Balfour Beatty Communities, LLC announced on August 2nd, 2013, it has reached financial close on the Northern Group Housing Privatisation Project with the U.S. Department of the Air Force.

The project privatises family housing across six Air Force bases, including Minot AFB, Grand Forks AFB and Cavalier AFS, each located in North Dakota; Ellsworth AFB, located in South Dakota; Mountain Home AFB, located in Idaho; and Cannon AFB, located in New Mexico.

The six-year initial development period, valued at approximately $442 million, will include the design, construction and/or renovation of 4,546 end state housing units with various amenities. The company's key partners on the project will include Balfour Beatty Construction and Niles Bolton Associates and Woolpert, which will provide architecture and engineering services, respectively.

According to our sources, the project was financed through a bond issuance underwritten by Bank of America/Merrill Lynch. Two series of parity bonds were issued totaling $221,533,000. Additionally, there was a Government Direct Loan (GDL) that is subordinate to the senior bonds in the amount of $116,110,000. Major investors were Guggenheim Partners and Metropolitan Life.

Balfour Beatty, through an SPE, made an equity contribution of 5% of total project costs as part of the project capitalization structure.

This is Balfour Beatty Communities' sixth Air Force housing privatisation project.

Chris Williams, President of Balfour Beatty Communities said:

"We are thrilled to expand our relationship with the Air Force. Our military portfolio has increased to encompass 53 Army, Navy and Air Force installations across 25 states and Washington, D.C."

Congressionally authorised since 1996, the Military Housing Privatisation Initiative allows the Department of Defense and the Department of the Air Force to work with the private sector to upgrade the quality of family housing and operate and maintain that housing. The family housing assets are typically leveraged with private investment to accomplish housing construction and renovation goals faster and at a lower cost than military construction.

Source: Balfour Beatty