S.B. No. 1008
 
 
 
 
AN ACT
  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