Morgan Stanley Real Estate has set up a joint venture to buy $1bn (£500m) of retail properties in metropolitan areas of the US

The world’s most acquisitive investor announced today the signing of definitive agreements for a tie up between a state pension fund investor client of its and US REIT Inland Western Retail Real Estate Trust.

The joint venture initially will be seeded with up to $500m (£250m) of properties from Inland Western's portfolio, with the additional $500m to come through purchases of ‘high-quality neighbourhood, community, and power centers’. Under Morgan Stanley Real Estate's client will contribute 80% of the equity and Inland Western will contribute 20%.

‘This partnership will enable our client to expand the retail component of their portfolio into markets that are currently underweighted,’ said John Kessler, chief operating officer for Morgan Stanley Real Estate Investing and global head of Core Products.

Inland Western Retail Real Estate Trust focuses on the ownership and management of multi-tenant shopping centres and single-user net lease properties. At the end of last year its portfolio consisted of 306 properties totalling 45m sq ft in 38 states and one Canadian province. It is one of four REITs that are, or have been, sponsored by affiliates of The Inland Real Estate Group of Companies, which collectively owns and manages $17bn (£8.5bn) of assets.

‘The venture underscores our commitment to evolve towards an increasingly asset management-based platform, as we continue to refine and execute our growth strategy,’ said Michael O'Hanlon, senior vice president and director of asset management of Inland Real Estate Investment Corporation.