Gables Residential Partners with USAA
- Jan 18, 2011
January 18, 2011
By Barbra Murray, Contributing Editor
The apartment market is on the upswing and Gables Residential has just formed a joint venture with USAA Real Estate Co. to capitalize on the sector’s resurgence. The partners plan to shell out $400 million to develop Class A apartment properties in key urban infill locations, and for USAA to acquire a stake in several of Gables’ premier, stabilized assets.
“The apartment recovery rallied above expectations in 2010 thanks to the release of pent-up renter demand, lower tenant rollover and job growth,” Marcus & Millichap Real Estate Investment Services notes in a new report. “With the continuing recovery of the multifamily market, it’s our desire to start projects sooner rather than later, and we started looking for an institutional partner a year ago so we could leverage our experience in the business,” David Fitch, president and CEO of Gables Residential, told CPE. “USAA was the best match for our expectations; they have the vision and goals we were looking for in a partner.”
The two companies wasted little time hammering out the details. “We have been negotiating and doing due diligence with USAA for the last six months, and we’ve been discussing construction and financing during the same period.”
And already, Gables and USAA have kicked off development of three projects. In the Lone Star State, the team is building Gables Bering, a 306-residence apartment community in Houston that will also feature 11,200 square feet of retail space, and in Dallas, the 333-unit Gables Fairmount is underway. Additionally, in Rockville, Md., a suburb of Washington, D.C., work has commenced on the 281-unit Gables Upper Rock. While the joint venture will consider select markets across the country, it has identified locations that are of particular interest right now. “We’re focusing on Greater Washington, D.C., and Dallas, and Houston and Atlanta are other areas we’ll be developing in,” Fitch said.
Gables is spearheading development and construction efforts for the joint venture and the REIT will take on the management responsibilities as well.