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Sapporo Buys Back Tokyo Property Stake From Morgan Stanley

Sapporo Holdings Ltd., Japan’s oldest brewer, agreed to buy back a stake in a Tokyo property complex from Morgan Stanley in a deal it had earlier valued at 40.5 billion yen ($525 million).

Japan’s fourth-largest brewer will buy back a 15 percent holding in Yebisu Garden Place, Sapporo said in a statement on its website today. Today’s statement didn’t confirm the value of the transaction estimated by the Tokyo-based company on Dec. 26.

Real estate provided 43 percent of Sapporo’s operating income of 15 billion yen in 2010, according to data compiled by Bloomberg. Sapporo sold the stake in the suburban Tokyo retail, restaurant and business-tower complex in 2007, as it faced a hostile takeover bid from investor Warren Lichtenstein’s Steel Partners Japan Strategic Fund.

Sapporo last month cited the 17-year-old property’s higher than average occupancy rate, compared with the central Tokyo area, as the reason for its interest. Morgan Stanley had recorded real-estate losses of about $4.4 billion in 2008 and 2009.

The beermaker owns 85 percent of Yebisu Garden Place, which consists of 11 buildings and has a current office occupancy rate of 96 percent, compared with the 92 percent average for central Tokyo, according to the company. Morgan Stanley is a tenant at the complex.

Bars and Restaurants

Sapporo gained 0.3 percent to 295 yen today, before the announcement. The stock has declined 21 percent in the past 12 months, compared with 18 percent drop for the broader Topix index. Asahi Group Holdings Ltd., Japan’s biggest by volume, gained 7.8 percent while Kirin Holdings Co., the second largest, lost 14 percent.

Named after the northern Japan city where it began brewing in 1876, Sapporo sells beer, wine and distilled drinks such as shochu. It also runs bars and restaurants.

The brewer is expanding in Southeast Asia and North America as slowing population growth hurts demand in its home market.

While real estate accounted for 6 percent of Sapporo’s 389 billion yen revenue in 2010, the division contributed operating income of 8 billion yen, compared with 9.8 billion yen from alcoholic beverages, according to data compiled by Bloomberg.

Morgan Stanley’s real-estate investing business had $41 billion of assets under management as of Sept. 30, with 37 percent in Asia, 37 percent in the Americas and 26 percent in Europe, according to the company’s website.

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