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 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 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
11/20/17

Officials: BP, Eni Interested In Developing Iraq's Majnoon Oilfield
Posted on Sunday November 19, 2017

BP and Eni are among companies that have expressed an interest in developing the giant Majnoon oilfield.

Oil Eases As Traders, Investors Grow Edgy Ahead Of OPEC
Posted on Sunday November 19, 2017

Oil prices fell 0.8%, extending recent weakness ahead of next week's OPEC meeting.

ADNOC Pushes Ahead With IPO After Emaar Sale
Posted on Sunday November 19, 2017

Abu Dhabi National Oil Co. plans to sell as much as 20% of its fuel-distribution unit.

Sources: Two Alberta Oil Sands Upgraders Warn Customers Of Volume Cuts
Posted on Sunday November 19, 2017

Two oil sands upgraders in Alberta have warned customers about cuts to synthetic crude output.

BP Seeks Stake In Cairn Energy Senegal Assets
Posted on Sunday November 19, 2017

Cairn Energy is in talks with BP to sell a 30% stake offshore Senegal.

Russia's Rosneft Signs Oil Supply Deal With Greece's Motor Oil
Posted on Sunday November 19, 2017

Rosneft and Greece's Motor Oil Hellas Corinth Refineries have signed a deal on mutual supplies of crude oil and oil products.

Media: Three Dead After Suspected Gas Leak At PetroChina Refinery
Posted on Sunday November 19, 2017

Three workers are killed and six others injured during a suspected gas leak.

Ancala Acquires Apache's Two North Sea Gas Pipeline Assets
Posted on Sunday November 19, 2017

Ancala Partners finalizes its acquisition of Apache's interests in two North Sea gas pipeline assets.

Keystone XL Clears Major Obstacle in Nebraska
Posted on Sunday November 19, 2017

Nebraska panel clears path for Keystone XL.

Shell, Bio-Bean Power London Buses with Coffee Ground Biofuel
Posted on Sunday November 19, 2017

Royal Dutch Shell plc and Bio-Bean team up to help power London buses with a biofuel made partly from waste coffee grounds.

Wall Street Journal
Commercial News

11/20/17

WSJ.com: Commercial Real Estate

Brookfield Property Makes $14.8 Billion Offer to Acquire Rest of GGP
Brookfield Property Partners LP has made a $14.8 billion offer to acquire the shares of mall owner GGP Inc. that it doesn?t already own, according to people familiar with the matter.

'Little India' Thrives in Central New Jersey
Oak Tree Road, known as ?Little India,? has been transformed from a rundown and desolate area to a booming ethnic business district that attracts South Asian customers from Maine to Maryland.

NYC's Pearl River Mart Will Expand to Chelsea Market
Pearl River Mart, once a casualty of skyrocketing retail rents, is planning to open another 3,500 square-foot store at Chelsea Market in Manhattan.

Office Spaces Focusing More on Communal Areas
Businesses are beginning to design offices spaces that are increasing the amount of square footage per employee when shared work settings are taken into account.

Chocolate Giant Ferrero to Look for Innovation at Cornell Tech
Ferrero, Italian manufacturer of sweets and chocolates, is setting up an innovation outpost at Cornell University?s technology campus on Roosevelt Island in New York City.

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.

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