A unit of Mori Building Co, Japan’s largest privately owned developer, is investing in Conduit House, a private equity firm specialising in hospitality projects, according to an announcement by the Hong Kong-based firm late last month.
Mori Hospitality is investing an undisclosed amount into Conduit House, which was founded last year by former Hyatt Hotels executive Grant Healy, after the Mori Building suffered its second year straight of contraction globally.
Conduit House, which focuses on turnarounds, repositioning and distressed assets across the residential, hotel and commercial sectors, currently has four projects in Bangkok, and one in Malaysia.
Moving Beyond Japan
“Conduit House represents a unique platform for Mori Hospitality to extend its exposure to hospitality opportunities in Asia beyond Japan,” said Hiroo Mori, President, and CEO of Mori Hospitality Corporation. “We believe that our investment in Conduit House will provide further depth, experience, and pipeline to our organization as well as future partnership opportunities,” he added.
After announcing plans to co-develop a 220-room hotel in Bangkok last September, and following up with the unveiling of a joint venture to build a hotel and branded residences in Port Dickson, Malaysia in late October, the six-month-old firm will tie the knot with Mori Building Co, one of Japan’s oldest real estate firms. Mori Building had a portfolio of 98 buildings for lease as of April 2018, amounting to approximately 1.25 million square meters (13.45 million square feet) of space.
Mori Hospitality, the unit through which the investment will be channeled operates hotels, golf resorts, member’s clubs, spas and fitness centres in Japan. Properties managed by this Mori arm include the 3,900-member Roppongi Hills Club, the Grand Hyatt Tokyo, and the Andaz Tokyo. Mori Building also developed the 101-storey Shanghai World Financial Center.
Teaming Up for Hospitality Projects
Grant Healy, managing director of Conduit House, said Mori Hospitality is aligned with his firm’s goals, and that the partners will be looking “at a number of compelling opportunities including asset turnaround and repositioning, redevelopments, asset management and distressed situations across South-East Asia, Australia, China, and Japan in gateway cities”
Healy spent over 22 years at Hyatt, including most recently as vice-president of hotel finance, before leaving the hotel giant over four years ago. In 2014, he co-founded Louis T. Collection, a hospitality management, and building solutions company.
Conduit’s Malaysian project will be located on a 250,000 square metre site in Port Dickson and is set to launch in 2021. The project will be carried out in conjunction with local developer Dasar Prisma Sdn Bhd and will offer buyers a 15-year leaseback, according to a company press release.
Its second most recent development was announced in September 2018. The private equity firm will develop the planned 227 room hotel in the Bangkok suburb of Bang Kapi along with an undisclosed privately held family group. Construction is set to start in the first half of 2020, and the building is expected to begin operating in early 2022.
Mori Seeks to Grow Portfolio
Mori Building’s investment comes during its second straight year of falling revenues. The conglomerate’s revenues slid 3.4 percent to JPY 249.9 billion in 2018, following a fall in property sales. However, the firm’s net income jumped 46.2 percent to JPY 40.2 billion in that same period, driven by higher occupancy rates and prices in office and residential leasing, as well as by better performance in its hotel business.
This year the company expects its revenues to drop 2.7 percent to JPY 243 billion and its net income to reverse course and fall by 25.4 percent in April, due in part to a downturn in residential property sales.