By Hiroyuki Kachi
(Adds tie-up details on Yebisu Garden Place.)
TOKYO (MarketWatch) -- Sapporo Holdings Ltd. (2501.TO) said Tuesday it has agreed with Morgan Stanley /zigman2/quotes/209104354/composite MS +1.82% to cooperate in the real estate business, giving the U.S. investment bank an interest in a posh district in central Tokyo.
Through their tie-up, a special purpose company to be launched by a Morgan Stanley real estate fund will buy a 15% interest in Yebisu Garden Place, a residential and shopping district in downtown Tokyo, for Y50 billion from the brewer's real estate unit.
The deal underscores the attractiveness of Japanese real estate, which has lured domestic and foreign investors as the country's economy improves. Commercial land prices have been recovering in the Tokyo metropolitan area and office vacancy rates have fallen considerably, suggesting that demand for real estate in central Tokyo will persist.
The accord also allows Sapporo to jointly operate Yebisu Garden Place with Morgan Stanley, which has been active recently in Japan's real estate sector. The tie-up will also give Sapporo the chance to team up with Morgan Stanley in other real estate businesses.
The transaction will give Sapporo a capital gain worth Y24.9 billion in the year ending December 2008.
Under the accord, another Morgan Stanley SPC will buy about a 1.5% stake in Sapporo on a voting-rights basis by December via trading on the market, with the understanding that the SPC will boost its stake to 5% by June next year.
Morgan Stanley earlier this year bought 13 hotels in Japan from All Nippon Airways Co. The company also bought the Westin Hotel Tokyo from Sapporo in late 2004 for about Y50.1 billion.
News of the capital alliance comes amid Sapporo's efforts since earlier this year against New York-based Steel Partners Japan Strategic Fund's bid to raise its stake in the brewer to 66.6% in terms of voting rights. Steel Partners had about an 18% stake in Sapporo as of January this year.