San Antonio-based USAA Real Estate Co., a division of insurance and financial services firm USAA, manages more than $4.4 billion in real estate assets. The firm provides acquisition, build-to-suit and development services for both corporate and institutional investors, and specializes in office, medical office, industrial, public sector, retail, land and hotel properties.

Last year USAA Real Estate ranked No. 19 on NREI’s listing of top industrial developers. Its co-investment partners include some 36 foreign and domestic institutional parties, while it manages and supplies leasing services to a portfolio exceeding 25 million sq. ft. of commercial real estate nationwide.

James Loyd, executive managing director of development, has more than 25 years of real estate experience and oversees the marketing, financial analysis and management of USAA Real Estate's build-to-suit, development and acquisition programs.

Recently, USAA initiated several urban, mixed-use developments in Texas. It is moving ahead with plans to develop The Town Center at La Cantera on more than 175 acres just outside San Antonio, featuring a mix of upscale hotel, residential, retail, entertainment and office space.

Earlier this year, USAA and High Street Residential, a division of Dallas-based Trammell Crow Co., announced plans to develop major mixed-use projects for three Dallas/Fort Worth suburbs. In April, the pair broke ground on Garland Station, a $22.1 million transit-oriented development located in the heart of the city’s historic downtown. The project will feature 189 residential units, ground floor retail and a 400-space parking garage.

Also in April, the City of Carrollton announced a partnership with High Street and USAA to develop high-density retail, residential and office projects on three transit-oriented areas around the city, including its historic downtown Carrollton Square.

The duo is also working with the City of DeSoto to redevelop its town center, which will consist of 136 residential units, 37,000 sq. ft. of commercial space and parking to service both public and private uses on the 6.5-acre tract. Construction began in December 2007 and is expected to be completed in 2010.

NREI recently caught up with Loyd in his San Antonio office to find out more about the company and its plans.

NREI: What is your investment allocation for commercial real estate development in 2008? How does that differ from recent years?

Loyd: [our allocation for commercial real estate investment is] in excess of $2 billion in acquisitions and new development starts. Generally, we are increasing our investment targets for 2008 and 2009 both for our parent company’s portfolio and our institutional partners.

NREI: What commercial property sectors are currently the most attractive?

Loyd: Right now, multifamily and mixed-use developments are seeing better fundamentals, while the retail sector is in question. Office and industrial are holding steady, but are subject to a decline in business investment for industrial and the retailing sector.

NREI: What role do joint ventures and other investment vehicles like mezzanine debt play in your strategy?

Loyd: I would say that 85% of our strategy involves joint ventures with developers like High Street Residential, Trammell Crow, Carter and several regional developers, and co-investments with major pension funds.

NREI: How has the recent credit crunch and subprime residential situation changed your long-term investment perspective?

Loyd: [Our long-term investment perspective] has changed only in the pricing outlook with a potential reduction of new supply.

NREI: Is commercial real estate more or less highly regarded today as an investment class?

Loyd: In our universe of similar investors, real estate has long been a core asset rather than an alternative class, although activity and allocations may wax and wane. Certainly Class-A properties are still in demand.

NREI: Are you looking for other development partners and why? Are you targeting certain types of projects?

Loyd: About 85% of our development investments are in ventures with development partners, leveraging both our capital and human resources. We have placed significant funds in multifamily and industrial with several office developments in the works.

NREI: How did you connect with High Street Residential?

Loyd: We came to them through our relationships with Trammell Crow Co. High Street is a creative, capable developer of infill, transit-oriented developments, and we’re happy to be along for the ride.