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
6/15/19

Oil Prices Down for the Week
Posted on Thursday June 13, 2019

The WTI is down 2.7 percent and Brent is down two percent.

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HEP's expanded terminal facility in Port Arthur, Texas. PHOTO: Business Wire

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But major producers are wary of scooping up smaller rivals as would-be sellers are demanding too much money.

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Blocking the Nord Stream 2 link under the Baltic Sea would be a blow to Russia, keeping it dependent on Ukraine as a gas export corridor.

Permian NGL Access a Plus for Exxon-Sabic Project
Posted on Thursday June 13, 2019

A new Corpus Christi-area ethane steam cracker complex will enjoy closer proximity to a major source of natural gas liquids feedstocks than other Texas Gulf Coast sites.

Schulich Buys 5 Percent of MEG Energy
Posted on Thursday June 13, 2019

Canadian investor Seymour Schulich says he bought about 5 percent of MEG Energy Corp.

Investors Focus on Trade War
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For now, the war that really worries oil investors is the deepening trade conflict between the U.S. and China.

Aker Solutions Appoints New CFO
Posted on Thursday June 13, 2019

Aker Solutions has appointed Ole Martin Grimsrud as its new chief financial officer.

IEA Cuts Oil Demand Growth Forecast Again
Posted on Thursday June 13, 2019

The International Energy Agency now sees global oil demand growth at 1.2 million barrels per day in 2019.

Wall Street Journal
Commercial News

6/15/19


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