TNP Strategic Retail Trust won't declare distribution amid loan issues

By Caroline Salls

Pittsburgh, March 19 - TNP Strategic Retail Trust, Inc. will not declare a distribution for the first quarter in connection with loan compliance issues, including the likelihood of an accelerated maturity date on its revolving credit facility and the cost of possible litigation tied to its DOF IV REIT Holdings, LLC loan agreement, according to an 8-K filed Tuesday with the Securities and Exchange Commission.

TNP said it may not be in compliance with some provisions related to its $45 million Key Bank NA revolving credit facility and the DOF IV loan agreement, which is secured by the company's Lahaina Gateway shopping center. The total debt under both loans is $67.2 million.

The company said DOF IV lender Torchlight has acknowledging that some previously disclosed defaults have been cured. However, TNP said Torchlight's approval is required under the terms of the DOF loan in connection with the company's plan to appoint an affiliate of Glenborough, LLC as its adviser and as the property manager for the Lahaina Gateway shopping center.

According to the 8-K, Torchlight's response to date has been to condition its approval on TNP agreeing to "commercially unreasonable amendments" to the DOF loan.

The company said it may have to enter litigation with Torchlight and/or dispose of its interest in the Lahaina Gateway shopping center rather than permit Torchlight to prevent the proper management of the company.

In addition, TNP said it is negotiating a forbearance in connection with the revolver.

The company said it expects an agreement to be finalized that involves an accelerated payment date and includes more severe restrictions on its ability to pay distributions until it has repaid the amount owed under the facility.

The revolver lender has approved the proposed adviser and property manager changes, the 8-K said.

TNP said its short-term liquidity needs are difficult to assess because of the loan compliance issues, leaving it unable to declare a first-quarter distribution.

Although its board of directors will continue to evaluate its ability to resume paying distributions, the company said stockholders should not assume a resumption of distribution payments during the rest of 2013, given the loan compliance uncertainties.

TNP is a Newport Beach, Calif., retail properties buyer.

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