"This sale underlines the strength of the region's capital markets, and in particular, investors' desires for real estate in the world's second largest economy," says JLL managing director Scott Hetherington. Based in Asia, Hetherington negotiated the transaction in tandem with EVP Tomohiko Sawayanagi from the Japan office. Marquee assets now owned by Morgan Stanley include the newly cast ANA InterContinental Tokyo and the Manza Beach Hotel & Resort.

The deal fits into Morgan Stanley's global hotel investment strategy, company officials say in a release announcing the agreement. "This transaction highlights Morgan Stanley's continued long-term commitment to investing in Japan and optimistic outlook for the nation's economy and hotel industry," adds the release. The hotels will be operated under an existing long-term management contract with IHG ANA Hotels Group Japan, a joint venture company started by ANA and InterContinental Hotel Group in December.

Creation of IHG ANA Hotels Group Japan and this week's sale to Morgan Stanley culminate a review begun by JLL four years ago to assess whether hotels were a core business for the airline. ANA opted to form a joint venture with InterContinental to manage the 33 hotels it owned, leased and operated in Japan and internationally. The portfolio was packaged with long-term operating agreements that Hetherington says reflect "a profound change" in the manner in which hotels are acquired.

Investors, Hetherington says, are now "happy to acquire hotels which are encumbered by operating agreements that fairly share the risks and rewards between owners and operators." JLL did two previous sales in the past year indicative of that trend, he says, those being the Swissotel Merchant Court and the Intercontinental Hotel in Singapore. As of April 1, the ANA Hotel Tokyo was rebranded as the ANA InterContinental Tokyo, while the remaining hotels in the portfolio will be similarly recast in the coming months under the ANA InterContinental, ANA Crowne Plaza and ANA-Holiday Inn flags.

As reported by GlobeSt.com earlier in the week, Morgan Stanley's $6.6 billion bid for CNL Hotels & Resorts Inc. won shareholder approval and closed. Ashford Hospitality Trust joint ventured with Morgan Stanley on the deal in which stockholders received $20.50 in cash for each share of outstanding common stock. The acquisition adds three Waldorf-Astorias in various western states; the Ritz-Carlton Orlando and JW Marriott Orlando at the Grande Lakes Resort; the Doral Golf Resort & Spa, which is a Marriott resort in Miami; the JW Marriott Desert Ridge Resort & Spa in Phoenix; and the Claremont Resort & Spa in Berkeley, CA to Morgan's portfolio.

Conducting large deals is one way Morgan Stanley is looking to set itself apart. At a recent RealShare Conference in New York City on the hospitality industry, John Buza, managing director of Morgan Stanley, told attendees, "We are just buying bigger deals, playing in the arena that other folks can't." He cited the CNL deal as one way Morgan Stanley was trying to differentiate itself.

Instant Insights /

Morgan Stanley Buys Japanese Hotels for $2.4B

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