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
1/19/18

Decision On Oil Pact Could Come In Late Spring, Early Summer-Russian Dep PM
Posted on Thursday January 18, 2018

A decision on global oil output cuts could be made in late spring or early summer.

Schlumberger Posts Bigger Fourth-Quarter Loss On Charges
Posted on Thursday January 18, 2018

Oilfield services provider Schlumberger posts a bigger quarterly loss than a year earlier.

Russia's Transneft: Oil Pipeline Fire Will Not Affect Export Schedule
Posted on Thursday January 18, 2018

A fire at the Samara-Tikhoretsk pipeline will not affect Russia's oil export schedule.

Mexico's Energy Opening Faces Test In Deepwater Oil Auction
Posted on Thursday January 18, 2018

An auction of deepwater oil and gas fields in Mexico this month may prove the last major opportunity for President Enrique Pena Nieto's government to capitalize on its opening of the energy sector.

VNG to Explore Strategic Options to Maximize E&P Business Value
Posted on Thursday January 18, 2018

VNG AG looking to explore 'strategic options' to maximize the value of its oil and gas exploration and production business in Norway and Denmark.

New Cepsa, Sonatrach Contract Expected to Generate 1,500 Jobs
Posted on Thursday January 18, 2018

New contract in Algeria is expected to lead to the generation of up to 1,500 new jobs.

CHC Reaffirms Commitment to North Sea Energy Sector
Posted on Thursday January 18, 2018

Helicopter services company CHC breaks ground on a $6 million redevelopment of its Aberdeen base.

Significant Commercial Gas Discovery Found Onshore Italy
Posted on Thursday January 18, 2018

A significant commercial gas discovery has been made at the Selva gas field in northern Italy, Po Valley Energy Limited (PVE) confirms.

Glut Fears Thwart Oil Rebound After Record Draw From Storage Hub
Posted on Wednesday January 17, 2018

A record draw from America's largest crude storage hub helped lift prices from the day's lows, but not enough to ease fears.

Crisis-Hit Venezuela's Oil Output Plummets In 2017 To Decades Low
Posted on Wednesday January 17, 2018

Venezuela's crude oil production fell nearly 13% last year, according to figures released by OPEC.

Wall Street Journal
Commercial News

1/19/18

WSJ.com: Commercial Real Estate

NYC Council Stops Midtown Tower Construction
Work on an 800-foot-tall tower in East Midtown that has been under construction for six months was halted last week following a vote by the New York City Council to limit skyscrapers in the area,.

Malls Never Wanted Gyms. Now They Court Them
Mall owners long treated gyms, massage parlors, and billiards halls as unwanted tenants that attracted lower-rent visitors who were unlikely to shop. Now they?re giving health clubs some of their best real estate.

New Jersey Office Rents Near Records
Asking rents for New Jersey office space are nearing records as landlords undertake extensive renovations and fill older properties with top-notch amenities.

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.

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