Transaction Structures

The Trust Lands Planning and Development Group understands that its different property holdings demand flexibility in the structuring of transactions. In recognition of this fact, the Board of Trustees has authorized the development group through Rule R850-140 to negotiate property specific transactions with the private sector. This has given the Planning and Development Group the ability to complete complex as well as simple transactions, as dictated by the circumstances of the property and the goals of the private sector and the Trust in that specific instance.

Transaction structures range from the simple sale of property to more complex joint ventures. The following is a brief description of these approaches:

Sales:In some instances, Trust Lands is willing to sell its property. Typically, sales will involve smaller, subdivided pieces. The paperwork associated with sales is unique to transactions with government. Every sale involves both a Certificate of Sale (which constitutes an agreement of sale and may include an installment sales contract) and the Patent. Trust Land often finance sales, typically requiring at least 25% down and with an interest rate at 2.5% over prime and with a term subject to negotiation. Partial releases are able to be arranged with release prices typically running at 125% over the average price.

Ground Leases: The Trust is interested in entering into ground leases on its commercial and industrial properties whenever possible. Ground lease transactions will not be subordinated. Trust Lands understands that ground lease transactions require proper pricing to encourage users to accept the same.

Development Leases:These contracts enable a developer to improve, subdivide and sell Trust Land without taking title to the land. The structure is designed to permit the developer to work the land without having to pay for the land until it is sold to the end user. The Trust holds the land and the developer provides the infrastructure capital and expertise. The Trust does not subordinate. Typically this is used on residential developments, but has also been used on larger, master planned communities. The Trust is compensated with a low holding cost payment (annual) and receives a percentage of the gross selling price at the time a residential lot is sold to a member of the public. If the Developer is also a builder, some form of transfer pricing is negotiated.

Participating mortgages:The Trust has completed a number of sale transactions in which it has received back end participation through the vehicle of a participating mortgage. This approach is best suited for transactions on a trust piece that might be considered premature.

The Trust Lands Development Group understands that each valuable piece of real estate requires a quality development plan and a proper transaction structure. We look forward to working with the development community in designing successful transactions