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
8/20/19

Oil Prices Keep Climbing
Posted on Monday August 19, 2019

WTI and Brent finished higher for the third consecutive trading day.

US Sanctions Force Iran to Ditch Cleaner Fuels Push
Posted on Monday August 19, 2019

Iran is about to burn a lot more fuel oil as a result of U.S. sanctions and new global shipping rules, reversing the nation's progress in switching to cleaner-burning natural gas.

BHGE Wins Louisiana LNG Project
Posted on Monday August 19, 2019

Earlier Tuesday, Venture Global noted that it had reached a favorable final investment decision and closed project financing.

Newly-Formed Indianola Energy Gets $100MM Equity Commitment
Posted on Monday August 19, 2019

U.S. investment firm Kayne Anderson has launched a new venture to pursue the acquisition and development of highly-proven resource plays in North America.

Motiva to Join US Chemical Industry
Posted on Monday August 19, 2019

Flint Hills Resources' Port Arthur Chemical Plant in Southeast Texas. PHOTO SOURCE: Flint Hills Resources

Shale Bond Buyers Get Picky
Posted on Monday August 19, 2019

After years pouring funds into the shale boom, bond buyers are getting increasingly selective.

Aramco Said to Pick Lazard and Moelis for IPO
Posted on Monday August 19, 2019

Saudi Aramco has picked Lazard Ltd and Moelis and Co to advise on the oil giant's second attempt at the world's largest IPO, people with knowledge of the matter said.

Subsea 7 Urges Engineers to Convert to Oil
Posted on Monday August 19, 2019

Subsea 7 is inviting experienced engineers from all sectors to forge a new career in the subsea oil and gas industry.

Equinor Makes Sputnik Oil Find
Posted on Monday August 19, 2019

Equinor makes an oil discovery in the Sputnik exploration well offshore Norway.

Oil Steadies as Demand Concerns Allayed
Posted on Monday August 19, 2019

Oil steadied near $56 a barrel as hints of trade detente between the U.S. and China and the prospect of monetary stimulus buoyed financial markets.

Wall Street Journal
Commercial News

8/20/19


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Charles Elfsten, President
Charles A. Elfsten
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