USAA was founded in 1922 as a member-owned association providing financial services to members of the military and their families. Today, it is five million members strong and carries a AAA credit rating. The properties, developed by USAA between 1986 and 1996, range from 300,000 sf to 517,000 sf and are located in the cities of Sacramento, CA, Colorado Springs, Norfolk, VA and Tampa, FL.
Ingrum declined comment on a potential sales price, but other local brokers familiar with the transaction tell GlobeSt.com the portfolio could sell for as much as $400 million, or $254 per sf, and that the initial capitalization rate on the deal would likely be in the 6% range. If those numbers turn out to be true, the buyer would need to garner rent equal to $15 per sf per year for 17 years to fully capitalize the investment.
Ingrum says all the buildings are owned free and clear and that the financial services company is selling them in order to "enhance their balance sheet, convert non-earning assets to cash and take advantage of what they think is a pretty attractive capital markets window." As far as the likelihood of USAA exercising its lease extension options, Ingrum says, "USAA developed these buildings and they are located in these markets for a reason (because they are close to military bases), so barring a very significant change in business," they are very likely to remain there.
Once the offering memorandum is ready, Ingrum says would-be buyers will have 30 days to put in a bid. After that, USAA will review the bids and either decide to move forward with one buyer or put the portfolio back out on the market for another round, possibly as four individual properties rather than a portfolio. "At the end of the day, USAA will do what is best for them," he says.
Joining Ingrum on the listing will be Jack Fraker, CBRE's Dallas-based executive vice president, as well as Greg Vorwaller, president of CBRE Investment Sales, and Mike McMenomy, senior managing director, who are based in CBRE's Los Angeles office.
"This significant assignment reflects the tremendous increase in demand for high-quality, well-located assets that provide income stability," adds Ingrum. The combination of USAA's extraordinary AAA credit and the superior quality of these USAA properties is exactly what long-term investors are looking for. The diversification provided by these four regional offices also allows investors access to four of the best growth markets in the country.
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