10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2013

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from              to             

Commission file number 000-54376

TNP STRATEGIC RETAIL TRUST, INC.

(Exact name of registrant as specified in its charter)

Maryland	90-0413866
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)
4695 MacArthur Court, Suite 1100 Newport Beach, California, 92660	(949) 798-6201
(Address of Principal Executive Offices; Zip Code)	(Registrant’s Telephone Number, Including Area Code)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  ¨    No  x

Indicate by check mark whether the registrant is a large accelerated filed, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer	¨	Accelerated filer	¨
Non-accelerated filer	¨  (Do not check if a smaller reporting company)	Smaller reporting company	x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No   x

As of May 15, 2013, there were 10,969,714 shares of the Registrant’s common stock issued and outstanding.

TNP STRATEGIC RETAIL TRUST, INC.

INDEX

		Page
PART I — FINANCIAL INFORMATION
Item 1.	Financial Statements
	Condensed Consolidated Balance Sheets as of March 31, 2013 and December 31, 2012	2
	Condensed Consolidated Statements of Operations for the three months ended March 31, 2013 and 2012	3
	Condensed Consolidated Statement of Equity for the three months ended March 31, 2013	4
	Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2013 and 2012	5
	Notes to Condensed Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	27
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	41
Item 4.	Controls and Procedures	42
PART II — OTHER INFORMATION
Item 1.	Legal Proceedings	43
Item 1A.	Risk Factors	43
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	43
Item 3.	Defaults Upon Senior Securities	44
Item 4.	Mine Safety Disclosures	44
Item 5.	Other Information	44
Item 6.	Exhibits	44
Signatures		45
EX-10.1
EX-31.1
EX-31.2
EX-31.3
EX-32.1
EX-32.2
EX-32.3

PART I

FINANCIAL INFORMATION

The accompanying condensed consolidated unaudited financial statements as of and for the three months ended March 31, 2013 have been prepared by TNP Strategic Retail Trust, Inc. (the “Company”) pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) regarding interim financial reporting. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements and should be read in conjunction with the audited consolidated financial statements and related notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012, as filed with the SEC on April 1, 2013. The financial statements herein should also be read in conjunction with the notes to the financial statements and Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in this Quarterly Report on Form 10-Q. The results of operations for the three months ended March 31, 2013 are not necessarily indicative of the operating results expected for the full year. The information furnished in the Company’s accompanying condensed consolidated unaudited balance sheets and condensed consolidated unaudited statements of operations, equity, and cash flows reflects all adjustments that are, in management’s opinion, necessary for a fair presentation of the aforementioned financial statements. Such adjustments are of a normal recurring nature.

1

ITEM 1.      FINANCIAL STATEMENTS

TNP STRATEGIC RETAIL TRUST, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

	March 31, 2013			December 31, 2012
ASSETS
Investments in real estate
Land	$	60,937,000		$	61,449,000
Building and improvements		161,177,000			161,703,000
Tenant improvements		11,862,000			11,846,000
		233,976,000			234,998,000
Accumulated depreciation		(9,914,000	)		(7,992,000	)
Investments in real estate, net		224,062,000			227,006,000
Cash and cash equivalents		1,126,000			1,707,000
Restricted cash		5,410,000			4,283,000
Prepaid expenses and other assets, net		1,581,000			1,187,000
Amounts due from affiliates		6,000			1,063,000
Tenant receivables, net		4,516,000			3,180,000
Lease intangibles, net		32,194,000			33,735,000
Assets held for sale		1,223,000			25,771,000
Deferred financing costs, net		3,239,000			3,527,000
TOTAL	$	273,357,000		$	301,459,000
LIABILITIES AND EQUITY LIABILITIES
Notes payable	$	185,323,000		$	190,577,000
Accounts payable and accrued expenses		5,219,000			5,592,000
Amounts due to affiliates		78,000			755,000
Other liabilities		1,805,000			3,303,000
Liabilities held for sale		-			21,277,000
Below market lease intangibles, net		11,548,000			11,828,000
Total liabilities		203,973,000			233,332,000
Commitments and contingencies
EQUITY
Stockholders' equity
Preferred stock, $0.01 par value; 50,000,000 shares authorized, none issued and outstanding		-			-
Common stock, $0.01 par value; 400,000,000 shares authorized, 10,969,714 issued and outstanding at March 31, 2013, 10,893,227 issued and outstanding at December 31, 2012		110,000			109,000
Additional paid-in capital		96,298,000			95,567,000
Accumulated deficit		(29,658,000	)		(30,160,000	)
Total stockholders' equity		66,750,000			65,516,000
Non-controlling interests		2,634,000			2,611,000
Total equity		69,384,000			68,127,000
TOTAL	$	273,357,000		$	301,459,000

See accompanying notes to condensed consolidated financial statements.

2

TNP STRATEGIC RETAIL TRUST, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	Three Months Ended March 31,
	2013			2012
Revenue:
Rental and reimbursements	$	8,039,000		$	3,932,000
Expense:
Operating and maintenance		2,997,000			1,280,000
General and administrative		1,598,000			631,000
Depreciation and amortization		3,182,000			1,750,000
Transaction expenses		51,000			1,900,000
Interest expense		3,669,000			2,789,000
		11,497,000			8,350,000
Loss from continuing operations		(3,458,000	)		(4,418,000	)
Discontinued operations:
Income (loss) from discontinued operations		(197,000	)		53,000
Gain on sale of real estate		4,838,000			-
Income from discontinued operations		4,641,000			53,000
Net income (loss)		1,183,000			(4,365,000	)
Net income (loss) attributable to non-controlling interests		45,000			(212,000	)
Net income (loss) attributable to common stockholders	$	1,138,000		$	(4,153,000	)
Basic earnings (loss) per common share:
Continuing operations	$	(0.31	)	$	(0.62	)
Discontinued operations		0.41			0.01
Net earnings (loss) applicable to common shares	$	0.10		$	(0.61	)
Diluted earnings (loss) per common share:
Continuing operations	$	(0.31	)	$	(0.62	)
Discontinued operations		0.41			0.01
Net earnings (loss) applicable to common shares	$	0.10		$	(0.61	)
Weighted average shares outstanding used to calculate earnings per common share:
Basic		10,935,089			6,797,797
Diluted		11,366,885			6,797,797

See accompanying notes to condensed consolidated financial statements.

3

TNP STRATEGIC RETAIL TRUST, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EQUITY

(Unaudited)

	Number of				Additional			Accumulated			Stockholders'			Non-controlling			Total
	Shares		Par Value		Paid-in Capital			Deficit			Equity			Interests			Equity
BALANCE — December 31, 2012		10,893,227	$	109,000	$	95,567,000		$	(30,160,000	)	$	65,516,000		$	2,611,000		$	68,127,000
Issuance of common shares		50,547		1,000		501,000			-			502,000			-			502,000
Issuance of common units		-		-		(3,000	)		-			(3,000	)		3,000			-
Offering costs		-		-		(28,000	)		-			(28,000	)		-			(28,000	)
Restricted stock grants		-		-		-			-			-			-			-
Deferred stock compensation		-		-		15,000			-			15,000			-			15,000
Issuance of common shares under DRIP		25,940		-		246,000			-			246,000			-			246,000
Distributions		-		-		-			(636,000	)		(636,000	)		(25,000	)		(661,000	)
Net income		-		-		-			1,138,000			1,138,000			45,000			1,183,000
BALANCE — March 31, 2013		10,969,714	$	110,000	$	96,298,000		$	(29,658,000	)	$	66,750,000		$	2,634,000		$	69,384,000

See accompanying notes to condensed consolidated financial statements.

4

TNP STRATEGIC RETAIL TRUST, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Three Months Ended March 31,
	2013			2012
Cash flows from operating activities:					Revised
Net income (loss)	$	1,183,000		$	(4,365,000	)
Income from discontinued operations		4,641,000			53,000
Loss from continuing operations		(3,458,000	)		(4,418,000	)
Adjustments to reconcile loss from continuing operations to net cash (used in) provided by operating activities:
Straight-line rent		(363,000	)		-
Amortization of deferred costs and note payable premium/discount		288,000			854,000
Depreciation and amortization		3,182,000			1,750,000
Amortization of above and below-market leases		138,000			(92,000	)
Bad debt expense		174,000			(5,000	)
Stock-based compensation expense		15,000			13,000
Changes in operating assets and liabilities, net of acquisitions:
Prepaid expenses and other assets		(306,000	)		2,594,000
Tenant receivables		(1,147,000	)		(152,000	)
Deferred financing costs		(257,000	)		495,000
Accounts payable and accrued expenses		(373,000	)		(315,000	)
Amounts due to affiliates		380,000			(449,000	)
Other liabilities		(1,236,000	)		524,000
Net change in restricted cash for operational expenditures		531,000			(702,000	)
Net cash (used in) provided by operating activities - continuing operations		(2,432,000	)		97,000
Net cash provided by operating activities - discontinued operations		575,000			290,000
		(1,857,000	)		387,000
Cash flows from investing activities:
Investments in real estate and real estate lease intangibles		-			(43,980,000	)
Improvements, capital expenditures, and leasing costs		(173,000	)		(38,000	)
Tenant lease incentive		(19,000	)		-
Real estate deposits		-			(1,545,000	)
Net change in restricted cash for capital expenditures		(1,154,000	)		(838,000	)
Net cash used in investing activities - continuing operations		(1,346,000	)		(46,401,000	)
Net cash provided by (used in) investing activities - discontinued operations		9,702,000			(3,251,000	)
		8,356,000			(49,652,000	)
Cash flows from financing activities:
Proceeds from issuance of common stock		502,000			18,956,000
Redemption of common stock		-			(176,000	)
Distributions		(415,000	)		(773,000	)
Payment of offering costs		(28,000	)		(2,289,000	)
Proceeds from notes payable		-			159,037,000
Repayment of notes payable		(4,271,000	)		(123,325,000	)
Payment of loan fees and financing costs		-			(1,287,000	)
Net change in restricted cash for financing activities		(504,000	)		-
Net cash (used in) provided by financing activities - continuing operations		(4,716,000	)		50,143,000
Net cash used in financing activities - discontinued operations		(2,364,000	)		-
		(7,080,000	)		50,143,000
Net increase (decrease) in cash and cash equivalents		(581,000	)		878,000
Cash and cash equivalents – beginning of period		1,707,000			2,052,000
Cash and cash equivalents – end of period	$	1,126,000		$	2,930,000
Supplemental disclosure of non-cash investing and financing activities:
Common units issued in acquisition of real estate	$	-		$	1,371,000
1031 exchange proceeds used in acquisition of real estate	$	-		$	486,000
Mortgage balance assumed on sale of real estate	$	19,717,000		$	-
Deferred organization and offering costs accrued	$	-		$	774,000
Issuance of common stock under DRIP	$	246,000		$	406,000
Cash distributions declared but not paid	$	-		$	293,000
Cash paid for interest	$	3,473,000		$	2,186,000

See accompanying notes to condensed consolidated financial statements.

5

TNP STRATEGIC RETAIL TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2013

(Unaudited)

1. ORGANIZATION AND BUSINESS

TNP Strategic Retail Trust, Inc. (the “Company”) was formed on September 18, 2008 as a Maryland corporation. The Company believes it qualifies as a real estate investment trust (“REIT”) under the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), and has elected REIT status beginning with the taxable year ended December 31, 2009, the year in which the Company began material operations. The Company was initially capitalized by the sale of shares of common stock to Thompson National Properties, LLC (the “Sponsor”) on October 16, 2008.

On November 4, 2008, the Company filed a registration statement on Form S-11 with the Securities and Exchange Commission (the “SEC”) to offer a maximum of 100,000,000 in shares of its common stock to the public in its primary offering at $10.00 per share and 10,526,316 shares of its common stock to the Company’s stockholders at $9.50 per share pursuant to its distribution reinvestment plan (“DRIP”) (collectively, the “Offering”). On August 7, 2009, the SEC declared the registration statement effective and the Company commenced the Offering. On February 7, 2013, the Company terminated the Offering and ceased offering shares of common stock in the primary offering and under the DRIP. As of December 31, 2012, the Company had accepted subscriptions for, and issued, 10,893,227 shares of common stock in the Offering (net of share redemptions), including 365,242 shares of common stock pursuant to the DRIP, resulting in gross offering proceeds of $107,609,000. As of the termination of the Offering on February 7, 2013, the Company had accepted subscriptions for, and issued, 10,969,714 shares of common stock (net of share redemptions), including 391,182 shares of common stock pursuant to the DRIP, resulting in gross offering proceeds of $108,357,000.

On June 15, 2012, the Company filed with the SEC a registration statement on Form S-11 to register up to $900,000,000 in shares of the Company’s common stock in a follow-on public offering. The Company subsequently determined not to proceed with the contemplated follow-on public offering and on March 1, 2013, the Company requested that the SEC withdraw the registration statement for the follow-on public offering, effective immediately. As a result of the termination of the Offering and the withdrawal of the registration statement for the Company’s follow-on public offering, offering proceeds are not currently available to fund the Company’s cash needs, and will not be available until the Company is able to successfully engage in an offering of its securities. The Company currently does not expect to commence a follow-on offering.

The Company is externally advised by TNP Strategic Retail Advisor, LLC, a Delaware limited liability company (“Advisor”). Subject to certain restrictions and limitations, Advisor provides certain services to the Company pursuant to an advisory agreement with the Company. The Company is currently negotiating with Glenborough, LLC and its affiliates (“Glenborough”) to replace the Advisor as the Company’s external advisor. Glenborough is a privately held full-service real estate investment and management company focused on the acquisition, management and leasing of high quality commercial properties. Glenborough and its predecessor entities have over three decades of experience in the commercial real estate industry. The Company’s board of directors is actively engaged in ongoing negotiations regarding the transition to Glenborough as the Company’s external advisor and the termination of the current advisory agreement and the property management agreements with respect to the Company’s properties. However, any change to the Company’s advisor or the Company’s property manager will require the consent of a number of the Company’s significant lenders, which the Company is still in the process of negotiating. The Company can give no assurance that it will be able to secure such lender consents or come to terms with Glenborough with respect to the transition. In December 2012, the Company entered into a consulting agreement with Glenborough to assist the Company through the advisor change process. Pursuant to the consulting agreement, the Company pays Glenborough a monthly consulting fee and reimburses Glenborough for its reasonable out-of-pocket expenses. From December 2012 through April 2013, the Company agreed to pay Glenborough a monthly consulting fee of $75,000 pursuant to the consulting agreement. Effective May 1, 2013, the Company and Glenborough amended the consulting agreement to expand the services provided to the Company by Glenborough and increase the monthly consulting fee payable to Glenborough to $90,000. The consulting agreement is terminable by either party upon 10 business days’ written notice.

Substantially all of the Company’s business is conducted through TNP Strategic Retail Trust Operating Partnership, L.P., a Delaware limited partnership (the “OP”). The initial limited partners of the OP were Advisor and TNP Strategic Retail OP Holdings, LLC, a Delaware limited liability company (“Holdings”). Advisor has invested $1,000 in the OP in exchange for common units of the OP (“Common Units”) and Holdings has invested $1,000 in the OP and has been issued a separate class of limited partnership units (the “Special Units”). As the Company accepted subscriptions for shares of its common stock, it transferred substantially all of the net proceeds of the Offering to the OP as a capital contribution. As of March 31, 2013 and December 31, 2012 the Company owned 96.2% of the limited partnership interest in the OP. As of March 31, 2013 and December 31, 2012, Advisor owned 0.01% of the limited partnership interest in the OP. Holdings owned 100% of the outstanding Special Units as of March 31, 2013 and December 31, 2012.

6

On May 26, 2011, in connection with the acquisition of Pinehurst Square East (“Pinehurst”), a retail property located in Bismarck, North Dakota, the OP issued 287,472 Common Units to certain of the sellers of Pinehurst who elected to receive Common Units for an aggregate value of $2,587,000, or $9.00 per Common Unit. On March 12, 2012, in connection with the acquisition of the Shops at Turkey Creek (“Turkey Creek”), a retail property located in Knoxville, Tennessee, the OP issued 144,324 Common Units to certain of the sellers of Turkey Creek who elected to receive Common Units for an aggregate value of $1,371,000, or $9.50 per Common Unit.

The Company’s principal demand for funds has been for the acquisition of real estate assets, the payment of operating expenses and interest on outstanding indebtedness and the payment of distributions to stockholders. Substantially all of the proceeds of the completed Offering have been used to fund investments in real properties and other real estate-related assets, for payment of operating expenses, for payment of various fees and expenses such as acquisition fees and management fees and for payment of distributions to stockholders. As discussed below, the Company’s available capital resources, cash and cash equivalents on hand and sources of liquidity are currently limited. The Company expects its future cash needs will be funded using cash from operations, future asset sales, debt financing and the proceeds to the Company from any offering of its securities that it conducts in the future. The Company expects that its investment activities will be reduced for the foreseeable future until it is able to engage in an offering of its securities or is able to identify other significant sources of financing. The Company also has suspended its share redemption program and dividend distributions until an improvement in liquidity and capital resources occurs following the completion of the advisor transition and the refinancing of the Company’s credit agreement with KeyBank National Association (“KeyBank”) following the expiration of the Company’s forbearance agreement with Key Bank (see Note 6. Notes Payable).

On August 2, 2012, the Company, the OP and Advisor entered into an amendment to the Company’s advisory agreement, effective as of August 7, 2012, which, among other things, established a requirement that the Company maintain at all times a cash reserve of at least $4,000,000 and provided that Advisor may deploy any cash proceeds in excess of the cash reserve for the Company’s business pursuant to the terms of the advisory agreement. As a result of the significant cash required to complete the Company’s acquisition of the Lahaina Gateway property on November 9, 2012, and the additional cash required by the mortgage lender for the Lahaina Gateway property acquisition for reserves and mandatory principal payments, the Company’s cash and cash equivalents have fallen to approximately $1,126,000 at March 31, 2013, significantly below the $4,000,000 cash reserve required under the advisory agreement. The Company’s cash and cash equivalents is likely to fall further and may remain significantly limited until the Company finds other sources of cash, such as from borrowings, sales of equity capital or sales of assets. Although no assurances may be given, the Company believes that its current cash from operations will be sufficient to support the Company’s ongoing operations, including its debt service payments, other than the required payment on the Company’s credit agreement with KeyBank following the expiration of the Company’s forbearance agreement with Key Bank (see discussion below).

On April 1, 2013, the Company executed the forbearance agreement on the Company’s credit agreement with KeyBank (see additional discussions in Note 6 – NOTES PAYABLE). On or before the expiration of the forbearance period, the Company currently intends to (1) refinance the credit agreement on or before the expiration of the forbearance agreement with KeyBank or with another lender; or (2) refinance a portion of the credit agreement on or before the expiration of the forbearance agreement with KeyBank or with another lender, and paydown of a portion of the balance of the credit agreement with proceeds from disposition of certain properties securing the credit agreement.

The Company has invested in a portfolio of income-producing retail properties throughout the United States, with a focus on grocery anchored multi-tenant retail centers in the Western United States, including neighborhood, community and lifestyle shopping centers, multi-tenant shopping centers and free standing single-tenant retail properties. As of March 31, 2013, the Company’s portfolio comprised of 20 properties with approximately 2,035,402 rentable square feet of retail space located in 14 states. As of March 31, 2013, the rentable space at the Company’s retail properties was 88% leased. Due to the Company’s currently limited capital resources, cash and cash equivalents on hand and sources of liquidity, the Company is not currently actively seeking additional investments.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation and Basis of Presentation

The accompanying condensed consolidated unaudited financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information as contained within the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) and the rules and regulations of the SEC, including the instructions to Form 10-Q and Article 10 of Regulation S-X. Management is required to make estimates and assumptions in the preparation of financial statements in conformity with GAAP. These estimates and assumptions affected the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

The condensed consolidated financial statements include the accounts of the Company, the OP, and their direct and indirect wholly owned subsidiaries. All significant intercompany balances and transactions are eliminated in consolidation. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) necessary to present fairly the Company’s financial position, results of operations and cash flows have been included.

7

The Company evaluates the need to consolidate joint ventures and variable interest entities based on standards set forth in ASC 810, Consolidation (“ASC 810”). In determining whether the Company has a controlling interest in a joint venture or a variable interest entity and the requirement to consolidate the accounts of that entity, management considers factors such as ownership interest, authority to make decisions and contractual and substantive participating rights of the partners/members as well as whether the entity is a variable interest entity for which the Company is the primary beneficiary. As of March 31, 2013, the Company did not have any joint ventures or variable interests in any variable interest entities.

Non-Controlling Interests

The Company’s non-controlling interests comprise primarily of the Common Units in the OP. The Company accounts for non-controlling interests in accordance with ASC 810. In accordance with ASC 810, the Company reports non-controlling interests in subsidiaries within equity in the condensed consolidated financial statements, but separate from the parent’s stockholders’ equity. Net income (loss) attributable to non-controlling interests is presented as a reduction from net income in calculating net income (loss) available to common stockholders on the statement of operations. Acquisitions or dispositions of non-controlling interests that do not result in a change of control are accounted for as equity transactions. In addition, ASC 810 requires that a parent company recognize a gain or loss in net income when a subsidiary is deconsolidated upon a change in control. In accordance with FASB ASC 480-10, Distinguishing Liabilities from Equity, non-controlling interests that are determined to be redeemable are carried at their fair value or redemption value as of the balance sheet date and reported as liabilities or temporary equity depending on their terms. The Company periodically evaluates individual non-controlling interests for the ability to continue to recognize the non-controlling interest as permanent equity in the condensed consolidated balance sheets. Any non-controlling interest that fails to qualify as permanent equity will be reclassified as liabilities or temporary equity and adjusted to the greater of (1) the carrying amount, or (2) its redemption value as of the end of the period in which the determination is made, and the resulting adjustment is recorded in the condensed consolidated statement of operations. All non-controlling interests at March 31, 2013 qualified as permanent equity.

Use of Estimates

The preparation of the Company’s financial statements requires significant management judgments, assumptions and estimates about matters that are inherently uncertain. These judgments affect the reported amounts of assets and liabilities and the Company’s disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenue and expenses during the reporting periods. With different estimates or assumptions, materially different amounts could be reported in the Company’s financial statements. Additionally, other companies may utilize different estimates that may impact the comparability of the Company’s results of operations to those of companies in similar businesses. The Company considers significant estimates to include the carrying amounts and recoverability of investments in real estate, impairments, real estate acquisition purchase price allocations, allowance for doubtful accounts, the estimated useful lives to determine depreciation and amortization, and fair value determinations, among others.

Cash and Cash Equivalents

Cash and cash equivalents represents current bank accounts and other bank deposits free of encumbrances and having maturity dates of three months or less from the respective dates of deposit. The Company limits cash investments to financial institutions with high credit standing; therefore, the Company believes it is not exposed to any significant credit risk in cash.

Restricted Cash

Restricted cash includes escrow accounts for real property taxes, insurance, capital expenditures and tenant improvements, debt service and leasing costs held by lenders.

Revenue Recognition

Revenues include minimum rents, expense recoveries and percentage rental payments. Minimum rents are recognized on an accrual basis over the terms of the related leases on a straight-line basis when collectability is reasonably assured and the tenant has taken possession or controls the physical use of the leased property. If the lease provides for tenant improvements, the Company determines whether the tenant improvements, for accounting purposes, are owned by the tenant or the Company. When the Company is the owner of the tenant improvements, the tenant is not considered to have taken physical possession or have control of the physical use of the leased asset until the tenant improvements are substantially completed. When the tenant is the owner of the tenant improvements, any tenant improvement allowance that is funded is treated as a lease incentive and amortized as a reduction of revenue over the lease term. Tenant improvement ownership is determined based on various factors including, but not limited to:

• whether the lease stipulates how a tenant improvement allowance may be spent;

• whether the amount of a tenant improvement allowance is in excess of market rates;

• whether the tenant or landlord retains legal title to the improvements at the end of the lease term;

• whether the tenant improvements are unique to the tenant or general-purpose in nature; and

• whether the tenant improvements are expected to have any residual value at the end of the lease.

8

For leases with minimum scheduled rent increases, the Company recognized income on a straight-line basis over the lease term when collectability is reasonably assured. Recognizing rental income on a straight-line basis for leases results in recognized revenue amounts which differ from those that are contractually due from tenants on a cash basis. If the Company determines the collectability of straight-line rents is not reasonably assured, the Company limits future recognition to amounts contractually owed and paid, and, when appropriate, establishes an allowance for estimated losses.

The Company maintains an allowance for doubtful accounts, including an allowance for straight-line rent receivables, for estimated losses resulting from tenant defaults or the inability of tenants to make contractual rent and tenant recovery payments. The Company monitors the liquidity and creditworthiness of its tenants on an ongoing basis. For straight-line rent amounts, the Company’s assessment is based on amounts estimated to be recoverable over the term of the lease. The Company’s straight-line rent receivable, which is included in tenant receivables on the condensed consolidated balance sheets, was $1,743,000 and $1,380,000 at March 31, 2013 and December 31, 2012, respectively.

Certain leases contain provisions that require the payment of additional rents based on the respective tenants’ sales volume (contingent or percentage rent) and substantially all contain provisions that require reimbursement of the tenants’ allocable real estate taxes, insurance and common area maintenance costs (“CAM”). Revenue based on percentage of tenants’ sales is recognized only after the tenant exceeds its sales breakpoint. Revenue from tenant reimbursements of taxes, CAM and insurance is recognized in the period that the applicable costs are incurred in accordance with the lease agreement.

The Company recognizes gains or losses on sales of real estate in accordance with ASC 360. Profits are not recognized until (a) a sale has been consummated; (b) the buyer’s initial and continuing investments are adequate to demonstrate a commitment to pay for the property; (c) the Company’s receivable, if any, is not subject to future subordination; and (d) the Company has transferred to the buyer the usual risks and reward of ownership, and the Company does not have a substantial continuing involvement with the property. The results of operations of income producing properties where the Company does not have a continuing involvement are presented in the discontinued operations section of the Company’s condensed consolidated statements of operations when the property has been classified as held-for-sale or sold.

Valuation of Accounts Receivable

The Company makes estimates of the collectability of its tenant receivables related to base rents, including deferred rents receivable, expense reimbursements and other revenue or income.

The Company analyzes tenant receivables, deferred rent receivable, historical bad debts, customer creditworthiness, current economic trends and changes in customer payment terms when evaluating the adequacy of the allowance for doubtful accounts. In addition, with respect to tenants in bankruptcy, the Company will make estimates of the expected recovery of pre-petition and post-petition claims in assessing the estimated collectability of the related receivable. In some cases, the ultimate resolution of these claims can exceed one year. When a tenant is in bankruptcy, the Company will record a bad debt reserve for the tenant’s receivable balance and generally will not recognize subsequent rental revenue until cash is received or until the tenant is no longer in bankruptcy and has the ability to make rental payments.

Concentration of Credit Risk

A concentration of credit risk arises in the Company’s business when a national or regionally based tenant occupies a substantial amount of space in multiple properties owned by the Company. In that event, if the tenant suffers a significant downturn in its business, it may become unable to make its contractual rent payments to the Company, exposing the Company to potential losses in rental revenue, expense recoveries, and percentage rent. Further, the impact may be magnified if the tenant is renting space in multiple locations. Generally, the Company does not obtain security from the nationally-based or regionally-based tenants in support of their lease obligations to the Company. The Company regularly monitors its tenant base to assess potential concentrations of credit risk. As of March 31, 2013, Publix is the Company’s largest tenant and accounted for approximately 99,979 square feet, or approximately 5% of the Company’s gross leasable area, and approximately $1,048,000, or 4% of the Company’s annual minimum rent. No other tenant accounted for over 5% of the Company’s annual minimum rent. There were no outstanding receivables from Publix at March 31, 2013.

The Company’s real estate properties are leased to tenants under operating leases for which the terms and expirations vary. As of March 31, 2013, the leases at the Company’s properties have remaining terms (excluding options to extend) of up to 14 years with a weighted-average remaining term (excluding options to extend) of 9 years. The leases may have provisions to extend the lease agreements, options for early termination after paying a specified penalty, rights of first refusal to purchase the property at competitive market rates, and other terms and conditions as negotiated. The Company retains substantially all of the risks and benefits of ownership of the real estate assets leased to tenants. Generally, upon the execution of a lease, the Company requires security deposits from tenants in the form of a cash deposit and/or a letter of credit. Amounts required as security deposits vary depending upon the terms of the respective leases and the creditworthiness of the tenant, but generally are not significant amounts. Therefore, exposure to credit risk exists to the extent that a receivable from a tenant exceeds the amount of its security deposit. Security deposits received in cash related to tenant leases are included in other liabilities in the accompanying condensed consolidated balance sheets and totaled $664,000 and $651,000 as of March 31, 2013 and December 31, 2012, respectively.  

9

Business Combinations

The Company records the acquisition of income-producing real estate or real estate that will be used for the production of income as a business combination. All assets acquired and liabilities assumed in a business combination are measured at their acquisition-date fair values. The balance of the purchase price is allocated to tenant improvements and identifiable intangible assets or liabilities. Tenant improvements represent the tangible assets associated with the existing leases valued on a fair value basis at the acquisition date. Tenant improvements are classified as assets under investments in real estate and are depreciated over the remaining lease terms. Identifiable intangible assets and liabilities relate to the value of in-place operating leases which come in three forms: (1) leasing commissions and legal costs, which represent the value associated with “cost avoidance” of acquiring in-place leases, such as lease commissions paid under terms generally experienced in markets in which the Company operates; (2) value of in-place leases, which represents the estimated loss of revenue and of costs incurred for the period required to lease the “assumed vacant” property to the occupancy level when purchased; and (3) above- or below-market value of in-place leases, which represents the difference between the contractual rents and market rents at the time of the acquisition, discounted for tenant credit risks. The value of in-place leases is recorded in acquired lease intangibles and amortized over the remaining lease term. Above- or below-market leases are classified in acquired lease intangibles, or in acquired below-market lease intangibles, depending on whether the contractual terms are above- or below-market. Above-market leases are amortized as a decrease to rental revenue over the remaining non-cancelable terms of the respective leases and below-market leases are amortized as an increase to rental revenue over the remaining initial lease term and any fixed rate renewal periods, if applicable.

Acquisition costs are expensed as incurred and costs that do not meet the definition of a liability at the acquisition date are expensed in periods subsequent to the acquisition date. During the three months ended March 31, 2013, the Company did not acquire any property. During the three months ended March 31, 2012, the Company acquired five properties, Morningside Marketplace (“Morningside Marketplace”), Woodland West Marketplace (“Woodland West”), Ensenada Square (“Ensenada Square”), the Shops at Turkey Creek (“Turkey Creek”), and Aurora Commons (“Aurora Commons”), and recorded the acquisitions as business combinations and expensed $1,453,000 of acquisition costs. Costs incurred in pursuit of targeted properties for acquisitions not yet closed or those determined to no longer be viable have been expensed and are also classified in the condensed consolidated statement of operations as transaction expenses.

Estimates of the fair values of the tangible assets, identifiable intangibles and assumed liabilities require the Company to make significant assumptions to estimate market lease rates, property-operating expenses, carrying costs during lease-up periods, discount rates, market absorption periods, and the number of years the property will be held for investment. The use of inappropriate assumptions would result in an incorrect valuation of the Company’s acquired tangible assets, identifiable intangibles and assumed liabilities, which would impact the amount of the Company’s net income. These allocations also impact depreciation expense and gains or losses recorded on future sales of properties.

Reportable Segments

ASC 280, Segment Reporting, establishes standards for reporting financial and descriptive information about an enterprise’s reportable segments. The Company has one reportable segment, income-producing retail properties, which consists of activities related to investing in real estate. The retail properties are geographically diversified throughout the United States, and the Company’s chief operating decision maker evaluates operating performance on an overall portfolio level.

Investments in Real Estate

Real property is recorded at cost, less accumulated depreciation and amortization. Costs include those related to acquisition, development and construction, including tenant improvements, interest incurred during development, costs of predevelopment and certain direct and indirect costs of development. Costs related to business combinations are expensed as incurred, and are included in transaction expense in the Company’s condensed consolidated statements of operations.

Depreciation and amortization is computed using a straight-line method over the estimated useful lives of the assets as follows:

	Years
Buildings and improvements	5-48 years
Exterior improvements	10-20 years
Equipment and fixtures	5-10 years

10

Tenant improvement costs recorded as capital assets are depreciated over the shorter of (1) the tenant’s remaining lease term or (2) the life of the improvement.

Expenditures for ordinary maintenance and repairs are expensed to operations as they are incurred. Significant renovations and improvements that improve or extend the useful lives of assets are capitalized.

Impairment of Long-lived Assets

The Company continually monitors events and changes in circumstances that could indicate that the carrying amounts of its investments in real estate and related intangible assets may not be recoverable. When indicators of potential impairment suggest that the carrying value of real estate and related intangible assets may not be recoverable, the Company assesses the recoverability by estimating whether the Company will recover the carrying value of the real estate and related intangible assets through its undiscounted future cash flows and its eventual disposition. If, based on this analysis, the Company does not believe that it will be able to recover the carrying value of the real estate and related intangible assets and liabilities, the Company would record an impairment loss to the extent that the carrying value exceeds the estimated fair value of the investments in real estate and related intangible assets. Key inputs that the Company estimates in this analysis include projected rental rates, capital expenditures and property sales capitalization rates. The Company did not record any impairment loss on its investments in real estate and related intangible assets during the three months ended March 31, 2013 and 2012.

Assets Held-for-Sale and Discontinued Operations

When certain criteria are met, long-lived assets are classified as held-for-sale and are reported at the lower of their carrying value or their fair value less costs to sell and are no longer depreciated. Discontinued operations is a component of an entity that has either been disposed of or is deemed to be held-for-sale and (i) the operations and cash flows of the component have been or will be eliminated from ongoing operations as a result of the disposal transaction and (ii) the entity will not have any significant continuing involvement in the operations of the component after the disposal transaction.

Fair Value Measurements

Under GAAP, the Company is required to measure certain financial instruments at fair value on a recurring basis. In addition, the Company is required to measure other financial instruments and balances at fair value on a non-recurring basis (e.g., carrying value of impaired real estate loans receivable and long-lived assets). Fair value is defined as the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The GAAP fair value framework uses a three-tiered approach. Fair value measurements are classified and disclosed in one of the following three categories:

• Level 1: unadjusted quoted prices in active markets that are accessible at the measurement date for identical assets or liabilities;

• Level 2: quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-derived valuations in which significant inputs and significant value drivers are observable in active markets; and

• Level 3: prices or valuation techniques where little or no market data is available that requires inputs that are both significant to the fair value measurement and unobservable.

When available, the Company utilizes quoted market prices or other observable inputs (Level 2 inputs), such as interest rates or yield curves, from independent third-party sources to determine fair value and classify such items in Level 1 or Level 2. In instances where the market for a financial instrument is not active, regardless of the availability of a nonbinding quoted market price, observable inputs might not be relevant and could require the Company to use significant judgment to derive a fair value measurement. Additionally, in an inactive market, a market price quoted from an independent third party may rely more on models with inputs based on information available only to that independent third party. When the Company determines the market for an asset owned by it to be illiquid or when market transactions for similar instruments do not appear orderly, the Company uses several valuation sources (including internal valuations, discounted cash flow analysis and quoted market prices) and establishes a fair value by assigning weights to the various valuation sources. Additionally, when determining the fair value of liabilities in circumstances in which a quoted price in an active market for an identical liability is not available, the Company measures fair value using (i) a valuation technique that uses the quoted price of the identical liability when traded as an asset or quoted prices for similar liabilities when traded as assets or (ii) another a present value technique that considers the future cash flows based on contractual obligations discounted by an observed or estimated market rates of comparable liabilities. The use of contractual cash flows with regard to amount and timing significantly reduces the judgment applied in arriving at fair value.

Changes in assumptions or estimation methodologies can have a material effect on these estimated fair values. In this regard, the derived fair value estimates cannot be substantiated by comparison to independent markets and, in many cases, may not be realized in an immediate settlement of the instrument.

11

The Company considers the following factors to be indicators of an inactive market: (1) there are few recent transactions, (2) price quotations are not based on current information, (3) price quotations vary substantially either over time or among market makers (for example, some brokered markets), (4) indexes that previously were highly correlated with the fair values of the asset or liability are demonstrably uncorrelated with recent indications of fair value for that asset or liability, (5) there is a significant increase in implied liquidity risk premiums, yields, or performance indicators (such as delinquency rates or loss severities) for observed transactions or quoted prices when compared with the Company’s estimate of expected cash flows, considering all available market data about credit and other nonperformance risk for the asset or liability, (6) there is a wide bid-ask spread or significant increase in the bid-ask spread, (7) there is a significant decline or absence of a market for new issuances (that is, a primary market) for the asset or liability or similar assets or liabilities, and (8) little information is released publicly (for example, a principal-to-principal market).

The Company considers the following factors to be indicators of non-orderly transactions: (1) there was not adequate exposure to the market for a period before the measurement date to allow for marketing activities that are usual and customary for transactions involving such assets or liabilities under current market conditions, (2) there was a usual and customary marketing period, but the seller marketed the asset or liability to a single market participant, (3) the seller is in or near bankruptcy or receivership (that is, distressed), or the seller was required to sell to meet regulatory or legal requirements (that is, forced), and (4) the transaction price is an outlier when compared with other recent transactions for the same or similar assets or liabilities.

Deferred Financing Costs

Deferred financing costs represent commitment fees, loan fees, legal fees and other third-party costs associated with obtaining financing. These costs are amortized over the terms of the respective financing agreements using the straight-line method which approximates the effective interest method. Unamortized deferred financing costs are expensed when the associated debt is refinanced or repaid before maturity. Costs incurred in seeking financings that do not close are expensed in the period in which it is determined that the financing will not close.

Income Taxes

The Company has elected to be taxed as a REIT under the Internal Revenue Code. To qualify as a REIT, the Company must meet certain organizational and operational requirements, including a requirement to distribute at least 90% of the Company’s annual REIT taxable income to stockholders (which is computed without regard to the dividends-paid deduction or net capital gain and which does not necessarily equal net income as calculated in accordance with GAAP). As a REIT, the Company generally will not be subject to federal income tax on income that it distributes as dividends to its stockholders. If the Company fails to qualify as a REIT in any taxable year, it will be subject to federal income tax on its taxable income at regular corporate income tax rates and generally will not be permitted to qualify for treatment as a REIT for federal income tax purposes for the four taxable years following the year during which qualification is lost, unless the Internal Revenue Service grants the Company relief under certain statutory provisions. Such an event could materially and adversely affect the Company’s net income and net cash available for distribution to stockholders. However, the Company believes that it is organized and operates in such a manner as to qualify for treatment as a REIT. The Company may also be subject to certain state or local income taxes, or franchise taxes.

The Company evaluates tax positions taken in the financial statements under the interpretation for accounting for uncertainty in income taxes. As a result of this evaluation, the Company may recognize a tax benefit from an uncertain tax position only if it is “more-likely-than-not” that the tax position will be sustained on examination by taxing authorities.

When necessary, deferred income taxes are recognized in certain taxable entities. Deferred income tax is generally a function of the period’s temporary differences (items that are treated differently for tax purposes than for financial reporting purposes). A valuation allowance for deferred income tax assets is provided if all or some portion of the deferred income tax asset may not be realized. Any increase or decrease in the valuation allowance is generally included in deferred income tax expense.

The Company’s tax returns remain subject to examination and consequently, the taxability of the distributions is subject to change.

Earnings Per Share

Basic earnings per share (“EPS”) is computed by dividing net income (loss) applicable to common stockholders by the weighted average number of shares of common stock outstanding during the period. Diluted EPS is computed after adjusting the basic EPS computation for the effect of potentially dilutive securities outstanding during the period. The effect of non-vested shares, if dilutive, is computed using the treasury stock method. The Company accounts for unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents (whether paid or unpaid) as participating securities, which are included in the computation of earnings per share pursuant to the two-class method. The Company’s excess of distributions over earnings related to participating securities are shown as a reduction in income (loss) applicable to common stockholders in the Company’s computation of EPS.

12

Reclassification

Certain amounts from the prior year have been reclassified to conform to current period presentation. Assets sold or held-for-sale have been reclassified on the condensed consolidated balance sheets and the related operating results reclassified from continuing to discontinued operations on the condensed consolidated statements of operations and condensed consolidated statements of cash flows. 

3. DISCONTINUED OPERATIONS AND ASSETS HELD FOR SALE

The Company reports as discontinued operations, properties held-for-sale and operating properties sold in the current period. The results of these discontinued operations are included in a separate component of income on the condensed consolidated statements of operations under the caption “Discontinued operations.”

During the three months ended March 31, 2013, the Company completed the sale of the Waianae Mall in Waianae, Hawaii (acquired in June 2010), for a sales price of $30,500,000. The Company classified assets and liabilities (including the mortgage debt) related to Waianae Mall as held for sale in the consolidated balance sheet at December 31, 2012. The results of operations related to Waianae Mall were classified as discontinued operations for the three months ended March 31, 2013 and 2012.

During the three months ended March 31, 2013, the Company also completed the sale of the McDonalds parcel at Willow Run Shopping Center (acquired in May 2012) to McDonalds Real Estate Company, for $1,050,000. Net proceeds from the sale of $983,000 were used to pay down the KeyBank line of credit. The results of operations related to the McDonalds parcel were classified as discontinued operations for the three months ended March 31, 2013. The McDonalds parcel was not classified as held for sale at December 31, 2012.

On December 4, 2012, the Company entered into a purchase and sale agreement, as amended, with a third party for the sale of the office building at the Aurora Commons property (acquired in March 2012), for gross proceeds of $1,250,000. The Company classified assets and liabilities related to the office portion of the Aurora Commons property as held for sale in the condensed consolidated balance sheets at March 31, 2013 and December 31, 2012. The results of operations related to the office building at Aurora Commons were classified as discontinued operations for the three months ended March 31, 2013 and 2012.

During the three months ended March 31, 2012, the Company completed the sale of the KFC parcel at Morningside Marketplace (acquired in January 2012), for $1,200,000. The results of operations related to the KFC parcel were classified in discontinued operations for the three months ended March 31, 2012. Discontinued operations for the three months ended March 31, 2012 also included the operating results of the Chase and Chevron parcels at Morningside Marketplace which were sold in April 2012.

The components of income and expense relating to discontinued operations for the three months ended March 31, 2013 and 2012 are shown below.

	2013			2012
Revenues from rental property	$	204,000		$	1,113,000
Rental property expenses		124,000			401,000
Depreciation and amortization		-			350,000
Interest		277,000			309,000
Operating (loss) income from discontinued operations		(197,000	)		53,000
Gain on sale of real estate		4,838,000			-
Income from discontinued operations	$	4,641,000		$	53,000

13

The major classes of assets and liabilities related to assets held for sale included in the condensed consolidated balance sheets are as follows:

	March 31,			December 31,
	2013			2012
ASSETS
Investments in real estate
Land	$	174,000		$	10,760,000
Building and improvements		1,001,000			13,937,000
Tenant improvements		26,000			689,000
		1,201,000			25,386,000
Accumulated depreciation		(48,000	)		(2,324,000	)
Investments in real estate, net		1,153,000			23,062,000
Restricted cash		-			358,000
Prepaid expenses and other assets, net		-			37,000
Tenant receivables		4,000			261,000
Lease intangibles, net		66,000			1,955,000
Deferred financing fees, net		-			98,000
Assets held for sale	$	1,223,000		$	25,771,000
LIABILITIES
Notes payable	$	-		$	19,571,000
Accounts payable and accrued expenses		-			247,000
Other liabilities		-			235,000
Below market lease intangibles, net		-			1,224,000
Liabilities held for sale	$	-		$	21,277,000

Amounts above are being presented at their carrying value which the Company believes to be lower than their estimated fair value less costs to sell.

4. FUTURE MINIMUM RENTAL INCOME

Operating Leases

The Company’s real estate properties are leased to tenants under operating leases for which the terms and expirations vary. As of March 31, 2013, the leases at the Company’s properties have remaining terms (excluding options to extend) of up to 15 years with a weighted-average remaining term (excluding options to extend) of eight years. The leases may have provisions to extend the lease agreements, options for early termination after paying a specified penalty, rights of first refusal to purchase the property at competitive market rates, and other terms and conditions as negotiated. The Company retains substantially all of the risks and benefits of ownership of the real estate assets leased to tenants. Generally, upon the execution of a lease, the Company requires security deposits from tenants in the form of a cash deposit and/or a letter of credit. Amounts required as security deposits vary depending upon the terms of the respective leases and the creditworthiness of the tenant, but generally are not significant amounts. Therefore, exposure to credit risk exists to the extent that a receivable from a tenant exceeds the amount of its security deposit. Security deposits received in cash related to tenant leases are included in other liabilities in the accompanying condensed consolidated unaudited balance sheets and totaled $664,000 and $651,000 as of March 31, 2013 and December 31, 2012, respectively.

As of March 31, 2013, the future minimum rental income from the Company’s properties under non-cancelable operating leases was as follows:

April 1 through December 31, 2013	$	17,194,000
2014		21,907,000
2015		20,607,000
2016		18,795,000
2017		17,238,000
Thereafter		80,755,000
	$	176,496,000

14

5. ACQUIRED LEASE INTANGIBLES AND BELOW-MARKET LEASE LIABILITIES

As of March 31, 2013 and December 31, 2012, the Company’s acquired lease intangibles and below-market lease liabilities were as follows:

	Lease Intangibles						Below - Market Lease Liabilities
	March 31, 2013			December 31, 2012			March 31, 2013			December 31, 2012
Cost	$	39,757,000		$	39,853,000		$	(12,674,000	)	$	(12,764,000	)
Accumulated amortization		(7,563,000	)		(6,118,000	)		1,126,000			936,000
	$	32,194,000		$	33,735,000		$	(11,548,000	)	$	(11,828,000	)

Increases (decreases) in net income as a result of amortization of the Company’s lease intangibles and below-market lease liabilities for the three months ended March 31, 2013 and 2012 were as follows:

	Lease Intangibles						Below - Market Lease Liabilities
	For the Three Months Ended March 31,						For the Three Months Ended March 31,
	2013			2012			2013		2012
Amortization and accelerated amortization	$	(1,608,000	)	$	(658,000	)	$	255,000	$	92,000

The scheduled amortization of lease intangibles and below-market lease liabilities as of March 31, 2013 was as follows:

	Acquired		Below-market
	Lease		Lease
	Intangibles		Intangibles
April 1 through December 31, 2013	$	4,195,000	$	(614,000	)
2014		4,756,000		(839,000	)
2015		4,025,000		(737,000	)
2016		3,530,000		(659,000	)
2017		3,155,000		(590,000	)
Thereafter		12,533,000		(8,109,000	)
	$	32,194,000	$	(11,548,000	)

6. NOTES PAYABLE

As of March 31, 2013 and December 31, 2012, the Company’s notes payable consisted of the following:

	Principal Balance				Interest Rates At
	March 31, 2013		December 31, 2012		March 31, 2013
KeyBank Credit Facility	$	36,455,000	$	38,438,000		5.50	%
Secured term loans		58,536,000		60,706,000		5.10% - 10.00	%
Mortgage loans		89,082,000		90,183,000		4.50% - 15.00	%
Unsecured loan		1,250,000		1,250,000		8.00	%
Total	$	185,323,000	$	190,577,000

During the three months ended March 31, 2013 and 2012, the Company incurred $3,669,000 and $2,789,000, respectively, of interest expense, which included the amortization and write-off of deferred financing costs of $287,000 and $821,000, respectively. In connection with the refinancing completed in January 2012 of the mortgage loans secured by four properties under the KeyBank line of credit into a KeyBank term loan, the Company wrote off approximately $540,000 of the remaining unamortized deferred financing costs associated with four properties under the KeyBank line of credit. As of March 31, 2013 and December 31, 2012, interest expense payable was $1,264,000 and $1,097,000, respectively.

15

The following is a schedule of principal maturities for all of the Company’s notes payable outstanding as of March 31, 2013:

	Amount
April 1 through December 31, 2013	$	36,455,000
2014		5,269,000
2015		1,250,000
2016		18,029,000
2017		92,958,000
Thereafter		31,362,000
	$	185,323,000

KeyBank Credit Facility

On December 17, 2010, the Company, through its wholly owned subsidiary, TNP SRT Secured Holdings, LLC (“TNP SRT Holdings”), entered into a line of credit with KeyBank and certain other lenders (collectively, the “Lenders”) to establish a secured revolving credit facility with an initial maximum aggregate commitment of $35 million (the “Credit Facility”). The proceeds of the Credit Facility may be used by the Company for general corporate purposes, subject to the terms of the Credit Facility. The Credit Facility initially consisted of an A tranche (“Tranche A”) with an initial aggregate commitment of $25 million, and a B tranche (“Tranche B”) with an initial aggregate commitment of $10 million. Tranche B under the Credit Facility terminated as of June 30, 2011. The aggregate commitment under Tranche A was subsequently increased on multiple occasions and, as of March 31, 2013, had an aggregate commitment of $45 million. As discussed below, due to the Company’s default under the Credit Facility, the Company entered into a forbearance agreement with KeyBank which, among other things, converted the entire outstanding principal amount under Tranche A into a term loan which is due and payable in full on July 31, 2013. As of March 31, 2013, the outstanding principal balance on the Credit Facility was $36,455,000.

Borrowings under the Credit Facility are secured by (1) pledges by the Company, the OP, TNP SRT Holdings, and certain subsidiaries of TNP SRT Holdings, of their respective direct and indirect equity ownership interests in, as applicable, any subsidiary of TNP SRT Holdings or us which directly or indirectly owns real property, subject to certain limitations and exceptions, (2) guarantees, granted by the Company and the OP on a joint and several basis, of the prompt and full payment of all of the obligations under the Credit Facility, (3) a security interest granted in favor of KeyBank with respect to all operating, depository, escrow and security deposit accounts and all cash management services of the Company, the OP, TNP SRT Holdings and any other borrower under the Credit Facility, and (4) a deed of trust, assignment agreement, security agreement and fixture filing in favor of KeyBank with respect to the San Jacinto Esplanade, Craig Promenade, Willow Run Shopping Center, Visalia Marketplace and Aurora Commons properties.

Under the Credit Facility, the Company is required to comply with certain restrictive and financial covenants. In January 2013, the Company became aware of a number of events of default under the Credit Facility relating to, among other things, the Company’s failure to use the net proceeds from its sale of shares in the Offering and the sale of its assets to repay borrowings under the Credit Facility as required by the Credit Facility and its failure to satisfy certain financial covenants under the Credit Facility (collectively, the “Existing Events of Default”). The Company also did not comply with certain financial covenants at March 31, 2013. Due to the Existing Events of Default, the Lenders became entitled to exercise all of their rights and remedies under the Credit Facility and applicable law.

On April 1, 2013, the Company, the OP, certain subsidiaries of the OP which are borrowers under the Credit Facility (collectively, the “Borrowers”) and KeyBank, as lender and agent for the other Lenders, entered into a forbearance agreement (the “Forbearance Agreement”) which amended the terms of the Credit Facility and provides for certain additional agreements with respect to the Existing Events of Default. Pursuant to the terms of the Forbearance Agreement, KeyBank and the other Lenders agreed to forbear the exercise of their rights and remedies with respect to the Existing Events of Default until the earliest to occur of (1) July 31, 2013, (2) the Company’s default under or breach of any of the representations or covenants under the Forbearance Agreement or (3) the date any additional events of defaults (other than the Existing Events of Default) under the Credit Facility occur or become known to KeyBank or any other Lender, (the “Forbearance Expiration Date”). Upon the Forbearance Expiration Date, all forbearances, deferrals and indulgences granted by the Lenders pursuant to the Forbearance Agreement will automatically terminate and the Lenders will be entitled to enforce, without further notice of any kind, any and all rights and remedies available to them as creditors at law, in equity, or pursuant to the Credit Facility or any other agreement as a result of the existing events of default or any additional events of default which occur or come to light following the date of the Forbearance Agreement.

Pursuant to the Forbearance Agreement, the Company, the OP and all of the Borrowers under the Credit Facility have jointly and severally agreed to pay to KeyBank (1) any and all out-of-pocket costs or expenses (including legal fees and disbursements) incurred or sustained by the Lenders in connection with the preparation of the Forbearance Agreement and all related matters, and (2) from time to time after the occurrence of any default under the Forbearance Agreement any out-of-pocket costs or expenses (including legal fees and consulting and other similar professional fees and expenses) incurred by the Lenders in connection with the preservation of or enforcement of any rights of the Lenders under the Forbearance Agreement and the Credit Facility. In connection with the execution of the Forbearance Agreement, the Company has agreed to pay a forbearance fee of approximately $192,000 to KeyBank, with 50% of such fee paid upon the execution of the Forbearance Agreement and the remaining 50% to be paid upon the earlier of the Forbearance Expiration Date or the date the Outstanding Loans are repaid in full.

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The Company paid down a total of $1,983,000 on the Credit Facility from the net proceeds from the sales of the Waianae Mall in January 2013 and the McDonalds pad at Willow Run in February 2013. The Forbearance Agreement converts the entire outstanding principal balance under the Credit Facility (the “Outstanding Loans”) into a term loan which is due and payable in full on July 31, 2013. Pursuant to the Forbearance Agreement, the Company, the OP and every other borrower under the Credit Facility must apply 100% of the net proceeds from, among other things, (1) the sale of shares in the Offering or any other sale of securities by the Company, the OP or any other borrower, (2) the sale or refinancing of any of the Company’s properties or other assets, and (3) the collection of insurance or condemnation proceeds due to any damage or destruction of properties or any condemnation for public use of any properties, to the repayment of the Outstanding Loans. The Forbearance Agreement provides that all commitments under the Credit Facility will terminate on July 31, 2013 and that, effective as of the date of the Forbearance Agreement, the Lenders have no further obligation whatsoever to advance any additional loans or amounts under the Credit Facility. The Forbearance Agreement also provides that neither the Company, the OP or any other borrower under the Credit Facility may, without KeyBank’s prior written consent, incur, assume, guarantee or be or remain liable, contingently or otherwise, with respect to any indebtedness other than the existing indebtedness specified in the Forbearance Agreement and any refinancing of such existing indebtedness which does not materially modify the terms of such existing indebtedness in a manner adverse to the Company or the Lenders.

Waianae Loan Assumption

On January 22, 2013, the Company sold the Waianae Mall in Waianae, Hawaii to an unaffiliated buyer for a final sales price of $29,763,000. The mortgage loan secured by the Waianae Mall with an outstanding balance of $19,717,000 was assumed by the buyer in connection with the sale. The Company incurred a disposition fee to the Advisor of $893,000 in connection with the sale.

Lahaina Loan

In connection with the acquisition of Lahaina Gateway Shopping Center on November 9, 2012, the Company, through TNP SRT Lahaina Gateway, LLC (“TNP SRT Lahaina”), borrowed $29,000,000 (the “Lahaina Loan”) from DOF IV REIT Holdings, LLC, (the “Lahaina Lender”). The entire unpaid principal balance of the Lahaina Loan and all accrued and unpaid interest thereon is due and payable in full on October 1, 2017. The Lahaina Loan bears interest at a rate of 9.483% per annum for the initial 12 months, and then 11.429% for the remainder of the term of the loan. On each of December 1, 2012, January 1, 2013, and February 1, 2013, the Company was required to make a mandatory principal prepayment of $333,333, such that the Company would prepay an aggregate $1,000,000 of the outstanding principal balance of the Lahaina Loan, no later than February 1, 2013.

On January 14, 2013, the Company received a letter of default from the Lahaina Lender in connection with the certain Guaranty of Recourse Obligations by the Company and Anthony W. Thompson, the Company’s Chairman and Co-Chief Executive Officer, for the benefit of the Lahaina Lender, pursuant to which the Company and Mr. Thompson guaranteed the obligations of TNP SRT Lahaina under the Lahaina Loan. The letter of default stated that two events of default existed under the Lahaina Loan as a result of the failure of TNP SRT Lahaina to (1) pay a deposit into a rollover account, and (2) pay two mandatory principal payments. The Lahaina Lender requested payment of the missed deposit into the rollover account, the two overdue mandatory principal payments, and late payment charges and default interest in the aggregate amount of $1,281,000 by January 18, 2013. On January 22, 2013, the Company used a portion of the proceeds from our sale of the Waianae Mall (discussed above) to pay the entire amount requested by Lahaina Lender and cure the events of default under the Lahaina Loan.

Since the acquisition of the Lahaina Gateway property on November 9, 2012, cash from operations from the Lahaina Gateway property has not been sufficient to support the property’s operating expenses, the debt service obligations under the Lahaina Loan, and the various cash reserve requirements imposed by the Lahaina Lender. As a result, since the acquisition of the Lahaina Gateway property, the Company has supported the property’s cash requirements with cash from operations generated by other properties within the Company’s portfolio. In order to settle the Company’s obligations under the Lahaina Loan and avoid potential litigation and foreclosure proceedings (and the associated delays and expenses), relating to the Lahaina Gateway property, the Company is currently negotiating a deed in lieu of foreclosure agreement with the Lahaina Lender (the “DIL Agreement”). Pursuant to the proposed terms of the DIL Agreement, the Company will convey title to the Lahaina Gateway property to the Lahaina Lender in exchange for the Lahaina Lender’s agreement not to seek payment from the Company for any amounts owed under the Lahaina Loan, subject to certain exceptions as set forth in the DIL Agreement.

The execution of the DIL Agreement is subject to a number of conditions, including mutual agreement on its final terms, and there is no guarantee that the Company will enter into the DIL Agreement on the terms described above, or at all.

KeyBank Mezzanine Loan

On June 13, 2012, the Company, through TNP SRT Portfolio II Holdings, LLC (“TNP SRT Portfolio II Holdings”) obtained a mezzanine loan from KeyBank in the original principal amount of $2,000,000 pursuant to a Loan Agreement by and between TNP SRT Portfolio II Holdings and KeyBank and a Promissory Note by TNP SRT Portfolio II Holdings in favor of KeyBank. The proceeds were also used to refinance the portions of the Credit Facility secured by Morningside Marketplace, Cochran Bypass (Bi Lo Grocery Store), Ensenada Square, Florissant Marketplace and Turkey Creek. The KeyBank Mezzanine Loan was paid in January 2013 using a portion of the proceeds from our sale of the Waianae Mall.

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7. FAIR VALUE DISCLOSURES

The Company believes the total values reflected on its condensed consolidated balance sheets reasonably approximate the fair values for cash and cash equivalents, accounts receivable, accounts payable and accrued expenses, and amounts due to affiliates due to their short-term nature, except for the Company’s notes payable, which are disclosed below.

The fair value of the Company’s notes payable is estimated using a present value technique based on contractual cash flows and management’s observations of current market interest rates for instruments with similar characteristics, including remaining loan term, loan-to-value ratio, type of collateral and other credit enhancements. The Company significantly reduces the amount of judgment and subjectivity in its fair value determination through the use of cash flow inputs that are based on contractual obligations. Discount rates are determined by observing interest rates published by independent market participants for comparable instruments. The Company classifies these inputs as Level 2 inputs.

The following table provides the carrying values and fair values of the Company’s notes payable as of March 31, 2013 and December 31, 2012:

At March 31, 2013	Carrying Value (1)		Fair Value (2)
Notes Payable	$	185,323,000	$	183,779,000

At December 31, 2012	Carrying Value (1)		Fair Value (2)
Notes Payable	$	190,577,000	$	191,319,000

(1) The carrying value of the Company’s notes payable represents outstanding principal as of March 31, 2013 and December 31, 2012.

(2) The estimated fair value of the notes payable is based upon indicative market prices of the Company’s notes payable based on prevailing market interest rates.

8. EQUITY

Common Stock

Under the Company’s Articles of Amendment and Restatement (the “Charter”), the Company has the authority to issue 400,000,000 shares of common stock. All shares of common stock have a par value of $0.01 per share. On October 16, 2008, the Company issued 22,222 shares of common stock to the Sponsor for an aggregate purchase price of $200,000. As of March 31, 2013, Anthony W. Thompson, the Company’s current Co-Chief Executive Officer and President, directly owned 111,111 shares of the Company’s common stock for which he paid an aggregate purchase price of $1,000,000 and the Sponsor, which is controlled by Mr. Thompson, owned 22,222 shares of the Company’s common stock.

On February 7, 2013, the Company terminated the Offering and ceased offering shares of common stock in the primary offering and under the DRIP. As of the termination of the Offering on February 7, 2013, the Company had accepted subscriptions for, and issued, 10,969,714 shares of common stock (net of share redemptions), including 391,182 shares of common stock pursuant to the DRIP, resulting in gross offering proceeds of $108,357,000.

Common Units

On May 26, 2011, in connection with the acquisition of Pinehurst Square East, a retail property located in Bismarck, North Dakota, the OP issued 287,472 Common Units to certain of the sellers of Pinehurst Square East who elected to receive Common Units for an aggregate value of approximately $2,587,000, or $9.00 per Common Unit. On March 12, 2012, in connection with the acquisition of Turkey Creek, a retail property located in Knoxville, Tennessee, the OP issued 144,324 Common Units to certain of the sellers of Turkey Creek who elected to receive Common Units for an aggregate value of approximately $1,371,079, or $9.50 per Common Unit.

Preferred Stock

The Charter authorizes the Company to issue 50,000,000 shares of $0.01 par value preferred stock. As of March 31, 2013 and December 31, 2012, no shares of preferred stock were issued and outstanding.

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Share Redemption Program

The Company’s share redemption program allows for share repurchases by the Company when certain criteria are met by requesting stockholders. Share repurchases pursuant to the share redemption program are made at the sole discretion of the Company. The number of shares to be redeemed during any calendar year is limited to no more than (1) 5.0% of the weighted average of the number of shares of the Company’s common stock outstanding during the prior calendar year and (2) those that could be funded from the net proceeds from the sale of shares under the DRIP in the prior calendar year plus such additional funds as may be borrowed or reserved for that purpose by the Company’s board of directors. The Company reserves the right to reject any redemption request for any reason or no reason or to amend or terminate the share redemption program at any time. The Company did not redeem any common shares under its share redemption program during the three months ended March 31, 2013. During the three months ended March 31, 2012, the Company redeemed 17,649 shares (including 549 shares issued under the DRIP program) of common shares under its share redemption program.

Effective January 15, 2013, the Company suspended its share redemption program, including redemptions upon death and disability.

Distributions

In order to qualify as a REIT, the Company is required to distribute at least 90% of its annual REIT taxable income, subject to certain adjustments, to its stockholders. Until the Company generates sufficient cash flow from operations to fully fund the payment of distributions, some or all of the Company’s distributions have been paid from other sources, including proceeds from the Offering.

Effective January 15, 2013, the Company announced that it will no longer be making monthly distributions. Quarterly distributions will be considered by the Company’s board of directors for 2013. On March 19, 2013, the Company announced that it will not be making a quarterly distribution for the quarter ended March 31, 2013.

The following table sets forth the distributions declared and paid to the Company’s common stockholders and non-controlling Common Unit holders for the three months ended March 31, 2013 and the year ended December 31, 2012, respectively:

	Distributions Declared to Common Stockholders (1)		Distributions Declared Per Share (1)		Distributions Declared to Common Unit Holders (1)/(3)		Cash Distribution Payments to Common Stockholders (2)		Cash Distribution Payments to Common Unit Holders (2)		Reinvested Distributions (DRIP shares issuance) (2)		Total Common Stockholder Distributions Paid and DRIP Shares Issued
First Quarter 2013 (4)	$	636,000	$	0.05833	$	25,000	$	390,000	$	25,000	$	246,000	$	636,000

	Distributions Declared to Common Stockholders (1)		Distributions Declared Per Share (1)		Distributions Declared to Common Unit Holders (1)/(3)		Cash Distribution Payments to Common Stockholders (2)		Cash Distribution Payments to Common Unit Holders (2)		Reinvested Distributions (DRIP shares issuance) (2)		Total Common Stockholder Distributions Paid and DRIP Shares Issued
First Quarter 2012	$	1,183,000	$	0.05833	$	57,000	$	721,000	$	52,000	$	406,000	$	1,127,000
Second Quarter 2012		1,637,000	$	0.05833		74,000		866,000		71,000		570,000		1,436,000
Third Quarter 2012		1,874,000	$	0.05833		76,000		1,015,000		76,000		709,000		1,724,000
Fourth Quarter 2012 (4)		1,259,000	$	0.05833		51,000		1,274,000		76,000		607,000		1,881,000
	$	5,953,000			$	258,000	$	3,876,000	$	275,000	$	2,292,000	$	6,168,000

(1) Distributions were generally declared monthly and are calculated at a monthly distribution rate of $0.05833 per share of common stock and Common Units.

(2) Cash distributions were paid, and DRIP shares issued pursuant to the Company’s distribution reinvestment plan, generally on a monthly basis. Cash distributions for all record dates of a given month were generally paid approximately 15 days following month end.

(3) None of the Common Unit holders of the OP are participating in the Company’s distribution reinvestment program, which was terminated effective February 7, 2013.

(4) Distributions for the month of December 2012 in the aggregate amount of $636,000 were declared on January 18, 2013, of which $390,000 was paid in cash and $246,000 was paid through the Company’s distribution reinvestment plan in the form of additional shares of common stock. Total dividends paid to holders of Common Units of the OP for the same period were $25,000.

Distribution Reinvestment Plan

The Company adopted the DRIP which allowed common stockholders to purchase additional shares of the Company’s common stock through the reinvestment of distributions, subject to certain conditions. The Company registered and reserved 10,526,316 shares of its common stock for sale pursuant to the DRIP The DRIP was terminated effective February 7, 2013 in connection with the expiration of the Offering and the Company’s deregistration of all of the unsold shares registered for sale pursuant to the Offering. For the three months ended March 31, 2013 and 2012, $246,000 and $406,000 in distributions were reinvested and 25,940 and 42,818 shares of common stock were issued under the DRIP, respectively.

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9. EARNINGS PER SHARE

EPS is computed by dividing net income (loss) attributable to common stockholders by the weighted average number of common shares outstanding during each period. Diluted EPS is computed after adjusting the basic EPS computation for the effect of potentially dilutive securities outstanding during the period. The effect of non-vested shares, if dilutive, is computed using the treasury stock method. The Company applies the two-class method for determining EPS as its outstanding unvested shares with non-forfeitable dividend rights are considered participating securities. The Company’s excess of distributions over earnings related to participating securities are shown as a reduction in income (loss) attributable to common stockholders in the Company’s computation of EPS.

The following table sets forth the computation of the Company’s basic and diluted loss per share:

	For the Three Months Ended
	March 31,
	2013			2012
Numerator - basic and diluted
Net loss from continuing operations	$	(3,458,000	)	$	(4,421,000	)
Non-controlling interests' share in continuing operations		131,000			214,000
Distributions paid on unvested restricted shares		-			(2,000	)
Net loss from continuing operations applicable to common shares		(3,327,000	)		(4,209,000	)
Discontinued operations		4,641,000			56,000
Non-controlling interests' share in discontinued operations		(176,000	)		(2,000	)
Net income (loss) applicable to common shares	$	1,138,000		$	(4,155,000	)
Denominator - basic and diluted
Basic weighted average common shares		10,935,089			6,797,797
Effect of dilutive securities Common Units (1)		431,796			-
Diluted weighted average common shares		11,366,885			6,797,797
Basic Earnings per Common Share
Net loss from continuing operations applicable to common shares	$	(0.31	)	$	(0.62	)
Discontinued operations		0.41			0.01
Net earnings (loss) applicable to common shares	$	0.10		$	(0.61	)
Diluted Earnings per Common Share
Net loss from continuing operations applicable to common shares	$	(0.31	)	$	(0.62	)
Discontinued operations		0.41			0.01
Net earnings (loss) applicable to common shares	$	0.10		$	(0.61	)

(1) Number of convertible Common Units pursuant to the redemption rights outlined in the Company's registration statement on Form S-11. Anti-dilutive for three months ended March 31, 2012.

10. INCENTIVE AWARD PLAN

The Company adopted an incentive award plan on July 7, 2009 (the “Incentive Award Plan”) that provides for the grant of equity awards to its employees, directors and consultants and those of the Company’s affiliates. The Incentive Award Plan authorizes the grant of non-qualified and incentive stock options, restricted stock awards, restricted stock units, stock appreciation rights, dividend equivalents and other stock-based awards or cash-based awards. The Company has reserved 2,000,000 shares of common stock for stock grants pursuant to the Incentive Award Plan.

Pursuant to the Company’s Amended and Restated Independent Directors Compensation Plan, which is a sub-plan of the Incentive Award Plan (the “Directors Plan”), the Company granted each of its independent directors an initial grant of 5,000 shares of restricted stock (the “initial restricted stock grant”) following the Company’s raising of the $2,000,000 minimum offering amount in the Offering on November 12, 2009. Each new independent director that subsequently joins the board of directors receives the initial restricted stock grant on the date he or she joins the board of directors. In addition, on the date of each of the Company’s annual stockholders meetings at which an independent director is re-elected to the board of directors, he or she will receive 2,500 shares of restricted stock. The restricted stock vests one-third on the date of grant and one-third on each of the next two anniversaries of the grant date. The restricted stock will become fully vested and non-forfeitable in the event of an independent director’s termination of service due to his or her death or disability, or upon the occurrence of a change in control of the Company.

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For the three months ended March 31, 2013 and 2012, the Company recognized compensation expense of $15,000 and $13,000, respectively, related to restricted common stock grants to its independent directors, which is included in general and administrative expense in the Company’s accompanying condensed consolidated statements of operations. Shares of restricted common stock have full voting rights and rights to dividends.

As of March 31, 2013 and December 31, 2012, there was $45,000 and $60,000, respectively, of total unrecognized compensation expense related to non-vested shares of restricted common stock. As of March 31, 2013, this expense is expected to be realized over a remaining period of one year. As of March 31, 2013 and December 31, 2012, the fair value of the non-vested shares of restricted common stock was $90,000 and 10,000 shares remain unvested. During the three months ended March 31, 2013, there were no restricted stock grants issued and no shares vested.

			Weighted
	Restricted		Average
	Stock (No.		Grant Date
	of Shares)		Fair Value
Balance - December 31, 2012		10,000	$	9.00
Granted		-		-
Vested		-		-
Balance - March 31, 2013		10,000		9.00

11. RELATED PARTY TRANSACTIONS

Pursuant to the advisory agreement by and among the Company, the OP and Advisor (the “Advisory Agreement”), the Company is obligated to pay Advisor specified fees upon the provision of certain services related to the investment of funds in real estate and real estate-related investments, management of the Company’s investments and for other services. Pursuant to the dealer manager agreement (the “Dealer Manager Agreement”) by and among the Company, the OP, and TNP Securities, LLC (the “Dealer Manager” or “TNP Securities”), prior to the termination of the Offering, the Company was obligated to pay the Dealer Manager certain commissions and fees in connection with the sales of shares in the Offering. Subject to certain limitations, the Company is also obligated to reimburse Advisor and Dealer Manager for organization and offering costs incurred by Advisor and Dealer Manager on behalf of the Company, and the Company is obligated to reimburse Advisor for acquisition and origination expenses and certain operating expenses incurred on behalf of the Company or incurred in connection with providing services to the Company. The Company records all related party fees as incurred, subject to any limitations described in the Advisory Agreement.

On August 7, 2011, the Company, the OP and Advisor entered into Amendment No.1 to the Advisory Agreement, effective as of August 7, 2011, in order to renew the term of the Advisory Agreement for an additional one-year term expiring on August 7, 2012. On January 12, 2012, the board of directors approved Amendment No. 3 to the Advisory Agreement to provide for the payment of a financing coordination fee to Advisor in an amount equal to 1.0% of any amount financed or refinanced by the Company or the OP. On August 1, 2012, the Company, the OP and Advisor entered into an amendment to the Company’s Advisory Agreement, effective August 7, 2012, which, among other things:

· Renews the term of Advisory Agreement for an additional one-year term expiring on August 7, 2013.

· Establishes a requirement that the Company maintains at all times a cash reserve of at least $4,000,000 and provides that Advisor may deploy any cash proceeds in excess of the cash reserve for the Company’s business pursuant to the terms of the Advisory Agreement.

· Deletes in its entirety Section 13 of the Advisory Agreement, which provided, among other things, that before the Company could complete a business combination with Advisor to become self-administered, certain conditions would have to be satisfied, including (i) the formation of a special committee comprised entirely of the Company’s independent directors, (ii) the receipt of an opinion from a qualified investment banking firm concluding that consideration to be paid to acquire the Company’s advisor was financially fair to the Company’s stockholders and (iii) the approval of the business combination by the Company’s stockholders entitled to vote thereon in accordance with the charter.

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Organization and Offering Costs

Organization and offering costs of the Company (other than selling commissions and the dealer manager fee described below) are initially paid by Advisor and its affiliates on the Company’s behalf. Such costs include legal, accounting, printing and other offering expenses, including marketing, salaries and direct expenses of certain of Advisor’s employees and employees of Advisor’s affiliates and others. Pursuant to the Advisory Agreement, the Company is obligated to reimburse Advisor or its affiliates, as applicable, for organization and offering costs associated with the Offering, provided the Company is not obligated to reimburse Advisor to the extent organization and offering costs, other than selling commissions and dealer manager fees, incurred by the Company exceed 3.0% of the gross offering proceeds from the Offering. Any such reimbursement will not exceed actual expenses incurred by Advisor.

As of March 31, 2013 and December 31, 2012, cumulative organization and offering costs incurred by Advisor on the Company’s behalf were $3,272,000 and $3,016,000, respectively. These costs are payable by the Company to the extent organization and offering costs, other than selling commissions and dealer manager fees, do not exceed 3.0% of the gross proceeds of the Offering. As of March 31, 2013, cumulative organization and offering costs reimbursed to the Advisor or paid directly by the Company were $4,273,000, which amount exceeded 3.0% of the gross proceeds from the Offering by $1,001,000. This excess was billed to Advisor and settled as of January 31, 2013.

Selling Commissions and Dealer Manager Fees

The Dealer Manager received a sales commission of 7.0% of the gross proceeds from the sale of shares of common stock in the primary offering. The Dealer Manager also received 3.0% of the gross proceeds from the sale of shares in the primary offering in the form of a dealer manager fee as compensation for acting as the dealer manager. The Company incurred selling commissions and dealer manager fees during the following periods:

	For the Three Months Ended
	March 31,				Inception Through
	2013		2012		March 31, 2013
Selling Commissions	$	32,000	$	1,196,000	$	6,925,000
Dealer Manager Fee		15,000		534,000		3,090,000
	$	47,000	$	1,730,000	$	10,015,000

Reimbursement of Operating Expenses

The Company reimburses Advisor for all expenses paid or incurred by Advisor in connection with the services provided to the Company, subject to the limitation that the Company will not reimburse Advisor for any amount by which the Company’s operating expenses (including the asset management fee described below) at the end of the four preceding fiscal quarters exceeds the greater of: (1) 2% of its average invested assets (as defined in the Charter), or (2) 25% of its net income (as defined in the Charter) determined without reduction for any additions to depreciation, bad debts or other similar non-cash expenses and excluding any gain from the sale of the Company’s assets for that period (the “2%/25% guideline”). Notwithstanding the above, the Company may reimburse Advisor for expenses in excess of the 2%/25% guideline if a majority of the independent directors determines that such excess expenses are justified based on unusual and nonrecurring factors. For the twelve months ended March 31, 2013, the Company’s total operating expenses (as defined in the Charter) did not exceed the 2%/25% guideline.

The Company reimburses Advisor for the cost of administrative services, including personnel costs and its allocable share of other overhead of Advisor such as rent and utilities; provided, however, that no reimbursement shall be made for costs of such personnel to the extent that personnel are used in transactions for which Advisor receives a separate fee or with respect to an officer of the Company. For the three months ended March 31, 2013 and 2012, the Company recorded a net recovery of administrative services of $98,000 and incurred $182,000 of administrative services to Advisor, respectively. The $98,000 net recovery resulted from an overaccrual of certain operating costs in 2012.  As of March 31, 2013 and December 31, 2012, administrative services of $0 and $209,000, respectively, were included in amounts due to affiliates.

Property Management Fee

The Company pays TNP Property Manager, LLC (“TNP Manager”), its property manager and an affiliate of Advisor, a market-based property management fee of up to 5.0% of the gross revenues generated by each property in connection with the operation and management of the Company’s properties. TNP Manager may subcontract with third party property managers and is responsible for supervising and compensating those property managers. For the three months ended March 31, 2013 and 2012, the Company incurred $344,000 and $250,000, respectively, in property management fees to TNP Manager. As of March 31, 2013 and December 31, 2012, property management fees of $60,000 and $48,000, respectively, were included in amounts due to affiliates.

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Acquisition and Origination Fee

The Company pays Advisor an acquisition fee equal to 2.5% of the cost of investments acquired, including acquisition expenses and any debt attributable to such investments. The Company incurred and paid $13,000 and $1,212,000 in acquisition fees to Advisor during the three months ended March 31, 2013 and 2012.

The Company pays Advisor 2.5% of the amount funded by the Company to acquire or originate real estate-related loans, including third party expenses related to such investments and any debt used to fund the acquisition or origination of the real estate related loans. The Company did not incur any loan origination fees to Advisor for the three months ended March 31, 2013 and 2012.

Asset Management Fee

The Company pays Advisor a monthly asset management fee equal to one-twelfth of 0.6% of the aggregate cost of all real estate investments the Company acquires; provided, however, that Advisor will not be paid the asset management fee until the Company’s funds from operations exceed the lesser of (1) the cumulative amount of any distributions declared and payable to the Company’s stockholders or (2) an amount that is equal to a 10.0% cumulative, non-compounded, annual return on invested capital for the Company’s stockholders. On November 11, 2011, the board of directors approved Amendment No. 2 to the Advisory Agreement to clarify that upon termination of the Advisory Agreement, any asset management fees that may have accumulated in arrears, but which had not been earned pursuant to the terms of the Advisory Agreement, will not be paid to Advisor. There were no asset management fees incurred for the three months ended March 31, 2013 and 2012.

Disposition Fee

If Advisor or its affiliates provides a substantial amount of services, as determined by the Company’s independent directors, in connection with the sale of a real property, Advisor or its affiliates will be paid disposition fees up to 50.0% of a customary and competitive real estate commission, but not to exceed 3.0% of the contract sales price of each property sold. For the three months ended March 31, 2013 and 2012, the Company incurred $924,000 and $24,000 of disposition fees payable to Advisor related to the Waianae Sale and the sale of the McDonalds pad at Willow Run in 2013 and the disposition of the KFC pad at Morningside Marketplace in 2012. There were no disposition fees payable to Advisor as of March 31, 2013 and December 31, 2012.

Leasing Commission Fee

On June 9, 2011, pursuant to Section 11 of the Advisory Agreement with the Advisor, the Company’s board of directors approved the payment of fees to the Advisor for services it provides in connection with leasing the Company’s properties. The amount of such leasing fees will be usual and customary for comparable services rendered for similar real properties in the geographic market of the properties leased. The leasing fees will be in addition to the market-based fees for property management services payable by the Company to TNP Manager, an affiliate of the Advisor. For the three months ended March 31, 2013 and 2012, the Company incurred and paid approximately $124,000 and $5,000 of lease commissions to Advisor or its affiliates, respectively. As of March 31, 2013 and December 31, 2012, leasing commission fees of $0 and $14,000, respectively, were included in amounts due to affiliates.

Financing Coordination Fee

On January 12, 2012, the board of directors approved Amendment No. 3 to the Advisory Agreement to provide for the payment of a financing coordination fee to Advisor in an amount equal to 1.0% of any amount financed or refinanced by the Company or the OP. There were no financing coordination fees incurred for the three months ended March 31, 2013. For the three months ended March 31, 2012, the Company incurred and paid $361,000 of financing coordination fees to Advisor or its affiliates.

Guaranty Fees

In connection with certain acquisition financings, the Company’s Chairman and Co-Chief Executive Officer and/or the Sponsor had executed certain guaranty agreements to the respective lenders. As consideration for such guaranty, the Company entered into a reimbursement and fee agreement to provide for an upfront payment and an annual guaranty fee payment for the duration of the guarantee period. For the three months ended March 31, 2013 and 2012, the Company incurred approximately $14,000 and $13,000, respectively, of guaranty fees. As of March 31, 2013 and December 31, 2012, guaranty fees of approximately $4,000 and $10,000, respectively, were included in amounts due to affiliates. At March 31, 2013, the Company’s outstanding guaranty agreements relate to the guarantee on the financing on Constitution Trail and Osceola Village.

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Related Party Loans

In connection with the acquisition of Morningside Marketplace in January 2012, the Company financed the payment of a portion of the purchase price for Morningside Marketplace with the proceeds of (1) a loan in the aggregate principal amount of $235,000 from the Sponsor, (2) a loan in the aggregate principal amount of $200,000 from Mr. James Wolford, the Company’s former Chief Financial Officer, and (3) a loan in the aggregate principal amount of $920,000 from Mrs. Sharon Thompson, the spouse of Mr. Anthony W. Thompson, the Company’s Chairman, Co-Chief Executive Officer and President (collectively, the “Morningside Affiliate Loans”). The Morningside Affiliate Loans each accrued interest at a rate of 12% per annum and were due on April 8, 2012. All Morningside Affiliate Loans including unpaid accrued interest were paid in full as of March 31, 2012.

Interest expense incurred and paid by the Company to an affiliate of Advisor during the three months ended March 31, 2013 and 2012 was $0 and $20,000, respectively.

Summary of Related Party Fees

Summarized below are the related-party costs incurred by the Company for the three months ended March 31, 2013 and 2012, respectively, and payable as of March 31, 2013 and December 31, 2012:

	Incurred					Payable
	Three Months Ended March 31,					As of March		As of December
	2013			2012		31, 2013		31, 2012
Expensed
Asset management fees	$	-		$	-	$	-	$	-
Reimbursement of operating expenses		(98,000	)		182,000		-		209,000
Acquisition fees		13,000			1,212,000		-		475,000
Property management fees		344,000			250,000		60,000		48,000
Guaranty fees		14,000			13,000		4,000		10,000
Disposition fees		924,000			24,000		-		-
Interest expense on notes payable		-			20,000		-		-
	$	1,197,000		$	1,701,000	$	64,000	$	742,000
Capitalized
Financing coordination fee	$	-		$	361,000	$	-	$	-
Leasing commission fees		124,000			5,000		14,000		-
	$	124,000		$	366,000	$	14,000	$	-
Additional Paid In Capital
Selling commissions	$	32,000		$	1,196,000	$	-	$	9,000
Dealer manager fees		15,000			534,000		-		4,000
Organization and offering costs		7,000			64,000		-		-
	$	54,000		$	1,794,000	$	-	$	13,000

In March 2012, the Company reimbursed its advisor $240,000 related to a non-refundable earnest deposit incurred by an affiliate of Advisor in 2010 on a potential acquisition commonly known as Morrison Crossing. The reimbursement was subsequently determined by the Company to be non-reimbursable since the acquisition was not one that was approved by the Company’s board of directors in 2010 and accordingly, the Company recorded the amount as a receivable from Advisor and recorded a provision to reserve the entire amount at March 31, 2013 and December 31, 2012. In May 2013, the Company settled with Advisor and determined to not seek reimbursement from Advisor for the amount previously paid.

12. COMMITMENTS AND CONTINGENCIES

Lahaina Gateway Ground Lease

The Lahaina Gateway property is encumbered by a ground lease which was assigned to the Company in connection with the acquisition of the property on November 9, 2012. The original lease term is for a period of 55 years, commencing on February 2, 2005 with an expiration date of February 1, 2060. The current annual base rent is $1,187,000, payable in monthly installments of approximately $99,000 through February 1, 2015. The annual base rent will increase to $1,342,000 on February 2, 2015, with scheduled increases of 13% every five years through February 2, 2035. Thereafter, the annual base rent will be renegotiated each five year period through lease expiration.

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Osceola Village Contingencies

In connection with the acquisition financing on Osceola Village, the Company through its subsidiary, granted a lender a profit participation in the property equal to 25% of the net profits received by the Company upon the sale of the property (the “Profit Participation Payment”). Net profits is calculated as (1) the gross proceeds received by the Company upon a sale of the property in an arms-length transaction at market rates to third parties less (2) the sum of: (a) principal repaid to the lender out of such sales proceeds at the time of such sale; (b) all bona fide closing costs and similar expenses provided that all such closing costs and similar expenses are paid to third parties, unaffiliated with the Company including, without limitation, reasonable brokerage fees and reasonable attorneys’ fees paid to third parties, unaffiliated with the Company and incurred by the Company in connection with the sale; and (c) a stipulated amount of $3,200,000. If for any reason consummation of such sale has not occurred on or before the scheduled maturity date or any earlier foreclosure of the underlying mortgage loan secured by the property, the Company shall be deemed to have sold the property as of the business day immediately preceding the mortgage loan maturity date or the filing date of the foreclosure action, whichever is applicable, for an amount equal to a stipulated sales price and shall pay the lender the Profit Participation Payment. In the event the underlying mortgage loan is prepaid, the Company shall also be required to immediately pay the Profit Participation Payment based upon a deemed sale of the property for a stipulated sales price. Based on the estimated sale price as of March 31, 2013 the Company has recorded an accrual for the estimated liability under the Profit Participation Payment.

Additionally, in connection with the acquisition financing on Osceola Village, the Company entered into a Master Lease Agreement (the “Master Lease”) with TNP SRT Osceola Village Master Lessee, LLC, a wholly-owned subsidiary of the OP (the “Master Lessee”). Pursuant to the Master Lease, TNP SRT Osceola Village leased to Master Lessee the approximately 23,000 square foot portion of Osceola Village which was not leased to third-party tenants as of the closing date (the “Premises”). The Master Lease provides that the Master Lessee will pay TNP SRT Osceola Village a monthly rent in an amount equal to $36,425, provided that such monthly amount will be reduced proportionally for each square foot of space at the premises subsequently leased to third-party tenants pursuant to leases which are reasonably acceptable to the lender and which satisfy certain criteria set forth in the Master Lease (“Approved Leases”). The Master Lease has a seven-year term, subject to earlier expiration upon the earlier to occur of (1) the date on which all available rentable space at the Premises is leased to third-party tenants pursuant to Approved Leases and (2) the date on which the mortgage loan is repaid in full in cash (other than as a result of a credit bid by the lender at a foreclosure sale). The Master Lessee has no right to assign or pledge the Master Lease or to sublet any part of the premises without the prior written consent of TNP SRT Osceola Village and the lender. In connection with the acquisition of Osceola Village, TNP SRT Osceola Village obtained a mortgage (the “Osceola Loan”) from ANICO. The Master Lease was assigned to ANICO pursuant to the assignment of leases and rents in favor of ANICO entered into by TNP SRT Osceola Village in connection with the Osceola Loan. Pursuant to the Master Lease, the Master Lessee acknowledges and agrees that upon any default by TNP SRT Osceola Village under any of the loan documents related to the Osceola Loan, ANICO will be entitled to enforce the assignment of the Master Lease to ANICO and replace TNP SRT Osceola Village under the Master Lease for all purposes.

Constitution Trail Contingency

In connection with the financing of the Constitution Trail acquisition, TNP SRT Constitution Trail, LLC, a wholly owned subsidiary of the OP (“TNP SRT Constitution Trail”), TNP SRT Constitution Trail Master Lessee, LLC (the “Starplex Master Lessee”), a wholly owned subsidiary of the OP, and the Sponsor, entered into a Master Lease Agreement with respect to a portion of Constitution Trail (the “Starplex Master Lease”). Pursuant to the Starplex Master Lease, TNP SRT Constitution Trail leased to the Starplex Master Lessee an approximately 7.78 acre parcel of land included in the Constitution Trail property, and the approximately 44,064 square foot Starplex Cinemas building located thereon (the “Starplex Premises”). The Starplex Master Lease provides that, in the event that the annual gross sales from the Starplex premises are less than $2,800,000, then thereafter the Starplex Master Lessee will pay TNP SRT Constitution Trail a monthly rent in an amount equal to $62,424 ($749,088 annually), subject to an offset based on any minimum annual rent for the Starplex premises received by TNP SRT Constitution Trail. The Starplex Master Lease will expire upon the earlier to occur of (1) December 31, 2018 and (2) the date on which the Constitution Trail mortgage loan is repaid in full in cash (other than as a result of a credit bid by the lender at a foreclosure sale or refinancing of the Constitution Trail Loan). The Starplex Master Lessee has no right to assign or pledge the Starplex Master Lease or to sublet any part of the Starplex premises without the prior written consent of TNP SRT Constitution Trail and the lender of the mortgage loan.

Carson Plaza Contingency

In 2012, the Company pursued an acquisition commonly known as Carson Plaza and placed a non-refundable deposit of $250,000 into escrow which was expensed and included in transaction expense for the year ended December 31, 2012. The acquisition did not materialize as a result of the Company’s claim of certain undisclosed environmental conditions uncovered during due diligence. The seller disagreed with the Company’s claim. The outcome of the Company’s claim and the prospect of the recovery of the deposit are unknown at the present time and accordingly, the Company did not accrue for any recovery of such amount at March 31, 2013 and December 31, 2012.

Economic Dependency

The Advisor and its affiliates currently provide certain services to the Company pursuant to the Advisory Agreement and the property management agreements with respect to the Company’s properties, management of the daily operations of the Company’s investment portfolio and certain general and administrative responsibilities. These services are currently relatively limited due to the fact that the Company is not currently actively engaged in acquisitions and has hired a number of employees of its own. As disclosed in “Note 1. ORGANIZATION AND BUSINESS”, the Company is currently engaged in negotiations to replace the Advisor with Glenborough. In the event that the Company is successful in transitioning to Glenborough as its external advisor and property manager, the Company will become dependent upon Glenborough and its affiliates to provide similar services to the Company pursuant to an advisory agreement and property management agreements with Glenborough. In the event that the Advisor, or Glenborough or any other successor advisor, is unable to provide the respective services, the Company will be required to obtain such services from other sources.

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Environmental

As an owner of real estate, the Company is subject to various environmental laws of federal, state and local governments. The Company is not aware of any environmental liability that could have a material adverse effect on its financial condition or results of operations. However, changes in applicable environmental laws and regulations, the uses and conditions of properties in the vicinity of the Company’s properties, the activities of its tenants and other environmental conditions of which the Company is unaware with respect to the properties could result in future environmental liabilities.

Legal Matters

From time to time, the Company is party to legal proceedings that arise in the ordinary course of its business. Management is not aware of any legal proceedings of which the outcome is reasonably likely to have a material adverse effect on its results of operations or financial condition.

13. SUBSEQUENT EVENTS

Amendment of Credit Facility by entering into Forbearance Agreement

On April 1, 2013, the Company, the OP, certain subsidiaries of the OP which are borrowers under the Credit Facility and KeyBank, as lender and agent for the other Lenders, entered into the Forbearance Agreement which amended the terms of the Credit Facility and provides for certain additional agreements. See “Note 6.NOTES PAYABLE.”

Amendment to Consulting Agreement

The Company’s board of directors is actively negotiating with Glenborough to replace the Company’s current advisor. In December 2012, the Company entered into a consulting agreement with Glenborough to assist the Company through the advisor change process. Effective May 1, 2013, the Company and Glenborough entered into an amendment to the consulting agreement which expanded the scope of the consulting services provided to the Company by Glenborough (as described below) and increased the monthly consulting fee payable to Glenborough by the Company from $75,000 per month to $90,000 per month.

Effective May 1, 2013, pursuant to the amendment to the consulting agreement, Glenborough shall perform the following accounting services for the Company:

· All property accounts receivable functions including property rent and common area maintenance billings

· All property accounts payable functions

Effective June 1, 2013, the following additional services will also be performed by Glenborough pursuant to the amendment to the consulting agreement:

· Corporate level receivables and payables

· Loan administration

· Cash management and treasury functions

· SEC financial reporting 

· Management reporting

· Audit coordination

· Tax preparation and coordination

The Company evaluates subsequent events up until the date the condensed consolidated financial statements are issued.

Pending Disposition

On or about May 9, 2013, the purchase and sale agreement, as amended, for the sale of the office building at the Aurora Commons property (Note 3) had expired and the buyer did not release the contingencies in the purchase and sale agreement.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis should be read in conjunction with our condensed consolidated unaudited financial statements, the notes thereto and the other unaudited financial data included in this Quarterly Report on Form 10-Q and in our audited consolidated financial statements and the notes thereto, and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our 2012 Annual Report on Form 10-K, as filed with the Securities and Exchange Commission, or SEC, on April 1, 2013, which we refer to herein as our “Form 10-K.” As used herein, the terms “we,” “our,” and “us” refer to TNP Strategic Retail Trust, Inc. and, as required by context, TNP Strategic Retail Operating Partnership, LP, a Delaware limited partnership (which we refer to as our “OP”) and to their subsidiaries. References to “shares” and “our common stock” refer to the shares of our common stock.

Forward-Looking Statements

Certain statements included in this Quarterly Report on Form 10-Q that are not historical facts (including any statements concerning investment objectives, other plans and objectives of management for future operations or economic performance, or assumptions or forecasts related thereto) are forward-looking statements. These statements are only predictions. We caution that forward-looking statements are not guarantees. Actual events or our investments and results of operations could differ materially from those expressed or implied in any forward-looking statements. Forward-looking statements are typically identified by the use of terms such as “may,” “should,” “expect,” “could,” “intend,” “plan,” “anticipate,” “estimate,” “believe,” “continue,” “predict,” “potential” or the negative of such terms and other comparable terminology.

The forward-looking statements included herein are based upon our current expectations, plans, estimates, assumptions and beliefs, which involve numerous risks and uncertainties. Assumptions relating to the foregoing involve judgments with respect to, among other things, future economic, competitive and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond our control. Although we believe that the expectations reflected in such forward-looking statements are based on reasonable assumptions, our actual results and performance could differ materially from those set forth in the forward-looking statements. The following are some of the risks and uncertainties, although not all of the risks and uncertainties, that could cause our actual results to differ materially from those presented in our forward-looking statements:

• We have a limited operating history, which makes our future performance difficult to predict.

• Some of our executive officers, one of our directors and certain other key real estate professionals are also officers, directors, managers, key professionals and/or holders of a direct or indirect controlling interest in our advisor. As a result, they face conflicts of interest, including significant conflicts created by our advisor’s compensation arrangements with us and other programs managed by affiliates of our advisor and conflicts in allocating time among us and these other programs and investors.

• Because investment opportunities that are suitable for us may also be suitable for other programs managed by affiliates of our advisor, our advisor and its affiliates face conflicts of interest relating to the purchase of properties and other investments and such conflicts may not be resolved in our favor, meaning that we could invest in less attractive assets, which could reduce the investment return to our stockholders.

• We pay fees to and reimburse the expenses of our advisor and its affiliates, and pay substantial consulting fees to a third party in connection with our ongoing transition to a new advisor. These payments increase the risk that our stockholders will not earn a profit on their investment in us and increase the risk of loss to our stockholders.

• Our initial public offering has terminated and we are uncertain of our sources for funding our future capital needs. If we cannot obtain debt or equity financing on acceptable terms, our ability to continue to acquire real properties or other real estate related assets, fund or expand our operations and resume payment of distributions to our stockholders will be adversely affected.

• We depend on tenants for our revenue and, accordingly, our revenue is dependent upon the success and economic viability of our tenants. Revenues from our properties could decrease due to a reduction in tenants (caused by factors including, but not limited to, tenant defaults, tenant insolvency, early termination of tenant leases and non-renewal of existing tenant leases) and/or lower rental rates, making it more difficult for us to meet our financial obligations, including debt service and our ability to pay distributions to our stockholders.

• Our current and future investments in real estate and other real estate related investments may be affected by unfavorable real estate market and general economic conditions, which could decrease the value of those assets and reduce the investment return to our stockholders. Revenues from our properties and the properties and other assets directly securing our loan investments could decrease. Such events would make it more difficult for us to meet our debt service obligations and limit our ability to pay distributions to our stockholders.

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• Disruptions in the financial markets, changes in the availability of capital, uncertain economic conditions or changes in the real estate market could adversely affect the value of our investments.

• Certain of our debt obligations have variable interest rates with interest and related payments that vary with the movement of LIBOR or other indices. Increases in the indices could increase the amount of our debt payments and limit our ability to pay distributions to our stockholders.

• Under our advisory agreement, our advisor has been directed to ensure that we maintain a cash reserve of $4.0 million at all times. As a result of the significant cash requirement in completing our acquisition of Lahaina Gateway and the cash required by the lender following the Lahaina Gateway acquisition for a mandatory principal repayment and the establishment of cash reserves, our cash position has fallen to less than $4.0 million and is likely to fall further and remain below our $4.0 million target until we find other sources of cash, such as from borrowings, sales of assets or sales of equity capital. Any delay in securing additional debt or equity capital could adversely affect our ability to pay distributions or to meet our obligations as they become due.

• We are engaged in negotiations to replace our current advisor. It may be very difficult to transition to a new advisor (which would require the consent of some of our significant lenders). If we are unable to successfully transition to a replacement advisor, such failure would result in a substantial disruption to our business and would adversely affect the value of an investment in us. Even if we were successful in transitioning to a new advisor, such efforts would involve significant disruption to our business, which may adversely affect the value of your investment in us.

• Due to short-term liquidity issues and defaults under certain of our loan agreements, we have suspended our share redemption program, including redemptions upon death and disability, indefinitely.

• We have entered into a forbearance agreement with KeyBank National Association (“KeyBank”) which accelerates the maturity date of our outstanding indebtedness under our revolving credit facility with KeyBank (the “Credit Facility”) and places limitations on our ability to incur additional indebtedness.

• Legislative or regulatory changes (including changes to the laws governing the taxation of real estate investment trusts, or REITs) or changes to generally accepted accounting principles, or GAAP, could adversely affect our operations and the value of an investment in us.

All forward-looking statements should be read in light of the risks identified in Part I, Item 1A of our 2012 Annual Report on Form 10-K. Any of the assumptions underlying the forward-looking statements included herein could be inaccurate, and undue reliance should not be placed upon on any forward-looking statements included herein. All forward-looking statements are made as of the date of this Quarterly Report on Form 10-Q, and the risk that actual results will differ materially from the expectations expressed herein will increase with the passage of time. Except as otherwise required by the federal securities laws, we undertake no obligation to publicly update or revise any forward-looking statements made after the date of this Quarterly Report on Form 10-Q, whether as a result of new information, future events, changed circumstances or any other reason. In light of the significant uncertainties inherent in the forward looking statements included in this Quarterly Report on Form 10-Q, and the risks described in Part I, Item 1A of our 2012 Annual Report on Form 10-K, the inclusion of such forward-looking statements should not be regarded as a representation by us or any other person that the objectives and plans set forth in this Quarterly Report on Form 10-Q will be achieved.

Overview

TNP Strategic Retail Trust, Inc. is a Maryland corporation formed on September 18, 2008 to invest in and manage a portfolio of income producing retail properties, located primarily in the Western United States, and real estate-related assets, including the investment in or origination of mortgage, mezzanine, bridge and other loans related to commercial real estate. We have elected to be taxed as a real estate investment trust, or REIT, for federal income tax purposes, commencing with the taxable year ended December 31, 2009. We own substantially all of our assets and conduct our operations through our OP, of which we are the sole general partner.

On November 4, 2008, we filed a registration statement on Form S-11 with the Securities and Exchange Commission, or SEC, for our initial public offering of up to $1,000,000,000 in shares of our common stock to the public at $10.00 per share in our primary offering and up to $100,000,000 shares of our common stock to our stockholders at $9.50 per share pursuant to our distribution reinvestment plan. On August 7, 2009, the SEC declared our registration statement effective and we commenced our initial public offering. On February 7, 2013, we terminated our initial public offering and ceased offering shares of our common stock in our primary offering and under our distribution reinvestment plan.

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From the commencement of our initial public offering through the termination of our initial public offering on February 7, 2013, we accepted subscriptions for, and issued, 10,969,714 shares of our common stock (net of share redemptions), including 391,182 shares of our common stock issued pursuant to our distribution reinvestment plan, resulting in aggregate gross offering proceeds of $108,357,000, net of redemptions. As of March 31, 2013, we had redeemed 160,409 shares pursuant to our share redemption program for an aggregate redemption amount of approximately $1,604,000. Due to short-term liquidity issues and defaults under certain of our loan agreements, we suspended our share redemption program, including with respect to redemptions upon death and disability, effective as of January 15, 2013. For more information regarding our share redemption program, see Item 5, “Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer of Equity Securities—Share Redemption Program” in our 2012 Annual Report on Form 10-K.

On June 15, 2012, we filed a registration statement on Form S-11 with the SEC to register a following-on public offering of up to $900,000,000 in shares of our common stock. However, we subsequently determined not to proceed with our contemplated follow-on public offering and on March 1, 2013 we requested that the SEC withdraw the registration statement for our contemplated follow-on public offering, effective immediately. We currently do not expect to commence a follow-on offering.

Subject to certain restrictions and limitations, our business is currently managed by TNP Strategic Retail Advisor, LLC, our external advisor, pursuant to an advisory agreement. We refer to TNP Strategic Retail Advisor, LLC as our “advisor.” Our advisor and TNP Property Manager, LLC, which we refer to as our “property manager,” manage our operations and our portfolio of real estate and real estate-related assets. Our advisor and property manager are affiliates of our sponsor, Thompson National Properties, LLC. Our advisor and property manager depend on the capital from our sponsor and fees and other compensation that they receive from us in connection with the purchase, management and sale of our assets to conduct their operations.

Our sponsor has a limited operating history and, since its inception, has operated at a significant net loss. In addition, our sponsor and its subsidiaries also have substantial secured and unsecured debt obligations coming due in the next several years. As a result of our sponsor’s financial condition, our board of directors is actively negotiating with Glenborough, LLC and its affiliates (“Glenborough”) to replace our current advisor. Glenborough is a privately held full-service real estate investment and management company focused on the acquisition, management and leasing of high quality commercial properties. Glenborough and its predecessor entities have over three decades of experience in the commercial real estate industry. Our board of directors is engaged in ongoing negotiations regarding the transition to Glenborough as our external advisor and the termination of our current advisory agreement and the property management agreements with respect to our properties. However, any change to our advisor or our property manager will require the consent of a number of our significant lenders, which we are still in the process of negotiating. We can give no assurance that we will be able to secure such lender consents or come to terms with Glenborough with respect to the transition. In December 2012, we entered into a consulting agreement with Glenborough to assist us through the advisor change process. Pursuant to the consulting agreement, we agree to pay Glenborough a monthly consulting fee of $75,000 and reimburse Glenborough for its reasonable out-of-pocket expenses. From December 2012 through April 2013, we agreed to pay Glenborough a monthly consulting fee of $75,000 pursuant to the consulting agreement. Effective May 1, 2013, we amended the consulting agreement to expand the services provided to us by Glenborough and increase the monthly consulting fee payable to Glenborough to $90,000. The consulting agreement is terminable by either party upon 10 business days’ written notice.

Effective January 15, 2013, we announced that we will no longer be making monthly distributions. Quarterly distributions will be considered by our board of directors for 2013. On March 19, 2013, we announced that we will not be making a quarterly distribution for the quarter ended March 31, 2013.

Market Outlook

Since 2007 and the emergence of the global economic crisis, there have been persistent concerns regarding the creditworthiness and refinancing capabilities of both corporations and sovereign governments. Economies throughout the world have experienced lingering levels of high unemployment and low levels of consumer and business confidence due to a global downturn in economic activity. While some markets have shown some signs of recovery, concerns remain regarding job growth, income growth and the overall economic health of consumers, businesses and governments. Recent global economic events remain centered on the potential for the default of several European sovereign debt issuers and the impact that such an event would have on the European Union and the rest of the world’s financial markets. During 2011, S&P downgraded the credit rating of the United States to AA+ from AAA. In November 2012, Moody’s downgraded France’s sovereign debt rating to Aa1 from AAA and, in February 2013, Moody’s downgraded the U.K. government debt to Aa1 from AAA as well. The global ratings agencies continue to have a number of western sovereign issuers on negative watch as governments have struggled to resolve their fiscal obligations. These events have led to continued volatility in the capital markets.

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Properties

As of March 31, 2013, our portfolio included the 20 properties below, which we refer to as “our properties” or “our portfolio,” comprising an aggregate of 2,035,402 square feet of single- and multi-tenant, commercial retail space located in 14 states, which we purchased for an aggregate purchase price of $263,998,000.

					Original
		Square			Purchase
Property Name	Location	Feet (1)		Date Acquired	Price (2)		Debt (3)
Moreno Marketplace	Moreno Valley, California		78,321	11/19/2009	$	12,500,000	$	9,320,000
Northgate Plaza	Tucson, Arizona		103,492	7/6/2010		8,050,000		6,367,000
San Jacinto	San Jacinto, California		53,777	8/11/2010		7,088,000		3,207,000
Craig Promenade	Las Vegas, Nevada		86,395	3/30/2011		12,800,000		5,785,000
Pinehurst Square	Bismarck, North Dakota		114,292	5/26/2011		15,000,000		10,267,000
Cochran Bypass	Chester, South Carolina		45,817	7/14/2011		2,585,000		1,577,000
Topaz Marketplace	Hesperia, California		50,319	9/23/2011		13,500,000		8,070,000
Osceola Village	Kissimee, Florida		116,645	10/11/2011		21,800,000		18,029,000
Constitution Trail	Normal, Illinois		199,139	10/21/2011		18,000,000		15,053,000
Summit Point	Lafayette, Georgia		111,970	12/21/2011		18,250,000		12,327,000
Morningside Marketplace	Fontana, California		76,923	1/9/2012		18,050,000		9,000,000
Woodland West Marketplace	Arlington, Texas		176,414	2/3/2012		13,950,000		10,074,000
Ensenada Square	Arlington, Texas		62,612	2/27/2012		5,025,000		3,121,000
Shops at Turkey Creek	Knoxville, Tennessee		16,324	3/12/2012		4,300,000		2,824,000
Aurora Commons	Aurora, Ohio		89,211	3/20/2012		7,000,000		4,550,000
Florissant Marketplace	Florissant, Missouri		146,257	5/16/2012		15,250,000		9,240,000
Willow Run Shopping Center	Westminster, Colorado		91,575	5/18/2012		11,550,000		8,662,000
Bloomingdale Hills	Tampa, Florida		78,442	6/18/2012		9,300,000		5,600,000
Visalia Marketplace	Visalia, California		200,794	6/25/2012		19,000,000		14,250,000
Lahaina Gateway	Lahaina, Hawaii		136,683	11/9/2012		31,000,000		28,000,000
			2,035,402		$	263,998,000	$	185,323,000

(1) Square feet includes improvements made on ground leases at the property.

(2) The purchase price for Pinehurst Square East and Shops at Turkey Creek included the issuance of common units in our OP to the sellers. The purchase price for Summit Point included the issuance of preferred membership interests in the entity that indirectly owns the property.

(3) Debt represents the outstanding balance at March 31, 2013. For more information on our financing, see Item 2, “Management Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources” and “Note 6. NOTES PAYABLE” to our condensed consolidated unaudited financial statements included in this Quarterly Report on Form 10-Q.

First Quarter 2013 Highlights

• On January 22, 2013, we sold the Waianae Mall in Waianae, Hawaii to an unaffiliated buyer for a final sales price of $29,763,000 (the “Waianae Sale”). The mortgage on the Waianae Mall with an outstanding balance of $19,717,000 was assumed by the buyer in connection with the sale.

• On February 19, 2013, we sold the McDonalds pad at Willow Run to the lessee, McDonalds Real Estate Company, for $1,050,000. Net proceeds of $983,000 were used to pay down the Credit Facility.

• We paid in full the $2,000,000 balance of the KeyBank mezzanine loan with the net proceeds from the Waianae Sale.

• We paid $1,000,000 on the Credit Facility with the net proceeds from the Waianae Sale.

• During the quarter we negotiated a forbearance agreement with KeyBank (the “Forbearance Agreement”) which amended the terms of the Credit Facility and addressed certain events of default under the Credit Facility. The Forbearance Agreement was signed on April 1, 2013.

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Results of Operations

Comparison of the three months ended March 31, 2013 versus the three months ended March 31, 2012

The following table provides summary information about our results of operations for the three months ended March 31, 2013 and 2012:

	Three Months Ended March 31,						Increase			Percentage
	2013			2012			(Decrease)			Change
Rental and reimbursements	$	8,039,000		$	3,932,000		$	4,107,000			104.5	%
Operating and maintenance expenses		2,997,000			1,280,000			1,717,000			134.1	%
General and administrative expenses		1,598,000			631,000			967,000			153.2	%
Depreciation and amortization expenses		3,182,000			1,750,000			1,432,000			81.8	%
Transaction expenses		51,000			1,900,000			(1,849,000	)		(97.3	)%
Interest expense		3,669,000			2,789,000			880,000			31.6	%
Net loss from continuing operations		(3,458,000	)		(4,418,000	)		960,000			(21.7	)%
Income from discontinued operations		4,641,000			53,000			4,588,000			8,656.6	%
Net income (loss)		1,183,000			(4,365,000	)		5,548,000			(127.1	)%

Our results of operations for the three months ended March 31, 2013 are not indicative of those expected in future periods.

Revenue

Revenues increased by $4,107,000 to $8,039,000 during the three months ended March 31, 2013 compared to $3,932,000 for the three months ended March 31, 2012. The increase was primarily due to five additional property acquisitions since March 31, 2012 and a full quarter of operations for the five properties acquired in the first quarter of 2012. The occupancy rate for our property portfolio was 88%, based on 2,035,402 rentable square feet, as of March 31, 2013 compared to 84%, based on 1,389,870 rentable square feet, as of March 31, 2012.

Operating and maintenance expenses

Operating and maintenance expense increased by $1,717,000 to $2,997,000 during the three months ended March 31, 2013 compared to $1,280,000 for the three months ended March 31, 2012. The increase was primarily due to five additional property acquisitions since March 31, 2012 and a full quarter of operations for the five properties acquired in the first quarter of 2012. Included in operating and maintenance expenses are property management fees paid to an affiliate of our advisor of $295,000 and $233,000 for the three months ended March 31, 2013 and 2012, respectively.

General and administrative expenses

General and administrative expenses increased by $967,000 to $1,598,000 during the three months ended March 31, 2013 compared to $631,000 for the three months ended March 31, 2012. General and administrative expenses consisted primarily of legal fees, audit fees, restricted stock compensation, directors’ fees, salaries, tax fees, abandoned project costs and administrative expenses reimbursable to our advisor. The increase primarily relates to higher legal, audit and consulting costs during the current quarter including monthly consulting fees of $75,000 to Glenborough.

Depreciation and amortization expense

Depreciation and amortization expense increased by $1,432,000 to $3,182,000 during the three months ended March 31, 2013 compared to $1,750,000 for the three months ended March 31, 2012. The increase was primarily due to five additional property acquisitions since March 31, 2012 and a full quarter of depreciation and amortization for the five properties acquired in the first quarter of 2012.

Transaction expenses

Transaction expenses decreased by $1,849,000 to $51,000 during the three months ended March 31, 2013 compared to $1,900,000 for the three months ended March 31, 2012. We incurred transaction expenses for five properties acquired during the first quarter of 2012 and had no acquisitions during the first quarter of 2013.

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Interest expense

Interest expense increased by $880,000 to $3,669,000 during the three months ended March 31, 2013 compared to $2,789,000 for the three months ended March 31, 2012. The increase was primarily due to the increased debt levels associated with the acquisition of five additional properties since March 31, 2012 and a full quarter of interest for the five properties acquired in the first quarter of 2012 and was partially offset by the write-off of deferred financing costs in the prior year period. Interest expense for the three months ended March 31, 2012 included the amortization and write-off of deferred financing costs of $838,000. The write-off of approximately $540,000 of unamortized deferred financing costs was as a result of the refinancing of the four properties from our credit agreement onto a new term loan completed during the three months ended March 31, 2012.

Income from discontinued operations

Income from discontinued operations increased by $4,588,000 to $4,641,000 during the three months ended March 31, 2013 compared to $53,000 for the three months ended March 31, 2012. The increase during the three months ended March 31, 2013 is primarily attributed to the gain on sale of the Waianae Mall which was sold in January 2013. Income from discontinued operations for the three months ended March 31, 2012 includes the net operating results of Waianae Mall, the office building at the Aurora Commons property, the KFC parcel at Morningside Marketplace, which was sold in February 2012, and the Chase and Chevron parcels at Morningside Marketplace, which were sold in April 2012.

Net income (loss)

Net income for the three months ended March 31, 2013 was $1,183,000 compared to a net loss of $4,365,000 for the same period in 2012. The change from a net loss for the three months ended March 31, 2012 to net income for the three months ended March 31, 2013 is primarily attributed to higher revenues, the gain on sale of real estate in the quarter and the reduction in non-recurring transaction expenses.

Liquidity and Capital Resources

As of March 31, 2013, we owned 20 real estate properties with a net carrying value aggregating $224.1 million. Our principal demand for funds has been for the acquisition of real estate assets, the payment of operating expenses and interest on our outstanding indebtedness and the payment of distributions to our stockholders. On February 7, 2013, as a result of the expiration of our initial public offering, we ceased offering shares of our common stock in our primary offering and under our distribution reinvestment plan. Additionally, we filed an application on March 1, 2013 with the SEC to withdraw the registration statement on Form S-11 for our follow-on offering that was initially filed with the SEC on June 15, 2012. As a result of the termination of our initial public offering and our withdrawal of the registration statement for our follow-on offering, offering proceeds are not currently available to fund our cash needs, and will not be available until we are able to successfully engage in an offering of our securities. We expect our future cash needs will be funded using cash from operations, future asset sales, debt financing and the proceeds to us from any offering of our securities that we conduct in the future. We also expect our investment activity will be reduced until we are able to engage in an offering of our securities or are able to identify other significant sources of financing. Due to the decrease in capital resources, we have suspended our share redemption program, including redemptions for death and disability, effective January 15, 2013. We intend to reevaluate our ability to resume share redemptions pursuant to our share redemption program after transitioning to a new advisor and addressing our liquidity issues. Our ability to resume share redemptions will be determined by our board of directors based on our liquidity and cash needs.

On August 2, 2012, we, our operating partnership and our advisor entered into an amendment to our amended and restated advisory agreement, effective as of August 7, 2012, which, among other things, establishes a requirement that we maintain at all times a cash reserve of at least $4,000,000 and provides that our advisor may deploy any cash proceeds in excess of the cash reserve for our business pursuant to the terms of the advisory agreement. As a result of the significant cash required to complete the acquisition of Lahaina Gateway on November 9, 2012 and the additional cash required by the mortgage lender for the Lahaina Gateway acquisition for reserves and mandatory principal payments, our cash and cash equivalents have fallen to approximately $1,126,000 at March 31, 2013. Our restricted cash (funds held by the lenders for property taxes, insurance, tenant improvements, leasing commissions, capital expenditures, rollover reserves and other financing needs) has increased to $5,410,000 at March 31, 2013. For properties with such lender reserves, we may draw upon such reserves to fund the specific needs for which the funds were established.

On April 1, 2013, we entered into a forbearance agreement relating to our credit agreement with KeyBank (for additional discussion see “– KeyBank Credit Facility” below). On or before the expiration of the forbearance period, we currently intend to (1) refinance the credit agreement on or before the expiration of the forbearance agreement with KeyBank or with another lender; or (2) refinance a portion of the credit agreement on or before the expiration of the forbearance agreement with KeyBank or with another lender and paydown of a portion of the balance of the credit agreement with proceeds from disposition of certain properties securing the credit agreement.

As of March 31, 2013, our borrowings exceeded 300% of the value of our net assets due to the exclusion from total assets of intangible assets that were acquired with the acquisition of our properties. Because these intangible assets were part of the purchase price and because our overall indebtedness was less than 75% of the book value of our assets at March 31, 2013, the excess over the borrowing limitation has been approved by our independent directors. As of December 31, 2012, our borrowings exceeded 300% of the value of our net assets due to the exclusion from total assets of intangible assets that were acquired with the acquisition of our properties. Because these intangible assets were part of the purchase price and because our overall indebtedness was less than 75% of the book value of our assets at December 31, 2012, the excess over the borrowing limitation has been approved by our independent directors.

Cash Flows from Operating Activities

During the three months ended March 31, 2013, net cash used in operating activities from continuing operations was $2,432,000 compared to net cash provided by operating activities of $97,000 during the three months ended March 31, 2012, a negative net change in cash flows from operating activities of $2,529,000. The negative change in cash flows from operating activities during the three months ended March 31, 2013 was primarily due to negative net changes in operating asset and liability balances involving prepaid expenses, tenant receivables and other liabilities which were partially offset by favorable changes in loss from continuing operations adjusted by non-cash depreciation and amortization charges. Prepaid expense balances increased in the three months ended March 31, 2013 compared to a decrease in prepaid expense balances for the prior year period resulting in a negative impact to cash flows from operating activities of $2,900,000. Tenant receivable balances increased in the three months ended March 31, 2013 compared to the prior year period resulting in a negative impact to cash flows from operating activities of $995,000. Other liability balances decreased in the three months ended March 31, 2013 compared to the prior year period resulting in a negative impact to cash flows from operating activities of $1,760,000. These negative impacts to cash flows from operating activities during the three months ended March 31, 2013 were partially offset by a reduced loss from continuing operations (reduced by $960,000) and higher non-cash depreciation and amortization adjustments of $1,432,000.

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Cash Flows from Investing Activities

Our most significant component of cash used in investing activities involves our expenditures for real estate acquisitions. During the three months ended March 31, 2013, net cash used in investing activities from continuing operations was $1,346,000 compared to $46,401,000 during the three months ended March 31, 2012. The decrease was primarily attributed to the acquisition of five properties during 2012 for an aggregate purchase price of $48,325,000. No property acquisitions were completed in the three months ended March 31, 2013. Net cash provided by investing activities from discontinued operations was $9,702,000 representing the net proceeds on the Waianae Sale and the sale of the McDonalds pad at Willow Run.

Cash Flows from Financing Activities

Our cash flows from financing activities consist primarily of proceeds from our initial public offering, debt financings and distributions paid to our stockholders. During the three months ended March 31, 2013, net cash used in financing activities from continuing operations was $4,716,000, compared to net cash provided by financing activities of $50,143,000 during the three months ended March 31, 2012. The primary components of net cash used in financing activities from continuing operations for the three months ended March 31, 2013 were repayments of notes payable ($4,271,000) and cash distributions ($415,000). For the three months ended March 31, 2012, net cash provided by financing activities primarily related to proceeds received from our initial public offering ($18,956,000) and proceeds from the issue of notes payable related to our property acquisitions and refinancing of debt during the period ($159,037,000), net of repayments on our notes payable ($123,325,000).

Short-term Liquidity and Capital Resources

Our principal short-term demand for funds will be for the payment of operating expenses and the payment of principal and interest on our outstanding indebtedness. To date, our cash needs for operations have been covered from cash provided by property operations and the sale of shares of our common stock. Due to the termination of our initial public offering on February 7, 2013, we intend to fund our short-term operating cash needs from operations. Operating cash flows are expected to increase as operations in our existing portfolio stabilize and efficiencies are gained. Additionally, offering and organization costs associated with our initial public offering have been eliminated due to the termination of our initial public offering on February 7, 2013. Effective January 15, 2013, our monthly distributions have been suspended. Currently, our board of directors will evaluate our ability to make quarterly distributions on a quarterly basis based on our other operational cash needs. Our board of directors has determined that quarterly distributions for the quarter ended March 31, 2013 will not be made based on our current liquidity and operational cash needs.

Long-term Liquidity and Capital Resources

On a long-term basis, our principal demand for funds will be for real estate and real estate-related investments and the payment of acquisition-related expenses, operating expenses, distributions to stockholders (currently suspended), future redemptions of shares (currently suspended) and interest and principal payments on current and future indebtedness. Generally, we intend to meet cash needs for items other than acquisitions and acquisition-related expenses from our cash flow from operations. Until the termination of our initial public offering on February 7, 2013, our cash needs for acquisitions were satisfied from the net proceeds of the public offering and from debt financings. On a long-term basis, we expect that substantially all cash generated from operations will be used to pay distributions to our stockholders after satisfying our operating expenses including interest and principal payments. When market conditions improve, we may consider future public offerings or private placements of equity, as well as additional borrowings. See Item 7A. “Quantitative and Qualitative Disclosures About Market Risk” and “Note 7. DEBT” to our consolidated financial statements included in our Annual Report for additional information on the maturity dates and terms of our outstanding indebtedness.

KeyBank Credit Facility

On December 17, 2010, we, through our wholly owned subsidiary, TNP SRT Secured Holdings, LLC, or TNP SRT Holdings, entered into the Credit Facility with KeyBank and certain other lenders, which we collectively refer to as the “lenders,” to establish a revolving credit facility with an initial maximum aggregate commitment of $35,000,000. The Credit Facility initially consisted of an A tranche, or “Tranche A,” with an initial aggregate commitment of $25 million, and a B tranche, or “Tranche B,” with an initial aggregate commitment of $10 million. Tranche B under the Credit Facility terminated as of June 30, 2011. The aggregate commitment under Tranche A was subsequently increased on multiple occasions and as of March 31, 2013 the aggregate commitment was $45 million. As discussed below, due to our default under the credit facility, we entered into the Forbearance Agreement with KeyBank which, among other things, converts the entire outstanding principal amount under Tranche A into a term loan which is due and payable in full on July 31, 2013. As of March 31, 2013, the Credit Facility had an outstanding balance of $36,455,000.

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Under the Credit Facility, we are required to comply with certain restrictive and financial covenants. In January 2013, we became aware of a number of events of default under the Credit Facility relating to, among other things, our failure to use the net proceeds from our sale of our shares in our public offering and the sale of our assets to repay our borrowings under the Credit Facility and our failure to satisfy certain financial covenants under the Credit Facility, which we collectively refer to as the “existing events of default.” We also did not comply with certain financial covenants at March 31, 2013. Due to the existing events of default, KeyBank and the other lenders became entitled to exercise all of their rights and remedies under the Credit Facility and applicable law.

On April 1, 2013, our operating partnership, certain subsidiaries of our operating partnership which are borrowers under the Credit Facility (the “Borrowers”) and KeyBank, as lender and agent for the other lenders, entered into the Forbearance Agreement which amended the terms of the Credit Facility and provided for certain additional agreements with respect to the existing events of default. Pursuant to the terms of the Forbearance Agreement, KeyBank and the other lenders agreed to forbear the exercise of their rights and remedies with respect to the existing events of default until the earliest to occur of (1) July 31, 2013, (2) our default under or breach of any of the representations or covenants under the Forbearance Agreement or (3) the date any additional events of defaults (other than the existing events of default) under the Credit Facility occur or become known to KeyBank or any other lender, which we refer to as the “forbearance expiration date.” Upon the forbearance expiration date, all forbearances, deferrals and indulgences granted by the lenders pursuant to the Forbearance Agreement will automatically terminate and the lenders will be entitled to enforce, without further notice of any kind, any and all rights and remedies available to them as creditors at law, in equity, or pursuant to the Credit Facility or any other agreement as a result of the existing events of default or any additional events of default which occur or come to light following the date of the Forbearance Agreement.

The Forbearance Agreement converted the entire outstanding principal balance under the Credit Facility, and all interest and other amounts payable under the Credit Facility, which we refer to as the “outstanding loan,” into a term loan which is due and payable in full on July 31, 2013. Pursuant to the Forbearance Agreement, we, our operating partnership and every other borrower under the Credit Facility must apply 100% of the net proceeds from, among other things, (1) the sale of our shares in our completed public offering or any other sale of securities by us, our operating partnership or any other borrower, (2) the sale or refinancing of any of our properties or other assets, and (3) the collection of insurance or condemnation proceeds due to any damage or destruction of our properties or any condemnation for public use of any of our properties, to the repayment of the outstanding loan. The Forbearance Agreement provides that all commitments under the Credit Facility will terminate of July 31, 2013 and that, effective as of the date of the Forbearance Agreement, the lenders have no further obligation whatsoever to advance any additional loans or amounts under the Credit Facility. The Forbearance Agreement also provides that neither we, our operating partnership or any other borrower under the Credit Facility may, without KeyBank’s prior written consent, incur, assume, guarantee or be or remain liable, contingently or otherwise, with respect to any indebtedness other than the existing indebtedness specified in the Forbearance Agreement and any refinancing of such existing indebtedness which do not materially modify the terms of such existing indebtedness in a manner adverse to us or the lenders.

Pursuant to the Forbearance Agreement we, our operating partnership and all of the Borrowers under the Credit Facility have jointly and severally agreed to pay to KeyBank (1) any and all out-of-pocket costs or expenses (including legal fees and disbursements) incurred or sustained by the lenders in connection with the preparation of the Forbearance Agreement and all related matters and (2) from time to time after the occurrence of any default under the Forbearance Agreement any out-of-pocket costs or expenses (including legal fees and consulting and other similar professional fees and expenses) incurred by the lenders in connection with the preservation of or enforcement of any rights of the lenders under the Forbearance Agreement and the Credit Facility. In connection with the execution of the Forbearance Agreement, we also agreed to pay a forbearance fee of $192,000 to KeyBank, with 50% of such fee paid upon the execution of the Forbearance Agreement and the remaining 50% to be paid upon the earlier of the forbearance expiration date or the date the outstanding loan is repaid in full.

Under the Forbearance Agreement, we are not permitted to make, without the lender’s consent, certain restricted payments (as defined in the Credit Facility) which includes the payment of distributions that are not required to maintain our REIT status.

Contractual Commitments and Contingencies

As of March 31, 2013, there have been no material changes in our enforceable and legally binding obligations, contractual obligations, and commitments from those disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2012.

Interim Financial Information

The financial information as of and for the period ended March 31, 2013 included in this quarterly report is unaudited, but includes all adjustments consisting of normal recurring adjustments that, in the opinion of management, are necessary for a fair presentation of our financial position and operating results for the three months ended March 31, 2013. These interim unaudited condensed consolidated financial statements do not include all disclosures required by GAAP for complete consolidated financial statements. Interim results of operations are not necessarily indicative of the results to be expected for the full year; and such results may be less favorable. Our accompanying interim unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2012.

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Limitation on Total Operating Expenses

We reimburse our advisor for all expenses paid or incurred by our advisor in connection with the services provided to us, except that we will not reimburse our advisor for any amount by which our total operating expenses at the end of the four preceding fiscal quarters exceed the greater of (1) 2% of our average invested assets, as defined in our charter, and (2) 25% of our net income, as defined in our charter, or the 2/25 Limit, unless a majority of our independent directors determines that such excess expenses are justified based on unusual and nonrecurring factors. For the twelve months ended March 31, 2013, our total operating expenses represented approximately 2.0% of our average invested assets, as defined in our charter. As a result, during the twelve months ended March 31, 2013, our total operating expenses did not exceed the 2/25 Limit.

Inflation

The majority of our leases at our properties contain inflation protection provisions applicable to reimbursement billings for common area maintenance charges, real estate tax and insurance reimbursements on a per square foot basis, or in some cases, annual reimbursement of operating expenses above a certain per square foot allowance. We expect to include similar provisions in our future tenant leases designed to protect us from the impact of inflation. Due to the generally long-term nature of these leases, annual rent increases, as well as rents received from acquired leases, may not be sufficient to cover inflation and rent may be below market rates.

REIT Compliance

To qualify as a REIT for tax purposes, we are required to distribute at least 90% of our REIT taxable income to our stockholders. We must also meet certain asset and income tests, as well as other requirements. We will monitor the business and transactions that may potentially impact our REIT status. If we fail to qualify as a REIT in any taxable year, we will be subject to federal income tax (including any applicable alternative minimum tax) on our taxable income at regular corporate rates and generally will not be permitted to qualify for treatment as a REIT for federal income tax purposes for the four taxable years following the year during which our REIT qualification is lost unless the Internal Revenue Service grants us relief under certain statutory provisions. Such an event could materially adversely affect our net income and net cash available for distribution to our stockholders. As of March 31, 2013, we believe we are in compliance with the REIT qualification requirements.

Distributions

In order to qualify as a REIT, we are required to distribute at least 90% of our annual REIT taxable income, subject to certain adjustments, to our stockholders. Prior to the termination of our initial public offering on February 7, 2013, we funded all of our cash distributions from proceeds from our initial public offering of common stock. Following the termination of our initial public offering, we may not be able to pay distributions from our cash from operations, in which case distributions may be paid in part from debt financing or from other sources.

Effective January 15, 2013, we announced that we will no longer be making monthly distributions. Quarterly distributions will be considered by our board of directors for 2013. On March 19, 2013, we announced that we will not be making a quarterly distribution for the quarter ended March 31, 2013.

The following table sets forth the distributions declared and paid to our common stockholders and holders of common units in our OP for the three months ended March 31, 2013 and the year ended December 31, 2012, respectively:

	Distributions Declared to Common Stockholders (1)		Distributions Declared Per Share (1)		Distributions Declared to Common Unit Holders (1)/(3)		Cash Distribution Payments to Common Stockholders (2)		Cash Distribution Payments to Common Unit Holders (2)		Reinvested Distributions (DRIP shares issuance) (2)		Total Common Stockholder Distributions Paid and DRIP Shares Issued
First Quarter 2013 (4)	$	636,000	$	0.05833	$	25,000	$	390,000	$	25,000	$	246,000	$	636,000

	Distributions Declared to Common Stockholders (1)		Distributions Declared Per Share (1)		Distributions Declared to Common Unit Holders (1)/(3)		Cash Distribution Payments to Common Stockholders (2)		Cash Distribution Payments to Common Unit Holders (2)		Reinvested Distributions (DRIP shares issuance) (2)		Total Common Stockholder Distributions Paid and DRIP Shares Issued
First Quarter 2012	$	1,183,000	$	0.05833	$	57,000	$	721,000	$	52,000	$	406,000	$	1,127,000
Second Quarter 2012		1,637,000	$	0.05833		74,000		866,000		71,000		570,000		1,436,000
Third Quarter 2012		1,874,000	$	0.05833		76,000		1,015,000		76,000		709,000		1,724,000
Fourth Quarter 2012 (4)		1,259,000	$	0.05833		51,000		1,274,000		76,000		607,000		1,881,000
	$	5,953,000			$	258,000	$	3,876,000	$	275,000	$	2,292,000	$	6,168,000

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(1) Distributions were generally declared monthly and are calculated at a monthly distribution rate of $0.05833 per share of common stock and common units in our OP.

(2) Cash distributions were paid, and DRIP shares issued pursuant to our distribution reinvestment plan, generally on a monthly basis. Cash distributions for all record dates of a given month were generally paid approximately 15 days following month end.

(3) None of the common unit holders in our OP participated in our distribution reinvestment program, which was terminated effective February 7, 2013.

(4) Distributions were not declared for the month of December 2012 until January 18, 2013 in the aggregate amount of $636,000 to common stockholders and $25,000 to holders of common units of the OP.

Funds from Operations and Modified Funds from Operations

Due to certain unique operating characteristics of real estate companies, as discussed below, the National Association of Real Estate Investment Trusts, or NAREIT, an industry trade group, has promulgated a measure known as funds from operations, or FFO, which we believe to be an appropriate supplemental measure to reflect the operating performance of a real estate investment trust, or REIT. The use of FFO is recommended by the REIT industry as a supplemental performance measure. FFO is not equivalent to our net income or loss as determined under GAAP.

We define FFO, a non-GAAP measure, consistent with the standards established by the White Paper on FFO approved by the Board of Governors of NAREIT, as revised in February 2004, or the White Paper. The White Paper defines FFO as net income or loss computed in accordance with GAAP, excluding gains or losses from sales of property but including asset impairment writedowns, plus depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. Adjustments for unconsolidated partnerships and joint ventures are calculated to reflect FFO. Our FFO calculation complies with NAREIT’s policy described above.

The historical accounting convention used for real estate assets requires straight-line depreciation of buildings and improvements, which implies that the value of real estate assets diminishes predictably over time, especially if such assets are not adequately maintained or repaired and renovated as required by relevant circumstances and/or as requested or required by lessees for operational purposes in order to maintain the value disclosed. We believe that since real estate values historically rise and fall with market conditions, including inflation, interest rates, the business cycle, unemployment and consumer spending, presentations of operating results for a REIT using historical accounting for depreciation may be less informative. Historical accounting for real estate involves the use of GAAP. Any other method of accounting for real estate such as the fair value method cannot be construed to be any more accurate or relevant than the comparable methodologies of real estate valuation found in GAAP. Nevertheless, we believe that the use of FFO, which excludes the impact of real estate related depreciation and amortization, provides a more complete understanding of our performance to investors and to management, and when compared year over year, reflects the impact on our operations from trends in occupancy rates, rental rates, operating costs, general and administrative expenses, and interest costs, which may not be immediately apparent from net income. However, FFO, and MFFO as described below, should not be construed to be more relevant or accurate than the current GAAP methodology in calculating net income or in its applicability in evaluating our operating performance. The method utilized to evaluate the value and performance of real estate under GAAP should be construed as a more relevant measure of operational performance and considered more prominently than the non-GAAP FFO and MFFO measures and the adjustments to GAAP in calculating FFO and MFFO.

Changes in the accounting and reporting promulgations under GAAP (for acquisition fees and expenses from a capitalization/depreciation model to an expensed-as-incurred model) that were put into effect in 2009 and other changes to GAAP accounting for real estate subsequent to the establishment of NAREIT’s definition of FFO have prompted an increase in cash-settled expenses, specifically acquisition fees and expenses for all industries as items that are expensed under GAAP, that are typically accounted for as operating expenses. Management believes these fees and expenses do not affect our overall long-term operating performance. Publicly registered, non-listed REITs typically have a significant amount of acquisition activity and are substantially more dynamic during their initial years of investment and operation. While other start-up entities may also experience significant acquisition activity during their initial years, we believe that public, non-listed REITs, like us, are unique in that they have a limited life with targeted exit strategies within a relatively limited time frame after acquisition activity ceases. Our board of directors will determine to pursue a liquidity event when it believes that the then-current market conditions are favorable. However, our board of directors does not anticipate evaluating a liquidity event (i.e., listing of our common stock on a national exchange, a merger or sale of our company or another similar transaction) until 2015. Thus, as a limited life REIT we will not continuously purchase assets and will have a limited life.

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Due to the above factors and other unique features of publicly registered, non-listed REITs, the Investment Program Association, or IPA, an industry trade group, has standardized a measure known as MFFO, which the IPA has recommended as a supplemental measure for publicly registered non-listed REITs and which we believe to be another appropriate supplemental measure to reflect the operating performance of a public, non-listed REIT having the characteristics described above. MFFO is not equivalent to our net income or loss as determined under GAAP, and MFFO may not be a useful measure of the impact of long-term operating performance on value if we do not continue to operate with a limited life and targeted exit strategy, as currently intended. We believe that, because MFFO excludes costs that we consider more reflective of investing activities and other non-operating items included in FFO and also excludes acquisition fees and expenses that affect our operations only in periods in which properties are acquired, MFFO can provide, on a going forward basis, an indication of the sustainability (that is, the capacity to continue to be maintained) of our operating performance after the period in which we are acquiring our properties and once our portfolio is in place. By providing MFFO, we believe we are presenting useful information that assists investors and analysts to better assess the sustainability of our operating performance after our offering has been completed and our properties have been acquired. We also believe that MFFO is a recognized measure of sustainable operating performance by the non-listed REIT industry. Further, we believe MFFO is useful in comparing the sustainability of our operating performance after our offering and acquisitions are completed with the sustainability of the operating performance of other real estate companies that are not as involved in acquisition activities. Investors are cautioned that MFFO should only be used to assess the sustainability of our operating performance after our offering has been completed and properties have been acquired, as it excludes acquisition costs that have a negative effect on our operating performance during the periods in which properties are acquired.

We define MFFO, a non-GAAP measure, consistent with the IPA’s Guideline 2010-01, Supplemental Performance Measure for Publicly Registered, Non-Listed REITs: Modified Funds from Operations, or the Practice Guideline, issued by the IPA in November 2010. The Practice Guideline defines MFFO as FFO further adjusted for the following items, as applicable, included in the determination of GAAP net income: acquisition fees and expenses; amounts relating to deferred rent receivables and amortization of above and below market leases and liabilities (which are adjusted in order to reflect such payments from a GAAP accrual basis to a cash basis of disclosing the rent and lease payments); accretion of discounts and amortization of premiums on debt investments; nonrecurring impairments of real estate-related investments (i.e., infrequent or unusual, not reasonably likely to recur in the ordinary course of business); mark-to-market adjustments included in net income; nonrecurring gains or losses included in net income from the extinguishment or sale of debt, hedges, foreign exchange, derivatives or securities holdings where trading of such holdings is not a fundamental attribute of the business plan, unrealized gains or losses resulting from consolidation from, or deconsolidation to, equity accounting, and after adjustments for consolidated and unconsolidated partnerships and joint ventures, with such adjustments calculated to reflect MFFO on the same basis. The accretion of discounts and amortization of premiums on debt investments, nonrecurring unrealized gains and losses on hedges, foreign exchange, derivatives or securities holdings, unrealized gains and losses resulting from consolidations, as well as other listed cash flow adjustments are adjustments made to net income in calculating the cash flows provided by operating activities and, in some cases, reflect gains or losses which are unrealized and may not ultimately be realized. While we rely on our advisor for managing interest rate, hedge and foreign exchange risk, we do not retain an outside consultant to review all our hedging agreements. Inasmuch as interest rate hedges are not a fundamental part of our operations, we believe it is appropriate to exclude such non-recurring gains and losses in calculating MFFO, as such gains and losses are not reflective of on-going operations.

Our MFFO calculation complies with the IPA’s Practice Guideline described above. In calculating MFFO, we exclude acquisition related expenses, amortization of above and below market leases, fair value adjustments of derivative financial instruments, deferred rent receivables and the adjustments of such items related to noncontrolling interests. Under GAAP, acquisition fees and expenses are characterized as operating expenses in determining operating net income. These expenses are paid in cash by us. All paid and accrued acquisition fees and expenses will have negative effects on returns to investors, the potential for future distributions, and cash flows generated by us, unless earnings from operations or net sales proceeds from the disposition of other properties are generated to cover the purchase price of the property, these fees and expenses and other costs related to such property. In the event that proceeds from our initial public offering are not available to fund our reimbursement of acquisition fees and expenses incurred by our advisor, such fees and expenses will need to be reimbursed to our advisor from other sources, including debt, operational earnings or cash flow, net proceeds from the sale of properties, or from ancillary cash flows. The acquisition of properties, and the corresponding acquisition fees and expenses, is the key operational feature of our business plan to generate operational income and cash flow to fund distributions to our stockholders. Further, under GAAP, certain contemplated non-cash fair value and other non-cash adjustments are considered operating non-cash adjustments to net income in determining cash flow from operating activities. In addition, we view fair value adjustments of derivatives, impairment charges and gains and losses from dispositions of assets as non-recurring items or items which are unrealized and may not ultimately be realized, and which are not reflective of on-going operations and are therefore typically adjusted for when assessing operating performance. In particular, we believe it is appropriate to disregard impairment charges, as this is a fair value adjustment that is largely based on market fluctuations and assessments regarding general market conditions which can change over time. An asset will only be evaluated for impairment if certain impairment indications exist and if the carrying, or book value, exceeds the total estimated undiscounted future cash flows (including net rental and lease revenues, net proceeds on the sale of the property, and any other ancillary cash flows at a property or group level under GAAP) from such asset. Investors should note, however, that determinations of whether impairment charges have been incurred are based partly on anticipated operating performance, because estimated undiscounted future cash flows from a property, including estimated future net rental and lease revenues, net proceeds on the sale of the property, and certain other ancillary cash flows, are taken into account in determining whether an impairment charge has been incurred. While impairment charges are excluded from the calculation of MFFO as described above, investors are cautioned that due to the fact that impairments are based on estimated future undiscounted cash flows and the relatively limited term of our operations, it could be difficult to recover any impairment charges.

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Our management uses MFFO and the adjustments used to calculate MFFO in order to evaluate our performance against other public, non-listed REITs which have limited lives with short and defined acquisition periods and targeted exit strategies shortly thereafter. As noted above, MFFO may not be a useful measure of the impact of long-term operating performance on value if we do not continue to operate in this manner. We believe that our use of MFFO and the adjustments used to calculate MFFO allow us to present our performance in a manner that reflects certain characteristics that are unique to public, non-listed REITs, such as their limited life, limited and defined acquisition period and targeted exit strategy, and hence that the use of such measures is useful to investors. By excluding expensed acquisition costs, the use of MFFO provides information consistent with management’s analysis of the operating performance of the properties. Additionally, fair value adjustments, which are based on the impact of current market fluctuations and underlying assessments of general market conditions, but can also result from operational factors such as rental and occupancy rates, may not be directly related or attributable to our current operating performance. By excluding such changes that may reflect anticipated and unrealized gains or losses, we believe MFFO provides useful supplemental information.

Presentation of this information is intended to provide useful information to investors as they compare the operating performance to that of other public, non-listed REITs, although it should be noted that not all public, non-listed REITs calculate FFO and MFFO the same way, so comparisons with other public, non-listed REITs may not be meaningful. Furthermore, FFO and MFFO are not necessarily indicative of cash flow available to fund cash needs and should not be considered as an alternative to net income (loss) or income (loss) from continuing operations as an indication of our performance, as an alternative to cash flows from operations as an indication of our liquidity, or indicative of funds available to fund our cash needs, including our ability to make distributions to our stockholders. FFO and MFFO should be reviewed in conjunction with GAAP measurements as an indication of our performance. MFFO has limitations as a performance measure where the price of a share of common stock during the offering stage was a stated value and there was no regular net asset value determinations during the offering stage and for a period thereafter. MFFO is useful in assisting management and investors in assessing the sustainability of operating performance in future operating periods, and in particular, after the offering and acquisition stages are complete and net asset value is disclosed. MFFO is not a useful measure in evaluating net asset value because impairments are taken into account in determining net asset value but not in determining MFFO.

We also present MFFO, calculated as discussed above, adjusted for the non-cash amortization of deferred financing costs and non-recurring non-cash allocations of organizational costs, or adjusted MFFO. We opted to use substantial short-term and medium-term borrowings to acquire properties in advance of raising equity proceeds under our initial public offering in order to more quickly build a larger and more diversified portfolio. Noncash interest expense represents amortization of financing costs paid to secure short-term and medium-term borrowings. GAAP requires these items to be recognized over the remaining term of the respective debt instrument, which may not correlate with the ongoing operations of our real estate portfolio. Management believes that the measure resulting from an adjustment to MFFO for noncash interest expense, provides supplemental information that allows for better comparability of reporting periods. We also believe that adjusted MFFO is useful in comparing the sustainability of our operating performance after our offering and acquisition stages are completed with the sustainability of the operating performance of other real estate companies that are not as involved in significant acquisition and short-term borrowing activities. Like FFO and MFFO, adjusted MFFO is not necessarily indicative of cash flow available to fund cash needs and should not be considered as an alternative to net income (loss) or income (loss) from continuing operations as an indication of our performance, as an alternative to cash flows from operations as an indication of our liquidity, or indicative of funds available to fund our cash needs, including our ability to make distributions to our stockholders. Further, adjusted MFFO should be reviewed in conjunction with GAAP measurements as an indication of our performance.

Neither the SEC, NAREIT nor any other regulatory body has passed judgment on the acceptability of the adjustments that we use to calculate FFO, MFFO or Adjusted MFFO. In the future, the SEC, NAREIT or another regulatory body may decide to standardize the allowable adjustments across the non-listed REIT industry and in response to such standardization we may have to adjust our calculation and characterization of FFO, MFFO or Adjusted MFFO accordingly.

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Our calculation of FFO, MFFO and Adjusted MFFO and the reconciliation to net income (loss) is presented in the following table for the three months ended March 31, 2013 and 2012:

	For the Three Months
	Ended March 31,
FFO, MFFO and Adjusted MFFO	2013			2012
Net income (loss)	$	1,183,000		$	(4,365,000	)
Adjustments (1):
(Gain)/loss on disposal of assets		(4,838,000	)		-
Depreciation of real estate		1,941,000			1,169,000
Depreciation of real estate - discontinued operations		-			233,000
Amortization of in place leases and other intangibles		1,241,000			581,000
Amortization of in place leases and other intangibles - discontinued operations					117,000
FFO		(473,000	)		(2,265,000	)
FFO per share - basic	$	(0.04	)	$	(0.33	)
FFO per share - diluted	$	(0.04	)	$	(0.33	)
Adjustments:
Straight-line rent (2)		(363,000	)		(143,000	)
Straight-line rent - discontinued operations (2)		-			(22,000	)
Transaction expenses (3)		51,000			1,900,000
Amortization of above market leases (4)		393,000			350,000
Amortization of above market leases - discontinued operations (4)		-			31,000
Amortization of below market leases (4)		(255,000	)		(92,000	)
Amortization of below market leases - discontinued operations (4)		-			(111,000	)
Accretion of discounts on debt investments - discontinued operations		-			(16,000	)
Amortization of debt discount		179,000			-
Realized losses from the early extinguishment of debt (5)		98,000			592,000
MFFO		(370,000	)		224,000
MFFO per share - basic	$	(0.03	)	$	0.03
MFFO per share - diluted	$	(0.03	)	$	0.03
Adjustments:
Amortization of deferred financing costs (6)		288,000			298,000
Non-recurring default interest, penalties and fees (7)		341,000			-
Adjusted MFFO	$	259,000		$	522,000
Adjusted MFFO per share - basic	$	0.02		$	0.08
Adjusted MFFO per share - diluted	$	0.02		$	0.08
Net income (loss) per share - basic (8)	$	0.10		$	(0.64	)
Net income (loss) per share - diluted (8)	$	0.10		$	(0.64	)
Weighted average common shares outstanding - basic		10,935,089			6,797,797
Weighted average common shares outstanding - diluted		11,366,885			6,797,797

(1) Our calculation of MFFO does not adjust for certain other non-recurring charges that do not fall within the IPA’s Practice Guideline definition of MFFO.

(2) Under GAAP, rental receipts are allocated to periods using various methodologies. This may result in income recognition that is significantly different than underlying contract terms. By adjusting for these items (to reflect such payments from a GAAP accrual basis to a cash basis of disclosing the rent and lease payments), MFFO provides useful supplemental information on the realized economic impact of lease terms and debt investments, providing insight on the contractual cash flows of such lease terms and debt investments, and aligns results with management’s analysis of operating performance.

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(3) In evaluating investments in real estate, management differentiates the costs to acquire the investment from the operations derived from the investment. Such information would be comparable only for non-listed REITs that have completed their acquisition activity and have other similar operating characteristics. By excluding expensed acquisition and certain disposition costs related to abandoned real estate sales, management believes MFFO provides useful supplemental information that is comparable for each type of real estate investment and is consistent with management’s analysis of the investing and operating performance of our properties. Acquisition fees and expenses include payments to our advisor or third parties. Acquisition and disposition fees and expenses under GAAP are considered operating expenses and as expenses included in the determination of net income and income from continuing operations, both of which are performance measures under GAAP. All paid and accrued acquisition and disposition fees and expenses will have negative effects on returns to investors, the potential for future distributions, and cash flows generated by the company, unless earnings from operations or net sales proceeds from the disposition of properties are generated to cover the purchase price of the property, these fees and expenses and other costs related to the property. In the event that proceeds from our initial public offering are not available to fund our reimbursement of acquisition fees and expenses incurred by our advisor, such fees and expenses will need to be reimbursed to our advisor from other sources, including debt, operational earnings or cash flow, net proceeds from the sale of properties, or from ancillary cash flows. The acquisition of properties, and the corresponding acquisition fees and expenses, is the key operational feature of our business plan to generate operational income and cash flow to fund distributions to
our stockholders.

(4) Under GAAP, certain intangibles are accounted for at cost and reviewed at least annually for impairment, and certain intangibles are assumed to diminish predictably in value over time and amortized, similar to depreciation and amortization of other real estate related assets that are excluded from FFO. However, because real estate values and market lease rates historically rise or fall with market conditions, management believes that by excluding charges relating to amortization of these intangibles, MFFO provides useful supplemental information on the performance of the real estate.

(5) Relates to the write-off of unamortized deferred financing costs as a result of refinancing and incremental interest due to early extinguishment of debt.

(6) We made an additional adjustment for the non-cash amortization of deferred financing costs as we believe it will provide useful information about our operations excluding non-cash expenses.

(7) Adjustment for the non-recurring late payment charges and default interest paid on January 22, 2013 to cure the events of default under the Lahaina Loan.

(8) Net loss per share relates to both common stockholders and non-controlling interests.

Related Party Transactions and Agreements

We have entered into agreements with our advisor and its affiliates whereby we agree to pay certain fees to, or reimburse certain expenses of, our advisor or its affiliates for acquisition fees and expenses, organization and offering costs, sales commissions, dealer manager fees, asset and property management fees and reimbursement of operating costs. Refer to “Note 11. RELATED PARTY TRANSACTIONS” to our condensed consolidated unaudited financial statements included in this Quarterly Report on Form 10-Q for a discussion of the various related party transactions, agreements and fees.

Off-Balance Sheet Arrangements

As of March 31, 2013 and December 31, 2012, apart from a ground lease at our Lahaina Gateway property, we had no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial conditions, changes in financial conditions, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources. The Lahaina Gateway property is encumbered by a ground lease which was assigned to us in connection with the acquisition of the property on November 9, 2012. The original lease term is for a period of 55 years, commencing on February 2, 2005 with an expiration date of February 1, 2060. The current annual base rent is $1,187,000, payable in monthly installments of approximately $99,000 through February 1, 2015. The annual base rent will increase to $1,342,000 on February 2, 2015, with scheduled increases of 13% every five years through February 2, 2035. Thereafter, the annual base rent will be renegotiated each five year period through lease expiration.

Critical Accounting Policies

Our consolidated interim financial statements have been prepared in accordance with GAAP and in conjunction with the rules and regulations of the SEC. The preparation of our financial statements requires significant management judgments, assumptions and estimates about matters that are inherently uncertain. These judgments affect the reported amounts of assets and liabilities and our disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenue and expenses during the reporting periods. With different estimates or assumptions, materially different amounts could be reported in our financial statements. Additionally, other companies may utilize different estimates that may impact the comparability of our results of operations to those of companies in similar businesses. A discussion of the accounting policies that management considers critical in that they involve significant management judgments, assumptions and estimates is included in our Annual Report on Form 10-K for the year ended December 31, 2012. There have been no significant changes to our accounting policies during 2013.

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Subsequent Events

Amendment of Credit Facility by entering into Forbearance Agreement

On April 1, 2013, our OP entered into a forbearance agreement which amended the terms of our Credit Facility and provides for certain additional agreements with respect to the existing events of default under the Credit Facility. See above under “Liquidity and Capital Resources—KeyBank Credit Facility.”

Amendment to Consulting Agreement

Our board of directors is actively negotiating with Glenborough to replace our current advisor. In December 2012, we entered into a consulting agreement with Glenborough to assist us through the advisor change process. Effective May 1, 2013, we and Glenborough entered into an amendment to the consulting agreement, which expanded the scope of the consulting services provided to us by Glenborough (as described below) and increased the monthly consulting fee payable to Glenborough by us from $75,000 per month to $90,000 per month.

Effective May 1, 2013, pursuant to the amendment to the consulting agreement, Glenborough shall perform the following accounting services for the Company:

· All property accounts receivable functions including property rent and common area maintenance billings

· All property accounts payable functions

Effective June 1, 2013, the following additional services will also be performed by Glenborough pursuant to the amendment to the consulting agreement:

· Corporate level receivables and payables

· Loan administration

· Cash management and treasury functions

· SEC financial reporting 

· Management reporting

· Audit coordination

· Tax preparation and coordination

Pending Disposition

On or about May 9, 2013, the purchase and sale agreement, as amended, for the sale of the office building at the Aurora Commons property (Note 3) had expired and the buyer did not release the contingencies in the purchase and sale agreement.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market risk is the adverse effect on the value of a financial instrument that results from a change in interest rates. We may be exposed to interest rate changes primarily as a result of long-term debt used to maintain liquidity, fund capital expenditures and expand our real estate investment portfolio and operations. Market fluctuations in real estate financing may affect the availability and cost of funds needed to expand our investment portfolio. In addition, restrictions upon the availability of real estate financing or high interest rates for real estate loans could adversely affect our ability to dispose of real estate in the future. We will seek to limit the impact of interest rate changes on earnings and cash flows and to lower our overall borrowing costs. We may use derivative financial instruments to hedge exposures to changes in interest rates on loans secured by our assets. The market risk associated with interest-rate contracts is managed by establishing and monitoring parameters that limit the types and degree of market risk that may be undertaken. With regard to variable rate financing, our advisor will assess our interest rate cash flow risk by continually identifying and monitoring changes in interest rate exposures that may adversely impact expected future cash flows and by evaluating hedging opportunities. Our advisor maintains risk management control systems to monitor interest rate cash flow risk attributable to both our outstanding and forecasted debt obligations as well as our potential offsetting hedge positions. While this hedging strategy will be designed to minimize the impact on our net income and funds from operations from changes in interest rates, the overall returns on your investment may be reduced.

We borrow funds and make investments at a combination of fixed and variable rates. Interest rate fluctuations will generally not affect our future cash flows on our fixed rate debt unless such instruments mature or are otherwise terminated. However, interest rate changes will affect the fair value of our fixed rate instruments. At March 31, 2013, the fair value of our fixed rate debt was $149,326,000 and the carrying value of our fixed rate debt was $148,869,000. The fair value estimate of our fixed rate debt was estimated using present value techniques utilizing contractual cash outflows and observable interest rates we would expect to pay for debt of a similar type and remaining maturity if the loans were originated at March 31, 2013. As we expect to hold our fixed rate instruments to maturity and the amounts due under such instruments would be limited to the outstanding principal balance and any accrued and unpaid interest, we do not expect that fluctuations in interest rates, and the resulting change in fair value of our fixed rate instruments, would have a significant impact on our operations.

At March 31, 2013, the fair value and carrying value of our variable rate debt was $36,455,000. Movements in interest rates on our variable rate debt would change our cash flows, but would not significantly affect the fair value of our debt. At March 31, 2013, we were exposed to market risks related to fluctuations in interest rates on $36,455,000 of variable rate debt outstanding. Our variable rate debt outstanding bears interest at the lesser of (1) the Adjusted LIBOR Rate (Index) as defined in the Credit Facility plus 3.50% per annum, or (2) the maximum rate of interest permitted by applicable law. The Index is further subject to a floor rate of 2.00%, resulting in a fully indexed floor rate of 5.50%. We estimate that a hypothetical increase or decrease in interest rates of 100 basis points would have no impact on future earnings as the floor rate would continue to be in effect. The one month LIBOR rate was 0.20% at March 31, 2013.

The weighted-average interest rates of our fixed rate debt and variable rate debt at March 31, 2013 were 6.72% and 5.50%, respectively. The weighted-average interest rate represents the actual interest rate in effect at March 31, 2013 (consisting of the contractual interest rate).

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ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

As of the end of the period covered by this report, management, including our co-chief executive officers and chief financial officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act). Based upon, and as of the date of, the evaluation, our co-chief executive officers and chief financial officer concluded that the disclosure controls and procedures were effective as of the end of the period covered by this report to ensure that information required to be disclosed in the reports we file and submit under the Exchange Act is recorded, processed, summarized and reported as and when required. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports we file and submit under the Exchange Act is accumulated and communicated to our management, including our co-chief executive officers and our chief financial officer, as appropriate to allow timely decisions regarding required disclosure.

Internal Control Over Financial Reporting

There have been no changes in our internal control over financial reporting that occurred during the fiscal quarter ended March 31, 2013 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

None.

ITEM 1A. RISK FACTORS

In addition to the other information set forth in this Quarterly Report, you should carefully consider the risk factors previously disclosed in “Item IA, To Part II” of our Annual Report on Form 10-K for the year ended December 31, 2012.

There were no material changes from these risk factors during the three months ended March 31, 2013

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

During the period covered by this Quarterly Report on Form 10-Q, we did not sell any equity securities that were not registered under the Securities Act of 1933, as amended, or the Securities Act.

We have adopted a share redemption program that may provide limited liquidity to our stockholders. Our share redemption program was suspended effective January 15, 2013. During the three months ended March 31, 2013, there were no shares redeemed pursuant to our share redemption program.

On November 4, 2008, we filed a registration statement on Form S-11 with the Securities and Exchange Commission (the “SEC”) to offer a maximum of 100,000,000 in shares of our common stock to the public in its primary offering at $10.00 per share and 10,526,316 shares of its common stock to our stockholders at $9.50 per share pursuant to our distribution reinvestment plan (“DRIP”) (collectively, the “Offering”). On August 7, 2009, the SEC declared the registration statement effective and we commenced the Offering. On February 7, 2013, we terminated the Offering and ceased offering shares of common stock in the primary offering and under the DRIP. As of December 31, 2012, we had accepted subscriptions for, and issued, 10,893,227 shares of common stock in the Offering (net of share redemptions), including 365,242 shares of common stock pursuant to the DRIP, resulting in gross offering proceeds of $107,609,000. As of the termination of the Offering on February 7, 2013, we had accepted subscriptions for, and issued, 10,969,714 shares of common stock (net of share redemptions), including 391,182 shares of common stock pursuant to the DRIP, resulting in gross offering proceeds of $108,357,000.

As of March 31, 2013, we had incurred selling commissions, dealer manager fees and organization and other offering costs in the amounts set forth below:

Type of Expense Amount	Amount		Estimated/Actual
Selling commissions and dealer manager fees	$	10,015,000		Actual
Organization and offering costs		3,220,000		Actual
Total	$	13,235,000

From the commencement of our initial public offering through the termination of our initial public offering on February 7, 2013, the net offering proceeds to us, after deducting the total expenses incurred as described above, were approximately $95,598,000, including net offering proceeds from our distribution reinvestment plan of $3,716,000.

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ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 4. MINE SAFETY DISCLOSURES.

Not applicable.

ITEM 5. OTHER INFORMATION.

None.

ITEM 6. EXHIBITS

The exhibits listed on the Exhibit Index (following the signatures section of this Quarterly Report on Form 10-Q) are included herewith, or incorporated herein by reference.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized on May 20, 2013.

TNP Strategic Retail Trust, Inc.
By:	/s/ ANTHONY W. THOMPSON
	Anthony W. Thompson
	Chairman of the Board, Co-Chief Executive Officer and President
	(Co-Principal Executive Officer)
By:	/s/ K. TIMOTHY O’BRIEN
	K. Timothy O’Brien
	Co-Chief Executive Officer
	(Co-Principal Executive Officer)
By:	/s/ Dee R. Balch
	Dee R. Balch
	Chief Financial Officer, Treasurer and Secretary
	(Principal Financial and Accounting Officer)

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EXHIBIT INDEX

Exhibit No.	Description
3.1	Articles of Amendment and Restatement of TNP Strategic Retail Trust, Inc. (incorporated by reference to Exhibit 3.1 to Pre-Effective Amendment No. 5 to the Company’s Registration Statement on Form S-11 (No. 333-154975) and incorporated herein by reference).
3.2	Bylaws of TNP Strategic Retail Trust, Inc. (incorporated by reference as Exhibit 3.2 to the Company’s Registration Statement on Form S-11 (No. 333-154975) and incorporated herein by reference).
4.1	Form of Subscription Agreement (incorporated by reference to Appendix C to the Registrant’s prospectus dated April 14, 2011 included in Post-Effective Amendment No. 6 to the Company’s Registration Statement on Form S-11 (No. 333-154975)).
4.2	Distribution Reinvestment Plan (incorporated by reference to Appendix D to the Registrant’s prospectus dated April 14, 2011 included in Post-Effective Amendment No. 6 to the Company’s Registration Statement on Form S-11 (No. 333-154975)).
10.1	First Amendment to Consulting Agreement, dated May 1, 2013, between TNP Strategic Retail Trust, Inc. and Glenborough, LLC

31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.3	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.3	Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS*	XBRL Instance Document
101.SCH*	XBRL Taxonomy Extension Schema Document
101.CAL*	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*	XBRL Taxonomy Extension Label Linkbase Document
101.PRE*	XBRL Taxonomy Extension Presentation Linkbase Document

* Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.

EX-10.1

Exhibit 10.1

First Amendment to Consulting Agreement

This First Amendment to Consulting Agreement is entered into as of May 1, 2013, by and among TNP Strategic Retail Trust, Inc., a Maryland corporation (the “REIT”), TNP Strategic Retail Operating Partnership, L.P., a Delaware limited partnership (the “Operating Partnership” and together with the REIT, the “Company”) and Glenborough, LLC, a Delaware limited liability company (the “Consultant”).

Whereas the Company and the Consultant entered into that certain Consulting Agreement dated as of December 14, 2012; and

Whereas the Company and the Consultant now wish to amend the Consulting Agreement;

Now, therefore, in consideration of the foregoing, of the mutual promises contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree to amend the Consulting Agreement as follows:

1. Exhibit A is hereby amended to add the following:

Consultant shall provide the following accounting services to the REIT and its subsidiaries as of the date of this Agreement:

o All A/R functions including property rent and cam billings and all REIT level A/R

o All A/P functions

Effective June 1, 2013, Consultant shall provide the following additional accounting services to the REIT and its subsidiaries:

Corporate level receivables and payables

o Loan Administration

o Cash management and treasury functions

o Work with outside auditors and attorneys to handle required SEC financial reporting

o Management reporting

o Audit coordination

o Tax prep coordination.

The following are not included in the services outlined above and are to be completed by the REIT’s current CFO and accounting group:

· Completion and filing of Q1 10-Q

· Assist GLB with closing out accounting for the month of April, 2013 on or before May 20, 2013

· Transfer of April closing balances to Consultant

· Assist in transition as reasonably requested by Consultant

· Assist in data conversion as reasonably requested by Consultant

· Assist in Q2 SEC filing(s) as reasonably requested by Consultant

2. The monthly Consulting Fee is hereby increased by $15,000, with such increase allocable to the additional services referenced in Section 1 above.

3. Except as specifically set forth herein, the Consulting Agreement shall remain unchanged, and in full force and effect.

TNP Strategic Retail Trust, Inc.	TNP Strategic Retail Operating Partnership, L.P.
	By:	TNP Strategic Retail Trust, Inc.
		Its General Partner
/s/ Jeffrey Rogers		/s/ Jeffrey Rogers
Jeffrey Rogers, Board Member		Jeffrey Rogers, Board Member

Glenborough, LLC
By:	/s/ Andrew Batinovich
	Andrew Batinovich, President

EX-31.1

Exhibit 31.1

Certification of Chief Executive Officer Pursuant to

Section 302 of the Sarbanes-Oxley Act of 2002

I, Anthony W. Thompson, certify that:

1. I have reviewed this quarterly report on Form 10-Q of TNP Strategic Retail Trust, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 20, 2013

/s/ Anthony W. Thompson 

Anthony W. Thompson

Chairman of the Board, President and Co-Chief
Executive Officer

(Co-Principal Executive Officer)

EX-31.2

EXHIBIT 31.2

Certification of Chief Executive Officer Pursuant to

Section 302 of the Sarbanes-Oxley Act of 2002

I, Timothy O’Brien, certify that:

1. I have reviewed this annual report on Form 10-Q of TNP Strategic Retail Trust, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 20, 2013

/s/ Timothy O’Brien

Timothy O’Brien

Co-Chief Executive Officer

(Co-Principal Executive Officer)

EX-31.3

Exhibit 31.3

Certification of Chief Financial Officer Pursuant to

Section 302 of the Sarbanes-Oxley Act of 2002

I, Dee R. Balch certify that:

1. I have reviewed this quarterly report on Form 10-Q of TNP Strategic Retail Trust, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 20, 2013

/s/ Dee R. Balch

Dee R. Balch

Chief Financial Officer, Treasurer and Secretary

(Principal Financial and Accounting Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906 OF THE

SARBANES-OXLEY ACT OF 2002

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and in connection with the Quarterly Report on Form 10-Q of TNP Strategic Retail Trust, Inc. (the “Company”) for the quarter ended March 31, 2013, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, the Chairman of the Board, President and Co-Chief Executive Officer of the Company, certifies, to his knowledge, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: May 20, 2013

/s/ Anthony W. Thompson 

Anthony W. Thompson

Chairman of the Board, President and Co-Chief
Executive Officer

(Co-Principal Executive Officer)

EX-32.2

EXHIBIT 32.2

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906 OF THE

SARBANES-OXLEY ACT OF 2002

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and in connection with the Annual Report on Form 10-Q of TNP Strategic Retail Trust, Inc. (the “Company”) for the quarter ended March 31, 2013, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, the Co-Chief Executive Officer of the Company, certifies, to his knowledge, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: May 20, 2013

/s/ Timothy O’Brien 

Timothy O’Brien

Co-Chief Executive Officer

(Co-Principal Executive Officer)

EX-32.3

Exhibit 32.3

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906 OF THE

SARBANES-OXLEY ACT OF 2002

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and in connection with the Quarterly Report on Form 10-Q of TNP Strategic Retail Trust, Inc. (the “Company”) for the quarter ended March 31, 2013, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, the Chief Financial Officer, Treasurer and Secretary of the Company, certifies, to her knowledge, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: May 20, 2013

/s/ Dee R. Balch 

Dee R. Balch

Chief Financial Officer, Treasurer and Secretary

(Principal Financial and Accounting Officer)

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ACQUIRED LEASE INTANGIBLES AND BELOW-MARKET LEASE LIABILITIES (Details) (USD $)	Mar. 31, 2013	Dec. 31, 2012
Lease intangibles and below-market lease liabilities
Intangibles, Net	$ 32,194,000	$ 33,735,000
Lease Intangibles [Member]
Lease intangibles and below-market lease liabilities
Cost	39,757,000	39,853,000
Accumulated amortization	(7,563,000)	(6,118,000)
Intangibles, Net	32,194,000	33,735,000
Below-Market Lease Liabilities [Member]
Lease intangibles and below-market lease liabilities
Cost	(12,674,000)	(12,764,000)
Accumulated amortization	1,126,000	936,000
Intangibles, Net	$ (11,548,000)	$ (11,828,000)

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COMMITMENTS AND CONTINGENCIES (Details Textual) (USD $)	3 Months Ended	12 Months Ended
	Mar. 31, 2013 sqft	Dec. 31, 2012
Commitments and Contingencies (Textual) [Abstract]
Percentage of profit participation in the property	25.00%
Stipulated amount for calculation of net profits on sale of property	$ 3,200,000
Net rentable area	23,000
Monthly operating leases rent expense net	36,425
Lease expiration date	Feb. 01, 2060
Non Refundable Deposit		250,000
Constitution Trail [Member]
Commitments and Contingencies (Textual) [Abstract]
Leased land	7.78
Starplex Premises [Member]
Commitments and Contingencies (Textual) [Abstract]
Monthly operating leases rent expense net	62,424
Annually operating leases rent expense net	749,088
Starplex Master Lease [Member]
Commitments and Contingencies (Textual) [Abstract]
Net rentable area	44,064
Conditional minimum annual gross sales	2,800,000
Lahaina Gateway Ground Lease [Member]
Commitments and Contingencies (Textual) [Abstract]
Monthly operating leases rent expense net	99,000
Lease expiration date	Feb. 01, 2060
Annually operating leases rent expense net	1,187,000
Original Lease Term	55 years
Increase In Operating Lease Rent Expense	$ 1,342,000
Percentage Of Increase In Rent Expense For Every Five Years	13.00%

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EARNINGS PER SHARE (Details) (USD $)	3 Months Ended
	Mar. 31, 2013		Mar. 31, 2012
Numerator - basic and diluted
Loss from continuing operations	$ (3,458,000)		$ (4,418,000)
IncomeLossFromContinuingOperationsAttributableToNoncontrollingEntity	131,000		214,000
Distributions paid on unvested restricted shares	0		(2,000)
Net loss from continuing operations applicable to common shares	(3,327,000)		(4,209,000)
Net (loss) income from discontinued operations	(4,641,000)		(53,000)
Non-controlling interests' share in discontinued operations	(176,000)		(2,000)
Net income (loss) applicable to common shares	$ 1,138,000		$ (4,155,000)
Denominator - basic and diluted
Basic weighted average common shares	10,935,089		6,797,797
Effect of dilutive securities Common Units	431,796	[1]	0	[1]
Diluted weighted average common shares	11,366,885		6,797,797
Basic Earnings per Common Share
Net loss from continuing operations applicable to common shares	$ (0.31)		$ (0.62)
Discontinued operations (In dollars per share)	$ 0.41		$ 0.01
Net earnings (loss) applicable to common shares	$ 0.10		$ (0.61)
Diluted Earnings per Common Share
Net loss from continuing operations applicable to common shares	$ (0.31)		$ (0.62)
Discontinued operations	$ 0.41		$ 0.01
Net earnings (loss) applicable to common shares	$ 0.10		$ (0.61)

[1] Number of convertible Common Units pursuant to the redemption rights outlined in the Company's registration statement on Form S-11. Anti-dilutive for three months ended March 31, 2012.

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SUBSEQUENT EVENTS (Details Textual) (Subsequent Event [Member], USD $)	3 Months Ended
	Mar. 31, 2013
Subsequent Event [Member]
Increase In Monthly Payment Of Consulting Fee	$ 90,000

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EQUITY (Details) (USD $)	0 Months Ended	3 Months Ended										12 Months Ended
	Feb. 07, 2013	Mar. 31, 2013		Dec. 31, 2012		Sep. 30, 2012		Jun. 30, 2012		Mar. 31, 2012		Dec. 31, 2012
Company's common stockholders and non-controlling Common Unit holders
Distributions Declared to Common Stockholders		$ 636,000	[1],[2]	$ 1,259,000	[1],[2]	$ 1,874,000	[1]	$ 1,637,000	[1]	$ 1,183,000	[1]	$ 5,953,000	[1]
Distributions Declared Per Share		$ 0.05833	[1],[2]	$ 0.05833	[1],[2]	$ 0.05833	[1]	$ 0.05833	[1]	$ 0.05833	[1]
Distributions Declared to Common Unit Holders		25,000	[1],[2],[3]	51,000	[1],[2],[3]	76,000	[1],[3]	74,000	[1],[3]	57,000	[1],[3]	258,000	[1],[3]
Cash Distributions Payments to Common Stockholders		390,000	[2],[4]	1,274,000	[2],[4]	1,015,000	[4]	866,000	[4]	721,000	[4]	3,876,000	[4]
Cash Distributions Payments to Common Units Holders		25,000	[2],[4]	76,000	[2],[4]	76,000	[4]	71,000	[4]	52,000	[4]	275,000	[4]
Reinvested Distributions (DRIP shares issuance)	391,182	246,000	[2],[4]	607,000	[2],[4]	709,000	[4]	570,000	[4]	406,000	[4]	2,292,000	[4]
Total Common Stockholder Cash Distributions Paid and Reinvested DRIP Shares Issued		$ 415,000		$ 1,881,000	[2]	$ 1,724,000		$ 1,436,000		$ 773,000		$ 6,168,000

[1] Distributions were generally declared monthly and are calculated at a monthly distribution rate of $0.05833 per share of common stock and Common Units.

[2] Distributions for the month of December 2012 in the aggregate amount of $636,000 were declared on January 18, 2013, of which $390,000 was paid in cash and $246,000 was paid through the Company's distribution reinvestment plan in the form of additional shares of common stock. Total dividends paid to holders of Common Units of the OP for the same period were $25,000.

[3] None of the Common Unit holders of the OP are participating in the Company's distribution reinvestment program, which was terminated effective February 7, 2013.

[4] Cash distributions were paid, and DRIP shares issued pursuant to the Company's distribution reinvestment plan, generally on a monthly basis. Cash distributions for all record dates of a given month were generally paid approximately 15 days following month end.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Textual) (USD $)	3 Months Ended
	Mar. 31, 2013 sqft	Mar. 31, 2012	Dec. 31, 2012
Summary of Significant Accounting Policies (Textual) [Abstract]
Straight-line rent receivable	$ 1,743,000		$ 1,380,000
Acquisition expense		1,453,000
Total percentage of Company's annual REIT taxable income to stockholders	90.00%
Rentable area based on Company's gross leasable area	99,979
Value of rentable area based on Company's annual minimum rent	1,048,000
Percentage of rentable area based on Company's gross leasable area	5.00%
Percentage of minimum value of rentable area based on company's annual minimum rent	4.00%
Company's properties remaining lease terms	14 years
Company's properties weighted-average remaining term	9 years
Security deposits on leases	$ 664,000		$ 651,000
Other Tenant [Member]
Summary of Significant Accounting Policies (Textual) [Abstract]
Percentage of minimum value of rentable area based on company's annual minimum rent	5.00%

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NOTES PAYABLE (Tables)

3 Months Ended

Mar. 31, 2013

Debt [Abstract]

Schedule Of Debt

As of March 31, 2013 and December 31, 2012, the Company’s notes payable consisted of the following:

	Principal Balance				Interest Rates At
	March 31, 2013		December 31, 2012		March 31, 2013
KeyBank Credit Facility	$	36,455,000	$	38,438,000		5.50	%
Secured term loans		58,536,000		60,706,000		5.10% - 10.00	%
Mortgage loans		89,082,000		90,183,000		4.50% - 15.00	%
Unsecured loan		1,250,000		1,250,000		8.00	%
Total	$	185,323,000	$	190,577,000

Schedule of maturities for notes payable outstanding

The following is a schedule of principal maturities for all of the Company’s notes payable outstanding as of March 31, 2013:

	Amount
April 1 through December 31, 2013	$	36,455,000
2014		5,269,000
2015		1,250,000
2016		18,029,000
2017		92,958,000
Thereafter		31,362,000
	$	185,323,000

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INCENTIVE AWARD PLAN (Details Textual) (USD $)	3 Months Ended			1 Months Ended			1 Months Ended
	Mar. 31, 2013	Mar. 31, 2012	Dec. 31, 2012	Nov. 30, 2009 Initial Restricted Stock Grant [Member]	Nov. 30, 2009 Restricted Stock Grant [Member]	Jul. 07, 2009 Incentive Award Plan [Member]	Nov. 30, 2009 Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common Stock registered and reserved	10,526,316					2,000,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Net of Forfeitures				5,000	2,500
Proceeds from Issuance Initial Public Offering							$ 2,000,000
Stock-based compensation expense	15,000	13,000
Employee Service Share-based Compensation, Nonvested Awards, Total Compensation Cost Not yet Recognized	45,000		60,000
Expense is expected to be realized over a remaining period	1 year
Fair value of the nonvested shares of restricted common stock	$ 90,000		$ 10,000

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NOTES PAYABLE (Details) (USD $)	Mar. 31, 2013	Dec. 31, 2012
Debt
Principal Balance	$ 185,323,000	$ 190,577,000
Interest Rate	8.00%
Key Bank Credit Facility
Debt
Principal Balance	36,455,000	38,438,000
Interest Rate	5.50%
Secured term loans [Member]
Debt
Principal Balance	58,536,000	60,706,000
Secured term loans [Member] | Maximum [Member]
Debt
Interest Rate	10.00%
Secured term loans [Member] | Minimum [Member]
Debt
Interest Rate	5.10%
Mortgage loans [Member]
Debt
Principal Balance	89,082,000	90,183,000
Mortgage loans [Member] | Maximum [Member]
Debt
Interest Rate	15.00%
Mortgage loans [Member] | Minimum [Member]
Debt
Interest Rate	4.50%
Unsecured loans [Member]
Debt
Principal Balance	$ 1,250,000	$ 1,250,000

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FUTURE MINIMUM RENTAL INCOME (Details) (USD $)	Mar. 31, 2013
Schedule of future minimum rental payments for operating leases
April 1 through December 31, 2013	$ 17,194,000
2014	21,907,000
2015	20,607,000
2016	18,795,000
2017	17,238,000
Thereafter	80,755,000
Total Minimum Rent	$ 176,496,000

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RELATED PARTY TRANSACTIONS (Details 1) (USD $)	3 Months Ended		54 Months Ended	3 Months Ended			3 Months Ended			3 Months Ended			3 Months Ended			3 Months Ended			3 Months Ended			3 Months Ended		12 Months Ended	3 Months Ended			3 Months Ended			3 Months Ended			3 Months Ended			3 Months Ended			3 Months Ended		54 Months Ended		3 Months Ended		54 Months Ended		3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012	Mar. 31, 2013	Mar. 31, 2013 Expensed [Member]	Mar. 31, 2012 Expensed [Member]	Dec. 31, 2012 Expensed [Member]	Mar. 31, 2013 Asset management fees [Member]	Mar. 31, 2012 Asset management fees [Member]	Dec. 31, 2012 Asset management fees [Member]	Mar. 31, 2013 Reimbursement of operating expenses [Member]	Mar. 31, 2012 Reimbursement of operating expenses [Member]	Dec. 31, 2012 Reimbursement of operating expenses [Member]	Mar. 31, 2013 Acquisition Fees [Member]	Mar. 31, 2012 Acquisition Fees [Member]	Dec. 31, 2012 Acquisition Fees [Member]	Mar. 31, 2013 Property management fees [Member]	Mar. 31, 2012 Property management fees [Member]	Dec. 31, 2012 Property management fees [Member]	Mar. 31, 2013 Guaranty fees [Member]	Mar. 31, 2012 Guaranty fees [Member]	Dec. 31, 2012 Guaranty fees [Member]	Mar. 31, 2013 Leasing fees [Member]	Mar. 31, 2012 Leasing fees [Member]	Dec. 31, 2012 Leasing fees [Member]	Mar. 31, 2013 Disposition Fees [Member]	Mar. 31, 2012 Disposition Fees [Member]	Dec. 31, 2012 Disposition Fees [Member]	Mar. 31, 2013 Interest expense on notes payable [Member]	Mar. 31, 2012 Interest expense on notes payable [Member]	Dec. 31, 2012 Interest expense on notes payable [Member]	Mar. 31, 2013 Capitalized [Member]	Mar. 31, 2012 Capitalized [Member]	Dec. 31, 2012 Capitalized [Member]	Mar. 31, 2013 Financing coordination fees [Member]	Mar. 31, 2012 Financing coordination fees [Member]	Dec. 31, 2012 Financing coordination fees [Member]	Mar. 31, 2013 Additional Paid-In Capital [Member]	Mar. 31, 2012 Additional Paid-In Capital [Member]	Dec. 31, 2012 Additional Paid-In Capital [Member]	Mar. 31, 2013 Selling commissions [Member]	Mar. 31, 2012 Selling commissions [Member]	Mar. 31, 2013 Selling commissions [Member]	Dec. 31, 2012 Selling commissions [Member]	Mar. 31, 2013 Dealer manager fees [Member]	Mar. 31, 2012 Dealer manager fees [Member]	Mar. 31, 2013 Dealer manager fees [Member]	Dec. 31, 2012 Dealer manager fees [Member]	Mar. 31, 2013 Organization and offering costs [Member]	Mar. 31, 2012 Organization and offering costs [Member]	Dec. 31, 2012 Organization and offering costs [Member]
Summarized below are the related-party transactions
Related-party costs, Incurred	$ 47,000	$ 1,730,000	$ 10,015,000	$ 1,197,000	$ 1,701,000		$ 0	$ 0		$ (98,000)	$ 182,000		$ 13,000	$ 1,212,000		$ 344,000	$ 250,000		$ 14,000	$ 13,000		$ 124,000	$ 5,000	$ 14,000	$ 924,000	$ 24,000		$ 0	$ 20,000		$ 124,000	$ 366,000		$ 0	$ 361,000		$ 54,000	$ 1,794,000		$ 32,000	$ 1,196,000	$ 6,925,000		$ 15,000	$ 534,000	$ 3,090,000		$ 7,000	$ 64,000
Related-party costs, Payable				$ 64,000		$ 742,000	$ 0		$ 0	$ 0		$ 209,000	$ 0		$ 475,000	$ 60,000		$ 48,000	$ 4,000		$ 10,000	$ 14,000		$ 0	$ 0		$ 0	$ 0		$ 0	$ 14,000		$ 0	$ 0		$ 0	$ 0		$ 13,000	$ 0		$ 0	$ 9,000	$ 0		$ 0	$ 4,000	$ 0		$ 0

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EQUITY (Details Textual) (USD $)	0 Months Ended	3 Months Ended										12 Months Ended		3 Months Ended						3 Months Ended	0 Months Ended
	Feb. 07, 2013	Mar. 31, 2013		Dec. 31, 2012		Sep. 30, 2012		Jun. 30, 2012		Mar. 31, 2012		Dec. 31, 2012		Mar. 31, 2013 Common Stock [Member]	Mar. 31, 2012 Common Stock [Member]	Mar. 31, 2011 Common Stock [Member]	Mar. 31, 2013 Anthony W. Thompson [Member]	Mar. 31, 2013 Sponsor [Member]	Oct. 16, 2008 Sponsor [Member]	Mar. 31, 2012 DRIP [Member]	Feb. 07, 2013 DRIP [Member] Ipo [Member] Termination Of Offering [Member]	May 26, 2011 Pinehurst Square East [Member]	Mar. 12, 2012 Turkey Creek [Member]
Deferred Compensation Arrangement With Individual Excluding Share Based Payments And Postretirement Benefits [Line Items]
Common stock shares sold in offering		10,969,714		10,893,227								10,893,227					111,111	22,222			10,969,714	287,472	144,324
Common stock, $0.01 par value; 400,000,000 shares authorized, 10,969,714 issued and outstanding at March 31, 2013, 10,893,227 issued and outstanding at December 31, 2012		$ 110,000		$ 109,000								$ 109,000					$ 1,000,000		$ 200,000			$ 2,587,000	$ 1,371,079
Common stock par value		$ 0.01		$ 0.01								$ 0.01										$ 9.00	$ 9.50
Issuance of common stock under DRIP	391,182	246,000	[1],[2]	607,000	[1],[2]	709,000	[1]	570,000	[1]	406,000	[1]	2,292,000	[1]	0
Company's Common Stock																			22,222
Authority to issue shares of common stock		400,000,000		400,000,000								400,000,000
Preferred stock, shares authorized		50,000,000		50,000,000								50,000,000
Preferred stock par value		$ 0.01		$ 0.01								$ 0.01
Weighted average of the number of shares		5.00%
Share redemptions, shares															17,649	0				549
Annual REIT taxable income		90.00%
Monthly cash distribution rate		$ 0.05833
Period over which distribution made to stock holders		15 days
Common Stock registered and reserved		10,526,316
Distributions reinvested		25,940								42,818				390,000
Dividends Payable														636,000
Dividend Paid Total														25,000
Proceeds from issuance of common stock		$ 502,000								$ 18,956,000											$ 108,357,000

[1] Cash distributions were paid, and DRIP shares issued pursuant to the Company's distribution reinvestment plan, generally on a monthly basis. Cash distributions for all record dates of a given month were generally paid approximately 15 days following month end.

[2] Distributions for the month of December 2012 in the aggregate amount of $636,000 were declared on January 18, 2013, of which $390,000 was paid in cash and $246,000 was paid through the Company's distribution reinvestment plan in the form of additional shares of common stock. Total dividends paid to holders of Common Units of the OP for the same period were $25,000.

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DISCONTINUED OPERATIONS AND ASSETS HELD FOR SALE

3 Months Ended

Mar. 31, 2013

Dispositions and Discontinued Operations [Abstract]

DISCONTINUED OPERATIONS

3. DISCONTINUED OPERATIONS AND ASSETS HELD FOR SALE

The Company reports as discontinued operations, properties held-for-sale and operating properties sold in the current period. The results of these discontinued operations are included in a separate component of income on the condensed consolidated statements of operations under the caption “Discontinued operations.”

During the three months ended March 31, 2013, the Company completed the sale of the Waianae Mall in Waianae, Hawaii (acquired in June 2010), for a sales price of $30,500,000. The Company classified assets and liabilities (including the mortgage debt) related to Waianae Mall as held for sale in the consolidated balance sheet at December 31, 2012. The results of operations related to Waianae Mall were classified as discontinued operations for the three months ended March 31, 2013 and 2012.

During the three months ended March 31, 2013, the Company also completed the sale of the McDonalds parcel at Willow Run Shopping Center (acquired in May 2012) to McDonalds Real Estate Company, for $1,050,000. Net proceeds from the sale of $983,000 were used to pay down the KeyBank line of credit. The results of operations related to the McDonalds parcel were classified as discontinued operations for the three months ended March 31, 2013. The McDonalds parcel was not classified as held for sale at December 31, 2012.

On December 4, 2012, the Company entered into a purchase and sale agreement, as amended, with a third party for the sale of the office building at the Aurora Commons property (acquired in March 2012), for gross proceeds of $1,250,000. The Company classified assets and liabilities related to the office portion of the Aurora Commons property as held for sale in the condensed consolidated balance sheets at March 31, 2013 and December 31, 2012. The results of operations related to the office building at Aurora Commons were classified as discontinued operations for the three months ended March 31, 2013 and 2012.

During the three months ended March 31, 2012, the Company completed the sale of the KFC parcel at Morningside Marketplace (acquired in January 2012), for $1,200,000. The results of operations related to the KFC parcel were classified in discontinued operations for the three months ended March 31, 2012. Discontinued operations for the three months ended March 31, 2012 also included the operating results of the Chase and Chevron parcels at Morningside Marketplace which were sold in April 2012.

The components of income and expense relating to discontinued operations for the three months ended March 31, 2013 and 2012 are shown below.

	2013			2012
Revenues from rental property	$	204,000		$	1,113,000
Rental property expenses		124,000			401,000
Depreciation and amortization		-			350,000
Interest		277,000			309,000
Operating (loss) income from discontinued operations		(197,000	)		53,000
Gain on sale of real estate		4,838,000			-
Income from discontinued operations	$	4,641,000		$	53,000

The major classes of assets and liabilities related to assets held for sale included in the condensed consolidated balance sheets are as follows:

	March 31,			December 31,
	2013			2012
ASSETS
Investments in real estate
Land	$	174,000		$	10,760,000
Building and improvements		1,001,000			13,937,000
Tenant improvements		26,000			689,000
		1,201,000			25,386,000
Accumulated depreciation		(48,000	)		(2,324,000	)
Investments in real estate, net		1,153,000			23,062,000
Restricted cash		-			358,000
Prepaid expenses and other assets, net		-			37,000
Tenant receivables		4,000			261,000
Lease intangibles, net		66,000			1,955,000
Deferred financing fees, net		-			98,000
Assets held for sale	$	1,223,000		$	25,771,000
LIABILITIES
Notes payable	$	-		$	19,571,000
Accounts payable and accrued expenses		-			247,000
Other liabilities		-			235,000
Below market lease intangibles, net		-			1,224,000
Liabilities held for sale	$	-		$	21,277,000

Amounts above are being presented at their carrying value which the Company believes to be lower than their estimated fair value less costs to sell.

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NOTES PAYABLE (Details 1) (USD $)	Mar. 31, 2013
Schedule of maturities for notes payable outstanding
April 1 through December 31, 2013	$ 36,455,000
2014	5,269,000
2015	1,250,000
2016	18,029,000
2017	92,958,000
Thereafter	31,362,000
Total maturities for notes payable outstanding	$ 185,323,000

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INCENTIVE AWARD PLAN (Tables)

3 Months Ended

Mar. 31, 2013

Incentive Award Plan [Abstract]

Granted and vested restricted stock

As of March 31, 2013 and December 31, 2012, the fair value of the non-vested shares of restricted common stock was $90,000 and 10,000 shares remain unvested. During the three months ended March 31, 2013, there were no restricted stock grants issued and no shares vested.

			Weighted
	Restricted		Average
	Stock (No.		Grant Date
	of Shares)		Fair Value
Balance - December 31, 2012		10,000	$	9.00
Granted		-		-
Vested		-		-
Balance - March 31, 2013		10,000		9.00

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EARNINGS PER SHARE (Tables)

3 Months Ended

Mar. 31, 2013

Earnings Per Share [Abstract]

Company's basic and diluted (loss)earnings per share

The following table sets forth the computation of the Company’s basic and diluted loss per share:

	For the Three Months Ended
	March 31,
	2013			2012
Numerator - basic and diluted
Net loss from continuing operations	$	(3,458,000	)	$	(4,421,000	)
Non-controlling interests' share in continuing operations		131,000			214,000
Distributions paid on unvested restricted shares		-			(2,000	)
Net loss from continuing operations applicable to common shares		(3,327,000	)		(4,209,000	)
Discontinued operations		4,641,000			56,000
Non-controlling interests' share in discontinued operations		(176,000	)		(2,000	)
Net income (loss) applicable to common shares	$	1,138,000		$	(4,155,000	)
Denominator - basic and diluted
Basic weighted average common shares		10,935,089			6,797,797
Effect of dilutive securities Common Units (1)		431,796			-
Diluted weighted average common shares		11,366,885			6,797,797
Basic Earnings per Common Share
Net loss from continuing operations applicable to common shares	$	(0.31	)	$	(0.62	)
Discontinued operations		0.41			0.01
Net earnings (loss) applicable to common shares	$	0.10		$	(0.61	)
Diluted Earnings per Common Share
Net loss from continuing operations applicable to common shares	$	(0.31	)	$	(0.62	)
Discontinued operations		0.41			0.01
Net earnings (loss) applicable to common shares	$	0.10		$	(0.61	)

(1) Number of convertible Common Units pursuant to the redemption rights outlined in the Company's registration statement on Form S-11. Anti-dilutive for three months ended March 31, 2012.

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NOTES PAYABLE (Details Textual) (USD $)	1 Months Ended	3 Months Ended				0 Months Ended						1 Months Ended			3 Months Ended				3 Months Ended
	Jan. 31, 2012	Mar. 31, 2013	Mar. 31, 2012	Dec. 31, 2012	Jun. 13, 2012 Key Bank Term Loan [Member]	Feb. 01, 2013 Lahaina Gateway Shopping Center [Member]	Jan. 02, 2013 Lahaina Gateway Shopping Center [Member]	Jan. 14, 2013 Lahaina Gateway Shopping Center [Member]	Dec. 01, 2012 Lahaina Gateway Shopping Center [Member]	Nov. 09, 2012 Lahaina Gateway Shopping Center [Member]	Nov. 09, 2012 Interest Rate Two [Member] Lahaina Gateway Shopping Center [Member]	Jan. 22, 2013 Waianae Loan [Member]	Mar. 31, 2013 Tranche A Of Credit Facility [Member]	Dec. 17, 2010 Tranche A Of Credit Facility [Member]	Mar. 31, 2013 Tranche A Of Credit Facility [Member] Key Bank [Member]	Mar. 31, 2013 Tranche A Of Credit Facility [Member] Key Bank [Member] Second Temporary Increase [Member]	Dec. 17, 2010 Tranche B Of Credit Facility [Member]	Dec. 17, 2010 Revolving Credit Facility [Member]	Mar. 31, 2013 Tranche A Commitments [Member]
Debt Instrument [Line Items]
Interest Expense, Debt		$ 3,669,000	$ 2,789,000
Amortization of deferred financing costs		287,000	821,000
Unamortized deferred financing costs	540,000
Interest expense payable		1,264,000		1,097,000
Initial maximum aggregate commitment														25,000,000			10,000,000	35,000,000
Aggregate Commitment Under Credit Facility													45,000,000
Credit facility amount outstanding																			36,455,000
Forbearance Fees Payable															192,000
Percentage Of Forbearance Fees Paid To Total Amount Outstanding		100.00%													50.00%	50.00%
Amount Of Netproceeds From Sale Of Assets Paid Towards Credit Facility Borrowing		1,983,000
Proceeds From Sale Of Land Held-For-Use												29,763,000
Principal Balance		185,323,000		190,577,000	2,000,000					29,000,000		19,717,000
Disposition Fee												893,000
Interest Rate		8.00%								9.483%	11.429%
Debt Instrument, Periodic Payment						333,333	333,333	1,281,000	333,333
Prepayment Of Outstanding Principal Balance						$ 1,000,000

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RELATED PARTY TRANSACTIONS (Tables)

3 Months Ended

Mar. 31, 2013

Related Party Transactions [Abstract]

Selling commissions and dealer manager fees as an offset to additional paid-in capital incurred

The Company incurred selling commissions and dealer manager fees during the following periods:

	For the Three Months Ended
	March 31,				Inception Through
	2013		2012		March 31, 2013
Selling Commissions	$	32,000	$	1,196,000	$	6,925,000
Dealer Manager Fee		15,000		534,000		3,090,000
	$	47,000	$	1,730,000	$	10,015,000

Summarized below are the related-party transactions

Summarized below are the related-party costs incurred by the Company for the three months ended March 31, 2013 and 2012, respectively, and payable as of March 31, 2013 and December 31, 2012:

	Incurred					Payable
	Three Months Ended March 31,					As of March		As of December
	2013			2012		31, 2013		31, 2012
Expensed
Asset management fees	$	-		$	-	$	-	$	-
Reimbursement of operating expenses		(98,000	)		182,000		-		209,000
Acquisition fees		13,000			1,212,000		-		475,000
Property management fees		344,000			250,000		60,000		48,000
Guaranty fees		14,000			13,000		4,000		10,000
Disposition fees		924,000			24,000		-		-
Interest expense on notes payable		-			20,000		-		-
	$	1,197,000		$	1,701,000	$	64,000	$	742,000
Capitalized
Financing coordination fee	$	-		$	361,000	$	-	$	-
Leasing commission fees		124,000			5,000		14,000		-
	$	124,000		$	366,000	$	14,000	$	-
Additional Paid In Capital
Selling commissions	$	32,000		$	1,196,000	$	-	$	9,000
Dealer manager fees		15,000			534,000		-		4,000
Organization and offering costs		7,000			64,000		-		-
	$	54,000		$	1,794,000	$	-	$	13,000

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ORGANIZATION AND BUSINESS (Details Textual) (USD $)	0 Months Ended	3 Months Ended		12 Months Ended	54 Months Ended			3 Months Ended					3 Months Ended	12 Months Ended	3 Months Ended	12 Months Ended	3 Months Ended		1 Months Ended			0 Months Ended	12 Months Ended
	Feb. 07, 2013	Mar. 31, 2013 sqft	Mar. 31, 2012	Dec. 31, 2012	Mar. 31, 2013 sqft	Dec. 31, 2011	Nov. 04, 2008	Mar. 31, 2013 Subsequent Event [Member]	Aug. 07, 2012 Advisory Agreement [Member]	May 26, 2011 Pinehurst Square East [Member]	Mar. 12, 2012 Turkey Creek [Member]	Jun. 15, 2012 Followon Public Offering [Member]	Mar. 31, 2013 Advisor [Member]	Dec. 31, 2012 Advisor [Member]	Mar. 31, 2013 Delaware Limited Liability Company [Member]	Dec. 31, 2012 Delaware Limited Liability Company [Member]	Mar. 31, 2013 TNP Strategic Retail Advisor LLC [Member]	Mar. 31, 2013 TNP Strategic Retail OP Holdings LLC [Member]	Dec. 31, 2012 Glenborough [Member] Consulting Agreement [Member]	Dec. 31, 2012 DRIP [Member]	Nov. 04, 2008 DRIP [Member]	Feb. 07, 2013 DRIP [Member] Ipo [Member]	Dec. 31, 2012 DRIP [Member] Ipo [Member]	Feb. 08, 2013 DRIP [Member] Ipo [Member]
Organization and Business (Additional Textual) [Abstract]
Shares issued under plan																				365,242	10,526,316
Common stock, primary offering price							$ 10.00														$ 9.50
Common stock, $0.01 par value; 400,000,000 shares authorized, 10,969,714 issued and outstanding at March 31, 2013, 10,893,227 issued and outstanding at December 31, 2012		$ 110,000		$ 109,000	$ 110,000					$ 2,587,000	$ 1,371,000
Investment of advisor in OP		47,000	1,730,000		10,015,000												1,000	1,000
Organization and Business (Textual) [Abstract]
Maximum common stock to the public from primary offering							100,000,000
Area of leased space of retail properties		23,000			23,000
Percentage of leased space of retail properties		88.00%			88.00%
Partnership Interest Ownership Percentage		100.00%		100.00%									0.01%	0.01%	96.20%	96.20%
Common Stock Par Or Stated Per Unit										$ 9.00	$ 9.50
Limited Partners' Capital Account, Units Issued										287,472	144,324
Increase In Monthly Payment Of Consulting Fee								90,000
Common Stock, Shares Subscribed but Unissued																								10,969,714
Common Stock Share Issued Net Of Share Redemption				10,893,227
Issuance of common stock under DRIP, shares	391,182
Proceeds from issuance of common stock		502,000	18,956,000																			108,357,000	107,609,000
Consulting Fees Monthly Payment																			75,000
Minimun Cash Reserve To Be Maintained									4,000,000
Cash and cash equivalents		$ 1,126,000	$ 2,930,000	$ 1,707,000	$ 1,126,000	$ 2,052,000
Shares To Be Registered												900,000,000

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

3 Months Ended

Mar. 31, 2013

Summary Of Significant Accounting Policies [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation and Basis of Presentation

The accompanying condensed consolidated unaudited financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information as contained within the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) and the rules and regulations of the SEC, including the instructions to Form 10-Q and Article 10 of Regulation S-X. Management is required to make estimates and assumptions in the preparation of financial statements in conformity with GAAP. These estimates and assumptions affected the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

The condensed consolidated financial statements include the accounts of the Company, the OP, and their direct and indirect wholly owned subsidiaries. All significant intercompany balances and transactions are eliminated in consolidation. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) necessary to present fairly the Company’s financial position, results of operations and cash flows have been included.

The Company evaluates the need to consolidate joint ventures and variable interest entities based on standards set forth in ASC 810, Consolidation (“ASC 810”). In determining whether the Company has a controlling interest in a joint venture or a variable interest entity and the requirement to consolidate the accounts of that entity, management considers factors such as ownership interest, authority to make decisions and contractual and substantive participating rights of the partners/members as well as whether the entity is a variable interest entity for which the Company is the primary beneficiary. As of March 31, 2013, the Company did not have any joint ventures or variable interests in any variable interest entities.

Non-Controlling Interests

The Company’s non-controlling interests comprise primarily of the Common Units in the OP. The Company accounts for non-controlling interests in accordance with ASC 810. In accordance with ASC 810, the Company reports non-controlling interests in subsidiaries within equity in the condensed consolidated financial statements, but separate from the parent’s stockholders’ equity. Net income (loss) attributable to non-controlling interests is presented as a reduction from net income in calculating net income (loss) available to common stockholders on the statement of operations. Acquisitions or dispositions of non-controlling interests that do not result in a change of control are accounted for as equity transactions. In addition, ASC 810 requires that a parent company recognize a gain or loss in net income when a subsidiary is deconsolidated upon a change in control. In accordance with FASB ASC 480-10, Distinguishing Liabilities from Equity, non-controlling interests that are determined to be redeemable are carried at their fair value or redemption value as of the balance sheet date and reported as liabilities or temporary equity depending on their terms. The Company periodically evaluates individual non-controlling interests for the ability to continue to recognize the non-controlling interest as permanent equity in the condensed consolidated balance sheets. Any non-controlling interest that fails to qualify as permanent equity will be reclassified as liabilities or temporary equity and adjusted to the greater of (1) the carrying amount, or (2) its redemption value as of the end of the period in which the determination is made, and the resulting adjustment is recorded in the condensed consolidated statement of operations. All non-controlling interests at March 31, 2013 qualified as permanent equity.

Use of Estimates

The preparation of the Company’s financial statements requires significant management judgments, assumptions and estimates about matters that are inherently uncertain. These judgments affect the reported amounts of assets and liabilities and the Company’s disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenue and expenses during the reporting periods. With different estimates or assumptions, materially different amounts could be reported in the Company’s financial statements. Additionally, other companies may utilize different estimates that may impact the comparability of the Company’s results of operations to those of companies in similar businesses. The Company considers significant estimates to include the carrying amounts and recoverability of investments in real estate, impairments, real estate acquisition purchase price allocations, allowance for doubtful accounts, the estimated useful lives to determine depreciation and amortization, and fair value determinations, among others.

Cash and Cash Equivalents

Cash and cash equivalents represents current bank accounts and other bank deposits free of encumbrances and having maturity dates of three months or less from the respective dates of deposit. The Company limits cash investments to financial institutions with high credit standing; therefore, the Company believes it is not exposed to any significant credit risk in cash.

Restricted Cash

Restricted cash includes escrow accounts for real property taxes, insurance, capital expenditures and tenant improvements, debt service and leasing costs held by lenders.

Revenue Recognition

Revenues include minimum rents, expense recoveries and percentage rental payments. Minimum rents are recognized on an accrual basis over the terms of the related leases on a straight-line basis when collectability is reasonably assured and the tenant has taken possession or controls the physical use of the leased property. If the lease provides for tenant improvements, the Company determines whether the tenant improvements, for accounting purposes, are owned by the tenant or the Company. When the Company is the owner of the tenant improvements, the tenant is not considered to have taken physical possession or have control of the physical use of the leased asset until the tenant improvements are substantially completed. When the tenant is the owner of the tenant improvements, any tenant improvement allowance that is funded is treated as a lease incentive and amortized as a reduction of revenue over the lease term. Tenant improvement ownership is determined based on various factors including, but not limited to:

• whether the lease stipulates how a tenant improvement allowance may be spent;

• whether the amount of a tenant improvement allowance is in excess of market rates;

• whether the tenant or landlord retains legal title to the improvements at the end of the lease term;

• whether the tenant improvements are unique to the tenant or general-purpose in nature; and

• whether the tenant improvements are expected to have any residual value at the end of the lease.

For leases with minimum scheduled rent increases, the Company recognized income on a straight-line basis over the lease term when collectability is reasonably assured. Recognizing rental income on a straight-line basis for leases results in recognized revenue amounts which differ from those that are contractually due from tenants on a cash basis. If the Company determines the collectability of straight-line rents is not reasonably assured, the Company limits future recognition to amounts contractually owed and paid, and, when appropriate, establishes an allowance for estimated losses.

The Company maintains an allowance for doubtful accounts, including an allowance for straight-line rent receivables, for estimated losses resulting from tenant defaults or the inability of tenants to make contractual rent and tenant recovery payments. The Company monitors the liquidity and creditworthiness of its tenants on an ongoing basis. For straight-line rent amounts, the Company’s assessment is based on amounts estimated to be recoverable over the term of the lease. The Company’s straight-line rent receivable, which is included in tenant receivables on the condensed consolidated balance sheets, was $1,743,000 and $1,380,000 at March 31, 2013 and December 31, 2012, respectively.

Certain leases contain provisions that require the payment of additional rents based on the respective tenants’ sales volume (contingent or percentage rent) and substantially all contain provisions that require reimbursement of the tenants’ allocable real estate taxes, insurance and common area maintenance costs (“CAM”). Revenue based on percentage of tenants’ sales is recognized only after the tenant exceeds its sales breakpoint. Revenue from tenant reimbursements of taxes, CAM and insurance is recognized in the period that the applicable costs are incurred in accordance with the lease agreement.

The Company recognizes gains or losses on sales of real estate in accordance with ASC 360. Profits are not recognized until (a) a sale has been consummated; (b) the buyer’s initial and continuing investments are adequate to demonstrate a commitment to pay for the property; (c) the Company’s receivable, if any, is not subject to future subordination; and (d) the Company has transferred to the buyer the usual risks and reward of ownership, and the Company does not have a substantial continuing involvement with the property. The results of operations of income producing properties where the Company does not have a continuing involvement are presented in the discontinued operations section of the Company’s condensed consolidated statements of operations when the property has been classified as held-for-sale or sold.

Valuation of Accounts Receivable

The Company makes estimates of the collectability of its tenant receivables related to base rents, including deferred rents receivable, expense reimbursements and other revenue or income.

The Company analyzes tenant receivables, deferred rent receivable, historical bad debts, customer creditworthiness, current economic trends and changes in customer payment terms when evaluating the adequacy of the allowance for doubtful accounts. In addition, with respect to tenants in bankruptcy, the Company will make estimates of the expected recovery of pre-petition and post-petition claims in assessing the estimated collectability of the related receivable. In some cases, the ultimate resolution of these claims can exceed one year. When a tenant is in bankruptcy, the Company will record a bad debt reserve for the tenant’s receivable balance and generally will not recognize subsequent rental revenue until cash is received or until the tenant is no longer in bankruptcy and has the ability to make rental payments.

Concentration of Credit Risk

A concentration of credit risk arises in the Company’s business when a national or regionally based tenant occupies a substantial amount of space in multiple properties owned by the Company. In that event, if the tenant suffers a significant downturn in its business, it may become unable to make its contractual rent payments to the Company, exposing the Company to potential losses in rental revenue, expense recoveries, and percentage rent. Further, the impact may be magnified if the tenant is renting space in multiple locations. Generally, the Company does not obtain security from the nationally-based or regionally-based tenants in support of their lease obligations to the Company. The Company regularly monitors its tenant base to assess potential concentrations of credit risk. As of March 31, 2013, Publix is the Company’s largest tenant and accounted for approximately 99,979 square feet, or approximately 5% of the Company’s gross leasable area, and approximately $1,048,000, or 4% of the Company’s annual minimum rent. No other tenant accounted for over 5% of the Company’s annual minimum rent. There were no outstanding receivables from Publix at March 31, 2013.

The Company’s real estate properties are leased to tenants under operating leases for which the terms and expirations vary. As of March 31, 2013, the leases at the Company’s properties have remaining terms (excluding options to extend) of up to 14 years with a weighted-average remaining term (excluding options to extend) of 9 years. The leases may have provisions to extend the lease agreements, options for early termination after paying a specified penalty, rights of first refusal to purchase the property at competitive market rates, and other terms and conditions as negotiated. The Company retains substantially all of the risks and benefits of ownership of the real estate assets leased to tenants. Generally, upon the execution of a lease, the Company requires security deposits from tenants in the form of a cash deposit and/or a letter of credit. Amounts required as security deposits vary depending upon the terms of the respective leases and the creditworthiness of the tenant, but generally are not significant amounts. Therefore, exposure to credit risk exists to the extent that a receivable from a tenant exceeds the amount of its security deposit. Security deposits received in cash related to tenant leases are included in other liabilities in the accompanying condensed consolidated balance sheets and totaled $664,000 and $651,000 as of March 31, 2013 and December 31, 2012, respectively.  

Business Combinations

The Company records the acquisition of income-producing real estate or real estate that will be used for the production of income as a business combination. All assets acquired and liabilities assumed in a business combination are measured at their acquisition-date fair values. The balance of the purchase price is allocated to tenant improvements and identifiable intangible assets or liabilities. Tenant improvements represent the tangible assets associated with the existing leases valued on a fair value basis at the acquisition date. Tenant improvements are classified as assets under investments in real estate and are depreciated over the remaining lease terms. Identifiable intangible assets and liabilities relate to the value of in-place operating leases which come in three forms: (1) leasing commissions and legal costs, which represent the value associated with “cost avoidance” of acquiring in-place leases, such as lease commissions paid under terms generally experienced in markets in which the Company operates; (2) value of in-place leases, which represents the estimated loss of revenue and of costs incurred for the period required to lease the “assumed vacant” property to the occupancy level when purchased; and (3) above- or below-market value of in-place leases, which represents the difference between the contractual rents and market rents at the time of the acquisition, discounted for tenant credit risks. The value of in-place leases is recorded in acquired lease intangibles and amortized over the remaining lease term. Above- or below-market leases are classified in acquired lease intangibles, or in acquired below-market lease intangibles, depending on whether the contractual terms are above- or below-market. Above-market leases are amortized as a decrease to rental revenue over the remaining non-cancelable terms of the respective leases and below-market leases are amortized as an increase to rental revenue over the remaining initial lease term and any fixed rate renewal periods, if applicable.

Acquisition costs are expensed as incurred and costs that do not meet the definition of a liability at the acquisition date are expensed in periods subsequent to the acquisition date. During the three months ended March 31, 2013, the Company did not acquire any property. During the three months ended March 31, 2012, the Company acquired five properties, Morningside Marketplace (“Morningside Marketplace”), Woodland West Marketplace (“Woodland West”), Ensenada Square (“Ensenada Square”), the Shops at Turkey Creek (“Turkey Creek”), and Aurora Commons (“Aurora Commons”), and recorded the acquisitions as business combinations and expensed $1,453,000 of acquisition costs. Costs incurred in pursuit of targeted properties for acquisitions not yet closed or those determined to no longer be viable have been expensed and are also classified in the condensed consolidated statement of operations as transaction expenses.

Estimates of the fair values of the tangible assets, identifiable intangibles and assumed liabilities require the Company to make significant assumptions to estimate market lease rates, property-operating expenses, carrying costs during lease-up periods, discount rates, market absorption periods, and the number of years the property will be held for investment. The use of inappropriate assumptions would result in an incorrect valuation of the Company’s acquired tangible assets, identifiable intangibles and assumed liabilities, which would impact the amount of the Company’s net income. These allocations also impact depreciation expense and gains or losses recorded on future sales of properties.

Reportable Segments

ASC 280, Segment Reporting, establishes standards for reporting financial and descriptive information about an enterprise’s reportable segments. The Company has one reportable segment, income-producing retail properties, which consists of activities related to investing in real estate. The retail properties are geographically diversified throughout the United States, and the Company’s chief operating decision maker evaluates operating performance on an overall portfolio level.

Investments in Real Estate

Real property is recorded at cost, less accumulated depreciation and amortization. Costs include those related to acquisition, development and construction, including tenant improvements, interest incurred during development, costs of predevelopment and certain direct and indirect costs of development. Costs related to business combinations are expensed as incurred, and are included in transaction expense in the Company’s condensed consolidated statements of operations.

Depreciation and amortization is computed using a straight-line method over the estimated useful lives of the assets as follows:

	Years
Buildings and improvements	5-48 years
Exterior improvements	10-20 years
Equipment and fixtures	5-10 years

Tenant improvement costs recorded as capital assets are depreciated over the shorter of (1) the tenant’s remaining lease term or (2) the life of the improvement.

Expenditures for ordinary maintenance and repairs are expensed to operations as they are incurred. Significant renovations and improvements that improve or extend the useful lives of assets are capitalized.

Impairment of Long-lived Assets

The Company continually monitors events and changes in circumstances that could indicate that the carrying amounts of its investments in real estate and related intangible assets may not be recoverable. When indicators of potential impairment suggest that the carrying value of real estate and related intangible assets may not be recoverable, the Company assesses the recoverability by estimating whether the Company will recover the carrying value of the real estate and related intangible assets through its undiscounted future cash flows and its eventual disposition. If, based on this analysis, the Company does not believe that it will be able to recover the carrying value of the real estate and related intangible assets and liabilities, the Company would record an impairment loss to the extent that the carrying value exceeds the estimated fair value of the investments in real estate and related intangible assets. Key inputs that the Company estimates in this analysis include projected rental rates, capital expenditures and property sales capitalization rates. The Company did not record any impairment loss on its investments in real estate and related intangible assets during the three months ended March 31, 2013 and 2012.

Assets Held-for-Sale and Discontinued Operations

When certain criteria are met, long-lived assets are classified as held-for-sale and are reported at the lower of their carrying value or their fair value less costs to sell and are no longer depreciated. Discontinued operations is a component of an entity that has either been disposed of or is deemed to be held-for-sale and (i) the operations and cash flows of the component have been or will be eliminated from ongoing operations as a result of the disposal transaction and (ii) the entity will not have any significant continuing involvement in the operations of the component after the disposal transaction.

Fair Value Measurements

Under GAAP, the Company is required to measure certain financial instruments at fair value on a recurring basis. In addition, the Company is required to measure other financial instruments and balances at fair value on a non-recurring basis (e.g., carrying value of impaired real estate loans receivable and long-lived assets). Fair value is defined as the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The GAAP fair value framework uses a three-tiered approach. Fair value measurements are classified and disclosed in one of the following three categories:

• Level 1: unadjusted quoted prices in active markets that are accessible at the measurement date for identical assets or liabilities;

• Level 2: quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-derived valuations in which significant inputs and significant value drivers are observable in active markets; and

• Level 3: prices or valuation techniques where little or no market data is available that requires inputs that are both significant to the fair value measurement and unobservable.

When available, the Company utilizes quoted market prices or other observable inputs (Level 2 inputs), such as interest rates or yield curves, from independent third-party sources to determine fair value and classify such items in Level 1 or Level 2. In instances where the market for a financial instrument is not active, regardless of the availability of a nonbinding quoted market price, observable inputs might not be relevant and could require the Company to use significant judgment to derive a fair value measurement. Additionally, in an inactive market, a market price quoted from an independent third party may rely more on models with inputs based on information available only to that independent third party. When the Company determines the market for an asset owned by it to be illiquid or when market transactions for similar instruments do not appear orderly, the Company uses several valuation sources (including internal valuations, discounted cash flow analysis and quoted market prices) and establishes a fair value by assigning weights to the various valuation sources. Additionally, when determining the fair value of liabilities in circumstances in which a quoted price in an active market for an identical liability is not available, the Company measures fair value using (i) a valuation technique that uses the quoted price of the identical liability when traded as an asset or quoted prices for similar liabilities when traded as assets or (ii) another a present value technique that considers the future cash flows based on contractual obligations discounted by an observed or estimated market rates of comparable liabilities. The use of contractual cash flows with regard to amount and timing significantly reduces the judgment applied in arriving at fair value.

Changes in assumptions or estimation methodologies can have a material effect on these estimated fair values. In this regard, the derived fair value estimates cannot be substantiated by comparison to independent markets and, in many cases, may not be realized in an immediate settlement of the instrument.

The Company considers the following factors to be indicators of an inactive market: (1) there are few recent transactions, (2) price quotations are not based on current information, (3) price quotations vary substantially either over time or among market makers (for example, some brokered markets), (4) indexes that previously were highly correlated with the fair values of the asset or liability are demonstrably uncorrelated with recent indications of fair value for that asset or liability, (5) there is a significant increase in implied liquidity risk premiums, yields, or performance indicators (such as delinquency rates or loss severities) for observed transactions or quoted prices when compared with the Company’s estimate of expected cash flows, considering all available market data about credit and other nonperformance risk for the asset or liability, (6) there is a wide bid-ask spread or significant increase in the bid-ask spread, (7) there is a significant decline or absence of a market for new issuances (that is, a primary market) for the asset or liability or similar assets or liabilities, and (8) little information is released publicly (for example, a principal-to-principal market).

The Company considers the following factors to be indicators of non-orderly transactions: (1) there was not adequate exposure to the market for a period before the measurement date to allow for marketing activities that are usual and customary for transactions involving such assets or liabilities under current market conditions, (2) there was a usual and customary marketing period, but the seller marketed the asset or liability to a single market participant, (3) the seller is in or near bankruptcy or receivership (that is, distressed), or the seller was required to sell to meet regulatory or legal requirements (that is, forced), and (4) the transaction price is an outlier when compared with other recent transactions for the same or similar assets or liabilities.

Deferred Financing Costs

Deferred financing costs represent commitment fees, loan fees, legal fees and other third-party costs associated with obtaining financing. These costs are amortized over the terms of the respective financing agreements using the straight-line method which approximates the effective interest method. Unamortized deferred financing costs are expensed when the associated debt is refinanced or repaid before maturity. Costs incurred in seeking financings that do not close are expensed in the period in which it is determined that the financing will not close.

Income Taxes

The Company has elected to be taxed as a REIT under the Internal Revenue Code. To qualify as a REIT, the Company must meet certain organizational and operational requirements, including a requirement to distribute at least 90% of the Company’s annual REIT taxable income to stockholders (which is computed without regard to the dividends-paid deduction or net capital gain and which does not necessarily equal net income as calculated in accordance with GAAP). As a REIT, the Company generally will not be subject to federal income tax on income that it distributes as dividends to its stockholders. If the Company fails to qualify as a REIT in any taxable year, it will be subject to federal income tax on its taxable income at regular corporate income tax rates and generally will not be permitted to qualify for treatment as a REIT for federal income tax purposes for the four taxable years following the year during which qualification is lost, unless the Internal Revenue Service grants the Company relief under certain statutory provisions. Such an event could materially and adversely affect the Company’s net income and net cash available for distribution to stockholders. However, the Company believes that it is organized and operates in such a manner as to qualify for treatment as a REIT. The Company may also be subject to certain state or local income taxes, or franchise taxes.

The Company evaluates tax positions taken in the financial statements under the interpretation for accounting for uncertainty in income taxes. As a result of this evaluation, the Company may recognize a tax benefit from an uncertain tax position only if it is “more-likely-than-not” that the tax position will be sustained on examination by taxing authorities.

When necessary, deferred income taxes are recognized in certain taxable entities. Deferred income tax is generally a function of the period’s temporary differences (items that are treated differently for tax purposes than for financial reporting purposes). A valuation allowance for deferred income tax assets is provided if all or some portion of the deferred income tax asset may not be realized. Any increase or decrease in the valuation allowance is generally included in deferred income tax expense.

The Company’s tax returns remain subject to examination and consequently, the taxability of the distributions is subject to change.

Earnings Per Share

Basic earnings per share (“EPS”) is computed by dividing net income (loss) applicable to common stockholders by the weighted average number of shares of common stock outstanding during the period. Diluted EPS is computed after adjusting the basic EPS computation for the effect of potentially dilutive securities outstanding during the period. The effect of non-vested shares, if dilutive, is computed using the treasury stock method. The Company accounts for unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents (whether paid or unpaid) as participating securities, which are included in the computation of earnings per share pursuant to the two-class method. The Company’s excess of distributions over earnings related to participating securities are shown as a reduction in income (loss) applicable to common stockholders in the Company’s computation of EPS.

Reclassification

Certain amounts from the prior year have been reclassified to conform to current period presentation. Assets sold or held-for-sale have been reclassified on the condensed consolidated balance sheets and the related operating results reclassified from continuing to discontinued operations on the condensed consolidated statements of operations and condensed consolidated statements of cash flows.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details)	3 Months Ended
	Mar. 31, 2013
Buildings and improvements [Member] | Maximum [Member]
Depreciation and amortization
Estimated useful lives of assets	48 years
Buildings and improvements [Member] | Minimum [Member]
Depreciation and amortization
Estimated useful lives of assets	5 years
Exterior improvements [Member] | Maximum [Member]
Depreciation and amortization
Estimated useful lives of assets	20 years
Exterior improvements [Member] | Minimum [Member]
Depreciation and amortization
Estimated useful lives of assets	10 years
Equipment and fixtures [Member] | Maximum [Member]
Depreciation and amortization
Estimated useful lives of assets	10 years
Equipment and fixtures [Member] | Minimum [Member]
Depreciation and amortization
Estimated useful lives of assets	5 years

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ACQUIRED LEASE INTANGIBLES AND BELOW-MARKET LEASE LIABILITIES (Details 1) (USD $)	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Lease Intangibles [Member]
Increases (decreases) in net income as result of amortization of lease intangibles
Amortization and accelerated amortization	$ (1,608,000)	$ (658,000)
Below-Market Lease Liabilities [Member]
Increases (decreases) in net income as result of amortization of lease intangibles
Amortization and accelerated amortization	$ 255,000	$ 92,000

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RELATED PARTY TRANSACTIONS (Details Textual) (USD $)	3 Months Ended		54 Months Ended		3 Months Ended			3 Months Ended			3 Months Ended			3 Months Ended			3 Months Ended		12 Months Ended	3 Months Ended				3 Months Ended					3 Months Ended		3 Months Ended				3 Months Ended				3 Months Ended			3 Months Ended	12 Months Ended	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012	Mar. 31, 2013	Dec. 31, 2012	Mar. 31, 2013 Property management fees [Member]	Mar. 31, 2012 Property management fees [Member]	Dec. 31, 2012 Property management fees [Member]	Mar. 31, 2013 Acquisition Fees [Member]	Mar. 31, 2012 Acquisition Fees [Member]	Dec. 31, 2012 Acquisition Fees [Member]	Mar. 31, 2013 Asset management fees [Member]	Mar. 31, 2012 Asset management fees [Member]	Dec. 31, 2012 Asset management fees [Member]	Mar. 31, 2013 Disposition Fees [Member]	Mar. 31, 2012 Disposition Fees [Member]	Dec. 31, 2012 Disposition Fees [Member]	Mar. 31, 2013 Leasing fees [Member]	Mar. 31, 2012 Leasing fees [Member]	Dec. 31, 2012 Leasing fees [Member]	Mar. 31, 2013 Financing coordination fees [Member]	Mar. 31, 2012 Financing coordination fees [Member]	Dec. 31, 2012 Financing coordination fees [Member]	Jan. 12, 2012 Financing coordination fees [Member]	Mar. 31, 2013 Guaranty fees [Member]	Mar. 31, 2012 Guaranty fees [Member]	Dec. 31, 2012 Guaranty fees [Member]	Mar. 31, 2013 Sponsor [Member]	Mar. 31, 2013 Spouse [Member]	Mar. 31, 2013 Loan fees [Member]	Dec. 31, 2012 Loan fees [Member]	Mar. 31, 2013 Interest expense on notes payable [Member]	Mar. 31, 2012 Interest expense on notes payable [Member]	Dec. 31, 2012 Interest expense on notes payable [Member]	Jun. 15, 2012 Mortgage Notes [Member]	Mar. 31, 2013 Organization and offering costs [Member]	Mar. 31, 2012 Organization and offering costs [Member]	Dec. 31, 2012 Organization and offering costs [Member]	Mar. 31, 2013 Mr James Wolford [Member]	Mar. 31, 2013 Reimbursement Of Operating Expenses [Member]	Mar. 31, 2012 Reimbursement Of Operating Expenses [Member]	Dec. 31, 2012 Reimbursement Of Operating Expenses [Member]	Mar. 31, 2013 Administrative Services [Member]	Dec. 31, 2012 Administrative Services [Member]	Mar. 31, 2013 Loan Origination Fees to Advisor [Member]	Mar. 31, 2012 Loan Origination Fees to Advisor [Member]
Related party transactions (Textual) [Abstract]
Related-party costs, Incurred	$ 47,000	$ 1,730,000	$ 10,015,000		$ 344,000	$ 250,000		$ 13,000	$ 1,212,000		$ 0	$ 0		$ 924,000	$ 24,000		$ 124,000	$ 5,000	$ 14,000	$ 0	$ 361,000			$ 14,000	$ 13,000				$ 0		$ 0	$ 20,000			$ 7,000	$ 64,000			$ (98,000)	$ 182,000		$ 0	$ 209,000	$ 98,000	$ 182,000
Related-party costs, Payable					60,000		48,000	0		475,000	0		0	0		0	14,000		0	0		0		4,000		10,000			0	0	0		0		0		0		0		209,000
Amounts due to affiliates	78,000		78,000	755,000																								920,000
Due to other related parties, noncurrent	1,001,000		1,001,000																								235,000											200,000
Percentage of interest rate on loan	8.00%		8.00%
Related Party Transactions (Additional Textual) [Abstract]
Payment of financial Coordination fees																							1.00%
Percentage of gross proceeds from the sale of shares of common stock	7.00%
Percentage of gross proceeds received from the sale of shares	3.00%
Related Party Reimbursement of Operating Expenses Terms	will not reimburse Advisor for any amount by which the Company's operating expenses (including the asset management fee described below) at the end of the four preceding fiscal quarters exceeds the greater of: (1) 2% of its average invested assets (as defined in the Charter), or (2) 25% of its net income (as defined in the Charter) determined without reduction for any additions to depreciation, bad debts or other similar non-cash expenses and excluding any gain from the sale of the Company's assets for that period
Market-based property management fee of gross revenues	5.00%
Company pays Advisor an acquisition fee for cost of investments acquired	2.50%
Company pays Advisor of the amount funded by the Company to acquire or originate real estate-related loans	2.50%
Company pays Advisor a monthly asset management fee on all real estate investments	0.60%
Cumulative amount of any distributions declared and payable to the Company's stockholders	10.00%
Advisor or its affiliates also will be paid disposition fees of a customary and competitive real estate commission	50.00%
Advisor or its affiliates also will be paid disposition fees of a customary and competitive real estate commission, not to exceed	3.00%
Percentage Of Offering Proceeds																																		12.00%
Cash Reserve Required To Maintain	4,000,000		4,000,000
Cumulative Organization and Offering Costs Reimbursed To The Advisor	$ 4,273,000
Reimbursement Of Operating Expenses Description	(1) 2% of its average invested assets (as defined in the Charter), or (2) 25% of its net income (as defined in the Charter) determined without reduction for any additions to depreciation, bad debts or other similar non-cash expenses and excluding any gain from the sale of the Company's assets for that period (the "2%/25% guideline"). Notwithstanding the above, the Company may reimburse Advisor for expenses in excess of the 2%/25% guideline if a majority of the independent directors determines that such excess expenses are justified based on unusual and nonrecurring factors. For the twelve months ended March 31, 2013, the Company's total operating expenses (as defined in the Charter) did not exceed the 2%/25% guideline.
Reimbursement Of Organizatin and Offering Cost In Excess Of Percentage	3.00%		3.00%

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CONDENSED CONSOLIDATED BALANCE SHEETS (USD $)	Mar. 31, 2013	Dec. 31, 2012
Investments in real estate
Land	$ 60,937,000	$ 61,449,000
Building and improvements	161,177,000	161,703,000
Tenant improvements	11,862,000	11,846,000
Investments in real estate, gross	233,976,000	234,998,000
Accumulated depreciation	(9,914,000)	(7,992,000)
Investments in real estate, net	224,062,000	227,006,000
Cash and cash equivalents	1,126,000	1,707,000
Restricted cash	5,410,000	4,283,000
Prepaid expenses and other assets, net	1,581,000	1,187,000
Amounts due from affiliates	6,000	1,063,000
Tenant receivables, net	4,516,000	3,180,000
Lease intangibles, net	32,194,000	33,735,000
Assets held for sale	1,223,000	25,771,000
Deferred financing costs, net	3,239,000	3,527,000
TOTAL	273,357,000	301,459,000
LIABILITIES AND EQUITY LIABILITIES
Notes payable	185,323,000	190,577,000
Accounts payable and accrued expenses	5,219,000	5,592,000
Amounts due to affiliates	78,000	755,000
Other liabilities	1,805,000	3,303,000
Liabilities held for sale	0	21,277,000
Below market lease intangibles, net	11,548,000	11,828,000
Total liabilities	203,973,000	233,332,000
Commitments and contingencies
Stockholders' equity
Preferred stock, $0.01 par value; 50,000,000 shares authorized, none issued and outstanding	0	0
Common stock, $0.01 par value; 400,000,000 shares authorized, 10,969,714 issued and outstanding at March 31, 2013, 10,893,227 issued and outstanding at December 31, 2012	110,000	109,000
Additional paid-in capital	96,298,000	95,567,000
Accumulated deficit	(29,658,000)	(30,160,000)
Total stockholders' equity	66,750,000	65,516,000
Non-controlling interests	2,634,000	2,611,000
Total equity	69,384,000	68,127,000
TOTAL	$ 273,357,000	$ 301,459,000

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FAIR VALUE DISCLOSURES (Details) (USD $)	Mar. 31, 2013		Dec. 31, 2012
Notes Payable
Notes Payable, Carrying Value	$ 185,323,000	[1]	$ 190,577,000	[1]
Notes Payable, Fair Value	$ 183,779,000	[2]	$ 191,319,000	[2]

[1] The carrying value of the Company's notes payable represents outstanding principal as of March 31, 2013 and December 31, 2012.

[2] The estimated fair value of the notes payable is based upon indicative market prices of the Company's notes payable based on prevailing market interest rates.

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CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $)	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Cash flows from operating activities:
Net income (loss)	$ 1,183,000	$ (4,365,000)
Income from discontinued operations	(4,641,000)	(53,000)
Loss from continuing operations	(3,458,000)	(4,418,000)
Adjustments to reconcile loss from continuing operations to net cash (used in) provided by operating activities:
Straight-line rent	(363,000)	0
Amortization of deferred costs and note payable premium/discount	288,000	854,000
Depreciation and amortization	3,182,000	1,750,000
Amortization of above and below-market leases	138,000	(92,000)
Bad debt expense	174,000	(5,000)
Stock-based compensation expense	15,000	13,000
Changes in operating assets and liabilities, net of acquisitions:
Prepaid expenses and other assets	(306,000)	2,594,000
Tenant receivables	(1,147,000)	(152,000)
Deferred financing costs	(257,000)	495,000
Accounts payable and accrued expenses	(373,000)	(315,000)
Amounts due to affiliates	380,000	(449,000)
Other liabilities	(1,236,000)	524,000
Net change in restricted cash for operational expenditures	531,000	(702,000)
Net cash (used in) provided by operating activities - continuing operations	(2,432,000)	97,000
Net cash provided by operating activities - discontinued operations	575,000	290,000
Net cash used in operating activities	(1,857,000)	387,000
Cash flows from investing activities:
Investments in real estate and real estate lease intangibles	0	(43,980,000)
Improvements, capital expenditures, and leasing costs	(173,000)	(38,000)
Tenant lease incentive	(19,000)	0
Real estate deposits	0	(1,545,000)
Net change in restricted cash for capital expenditures	(1,154,000)	(838,000)
Net cash used in investing activities - continuing operations	(1,346,000)	(46,401,000)
Net cash provided by (used in) investing activities - discontinued operations	9,702,000	(3,251,000)
Net cash used in investing activities	8,356,000	(49,652,000)
Cash flows from financing activities:
Proceeds from issuance of common stock	502,000	18,956,000
Redemption of common stock	0	(176,000)
Distributions	(415,000)	(773,000)
Payment of offering costs	(28,000)	(2,289,000)
Proceeds from notes payable	0	159,037,000
Repayment of notes payable	(4,271,000)	(123,325,000)
Payment of loan fees and financing costs	0	(1,287,000)
Net change in restricted cash for financing activities	(504,000)	0
Net cash (used in) provided by financing activities - continuing operations	(4,716,000)	50,143,000
Net cash used in financing activities - discontinued operations	(2,364,000)	0
Net cash provided by financing activities	(7,080,000)	50,143,000
Net increase (decrease) in cash and cash equivalents	(581,000)	878,000
Cash and cash equivalents beginning of period	1,707,000	2,052,000
Cash and cash equivalents end of period	1,126,000	2,930,000
Supplemental disclosure of non-cash investing and financing activities:
Common units issued in acquisition of real estate	0	1,371,000
1031 exchange proceeds used in acquisition of real estate	0	486,000
Mortgage balance assumed on sale of real estate	19,717,000	0
Deferred organization and offering costs accrued	0	774,000
Issuance of common stock under DRIP	246,000	406,000
Cash distributions declared but not paid	0	293,000
Cash paid for interest	$ 3,473,000	$ 2,186,000

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DISCONTINUED OPERATIONS AND ASSETS HELD FOR SALE (Details 1) (USD $)	Mar. 31, 2013	Dec. 31, 2012
Investments in real estate
Land	$ 60,937,000	$ 61,449,000
Building and improvements	161,177,000	161,703,000
Tenant improvements	11,862,000	11,846,000
Investments in real estate, net	233,976,000	234,998,000
Accumulated depreciation	(9,914,000)	(7,992,000)
Investments in real estate, net	224,062,000	227,006,000
Restricted cash	5,410,000	4,283,000
Prepaid expenses and other assets, net	1,581,000	1,187,000
Tenant receivables	4,516,000	3,180,000
Lease intangibles, net	32,194,000	33,735,000
Deferred financing fees, net	3,239,000	3,527,000
Assets held for sale	1,223,000	25,771,000
LIABILITIES
Notes payable	185,323,000	190,577,000
Accounts payable and accrued expenses	5,219,000	5,592,000
Other liabilities	1,805,000	3,303,000
Below market lease intangibles, net	11,548,000	11,828,000
Liabilities held for sale	0	21,277,000
Assets Held-For-Sale [Member]
Investments in real estate
Land	174,000	10,760,000
Building and improvements	1,001,000	13,937,000
Tenant improvements	26,000	689,000
Investments in real estate, net	1,201,000	25,386,000
Accumulated depreciation	(48,000)	(2,324,000)
Investments in real estate, net	1,153,000	23,062,000
Restricted cash	0	358,000
Prepaid expenses and other assets, net	0	37,000
Tenant receivables	4,000	261,000
Lease intangibles, net	66,000	1,955,000
Deferred financing fees, net	0	98,000
Assets held for sale	1,223,000	25,771,000
LIABILITIES
Notes payable	0	19,571,000
Accounts payable and accrued expenses	0	247,000
Other liabilities	0	235,000
Below market lease intangibles, net	0	1,224,000
Liabilities held for sale	$ 0	$ 21,277,000

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DISCONTINUED OPERATIONS AND ASSETS HELD FOR SALE (Tables)

3 Months Ended

Mar. 31, 2013

Dispositions and Discontinued Operations [Abstract]

Income and expense relating to discontinued operations

The components of income and expense relating to discontinued operations for the three months ended March 31, 2013 and 2012 are shown below.

	2013			2012
Revenues from rental property	$	204,000		$	1,113,000
Rental property expenses		124,000			401,000
Depreciation and amortization		-			350,000
Interest		277,000			309,000
Operating (loss) income from discontinued operations		(197,000	)		53,000
Gain on sale of real estate		4,838,000			-
Income from discontinued operations	$	4,641,000		$	53,000

Assets and liabilities held for sale and of discontinued operations

The major classes of assets and liabilities related to assets held for sale included in the condensed consolidated balance sheets are as follows:

	March 31,			December 31,
	2013			2012
ASSETS
Investments in real estate
Land	$	174,000		$	10,760,000
Building and improvements		1,001,000			13,937,000
Tenant improvements		26,000			689,000
		1,201,000			25,386,000
Accumulated depreciation		(48,000	)		(2,324,000	)
Investments in real estate, net		1,153,000			23,062,000
Restricted cash		-			358,000
Prepaid expenses and other assets, net		-			37,000
Tenant receivables		4,000			261,000
Lease intangibles, net		66,000			1,955,000
Deferred financing fees, net		-			98,000
Assets held for sale	$	1,223,000		$	25,771,000
LIABILITIES
Notes payable	$	-		$	19,571,000
Accounts payable and accrued expenses		-			247,000
Other liabilities		-			235,000
Below market lease intangibles, net		-			1,224,000
Liabilities held for sale	$	-		$	21,277,000

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DISCONTINUED OPERATIONS AND ASSETS HELD FOR SALE (Details Textual) (USD $)	3 Months Ended		0 Months Ended	1 Months Ended	3 Months Ended
	Mar. 31, 2013 Mcdonalds Parcel [Member]	Mar. 31, 2013 Kfc Parcel [Member]	Dec. 04, 2012 Amendment To Purchase and Sale Agreement [Member]	Jan. 22, 2013 Waianae Loan [Member]	Mar. 31, 2013 Waianae Property [Member]
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Proceeds from Sale of Land Held-for-use		$ 1,200,000	$ 1,250,000	$ 29,763,000	$ 30,500,000
Assets Of Disposal Group Including Discontinued Operation Gross Proceeds	1,050,000
Assets Of Disposal Group Including Discontinued Operation Net Proceeds	$ 983,000

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ACQUIRED LEASE INTANGIBLES AND BELOW-MARKET LEASE LIABILITIES (Tables)

3 Months Ended

Mar. 31, 2013

Intangibles [Abstract]

Lease intangibles and below-market lease liabilities

As of March 31, 2013 and December 31, 2012, the Company’s acquired lease intangibles and below-market lease liabilities were as follows:

	Lease Intangibles						Below - Market Lease Liabilities
	March 31, 2013			December 31, 2012			March 31, 2013			December 31, 2012
Cost	$	39,757,000		$	39,853,000		$	(12,674,000	)	$	(12,764,000	)
Accumulated amortization		(7,563,000	)		(6,118,000	)		1,126,000			936,000
	$	32,194,000		$	33,735,000		$	(11,548,000	)	$	(11,828,000	)

Increases (decreases) in net income as result of amortization of lease intangibles

Increases (decreases) in net income as a result of amortization of the Company’s lease intangibles and below-market lease liabilities for the three months ended March 31, 2013 and 2012 were as follows:

	Lease Intangibles						Below - Market Lease Liabilities
	For the Three Months Ended March 31,						For the Three Months Ended March 31,
	2013			2012			2013		2012
Amortization and accelerated amortization	$	(1,608,000	)	$	(658,000	)	$	255,000	$	92,000

Scheduled amortization of lease intangibles and below-market lease liabilities

The scheduled amortization of lease intangibles and below-market lease liabilities as of March 31, 2013 was as follows:

	Acquired		Below-market
	Lease		Lease
	Intangibles		Intangibles
April 1 through December 31, 2013	$	4,195,000	$	(614,000	)
2014		4,756,000		(839,000	)
2015		4,025,000		(737,000	)
2016		3,530,000		(659,000	)
2017		3,155,000		(590,000	)
Thereafter		12,533,000		(8,109,000	)
	$	32,194,000	$	(11,548,000	)

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ORGANIZATION AND BUSINESS

3 Months Ended

Mar. 31, 2013

Organization and Business [Abstract]

ORGANIZATION AND BUSINESS

1. ORGANIZATION AND BUSINESS

TNP Strategic Retail Trust, Inc. (the “Company”) was formed on September 18, 2008 as a Maryland corporation. The Company believes it qualifies as a real estate investment trust (“REIT”) under the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), and has elected REIT status beginning with the taxable year ended December 31, 2009, the year in which the Company began material operations. The Company was initially capitalized by the sale of shares of common stock to Thompson National Properties, LLC (the “Sponsor”) on October 16, 2008.

On November 4, 2008, the Company filed a registration statement on Form S-11 with the Securities and Exchange Commission (the “SEC”) to offer a maximum of 100,000,000 in shares of its common stock to the public in its primary offering at $10.00 per share and 10,526,316 shares of its common stock to the Company’s stockholders at $9.50 per share pursuant to its distribution reinvestment plan (“DRIP”) (collectively, the “Offering”). On August 7, 2009, the SEC declared the registration statement effective and the Company commenced the Offering. On February 7, 2013, the Company terminated the Offering and ceased offering shares of common stock in the primary offering and under the DRIP. As of December 31, 2012, the Company had accepted subscriptions for, and issued, 10,893,227 shares of common stock in the Offering (net of share redemptions), including 365,242 shares of common stock pursuant to the DRIP, resulting in gross offering proceeds of $107,609,000. As of the termination of the Offering on February 7, 2013, the Company had accepted subscriptions for, and issued, 10,969,714 shares of common stock (net of share redemptions), including 391,182 shares of common stock pursuant to the DRIP, resulting in gross offering proceeds of $108,357,000.

On June 15, 2012, the Company filed with the SEC a registration statement on Form S-11 to register up to $900,000,000 in shares of the Company’s common stock in a follow-on public offering. The Company subsequently determined not to proceed with the contemplated follow-on public offering and on March 1, 2013, the Company requested that the SEC withdraw the registration statement for the follow-on public offering, effective immediately. As a result of the termination of the Offering and the withdrawal of the registration statement for the Company’s follow-on public offering, offering proceeds are not currently available to fund the Company’s cash needs, and will not be available until the Company is able to successfully engage in an offering of its securities. The Company currently does not expect to commence a follow-on offering.

The Company is externally advised by TNP Strategic Retail Advisor, LLC, a Delaware limited liability company (“Advisor”). Subject to certain restrictions and limitations, Advisor provides certain services to the Company pursuant to an advisory agreement with the Company. The Company is currently negotiating with Glenborough, LLC and its affiliates (“Glenborough”) to replace the Advisor as the Company’s external advisor. Glenborough is a privately held full-service real estate investment and management company focused on the acquisition, management and leasing of high quality commercial properties. Glenborough and its predecessor entities have over three decades of experience in the commercial real estate industry. The Company’s board of directors is actively engaged in ongoing negotiations regarding the transition to Glenborough as the Company’s external advisor and the termination of the current advisory agreement and the property management agreements with respect to the Company’s properties. However, any change to the Company’s advisor or the Company’s property manager will require the consent of a number of the Company’s significant lenders, which the Company is still in the process of negotiating. The Company can give no assurance that it will be able to secure such lender consents or come to terms with Glenborough with respect to the transition. In December 2012, the Company entered into a consulting agreement with Glenborough to assist the Company through the advisor change process. Pursuant to the consulting agreement, the Company pays Glenborough a monthly consulting fee and reimburses Glenborough for its reasonable out-of-pocket expenses. From December 2012 through April 2013, the Company agreed to pay Glenborough a monthly consulting fee of $75,000 pursuant to the consulting agreement. Effective May 1, 2013, the Company and Glenborough amended the consulting agreement to expand the services provided to the Company by Glenborough and increase the monthly consulting fee payable to Glenborough to $90,000. The consulting agreement is terminable by either party upon 10 business days’ written notice.

Substantially all of the Company’s business is conducted through TNP Strategic Retail Trust Operating Partnership, L.P., a Delaware limited partnership (the “OP”). The initial limited partners of the OP were Advisor and TNP Strategic Retail OP Holdings, LLC, a Delaware limited liability company (“Holdings”). Advisor has invested $1,000 in the OP in exchange for common units of the OP (“Common Units”) and Holdings has invested $1,000 in the OP and has been issued a separate class of limited partnership units (the “Special Units”). As the Company accepted subscriptions for shares of its common stock, it transferred substantially all of the net proceeds of the Offering to the OP as a capital contribution. As of March 31, 2013 and December 31, 2012 the Company owned 96.2% of the limited partnership interest in the OP. As of March 31, 2013 and December 31, 2012, Advisor owned 0.01% of the limited partnership interest in the OP. Holdings owned 100% of the outstanding Special Units as of March 31, 2013 and December 31, 2012.

On May 26, 2011, in connection with the acquisition of Pinehurst Square East (“Pinehurst”), a retail property located in Bismarck, North Dakota, the OP issued 287,472 Common Units to certain of the sellers of Pinehurst who elected to receive Common Units for an aggregate value of $2,587,000, or $9.00 per Common Unit. On March 12, 2012, in connection with the acquisition of the Shops at Turkey Creek (“Turkey Creek”), a retail property located in Knoxville, Tennessee, the OP issued 144,324 Common Units to certain of the sellers of Turkey Creek who elected to receive Common Units for an aggregate value of $1,371,000, or $9.50 per Common Unit.

The Company’s principal demand for funds has been for the acquisition of real estate assets, the payment of operating expenses and interest on outstanding indebtedness and the payment of distributions to stockholders. Substantially all of the proceeds of the completed Offering have been used to fund investments in real properties and other real estate-related assets, for payment of operating expenses, for payment of various fees and expenses such as acquisition fees and management fees and for payment of distributions to stockholders. As discussed below, the Company’s available capital resources, cash and cash equivalents on hand and sources of liquidity are currently limited. The Company expects its future cash needs will be funded using cash from operations, future asset sales, debt financing and the proceeds to the Company from any offering of its securities that it conducts in the future. The Company expects that its investment activities will be reduced for the foreseeable future until it is able to engage in an offering of its securities or is able to identify other significant sources of financing. The Company also has suspended its share redemption program and dividend distributions until an improvement in liquidity and capital resources occurs following the completion of the advisor transition and the refinancing of the Company’s credit agreement with KeyBank National Association (“KeyBank”) following the expiration of the Company’s forbearance agreement with Key Bank (see Note 6. Notes Payable).

On August 2, 2012, the Company, the OP and Advisor entered into an amendment to the Company’s advisory agreement, effective as of August 7, 2012, which, among other things, established a requirement that the Company maintain at all times a cash reserve of at least $4,000,000 and provided that Advisor may deploy any cash proceeds in excess of the cash reserve for the Company’s business pursuant to the terms of the advisory agreement. As a result of the significant cash required to complete the Company’s acquisition of the Lahaina Gateway property on November 9, 2012, and the additional cash required by the mortgage lender for the Lahaina Gateway property acquisition for reserves and mandatory principal payments, the Company’s cash and cash equivalents have fallen to approximately $1,126,000 at March 31, 2013, significantly below the $4,000,000 cash reserve required under the advisory agreement. The Company’s cash and cash equivalents is likely to fall further and may remain significantly limited until the Company finds other sources of cash, such as from borrowings, sales of equity capital or sales of assets. Although no assurances may be given, the Company believes that its current cash from operations will be sufficient to support the Company’s ongoing operations, including its debt service payments, other than the required payment on the Company’s credit agreement with KeyBank following the expiration of the Company’s forbearance agreement with Key Bank (see discussion below).

On April 1, 2013, the Company executed the forbearance agreement on the Company’s credit agreement with KeyBank (see additional discussions in Note 6 – NOTES PAYABLE). On or before the expiration of the forbearance period, the Company currently intends to (1) refinance the credit agreement on or before the expiration of the forbearance agreement with KeyBank or with another lender; or (2) refinance a portion of the credit agreement on or before the expiration of the forbearance agreement with KeyBank or with another lender, and paydown of a portion of the balance of the credit agreement with proceeds from disposition of certain properties securing the credit agreement.

The Company has invested in a portfolio of income-producing retail properties throughout the United States, with a focus on grocery anchored multi-tenant retail centers in the Western United States, including neighborhood, community and lifestyle shopping centers, multi-tenant shopping centers and free standing single-tenant retail properties. As of March 31, 2013, the Company’s portfolio comprised of 20 properties with approximately 2,035,402 rentable square feet of retail space located in 14 states. As of March 31, 2013, the rentable space at the Company’s retail properties was 88% leased. Due to the Company’s currently limited capital resources, cash and cash equivalents on hand and sources of liquidity, the Company is not currently actively seeking additional investments.

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CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $)	Mar. 31, 2013	Dec. 31, 2012
Preferred stock par value	$ 0.01	$ 0.01
Preferred stock, shares authorized	50,000,000	50,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock par value	$ 0.01	$ 0.01
Common stock, shares authorized	400,000,000	400,000,000
Common stock, Issued	10,969,714	10,893,227
Common stock, shares outstanding	10,969,714	10,893,227

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RELATED PARTY TRANSACTIONS

3 Months Ended

Mar. 31, 2013

Related Party Transactions [Abstract]

RELATED PARTY TRANSACTIONS

11. RELATED PARTY TRANSACTIONS

Pursuant to the advisory agreement by and among the Company, the OP and Advisor (the “Advisory Agreement”), the Company is obligated to pay Advisor specified fees upon the provision of certain services related to the investment of funds in real estate and real estate-related investments, management of the Company’s investments and for other services. Pursuant to the dealer manager agreement (the “Dealer Manager Agreement”) by and among the Company, the OP, and TNP Securities, LLC (the “Dealer Manager” or “TNP Securities”), prior to the termination of the Offering, the Company was obligated to pay the Dealer Manager certain commissions and fees in connection with the sales of shares in the Offering. Subject to certain limitations, the Company is also obligated to reimburse Advisor and Dealer Manager for organization and offering costs incurred by Advisor and Dealer Manager on behalf of the Company, and the Company is obligated to reimburse Advisor for acquisition and origination expenses and certain operating expenses incurred on behalf of the Company or incurred in connection with providing services to the Company. The Company records all related party fees as incurred, subject to any limitations described in the Advisory Agreement.

On August 7, 2011, the Company, the OP and Advisor entered into Amendment No.1 to the Advisory Agreement, effective as of August 7, 2011, in order to renew the term of the Advisory Agreement for an additional one-year term expiring on August 7, 2012. On January 12, 2012, the board of directors approved Amendment No. 3 to the Advisory Agreement to provide for the payment of a financing coordination fee to Advisor in an amount equal to 1.0% of any amount financed or refinanced by the Company or the OP. On August 1, 2012, the Company, the OP and Advisor entered into an amendment to the Company’s Advisory Agreement, effective August 7, 2012, which, among other things:

· Renews the term of Advisory Agreement for an additional one-year term expiring on August 7, 2013.

· Establishes a requirement that the Company maintains at all times a cash reserve of at least $4,000,000 and provides that Advisor may deploy any cash proceeds in excess of the cash reserve for the Company’s business pursuant to the terms of the Advisory Agreement.

· Deletes in its entirety Section 13 of the Advisory Agreement, which provided, among other things, that before the Company could complete a business combination with Advisor to become self-administered, certain conditions would have to be satisfied, including (i) the formation of a special committee comprised entirely of the Company’s independent directors, (ii) the receipt of an opinion from a qualified investment banking firm concluding that consideration to be paid to acquire the Company’s advisor was financially fair to the Company’s stockholders and (iii) the approval of the business combination by the Company’s stockholders entitled to vote thereon in accordance with the charter.

Organization and Offering Costs

Organization and offering costs of the Company (other than selling commissions and the dealer manager fee described below) are initially paid by Advisor and its affiliates on the Company’s behalf. Such costs include legal, accounting, printing and other offering expenses, including marketing, salaries and direct expenses of certain of Advisor’s employees and employees of Advisor’s affiliates and others. Pursuant to the Advisory Agreement, the Company is obligated to reimburse Advisor or its affiliates, as applicable, for organization and offering costs associated with the Offering, provided the Company is not obligated to reimburse Advisor to the extent organization and offering costs, other than selling commissions and dealer manager fees, incurred by the Company exceed 3.0% of the gross offering proceeds from the Offering. Any such reimbursement will not exceed actual expenses incurred by Advisor.

As of March 31, 2013 and December 31, 2012, cumulative organization and offering costs incurred by Advisor on the Company’s behalf were $3,272,000 and $3,016,000, respectively. These costs are payable by the Company to the extent organization and offering costs, other than selling commissions and dealer manager fees, do not exceed 3.0% of the gross proceeds of the Offering. As of March 31, 2013, cumulative organization and offering costs reimbursed to the Advisor or paid directly by the Company were $4,273,000, which amount exceeded 3.0% of the gross proceeds from the Offering by $1,001,000. This excess was billed to Advisor and settled as of January 31, 2013.

Selling Commissions and Dealer Manager Fees

The Dealer Manager received a sales commission of 7.0% of the gross proceeds from the sale of shares of common stock in the primary offering. The Dealer Manager also received 3.0% of the gross proceeds from the sale of shares in the primary offering in the form of a dealer manager fee as compensation for acting as the dealer manager. The Company incurred selling commissions and dealer manager fees during the following periods:

	For the Three Months Ended
	March 31,				Inception Through
	2013		2012		March 31, 2013
Selling Commissions	$	32,000	$	1,196,000	$	6,925,000
Dealer Manager Fee		15,000		534,000		3,090,000
	$	47,000	$	1,730,000	$	10,015,000

Reimbursement of Operating Expenses

The Company reimburses Advisor for all expenses paid or incurred by Advisor in connection with the services provided to the Company, subject to the limitation that the Company will not reimburse Advisor for any amount by which the Company’s operating expenses (including the asset management fee described below) at the end of the four preceding fiscal quarters exceeds the greater of: (1) 2% of its average invested assets (as defined in the Charter), or (2) 25% of its net income (as defined in the Charter) determined without reduction for any additions to depreciation, bad debts or other similar non-cash expenses and excluding any gain from the sale of the Company’s assets for that period (the “2%/25% guideline”). Notwithstanding the above, the Company may reimburse Advisor for expenses in excess of the 2%/25% guideline if a majority of the independent directors determines that such excess expenses are justified based on unusual and nonrecurring factors. For the twelve months ended March 31, 2013, the Company’s total operating expenses (as defined in the Charter) did not exceed the 2%/25% guideline.

The Company reimburses Advisor for the cost of administrative services, including personnel costs and its allocable share of other overhead of Advisor such as rent and utilities; provided, however, that no reimbursement shall be made for costs of such personnel to the extent that personnel are used in transactions for which Advisor receives a separate fee or with respect to an officer of the Company. For the three months ended March 31, 2013 and 2012, the Company recorded a net recovery of administrative services of $98,000 and incurred $182,000 of administrative services to Advisor, respectively. The $98,000 net recovery resulted from an overaccrual of certain operating costs in 2012.  As of March 31, 2013 and December 31, 2012, administrative services of $0 and $209,000, respectively, were included in amounts due to affiliates.

Property Management Fee

The Company pays TNP Property Manager, LLC (“TNP Manager”), its property manager and an affiliate of Advisor, a market-based property management fee of up to 5.0% of the gross revenues generated by each property in connection with the operation and management of the Company’s properties. TNP Manager may subcontract with third party property managers and is responsible for supervising and compensating those property managers. For the three months ended March 31, 2013 and 2012, the Company incurred $344,000 and $250,000, respectively, in property management fees to TNP Manager. As of March 31, 2013 and December 31, 2012, property management fees of $60,000 and $48,000, respectively, were included in amounts due to affiliates.

Acquisition and Origination Fee

The Company pays Advisor an acquisition fee equal to 2.5% of the cost of investments acquired, including acquisition expenses and any debt attributable to such investments. The Company incurred and paid $13,000 and $1,212,000 in acquisition fees to Advisor during the three months ended March 31, 2013 and 2012.

The Company pays Advisor 2.5% of the amount funded by the Company to acquire or originate real estate-related loans, including third party expenses related to such investments and any debt used to fund the acquisition or origination of the real estate related loans. The Company did not incur any loan origination fees to Advisor for the three months ended March 31, 2013 and 2012.

Asset Management Fee

The Company pays Advisor a monthly asset management fee equal to one-twelfth of 0.6% of the aggregate cost of all real estate investments the Company acquires; provided, however, that Advisor will not be paid the asset management fee until the Company’s funds from operations exceed the lesser of (1) the cumulative amount of any distributions declared and payable to the Company’s stockholders or (2) an amount that is equal to a 10.0% cumulative, non-compounded, annual return on invested capital for the Company’s stockholders. On November 11, 2011, the board of directors approved Amendment No. 2 to the Advisory Agreement to clarify that upon termination of the Advisory Agreement, any asset management fees that may have accumulated in arrears, but which had not been earned pursuant to the terms of the Advisory Agreement, will not be paid to Advisor. There were no asset management fees incurred for the three months ended March 31, 2013 and 2012.

Disposition Fee

If Advisor or its affiliates provides a substantial amount of services, as determined by the Company’s independent directors, in connection with the sale of a real property, Advisor or its affiliates will be paid disposition fees up to 50.0% of a customary and competitive real estate commission, but not to exceed 3.0% of the contract sales price of each property sold. For the three months ended March 31, 2013 and 2012, the Company incurred $924,000 and $24,000 of disposition fees payable to Advisor related to the Waianae Sale and the sale of the McDonalds pad at Willow Run in 2013 and the disposition of the KFC pad at Morningside Marketplace in 2012. There were no disposition fees payable to Advisor as of March 31, 2013 and December 31, 2012.

Leasing Commission Fee

On June 9, 2011, pursuant to Section 11 of the Advisory Agreement with the Advisor, the Company’s board of directors approved the payment of fees to the Advisor for services it provides in connection with leasing the Company’s properties. The amount of such leasing fees will be usual and customary for comparable services rendered for similar real properties in the geographic market of the properties leased. The leasing fees will be in addition to the market-based fees for property management services payable by the Company to TNP Manager, an affiliate of the Advisor. For the three months ended March 31, 2013 and 2012, the Company incurred and paid approximately $124,000 and $5,000 of lease commissions to Advisor or its affiliates, respectively. As of March 31, 2013 and December 31, 2012, leasing commission fees of $0 and $14,000, respectively, were included in amounts due to affiliates.

Financing Coordination Fee

On January 12, 2012, the board of directors approved Amendment No. 3 to the Advisory Agreement to provide for the payment of a financing coordination fee to Advisor in an amount equal to 1.0% of any amount financed or refinanced by the Company or the OP. There were no financing coordination fees incurred for the three months ended March 31, 2013. For the three months ended March 31, 2012, the Company incurred and paid $361,000 of financing coordination fees to Advisor or its affiliates.

Guaranty Fees

In connection with certain acquisition financings, the Company’s Chairman and Co-Chief Executive Officer and/or the Sponsor had executed certain guaranty agreements to the respective lenders. As consideration for such guaranty, the Company entered into a reimbursement and fee agreement to provide for an upfront payment and an annual guaranty fee payment for the duration of the guarantee period. For the three months ended March 31, 2013 and 2012, the Company incurred approximately $14,000 and $13,000, respectively, of guaranty fees. As of March 31, 2013 and December 31, 2012, guaranty fees of approximately $4,000 and $10,000, respectively, were included in amounts due to affiliates. At March 31, 2013, the Company’s outstanding guaranty agreements relate to the guarantee on the financing on Constitution Trail and Osceola Village.

Related Party Loans

In connection with the acquisition of Morningside Marketplace in January 2012, the Company financed the payment of a portion of the purchase price for Morningside Marketplace with the proceeds of (1) a loan in the aggregate principal amount of $235,000 from the Sponsor, (2) a loan in the aggregate principal amount of $200,000 from Mr. James Wolford, the Company’s former Chief Financial Officer, and (3) a loan in the aggregate principal amount of $920,000 from Mrs. Sharon Thompson, the spouse of Mr. Anthony W. Thompson, the Company’s Chairman, Co-Chief Executive Officer and President (collectively, the “Morningside Affiliate Loans”). The Morningside Affiliate Loans each accrued interest at a rate of 12% per annum and were due on April 8, 2012. All Morningside Affiliate Loans including unpaid accrued interest were paid in full as of March 31, 2012.

Interest expense incurred and paid by the Company to an affiliate of Advisor during the three months ended March 31, 2013 and 2012 was $0 and $20,000, respectively.

Summary of Related Party Fees

Summarized below are the related-party costs incurred by the Company for the three months ended March 31, 2013 and 2012, respectively, and payable as of March 31, 2013 and December 31, 2012:

	Incurred					Payable
	Three Months Ended March 31,					As of March		As of December
	2013			2012		31, 2013		31, 2012
Expensed
Asset management fees	$	-		$	-	$	-	$	-
Reimbursement of operating expenses		(98,000	)		182,000		-		209,000
Acquisition fees		13,000			1,212,000		-		475,000
Property management fees		344,000			250,000		60,000		48,000
Guaranty fees		14,000			13,000		4,000		10,000
Disposition fees		924,000			24,000		-		-
Interest expense on notes payable		-			20,000		-		-
	$	1,197,000		$	1,701,000	$	64,000	$	742,000
Capitalized
Financing coordination fee	$	-		$	361,000	$	-	$	-
Leasing commission fees		124,000			5,000		14,000		-
	$	124,000		$	366,000	$	14,000	$	-
Additional Paid In Capital
Selling commissions	$	32,000		$	1,196,000	$	-	$	9,000
Dealer manager fees		15,000			534,000		-		4,000
Organization and offering costs		7,000			64,000		-		-
	$	54,000		$	1,794,000	$	-	$	13,000

In March 2012, the Company reimbursed its advisor $240,000 related to a non-refundable earnest deposit incurred by an affiliate of Advisor in 2010 on a potential acquisition commonly known as Morrison Crossing. The reimbursement was subsequently determined by the Company to be non-reimbursable since the acquisition was not one that was approved by the Company’s board of directors in 2010 and accordingly, the Company recorded the amount as a receivable from Advisor and recorded a provision to reserve the entire amount at March 31, 2013 and December 31, 2012. In May 2013, the Company settled with Advisor and determined to not seek reimbursement from Advisor for the amount previously paid.

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Document and Entity Information	3 Months Ended
	Mar. 31, 2013	May 15, 2013
Document And Entity Information [Line Items]
Entity Registrant Name	TNP Strategic Retail Trust, Inc.
Entity Central Index Key	0001446371
Document Type	10-Q
Document Period End Date	Mar. 31, 2013
Amendment Flag	false
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	Q1
Current Fiscal Year End Date	--12-31
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		10,969,714

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COMMITMENTS AND CONTINGENCIES

3 Months Ended

Mar. 31, 2013

Commitments and Contingencies [Abstract]

COMMITMENTS AND CONTINGENCIES

12. COMMITMENTS AND CONTINGENCIES

Lahaina Gateway Ground Lease

The Lahaina Gateway property is encumbered by a ground lease which was assigned to the Company in connection with the acquisition of the property on November 9, 2012. The original lease term is for a period of 55 years, commencing on February 2, 2005 with an expiration date of February 1, 2060. The current annual base rent is $1,187,000, payable in monthly installments of approximately $99,000 through February 1, 2015. The annual base rent will increase to $1,342,000 on February 2, 2015, with scheduled increases of 13% every five years through February 2, 2035. Thereafter, the annual base rent will be renegotiated each five year period through lease expiration.

Osceola Village Contingencies

In connection with the acquisition financing on Osceola Village, the Company through its subsidiary, granted a lender a profit participation in the property equal to 25% of the net profits received by the Company upon the sale of the property (the “Profit Participation Payment”). Net profits is calculated as (1) the gross proceeds received by the Company upon a sale of the property in an arms-length transaction at market rates to third parties less (2) the sum of: (a) principal repaid to the lender out of such sales proceeds at the time of such sale; (b) all bona fide closing costs and similar expenses provided that all such closing costs and similar expenses are paid to third parties, unaffiliated with the Company including, without limitation, reasonable brokerage fees and reasonable attorneys’ fees paid to third parties, unaffiliated with the Company and incurred by the Company in connection with the sale; and (c) a stipulated amount of $3,200,000. If for any reason consummation of such sale has not occurred on or before the scheduled maturity date or any earlier foreclosure of the underlying mortgage loan secured by the property, the Company shall be deemed to have sold the property as of the business day immediately preceding the mortgage loan maturity date or the filing date of the foreclosure action, whichever is applicable, for an amount equal to a stipulated sales price and shall pay the lender the Profit Participation Payment. In the event the underlying mortgage loan is prepaid, the Company shall also be required to immediately pay the Profit Participation Payment based upon a deemed sale of the property for a stipulated sales price. Based on the estimated sale price as of March 31, 2013 the Company has recorded an accrual for the estimated liability under the Profit Participation Payment.

Additionally, in connection with the acquisition financing on Osceola Village, the Company entered into a Master Lease Agreement (the “Master Lease”) with TNP SRT Osceola Village Master Lessee, LLC, a wholly-owned subsidiary of the OP (the “Master Lessee”). Pursuant to the Master Lease, TNP SRT Osceola Village leased to Master Lessee the approximately 23,000 square foot portion of Osceola Village which was not leased to third-party tenants as of the closing date (the “Premises”). The Master Lease provides that the Master Lessee will pay TNP SRT Osceola Village a monthly rent in an amount equal to $36,425, provided that such monthly amount will be reduced proportionally for each square foot of space at the premises subsequently leased to third-party tenants pursuant to leases which are reasonably acceptable to the lender and which satisfy certain criteria set forth in the Master Lease (“Approved Leases”). The Master Lease has a seven-year term, subject to earlier expiration upon the earlier to occur of (1) the date on which all available rentable space at the Premises is leased to third-party tenants pursuant to Approved Leases and (2) the date on which the mortgage loan is repaid in full in cash (other than as a result of a credit bid by the lender at a foreclosure sale). The Master Lessee has no right to assign or pledge the Master Lease or to sublet any part of the premises without the prior written consent of TNP SRT Osceola Village and the lender. In connection with the acquisition of Osceola Village, TNP SRT Osceola Village obtained a mortgage (the “Osceola Loan”) from ANICO. The Master Lease was assigned to ANICO pursuant to the assignment of leases and rents in favor of ANICO entered into by TNP SRT Osceola Village in connection with the Osceola Loan. Pursuant to the Master Lease, the Master Lessee acknowledges and agrees that upon any default by TNP SRT Osceola Village under any of the loan documents related to the Osceola Loan, ANICO will be entitled to enforce the assignment of the Master Lease to ANICO and replace TNP SRT Osceola Village under the Master Lease for all purposes.

Constitution Trail Contingency

In connection with the financing of the Constitution Trail acquisition, TNP SRT Constitution Trail, LLC, a wholly owned subsidiary of the OP (“TNP SRT Constitution Trail”), TNP SRT Constitution Trail Master Lessee, LLC (the “Starplex Master Lessee”), a wholly owned subsidiary of the OP, and the Sponsor, entered into a Master Lease Agreement with respect to a portion of Constitution Trail (the “Starplex Master Lease”). Pursuant to the Starplex Master Lease, TNP SRT Constitution Trail leased to the Starplex Master Lessee an approximately 7.78 acre parcel of land included in the Constitution Trail property, and the approximately 44,064 square foot Starplex Cinemas building located thereon (the “Starplex Premises”). The Starplex Master Lease provides that, in the event that the annual gross sales from the Starplex premises are less than $2,800,000, then thereafter the Starplex Master Lessee will pay TNP SRT Constitution Trail a monthly rent in an amount equal to $62,424 ($749,088 annually), subject to an offset based on any minimum annual rent for the Starplex premises received by TNP SRT Constitution Trail. The Starplex Master Lease will expire upon the earlier to occur of (1) December 31, 2018 and (2) the date on which the Constitution Trail mortgage loan is repaid in full in cash (other than as a result of a credit bid by the lender at a foreclosure sale or refinancing of the Constitution Trail Loan). The Starplex Master Lessee has no right to assign or pledge the Starplex Master Lease or to sublet any part of the Starplex premises without the prior written consent of TNP SRT Constitution Trail and the lender of the mortgage loan.

Carson Plaza Contingency

In 2012, the Company pursued an acquisition commonly known as Carson Plaza and placed a non-refundable deposit of $250,000 into escrow which was expensed and included in transaction expense for the year ended December 31, 2012. The acquisition did not materialize as a result of the Company’s claim of certain undisclosed environmental conditions uncovered during due diligence. The seller disagreed with the Company’s claim. The outcome of the Company’s claim and the prospect of the recovery of the deposit are unknown at the present time and accordingly, the Company did not accrue for any recovery of such amount at March 31, 2013 and December 31, 2012.

Economic Dependency

The Advisor and its affiliates currently provide certain services to the Company pursuant to the Advisory Agreement and the property management agreements with respect to the Company’s properties, management of the daily operations of the Company’s investment portfolio and certain general and administrative responsibilities. These services are currently relatively limited due to the fact that the Company is not currently actively engaged in acquisitions and has hired a number of employees of its own. As disclosed in “Note 1. ORGANIZATION AND BUSINESS”, the Company is currently engaged in negotiations to replace the Advisor with Glenborough. In the event that the Company is successful in transitioning to Glenborough as its external advisor and property manager, the Company will become dependent upon Glenborough and its affiliates to provide similar services to the Company pursuant to an advisory agreement and property management agreements with Glenborough. In the event that the Advisor, or Glenborough or any other successor advisor, is unable to provide the respective services, the Company will be required to obtain such services from other sources.

Environmental

As an owner of real estate, the Company is subject to various environmental laws of federal, state and local governments. The Company is not aware of any environmental liability that could have a material adverse effect on its financial condition or results of operations. However, changes in applicable environmental laws and regulations, the uses and conditions of properties in the vicinity of the Company’s properties, the activities of its tenants and other environmental conditions of which the Company is unaware with respect to the properties could result in future environmental liabilities.

Legal Matters

From time to time, the Company is party to legal proceedings that arise in the ordinary course of its business. Management is not aware of any legal proceedings of which the outcome is reasonably likely to have a material adverse effect on its results of operations or financial condition.

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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (USD $)	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Revenue:
Rental and reimbursements	$ 8,039,000	$ 3,932,000
Expense:
Operating and maintenance	2,997,000	1,280,000
General and administrative	1,598,000	631,000
Depreciation and amortization	3,182,000	1,750,000
Transaction expenses	51,000	1,900,000
Interest expense	3,669,000	2,789,000
Total operating expense	11,497,000	8,350,000
Loss from continuing operations	(3,458,000)	(4,418,000)
Discontinued operations:
Income (loss) from discontinued operations	(197,000)	53,000
Gain on sale of real estate	4,838,000	0
Income from discontinued operations	(4,641,000)	(53,000)
Net income (loss)	1,183,000	(4,365,000)
Net income (loss) attributable to non-controlling interests	45,000	(212,000)
Net income (loss) attributable to common stockholders	$ 1,138,000	$ (4,153,000)
Basic earnings (loss) per common share:
Continuing operations (In dollars per share)	$ (0.31)	$ (0.62)
Discontinued operations (In dollars per share)	$ 0.41	$ 0.01
Net earnings (loss) applicable to common shares (In dollars per share)	$ 0.10	$ (0.61)
Diluted earnings (loss) per common share:
Continuing operations (In dollars per share)	$ (0.31)	$ (0.62)
Discontinued operations (In dollars per share)	$ 0.41	$ 0.01
Net earnings (loss) applicable to common shares (In dollars per share)	$ 0.10	$ (0.61)
Weighted average shares outstanding used to calculate earnings per common share:
Basic (In shares)	10,935,089	6,797,797
Diluted (In shares)	11,366,885	6,797,797

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NOTES PAYABLE

3 Months Ended

Mar. 31, 2013

Debt [Abstract]

NOTES PAYABLE

6. NOTES PAYABLE

As of March 31, 2013 and December 31, 2012, the Company’s notes payable consisted of the following:

	Principal Balance				Interest Rates At
	March 31, 2013		December 31, 2012		March 31, 2013
KeyBank Credit Facility	$	36,455,000	$	38,438,000		5.50	%
Secured term loans		58,536,000		60,706,000		5.10% - 10.00	%
Mortgage loans		89,082,000		90,183,000		4.50% - 15.00	%
Unsecured loan		1,250,000		1,250,000		8.00	%
Total	$	185,323,000	$	190,577,000

During the three months ended March 31, 2013 and 2012, the Company incurred $3,669,000 and $2,789,000, respectively, of interest expense, which included the amortization and write-off of deferred financing costs of $287,000 and $821,000, respectively. In connection with the refinancing completed in January 2012 of the mortgage loans secured by four properties under the KeyBank line of credit into a KeyBank term loan, the Company wrote off approximately $540,000 of the remaining unamortized deferred financing costs associated with four properties under the KeyBank line of credit. As of March 31, 2013 and December 31, 2012, interest expense payable was $1,264,000 and $1,097,000, respectively.

The following is a schedule of principal maturities for all of the Company’s notes payable outstanding as of March 31, 2013:

	Amount
April 1 through December 31, 2013	$	36,455,000
2014		5,269,000
2015		1,250,000
2016		18,029,000
2017		92,958,000
Thereafter		31,362,000
	$	185,323,000

KeyBank Credit Facility

On December 17, 2010, the Company, through its wholly owned subsidiary, TNP SRT Secured Holdings, LLC (“TNP SRT Holdings”), entered into a line of credit with KeyBank and certain other lenders (collectively, the “Lenders”) to establish a secured revolving credit facility with an initial maximum aggregate commitment of $35 million (the “Credit Facility”). The proceeds of the Credit Facility may be used by the Company for general corporate purposes, subject to the terms of the Credit Facility. The Credit Facility initially consisted of an A tranche (“Tranche A”) with an initial aggregate commitment of $25 million, and a B tranche (“Tranche B”) with an initial aggregate commitment of $10 million. Tranche B under the Credit Facility terminated as of June 30, 2011. The aggregate commitment under Tranche A was subsequently increased on multiple occasions and, as of March 31, 2013, had an aggregate commitment of $45 million. As discussed below, due to the Company’s default under the Credit Facility, the Company entered into a forbearance agreement with KeyBank which, among other things, converted the entire outstanding principal amount under Tranche A into a term loan which is due and payable in full on July 31, 2013. As of March 31, 2013, the outstanding principal balance on the Credit Facility was $36,455,000.

Borrowings under the Credit Facility are secured by (1) pledges by the Company, the OP, TNP SRT Holdings, and certain subsidiaries of TNP SRT Holdings, of their respective direct and indirect equity ownership interests in, as applicable, any subsidiary of TNP SRT Holdings or us which directly or indirectly owns real property, subject to certain limitations and exceptions, (2) guarantees, granted by the Company and the OP on a joint and several basis, of the prompt and full payment of all of the obligations under the Credit Facility, (3) a security interest granted in favor of KeyBank with respect to all operating, depository, escrow and security deposit accounts and all cash management services of the Company, the OP, TNP SRT Holdings and any other borrower under the Credit Facility, and (4) a deed of trust, assignment agreement, security agreement and fixture filing in favor of KeyBank with respect to the San Jacinto Esplanade, Craig Promenade, Willow Run Shopping Center, Visalia Marketplace and Aurora Commons properties.

Under the Credit Facility, the Company is required to comply with certain restrictive and financial covenants. In January 2013, the Company became aware of a number of events of default under the Credit Facility relating to, among other things, the Company’s failure to use the net proceeds from its sale of shares in the Offering and the sale of its assets to repay borrowings under the Credit Facility as required by the Credit Facility and its failure to satisfy certain financial covenants under the Credit Facility (collectively, the “Existing Events of Default”). The Company also did not comply with certain financial covenants at March 31, 2013. Due to the Existing Events of Default, the Lenders became entitled to exercise all of their rights and remedies under the Credit Facility and applicable law.

On April 1, 2013, the Company, the OP, certain subsidiaries of the OP which are borrowers under the Credit Facility (collectively, the “Borrowers”) and KeyBank, as lender and agent for the other Lenders, entered into a forbearance agreement (the “Forbearance Agreement”) which amended the terms of the Credit Facility and provides for certain additional agreements with respect to the Existing Events of Default. Pursuant to the terms of the Forbearance Agreement, KeyBank and the other Lenders agreed to forbear the exercise of their rights and remedies with respect to the Existing Events of Default until the earliest to occur of (1) July 31, 2013, (2) the Company’s default under or breach of any of the representations or covenants under the Forbearance Agreement or (3) the date any additional events of defaults (other than the Existing Events of Default) under the Credit Facility occur or become known to KeyBank or any other Lender, (the “Forbearance Expiration Date”). Upon the Forbearance Expiration Date, all forbearances, deferrals and indulgences granted by the Lenders pursuant to the Forbearance Agreement will automatically terminate and the Lenders will be entitled to enforce, without further notice of any kind, any and all rights and remedies available to them as creditors at law, in equity, or pursuant to the Credit Facility or any other agreement as a result of the existing events of default or any additional events of default which occur or come to light following the date of the Forbearance Agreement.

Pursuant to the Forbearance Agreement, the Company, the OP and all of the Borrowers under the Credit Facility have jointly and severally agreed to pay to KeyBank (1) any and all out-of-pocket costs or expenses (including legal fees and disbursements) incurred or sustained by the Lenders in connection with the preparation of the Forbearance Agreement and all related matters, and (2) from time to time after the occurrence of any default under the Forbearance Agreement any out-of-pocket costs or expenses (including legal fees and consulting and other similar professional fees and expenses) incurred by the Lenders in connection with the preservation of or enforcement of any rights of the Lenders under the Forbearance Agreement and the Credit Facility. In connection with the execution of the Forbearance Agreement, the Company has agreed to pay a forbearance fee of approximately $192,000 to KeyBank, with 50% of such fee paid upon the execution of the Forbearance Agreement and the remaining 50% to be paid upon the earlier of the Forbearance Expiration Date or the date the Outstanding Loans are repaid in full.

The Company paid down a total of $1,983,000 on the Credit Facility from the net proceeds from the sales of the Waianae Mall in January 2013 and the McDonalds pad at Willow Run in February 2013. The Forbearance Agreement converts the entire outstanding principal balance under the Credit Facility (the “Outstanding Loans”) into a term loan which is due and payable in full on July 31, 2013. Pursuant to the Forbearance Agreement, the Company, the OP and every other borrower under the Credit Facility must apply 100% of the net proceeds from, among other things, (1) the sale of shares in the Offering or any other sale of securities by the Company, the OP or any other borrower, (2) the sale or refinancing of any of the Company’s properties or other assets, and (3) the collection of insurance or condemnation proceeds due to any damage or destruction of properties or any condemnation for public use of any properties, to the repayment of the Outstanding Loans. The Forbearance Agreement provides that all commitments under the Credit Facility will terminate on July 31, 2013 and that, effective as of the date of the Forbearance Agreement, the Lenders have no further obligation whatsoever to advance any additional loans or amounts under the Credit Facility. The Forbearance Agreement also provides that neither the Company, the OP or any other borrower under the Credit Facility may, without KeyBank’s prior written consent, incur, assume, guarantee or be or remain liable, contingently or otherwise, with respect to any indebtedness other than the existing indebtedness specified in the Forbearance Agreement and any refinancing of such existing indebtedness which does not materially modify the terms of such existing indebtedness in a manner adverse to the Company or the Lenders.

Waianae Loan Assumption

On January 22, 2013, the Company sold the Waianae Mall in Waianae, Hawaii to an unaffiliated buyer for a final sales price of $29,763,000. The mortgage loan secured by the Waianae Mall with an outstanding balance of $19,717,000 was assumed by the buyer in connection with the sale. The Company incurred a disposition fee to the Advisor of $893,000 in connection with the sale.

Lahaina Loan

In connection with the acquisition of Lahaina Gateway Shopping Center on November 9, 2012, the Company, through TNP SRT Lahaina Gateway, LLC (“TNP SRT Lahaina”), borrowed $29,000,000 (the “Lahaina Loan”) from DOF IV REIT Holdings, LLC, (the “Lahaina Lender”). The entire unpaid principal balance of the Lahaina Loan and all accrued and unpaid interest thereon is due and payable in full on October 1, 2017. The Lahaina Loan bears interest at a rate of 9.483% per annum for the initial 12 months, and then 11.429% for the remainder of the term of the loan. On each of December 1, 2012, January 1, 2013, and February 1, 2013, the Company was required to make a mandatory principal prepayment of $333,333, such that the Company would prepay an aggregate $1,000,000 of the outstanding principal balance of the Lahaina Loan, no later than February 1, 2013.

On January 14, 2013, the Company received a letter of default from the Lahaina Lender in connection with the certain Guaranty of Recourse Obligations by the Company and Anthony W. Thompson, the Company’s Chairman and Co-Chief Executive Officer, for the benefit of the Lahaina Lender, pursuant to which the Company and Mr. Thompson guaranteed the obligations of TNP SRT Lahaina under the Lahaina Loan. The letter of default stated that two events of default existed under the Lahaina Loan as a result of the failure of TNP SRT Lahaina to (1) pay a deposit into a rollover account, and (2) pay two mandatory principal payments. The Lahaina Lender requested payment of the missed deposit into the rollover account, the two overdue mandatory principal payments, and late payment charges and default interest in the aggregate amount of $1,281,000 by January 18, 2013. On January 22, 2013, the Company used a portion of the proceeds from our sale of the Waianae Mall (discussed above) to pay the entire amount requested by Lahaina Lender and cure the events of default under the Lahaina Loan.

Since the acquisition of the Lahaina Gateway property on November 9, 2012, cash from operations from the Lahaina Gateway property has not been sufficient to support the property’s operating expenses, the debt service obligations under the Lahaina Loan, and the various cash reserve requirements imposed by the Lahaina Lender. As a result, since the acquisition of the Lahaina Gateway property, the Company has supported the property’s cash requirements with cash from operations generated by other properties within the Company’s portfolio. In order to settle the Company’s obligations under the Lahaina Loan and avoid potential litigation and foreclosure proceedings (and the associated delays and expenses), relating to the Lahaina Gateway property, the Company is currently negotiating a deed in lieu of foreclosure agreement with the Lahaina Lender (the “DIL Agreement”). Pursuant to the proposed terms of the DIL Agreement, the Company will convey title to the Lahaina Gateway property to the Lahaina Lender in exchange for the Lahaina Lender’s agreement not to seek payment from the Company for any amounts owed under the Lahaina Loan, subject to certain exceptions as set forth in the DIL Agreement.

The execution of the DIL Agreement is subject to a number of conditions, including mutual agreement on its final terms, and there is no guarantee that the Company will enter into the DIL Agreement on the terms described above, or at all.

KeyBank Mezzanine Loan

On June 13, 2012, the Company, through TNP SRT Portfolio II Holdings, LLC (“TNP SRT Portfolio II Holdings”) obtained a mezzanine loan from KeyBank in the original principal amount of $2,000,000 pursuant to a Loan Agreement by and between TNP SRT Portfolio II Holdings and KeyBank and a Promissory Note by TNP SRT Portfolio II Holdings in favor of KeyBank. The proceeds were also used to refinance the portions of the Credit Facility secured by Morningside Marketplace, Cochran Bypass (Bi Lo Grocery Store), Ensenada Square, Florissant Marketplace and Turkey Creek. The KeyBank Mezzanine Loan was paid in January 2013 using a portion of the proceeds from our sale of the Waianae Mall.

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ACQUIRED LEASE INTANGIBLES AND BELOW-MARKET LEASE LIABILITIES

3 Months Ended

Mar. 31, 2013

Intangibles [Abstract]

ACQUIRED LEASE INTANGIBLES AND BELOW-MARKET LEASE LIABILITIES

5. ACQUIRED LEASE INTANGIBLES AND BELOW-MARKET LEASE LIABILITIES

As of March 31, 2013 and December 31, 2012, the Company’s acquired lease intangibles and below-market lease liabilities were as follows:

	Lease Intangibles						Below - Market Lease Liabilities
	March 31, 2013			December 31, 2012			March 31, 2013			December 31, 2012
Cost	$	39,757,000		$	39,853,000		$	(12,674,000	)	$	(12,764,000	)
Accumulated amortization		(7,563,000	)		(6,118,000	)		1,126,000			936,000
	$	32,194,000		$	33,735,000		$	(11,548,000	)	$	(11,828,000	)

Increases (decreases) in net income as a result of amortization of the Company’s lease intangibles and below-market lease liabilities for the three months ended March 31, 2013 and 2012 were as follows:

	Lease Intangibles						Below - Market Lease Liabilities
	For the Three Months Ended March 31,						For the Three Months Ended March 31,
	2013			2012			2013		2012
Amortization and accelerated amortization	$	(1,608,000	)	$	(658,000	)	$	255,000	$	92,000

The scheduled amortization of lease intangibles and below-market lease liabilities as of March 31, 2013 was as follows:

	Acquired		Below-market
	Lease		Lease
	Intangibles		Intangibles
April 1 through December 31, 2013	$	4,195,000	$	(614,000	)
2014		4,756,000		(839,000	)
2015		4,025,000		(737,000	)
2016		3,530,000		(659,000	)
2017		3,155,000		(590,000	)
Thereafter		12,533,000		(8,109,000	)
	$	32,194,000	$	(11,548,000	)

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FUTURE MINIMUM RENTAL INCOME (Tables)

3 Months Ended

Mar. 31, 2013

Minimum Rents [Abstract]

Schedule of Future Minimum Rental Payments For Operating Leases

As of March 31, 2013, the future minimum rental income from the Company’s properties under non-cancelable operating leases was as follows:

April 1 through December 31, 2013	$	17,194,000
2014		21,907,000
2015		20,607,000
2016		18,795,000
2017		17,238,000
Thereafter		80,755,000
	$	176,496,000

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SUBSEQUENT EVENTS

3 Months Ended

Mar. 31, 2013

Subsequent Events [Abstract]

SUBSEQUENT EVENTS

13. SUBSEQUENT EVENTS

Amendment of Credit Facility by entering into Forbearance Agreement

On April 1, 2013, the Company, the OP, certain subsidiaries of the OP which are borrowers under the Credit Facility and KeyBank, as lender and agent for the other Lenders, entered into the Forbearance Agreement which amended the terms of the Credit Facility and provides for certain additional agreements. See “Note 6.NOTES PAYABLE.”

Amendment to Consulting Agreement

The Company’s board of directors is actively negotiating with Glenborough to replace the Company’s current advisor. In December 2012, the Company entered into a consulting agreement with Glenborough to assist the Company through the advisor change process. Effective May 1, 2013, the Company and Glenborough entered into an amendment to the consulting agreement which expanded the scope of the consulting services provided to the Company by Glenborough (as described below) and increased the monthly consulting fee payable to Glenborough by the Company from $75,000 per month to $90,000 per month.

Effective May 1, 2013, pursuant to the amendment to the consulting agreement, Glenborough shall perform the following accounting services for the Company:

· All property accounts receivable functions including property rent and common area maintenance billings

· All property accounts payable functions

Effective June 1, 2013, the following additional services will also be performed by Glenborough pursuant to the amendment to the consulting agreement:

· Corporate level receivables and payables

· Loan administration

· Cash management and treasury functions

· SEC financial reporting 

· Management reporting

· Audit coordination

· Tax preparation and coordination

The Company evaluates subsequent events up until the date the condensed consolidated financial statements are issued.

Pending Disposition

On or about May 9, 2013, the purchase and sale agreement, as amended, for the sale of the office building at the Aurora Commons property (Note 3) had expired and the buyer did not release the contingencies in the purchase and sale agreement.

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EARNINGS PER SHARE

3 Months Ended

Mar. 31, 2013

Earnings Per Share [Abstract]

EARNINGS PER SHARE

9. EARNINGS PER SHARE

EPS is computed by dividing net income (loss) attributable to common stockholders by the weighted average number of common shares outstanding during each period. Diluted EPS is computed after adjusting the basic EPS computation for the effect of potentially dilutive securities outstanding during the period. The effect of non-vested shares, if dilutive, is computed using the treasury stock method. The Company applies the two-class method for determining EPS as its outstanding unvested shares with non-forfeitable dividend rights are considered participating securities. The Company’s excess of distributions over earnings related to participating securities are shown as a reduction in income (loss) attributable to common stockholders in the Company’s computation of EPS.

The following table sets forth the computation of the Company’s basic and diluted loss per share:

	For the Three Months Ended
	March 31,
	2013			2012
Numerator - basic and diluted
Net loss from continuing operations	$	(3,458,000	)	$	(4,421,000	)
Non-controlling interests' share in continuing operations		131,000			214,000
Distributions paid on unvested restricted shares		-			(2,000	)
Net loss from continuing operations applicable to common shares		(3,327,000	)		(4,209,000	)
Discontinued operations		4,641,000			56,000
Non-controlling interests' share in discontinued operations		(176,000	)		(2,000	)
Net income (loss) applicable to common shares	$	1,138,000		$	(4,155,000	)
Denominator - basic and diluted
Basic weighted average common shares		10,935,089			6,797,797
Effect of dilutive securities Common Units (1)		431,796			-
Diluted weighted average common shares		11,366,885			6,797,797
Basic Earnings per Common Share
Net loss from continuing operations applicable to common shares	$	(0.31	)	$	(0.62	)
Discontinued operations		0.41			0.01
Net earnings (loss) applicable to common shares	$	0.10		$	(0.61	)
Diluted Earnings per Common Share
Net loss from continuing operations applicable to common shares	$	(0.31	)	$	(0.62	)
Discontinued operations		0.41			0.01
Net earnings (loss) applicable to common shares	$	0.10		$	(0.61	)

(1) Number of convertible Common Units pursuant to the redemption rights outlined in the Company's registration statement on Form S-11. Anti-dilutive for three months ended March 31, 2012.

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FAIR VALUE DISCLOSURES

3 Months Ended

Mar. 31, 2013

Fair Value Disclosures [Abstract]

FAIR VALUE DISCLOSURES

7. FAIR VALUE DISCLOSURES

The Company believes the total values reflected on its condensed consolidated balance sheets reasonably approximate the fair values for cash and cash equivalents, accounts receivable, accounts payable and accrued expenses, and amounts due to affiliates due to their short-term nature, except for the Company’s notes payable, which are disclosed below.

The fair value of the Company’s notes payable is estimated using a present value technique based on contractual cash flows and management’s observations of current market interest rates for instruments with similar characteristics, including remaining loan term, loan-to-value ratio, type of collateral and other credit enhancements. The Company significantly reduces the amount of judgment and subjectivity in its fair value determination through the use of cash flow inputs that are based on contractual obligations. Discount rates are determined by observing interest rates published by independent market participants for comparable instruments. The Company classifies these inputs as Level 2 inputs.

The following table provides the carrying values and fair values of the Company’s notes payable as of March 31, 2013 and December 31, 2012:

At March 31, 2013	Carrying Value (1)		Fair Value (2)
Notes Payable	$	185,323,000	$	183,779,000

At December 31, 2012	Carrying Value (1)		Fair Value (2)
Notes Payable	$	190,577,000	$	191,319,000

(1) The carrying value of the Company’s notes payable represents outstanding principal as of March 31, 2013 and December 31, 2012.

(2) The estimated fair value of the notes payable is based upon indicative market prices of the Company’s notes payable based on prevailing market interest rates.

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EQUITY

3 Months Ended

Mar. 31, 2013

Equity [Abstract]

EQUITY

8. EQUITY

Common Stock

Under the Company’s Articles of Amendment and Restatement (the “Charter”), the Company has the authority to issue 400,000,000 shares of common stock. All shares of common stock have a par value of $0.01 per share. On October 16, 2008, the Company issued 22,222 shares of common stock to the Sponsor for an aggregate purchase price of $200,000. As of March 31, 2013, Anthony W. Thompson, the Company’s current Co-Chief Executive Officer and President, directly owned 111,111 shares of the Company’s common stock for which he paid an aggregate purchase price of $1,000,000 and the Sponsor, which is controlled by Mr. Thompson, owned 22,222 shares of the Company’s common stock.

On February 7, 2013, the Company terminated the Offering and ceased offering shares of common stock in the primary offering and under the DRIP. As of the termination of the Offering on February 7, 2013, the Company had accepted subscriptions for, and issued, 10,969,714 shares of common stock (net of share redemptions), including 391,182 shares of common stock pursuant to the DRIP, resulting in gross offering proceeds of $108,357,000.

Common Units

On May 26, 2011, in connection with the acquisition of Pinehurst Square East, a retail property located in Bismarck, North Dakota, the OP issued 287,472 Common Units to certain of the sellers of Pinehurst Square East who elected to receive Common Units for an aggregate value of approximately $2,587,000, or $9.00 per Common Unit. On March 12, 2012, in connection with the acquisition of Turkey Creek, a retail property located in Knoxville, Tennessee, the OP issued 144,324 Common Units to certain of the sellers of Turkey Creek who elected to receive Common Units for an aggregate value of approximately $1,371,079, or $9.50 per Common Unit.

Preferred Stock

The Charter authorizes the Company to issue 50,000,000 shares of $0.01 par value preferred stock. As of March 31, 2013 and December 31, 2012, no shares of preferred stock were issued and outstanding.

Share Redemption Program

The Company’s share redemption program allows for share repurchases by the Company when certain criteria are met by requesting stockholders. Share repurchases pursuant to the share redemption program are made at the sole discretion of the Company. The number of shares to be redeemed during any calendar year is limited to no more than (1) 5.0% of the weighted average of the number of shares of the Company’s common stock outstanding during the prior calendar year and (2) those that could be funded from the net proceeds from the sale of shares under the DRIP in the prior calendar year plus such additional funds as may be borrowed or reserved for that purpose by the Company’s board of directors. The Company reserves the right to reject any redemption request for any reason or no reason or to amend or terminate the share redemption program at any time. The Company did not redeem any common shares under its share redemption program during the three months ended March 31, 2013. During the three months ended March 31, 2012, the Company redeemed 17,649 shares (including 549 shares issued under the DRIP program) of common shares under its share redemption program.

Effective January 15, 2013, the Company suspended its share redemption program, including redemptions upon death and disability.

Distributions

In order to qualify as a REIT, the Company is required to distribute at least 90% of its annual REIT taxable income, subject to certain adjustments, to its stockholders. Until the Company generates sufficient cash flow from operations to fully fund the payment of distributions, some or all of the Company’s distributions have been paid from other sources, including proceeds from the Offering.

Effective January 15, 2013, the Company announced that it will no longer be making monthly distributions. Quarterly distributions will be considered by the Company’s board of directors for 2013. On March 19, 2013, the Company announced that it will not be making a quarterly distribution for the quarter ended March 31, 2013.

The following table sets forth the distributions declared and paid to the Company’s common stockholders and non-controlling Common Unit holders for the three months ended March 31, 2013 and the year ended December 31, 2012, respectively:

	Distributions Declared to Common Stockholders (1)		Distributions Declared Per Share (1)		Distributions Declared to Common Unit Holders (1)/(3)		Cash Distribution Payments to Common Stockholders (2)		Cash Distribution Payments to Common Unit Holders (2)		Reinvested Distributions (DRIP shares issuance) (2)		Total Common Stockholder Distributions Paid and DRIP Shares Issued
First Quarter 2013 (4)	$	636,000	$	0.05833	$	25,000	$	390,000	$	25,000	$	246,000	$	636,000

	Distributions Declared to Common Stockholders (1)		Distributions Declared Per Share (1)		Distributions Declared to Common Unit Holders (1)/(3)		Cash Distribution Payments to Common Stockholders (2)		Cash Distribution Payments to Common Unit Holders (2)		Reinvested Distributions (DRIP shares issuance) (2)		Total Common Stockholder Distributions Paid and DRIP Shares Issued
First Quarter 2012	$	1,183,000	$	0.05833	$	57,000	$	721,000	$	52,000	$	406,000	$	1,127,000
Second Quarter 2012		1,637,000	$	0.05833		74,000		866,000		71,000		570,000		1,436,000
Third Quarter 2012		1,874,000	$	0.05833		76,000		1,015,000		76,000		709,000		1,724,000
Fourth Quarter 2012 (4)		1,259,000	$	0.05833		51,000		1,274,000		76,000		607,000		1,881,000
	$	5,953,000			$	258,000	$	3,876,000	$	275,000	$	2,292,000	$	6,168,000

(1) Distributions were generally declared monthly and are calculated at a monthly distribution rate of $0.05833 per share of common stock and Common Units.

(2) Cash distributions were paid, and DRIP shares issued pursuant to the Company’s distribution reinvestment plan, generally on a monthly basis. Cash distributions for all record dates of a given month were generally paid approximately 15 days following month end.

(3) None of the Common Unit holders of the OP are participating in the Company’s distribution reinvestment program, which was terminated effective February 7, 2013.

(4) Distributions for the month of December 2012 in the aggregate amount of $636,000 were declared on January 18, 2013, of which $390,000 was paid in cash and $246,000 was paid through the Company’s distribution reinvestment plan in the form of additional shares of common stock. Total dividends paid to holders of Common Units of the OP for the same period were $25,000.

Distribution Reinvestment Plan

The Company adopted the DRIP which allowed common stockholders to purchase additional shares of the Company’s common stock through the reinvestment of distributions, subject to certain conditions. The Company registered and reserved 10,526,316 shares of its common stock for sale pursuant to the DRIP The DRIP was terminated effective February 7, 2013 in connection with the expiration of the Offering and the Company’s deregistration of all of the unsold shares registered for sale pursuant to the Offering. For the three months ended March 31, 2013 and 2012, $246,000 and $406,000 in distributions were reinvested and 25,940 and 42,818 shares of common stock were issued under the DRIP, respectively.

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INCENTIVE AWARD PLAN

3 Months Ended

Mar. 31, 2013

Incentive Award Plan [Abstract]

INCENTIVE AWARD PLAN

10. INCENTIVE AWARD PLAN

The Company adopted an incentive award plan on July 7, 2009 (the “Incentive Award Plan”) that provides for the grant of equity awards to its employees, directors and consultants and those of the Company’s affiliates. The Incentive Award Plan authorizes the grant of non-qualified and incentive stock options, restricted stock awards, restricted stock units, stock appreciation rights, dividend equivalents and other stock-based awards or cash-based awards. The Company has reserved 2,000,000 shares of common stock for stock grants pursuant to the Incentive Award Plan.

Pursuant to the Company’s Amended and Restated Independent Directors Compensation Plan, which is a sub-plan of the Incentive Award Plan (the “Directors Plan”), the Company granted each of its independent directors an initial grant of 5,000 shares of restricted stock (the “initial restricted stock grant”) following the Company’s raising of the $2,000,000 minimum offering amount in the Offering on November 12, 2009. Each new independent director that subsequently joins the board of directors receives the initial restricted stock grant on the date he or she joins the board of directors. In addition, on the date of each of the Company’s annual stockholders meetings at which an independent director is re-elected to the board of directors, he or she will receive 2,500 shares of restricted stock. The restricted stock vests one-third on the date of grant and one-third on each of the next two anniversaries of the grant date. The restricted stock will become fully vested and non-forfeitable in the event of an independent director’s termination of service due to his or her death or disability, or upon the occurrence of a change in control of the Company.

For the three months ended March 31, 2013 and 2012, the Company recognized compensation expense of $15,000 and $13,000, respectively, related to restricted common stock grants to its independent directors, which is included in general and administrative expense in the Company’s accompanying condensed consolidated statements of operations. Shares of restricted common stock have full voting rights and rights to dividends.

As of March 31, 2013 and December 31, 2012, there was $45,000 and $60,000, respectively, of total unrecognized compensation expense related to non-vested shares of restricted common stock. As of March 31, 2013, this expense is expected to be realized over a remaining period of one year. As of March 31, 2013 and December 31, 2012, the fair value of the non-vested shares of restricted common stock was $90,000 and 10,000 shares remain unvested. During the three months ended March 31, 2013, there were no restricted stock grants issued and no shares vested.

			Weighted
	Restricted		Average
	Stock (No.		Grant Date
	of Shares)		Fair Value
Balance - December 31, 2012		10,000	$	9.00
Granted		-		-
Vested		-		-
Balance - March 31, 2013		10,000		9.00

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DISCONTINUED OPERATIONS AND ASSETS HELD FOR SALE (Details) (USD $)	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Income and expense relating to discontinued operations
Revenues from rental property	$ 204,000	$ 1,113,000
Rental property expenses	124,000	401,000
Depreciation and amortization	0	350,000
Interest	277,000	309,000
Operating (loss) income from discontinued operations	(197,000)	53,000
Gain on sale of real estate	4,838,000	0
Net income from discontinued operations	$ 4,641,000	$ 53,000

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RELATED PARTY TRANSACTIONS (Details) (USD $)	3 Months Ended		54 Months Ended
	Mar. 31, 2013	Mar. 31, 2012	Mar. 31, 2013
Selling commissions and dealer manager fees as an offset to additional paid-in capital incurred
Related-party costs, Incurred	$ 47,000	$ 1,730,000	$ 10,015,000
Selling commissions [Member]
Selling commissions and dealer manager fees as an offset to additional paid-in capital incurred
Related-party costs, Incurred	32,000	1,196,000	6,925,000
Dealer manager fees [Member]
Selling commissions and dealer manager fees as an offset to additional paid-in capital incurred
Related-party costs, Incurred	$ 15,000	$ 534,000	$ 3,090,000

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)

3 Months Ended

Mar. 31, 2013

Summary Of Significant Accounting Policies [Abstract]

Depreciation and amortization

Depreciation and amortization is computed using a straight-line method over the estimated useful lives of the assets as follows:

	Years
Buildings and improvements	5-48 years
Exterior improvements	10-20 years
Equipment and fixtures	5-10 years

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FAIR VALUE DISCLOSURES (Tables)

3 Months Ended

Mar. 31, 2013

Fair Value Disclosures [Abstract]

Notes Payable

The following table provides the carrying values and fair values of the Company’s notes payable as of March 31, 2013 and December 31, 2012:

At March 31, 2013	Carrying Value (1)		Fair Value (2)
Notes Payable	$	185,323,000	$	183,779,000

At December 31, 2012	Carrying Value (1)		Fair Value (2)
Notes Payable	$	190,577,000	$	191,319,000

(1) The carrying value of the Company’s notes payable represents outstanding principal as of March 31, 2013 and December 31, 2012.

(2) The estimated fair value of the notes payable is based upon indicative market prices of the Company’s notes payable based on prevailing market interest rates.

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INCENTIVE AWARD PLAN (Details) (USD $)	3 Months Ended
	Mar. 31, 2013
Granted and vested restricted stock
Restricted Stock, Opening balance	10,000
Weighted Average Grant Date Fair Value, Opening balance	$ 9.00
Restricted Stock, Granted	0
Weighted Average Grant Date Fair Value, Granted	$ 0.00
Restricted Stock, Vested	0
Weighted Average Grant Date Fair Value, Vested	$ 0.00
Restricted Stock, Closing balance	10,000
Weighted Average Grant Date Fair Value, Closing balance	$ 9.00

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ACQUIRED LEASE INTANGIBLES AND BELOW-MARKET LEASE LIABILITIES (Details 2) (USD $)	Mar. 31, 2013
Lease Intangibles [Member]
Scheduled amortization of lease intangibles and below-market lease liabilities
April 1 through December 31, 2013	$ 4,195,000
2014	4,756,000
2015	4,025,000
2016	3,530,000
2017	3,155,000
Thereafter	12,533,000
Total amortization of acquired lease intangibles	32,194,000
Below-Market Lease Liabilities [Member]
Scheduled amortization of lease intangibles and below-market lease liabilities
April 1 through December 31, 2013	(614,000)
2014	(839,000)
2015	(737,000)
2016	(659,000)
2017	(590,000)
Thereafter	(8,109,000)
Total amortization of acquired lease intangibles	$ (11,548,000)

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CONSOLIDATED STATEMENTS OF EQUITY (USD $)	Common Stock	Additional Paid-in Capital	Accumulated Deficit	Shareholders' Equity	Non-controlling Interests	Total
BALANCE at Dec. 31, 2012	$ 109,000	$ 95,567,000	$ (30,160,000)	$ 65,516,000	$ 2,611,000	$ 68,127,000
BALANCE (In shares) at Dec. 31, 2012	10,893,227
Issuance of common shares	1,000	501,000	0	502,000	0	502,000
Issuance of common stock, shares	50,547
Issuance of common units	0	(3,000)	0	(3,000)	3,000	0
Offering costs	0	(28,000)	0	(28,000)	0	(28,000)
Restricted stock grants	0	0	0	0	0	0
Deferred stock compensation	0	15,000	0	15,000	0	15,000
Issuance of common stock under DRIP	0	246,000	0	246,000	0	246,000	[1],[2]
Issuance of common stock under DRIP, shares	25,940
Distributions	0	0	(636,000)	(636,000)	(25,000)	(661,000)
Net income	0	0	1,138,000	1,138,000	45,000	1,183,000
BALANCE at Mar. 31, 2013	$ 110,000	$ 96,298,000	$ (29,658,000)	$ 66,750,000	$ 2,634,000	$ 69,384,000
BALANCE (In shares) at Mar. 31, 2013	10,969,714

[1] Cash distributions were paid, and DRIP shares issued pursuant to the Company's distribution reinvestment plan, generally on a monthly basis. Cash distributions for all record dates of a given month were generally paid approximately 15 days following month end.

[2] Distributions for the month of December 2012 in the aggregate amount of $636,000 were declared on January 18, 2013, of which $390,000 was paid in cash and $246,000 was paid through the Company's distribution reinvestment plan in the form of additional shares of common stock. Total dividends paid to holders of Common Units of the OP for the same period were $25,000.

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FUTURE MINIMUM RENTAL INCOME

3 Months Ended

Mar. 31, 2013

Minimum Rents [Abstract]

FUTURE MINIMUM RENTAL INCOME

4. FUTURE MINIMUM RENTAL INCOME

Operating Leases

The Company’s real estate properties are leased to tenants under operating leases for which the terms and expirations vary. As of March 31, 2013, the leases at the Company’s properties have remaining terms (excluding options to extend) of up to 15 years with a weighted-average remaining term (excluding options to extend) of eight years. The leases may have provisions to extend the lease agreements, options for early termination after paying a specified penalty, rights of first refusal to purchase the property at competitive market rates, and other terms and conditions as negotiated. The Company retains substantially all of the risks and benefits of ownership of the real estate assets leased to tenants. Generally, upon the execution of a lease, the Company requires security deposits from tenants in the form of a cash deposit and/or a letter of credit. Amounts required as security deposits vary depending upon the terms of the respective leases and the creditworthiness of the tenant, but generally are not significant amounts. Therefore, exposure to credit risk exists to the extent that a receivable from a tenant exceeds the amount of its security deposit. Security deposits received in cash related to tenant leases are included in other liabilities in the accompanying condensed consolidated unaudited balance sheets and totaled $664,000 and $651,000 as of March 31, 2013 and December 31, 2012, respectively.

As of March 31, 2013, the future minimum rental income from the Company’s properties under non-cancelable operating leases was as follows:

April 1 through December 31, 2013	$	17,194,000
2014		21,907,000
2015		20,607,000
2016		18,795,000
2017		17,238,000
Thereafter		80,755,000
	$	176,496,000

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EQUITY (Tables)

3 Months Ended

Mar. 31, 2013

Equity [Abstract]

Distributions declared and paid

The following table sets forth the distributions declared and paid to the Company’s common stockholders and non-controlling Common Unit holders for the three months ended March 31, 2013 and the year ended December 31, 2012, respectively:

	Distributions Declared to Common Stockholders (1)		Distributions Declared Per Share (1)		Distributions Declared to Common Unit Holders (1)/(3)		Cash Distribution Payments to Common Stockholders (2)		Cash Distribution Payments to Common Unit Holders (2)		Reinvested Distributions (DRIP shares issuance) (2)		Total Common Stockholder Distributions Paid and DRIP Shares Issued
First Quarter 2013 (4)	$	636,000	$	0.05833	$	25,000	$	390,000	$	25,000	$	246,000	$	636,000

	Distributions Declared to Common Stockholders (1)		Distributions Declared Per Share (1)		Distributions Declared to Common Unit Holders (1)/(3)		Cash Distribution Payments to Common Stockholders (2)		Cash Distribution Payments to Common Unit Holders (2)		Reinvested Distributions (DRIP shares issuance) (2)		Total Common Stockholder Distributions Paid and DRIP Shares Issued
First Quarter 2012	$	1,183,000	$	0.05833	$	57,000	$	721,000	$	52,000	$	406,000	$	1,127,000
Second Quarter 2012		1,637,000	$	0.05833		74,000		866,000		71,000		570,000		1,436,000
Third Quarter 2012		1,874,000	$	0.05833		76,000		1,015,000		76,000		709,000		1,724,000
Fourth Quarter 2012 (4)		1,259,000	$	0.05833		51,000		1,274,000		76,000		607,000		1,881,000
	$	5,953,000			$	258,000	$	3,876,000	$	275,000	$	2,292,000	$	6,168,000

(1) Distributions were generally declared monthly and are calculated at a monthly distribution rate of $0.05833 per share of common stock and Common Units.

(2) Cash distributions were paid, and DRIP shares issued pursuant to the Company’s distribution reinvestment plan, generally on a monthly basis. Cash distributions for all record dates of a given month were generally paid approximately 15 days following month end.

(3) None of the Common Unit holders of the OP are participating in the Company’s distribution reinvestment program, which was terminated effective February 7, 2013.

(4) Distributions for the month of December 2012 in the aggregate amount of $636,000 were declared on January 18, 2013, of which $390,000 was paid in cash and $246,000 was paid through the Company’s distribution reinvestment plan in the form of additional shares of common stock. Total dividends paid to holders of Common Units of the OP for the same period were $25,000.

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FUTURE MINIMUM RENTAL INCOME (Details textual) (USD $)	3 Months Ended
	Mar. 31, 2013	Dec. 31, 2012
Description of Lessee Leasing Arrangements, Operating Leases	As of March 31, 2013, the leases at the Company's properties have remaining terms (excluding options to extend) of up to 15 years with a weighted-average remaining term (excluding options to extend) of eight years.
Security Deposit	$ 664,000	$ 651,000

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

3 Months Ended

Mar. 31, 2013

Summary Of Significant Accounting Policies [Abstract]

Principles of Consolidation and Basis of Presentation

Principles of Consolidation and Basis of Presentation

The accompanying condensed consolidated unaudited financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information as contained within the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) and the rules and regulations of the SEC, including the instructions to Form 10-Q and Article 10 of Regulation S-X. Management is required to make estimates and assumptions in the preparation of financial statements in conformity with GAAP. These estimates and assumptions affected the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

The condensed consolidated financial statements include the accounts of the Company, the OP, and their direct and indirect wholly owned subsidiaries. All significant intercompany balances and transactions are eliminated in consolidation. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) necessary to present fairly the Company’s financial position, results of operations and cash flows have been included.

The Company evaluates the need to consolidate joint ventures and variable interest entities based on standards set forth in ASC 810, Consolidation (“ASC 810”). In determining whether the Company has a controlling interest in a joint venture or a variable interest entity and the requirement to consolidate the accounts of that entity, management considers factors such as ownership interest, authority to make decisions and contractual and substantive participating rights of the partners/members as well as whether the entity is a variable interest entity for which the Company is the primary beneficiary. As of March 31, 2013, the Company did not have any joint ventures or variable interests in any variable interest entities.

Non-Controlling Interests

Non-Controlling Interests

The Company’s non-controlling interests comprise primarily of the Common Units in the OP. The Company accounts for non-controlling interests in accordance with ASC 810. In accordance with ASC 810, the Company reports non-controlling interests in subsidiaries within equity in the condensed consolidated financial statements, but separate from the parent’s stockholders’ equity. Net income (loss) attributable to non-controlling interests is presented as a reduction from net income in calculating net income (loss) available to common stockholders on the statement of operations. Acquisitions or dispositions of non-controlling interests that do not result in a change of control are accounted for as equity transactions. In addition, ASC 810 requires that a parent company recognize a gain or loss in net income when a subsidiary is deconsolidated upon a change in control. In accordance with FASB ASC 480-10, Distinguishing Liabilities from Equity, non-controlling interests that are determined to be redeemable are carried at their fair value or redemption value as of the balance sheet date and reported as liabilities or temporary equity depending on their terms. The Company periodically evaluates individual non-controlling interests for the ability to continue to recognize the non-controlling interest as permanent equity in the condensed consolidated balance sheets. Any non-controlling interest that fails to qualify as permanent equity will be reclassified as liabilities or temporary equity and adjusted to the greater of (1) the carrying amount, or (2) its redemption value as of the end of the period in which the determination is made, and the resulting adjustment is recorded in the condensed consolidated statement of operations. All non-controlling interests at March 31, 2013 qualified as permanent equity.

Use of Estimates

Use of Estimates

The preparation of the Company’s financial statements requires significant management judgments, assumptions and estimates about matters that are inherently uncertain. These judgments affect the reported amounts of assets and liabilities and the Company’s disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenue and expenses during the reporting periods. With different estimates or assumptions, materially different amounts could be reported in the Company’s financial statements. Additionally, other companies may utilize different estimates that may impact the comparability of the Company’s results of operations to those of companies in similar businesses. The Company considers significant estimates to include the carrying amounts and recoverability of investments in real estate, impairments, real estate acquisition purchase price allocations, allowance for doubtful accounts, the estimated useful lives to determine depreciation and amortization, and fair value determinations, among others.

Cash and Cash Equivalents

Cash and Cash Equivalents

Cash and cash equivalents represents current bank accounts and other bank deposits free of encumbrances and having maturity dates of three months or less from the respective dates of deposit. The Company limits cash investments to financial institutions with high credit standing; therefore, the Company believes it is not exposed to any significant credit risk in cash.

Restricted Cash

Restricted Cash

Restricted cash includes escrow accounts for real property taxes, insurance, capital expenditures and tenant improvements, debt service and leasing costs held by lenders.

Revenue Recognition

Revenue Recognition

Revenues include minimum rents, expense recoveries and percentage rental payments. Minimum rents are recognized on an accrual basis over the terms of the related leases on a straight-line basis when collectability is reasonably assured and the tenant has taken possession or controls the physical use of the leased property. If the lease provides for tenant improvements, the Company determines whether the tenant improvements, for accounting purposes, are owned by the tenant or the Company. When the Company is the owner of the tenant improvements, the tenant is not considered to have taken physical possession or have control of the physical use of the leased asset until the tenant improvements are substantially completed. When the tenant is the owner of the tenant improvements, any tenant improvement allowance that is funded is treated as a lease incentive and amortized as a reduction of revenue over the lease term. Tenant improvement ownership is determined based on various factors including, but not limited to:

• whether the lease stipulates how a tenant improvement allowance may be spent;

• whether the amount of a tenant improvement allowance is in excess of market rates;

• whether the tenant or landlord retains legal title to the improvements at the end of the lease term;

• whether the tenant improvements are unique to the tenant or general-purpose in nature; and

• whether the tenant improvements are expected to have any residual value at the end of the lease.

For leases with minimum scheduled rent increases, the Company recognized income on a straight-line basis over the lease term when collectability is reasonably assured. Recognizing rental income on a straight-line basis for leases results in recognized revenue amounts which differ from those that are contractually due from tenants on a cash basis. If the Company determines the collectability of straight-line rents is not reasonably assured, the Company limits future recognition to amounts contractually owed and paid, and, when appropriate, establishes an allowance for estimated losses.

The Company maintains an allowance for doubtful accounts, including an allowance for straight-line rent receivables, for estimated losses resulting from tenant defaults or the inability of tenants to make contractual rent and tenant recovery payments. The Company monitors the liquidity and creditworthiness of its tenants on an ongoing basis. For straight-line rent amounts, the Company’s assessment is based on amounts estimated to be recoverable over the term of the lease. The Company’s straight-line rent receivable, which is included in tenant receivables on the condensed consolidated balance sheets, was $1,743,000 and $1,380,000 at March 31, 2013 and December 31, 2012, respectively.

Certain leases contain provisions that require the payment of additional rents based on the respective tenants’ sales volume (contingent or percentage rent) and substantially all contain provisions that require reimbursement of the tenants’ allocable real estate taxes, insurance and common area maintenance costs (“CAM”). Revenue based on percentage of tenants’ sales is recognized only after the tenant exceeds its sales breakpoint. Revenue from tenant reimbursements of taxes, CAM and insurance is recognized in the period that the applicable costs are incurred in accordance with the lease agreement.

The Company recognizes gains or losses on sales of real estate in accordance with ASC 360. Profits are not recognized until (a) a sale has been consummated; (b) the buyer’s initial and continuing investments are adequate to demonstrate a commitment to pay for the property; (c) the Company’s receivable, if any, is not subject to future subordination; and (d) the Company has transferred to the buyer the usual risks and reward of ownership, and the Company does not have a substantial continuing involvement with the property. The results of operations of income producing properties where the Company does not have a continuing involvement are presented in the discontinued operations section of the Company’s condensed consolidated statements of operations when the property has been classified as held-for-sale or sold.

Valuation of Accounts Receivable

Valuation of Accounts Receivable

The Company makes estimates of the collectability of its tenant receivables related to base rents, including deferred rents receivable, expense reimbursements and other revenue or income.

The Company analyzes tenant receivables, deferred rent receivable, historical bad debts, customer creditworthiness, current economic trends and changes in customer payment terms when evaluating the adequacy of the allowance for doubtful accounts. In addition, with respect to tenants in bankruptcy, the Company will make estimates of the expected recovery of pre-petition and post-petition claims in assessing the estimated collectability of the related receivable. In some cases, the ultimate resolution of these claims can exceed one year. When a tenant is in bankruptcy, the Company will record a bad debt reserve for the tenant’s receivable balance and generally will not recognize subsequent rental revenue until cash is received or until the tenant is no longer in bankruptcy and has the ability to make rental payments.

Concentration of Credit Risk

Concentration of Credit Risk

A concentration of credit risk arises in the Company’s business when a national or regionally based tenant occupies a substantial amount of space in multiple properties owned by the Company. In that event, if the tenant suffers a significant downturn in its business, it may become unable to make its contractual rent payments to the Company, exposing the Company to potential losses in rental revenue, expense recoveries, and percentage rent. Further, the impact may be magnified if the tenant is renting space in multiple locations. Generally, the Company does not obtain security from the nationally-based or regionally-based tenants in support of their lease obligations to the Company. The Company regularly monitors its tenant base to assess potential concentrations of credit risk. As of March 31, 2013, Publix is the Company’s largest tenant and accounted for approximately 99,979 square feet, or approximately 5% of the Company’s gross leasable area, and approximately $1,048,000, or 4% of the Company’s annual minimum rent. No other tenant accounted for over 5% of the Company’s annual minimum rent. There were no outstanding receivables from Publix at March 31, 2013.

The Company’s real estate properties are leased to tenants under operating leases for which the terms and expirations vary. As of March 31, 2013, the leases at the Company’s properties have remaining terms (excluding options to extend) of up to 14 years with a weighted-average remaining term (excluding options to extend) of 9 years. The leases may have provisions to extend the lease agreements, options for early termination after paying a specified penalty, rights of first refusal to purchase the property at competitive market rates, and other terms and conditions as negotiated. The Company retains substantially all of the risks and benefits of ownership of the real estate assets leased to tenants. Generally, upon the execution of a lease, the Company requires security deposits from tenants in the form of a cash deposit and/or a letter of credit. Amounts required as security deposits vary depending upon the terms of the respective leases and the creditworthiness of the tenant, but generally are not significant amounts. Therefore, exposure to credit risk exists to the extent that a receivable from a tenant exceeds the amount of its security deposit. Security deposits received in cash related to tenant leases are included in other liabilities in the accompanying condensed consolidated balance sheets and totaled $664,000 and $651,000 as of March 31, 2013 and December 31, 2012, respectively.

Business Combinations

Business Combinations

The Company records the acquisition of income-producing real estate or real estate that will be used for the production of income as a business combination. All assets acquired and liabilities assumed in a business combination are measured at their acquisition-date fair values. The balance of the purchase price is allocated to tenant improvements and identifiable intangible assets or liabilities. Tenant improvements represent the tangible assets associated with the existing leases valued on a fair value basis at the acquisition date. Tenant improvements are classified as assets under investments in real estate and are depreciated over the remaining lease terms. Identifiable intangible assets and liabilities relate to the value of in-place operating leases which come in three forms: (1) leasing commissions and legal costs, which represent the value associated with “cost avoidance” of acquiring in-place leases, such as lease commissions paid under terms generally experienced in markets in which the Company operates; (2) value of in-place leases, which represents the estimated loss of revenue and of costs incurred for the period required to lease the “assumed vacant” property to the occupancy level when purchased; and (3) above- or below-market value of in-place leases, which represents the difference between the contractual rents and market rents at the time of the acquisition, discounted for tenant credit risks. The value of in-place leases is recorded in acquired lease intangibles and amortized over the remaining lease term. Above- or below-market leases are classified in acquired lease intangibles, or in acquired below-market lease intangibles, depending on whether the contractual terms are above- or below-market. Above-market leases are amortized as a decrease to rental revenue over the remaining non-cancelable terms of the respective leases and below-market leases are amortized as an increase to rental revenue over the remaining initial lease term and any fixed rate renewal periods, if applicable.

Acquisition costs are expensed as incurred and costs that do not meet the definition of a liability at the acquisition date are expensed in periods subsequent to the acquisition date. During the three months ended March 31, 2013, the Company did not acquire any property. During the three months ended March 31, 2012, the Company acquired five properties, Morningside Marketplace (“Morningside Marketplace”), Woodland West Marketplace (“Woodland West”), Ensenada Square (“Ensenada Square”), the Shops at Turkey Creek (“Turkey Creek”), and Aurora Commons (“Aurora Commons”), and recorded the acquisitions as business combinations and expensed $1,453,000 of acquisition costs. Costs incurred in pursuit of targeted properties for acquisitions not yet closed or those determined to no longer be viable have been expensed and are also classified in the condensed consolidated statement of operations as transaction expenses.

Estimates of the fair values of the tangible assets, identifiable intangibles and assumed liabilities require the Company to make significant assumptions to estimate market lease rates, property-operating expenses, carrying costs during lease-up periods, discount rates, market absorption periods, and the number of years the property will be held for investment. The use of inappropriate assumptions would result in an incorrect valuation of the Company’s acquired tangible assets, identifiable intangibles and assumed liabilities, which would impact the amount of the Company’s net income. These allocations also impact depreciation expense and gains or losses recorded on future sales of properties.

Reportable Segments

Reportable Segments

ASC 280, Segment Reporting, establishes standards for reporting financial and descriptive information about an enterprise’s reportable segments. The Company has one reportable segment, income-producing retail properties, which consists of activities related to investing in real estate. The retail properties are geographically diversified throughout the United States, and the Company’s chief operating decision maker evaluates operating performance on an overall portfolio level.

Investments in Real Estate

Investments in Real Estate

Real property is recorded at cost, less accumulated depreciation and amortization. Costs include those related to acquisition, development and construction, including tenant improvements, interest incurred during development, costs of predevelopment and certain direct and indirect costs of development. Costs related to business combinations are expensed as incurred, and are included in transaction expense in the Company’s condensed consolidated statements of operations.

Depreciation and amortization is computed using a straight-line method over the estimated useful lives of the assets as follows:

	Years
Buildings and improvements	5-48 years
Exterior improvements	10-20 years
Equipment and fixtures	5-10 years

Tenant improvement costs recorded as capital assets are depreciated over the shorter of (1) the tenant’s remaining lease term or (2) the life of the improvement.

Expenditures for ordinary maintenance and repairs are expensed to operations as they are incurred. Significant renovations and improvements that improve or extend the useful lives of assets are capitalized.

Impairment of Long-lived Assets

Impairment of Long-lived Assets

The Company continually monitors events and changes in circumstances that could indicate that the carrying amounts of its investments in real estate and related intangible assets may not be recoverable. When indicators of potential impairment suggest that the carrying value of real estate and related intangible assets may not be recoverable, the Company assesses the recoverability by estimating whether the Company will recover the carrying value of the real estate and related intangible assets through its undiscounted future cash flows and its eventual disposition. If, based on this analysis, the Company does not believe that it will be able to recover the carrying value of the real estate and related intangible assets and liabilities, the Company would record an impairment loss to the extent that the carrying value exceeds the estimated fair value of the investments in real estate and related intangible assets. Key inputs that the Company estimates in this analysis include projected rental rates, capital expenditures and property sales capitalization rates. The Company did not record any impairment loss on its investments in real estate and related intangible assets during the three months ended March 31, 2013 and 2012.

Assets Held-for-Sale and Discontinued Operations

Assets Held-for-Sale and Discontinued Operations

When certain criteria are met, long-lived assets are classified as held-for-sale and are reported at the lower of their carrying value or their fair value less costs to sell and are no longer depreciated. Discontinued operations is a component of an entity that has either been disposed of or is deemed to be held-for-sale and (i) the operations and cash flows of the component have been or will be eliminated from ongoing operations as a result of the disposal transaction and (ii) the entity will not have any significant continuing involvement in the operations of the component after the disposal transaction.

Fair Value Measurements

Fair Value Measurements

Under GAAP, the Company is required to measure certain financial instruments at fair value on a recurring basis. In addition, the Company is required to measure other financial instruments and balances at fair value on a non-recurring basis (e.g., carrying value of impaired real estate loans receivable and long-lived assets). Fair value is defined as the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The GAAP fair value framework uses a three-tiered approach. Fair value measurements are classified and disclosed in one of the following three categories:

• Level 1: unadjusted quoted prices in active markets that are accessible at the measurement date for identical assets or liabilities;

• Level 2: quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-derived valuations in which significant inputs and significant value drivers are observable in active markets; and

• Level 3: prices or valuation techniques where little or no market data is available that requires inputs that are both significant to the fair value measurement and unobservable.

When available, the Company utilizes quoted market prices or other observable inputs (Level 2 inputs), such as interest rates or yield curves, from independent third-party sources to determine fair value and classify such items in Level 1 or Level 2. In instances where the market for a financial instrument is not active, regardless of the availability of a nonbinding quoted market price, observable inputs might not be relevant and could require the Company to use significant judgment to derive a fair value measurement. Additionally, in an inactive market, a market price quoted from an independent third party may rely more on models with inputs based on information available only to that independent third party. When the Company determines the market for an asset owned by it to be illiquid or when market transactions for similar instruments do not appear orderly, the Company uses several valuation sources (including internal valuations, discounted cash flow analysis and quoted market prices) and establishes a fair value by assigning weights to the various valuation sources. Additionally, when determining the fair value of liabilities in circumstances in which a quoted price in an active market for an identical liability is not available, the Company measures fair value using (i) a valuation technique that uses the quoted price of the identical liability when traded as an asset or quoted prices for similar liabilities when traded as assets or (ii) another a present value technique that considers the future cash flows based on contractual obligations discounted by an observed or estimated market rates of comparable liabilities. The use of contractual cash flows with regard to amount and timing significantly reduces the judgment applied in arriving at fair value.

Changes in assumptions or estimation methodologies can have a material effect on these estimated fair values. In this regard, the derived fair value estimates cannot be substantiated by comparison to independent markets and, in many cases, may not be realized in an immediate settlement of the instrument.

The Company considers the following factors to be indicators of an inactive market: (1) there are few recent transactions, (2) price quotations are not based on current information, (3) price quotations vary substantially either over time or among market makers (for example, some brokered markets), (4) indexes that previously were highly correlated with the fair values of the asset or liability are demonstrably uncorrelated with recent indications of fair value for that asset or liability, (5) there is a significant increase in implied liquidity risk premiums, yields, or performance indicators (such as delinquency rates or loss severities) for observed transactions or quoted prices when compared with the Company’s estimate of expected cash flows, considering all available market data about credit and other nonperformance risk for the asset or liability, (6) there is a wide bid-ask spread or significant increase in the bid-ask spread, (7) there is a significant decline or absence of a market for new issuances (that is, a primary market) for the asset or liability or similar assets or liabilities, and (8) little information is released publicly (for example, a principal-to-principal market).

The Company considers the following factors to be indicators of non-orderly transactions: (1) there was not adequate exposure to the market for a period before the measurement date to allow for marketing activities that are usual and customary for transactions involving such assets or liabilities under current market conditions, (2) there was a usual and customary marketing period, but the seller marketed the asset or liability to a single market participant, (3) the seller is in or near bankruptcy or receivership (that is, distressed), or the seller was required to sell to meet regulatory or legal requirements (that is, forced), and (4) the transaction price is an outlier when compared with other recent transactions for the same or similar assets or liabilities.

Deferred Financing Costs

Deferred Financing Costs

Deferred financing costs represent commitment fees, loan fees, legal fees and other third-party costs associated with obtaining financing. These costs are amortized over the terms of the respective financing agreements using the straight-line method which approximates the effective interest method. Unamortized deferred financing costs are expensed when the associated debt is refinanced or repaid before maturity. Costs incurred in seeking financings that do not close are expensed in the period in which it is determined that the financing will not close.

Income Taxes

Income Taxes

The Company has elected to be taxed as a REIT under the Internal Revenue Code. To qualify as a REIT, the Company must meet certain organizational and operational requirements, including a requirement to distribute at least 90% of the Company’s annual REIT taxable income to stockholders (which is computed without regard to the dividends-paid deduction or net capital gain and which does not necessarily equal net income as calculated in accordance with GAAP). As a REIT, the Company generally will not be subject to federal income tax on income that it distributes as dividends to its stockholders. If the Company fails to qualify as a REIT in any taxable year, it will be subject to federal income tax on its taxable income at regular corporate income tax rates and generally will not be permitted to qualify for treatment as a REIT for federal income tax purposes for the four taxable years following the year during which qualification is lost, unless the Internal Revenue Service grants the Company relief under certain statutory provisions. Such an event could materially and adversely affect the Company’s net income and net cash available for distribution to stockholders. However, the Company believes that it is organized and operates in such a manner as to qualify for treatment as a REIT. The Company may also be subject to certain state or local income taxes, or franchise taxes.

The Company evaluates tax positions taken in the financial statements under the interpretation for accounting for uncertainty in income taxes. As a result of this evaluation, the Company may recognize a tax benefit from an uncertain tax position only if it is “more-likely-than-not” that the tax position will be sustained on examination by taxing authorities.

When necessary, deferred income taxes are recognized in certain taxable entities. Deferred income tax is generally a function of the period’s temporary differences (items that are treated differently for tax purposes than for financial reporting purposes). A valuation allowance for deferred income tax assets is provided if all or some portion of the deferred income tax asset may not be realized. Any increase or decrease in the valuation allowance is generally included in deferred income tax expense.

The Company’s tax returns remain subject to examination and consequently, the taxability of the distributions is subject to change.

Earnings Per Share

Earnings Per Share

Basic earnings per share (“EPS”) is computed by dividing net income (loss) applicable to common stockholders by the weighted average number of shares of common stock outstanding during the period. Diluted EPS is computed after adjusting the basic EPS computation for the effect of potentially dilutive securities outstanding during the period. The effect of non-vested shares, if dilutive, is computed using the treasury stock method. The Company accounts for unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents (whether paid or unpaid) as participating securities, which are included in the computation of earnings per share pursuant to the two-class method. The Company’s excess of distributions over earnings related to participating securities are shown as a reduction in income (loss) applicable to common stockholders in the Company’s computation of EPS.

Reclassification

Reclassification

Certain amounts from the prior year have been reclassified to conform to current period presentation. Assets sold or held-for-sale have been reclassified on the condensed consolidated balance sheets and the related operating results reclassified from continuing to discontinued operations on the condensed consolidated statements of operations and condensed consolidated statements of cash flows.