Lone Star Buys Yokohama Apartment Block From Mapletree for Hotel Project

Lone Star Funds on Tuesday announced its acquisition of a 175-room lodging asset in central Yokohama from Singapore’s Mapletree Investments for an undisclosed price, as the US private equity firm hunts for value-add opportunities in Japan’s real estate market.

Oakwood Suites Yokohama occupies floors 46 through 51 at The Tower Yokohama Kitanaka, a 58-storey condominium developed by Japanese giant Mitsui Fudosan. Lone Star plans to convert the Oakwood from the property’s current use as serviced apartments into an upscale branded hotel, the Dallas-based firm said in a release.

Lone Star made the investment through its $2.7 billion Real Estate Fund VII, which held a final closing last September and targets value-add bets on debt portfolios, operating companies and direct equity in commercial properties in North America, Europe and Japan.

“This is a good example of the value-add investment approach that Lone Star has a long track record of executing upon in Japan,” said Jerome Foulon, global head of commercial real estate at Lone Star.

Opened in 2020

Temasek-owned Mapletree opened Oakwood Suites Yokohama in November 2020 as part of The Tower Yokohama Kitanaka, a 1.8 million square foot (167,225 square metre) project led by Mitsui Fudosan, Japan’s biggest developer.

The landmark mixed-use tower in the Kannai area near Yokohama’s waterfront boasts 1,176 high-end residential units and direct access to Bashamichi subway station, putting the property a half-hour train ride from Tokyo.

No financial details were revealed about the Oakwood transaction, which was brokered by JLL, but a nearby asset of similar scale — Hotel JAL City Kannai Yokohama — changed hands during the final days of 2023 for JPY 4 billion (then $28 million). SC Capital’s Japan Hotel REIT acquired the 170-room limited-service hotel in the expectation that the Kannai area’s hospitality market would grow further.

Lone Star plans to use the Oakwood’s average room size of more than 560 square feet as a competitive advantage in repositioning the asset, with the reopening scheduled for the fourth quarter of this year.

“In order to further improve the quality of this high-end asset, Lone Star will redesign the value proposition of the property and execute a significant repositioning plan,” said Lone Star Japan head Mitsuo Matsunaga.

Local Track Record

Lone Star has invested in Japan for more than 28 years, committing $9.6 billion in equity capital across nearly 90 investments.

Earlier this month the Texas firm announced its sale of Tokyo Beta, a 16,192-room shared living platform, to fellow US fund manager Warburg Pincus. The portfolio was created under the Real Estate Fund VI strategy after the purchase of more than 1,000 non-performing loans in Japan between 2020 and 2022.

Following the acquisition, Lone Star restructured the management of nearly 1,200 share houses from more than 200 individual property managers, streamlining operations into a single platform of affordable rental units aimed at young professionals and students.

“This portfolio highlights Lone Star’s willingness and ability to develop strong and promising businesses serving not only our investors but also Japanese consumers with improved products and services,” Matsunaga said at the time.