American developers bringing taste of West


February 07, 1993|By Kenneth N. Gilpin | Kenneth N. Gilpin,New York Times News Service

The United States has been exporting chunks of its culture for decades, through books, television shows, compact discs and movies, to name a few. But it is fair to say that planned communities, like Columbia, Md. -- or even the concept -- have not been big items of foreign exchange. But that is changing.

Inspired by a slumping market in the United States and a perceived need to provide Western-style comfort and security for foreigners seeking gold in the former Soviet Union, American developers, with the blessing of the Russian government, have packed up their blueprints and headed for Moscow.

The most ambitious of these projects, an $88 million, 478-town house development called Rosinka, is now going up, piece by imported piece, around a recently constructed 40-acre lake 15 miles from Red Square. Monthly rents start at $3,750 and go up to $6,833.

Rosinka will be not only one of the most ambitious, but also one of the most expensive in which to live, which means most Russians will probably be excluded, though the developers say that 10 percent of the town houses will eventually be occupied by Russians who work for Western companies.

On its grounds, Rosinka will have tennis courts, an indoor pool, a day care center and a shopping mall.

"If I had to move to Russia, this is the only place I would live, $$ because it is as close to home as you can get," said Diane Corchard of Senie Kershner International Housing Ltd. of Norwalk, Conn., leasing manager for the project. "When you lie in bed and look outside, it's like being in Vermont."

Kershner International acquired a 50-year lease three years ago to develop the community on Zavet Ilyicha, a collective farm.

It joins other projects.

Last summer, an Atlanta developer, the Worsham Group, and two Russian partners opened a 200-unit complex of town houses and apartments that Moscow magazine characterized as a "hygienically sealed 40-acre hard-currency colony" in the embassy section of the city. Companies that have leased dwelling space there include Ciba-Geigy, Credit Suisse and Du Pont.

And two years ago, the Russian government signed up the Houston-based developer Gerald Hines as manager and leasing agent of a 333-unit apartment complex, called Park Place, 10 miles southwest of Moscow, built by a Turkish contractor.

Compared with these projects, Rosinka is a distinctly American undertaking, even though it did not start out that way.

Financing a development on the East Coast is a little different from throwing up 478 town houses in the Russian countryside, and signing up creditors was a problem.

At one point, Kershner International thought it had a deal with a Finnish company to build the homes with a loan guaranteed by the Finnish government. But Helsinki balked when the Russian government fell behind in its loan payments. A similar contract with an Italian company dissolved when a loan sponsored by the Italian government failed to come through.

Salvation arrived when Kershner International started talking with Deluxe Homes Inc., a Berwick, Pa., builder of modular units, whose biggest project to date was a 314-unit complex in New York City.

Deluxe put Kershner International in touch with the First Eastern Bank NA in Wilkes-Barre, Pa., a $2.5 billion institution that knows Deluxe well but does not make many loans outside Pennsylvania, let alone in Russia.

"We don't have international loans in our portfolio," said James Mack, an executive vice president at First Eastern who oversees the bank's commercial loans. "Any credit judgments we make relate to what we know and know well, and we know our customers in western Pennsylvania well."

First Eastern came up with a small revolving construction loan, Lloyd's of London provided the team with political-risk insurance, and the International Moscow Bank came up with separate loans in dollars and rubles.

Earlier this year, Deluxe began sending the steel-frame homes, which leave Berwick about 90 percent complete, by ship to St. Petersburg. Trucks carry the homes 535 miles to the building site.

"By dribs and drabs, using Deluxe's bank and letters of credit from each prospective tenant as security, we have been able to amass financing," said John Stock, a lawyer in Westport, Conn., who is one of the partners in the venture.

Having the U.S. government as Rosinka's anchor tenant also helped.

After looking at its own projected housing needs for the coming year, a forecast that showed a shortfall of more than 40 apartments, the State Department agreed to lease 40 units at Rosinka; the Agency for International Development took 10.

"We worked for almost a year to get them," said Noland Kershner, another principal in the project. "But they put us through a wringer and got a discount."

The U.S. government was able to slice $2,500 a year out of the annual rent it will pay for each apartment. Even so, rents on the units Washington has taken range from $42,500 to $47,500 a year.

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