USAA Real Estate Closes Restructuring Deal

Five months after announcing the transaction, USAA and its real estate arm have completed a management buyout.
Len O’Donnell. Image courtesy of USAA Real Estate

Five months after announcing a restructuring, financial services giant USAA and its real estate arm USAA Real Estate have officially closed on the management buyout deal, the companies announced on Friday morning.

USAA has sold a controlling interest in USAA Real Estate to current leadership at USAARE and Paxion Capital. USAA will keep a significant ownership stake in USAARE, which will continue to manage USAA’s real estate portfolio.

As previously announced, USAARE President & CEO Len O’Donnell will continue to lead day-to-day business at the firm. James Davidson and Fritz Wolff will be key principals under the new arrangement. Paxion Capital, a separate entity founded and managed by Davidson and Wolff, was a minority investor in the transaction.

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The move is intended to streamline USAA’s operating structure in its core businesses: banking, auto, home and life insurance and retirement products. According to the company, the deal will minimize regulatory requirements for USAARE, which will allow it to grow more profitably.

The restructuring is expected to have minimal impact on employees of the company, with USAARE planning to maintain its current workforce.

In prepared remarks, O’Donnell said the restructuring would help the company reach its full potential as a world-class investment manager.

A month before USAA’s announcement last November, Howard Hughes Corp. unveiled its own reorganization, naming Paul Layne as its new CEO and revealing a new streamlining plan that would save as much as $50 million a year and involve the sale of $2 billion in non-core assets. The plan also called for the company to move its headquarters from Dallas to The Woodlands, Texas, a northern suburb of Houston.

San Antonio-based USAA was founded in 1922 and had more than $30 billion in revenue as of 2017, according to the firm.