Morgan Stanley to acquire Al Nippon Airways'' hotel chain for $2.4 billion

Mumbai: Global financial services firm and investment manager Morgan Stanley has agreed to buy All Nippon Airways (ANA) Co.''s 13 Japanese hotels for 281.3 billion yen ($2.4 billion) in the nation''s largest real estate acquisition.

Tokyo- based ANA, the country''s largest domestic airline, is selling the properties to raise funds for new planes. The airline has ordered 50 Boeing 787 aircraft with delivery beginning in May 2008. The planes, with a list price of $6 billion, will help the airline cut fuel costs by as much as 20 per cent.

Morgan Stanley, the biggest property investor among Wall Street firms, will acquire properties, including the ANA Hotel in Tokyo''s Roppongi business district, 150 billion yen on the company''s books, the airline said.

The purchase will add to Morgan Stanley''s more than 80 hotel properties worldwide.

Morgan Stanley is raising $8 billion for its sixth high-return real estate fund, about 40 per cent of which is earmarked for Japan, where commercial occupancy rates and rents are climbing.

Several international and Japanese investment banks and buyout firms are competing for the airline''s hotels, which include ANA Hotel Tokyo in the city''s Roppongi business and entertainment district. Other properties include a hotel close to Narita International Airport and ANA Hotel Hiroshima, a 15- minute walk from the Atomic Bomb Dome.

ANA is being advised on the sale by Jones Lang LaSalle Inc. and Nomura Holdings Inc.

Land prices in Japan rose last year for the first time in 16 years as international and domestic investors competed to acquire properties in the three biggest cities.

Gains in Tokyo, Osaka and Nagoya compensated for drops elsewhere in the country. Average commercial land prices in the three cities rose 8.9 per cent in 2006 while residential land prices grew 2.8 per cent, the ministry of land, infrastructure and transport said in a report released on March 22.