The joint venture with Vornado (ET had reported in February that the two were in exploratory talks) is Reliance's fifth global partnership in three months--the other four being with Marks & Spencer, Vision Express, Miss Sixty and Office Depot. However, the latest partnership is important as it would deal with real estate acquisition and management, which is crucial for the viability of any retail company.

Most retailers are bleeding because they have acquired properties mindlessly to cash in on the consumer boom. While some like RRL and AV Birla Group have the staying power, others want quick returns, which are clearly not coming through.

Meanwhile, a source said the group's big-buck real estate foray may also see it tapping a synergistic foray into hospitality. "The group is looking at the possibility of setting up hotels to take advantage of the excess floor space index (real estate space) available at some of its existing properties," a source explained. But it is learnt that the group has not yet taken a final call on the hospitality project, given the vastly different skill sets required for the same.

At Mumbai's Bandra-Kurla Complex, Reliance is developing an integrated project, including corporate offices, shopping mall and five-star hotels, on a 25-acre plot. However, it is not clear whether the real estate joint venture with Vornado would extend to hotel projects, even though the US realty major has an asset like Hotel Pennsylvania in its portfolio.

Reliance, which was averse to global partnerships in the past, has now adopted a more pragmatic approach to form joint ventures with the world's best to capitalise on their domain expertise and brand power. Since the group is a green horn in retail and has never dealt with a consumer business on such a large scale, it wants to learn the systems and processes from experienced global companies so that it can apply them on its own retail venture.

So, Reliance didn't think too much when it had to relent majority control to global apparel and food company Marks & Spencer. Even in its JV with Vornado, Reliance may be a minority player, but the shareholding structure could not be confirmed.

Sources said the real estate assets of Reliance Retail will now be parked with this realty fund, thus transferring a high cost base from the retail company's balance sheet. With this, the fund becomes the official real estate supplier to RRL, a role hitherto performed by the Mukesh Ambani-backed Urban Infrastructure Opportunities Fund and others.

Vornado, the $14-billion market cap company, develops and manages retail properties and office spaces in Washington and New York. In India, it is likely to give the much-needed push to RRL's expansion plans, which have slowed down in recent months. It will also develop seamless malls, which will house global brands with which RRL is signing up joint ventures.

It is believed that besides this particular project, the Reliance-Vornado JV will look at catering to other retailers and corporate houses. Vornado-owned and managed malls in the US have Wal-Mart, JC Penny and Macy's as anchor tenants and the same could happen in India, with the realty fund offering space to multiple retailers. The JV is close to appointing an independent CEO but he is unlikely to be from Reliance.