Sapporo Holdings Ltd., Japan’s fourth-largest brewer, said it’s in talks to repurchase a 15 percent stake in its Yebisu Garden Place property in Tokyo from Morgan Stanley.
Morgan Stanley Real Estate’s stake in the 17-year-old building is valued at about 40.5 billion yen ($519 million), Sapporo said in a statement to the Tokyo Stock Exchange today. The real estate unit of the U.S.-based bank bought the shares for 50 billion yen in 2007, according to the company’s statements at the time of the purchase. Natsuo Nishio, a Tokyo-based Morgan Stanley spokesman, declined to comment.
Sapporo cited the property’s higher than average occupancy rate, compared with the central Tokyo area, as the reason for its interest. Morgan Stanley is negotiating the sale of its stake in the 40-story tower and surrounding retail and office complex after recording real-estate losses of about $4.4 billion in 2008 and 2009.
“Morgan Stanley is looking to reduce its exposures to real estate,” said Takashi Ishizawa, a Tokyo-based property analyst at Mizuho Securities Co. “The deal would be beneficial for both, as Sapporo has always been interested in real estate.”
Sapporo, whose property business accounted for about 52 percent of operating profit in the nine months ended Sept. 30, expects to reach an agreement by the end of January and complete the transaction by the end of February, it said. The brewer now owns 85 percent of the property.
Yebisu Garden Place consists 11 buildings and has a current office occupancy rate of 96 percent, compared with the 92 percent average for central Tokyo, according to Sapporo. Morgan Stanley is a tenant at the complex.
Morgan Stanley’s real-estate investing business had $43 billion of assets under management as of June 30, with 37 percent in Asia, 37 percent in the Americas and 26 percent in Europe, according to the company’s website.