Morgan Stanley buys ANA hotels for $US2.36bn.

All Nippon Airways has sold 13 Japanese owned and leased hotels in Asia Pacific's largest hotel transaction to the Morgan Stanley Real Estate Fund for $US2.36 billion.

The hotels were sold with the benefit of long term operating agreements with IHG ANA Hotels Group Japan.

Following the sale, the ANA Hotel Tokyo was re-branded as the ANA-InterContinental Tokyo and over the coming months the remainder of the owned and leased hotels in the portfolio will be re-branded under the ANA-InterContinental, ANA-Crowne Plaza and ANA-Holiday Inn flags.

Joint advisors, Jones Lang LaSalle Hotels’ Asia managing director Scott Hetherington and the firm’s executive vice president in Japan Tomohiko Sawayanagi brokered the deal which is the largest hotel transaction in Asia Pacific and one of the biggest real estate sales the region has experienced.

Hetherington said the sale underlines the strength of the region’s capital markets and in particular, investors’ desire for real estate in the world’s second largest economy.

“Global investors were approached for the Portfolio which has a total of approximately 5,000 rooms located throughout Japan and includes market leading properties such as the ANA-InterContinental Tokyo and its sister property on Manza Beach in Okinawa.

“Through a highly competitive process, bids were received from investors not only in Japan but also from Asia and North America. The level of interest was reflective of the scarcity of opportunity to buy a portfolio of this size and the desire of international investors to consider hotel investments,” he added.

Hetherington said historically the hotel investment market in Asia has been driven by owner operators.

“But we have seen a profound change in this view over the past few years with investors being happy to acquire hotels which are encumbered by operating agreements that fairly share the risks and rewards between owners and operators.

“The sale by the firm of the Swissotel Merchant Court and the Intercontinental Hotel in Singapore last year as further evidence of this trend,” he added.

According to Sawayanagi, the sale is the culmination of four years’ work by the firm which started when ANA began to review whether hotels were a core business for the airline.

“We were appointed to conduct a tender process to seek an international management company to form a joint venture with ANA to manage the 33 hotels it owned, leased and operated in Japan and internationally.

“The portfolio presented a tremendous opportunity for the purchaser to work with the new operating joint venture to reposition and refurbish the hotels and to benefit from an ever strengthening domestic consumer market in Japan,” he added.

Australian Property Journal