Holiday Inn Express Osaka City Centre Midosuji (Image: IHG Hotels & Resorts)
Swedish fund manager EQT has completed the sale of a Holiday Inn Express hotel in central Osaka to TSE-listed Orix JREIT for JPY 22.5 billion ($148.4 million).
Funds managed by Baring Private Equity Asia, now part of EQT, had acquired the 304-key Holiday Inn Express Osaka City Centre Midosuji, then known as the B Osaka Midosuji, in 2021 from developer Tokyo Tatemono for $93.3 million. The firm undertook a renovation and rebranding of the 21-storey property in partnership with IHG Hotels & Resorts to launch the mid-priced Holiday Inn Express brand in Japan.
Michio Matsumoto, managing director and head of Japan real estate at EQT, said Tuesday that the transaction reflected the Stockholm-based firm’s commitment to Japan and ability to execute successfully in Asia’s second-biggest economy.
“It also demonstrates the strength of our approach — combining global expertise with local knowledge,” Matsumoto said in a release. “We see significant long-term opportunities across Japan’s office, logistics, residential, and hospitality sectors, and look forward to continuing to expand our presence in the market.”
Post-COVID Tailwind
The Holiday Inn Express Osaka City Center Midosuji concluded its renovation programme in August 2022, ahead of Japan’s post-COVID reopening in October the same year, and since then has continued to grow its average daily rate, EQT said.
Michio Matsumoto, managing director and head of Japan real estate at EQT
The hotel is situated on Osaka’s main Midosuji Boulevard between two prominent subway stations, Shinsaibashi on the Midosuji line and Hommachi on the Chuo line. Orix JREIT’s purchase price for the 2019-built property translates to JPY 74 million ($487,891) per key and an appraisal net operating income yield of 4.6 percent, according to a stock filing.
News of the deal comes less than a week after Daiwa House REIT announced plans to acquire a 280-key hotel in Tokyo’s central Shinjuku ward from Fuyo General Lease Co for JPY 10.2 billion ($67.6 million). The transaction price for Daiwa Roynet Hotel Nishi-Shinjuku values the 2018-vintage property at JPY 36.4 million ($241,730) per key and implies a net operating income yield of 5.3 percent.
Like Daiwa Roynet, the Osaka property enjoys an excellent location in the heart of a key city and also benefits from an efficient Holiday Inn Express platform that continuously delivers a strong bottom line, according to Dan Voellm, founder and chief executive of consulting firm AP Hospitality Advisors.
“The Japanese hotel market remains active, and quality assets are in high demand,” Voellm told Mingtiandi. “Domestic players with lower cost of capital can outbid overseas players, if they so choose to.”
Keen to Make Deals
Orix Corp’s real estate investment unit has raised the target size of a fund launched in January by 33 percent to JPY 40 billion ($272 million), reflecting rebounding Japanese institutional investor demand for property market deals, the unit’s president told Bloomberg last month.
Earlier this year, Orix JREIT bought the 428-key Hotel Universal Port Vita near Osaka’s Universal Studios Japan theme park from Orix Corp for JPY 35 billion ($230 million), seeking to gain from tourism growth driven by this year’s Osaka-Kansai Expo and the construction of casino-focused integrated resorts due to open in 2030.
The number of inbound tourists in Japan during 2025 surpassed 31.6 million in the first nine months, reaching the 30 million mark a month earlier than in 2024 and closing fast on the full-year record of 36.87 million set last year, according to official statistics.
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