Military housing went from job to vocation after 9/11

COURTESY PICERNE
SERVING THEM: John Picerne, president and CEO of Picerne Military Housing, says his company’s work is evenly divided between rehabs and new construction.
COURTESY PICERNE SERVING THEM: John Picerne, president and CEO of Picerne Military Housing, says his company’s work is evenly divided between rehabs and new construction.

John Picerne was raised on the real estate business in the third-generation Picerne Real Estate Group. But the further he went in the family business, the less comfortable he became with the boom-and-bust cycles of residential housing. Craving a more stable slice of the market, Picerne ventured into military housing, particularly building apartments on Army bases, and broke off the independent Picerne Military Housing in 2005.
Now Picerne Military has 20,000 units under management at bases across the country and employs 863 people, up 60 percent from the start of the recession, including 80 at the company headquarters in East Greenwich. This year Picerne was honored at the White House for a company foundation that helps the families of veterans and was a finalist for the Ernst & Young Entrepreneur of the Year award.

PBN: How is building housing for the military fundamentally different from building apartments for civilians?

PICERNE: Military housing differs in several ways. It provides housing to military members and their families exclusively and the work we do is entirely on military installations. The way it works is we receive a ground lease for 50 years, we purchase all the buildings from the military, raise debt against the projected rental income, and then reconstruct and redevelop new housing for active-duty members. In our portfolio, which has [more than] 20,000 homes, we have developed about 50 percent new homes and 50 percent renovations. The renovations are really anywhere from minor on relatively new homes to major renovations, which would be all the way down to bare studs and framing, where we are basically starting over again. We also have an extensive number of historic homes in our portfolio.

PBN: What drew you to military housing initially from Picerne Real Estate Group’s specialty in traditional apartments? PICERNE: Because I had grown up in a family business I had seen a tremendous amount of highs and lows in the real estate industry over the decades as a kid and realized I did not want to continue down the path of recessions coming and going and seeing the portfolio going from being worth a lot of money to a little. So I tried to find a business that would be somewhat recession-resistant. It seemed like government-supported housing in some form would make the most sense.

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PBN: Since the 1990s, and since 9/11, how has military housing changed?
PICERNE: The most significant change was in 1996. The Department of Defense was trying to figure out a universal housing program … but they realized pretty quickly that the different services … weren’t going to do it uniformly across the Department of Defense. So we engaged closer to the Army, because we liked what they were developing, which was more of a partnership than a contract. And we liked the idea that the Army installations were larger and probably needed the most help. They probably got the least amount of help in the pre-privatization years. Prior to 1996, the Department of Defense had a backlog of about $30 billion across the country, so it was a huge dollar amount. So that was where we could make the most difference, by joining in with the Army.
Since then the most significant change was 9-11. It seems obvious now, as it was an impactful time for all Americans, but it was even more impactful for those living on installations and defending our nation. For me, it may seem corny, but my job went from being a smart career decision to a vocation starting right after 9/11. Once we announced we were going to war in Afghanistan and Iraq, the family members we had started to get to know from providing services at these installations were being deployed and were going off to war. Things become very real very fast when you are in that world. PBN: On a practical level, how did being at war change the kind of housing you were providing?
PICERNE: What we as a company were instrumental in transforming is the notion that housing was not just housing, that it wasn’t a caring business. We started developing our program around the notion of … having neighborhood centers, so that in a smaller mass you could have 500 to 600 families living in a way harkening back to the old Americana way of a central hub and spoke, where you have a neighborhood center with amenities, offices and our service providers. They are getting to know a certain group of people, so you have a sense of community. Inside the gate, these folks realize this is the life they have chosen and it is a different life. We, civilians, come and go to our homes and neighborhood and maybe we know our neighbor and maybe we don’t; it is not that important whether we do or not. In the military it is utterly important because without that sense of community and connectivity they would be lost. Their spouses go off to work every day and they don’t know if they are coming back.

PBN: With Iraq and Afghanistan winding down, does the need for military housing become more or less?
PICERNE: It remains to be seen. We are going to see what happens with budget cuts and sequestration. If the government shrinks the size of the active-duty force, it may require somewhat less housing in the global or gross sense. But in the net sense, over the course of the years to come, we are going to need more housing on installations where folks can get the services they need, whether medical services or psychological services. I think there is a sense of need to be connected. This is hard work. •

INTERVIEW
John Picerne
POSITION: President and CEO of Picerne Military Housing
BACKGROUND: After starting in the family business, Picerne Real Estate Group in Warwick, Picerne decided to forge his own niche in the development world focused on military housing in 1998. Seven years later, Picerne Military Housing became an independent company. It now manages 20,000 units across the country.
EDUCATION: High school and some college at Arizona State University
FIRST JOB: Construction at age 17
RESIDENCE: Providence and Narragansett
AGE: 50

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