ProLogis Forms $575M JV with India’s K Raheja
- Apr 09, 2008
ProLogis has entered the distribution market in India through a 50/50 development joint venture agreement with K Raheja Corp, one of the largest real estate developers in India. The venture plans to invest $575 million, approximately 60 percent of which will be leveraged. The move is the latest in ProLogis’ international strategy of geographic diversification–the company currently conducts business in 118 markets across North America, Europe and Asia. “By establishing a presence in the world’s top logistics markets, we have effectively mitigated the impact of any single economy on our overall results,” Abhijit Malkani, head of operations for ProLogis in India, told CPN today. The timing is also right for opening up operations in India, said Malkani (pictured) “There has been strong manufacturing growth and growth in port volumes, combined with a move toward outsourcing of logistics–similar to the drivers we’ve seen in China,” he said. “Plus there is a general lack of modern, efficient warehouse space.” The sectors driving warehouse demand include retail, food storage, electronics, auto components, consumer goods, textiles and pharmaceuticals, Malkani said. The JV will initially seek opportunities in Mumbai, Chennai, Delhi, Bengaluru, Kolkata, and Pune–which are among the fastest growing locations for distribution operations in India. The venture partners are currently negotiating for nearly 500 acres at numerous sites in these areas. Acquiring land in India has proven to be challenging for several reasons, Malkani said. Land prices are escalating rapidly,. and a buyer must often consolidate small parcels of less than an acre. There is also a shortage of land zoned for warehousing, and legal complexities surround the process of entitling and rezoning land.The JV expects to invest its funds over the next three years and develop approximately 7.5 million square feet of distribution space over the next five years. The deal follows yesterday’s announcement, as reported by CPN, of a $1 billion joint venture between Denver-based ProLogis and Arcapita, an investment bank headquartered in Bahrain. The undertaking will develop and acquire logistics warehouse spaced in most of the Middle Eastern nations of the Gulf Cooperation Council K Raheja Corp is a private, family-owned company that develops office, retail, hotel and residential real estate. Clients include multi-national corporations such as IBM, Morgan Stanley, HSBC, Nokia, Accenture, Oracle and Citigroup. Denver-based ProLogis conducts business in 118 markets across North America, Europe and Asia. The company has $36 billion of assets owned, managed and under development in nearly 2,800 properties spanning 510.2 million square feet.