joint venture marketing
A joint venture is a business agreement in which parties agree to work together on a project sharing assets toward a common goal. Commercial real estate investment is a fairly commonplace joint venture in the marketplace. Together two or more companies can combine their resources – everything from finances, marketing, technology and staff – to develop and manage a profitable commercial real estate property such as a shopping center or office building.
The two or more companies involved in the agreement share control over construction, marketing and management and other related expenses. The partners, while sharing risks, are also able to legally keep this particular business venture separate from the rest of their organization.
There are several advantages for entering into commercial real estate joint ventures. First, it allows companies to gain access to capital which is tight in today’s economy. Also, one company may have more management related expertise than money and this allows them to continue to grow.
The challenges of the joint ventures include the amount of time required to build the right kind of relationship. Integration can also take time as employees bring in different cultures and expectations into the venture. But the advantages far outweigh the risks involved and many companies in America are taking the plunge into such ventures.
If they build it, will the shoppers come?
Recently, Tanger Factory Outlet Centers, Inc., (NYSE:SKT) and Simon Property Group, Inc., (NYSE:SPG) announced a 50/50 joint venture agreement for the development, construction, leasing and management of a Tanger Outlet Center south of Houston, Texas.
The Tanger Outlets will be located in Texas City, TX which is approximately 30 miles south of Houston and 20 miles north of Galveston. The area receives an estimated 100,000 vehicles per day near the anticipated location Exit 17 of Interstate 45 at Holland Road. The center is expected to feature over 90 brand names and designer outlet stores when the first phase of approximately 350,000 square feet is completed. Tanger and Simon separately have a strong reputation throughout Texas and experts see this as a good marriage.
Steven B. Tanger, President and Chief Executive Officer of Tanger Outlet Centers, Inc., commented, “The opportunity to build a Tanger Outlet Center south of Houston makes perfect sense. Our partnership with Simon will provide our retail partners with what we believe are the best location and strongest development. When built, we will offer residents and visitors to this region one of the nation’s best brand name and designer outlet shopping centers with today’s style and fashion trends at the best values every day.”
Another company Worldwide Realty Corporation, the real estate arm of Children of America, specializing is also asking for interest from other firms to get into a joint venture opportunity.
Just show me the money
Another common option are lenders with money available for investment, seeking what they see believe might be good investment opportunities without the headache of daily operations. Then they partner with construction and property management firms to locate, build and lease the properties on their behalf.
Still all about the money but no hard hats involved
This week Prudential Mortgage Capital Company and affiliated funds of Perella Weinberg Partners disclosed their plans to work together to originate commercial mortgages. This partnership taps into Prudential’s credit and finance expertise and Perella Weinberg Partners’ real estate lending and investing experience.
christian fea is CEO of Synertegic, Inc. A joint venture marketing firm. He exemplifies how to profit from Joint Venture relationships by creating profit centers with minimal risk and maximum profitability.
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