The Five Food Groups – May 2008

INDUSTRIAL
ProLogis makes its debut in India
Denver-based industrial property investor ProLogis is making its foray into the Indian property market with its 50/50 development joint venture with Indian real estate developer K Raheja Corp. Under the agreement, the joint venture will acquire land, develop properties and manage the assets, initially focusing on developments in Mumbai, Chennai, Bengaluru, Kolkata and Pune. Abhijit Malkani, former regional director of Indian and Middle East operations for NAI Global, is heading ProLogis’ operations in India. ProLogis expects to develop approximately 7.5 million square feet over the next three years and about 25 million square feet over the next five years, with plans to invest approximately $575 million (€364 million) over the next three years. The joint venture has already acquired 27 acres of land in Loni, near Pune, and is in advanced stages of land acquisition talks for 140 acres in Bengaluru, 120 acres in Chennai, 99 acres in Kolkata, 70 acres in Mumbai and an additional 33 acres in Pune. The industrial giant has a significant presence in Asia. “Over the last few years, ProLogis has achieved tremendous success in Asia following the establishment of operations in Japan, China and South Korea,” Jeff Schwartz, ProLogis chairman and chief executive officer, said in a statement announcing the joint venture. India was a “logical next step,” he added, noting that the country had seen steadily rising demand for modern warehouse space over the past several years due to strong growth in manufacturing, widespread infrastructure improvements and greater interest among companies to outsource logistics needs.

RESIDENTIAL
Multifamily goes green
Crescent Resources, a joint venture between Morgan Stanley Real Estate and Duke Energy, is building upscale multifamily apartments as part of its new Circle concept, featuring upscale “green” living. The Circle developments include suburban garden apartment communities and urban mid- to high-rise apartments. Some developments will be Leadership in Energy and Environmental Design (LEED) designed according to guidelines by the US Green Building Council, and all developments will incorporate environmentally-friendly designs. Three projects are already under construction in North Carolina and Florida with additional developments planned for North Carolina, Tennessee and Texas. Crescent was also looking at markets in Dallas and Washington and expected to have 1,300 Circle residences under construction at the time of press.

HOSPITALITY
The toughest markets
Jones Lang LaSalle’s hotel and investment management arms, LaSalle Investment Management and LaSalle Hotel Properties, are set to target the toughest US hotel markets in a $250 million (€157 million) joint venture. The two firms anticipate investments of up to $700 million with leverage, according to a statement. The JV will focus on high barrierto-entry markets in the US, such as the Northeast and Pacific regions. LaSalle Hotel Properties will own 15 percent of the venture and earn an incentive fee depending on returns. LaSalle Hotel Properties, run by chairman and chief executive officer Jon Bortz, will also acquire, manage and redevelop the properties over the life of the venture, expected to be up to seven years. Bortz said the JV would help the hotel group diversify, while LaSalle Investment Management managing director Dan Witte said the vehicle would be “timely” given the current market dislocation. LaSalle Hotel Properties, a real estate investment trust which is part of the Jones Lang LaSalle group, went public in 1998 with 10 hotel investments. The firm now owns 31 luxury hotels in 11 US markets including the Westin, Sheraton, Hilton and Hyatt brands.

OFFICE
Up, up and away
New York-based Savanna Investment Management has purchased 282 acres near Stewart International Airport in New York for its proposed Hudson International Business Center, which will comprise more than one million square feet of commercial development. The complex will also include a hotel as well as light industrial space. Savanna plans to build up to five buildings ranging in size from 130,000 square feet to 475,000 square feet. It already owns Three Enterprise Drive, a 350,000-square-foot industrial facility in Newburgh next to Stewart Airport.

RETAIL
Much ado about beans
Sun Capital Partners is starting its morning with a good cup o’ joe. The Florida-based firm has scooped up Canada’s third-largest coffee shop chain, Timothy’s Coffees of the World, through its $6 billion (€3.9 billion) buyout fund Sun Capital Partners V. The acquisition includes 166 franchise and directly-operated stores primarily located in the Ontario area, as well as a wholesale distributor of single-serve coffee and tea products. Anthony Polazzi, Sun Capital vice president, recently told PERE it would continue to expand the chain in the Ontario region even though competition in the coffee retail industry was fierce.