EFTA02639973.pdf

From: Jaeger, Bruce < Sent: Friday, August 18, 2017 8:35 PM To: jeffrey E. Subject: RE: REIT Operating Units Jeffrey- As discussed, please call me on Monday once you determine that the client is comfortable with disclosing their REIT holdings. In addition to the potential loan against the REIT operating units, if the underlying REIT is liquid and the GP is a willing party, contributing the operating units to an exchange fund may be an interesting way to diversify without triggering a taxable event. In the event the exchange fund accepts the operating units, a loan against more liquid collateral may be more beneficial for your client. Once we get clearance we can explore both options. Thank you Have a nice week end. Bruce Bruce W. Jaeger Director/Investments I STIFEL Direct: I Mobile: I Fax: E-mail: <mailto > I www.stifel.com <http://www.stifel.com/> 3 Bryant Park I 3rd Floor I New York, NY 10036 From: jeffrey E. [mailto:jeevacation@gmailcom] Sent: Tuesday, August 08, 2017 4:14 PM To: Jaeger, Bruce (New York 3 Bryant) Subject: Re: REIT Operating Units EFTA_R1_01872655 EFTA02639973 i assume there is tax risk if they have to exchange for shares or cash. . the holder will geta capital gain? On Tue, Aug 8, 2017 at 2:51 PM, Jaeger, Bruce < <mailto > wrote: For Information & Discussion Purposes Only Stifel Bank & Trust has issued non-purpose loan(s) using Convertible REIT Operating Units as collateral. The Client, Bank and REIT were subject to a Tri-party collateral agreement. In the event of a default, Stifel Bank could "put" the operating units back to the GP and the REIT, at their discretion within a reasonable period of time, would redeem the units for either cash or freely tradeable securities. This loan structure required a "user friendly GP" that was willing to accommodate their significant shareholder. The Bank cannot accept more than 9.5% of the company shares to limit the affiliate issue in the event of a default. To hedge the loan and potential collateral call(s), the client could enter into a proxy hedge subject to correlation and disclosure risk. The nature of the facility can be in the form of either a demand loan or committed facility with fees to be negotiated separately for each structure. The size and LTV are dependent upon the Bank's appetite for risk, counterparty, internal concentration limits, assets held at the firm as well as other applicable criteria. It is helpful to know the exact restriction(s) on the units and if they are in certificated or book entry form. Another possible solution would be to have the client contribute the operating units to an Exchange Fund and then post the exchange fund units as Collateral for the loan. This is subject to another set of criteria which uses the diversified exchange fund units as collateral for a loan. We are not sure if the Exchange Fund would accept "operating" units but, for tax efficiency, the units would need to be contributed to the fund and then converted into shares by the fund subject to regulatory requirements. Happy to do more work but, I would need to know the particulars of the shareholder and their holdings. Let me know how you wish to proceed. Best regards- Bruce 2 EFTA_R1_01872656 EFTA02639974 From: Jeffrey E. [mailto:jeevacation@gmailcom) Sent: Tuesday, August 08, 2017 9:43 AM To: Jaeger, Bruce (New York 3 Bryant) Subject: Re: REIT Operating Units tell me the structure ? On Tue, Aug 8, 2017 at 9:39 AM, Jaeger, Bruce < <mailto > wrote: Jeffrey, Good catching up this am. I did a little due diligence and we DO structure loan facilities against REIT Operating Units out of our Stifel Bank & Trust. Let me know how you wish to proceed. Best regards, Bruce Bruce W. Jaeger Director/Investments I STIFEL Direct: > I Mobile: > I Fax: E-mail: <mailto > I www.stifel.com <http://www.stifel.com/> 3 Bryant Park I 3rd Floor I New York, NY 10036 This message, and any of its attachments, is for the intended recipient(s) only, and it may contain information that is privileged, confidential, and/or proprietary and subject to important terms and conditions available at http://www.stifel.com/disclosures/emaildisclaimers/. If you are not the intended recipient, please delete this message and immediately notify the sender. No confidentiality, privilege, or property rights are waived or lost by any errors in transmission. 3 EFTA_R1_01872657 EFTA02639975  please note The information contained in this communication is confidential, may be attorney-client privileged, may constitute inside information, and is intended only for the use of the addressee. It is the property of JEE Unauthorized use, disclosure or copying of this communication or any part thereof is strictly prohibited and may be unlawful. If you have received this communication in error, please notify us immediately by return e-mail or by e-mail to [email protected] <mailto:[email protected]> , and destroy this communication and all copies thereof, including all attachments. copyright -all rights reserved please note The information contained in this communication is confidential, may be attorney-client privileged, may constitute inside information, and is intended only for the use of the addressee. It is the property of JEE Unauthorized use, disclosure or copying of this communication or any part thereof is strictly prohibited and may be unlawful. If you have received this communication in error, please notify us immediately by return e-mail or by e-mail to [email protected] <mailto:[email protected]> , and destroy this communication and all copies thereof, including all attachments. copyright -all rights reserved 4 EFTA_R1_01872658 EFTA02639976