-mail, she wrote that TNP has taken steps to reduce overhead costs and increase revenue.

These steps will strengthen the company's finances and benefit thousands of investors, Ms. Swartz wrote.

“One of these steps was to defer payments related to the TNP 12% Notes program through the end of 2012,” she wrote. “We fully intend to pay investors in this program all remaining interest and principal on or prior to the maturity date of June 10, 2013.”

Mr. Thompson, chief executive of Thompson National Properties, launched his firm in 2008. Earlier, he founded Triple Net Properties LLC, which packaged real estate investments known as tenant-in-common exchanges, which were sold through independent broker-dealers.

A related company, NNN Realty Advisors, merged in 2007 with Grubb & Ellis Co. Burdened by debt, that once-iconic commercial real estate company filed for bankruptcy protection in February and subsequently sold its remaining assets for $30 million.

Since 2008, Thompson National Properties has launched 17 investment programs, the largest being a nontraded real estate investment trust, TNP Strategic Retail Trust. According to a filing with the SEC, the REIT has bought grocery and necessity-anchored retail shopping centers valued at $200 million and raised $91 million from investors.

Note programs typically are linked to real estate, said Bryan Mick, president of Mick & Associates PC LLO, a due-diligence firm.

It is important for broker-dealers to understand the structure of such note programs. Key information includes the value on the assets, whether such deals contain an “equity cushion” — meaning the property value is greater than the amount of money raised — and if the debt service is manageable, Mr. Mick said.

Twenty-two independent broker-dealers had agreements to sell the notes, which required a minimum investment of $50,000, according to the SEC filing. Brokers earned a 7% commission on the sale of the notes, according to the filing.

Ten of the broker-dealers listed as sellers of the notes have shut down, including GunnAllen Financial Inc., Pacific West Securities Inc. and Workman Securities Corp.

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