The first deal of its kind in the region, the project brought together a consortium of 5 banks to provide financing on a non-recourse basis, via a soft mini-perm
Hyde Development secured construction financing for Northern Stacks from Nebraska-based First National Bank of Omaha, which Paul Hyde credits with "the foresight to see that [the project] would work before we put a shovel in the ground." Bank construction loans generally have two-year terms with the option for a three-year "mini-perm
" extension, repayments for which include principal, he said.
"That deal had to be structured as a mini-perm
loan, which is interesting," he notes.
Capital One announced that it has provided an $80 million construction/ mini-perm
loan for the soon-to-be-completed 194-key 1 Hotel on the Brooklyn waterfront which was initially part of a larger financing package that included a 107-unit recently completed condominium building.
A November 2014 Bank of America Merrill Lynch white paper reckoned a "50 percent increase in the cost of capital for a bank at a 35 percent taxable rate would equate to a need to increase loan spreads in excess of 60 basis points." On a traditional mini-perm
five-year, $10,000,000 loan, a 60 basis point increase in the interest rate equates to a net present value of, roughly, $261,503.
"If project bonds are not available as a financing option for the construction phase of a project, they can nonetheless be incorporated as a potential element of a project's financing mix at a later stage through a mini-perm
Its main product, a mini-perm
loan, has a term of three to five years benefiting property investors who are currently not eligible for longer-term financing.
Chicago-based Maverick Commercial Mortgage closed on a $5.9 million construction and mini-perm
loan for DuPage Dodge-Chrysler-Jeep, Glendale Heights, Illinois, in December.
Additionally, Solera offers a full line of other real estate related financing options such as home equity loans and lines of credit, residential mini-perm
loans and jumbo loans.
In particular, soft and hard 'mini-perm
' structures have come to the fore, with the latter being used to help structure the debt on the $2.1 billion Addur IWPP.
The loan is an eight-year mini-perm
, the first time such a structure has been used to finance a Middle East power project.