Mitsui-Backed REIT Buys Three Japan Hotels From First Brothers for $21M

A Tokyo-listed REIT sponsored by property giant Mitsui Fudosan has acquired a portfolio of three hotels in Japan for JPY 3.1 billion ($21.2 million).

Nippon Accommodations Fund said in a filing that the properties are Smile-branded hotels in the cities of Akashi, in Honshu’s Kansai region; Matsuyama, the capital of Ehime prefecture on Shikoku; and Naha, the capital of Okinawa prefecture. They comprise 331 guest rooms in total.

The seller was identified as a subsidiary of First Brothers, the Tokyo-based investment management firm founded by Tomoki Yoshihara, a veteran of Mitsui and Morgan Stanley. JLL advised on the disposal, the real estate consultancy said Tuesday in a release.

“We continue to see robust investment appetite for hotel assets throughout Japan,” said James Yukio Abe, managing director and head of investment sales for Japan at JLL’s hotels and hospitality group. “These three hotels are well positioned to provide stable income to the investor as Japan continues to experience a strong recovery in tourism and travel.”

Casting a Wide Net

Mitsui’s Nippon Accommodations Fund focuses on stable mid- to long-term earnings through investment in rental housing and hospitality facilities. The $2.3 billion trust holds 11,648 rental apartment units, mostly in and around Tokyo, and 1,829 hospitality units.

The J-REIT picked up the three-asset portfolio’s highest-valued property, the 128-room Smile Hotel Okinawa Naha, for JPY 1.12 billion. The 2,773 square metre (29,848 square foot) hostelry on Japan’s smallest main island is frequented by business travellers and solo tourists, the trust’s manager said.

The 97-room Smile Hotel Matsuyama on Shikoku, acquired for JPY 1.04 billion, provides 2,144 square metres of space and sits a one-minute walk from Iyo Railway’s Katsuyama station. The 106-room Smile Hotel Nishi-Akashi west of Kobe, with a sale price of JPY 970 million, spans 2,045 square metres and is within a two-minute walk of Nishi-Akashi station on the JR Kobe and San-yo Shinkansen lines.

Last week, JLL announced that it had advised on the sale of central Kyoto’s Hotel Resol Kyoto Kawaramachi Sanjo for an undisclosed price. The 144-room hotel was purchased by a special purpose vehicle of Mitsui Bussan Digital Asset Management, which specialises in asset management for real assets using blockchain.

Strong Deal Volume

According to JLL, the first half of 2023 saw JPY 203 billion ($1.39 billion) worth of hotels change hands in Japan, with the six-month deal volume representing a 65.4 percent year-on-year increase.

The country’s big-ticket hotel transactions in the first half included KKR and Gaw Capital Partners’ acquisition of the Hyatt Regency Tokyo from Odakyu Electric Railway for a reported JPY 57.1 billion ($410 million), as well as BentallGreenOak’s purchase of the Rihga Royal Hotel Osaka for around JPY 50 billion ($360 million).

JLL said it expects the positive trend to continue into the second half of the year, with several transactions already closed or agreed.