Bill Text: TX SB1008 | 2015-2016 | 84th Legislature | Enrolled
Bill Title: Relating to the authority of certain domestic life, health, and accident insurance companies to make investments in mezzanine real estate loans.
Spectrum: Partisan Bill (Republican 2-0)
Status: (Passed) 2015-06-01 - Effective on 9/1/15 [SB1008 Detail]
Download: Texas-2015-SB1008-Enrolled.html
S.B. No. 1008 |
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relating to the authority of certain domestic life, health, and | ||
accident insurance companies to make investments in mezzanine real | ||
estate loans. | ||
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: | ||
SECTION 1. Subchapter C, Chapter 425, Insurance Code, is | ||
amended by adding Section 425.1185 to read as follows: | ||
Sec. 425.1185. AUTHORIZED INVESTMENTS: MEZZANINE REAL | ||
ESTATE LOANS. (a) In this section, "mezzanine real estate loan" | ||
means a loan that is secured by a pledge of direct or indirect | ||
equity interests in an entity that owns real estate. | ||
(b) Subject to Subsections (c) and (d), an insurance company | ||
with more than $10 billion in admitted assets may invest in a | ||
mezzanine real estate loan if the loan documents: | ||
(1) require that each pledgor abstain from granting an | ||
additional security interest in the equity interest pledged; | ||
(2) employ techniques to minimize the likelihood or | ||
impact of a bankruptcy filing by the real estate owner or the | ||
mezzanine real estate loan borrower; and | ||
(3) require the real estate owner or the mezzanine | ||
real estate loan borrower to: | ||
(A) hold no assets other than, in the case of the | ||
owner, the real estate, and in the case of the borrower, the equity | ||
interests in the entity; | ||
(B) not engage in any business other than, in the | ||
case of the owner, the ownership and operation of the real estate, | ||
and in the case of the borrower, holding an ownership interest in | ||
the owner; and | ||
(C) not incur additional debt, other than limited | ||
trade payables, a first mortgage loan, or the mezzanine real estate | ||
loan. | ||
(c) Before making an initial investment in a mezzanine real | ||
estate loan, an insurance company shall corroborate that the sum of | ||
the first mortgage on the real estate and the mezzanine real estate | ||
loan does not exceed 100 percent of the value of the current | ||
appraised value of the real estate. | ||
(d) An insurance company's cumulative investment under this | ||
section may not exceed three percent of the insurance company's | ||
admitted assets. | ||
SECTION 2. Section 425.1185, Insurance Code, as added by | ||
this Act, applies only to an investment made on or after the | ||
effective date of this Act. An investment made before the effective | ||
date of this Act is governed by the law as it existed immediately | ||
before that date, and that law is continued in effect for that | ||
purpose. | ||
SECTION 3. This Act takes effect September 1, 2015. | ||
______________________________ | ______________________________ | |
President of the Senate | Speaker of the House | |
I hereby certify that S.B. No. 1008 passed the Senate on | ||
April 30, 2015, by the following vote: Yeas 31, Nays 0. | ||
______________________________ | ||
Secretary of the Senate | ||
I hereby certify that S.B. No. 1008 passed the House on | ||
May 19, 2015, by the following vote: Yeas 146, Nays 0, two | ||
present not voting. | ||
______________________________ | ||
Chief Clerk of the House | ||
Approved: | ||
______________________________ | ||
Date | ||
______________________________ | ||
Governor |