In the largest Asian hotel portfolio sale on record, Morgan Stanley in March agreed to pay $2.4 billion for 13 luxury hotels in Japan. The seller was All Nippon Airways Co., Japan's second largest airline, which is shedding non-strategic assets. When the transaction closes in early June, Morgan Stanley will become one of Japan's largest hotel owners.

The ANA Nippon Airways Co. portfolio consists of roughly 5,000 hotel rooms. The assets are all located in plum Japanese cities like Tokyo and Okinawa. The portfolio offering encountered heated demand from a broad range of investors. Bids were fielded from Asian and North American investors, reports Jones Lang LaSalle Hotels, which represented the seller.

Managing director Scott Hetherington of Jones Lang LaSalle says that the heightened interest reflected “the scarcity of opportunity” to buy a significant hotel stake in the world's second-largest economy. “The hotel investment market in Asia has been driven by owner operators but we've seen a profound change in this view over the past few years,” adds Hetherington.

This latest acquisition may not be Morgan Stanley's last move into the Japanese market, either. In March, the firm finished raising $8 billion for a global real estate fund, and as much as 40% of that total will be used to buy Japanese commercial real estate.