News Archive : Japan Real Estate

Friday, November 11, 2005

Starwood Ready To Help Tsutsumi Bros Acquire Seibu Railway

November 10, 2005
Starwood Ready To Help Tsutsumi Bros Acquire Seibu Railway

TOKYO (Nikkei)--Starwood Capital Group Global LLC is willing to fund the tender offer for Seibu Railway Co. proposed by Yuji and Seiji Tsutsumi, two members of the railway group's founding family, The Nihon Keizai Shimbun learned Wednesday.

The U.S. investment firm is poised to invest up to 5 billion dollars, or about 580 billion yen, enough to fund the entire acquisition, according to sources.

Ever since the Tsutsumi brothers announced last week their tender offer proposal -- an alternative to Seibu Railway management's restructuring plan that calls for shifting to a holding company structure -- they have been receiving inquiries from investment firms and nonfinancial companies from home and abroad. Goldman Sachs Group Inc. and Morgan Stanley have been reported as potential sponsors.

Starwood Capital Chairman and Chief Executive Officer Barry Sternlicht notified Yuji Tsutsumi of the decision to invest. Because the Connecticut-based firm has conducted assessments of the locations and operations of the Seibu Railway group's hotels, it said that it would be able to provide fund quickly if the parties can reach an agreement.

In 1995, Sternlicht acquired a real estate investment trust that specializes in hotels and renamed this Starwood Lodging Trust. Since then, the Starwood group has taken control of several major hotel chains, including Westin and Sheraton.

In August, the group acquired France's Taittinger SA, known for its champagne and the luxurious Hotel de Crillon in Paris, for 2.1 billion euros, or about 290 billion yen.

Starwood Capital bought the Westin Hotel Tokyo last December for about 50 billion yen, jointly with the Morgan Stanley. In addition, it announced a plan to spend 500 billion yen over three to five years starting this year to acquire other hotels and commercial facilities in Japan.

Meanwhile, the Tsutsumi brothers are in talks with Mori Trust Co. to form a partnership to rehabilitate the Seibu Railway group's struggling resort business after the brothers complete their acquisition of Seibu Railway.

Because Mori Trust operates resorts in areas where the Seibu Railway group's hotels and golf courses are concentrated, the major building developer envisions joint development projects.

(The Nihon Keizai Shimbun Thursday morning edition)