April 30, 2013
In a report recently filed with the Securities and Exchange Commission, TNP Strategic Retail Trust disclosed that it has raised “substantially less than 50%” of the maximum amount it sought to raise in its initial public offering. It also disclosed several events of default in connection with its own financial obligations and those of other TNP-sponsored REITs.
TNP Strategic Retail Trust (“TNP SRT”) terminated its offering earlier this year. In the 10-k filing with the Commission, TNP SRT’s management stated that amount raised was less than TNP expected, and cautioned that “[TNP SRT’s] inability to raise greater proceeds … could increase the risk that [investors] will lose money on [their] investment.”
Further suggesting cash flow problems, TNP SRT disclosed in its 10-k form “a number of events of default” pertaining to a credit facility from a major lender, as well as a letter of default it received from another lender. TNP SRT indicated that it cured the latter default by using proceeds from the sale of a Hawaii property.
Other TNP-sponsored funds, and TNP itself, appear to be facing their own cash flow problems, as detailed in TNP SRT’s most recent 10-k filing:
“Our sponsor has a limited operating history and, since inception, has operated at a significant net loss. … During 2012, three programs sponsored by our sponsor failed to make interest payments on their privately issued notes. In April and May 2012, each of TNP 2008 Participating Notes Program, LLC and TNP Profit Participation Program, LLC failed to timely make monthly interest payments to investors (such payments were subsequently made in May and June 2012, respectively). If these programs (each of which is a subsidiary of our sponsor) continue to fail to timely make the required payments to investors, the programs may be in default pursuant to the terms of such programs and the payment of the outstanding indebtedness on these programs may be accelerated. In addition, during 2012, TNP 12% Notes Program, LLC defaulted on its notes program and suspended all interest payments to investors. However, effective November 7, 2012, the majority of the TNP 12% Notes Program, LLC note holders affirmatively voted to waive any prior defaults and modify certain terms of the notes, including a significant reduction in the interest rate and an extension of the maturity date until June 2016. … We estimated that our sponsor’s liabilities exceeded its assets by approximately $45 million as of September 30, 2012 (the latest available financial information) and that, as the date of this annual report, our sponsor has a negative working capital position.” (emphases supplied)
The entire 10-k filing may be accessed here: TNP Strategic Retail Trust 10-k filing.
Attorneys Rosca and Peiffer are preparing to take action on behalf of investors in TNP-sponsored REITs, against securities broker-dealer firms that may have failed in their duties to adequately vet the TNP products prior to recommending them to their customers. TNP investors are encouraged to contact attorneys Jason Kane or Joe Peiffer for a free consultation at (216) 589-9280.