Frothy deal in Japan

Morgan Stanley is helping Sapporo turn from beer to real estate.

Morgan Stanley has formed a real estate partnership with Japanese beer maker Sapporo, launching the effort with the investment bank's purchase of a 15 percent stake in the crown jewel in Sapporo's property holdings, commercial facility Yebisu Garden Place, for $437 million (€302 million). The two companies will begin jointly operating the facility by next June.

Sapporo has continued to expand its non-beer operations as a declin ing Japanese population and stiff competition in the beverage market drives its beer profits down. The company's strong property business has helped it in the meantime as its beer and drink operations struggle. According to Reuters, Sapporo's real estate business, which operates under the banner Yebisu Garden Place Co, earned more than 70 percent of the company's operating profit in 2006 and despite its beverage problems, the company posted a 60 percent jump in group operating profit for the nine months prior to September.

As part of the deal, Morgan Stanley will use its real estate fund to purchase five percent of Sapporo's common shares by next June. Morgan Stanley closed its latest global property vehicle, Morgan Stanley Real Estate Fund VI, on $8 billion in June.

Sapporo says it plans to use some of the proceeds from the Yebisu Garden Place stake sale as well as the Sapporo stake sale to buy more real estate and bolster its overseas operations. Sapporo Holdings president Takao Murakami told a press conference that the two will consider buying new properties in Japan as well as increasing the value of existing properties, targeting the Tokyo metropolitan area as well as the company's hometown, Sapporo, on the island of Hokkaido.

The move is just the latest foray into the Japanese property market by Morgan Stanley. In April Morgan Stanley made a deal to acquire 13 hotels and two property-management units from Japanese airline All Nippon Airways for $2.4 billion. In 2004 Morgan Stanley bought the Westin Hotel Tokyo from Sapporo for about $435 million. Japanese real estate has been attracting domestic and foreign investors as the country's economy recovers from the lows experienced for the last decade. Office vacancy rates have been falling and commercial land prices have been recovering in the Tokyo metropolitan area.

Report: Indian real estate and infrastructure attracts half of all private equity
IndusView Advisors, an Indian consultant that advises multinationals on cross-border deals, reported last month that $5 billion (€2.5 billion) has been invested into property and infrastructure in India. In the report, the firm says 32 private equity real estate deals worth $2.6 billion have been completed since records began, while 20 infrastructure transactions worth $2.4 billion have been done. The amount invested in these two sectors is half of the total $10 billion invested in all Indian sectors by private equity firms. The high levels have helped to propel India to second in the chart of top investment locations in Asia. It beats China, which has attracted $8.3 billion. Only Japan has attracted more, says the report. According to Indian government estimates, the two sectors have the capacity to absorb as much as $300 billion over the next five years.

CBRE beefs up China team
CB Richard Ellis has appointed three senior executives to its team of China real estate professionals. Greg Penn, joining as senior managing director of investment properties, will be based in Hong Kong. He will be responsible for the acquisition and disposition of property assets and will direct capital market real estate transactions. Penn will also serve as a member of the greater China strategic group. Martin Woods, appointed executive director for CBRE projects in greater China, will be charged with project management and building consultancy for the company in mainland China, Hong Kong, Macau and Taiwan, in response to growing market demand. Jane Martin, coming on as senior director for CBRE Consulting, will be leading corporate consulting assignments across greater China.

The Blackstone Group opens office in Tokyo
The Blackstone Group has set up an office in Japan, its third office in Asia after Mumbai and Hong Kong, as part of an Asian expansion plan. The firm lags other US private equity groups such as TPG and The Carlyle Group in entering Asia but has made headlines globally by successfully attracting $3 billion from China Investment Corp, a newly established government investment agency. The Tokyo office is led by Alan Miyasaki, who joined Blackstone in 2001. He is a managing director in the firm's real estate division and responsible for acquisitions in Asia. He recently moved to Tokyo from New York. Since joining Blackstone, he has been involved in transactions worth over $20 billion in the retail and lodging sectors, according to the company website. The new office joins several others that Blackstone has set up across Asia in recent years. Blackstone set up an office focused on private equity and real estate transactions in Mumbai in 2005. In January, Blackstone opened a satellite office in Hong Kong to focus on private equity transactions, hiring former Hong Kong treasury secretary Antony Leung to head the office.