The Michaels Organization, a leading name in residential real estate, has announced that it has secured financing to invest more than $500 million in its U.S Army housing portfolio over the next five years. This massive reinvestment is the largest in Michaels’ history since it became a private sector partner to the U.S. Department of Defense. The project will be funded in part by existing project reinvestment funds and partly through a $305 million bond issuance, which is the first-of-its-kind and achieved a successful financial closing on March 6, 2024, thanks to a world-class team of financiers, attorneys, and investors.
The development plan, created in collaboration with Army leadership, includes the construction of new homes, restoration of historic homes, and interior and exterior renovations of existing homes. Additionally, Michaels plans to make a significant investment in new infrastructure and amenities for service members and their families. This initiative will enhance housing at Fort Belvoir, Fort Leavenworth, Fort Moore, Fort Irwin, Fort Huachuca, Presidio of Monterey, and Yuma Proving Ground.
Erik Roberson, Senior Vice President of Investment Management, led this initiative for Michaels, guiding the effort from start to its successful conclusion.
“It is a massive honor to be entrusted with the responsibility of building the homes and communities where our service members call home. For us to truly deliver upon that responsibility requires the support of many, and it is uplifting to see so many willing to invest their time and money in improving the quality of life for our service members of both today and tomorrow. We extend our deepest thanks to all involved and are beyond excited for what this means in advancing the places our service members live, work, and play,” Roberson said.
Congress authorized the Military Housing Privatization Initiative in 1996. Michaels has been a private-sector housing partner to the Department of Defense since 2004, when it was selected to develop, own, and manage the family housing at Fort Leavenworth.
“We consider it an incredible privilege to house heroes and serve their families,” said Michaels’ Chief Executive Officer John J. O’Donnell. “We thank the U.S. Department of Defense for their continued trust in us as well as our partners at Stifel, whose expertise was critical to the success of our bond issuance. We know that providing excellent housing is important to our service members’ quality of life, as well as essential to the military’s recruitment and retention efforts, ” O’Donnell said.
The bond issuance team consisted of Stifel and Ballard Spahr LLP, both of whom have a track record of dealing with complex financial transactions and working with committed institutional investors. During this transaction, Michael Sklar, a partner at Levine, Staller, Sklar, Chan & Brown, P.A, provided legal representation for Michaels.
“The marketplace has fully embraced this bond transaction, with 35 of the largest and most sophisticated investors in the country placing more than $1.8 billion of orders for this $305 million financing resulting in an attractive borrowing cost,” said Gary Brandt, Managing Director at Stifel. “This support reflects a high level of confidence in this joint venture partnership between the U.S. Army and The Michaels Organization to provide high-quality homes for 15,000 military families for many years to come. It was an honor for our Stifel team to join this incredibly talented group of individuals to help create a new source of capital for this very important program.”
Jere Thompson, the partner at Ballard Spahr in charge of the bond financing, said: “It was a privilege working with Michaels, Levine Staller, the Army and Stifel in structuring this transaction. Having this unique opportunity to serve as Transaction Counsel to the $305 million bond issue allowed us to be creative in monetizing the residual revenues of the Army from the military housing joint ventures with Michaels in order to permit the immediate financing of improvements at the installations jointly owned and operated by Michaels and the United States Army.”
Michaels plans to begin implementation of a five-year development plan this summer, which will include work at all installations concurrently.
