Vornado Increases Presence in India with New $500M Retail JV

Paramus, N.J.-based Vornado Realty Trust has just formed a joint venture with Mumbai-based Reliance Industries Ltd. to acquire, develop and manage shopping centers in major cities across India. Vornado and Reliance will each contribute as much as $250 million to the partnership. The properties, most of which will be anchored by supermarkets, will range in size from 500,000 to approximately 1 million square feet. India, according to A.T. Kearney Inc., is one of the most appealing regions in the world for retail investment, scoring the number two spot on the global management consulting firm’s 2008 Global Retail Development Index. Opportunity in India’s retail market has reached its highest point ever at $510 billion, and spending patterns are growing at record pace. Joining forces with Reliance will allow Vornado to further penetrate the commercial real estate market in India. The REIT presently has joint venture investments in the country totaling about $91 million, and capital commitments to those partnerships accounting for an additional $92 million. India’s desirability as a premier real estate investment market is undeniable. According to a recent report by PricewaterhouseCoopers L.L.P., the country’s economy is expected to grow to approximately 90 percent of the U.S. economy by 2050, spurred in part by a large working-age population and an anticipated increase in education levels. A bevy of U.S. company’s have recently formed joint ventures to tap into India’s real estate market, which is booming across all sectors. In June, Prudential Real Estate Investors announced a partnership with Beekman Helix India Partners L.L.C to invest in the development of office parks and middle-income residential properties with an initial purse of $500 million. Last spring, Hilton Hotels joined forces with Marigold Hospitality Ltd. to develop 16 Hampton by Hilton Hotels at a cost of $200 to $250 million, and distribution facilities giant ProLogis announced its entrée into India via a $575 million development joint venture with K Raheja Corp. One of the largest owners and managers of real estate in the U.S., Vornado has a portfolio consisting of over 100 million square feet, with the majority of its assets located in the New York and Washington, D.C. metro areas. Vornado stock opened today at $100.80. Reliance is India’s largest public company, boasting revenues exceeding $34 billion and a market capitalization of over $75 billion. Reliance operates over 700 retail properties across India.