Hard mini-perms are medium-term bank financings (typically with a tenor of eight to 10 years) that the project company will use to finance the construction and early operation phases of the project, and refinance with longer term debt (such as a project bond) before maturity.
As a result soft mini-perms have tended to win greater acceptance amongst project participants - for example, a mini perm financing option has most recently featured in the proposed financing for the Abu Dhabi Water and Electricity Authority's Mirfa IWPP.
By contrast, with soft mini-perms
, the legal maturity of the bank loan remains long-term -- 26 years for a 28-year concession -- but the sponsors are given incentives to refinance the loan by an earlier date.
Far East offers a wide range of loans including construction, acquisition and repositioning, mini-perms
and lines of credit with focus on retail, industrial, commercial office and hospitality.
As the committee knows, the resulting exposure from mini-perms
and from other commercial real estate lending has placed substantial stress on the banking industry, has been a main contributor to the failure of several large banking institutions, and has led to the merger or acquisition of others.
Bankers surveyed predict flat demand for mini-perms
and value-added loans in 2005 as compared to 2004 levels.
In another bullish sign for commercial real estate, loan demand is expected to be moderate to strong for all purposes -- construction, acquisition and value-added lending, as well as for mini-perms
, according to the bankers surveyed.