Hong Kong’s AB Capital Adds Eighth Japanese Hotel with Tokyo Acquisition

AB Capital has acquired a hotel near Tokyo’s Haneda airport, as the Japan-focused real estate private equity firm continues to expand its hospitality portfolio in Asia’s second largest economy.

The Hong Kong-based investment manager on Thursday completed its acquisition of the 219-key Ai Hotel Keikyu Kamata-ekimae, marking AB’s eighth Japanese hospitality buy and the fourth investment under its AB Capital Japan Hospitality Fund II. The seller and financial details were not disclosed.

“This purchase marks another significant milestone for AB Capital, expanding its portfolio in Japan’s key cities and reinforcing its commitment to the region’s vibrant hospitality industry,” AB Capital said in a release following the deal.

The acquisition comes as global investors continue to target Japanese hospitality assets amid the country’s tourism boom, with the $3.8 billion in hotel deals in the country during the first nine months of this year already surpassing 2023’s full year total, according to a JLL report released last month.

Rebranding and Renovating

Rooms in the hotel in Tokyo’s Kamata area average 13.3 square metres (143 square feet) in area, with the property located within a four-minute walk of the Keikyu Kamata station, which can transport guests to Haneda airport in roughly 10 minutes. The property is also a nine-minute walk from Kamata Station, which connects to Tokyo’s central business district and Yokohama.

“Located in Ota City, southwest of central Tokyo, Kamata hotels cater mostly to domestic travellers,” said Dan Voellm, chief executive and founder of investment consultancy AP Hospitality Advisors. “The ease of access to both Haneda airport and central Tokyo make this a strategic location. The submarket is thus among the markets benefitting from market compression out of central Tokyo. After rebranding, the property is set to see an uplift in performance becoming both an ‘alpha’ and ‘beta’ play for AB capital.”

The 2008-vintage hotel will be renovated and rebranded under a local hotel chain understood to be APA Hotels, with the property set to be operated by Aoki Co under a franchise agreement. The rebranding initiative aims to boost the hotel’s revenue per available room and enhance overall guest experience, AB Capital said.

AB Capital expects renovations to be completed in the fourth quarter and is targeting to commence operations by the first quarter of 2025. The fund manager hinted at more deals in the future as it aims to build a diversified hospitality portfolio.

“Looking ahead, AB Capital is committed to building upon the success of its previous track record, with a focused aim to construct a diversified hotel portfolio that offers favourable risk-adjusted returns to its investors,” AB Capital said.

AB closed on its acquisition of the Ai Hotel Keikyu Kamata-ekimae in the same month that it completed the purchase of the 175-room Vessel Inn Asakusa Tsukuba Express in Tokyo’s Asakusa district under the AB Capital Japan Hospitality Fund II.

The pair of October deals come after the company in July acquired a pair of hotels in Osaka and Kyoto as the first investments under that vehicle, with the twin transactions coming just over a year after the fund manager picked up a 220-room hotel in Tokyo.

The firm’s portfolio also includes two other hotels in Tokyo and one in Osaka. Using financing from local banks, CEO Alan Kam and co-founder Bryan Lee bought the 48-room Folio Sakura Shinsaibashi Osaka by Banyan Tree in December 2020, the 43-room Prostyle Ryokan Tokyo Asakusa in June 2021 and the 113-room Hotel LiVEMAX Shinjuku Kabukicho Meijidori in March 2022.

Japan Deal Streak

With tourism in Japan having exceeded pre-pandemic levels with a record 17.8 million foreign visitors in the first half of the year, according to the Japan National Tourism Organisation, investors have been piling into the country’s hospitality assets. Investment in Japanese hotels will reach $4.7 billion this year, with volume to grow a further 4 percent to $4.9 billion in 2025, according to a report last month by JLL.

Last week, TPG Angelo Gordon made the region’s biggest hospitality investment so far this year with the JPY 106 billion ($691 million) purchase of the Grand Nikko Tokyo Daiba, with the US investment manager teaming up with local player Kenedix to acquire the 882-key hotel in Tokyo’s Odaiba area from local real estate firm Hulic Co.

Other mega deals this year include the $593.1 million trade of The Park Front Hotel @ Universal Studios in Osaka and Singapore sovereign fund GIC’s $435.5 million disposal of the Hilton Fukuoka Sea Hawk.

Last month, Singapore’s Invictus Developments acquired the 140-room Lyf Ginza Tokyo hotel from a 50:50 joint venture of CapitaLand Investment’s Ascott hospitality unit and the Qatar Investment Authority.