International Public Partnerships Limited (INPP), the London-listed investor in mainly UK-based public-private partnerships (PPPs), has completed its first deal in the US.
The firm has invested approximately $48 million into a number of fully-yielding mezzanine debt instruments with a remaining average life of 37 years.
The debt, which is being acquired from the Federal Home Loan Mortgage Corporation (Freddie Mac), is underpinned by security over seven operational military housing PPPs. The PPPs relate to 19 military bases in the US comprising around 21,800 individual housing units.
Military housing is the US’s longest established sector for PPP investment, with private sector capital enabled by Congress in 1996 through the Military Housing Privatization Initiative (MHPI). To date, the sector has attracted more than $30 billion from domestic and international investors.
In a statement, INPP said the deal offered: a secure revenue stream via the US military’s Basic Allowance for Housing paid to service personnel, creating an indirectly government-sourced revenue payment; high barriers to entry, as the number of on-base housing units is limited; no residual value exposure; and a geographically diverse portfolio of housing units across the continental US including some of the largest and most critical US military installations.
The statement said the deal opportunity had been identified as a result of the relationship formed between Hunt Companies, the US real assets firm, and INPP advisor Amber Fund Management earlier this year. The deal saw the former acquire a 50 percent stake in the latter.
Hunt is an owner, manager and provider of services to US military housing, with interests in approximately 33,000 housing units including those that were part of this transaction.
On its website, INPP provides a geographical split of its investments as follows: UK 71 percent; Belgium 12 percent; Australia 8 percent; Germany 4 percent; Canada 3 percent; Ireland 1 percent; and Italy less than 1 percent. The firm was listed in 2006 and now has 116 investments in total.