In a bid to take advantage of institutional capital's interest in real estate investment Inland Western Retail Real Estate Trust Inc. entered into a definitive agreement to form a $1 billion joint venture with an unnamed pension fund advised by Morgan Stanley Real Estate. The venture will acquire shopping centers in major metro areas throughout the United States.

The pension fund will contribute 80 percent of the equity to the venture, with Inland Western providing the remaining 20 percent.

The deal will enable Inland to grow its asset management business, a popular tactic among retail REITs that enables them to boost returns. REITs can increase their return by putting less equity in the deal and by reaping management fees as part of the ventures, says Joseph French, national director of retail with the real estate investment brokerage firm Sperry Van Ness.