Trophy Buy Broadens Morgan's Massive Japan Platform

TOKYO-Starwood Hotels & Resorts Worldwide Inc. of White Plains and a fund managed by New York City-based Morgan Stanley Real Estate have contracted to buy the 802-room Sheraton Grande Tokyo Bay Hotel in the Disney resort area from locally based construction company Taisei Corp. Group. The deal for the 19-year-old property is expected to close in March.

For Morgan Stanley, the deal broadens an already massive Japanese platform. The investor has acquired more than $17 billion of office, hotel, residential and retail properties since 1998. Today, the firm’s real estate assets under management in Japan total $6.7 billion and include such properties as the Westin Tokyo, Shinagawa Mitsubishi Building and Akasaka Garden City in Tokyo, the Shin Kobe Oriental in Kobe and the Hyatt Regency Kyoto in Kyoto.

The price of this latest score was not disclosed in a jointly prepared statement Monday by Starwood and Morgan Stanley. However, industry sources familiar with trophy hotel properties tell GlobeSt.com the estimated replacement cost of the asset is about $400 million, based on hard construction costs alone of about $500,000 per room. “The buyers, of course, could pay above replacement cost for a property of this stature,” a construction industry source says.