Kasumigaseki Capital Wins Approval for Tokyo Listing of Hotel REIT

Japanese property investor and fund manager Kasumigaseki Capital has received approval from the Tokyo Stock Exchange for the listing of a hotel-focused REIT.

Kasumigaseki aims to secure stable revenue and contribute to continuous growth of the REIT by providing acquisition opportunities from hotels developed by the group, according to a stock filing. Kasumigaseki’s hotel business develops the Fav, Fav Lux, Edit x Seven, Seven x Seven and Base Layer brands.

Styling itself as a developer-backed listed trust specialising in hotels, the REIT aims to promote Japan’s tourism industry by investing in properties that accommodate large groups, an undersupplied segment in the domestic hospitality market.

“Based on KC group’s corporate philosophy of ‘Turning Challenge into Value’, KC will aim to achieve further growth and solve social issues in the business field with growth potential and business with social significance,” the company said.

Comforts of Home

Kasumigaseki got its start rebuilding a shopping centre damaged by the March 2011 earthquake. The company led by president and CEO Koshiro Komoto has since expanded by developing solar power plants, day care centres, apartment-hotels, logistics facilities and healthcare-related properties.

Komoto began his career in construction management at Meiho Facility Works and later worked in real estate fund management at Grosvenor, the British investment group controlled by the Duke of Westminster, before joining Kasumigaseki in 2014. The company listed on the TSE’s top-tier Prime Market in 2023.

Kasumigaseki’s flagship Fav brand offers standard guest rooms of more than 35 square metres (377 square feet) to accommodate four or more people. The rooms come equipped with a kitchen and washing machine for long-term stays, with the customer unit price set lower than that of a business hotel.

Across all its brands, Kasumigaseki has a pipeline of 41 hotel projects nationwide, according to the company’s most recent annual report.

“We are in the midst of developing facilities conceptualised on spacious and well-designed hotels where families and friends can stay together,” Kasumigaseki said in the report.

New Supply Dries Up

The number of inbound tourists in Japan reached a record 37 million last year, per official statistics, surpassing the pre-COVID peak of 32 million in 2019.

The hotel sector will experience a steep drop in new supply over the coming years, which will benefit existing assets and boost room rates amid unwavering demand from overseas travellers, according to Savills.

“Overall, the yearly supply of new guestrooms across Japan has been decreasing in recent years, and is anticipated to remain limited from 2025, particularly in established tourist destinations, while new supply remains more consistent in less-travelled regional areas,” the consultancy said in its Japan hospitality report. “This trend is likely to benefit existing hotels, as limited new hotel supply against a backdrop of ever-expanding inbound tourist demand should create a sense of scarcity in the market, likely contributing to further ADR growth and greater hotel valuations.”