DEPARTMENT OF STATE OVERSEAS BUILDINGS OPERATIONS
1
Global Real Estate Portfolio: Opportunities in Housing
Development
EXPO Real – Munich, Germany
October 5, 2022
DEPARTMENT OF STATE OVERSEAS BUILDINGS OPERATIONS
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Table of Contents
UNCLASSIFIED
01 Overview: OBO and OBO/PRE
02 Challenge: Rental Benchmarks
03 Challenge: Leasing Program
04 Challenge: Disposal Program
05 Challenge: Reinvesting Sale Proceeds – Housing Program
06 Signature Projects
07 Work With Us
DEPARTMENT OF STATE OVERSEAS BUILDINGS OPERATIONS
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Overview: OBO and OBO/PRE
01
DEPARTMENT OF STATE OVERSEAS BUILDINGS OPERATIONS
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Mission, Vision, & Goals
MISSION
To provide safe, secure, resilient, and functional
facilities that represent the U.S. Government to the
host nation and support the Department’s
achievement of U.S. foreign policy objectives abroad.
VISION
These facilities represent American values and the best
in American architecture, design, engineering,
technology, sustainability, art, culture, & construction
execution.
GOALS
SECURITY
Enhance the security, safety, and functionality of
facilities and residences for overseas personnel.
RESILIENCE
Provide industry-leading resilient facilities that
represent the nation and support personnel in
achieving U.S. foreign policy objectives.
STEWARDSHIP
Promote continuous improvement facilitated by a
culture of optimizing people, processes, and
supporting technology.
UNCLASSIFIED
DEPARTMENT OF STATE OVERSEAS BUILDINGS OPERATIONS
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Portfolio
290 Locations
25,052 Domestic & Overseas Assets
9,304 Government-owned
15,748 Leased
16,315 Residences
931 Office Buildings
$82B Portfolio Value
7.6M Gross Square Meter of Space
18,300 Culturally Significant Objects & Artworks
U.S. Embassy Niamey, Niger
Design Architect: Miller Hull / Contractor: B.L. Harbert International / Architect of Record: Page
UNCLASSIFIED
DEPARTMENT OF STATE OVERSEAS BUILDINGS OPERATIONS
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Program
Capital Security
Construction
– 50+ Active Projects
– $20B Workload
Major Renovation
‒ 40+ Active Projects
‒ $850M Workload
Compound Security
Upgrade
‒ 24+ Active Major Projects
‒ $400M Workload
Minor Construction &
Improvements
‒ 320+ Active Projects
‒ $110M Workload
Real Property Leasing
‒ 15,700+ Leases
‒ $73B Replacement Value
U.S. Embassy Maputo, Mozambique
Design Architect: Allied Works / Architect of Record: YGH Architects / Contractor: Pernix Group
UNCLASSIFIED
DEPARTMENT OF STATE OVERSEAS BUILDINGS OPERATIONS
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Major Projects – Capital Security Construction Outlook FY22-27
15+ Planned Projects
– New Embassy or Consulate
– New Chancery or Office Annex
– Housing
UNCLASSIFIED
DEPARTMENT OF STATE OVERSEAS BUILDINGS OPERATIONS
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Challenge: Leasing Program
03
DEPARTMENT OF STATE OVERSEAS BUILDINGS OPERATIONS
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Rental Benchmarks
UNCLASSIFIED
The Rental Benchmark Program promotes cost-effective residential property
leasing and efficient management of housing programs in response to individual
market conditions.
DEPARTMENT OF STATE OVERSEAS BUILDINGS OPERATIONS
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Market Data Sources
UNCLASSIFIED
Post Market
Survey
MERCER
ECA
Market-based benchmarks are
developed and reviewed on:
1. Cost of the most recent leases for
residential properties in post’s housing
inventory
2. Post’s rental market surveys;
3. Surveys conducted by private real
estate firms contracted by OBO;
4. Independent sources’ analysis of local
rental market information; and
5. Security restrictions on neighborhoods
or areas placed on housing by the post
RSO.
DEPARTMENT OF STATE OVERSEAS BUILDINGS OPERATIONS
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Challenge: Build to Lease Program
03
DEPARTMENT OF STATE OVERSEAS BUILDINGS OPERATIONS
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Background
UNCLASSIFIED
Department of State provides housing for US employees
overseas
‒ Total residential portfolio of 26,000 keys, combination of owned
and leased
‒ Available housing in some locations has significant security, life-
safety, or cost issues
‒ Quality of life and morale are also impacted, resulting in posts that
are hard to staff
The Department is working to improve housing conditions
where possible
‒ In some cases, by responding to unsolicited proposals or projects
already in development
‒ In other cases, by proactively identifying locations with greatest
needs and soliciting proposals
DEPARTMENT OF STATE OVERSEAS BUILDINGS OPERATIONS
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Background
UNCLASSIFIED
Build-to-Lease Housing
‒ Typically, sole-occupancy compound of apartments or
townhouses, with community facilities
‒ Competitive solicitation, not limited to US firms
‒ Private developer provides land, financing, design, and
construction
‒ USG commits in advance to leasing the completed property
‒ OBO may purchase the property during/after the lease
Option-to-Lease Housing
‒ Similar outcome to BTL, but USG does not commit until design
is complete at minimum
‒ Not a competitive solicitation. Generally, involves projects
already planned or in construction
DEPARTMENT OF STATE OVERSEAS BUILDINGS OPERATIONS
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Regional Focus – Africa, Central America, Central Asia
UNCLASSIFIED
Housing challenges at several Posts
‒ Security: housing compounds are often required or preferred
‒ Life safety: fire hazards and earthquake risk
‒ Cost: urban growth creating pressure on existing portfolio
‒ Availability: lack of quality construction and maintenance
Regional approach of clustered projects
‒ Provides opportunities for greater efficiency
‒ May involve use of same contractors, designs,
construction oversight personnel for multiple projects
DEPARTMENT OF STATE OVERSEAS BUILDINGS OPERATIONS
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Project Planning Considerations
UNCLASSIFIED
Land Acquisition
‒ Developer must obtain site control prior to
agreement with USG
‒ Developer solely responsible for due diligence,
purchase, permitting
Project Financing
‒ Developer responsible for financing project both
during construction and during operations
‒ USG may provide limited funding at or prior to
completion, for unique/non-market items
‒ Debt and equity providers are often satisfied with
below-market yields, given the USG lease
Design
‒ USG will provide high-level design criteria, and will
review developer’s design stages
‒ In addition to local codes, design must meet USG
requirements for security, safety, and quality
Construction
‒ Developer responsible for hiring builder and project
management/quality assurance teams
‒ USG monitors construction, installs certain features
directly including appliances and furniture.
Management & Operation
‒ Landlord may operate and maintain property directly
or through third-party contract
‒ Typical lease term is 8-12 years, with tenant’s option
to renew or purchase
DEPARTMENT OF STATE OVERSEAS BUILDINGS OPERATIONS
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Staff Housing Port au Prince, Haiti
UNCLASSIFIED
DEPARTMENT OF STATE OVERSEAS BUILDINGS OPERATIONS
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Staff Housing Santo Domingo, Dominican Republic
UNCLASSIFIED
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Staff Housing Santo Domingo, Dominican Republic
UNCLASSIFIED
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Staff Housing Addis Ababa, Ethiopia
UNCLASSIFIED
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Staff Housing Addis Ababa, Ethiopia
UNCLASSIFIED
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Staff Housing Nairobi, Kenya
UNCLASSIFIED
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Staff Housing Nairobi, Kenya
UNCLASSIFIED
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Staff Housing Nairobi, Kenya
UNCLASSIFIED
DEPARTMENT OF STATE OVERSEAS BUILDINGS OPERATIONS
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Challenge: Disposal Program
04
DEPARTMENT OF STATE OVERSEAS BUILDINGS OPERATIONS
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Disposal Program
UNCLASSIFIED
Evaluates opportunities to:
- Increase the value of owned property prior
to sale / disposal
Employs a variety of sale methods and marketing
approaches to achieve the highest sale value for
U.S. Government’s properties including:
- Sealed Bid
- Select Invitation
- Open Market Approach
- Auction
DEPARTMENT OF STATE OVERSEAS BUILDINGS OPERATIONS
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Challenge: Reinvesting Sale Proceeds – Housing Program
05
DEPARTMENT OF STATE OVERSEAS BUILDINGS OPERATIONS
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Purchase Programs
UNCLASSIFIED
Staff Housing Opportunity Purchases (SHOP)
- Bulk purchases
- Financially driven
- Streamlined acquisitions
Mission Driven and Programmatic (non-SHOP)
- Designated property
- Commercial property
- Unique circumstances
DEPARTMENT OF STATE OVERSEAS BUILDINGS OPERATIONS
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Staff Housing Opportunity Purchase (SHOP) Program
UNCLASSIFIED
GOAL
The SHOP Program invests real estate sale proceeds into residential properties that provide safe, secure, high-
quality housing that also offers the best overall value to the U.S. government.
THIS OBJECTIVE IS ACCOMPLISHED BY:
- Increasing the overall proportion of U.S. government-owned property
- Improving the quality of the housing portfolio occupants
- Reducing leasehold expenses
- Avoiding lease renewal risk
- Appreciation in property value over time
DEPARTMENT OF STATE OVERSEAS BUILDINGS OPERATIONS
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SHOP – Prioritizing and Identifying Target Posts
UNCLASSIFIED
For example: Excluding countries where purchases are
not permitted or have significant geopolitical challenges.
For example: Scoring on specific OBO priorities such
as low ownership rates, too oversized already, etc.
For example: Exploring current market data
(price, availability, building codes) to answer
the question – “Is there anything to buy that
meets our many requirements?”
Scoring / Ranking / Prioritizing
Market Assessment
Filtering
DEPARTMENT OF STATE OVERSEAS BUILDINGS OPERATIONS
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SHOP – Due Diligence
UNCLASSIFIED
Early due diligence is Key:
TOP LEVEL DUE DILIGENCE
- Develop Post short list
- Preliminary market investigation
- Post willing to participate?
- Acceptable pricing, sizes, locations
- FIRE standards
- Seismic standards
- Existing / proposed product
- Natural hazards
PROJECT DUE DILIGENCE
- Appraisals
- Lease-vs-buy analyses
- Legal investigation
- HOA Documents
- Vetting of sellers
- A/E inspections
- Make readies
- Post facilities management review
- Post security review
DEPARTMENT OF STATE OVERSEAS BUILDINGS OPERATIONS
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Staff Housing Opportunity to Purchase (SHOP) Program
UNCLASSIFIED
Guayaquil
Johannesburg
Kolkota
London *
Luxembourg *
Manila *
Nicosia *
Osaka-Kobe
Port Moresby *
Pretoria *
Rabat *
Riga *
Santiago *
Stockholm *
Tallinn *
The Hague *
Ulaanbaatar *
Sofia *
Yerevan *
Phnom Penh *
Helsinki *
Jerusalem *
Khartoum *
Manama *
Kyiv *
Podgorica *
Prague *
Port of Spain *
Paris *
Warsaw *
Oslo *
LEGEND
RED – No SHOP Prospects (11 Total)
YELLOW – Active SHOP Action (20 Total)
*
– Embassy Update 07/28/2022
DEPARTMENT OF STATE OVERSEAS BUILDINGS OPERATIONS
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Joint-Venture / Public-Private Partnerships (JV/PPP) Program
UNCLASSIFIED
- The Joint-Venture / Public-Private Partnership (JV/PPP)
program extracts value from underutilized properties by
redeveloping them with a private-sector partner
- Deals are typically structured as an exchange where the U.S.
government swaps sites (e.g., through a disposal or long-
term out-lease) for newly constructed finished residential
end-units
- The JV/PPP process requires extensive risk management
techniques and a longer transaction timeframes
JV/PPP PROCESS
- Initial feasibility analysis
- Request for proposals
- Proposal evaluation
- Negotiations
- Partnership agreement
- Design review
- Construction oversight
DEPARTMENT OF STATE OVERSEAS BUILDINGS OPERATIONS
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Out-Lease Program – USG as a Landlord
UNCLASSIFIED
The Out-Lease Program is designed to financially benefit the U.S.
government by leasing or licensing USG owned properties which,
for various reasons will not, or cannot, be sold. Often embassy
missions identify American Schools and U.S. government affiliated
organizations to lease / license the buildings.
Asset Management:
- Negotiates the terms of the out-lease
- Collaborates with post to oversees the transaction lifecycle
- Negotiates and completes lease renewals
- Works with embassy to manage the property
DEPARTMENT OF STATE OVERSEAS BUILDINGS OPERATIONS
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Work With Us
07
DEPARTMENT OF STATE OVERSEAS BUILDINGS OPERATIONS
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How to Get Involved
Monitor SAM.GOV
- One-stop source for US federal government contract opportunities
- Set up alerts based on geography, federal agency, and type of product and
service.
- NAICS Code examples: 23 – Construction; 53 – Real Estate Leasing
- Product and Service Code examples: X – Lease Facilities; Y – Construction
of Facilities
Via the local US Embassy or Consulate
- Embassy webpage and social media presence
- Contact Embassy directly or advertise
Contact OBO
- Capabilities Conversations
U.S. Consulate General Windhoek, Namibia
SHoP Architects
