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
12/6/19

Oil Prices Up for the Week
Posted on Thursday December 05, 2019

Both WTI and Brent are up for the week, but only one of the benchmarks is up dramatically for the period.

Chevron Invests in Electric Motor Maker
Posted on Thursday December 05, 2019

Chevron Technology Ventures has invested in an electric motor manufacturer that aims to disrupt the oil and gas and other industries.

Petrofac Mulls Offshore Oil Asset Sale in Malaysia
Posted on Thursday December 05, 2019

Petrofac Ltd., the U.K.-listed oilfield service provider, is weighing a sale of its Malaysian assets for about $300 million.

US Drops Five Oil Rigs
Posted on Thursday December 05, 2019

The U.S. idled five oil rigs and added two gas rigs for a net loss of three rigs this week.

US Loses Thousands of Upstream Jobs in November
Posted on Thursday December 05, 2019

The U.S. saw a sharp decline in support activities for mining in November, according to data released Friday from the U.S. Bureau of Labor Statistics.

Halliburton Confirms More Layoffs in Oklahoma
Posted on Thursday December 05, 2019

Halliburton has confirmed job cuts in Duncan, Oklahoma, just days after closing a facility in El Reno, Oklahoma.

OPEC+ Agrees to Redistribute Oil Cuts
Posted on Thursday December 05, 2019

OPEC+ will adjust its output target and redistribute production cuts between its members under pressure from Saudi Arabia.

Solstad Announces Several Contract Awards in Dec
Posted on Thursday December 05, 2019

Solstad Offshore ASA has announced several contract awards this month already.

Providence Founder Steps Down
Posted on Thursday December 05, 2019

Tony O'Reilly has stepped down from the position of chief executive officer of Providence Resources and resigned from the board with immediate effect.

Aramco Raises $25.6B in World's Biggest IPO
Posted on Thursday December 05, 2019

Saudi Aramco raised $25.6 billion from the world's biggest initial public offering.

Wall Street Journal
Commercial News

12/6/19

WSJ.com: US Business

Trump Administration Weighs Putting Amazon Foreign Sites on 'Notorious Markets' List
The Trump administration is considering putting some of Amazon.com Inc.?s overseas operations on a list of global marketplaces known for counterfeit goods, according to people familiar with the matter.

Facebook in Talks to Add More New York Office Space
Facebook is in talks to lease a landmark Manhattan building in a deal that would make it one of New York?s largest corporate tenants and would help offset the lack of Amazon?s second headquarters earlier planned for the city.

'The Irishman' Isn't Netflix's Biggest Splash Despite Big Stars and Director
Netflix?s mob drama ?The Irishman? attracted 13.2 million viewers in the U.S. during its first five days of availability, according to Nielsen, well short of the streaming service?s best-performing movie title, ?Bird Box,? which cost far less to make.

Disney in Japan Apologizes for Influencers' Tweets on 'Frozen 2'
Walt Disney?s Japan unit apologized after artists it hired to endorse its ?Frozen 2? movie on Twitter failed to label the tweets as promotional.

Disney Disturbs the Force: Pleasing Star Wars Fans Complicates Saga
?The Rise of Skywalker? looms as a big hit and everyone loves Baby Yoda. But there?s also a disgruntled contingent of fans, a string of fired directors, a movie spinoff that left audiences cold and a decline in ticket sales. ?We?re gonna hit pause.?

Strong U.S. Hiring Eases Concerns About Economy
The U.S. job market strengthened in November, as employers added 266,000 jobs and unemployment matched a 50-year low, fueling the economic expansion.

November Jobs Report Affirms Fed Officials' Make-No-Moves Stance
Federal Reserve officials will feel comfortable maintaining their wait-and-see posture on interest rates after Friday?s report showing robust U.S. hiring in November.

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