Insights from Lou Jug, Managing Director,
Head of North America, Global Investors
Group, USAA Real Estate
By Greg Dresdow
Recently, we had a chance to speak with Lou Jug, Managing
Director, Head of North America for the Global Investors
Group of USAA Real Estate. USAA Real Estate (USAARE)
was formed in 1982 as the real estate arm of USAA, a
leading financial services company serving the military and
their families. While Lou resides in the East Bay, his office is
at corporate headquarters in San Antonio. build-to-suites and seek other office opportunities in strong
urban markets or in dynamic mixed-use environments.
Can you provide an overview of
USAARE’s real estate activity in
the US? Where do you see the best
opportunities in the next 24
months – by area of the country
or property type?
USAARE has over $20 billion of assets under management
and invests in virtually all major property types. The company
co-invests with US pension funds as well as foreign and
domestic institutional investors. It also provides capital to
development partners. Geographically, USAARE invests in
North America and Europe. In Europe, investment focus is
currently in logistics.
Notwithstanding our investment activity, we remain an active
seller of assets that we believe have maximized returns for our
investors and have sold more than $10 billion over the past
five years.
We are bullish on all rental housing as a long-term investment
theme, including multifamily, work force housing, single family
rentals and senior housing. Demographics and economic
trends are driving demand in all of these product types and
USAA is increasingly focused on creating viable solutions to
create quality workforce housing.
USAARE has a multi-faceted platform, including core, core-
plus, value-add and opportunistic funds – but at its core,
USAA is a value investor. USAA and its affiliates also offer
a variety of lending programs. So, the company is truly multi-
faceted with diversified property types.
How active is USAARE? Are you
a current net buyer or net seller?
What do you see as opportunities
in the next 12 months?
USAA remains quite active, but for the last several years
the company has taken a more defensive posture as values
reached peak levels. In our acquisition due diligence, we
focus on replacement cost and how the asset competes
in the sub-market. While our primary focus right now is on
multifamily and industrial, we will, however, still consider
office and retail. As a side note on retail, many investors shy
away from retail today. We are open to retail, if we see the
opportunity to densify and repurpose underutilized parcels
into experiential retail and non-retail mixed use elements,
making it more of a community.
We will also look at drug store / grocery-anchored retail,
especially if there is adjacent land or excess land on which
we can develop to create additional income. The same is
true for office product. We are active in the area of corporate
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BPM Real Estate Insights
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