Mini Perm

(redirected from Mini-Perm)

Mini Perm

In construction and project finance, an informal term for debt financing that is payable over three to five years. Generally speaking, a developer accesses mini perm financing to complete the project to the point where it can begin to produce revenue. The developer then uses the revenue to pay off the mini perm.
References in periodicals archive ?
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 structure.
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.
Associated Bank is providing both debt and equity solutions for the project: a $4,675,000 construction and mini-perm loan and an equity investment $1,600,754.
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 funding structure."
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.