Tom Honeycutt, a USAA spokesman, tells GlobeSt.com that the size of Cobalt's capital pool hasn't been set and he declined to give an estimate. The firm also is ironing out its investment criteria. The firm's strategy includes managing properties it owns and establishing partnerships and venture arrangements with companies in local markets.

Cobalt intends to operate in top-tier markets around the country. Honeycutt listed Dallas, Atlanta, Seattle, New York City and San Francisco as likely places where Cobalt would do business.

The firm has no current holdings, "but we expect to change that shortly," Honeycutt says.Friedland, before forming Cobalt, was COO for American Industrial Properties. He also was the REIT's chief investment officer until its sale last year. From 1997 to 2001, he directed the growth of its portfolio from $70 million to $650 million in assets. "It's a great opportunity for us to bring someone of his expertise into us, but leave the flexibility of him being the developer and architect of the private equity firm structure," Honeycutt says.