Financial instruments and methods

• US 20030225656A1
• Filed: 05/14/2003
• Published: 12/04/2003
• Est. Priority Date: 05/14/2003
• Status: Abandoned Application

• Current Assignee: Bank of America Corp.
• Original Assignee: Merrill Lynch and Company Incorporated (Bank of America Corp.)
• Inventors: Aberman, Robert, Stein, Russell L., Kaperst, Stuart C., Kaplan, Todd K., Krissel, Jonathan
• Application Number:
  US10/249,884
• Publication Number:
  US 20030225656A1
• Time in Patent Office: Days
• US Class Current: 705/36
• CPC Class Codes: G06Q 30/06 Buying, selling or leasing transactions
• CPC Class Codes: G06Q 40/04 Trading; Exchange, e.g. stocks, commodities, derivatives or currency exchange
• CPC Class Codes: G06Q 40/06 Asset management; Financial planning or analysis

Abstract

A business entity creates a real estate investment trust. The trust issues shares of preferred stock, each of which is associated with either a forward purchase contract obligating the holder to purchase common stock of business entity at a predetermined future time, or a warrant to purchase common stock. The preferred stock of the trust may be exchangeable for capital stock of the business entity upon the occurrence of a predetermined event. In this way the entity is able to insert capital with significant equity characteristics into its capital structure, and in the case of a financial institution, can provide favorable regulatory treatment of the capital that is raised.

Claims

1. A method for use in connection with a first entity possessing first assets and for use in connection with a plurality of investors, the method comprising the steps of:

establishing, by the first entity, a second entity holding real-estate-related assets;

issuing preferred stock of the second entity to the plurality of investors, each share of which is associated with an equity contract relating to the purchase by the holder of the preferred stock of common stock of the first entity;

at the second entity, monitoring to determine whether there are one hundred or more owners of the second entity;

at the second entity, monitoring to determine whether fifty percent or more of the second entity is owned by five or fewer owners;

at the second entity, paying out at least ninety percent of income of the second entity to shareholders in the form of dividends.

2. The method of claim 1 wherein the step of establishing the second entity is performed contemporaneously with the issuing of the preferred stock of the second entity to the plurality of shareholders.

3. The method of claim 1 wherein the equity contract is a forward contract obligating its holder to purchase common stock of the first entity at a date in the future.

4. The method of claim 1 wherein the second entity is a real estate investment trust.

5. The method of claim 1 further comprising the step of:

exchanging the preferred stock of the second entity for capital stock of the first entity upon the occurrence of a predetermined event.

6. The method of claim 5 wherein the predetermined event comprises an event indicative of financial distress of the first entity.

7. The method of claim 5 wherein the predetermined event comprises an event indicative of financial distress of the second entity.

8. The method of claim 5 wherein the capital stock for which the preferred stock of the second entity is exchanged is preferred stock of the first entity.

9. A method for use in connection with a first entity possessing first assets and for use in connection with a plurality of investors, the method comprising the steps of:

establishing, by the first entity, a second entity comprising a real estate investment trust; and

issuing preferred stock of the second entity to the plurality of investors, each share of which is associated with an equity contract relating to the purchase by the holder of the preferred stock of common stock of the first entity.

10. The method of claim 9 wherein the step of establishing the second entity is performed contemporaneously with the issuing of the preferred stock of the second entity to the plurality of shareholders.

11. The method of claim 9 wherein the equity contract is a forward contract obligating the holder of the stock to purchase common stock of the first entity at a date in the future.

12. The method of claim 9 wherein the second entity performs the further steps of:

monitoring to determine whether there are one hundred or more owners of the real estate investment trust;

monitoring to determine whether fifty percent or more of the second entity is owned by five or fewer owners;

paying out at least ninety percent of the income of the second entity to shareholders in the form of dividends.

13. The method of claim 9 wherein the second entity performs the further step of:

monitoring such requirements as allow the second entity to continue as a real estate investment trust.

14. The method of claim 9 further comprising the step of:

exchanging the preferred stock of the second entity for capital stock of the first entity upon the occurrence of a predetermined event.

15. The method of claim 14 wherein the predetermined event comprises an event indicative of financial distress of the first entity.

16. The method of claim 14 wherein the predetermined event comprises an event indicative of financial distress of the second entity.

17. The method of claim 14 wherein the capital stock for which the preferred stock of the second entity is exchanged is preferred stock of the first entity.

18. A system comprising first and second business entities;

the first entity comprising a corporation having shares of common stock outstanding;

the second entity comprising a corporation holding real-estate-related assets and deriving income therefrom;

the second entity further characterized as having shares of preferred stock outstanding;

the second entity having no fewer than 100 owners;

the second entity further characterized in that no five or fewer owners own fifty percent or more of the second entity;

the second entity further characterized as paying out no less than ninety percent of its income to shareholders in the form of dividends;

each share of preferred stock of the second entity associated with an equity contract relating to the purchase by the holder of the preferred stock of common stock of the first entity.

19. The system of claim 18 wherein the equity contract is a forward contract obligating its holder to purchase common stock of the first entity at a date in the future.

20. The system of claim 18 wherein the first entity is a financial institution.

21. The system of claim 20 wherein the second entity is a real estate investment trust.

22. The system of claim 20 wherein the preferred stock is exchangeable for capital stock of the first entity upon the occurrence of a predetermined event.

23. The system of claim 22 wherein the predetermined event comprises an event indicative of financial distress of the first entity.

24. The system of claim 22 wherein the predetermined event comprises an event indicative of financial distress of the second entity.

25. The system of claim 22 wherein the capital stock for which the preferred stock of the second entity is exchanged is preferred stock of the first entity.

26. A system comprising first and second business entities;

the first entity comprising a corporation having shares of common stock outstanding;

the second entity comprising a real estate investment trust holding real-estate-related assets and deriving income therefrom;

the second entity further characterized as having shares of preferred stock outstanding;

each share of preferred stock of the second entity associated with an equity contract relating to the purchase by the holder of the preferred stock of common stock of the first entity.

27. The system of claim 26 wherein the equity contract is a forward contract obligating its holder to purchase common stock of the first entity at a date in the future.

28. The system of claim 26 wherein the first entity is a financial institution.

29. The system of claim 26 wherein the first entity is company that is not a financial institution.

30. The system of claim 26 wherein the preferred stock is exchangeable for capital stock of the first entity upon the occurrence of a predetermined event.

31. The system of claim 30 wherein the predetermined event comprises an event indicative of financial distress of the first entity.

32. The system of claim 30 wherein the predetermined event comprises an event indicative of financial distress of the second entity.

33. The system of claim 30 wherein the capital stock for which the preferred stock of the real estate investment trust is exchanged is preferred stock of the first entity.

34. A method for use in connection with a financial institution regulated by the Federal Reserve Board and possessing first assets, the method for use in connection with a plurality of investors, the method comprising the steps of:

establishing, by the financial institution, a second entity holding real-estate-related assets;

issuing preferred stock of the second entity to the plurality of investors, each share of which is associated with an equity contract relating to the purchase by the holder of the preferred stock of common stock of the first entity;

at the second entity, monitoring to determine whether there are one hundred or more owners of the second entity;

at the second entity, monitoring to determine whether fifty percent or more of the second entity is owned by five or fewer owners;

at the second entity, paying out at least ninety percent of income of the second entity to shareholders in the form of dividends;

whereby the Tier 1 or Tier 2 capitalization of the financial institution is increased.

35. The method of claim 34 wherein the step of establishing the second entity is performed contemporaneously with the issuing of the preferred stock of the second entity to the plurality of shareholders.

36. The method of claim 34 wherein the equity contract is a forward contract obligating the holder of the stock to purchase common stock of the financial institution at a date in the future.

37. The method of claim 34 wherein the second entity is a real estate investment trust.

38. The method of claim 34 further comprising the step of:

exchanging the preferred stock of the second entity for capital stock of the financial institution upon the occurrence of a predetermined event.

39. The method of claim 38 wherein the predetermined event comprises an event indicative of financial distress of the financial institution.

40. The method of claim 38 wherein the predetermined event comprises an event indicative of financial distress of the second entity.

41. The method of claim 38 wherein the capital stock for which the preferred stock of the second entity is exchanged is preferred stock of the financial institution.

42. A method for use in connection with a financial institution regulated by a regulator and possessing first assets, the method for use in connection with a plurality of investors, the method comprising the steps of:

establishing, by the financial institution, second entity comprising a real estate investment trust;

issuing preferred stock of the real estate investment trust to the plurality of investors, each share of which is associated with an equity contract relating to the purchase by the holder of the preferred stock of common stock of the first entity;

whereby the Tier 1 or Tier 2 capitalization of the financial institution is increased.

43. The method of claim 42 wherein the step of establishing the real estate investment trust is performed contemporaneously with the issuing of the preferred stock of the real estate investment trust to the plurality of shareholders.

44. The method of claim 42 wherein the second entity performs the further step of:

monitoring such requirements as allow the second entity to continue as a real estate investment trust.

45. The method of claim 42 wherein the equity contract is a forward contract obligating the holder of the stock to purchase common stock of the financial institution at a date in the future.

46. The method of claim 42 wherein the real estate investment trust performs the further steps of:

monitoring to determine whether there are one hundred or more owners of the real estate investment trust;

monitoring to determine whether fifty percent or more of the real estate investment trust is controlled by five or fewer owners;

paying out at least ninety percent of the income of the real estate investment trust to shareholders in the form of dividends.

47. The method of claim 42 further comprising the step of:

exchanging the preferred stock of the real estate investment trust for capital stock of the financial institution upon the occurrence of a predetermined event.

48. The method of claim 47 wherein the predetermined event comprises an event indicative of financial distress of the financial institution.

49. The method of claim 47 wherein the predetermined event comprises an event indicative of financial distress of the real estate investment trust.

50. The method of claim 47 wherein the capital stock for which the preferred stock of the real estate investment trust is exchanged is preferred stock of the financial institution.

51. A system comprising first and second business entities;

the first entity comprising a financial institution regulated by a regulator and having shares of common stock outstanding;

the second entity comprising a corporation holding real-estate-related assets and deriving income therefrom;

the second entity further characterized as having shares of preferred stock outstanding;

the second entity having no fewer than 100 owners;

the second entity further characterized in that no five or fewer owners own fifty percent or more of the second entity;

the second entity further characterized as paying out no less than ninety percent of its income to shareholders in the form of dividends;

each share of preferred stock of the second entity associated with an equity contract relating to the purchase by the holder of the preferred stock of common stock of the first entity;

the financial institution having greater Tier 1 or Tier 2 capitalization than it would have in the absence of the second entity.

52. The system of claim 51 wherein the equity contract is a forward contract obligating its holder to purchase common stock of the financial institution at a date in the future.

53. The system of claim 51 wherein the second entity is a real estate investment trust.

54. The system of claim 51 wherein the preferred stock is exchangeable for capital stock of the financial institution upon the occurrence of a predetermined event.

55. The system of claim 54 wherein the predetermined event comprises an event indicative of financial distress of the financial institution.

56. The system of claim 54 wherein the predetermined event comprises an event indicative of financial distress of the second entity.

57. The system of claim 54 wherein the capital stock for which the preferred stock of the second entity is exchanged is preferred stock of the first entity.

58. A system comprising first and second business entities;

the first entity comprising a financial institution regulated by a regulator and having shares of common stock outstanding;

the second entity comprising a real estate investment trust holding real-estate-related assets and deriving income therefrom;

the second entity further characterized as having shares of preferred stock outstanding;

each share of preferred stock of the second entity associated with an equity contract relating to the purchase by the holder of the preferred stock of common stock of the first entity;

the financial institution having greater Tier 1 or Tier 2 capitalization than it would have in the absence of the second entity.

59. The system of claim 58 wherein the equity contract comprises a forward contract obligating its holder to purchase common stock of the first entity at a date in the future.

60. The system of claim 58 wherein the preferred stock is exchangeable for capital stock of the first entity upon the occurrence of a predetermined event.

61. The system of claim 60 wherein the predetermined event comprises an event indicative of financial distress of the financial institution.

62. The system of claim 60 wherein the predetermined event comprises an event indicative of financial distress of the real estate investment trust.

63. The system of claim 60 wherein the capital stock for which the preferred stock of the real estate investment trust is exchanged is preferred stock of the first entity.

64. A method for use in connection with a corporation rated by a ratings agency and having common stock and possessing first assets and for use in connection with a plurality of investors, the method comprising the steps of:

establishing, by the corporation, a second entity holding real-estate-related assets;

issuing preferred stock of the second entity to the plurality of investors, each share of which is associated with an equity contract relating to the purchase by the holder of the preferred stock of common stock of the first entity;

at the second entity, monitoring to determine whether there are one hundred or more owners of the second entity;

at the second entity, monitoring to determine whether fifty percent or more of the second entity is controlled by five or fewer owners;

at the second entity, paying out at least ninety percent of income of the second entity to shareholders in the form of dividends;

whereby the corporation receives an improved balance of equity versus debt.

65. The method of claim 64 wherein the step of establishing the second entity is performed contemporaneously with the issuing of the preferred stock of the second entity to the plurality of shareholders.

66. The method of claim 64 wherein the equity contract comprises a forward contract obligating the holder of the stock to purchase common stock of the corporation at a date in the future.

67. The method of claim 64 wherein the second entity is a real estate investment trust.

68. The method of claim 64 further comprising the step of:

exchanging the preferred stock of the second entity for capital stock of the corporation upon the occurrence of a predetermined event.

69. The method of claim 68 wherein the predetermined event comprises an event indicative of financial distress of the corporation.

70. The method of claim 68 wherein the predetermined event comprises an event indicative of financial distress of the second entity.

71. The method of claim 68 wherein the capital stock for which the preferred stock of the second entity is exchanged is preferred stock of the corporation.

72. A method for use in connection with a corporation possessing first assets and for use in connection with a plurality of investors, the method comprising the steps of:

establishing, by the corporation, a second entity comprising a real estate investment trust; and

issuing preferred stock of the real estate investment trust to the plurality of investors, each share of which is associated with an equity contract relating to the purchase by the holder of the preferred stock of common stock of the first entity;

whereby the corporation receives an improved balance of equity versus debt.

73. The method of claim 72 wherein the second entity performs the further step of:

monitoring such requirements as allow the second entity to continue as a real estate investment trust.

74. The method of claim 72 wherein the step of establishing the real estate investment trust is performed contemporaneously with the issuing of the preferred stock of the real estate investment trust to the plurality of shareholders.

75. The method of claim 72 wherein the equity contract comprises a forward contract obligating the holder of the stock to purchase common stock of the corporation at a date in the future.

76. The method of claim 72 wherein the real estate investment trust performs the further steps of:

monitoring to determine whether there are one hundred or more owners of the real estate investment trust;

monitoring to determine whether fifty percent or more of the real estate investment trust is controlled by five or fewer owners;

paying out at least ninety percent of the income of the real estate investment trust to shareholders in the form of dividends.

77. The method of claim 72 further comprising the step of:

exchanging the preferred stock of the real estate investment trust for capital stock of the corporation upon the occurrence of a predetermined event.

78. The method of claim 75 wherein the predetermined event comprises an event indicative of financial distress of the corporation.

79. The method of claim 75 wherein the predetermined event comprises an event indicative of financial distress of the real estate investment trust.

80. The method of claim 75 wherein the capital stock for which the preferred stock of the real estate investment trust is exchanged is preferred stock of the corporation.

81. A system comprising first and second business entities;

the first entity comprising a corporation and having shares of common stock outstanding;

second entity comprising a corporation holding real-estate-related assets and deriving income therefrom;

the second entity further characterized as having shares of preferred stock outstanding;

the second entity having no fewer than 100 owners;

the second entity further characterized in that no five or fewer owners own fifty percent or more of the second entity;

the second entity further characterized as paying out no less than ninety percent of its income to shareholders in the form of dividends;

each share of preferred stock of the second entity associated with an equity contract relating to the purchase by the holder of the preferred stock of common stock of the first entity;

whereas the corporation has an improved balance of equity versus debt than the corporation would have in the absence of the second entity.

82. The system of claim 81 wherein the equity contract comprises a forward contract obligating its holder to purchase common stock of the first entity at a date in the future.

83. The system of claim 81 wherein the first entity is a company that is not a financial institution.

84. The system of claim 83 wherein the second entity is a real estate investment trust.

85. The system of claim 81 wherein the preferred stock is exchangeable for capital stock of the corporation upon the occurrence of a predetermined event.

86. The system of claim 85 wherein the predetermined event comprises an event indicative of financial distress of the corporation.

87. The system of claim 85 wherein the predetermined event comprises an event indicative of financial distress of the second entity.

88. The system of claim 85 wherein the capital stock for which the preferred stock of the second entity is exchanged is preferred stock of the corporation.

89. A system comprising first and second business entities;

the first entity comprising a corporation and having shares of common stock outstanding;

the second entity comprising a real estate investment trust holding real-estate-related assets and deriving income therefrom;

the second entity further characterized as having shares of preferred stock outstanding;

each share of preferred stock of the second entity associated with an equity contract relating to the purchase by the holder of the preferred stock of common stock of the first entity;

whereas the corporation has a better balance of equity versus debt than the corporation would have in the absence of the real estate investment trust.

90. The system of claim 89 wherein the equity contract comprises a forward contract obligating its holder to purchase common stock of the corporation at a date in the future.

91. The system of claim 89 wherein the first entity is a company that is not a financial institution.

92. The system of claim 89 wherein the preferred stock is exchangeable for capital stock of the corporation upon the occurrence of a predetermined event.

93. The system of claim 92 wherein the predetermined event comprises an event indicative of financial distress of the corporation.

94. The system of claim 92 wherein the predetermined event comprises an event indicative of financial distress of the real estate investment trust.

95. The system of claim 92 wherein the capital stock for which the preferred stock of the real estate investment trust is exchanged is preferred stock of the corporation.

96. A method for use in connection with a first entity possessing first assets and for use in connection with a plurality of investors, the method comprising the steps of:

establishing, by the first entity, a second entity holding real-estate-related assets;

issuing preferred stock of the second entity to the plurality of investors, each share of which is associated with an equity contract relating to the purchase by the holder of the preferred stock of common stock of the first entity;

the second entity, paying dividends to the investors; and

at the second entity, deducting from income the dividends paid.

97. The method of claim 96 wherein the step of establishing the second entity is performed contemporaneously with the issuing of the preferred stock of the second entity to the plurality of shareholders.

98. The method of claim 96 wherein the equity contract comprises a forward contract obligating the holder of the stock to purchase common stock of the first entity at a date in the future.

99. The method of claim 96 wherein the second entity is a real estate investment trust.

100. The method of claim 96 further comprising the step of:

exchanging the preferred stock of the second entity for capital stock of the first entity upon the occurrence of a predetermined event.

101. The method of claim 100 wherein the predetermined event comprises an event indicative of financial distress of the first entity.

102. The method of claim 100 wherein the predetermined event comprises an event indicative of financial distress of the second entity.

103. The method of claim 100 wherein the capital stock for which the preferred stock of the second entity is exchanged is preferred stock of the first entity.

104. A method for use in connection with a first entity possessing first assets and for use in connection with a plurality of investors, the method comprising the steps of:

establishing by the first entity, a second entity comprising a real estate investment trust;

issuing preferred stock of the real estate investment trust to the plurality of investors, each share of which is associated with an equity contract relating to the purchase by the holder of the preferred stock of common stock of the first entity;

at the real estate investment trust, paying dividends from the real estate investment trust to the investors; and

at the real estate investment trust, deducting from income the dividends paid.

105. The method of claim 104 wherein the second entity performs the further step of:

monitoring such requirements as allow the second entity to continue as a real estate investment trust.

106. The method of claim 104 wherein the step of establishing the real estate investment trust is performed contemporaneously with the issuing of the preferred stock of the real estate investment trust to the plurality of shareholders.

107. The method of claim 104 wherein the equity contract comprises a forward contract obligating the holder of the stock to purchase common stock of the first entity at a date in the future.

108. The method of claim 104 wherein the real estate investment trust performs the further steps of:

monitoring to determine whether there are one hundred or more owners of the real estate investment trust;

to determine whether fifty percent or more of the real estate investment trust is controlled by five or fewer owners;

paying out at least ninety percent of the income of the real estate investment trust to shareholders in the form of dividends.

109. The method of claim 104 further comprising the step of:

exchanging the preferred stock of the real estate investment trust for capital stock of the first entity upon the occurrence of a predetermined event.

110. The method of claim 109 wherein the predetermined event comprises an event indicative of financial distress of the first entity.

111. The method of claim 109 wherein the predetermined event comprises an event indicative of financial distress of the real estate investment trust.

112. The method of claim 109 wherein the capital stock for which the preferred stock of the real estate investment trust is exchanged is preferred stock of the first entity.

113. A system comprising first and second business entities;

the first entity comprising a corporation having shares of common stock outstanding;

the second entity comprising a corporation holding real-estate-related assets and deriving income therefrom;

the second entity further characterized as having shares of preferred stock outstanding;

share of preferred stock of the second entity associated with an equity contract relating to the purchase by the holder of the preferred stock of common stock of the first entity;

the second entity further characterized as being able to deduct dividends paid from its income.

114. The system of claim 113 wherein the equity contract comprises a forward contract obligating its holder to purchase common stock of the first entity at a date in the future.

115. The system of claim 113 wherein the first entity is a financial institution.

116. The system of claim 115 wherein the second entity is a real estate investment trust.

117. The system of claim 113 wherein the preferred stock is exchangeable for capital stock of the first entity upon the occurrence of a predetermined event.

118. The system of claim 117 wherein the predetermined event comprises an event indicative of financial distress of the first entity.

119. The system of claim 117 wherein the predetermined event comprises an event indicative of financial distress of the second entity.

120. The system of claim 117 wherein the capital stock for which the preferred stock of the second entity is exchanged is preferred stock of the first entity.

121. A system comprising first and second business entities;

the first entity comprising a corporation having shares of common stock outstanding;

the second entity comprising a real estate investment trust holding real-estate-related assets and deriving income therefrom;

the second entity further characterized as having shares of preferred stock outstanding;

each share of preferred stock of the second entity associated with an equity contract relating to the purchase by the holder of the preferred stock of common stock of the first entity;

the second entity further characterized as being able to deduct dividends paid from its income.

122. The system of claim 121 wherein the equity contract comprises a forward contract obligating its holder to purchase common stock of the first entity at a date in the future.

123. The system of claim 121 wherein the first entity is a financial institution.

124. The system of claim 121 wherein the first entity is a company that is not a financial institution.

125. The system of claim 121 wherein the preferredsi stock is exchangeable for capital stock of the first entity upon the occurrence of a predetermined event.

126. The system of claim 125 wherein the predetermined event comprises an event indicative of financial distress of the first entity.

127. The system of claim 125 wherein the predetermined event comprises an event indicative of financial distress of the second entity.

128. The method of claim 125 wherein the capital stock for which the preferred stock of the real estate investment trust is exchanged is preferred stock of the first entity.

129. A method for use in connection with a financial institution regulated by a regulator and possessing first assets, the method for use in connection with a plurality of investors, the method comprising the steps of:

establishing, by the financial institution, a second entity holding real-estate-related assets;

issuing preferred stock of the second entity to the plurality of investors, each share of which is associated with an equity contract relating to the purchase by the holder of the preferred stock of common stock of the first entity;

at the second entity, deducting dividends paid to the investors from its income;

whereby the Tier 1 or Tier 2 capitalization of the ehfinancial institution is increased.

130. The method of claim 129 wherein the step of establishing the second entity is performed contemporaneously with the issuing of the preferred stock of the second entity to the plurality of shareholders.

131. The method of claim 129 wherein the equity contract comprises a forward contract obligating the holder of the stock to purchase common stock of the financial institution at a date in the future.

132. The method of claim 129 wherein the second entity is a real estate investment trust.

133. The method of claim 129 further comprising the step of:

exchanging the preferred stock of the second entity for capital stock of the financial institution upon the occurrence of a predetermined event.

134. The method of claim 133 wherein the predetermined event comprises an event indicative of financial distress of the financial institution.

135. The method of claim 133 wherein the predetermined event comprises an event indicative of financial distress of the second entity.

136. The method of claim 133 wherein the capital stock for which the preferred stock of the second entity is exchanged is preferred stock of the financial institution.

137. A method for use in connection with a financial institution regulated by a regulator and possessing first assets, the method for use in connection with a plurality of investors, the method comprising the steps of:

establishing, by the financial institution, a second entity comprising a real estate investment trust;

issuing preferred stock of the real estate investment trust to the plurality of investors, each share of which is associated with an equity contract relating to the purchase by the holder of the preferred stock of common stock of the first entity;

deducting from the income of the real estate investment trust dividends paid to the investors;

whereby the Tier 1 or Tier 2 capitalization of the financial institution is increased.

138. The method of claim 137 wherein the second entity performs the further step of:

monitoring such requirements as allow the second entity to continue as a real estate investment trust.

139. The method of claim 137 wherein the step of establishing the real estate investment trust is performed contemporaneously with the issuing of the preferred stock of the real estate investment trust to the plurality of shareholders.

140. The method of claim 137 wherein the equity contract comprises a forward contract obligating the holder of the stock to purchase common stock of the financial institution at a date in the future.

141. The method of claim 137 wherein the real estate investment trust performs the further steps of:

monitoring to determine whether there are one hundred or more owners of the real estate investment trust;

monitoring to determine whether fifty percent or more of the real estate investment trust is controlled by five or fewer owners;

paying out at least ninety percent of the income of the real estate investment trust to shareholders in the form of dividends.

142. The method of claim 137 further comprising the step of:

exchanging the preferred stock of the real estate investment trust for capital stock of the financial institution upon the occurrence of a predetermined event.

143. The method of claim 142 wherein the predetermined event comprises an event indicative of financial distress of the financial institution.

144. The method of claim 142 wherein the predetermined event comprises an event indicative of financial distress of the real estate investment trust.

145. The method of claim 142 wherein the capital stock for which the preferred stock of the real estate investment trust is exchanged is preferred stock of the financial institution.

146. A system comprising first and second business entities;

the first entity comprising a financial institution regulated by a regulator and having shares of common stock outstanding;

the second entity comprising a corporation holding real-estate-related assets and deriving income therefrom;

the second entity further characterized as having shares of preferred stock outstanding;

each share of preferred stock of the second entity associated with an equity contract relating to the purchase by the holder of the preferred stock of common stock of the first entity the second entity characterized as being able to deduct dividends paid from its income;

the financial institution having greater Tier 1 or Tier 2 capitalization than it would have in the absence of the second entity.

147. The system of claim 146 wherein the equity contract comprises a forward contract obligating its holder to purchase common stock of the financial institution at a date in the future.

148. The system of claim 146 wherein the second entity is a real estate investment trust.

149. The system of claim 146 wherein the preferred stock is exchangeable for capital stock of the financial institution upon the occurrence of a predetermined event.

150. The system of claim 149 wherein the predetermined event comprises an event indicative of financial distress of the financial institution.

151. The system of claim 149 wherein the predetermined event comprises an event indicative of financial distress of the second entity.

152. The system of claim 149 wherein the capital stock for which the preferred stock of the second entity is exchanged is preferred stock of the first entity.

153. A system comprising first and second business entities;

the first entity comprising a financial institution regulated by a regulator and having shares of common stock outstanding;

the second entity comprising a real estate investment trust holding real-estate-related assets and deriving income therefrom;

the second entity further characterized as having shares of preferred stock outstanding;

each share of preferred stock of the second entity associated with an equity contract relating to the purchase by the holder of the preferred stock of common stock of the first entity;

the second entity characterized as being able to deduct dividends paid from its income;

the financial institution having greater Tier 1 or Tier 2 capitalization than it would have in the absence of the second entity.

154. The system of claim 153 wherein the equity contract comprises a forward contract obligating its holder to purchase common stock of the first entity at a date in the future.

155. The system of claim 153 wherein the preferred stock is exchangeable for capital stock of the first entity upon the occurrence of a predetermined event.

156. The system of claim 155 wherein the predetermined event comprises an event indicative of financial distress of the financial institution.

157. The system of claim 155 wherein the predetermined event comprises an event indicative of financial distress of the real estate investment trust.

158. The system of claim 155 wherein the capital stock for which the preferred stock of the real estate investment trust is exchanged is preferred stock of the first entity.

159. A method for use in connection with a corporation having common stock and possessing first assets and for use in connection with a plurality of investors, the method comprising the steps of:

establishing, by the corporation, a second entity holding real-estate-related assets;

issuing preferred stock of the second entity to the plurality of investors, each share of which is associated with an equity contract relating to the purchase by the holder of the preferred stock of common stock of the first entity;

at the second entity, deducting dividends paid to the investors from its income;

whereby the corporation receives an improved balance of equity versus debt.

160. The method of claim 159 wherein the step of establishing the second entity is performed contemporaneously with the issuing of the preferred stock of the second entity to the plurality of shareholders.

161. The method of claim 159 wherein the equity contract comprises a forward contract obligating the holder of the stock to purchase common stock of the corporation at a date in the future.

162. The method of claim 159 wherein the second entity is a real estate investment trust.

163. The method of claim 159 further comprising the step of:

exchanging the preferred stock of the second entity for capital stock of the corporation upon the occurrence of a predetermined event.

164. The method of claim 163 wherein the predetermined event comprises an event indicative of financial distress of the corporation.

165. The method of claim 163 wherein the predetermined event comprises an event indicative of financial distress of the second entity.

166. The method of claim 163 wherein the capital stock for which the preferred stock of the second entity is exchanged is preferred stock of the corporation.

168. The method of claim 165 wherein the second entity performs the further step of:

monitoring such requirements as allow the second entity to continue as a real estate investment trust.

169. The method of claim 165 wherein the step of establishing the real estate investment trust is performed contemporaneously with the issuing of the preferred stock of the real estate investment trust to the plurality of shareholders.

170. The method of claim 165 wherein the equity contract comprises a forward contract obligating the holder of the stock to purchase common stock of the corporation at a date in the future.

171. The method of claim 165 wherein the real estate investment trust performs the further steps of:

monitoring to determine whether there are one hundred or more owners of the real estate investment trust;

monitoring to determine whether fifty percent or more of the real estate investment trust is controlled by five or fewer owners;

paying out at least ninety percent of the income of the real estate investment trust to shareholders in the form of dividends.

172. The method of claim 165 further comprising the step of:

exchanging the preferred stock of the real estate investment trust for capital stock of the corporation upon the occurrence of a predetermined event.

173. The method of claim 172 wherein the predetermined event comprises an event indicative of financial distress of the corporation.

174. The method of claim 172 wherein the predetermined event comprises an event indicative of financial distress of the real estate investment trust.

175. The method of claim 172 wherein the capital stock for which the preferred stock of the real estate investment trust is exchanged is preferred stock of the corporation.

180. The system of claim 174 wherein the preferred stock is exchangeable for capital stock of the corporation upon the occurrence of a predetermined event.

181. The system of claim 180 wherein the predetermined event comprises an event indicative of financial distress of the corporation.

182. The system of claim 180 wherein the predetermined event comprises an event indicative of financial distress of the second entity.

183. The system of claim 180 wherein the capital stock for which the preferred stock of the second entity is exchanged is preferred stock of the corporation.

167. A method for use in connection with a corporation possessing first assets and for use in connection with a plurality of investors, the method comprising the steps of:

establishing, by the corporation, a second entity comprising a real estate investment trust;

issuing preferred stock of the real estate investment trust to the plurality of investors, each share of which is associated with an equity contract relating to the purchase by the holder of the preferred stock of common stock of the first entity;

at the real estate investment trust, deducting dividends paid from its income;

whereby the corporation receives an improved balance of equity versus debt.

176. A system comprising first and second business entities;

the first entity comprising a corporation and having shares of common stock outstanding;

the second entity comprising a corporation holding real-estate-related assets and deriving income therefrom;

the second entity further characterized as having shares of preferred stock outstanding;

each share of preferred stock of the second entity associated with an equity contract relating to the purchase by the holder of the preferred stock of common stock of the first entity;

the second entity characterized as being able to deduct dividends paid from income;

the corporation having a better balance of equity versus debt than the corporation would have in the absence of the second entity.

177. The system of claim 176 wherein the equity contract comprises a forward contract obligating its holder to purchase common stock of the first entity at a date in the future.

178. The system of claim 176 wherein the first entity is a company that is not a financial institution.

179. The system of claim 178 wherein the second entity i hat ists a real estate investment trust.

184. A system comprising first and second business entities;

the first entity comprising a corporation and having shares of common stock outstanding;

the second entity comprising a real estate investment trust holding real-estate-related assets and deriving income therefrom;

second entity further characterized as having shares of preferred stock outstanding;

each share of preferred stock of the second entity associated with an equity contract relating to the purchase by the holder of the preferred stock of common stock of the first entity;

the second entity characterized as being able to deduct dividends paid from income;

the corporation having a better balance of equity versus debt than the corporation would have in the absence of the real estate investment trust.

185. The system of claim 184 wherein the equity contract comprises a forward contract obligating its holder to purchase common stock of the corporation at a date in the future.

186. The system of claim 184 wherein the first entity is a company that not a financial institution.

187. The system of claim 184 wherein the preferred st aock is exchangeable for capital stock of the corporation upon the occurrence of a predetermined event.

188. The system of claim 187 wherein the predetermined event comprises an event indicative of financial distress of the corporation.

189. The system of claim 187 wherein the predetermined event comprises an event indicative of financial distress of the real estate investment trust.

190. The system of claim 187 wherein the capital stock for which the preferred stock of the real estate investment trust is exchanged is preferred stock of the corporation.

191. A financial instrument comprising:

a preferred share of a real estate investment trust, a forward contract obligating the holder of the preferred share to purchase, at a future date, common stock of an entity owning common stock of the real estate investment trust.

192. The instrument of claim 191 further characterized in that the preferred share is exchangeable for capital stock of the entity owning common stock of the real estate investment trust upon the occurrence of a predetermined event.

193. The financial instrument of claim 192 wherein the predetermined event comprises an event indicative of financial distress of the entity owning common stock of the real estate investment trust.

194. The method of claim 192 wherein the predetermined event comprises an event indicative of financial distress of the real estate investment trust.

195. The method of claim 192 wherein the capital stock for which the preferred stock of the real estate investment trust is exchanged is preferred stock of the entity owning common stock of the real estate investment trust.