Since 1977, we have been experts in providing financing solutions in the form of Real Estate Trust Preferred Securities (TRuPS)
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REAL ESTATE TRUST
PREFERRED SECURITIES
(TRuPS)

 

Ocean Pacific Capital has been providing the best Commercial Real Estate financing for clients since 1977. We have extensive experience in providing financing solutions in the form of Real Estate Trust Preferred Securities (TRuPS). Real Estate Trust Preferred Securities or TRuPS for short are similar to debentures and preferreds that is generally longer term, has early redemption features, makes quarterly fixed interest payments, and matures at face value.

Trust preferreds have been created by companies for their favorable accounting treatments and flexibility. Specifically, these securities are taxed like debt obligations by the IRS, while having many characteristics of equities. They are recorded as debt in a company's accounting statements as according to GAAP procedures, but may be treated as capital for regulatory purposes.Because the interest paid to the trust is tax deductible, the company may enjoy a significantly lower cost of funding.

They offer many advantages over other funding choices including equity or secured/unsecured debt. They are cost effective and typically will improve ROE if used as a substitue for equity. Also the issuer can pick from a variety of pricing alternatives and have efficient execution time, with no marketing or SEC registration requirements.

Trust preferred securities (TRuPS) are cumulative preferred stock issued by bank holding companies through a special purpose vehicle. For the issuing bank holding company, TruPS combine benefits of both debt and equity.

The special purpose vehicle is wholly owned by the bank holding company and is usually a trust. It sells the TruPS to investors and uses the proceeds to purchase a subordinated note from the bank holding company. This becomes its sole asset, and cash flows from the note largely mirror the dividends payable on the TRuPS. The note has an initial maturity of at least 30 years. Dividends are paid quarterly or semi-annually. Dividends may be deferred for at least five years without creating an event of default or acceleration.

From a tax standpoint, TRuPS have a significant advantage over the direct issuance of preferred shares. This is because dividends on preferred shares are not deductible as a business expense, but interest on a subordinated note is. In this regard, the TRuPS behaves like debt. In another regard, it behaves like equity. In 1996, the Federal Reserve ruled that up to 25% of a bank holding companies tier 1 capital may comprise TRuPS or directly-issued preferred stock. In 2005, the Fed reaffirmed this treatment of TRuPS after FASB modified the accounting treatment of TRuPS under GAAP.

Initially, TRuPS were only issued by larger bank holding companies. This changed in 2000, when several institutions issued TRuPS, which were pooled in a CDO. Since then, the TRuPS CDO market has grown dramatically and has become a significant source of capital for small and medium sized bank holding companies. Contact one of our best TRuPS specialists today for a free consultation at 1-800-595-1474 or fill out a simple information request form.

 


Whatever your financing needs,
we will tailor a loan that's right for you.

 
 
 


Daily Oil & Gas and Wall Street Journal News
9/20/20

Wellesley Petroleum drills dry hole in North Sea PL 829
Posted on Friday September 18, 2020

Wellesley Petroleum AS drilled a dry hole in North Sea production license 829, about 75 km north of Gjøa field and 60 km northwest of Florø in 211 m of water.

Vintage completes Vali development concept
Posted on Thursday September 17, 2020

The Vintage Energy Ltd.-led joint venture in southwest Queensland Cooper basin permit ATP 2021 completed the development concept for Vali gas field.

BW Energy plans Hibiscus-Ruche development via converted jack up
Posted on Wednesday September 16, 2020

BW Energy provided an alternative development plan for Hibiscus-Ruche, in the Dussafu Marin permit and associated Ruche Exclusive Exploitation Area offshore Gabon.

Theia Energy moves Great Sandy Desert exploration project forward
Posted on Monday August 31, 2020

Theia Energy has entered a land use agreement with the Karajarri Traditional Lands Association enabling the company to move forward with its unconventional oil and gas exploration plans in the onshore Canning basin permit EP 493.

Triangle placement and share purchase plan to fund Cliff Head work
Posted on Thursday August 27, 2020

Triangle Energy (Global) Ltd., Perth, has raised $2.2 million (Aus.) through a share placement and intends to raise a further $1 million via a share purchase plan to current shareholders.

Wall Street Journal
Commercial News

9/20/20

WSJ.com: US Business

TikTok Deal Faces Questions Over Security, Ownership
An emerging deal to make China?s popular TikTok app a U.S.-based company stands to reshape the social-media landscape, even as questions persisted Sunday over security concerns and ownership of the new company.

China Has Reasons to Like TikTok's Trump-Approved Deal
A White House-approved plan to transform TikTok into a U.S.-based company would keep the operation of the viral short-video app, and likely the algorithm that has powered its rise, in Chinese hands. This structure improves the deal?s chances of finding favor in Beijing, which had threatened to veto a sale.

WeChat Ban Blocked by Federal Judge in Ruling Against Trump Administration
A federal judge temporarily blocked the Trump administration?s executive order curbing Americans? use of WeChat, agreeing with free-speech arguments raised by users of the popular Chinese-owned messaging and e-commerce app.

Meat Was Once in Short Supply. Now, It's on Sale.
Prices for meat are falling at grocery stores as last spring?s shortages fade and livestock clog farms, benefiting consumers but hurting meatpackers and farmers already hit by Covid-19 disruptions.

CEOs Start to Place Big Bets as Pandemic Grinds On
As the coronavirus?s spread continues in the U.S. and abroad, businesses have concluded they?ll coexist with it for some time. So they are reviving stalled operational plans, changing leaders and reissuing financial targets.

Pandemic Threatens to Widen Racial Homeownership Gap
The housing market has led the recovery from the pandemic-induced economic downturn as Americans have rushed to buy homes, but some analysts warn it may widen the longstanding gap in homeownership between Black and white Americans.

Jobless Rates in Northeast, West Are Highest in Nation
Unemployment rates in regions across the U.S. moved down this summer after peaking in April, when the coronavirus first triggered widespread lockdowns. Still, jobless rates clocked in above 10% in 10 states.

BRE #:00619059
Charles Elfsten, President
Charles A. Elfsten
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