SAN MATEO, CA -- (Marketwired) -- 08/28/13 -- Strategic Realty Trust, Inc. (formerly known as TNP Strategic Retail Trust ("Company" or "Strategic")) responds to claims made by Thompson National Properties, LLC (collectively "Thompson"). Thompson affiliates were recently terminated as Strategic's advisor and property manager. In general Thompson's claims have no merit and many cases are complete fabrications.
Thompson Claim: "the Special Committee of the Board of Directors of Company... facilitated the takeover of the company by Glenborough, LLC without shareholder approval...."
Strategic Response: The Company's Charter requires that Board of Directors contain a majority of Independent Directors and specially charges the Independent Directors to select, approve and negotiate the contract with the advisor on behalf of the shareholders and does not call for shareholders to approve any change of advisor. This Charter was prepared under the control and supervision of Thompson.
The Independent Directors formed a Special Committee in August of 2012 for the protection of shareholders after
•Thompson was found to be paying fees to itself that had not been earned. •Thompson defaulted on certain of their corporate debt obligations •Thompson's significant corporate losses and negative net worth grew to over $40 million
Thompson Claim: "The Special Committee hired Glenborough as a consultant in December 2012.....to do the same work Thompson was performing. In connection with the hiring of Glenborough, the Special Committee stripped Thompson of effectively all of its authority to advise and manage the Company."
Strategic Response: The Special Committee was acting fully within its authority under the Company Charter to protect shareholders and to commence a transition to a new advisor. The contract with Glenborough was to commence the transition to the new advisory agreement. During the consulting period Glenborough performed many services for the Company including but not limited to, property and corporate accounting, SEC reporting, asset management and working with the Company's lenders to secure consent for the change of the advisor and change of the property manager. The total fees (net of rebates) earned by Glenborough for the six months ended June 2013 were market based and were less than the total fees and overhead charges by Thompson for the same period in 2012.
Thompson Claim: The sale to Glenborough of a 12% interest in SRT Holdings (a Company subsidiary that holds five properties subject to the Key Bank debt) was at a below-market price.
Strategic Response: The price for the investment was based on an arm's-length negotiation between the Special Committee and Glenborough. Thompson's estimate of value for three of the five properties was essentially the same as the negotiated price. Thompson's estimate of value for the other two properties was based on dated appraisals or discounted cash flow valuations that contained lofty leasing projections endorsed by Thompson that have not been realized under Thompson's property management team.
The Special Committee unanimously approved the transaction with Glenborough as fair, reasonable and on terms no worse than could reasonably be expected from a third party. No fairness opinion was required. All closing costs were paid by the joint venture as is customary. The Company can buy out Glenborough at any time and based on the formula the buyout price today would likely be the price paid by Glenborough plus a prorated 7% annual return. There is no windfall as Thompson suggests. Given that the Key Bank debt associated with the five properties was in default and is subject to a forbearance agreement, most if not all third parties would have demanded a much higher preferred return. Further, the holder of that debt, KeyBank, approved the transaction, the appointment of Glenborough as the managing member of that entity, and the replacement of Thompson as property manager for those assets.
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