Army announces $1.3 billion housing agreement in Korea
January 8, 2009
The Department of the Army has reached agreement on terms of the largest single military housing project since World War II. The $1.3 billion project will provide 2400 units of family housing at U.S. Army Garrison Humphreys, Republic of Korea. Humphreys Family Communities LLC, will construct, own, provide equity, and issue debt for the project.
The project will be called "Park Place" and balances American-Style residential design features in a Korean inspired environment for three, four, and five bedroom units. Park Place boasts two distinct communities and will feature high rise residential towers and a main town center that blends two story traditional townhomes with store front retail space. These communities are designed to be pedestrian friendly and minimize vehicular traffic. Each neighborhood will have a large community center, playgrounds, parks, athletic fields, underground parking, and abundant open space.
"This project is critical for the U.S. Armed Forces to meet its treaty commitments to relocate from Seoul, and to provide a high quality of life for our military and their Families" said General Walter L. Sharp, Commander U.S. Forces Korea. "The structure of the project allows for additional housing both at Humphreys and elsewhere in Korea as tours are normalized on the Peninsula", he added.
Keith Eastin, Assistant Secretary of the Army (Installations & Environment) said,
"This unique transaction is a first-of-a-kind concept and a potential roadmap where developers build privately owned housing on host-owned land for rental by American Soldiers and their Families. Operational mission requirements have led us to this revolutionary approach in Army Family housing development. "
Eastin emphasized, "It is a landmark accomplishment, especially given the current budget challenges across the Department of Defense and the volatility in the private capital markets."
Military Families assigned to Korea may enter into a standard lease with HFC and rent a home at a monthly rate equivalent to the Overseas Housing Allowance (OHA). Joseph Calcara, Deputy Assistant Secretary of the Army (Installations & Housing) said, "By leveraging permitted real estate uses under the Status of Forces Agreement with market demand, we are able to produce affordable housing for individual rentals at no capital construction investment by the Army, as well as provide for the operations, maintenance, property management, and long-term recapitalization of the asset over the project life cycle."
Humphreys Family Communities, LLC is comprised of Pinnacle Hunt HFC LLC, the managing member and will be comprised of affiliates from American Management Services, dba Pinnacle and Hunt ELP, Ltd.
Pinnacle of Irvine, CA, is the second largest property manager in the Unites States with more than 175,000 housing units in their portfolio, including more than 26,000 housing units for its military partners and clients.
Hunt of El Paso, TX, is an equity member of HFC, and with experience in building more than fifty military housing projects, will assist in the capital structuring and construction oversight of the project.
Samsung C&T, of Seoul, Korea, is the design-builder and will also provide construction completion guarantees for the project. Samsung has successfully completed more than 1,700 projects, and in 2007 alone, placed over $5 billion in construction around the world.
The design team is composed of SAMOO and Heerim, two of the largest and most accomplished Korean firms, along with MVE & Partners, a premier US residential design firms.
The finance team is led by Merrill Lynch, supported by Bank of America and Sumitomo Mitsui Bank. HFC will fully fund all project development, construction, property management and asset management services through the use of private debt and equity, reinvested interim income and operating cash flow, and interest earnings on cash balances. The Army will not provide any financial contributions, loans, or occupancy guarantees.
Financial closing is scheduled for June 2009, with construction beginning August 2009. The first units are scheduled to be available for lease in 2012.
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