In January, Atlanta-based Gables Residential and an affiliate of USAA Real Estate Co. announced a joint venture to develop apartments at urban infill sites. The agreement also allowed USAA to purchase an interest in a number of Gables properties. Overall, the development and acquisitions amount to more than $400 million of Class A multifamily assets. The partners announced that they’re closed acquisitions on three stabilized properties and have begun development of three more: Gables Fairmount, a 333-unit property in Dallas; Gables Bering, a 306-unit property with 11,200 square feet of retail in Houston; and Gables Upper Rock, 281-unit property in Rockville, Md.
Gables CEO David Fitch took some time to talk with Multifamily Executive senior editor Les Shaver about the agreement with USAA.
MFE: What attracted you to USAA?
FITCH: We're attracted to USAA as a joint venture partner because of their experience. We had a common view of the type of product that we wanted to develop and that they wanted to own. We had existing sites that were attractive to them. For allocation purposes, we felt like the best way to execute to do this would be in joint ventures. Instead of owning 100% of a project, we felt it was better to do it in a joint venture. We hope to do additional investments with them beyond this additional set.
MFE: Does the partnership provide a way to get your development platform moving again without contributing equity?
FITCH: It’s a chance to enter into a venture with as strong and as experienced institutional partner as you could find. We had very common thoughts about where the thought the business was going and what we wanted to build and own and operate.
MFE: Does this make Gables stronger for an eventual sale?
FITCH: We would build these assets with or without USAA. It’s the type of developments that we have been building and will continue to build. I think it’s an additive to Gables to have an association with the likes of USAA. It adds further credibility to the Gables platform. It’s a strong partner.
MFE: Do you see a lot of insurers jumping into the multifamily business?
FITCH: Clearly, the insurance companies are back in the business of investing in multifamily at the acquisition level and at the debt level. As we went through the process of deciding who to joint venture these assets with, as time went by, more and more insurance companies came forth as interested increasing their allocation towards multifamily. I think that will continue.