Base-housing deals boost firm?s profile

A Nashville-based real-estate-development company that is gobbling up multibillion-dollar contracts has started to raise its profile in Washington.

Actus Lend Lease benefited tremendously after Congress passed bipartisan legislation in 1996 that privatized the renovation and redevelopment of housing for members of the military and their dependents. As the Pentagon is broadening its privatization plan, Actus has hired an influential lobbying shop — the Rhoads Group — to increase its profile in Congress and at the Defense Department.

When the word “privatization” is cited to change a program, Democrats are usually skeptical. But Rep. Neil Abercrombie (D-Hawaii) was a vocal proponent of privatizing housing for the military nearly 10 years ago. Hawaii was criticized for military housing far below standard, and Abercrombie, the ranking member on the House Armed Services Tactical Air and Land Forces Subcommittee, helped move the bill.

Many military families in Hawaii have been looking to live off base, thus competing with civilians in a scarce real-estate market, said Abercrombie.

With this project, members of the military receive housing that “otherwise would not be available,” easing pressure on the civilian population to compete for housing, he added.

Hawaii has become the template for military housing privatization, Abercrombie said. The Defense Department has private developers working on at least 13,000 housing units for all military services in Hawaii.

One of the largest government privatization endeavors is the $2.2 billion U.S. Army Hawaii project, awarded to Actus to renovate and build approximately 8,000 homes on the island of Oahu, one of the country’s hottest real-estate markets.

As part of the deal, Actus is leasing the land from the Army for 50 years and is responsible to finance, develop, operate and maintain the properties. At the end of the 50-year lease, the Army has the option to extend it for 25 years, said Chris Sherwood, Actus’s vice president for business development.

While the Defense Department is only halfway through with reaching privatization agreements to overhaul close to 200,000 units by 2007, Actus has positioned itself as a major player in the business. The company has grabbed contracts for some of the largest military bases, such as Fort Hood in Texas, Fort Campbell in Kentucky, Fort Drum in New York, Beaufort and Parris Island in South Carolina, Camp Lejeune and Cherry Point in North Carolina, and Hickam Air Force Base in Hawaii.

Actus is still eyeing a market that could be worth $6.8 billion. But the company bristles at the word “lobbying.”

“Lobbying is not what we do,” said Sherwood, who added that having a connection in Washington helps the company.

“The biggest challenge is getting the message out and getting the information up and down the chain in the military, educating people on what privatization really is,” Sherwood said.

Apart from the remaining contracts the Pentagon still has to dole out, Actus is monitoring another potentially large military market. With the upcoming round of base closures and realignments and the return of 70,000 personnel from overseas bases, the military will have to deal with a housing shortage.

Fort Bliss in Texas, for example, is poised to increase its numbers by more than 11,000 soldiers. The company also is looking to make a bid at Fort Knox in Kentucky, according to a lobbyist working with Actus.

“We have identified 15 installations on the [Pentagon’s] preliminary list, and a number of installations would fit into the model that we look at,” said Mark Menhinnitt, president of Actus.

Actus’s competitors include Clark Realty, Picerne, Lincoln Property, Forest City Enterprises and Hunt Building Corp. Actus focuses entirely on military housing, Sherwood said, while the other companies have a variety of interests.

The competition for the military contracts can get fierce when you “talk billions of dollars and long-term contracts,” Abercrombie said.