(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.
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