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
10/20/17

Chevron Approves New Tech Investment To Raise Output At North Sea Field
Posted on Thursday October 19, 2017

Chevron approves an investment to increase output from its Captain oilfield by using a new water-injection technology for the first time in the North Sea, the company says.

Schlumberger, Baker Hughes Warn Of N. America Slowdown
Posted on Thursday October 19, 2017

Schlumberger and Baker Hughes warned of a slowdown in North America and a challenging year ahead.

BP Chairman Svanberg to Retire; Search Starts for Successor
Posted on Wednesday October 18, 2017

BP's Chairman Carl-Henric Svanberg to retire.

Statement: Indonesia To Extend Inpex's Masela LNG Contract By 27 Years
Posted on Wednesday October 18, 2017

Indonesia has agreed with Inpex to extend the company's contract to operate the Masela natural gas field by up to 27 years.

Eni Looks To Strengthen Ties With Rosneft, Maybe In LNG
Posted on Wednesday October 18, 2017

Eni is keen to strengthen ties with Rosneft and could forge a partnership in the LNG sector.

Oil Drops More Than 1% On Profit Taking After 4 Days Of Gains
Posted on Wednesday October 18, 2017

Oil prices fell more than 1%, breaking four days of gains.

Juncker: No EU Unity For Russia Nord Stream 2 Talks
Posted on Wednesday October 18, 2017

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World's Biggest Oil Traders See Wildly Diverging Crude Price
Posted on Wednesday October 18, 2017

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In 'Energy City' USA, Hurricane Harvey's Fury Is Still Lingering
Posted on Wednesday October 18, 2017

It took five weeks for the largest US oil refinery to get back to normal after Hurricane Harvey.

Wall Street Journal
Commercial News

10/20/17

WSJ.com: Commercial Real Estate

'Little India' Thrives in Central New Jersey
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NYC's Pearl River Mart Will Expand to Chelsea Market
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Office Spaces Focusing More on Communal Areas
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Chocolate Giant Ferrero to Look for Innovation at Cornell Tech
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Shortage of Industrial Space on Long Island Squeezes Tenants
Long Island?s shrinking industrial space has placed expanding tenants in a tough spot, forcing them to look east to Suffolk County and off the island entirely, according to real-estate services firm JLL.

Supermarkets Face a Growing Problem: Too Much Space
A massive build-out by retailers has left the country piled up with grocery shelves as consumers shift from big weekly shopping trips to more snacking and to-go meals.

Excuse Me, You're Blocking My Sun
Australia?s rapid embrace of rooftop panels?now installed on one in four homes in some areas?has collided with another hot spot of investment, construction of apartments and homes.

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