The agreement has a 50-year term beginning with a six-year initial development period that is valued at in excess of $700 million. This is the largest public/private military housing initiative to date, and the largest of the 11 such projects under agreement with GMH.
As with a November 2004 agreement covering eight bases in its Northeast region, which went to GMH, the Navy selected one of several bidders to proceed exclusively with final negotiations. In this case GMH was selected from a field of four, according to a GMH spokeswoman. "The exclusive negotiating process begins this week and generally takes from six months to a year," she says.
The bases in the Southeast region are: Naval Weapons Station, Charlotte, SC; Naval Submarine Base, Kings Bay, GA; Naval Air Station, Jacksonville, FL; Naval Station, Mayport, FL; Naval Air Station, Key West, FL; Naval Support Activity, Panama City, FL; Naval Air Station, Pensacola, FL; Naval Air Station, Whiting Field, FL; Naval Construction Battalion Center, Gulfport, MS; Naval Air Station; Meridian, MS; and Naval Air Station Joint Reserve Base, Fort Worth.
Throughout the full term, GMH earns management, construction, renovation and development fees in addition to equity return from its capital investment. As with other military housing agreements, the initial development expenditure comes from a combination of private debt and equity along with interest earnings and excess cash flow. On Feb. 8, as GlobeSt.com reported, GMH finalized a similar agreement with the Department of the Air Force for 2,875 units at four bases.
Like the Air Force housing, residential units at the naval bases are designed to complement their individual regional surroundings. GMH will partner with two homebuilders, Dallas-based Centex Construction Co. and Greeley, CO-based Hensel Phelps Construction Co. Niles Bolton Associates, which is headquartered in Atlanta, will handle planning and architectural design, and Dayton, OH-based Woolpert Inc. is providing engineering services.
Bruce Robinson is president of GMH's military housing division. The locally based REIT also specializes in student housing under a separate division.
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