Daiwa House REIT Buying Shinjuku Hotel for $68M

Daiwa House REIT Investment Corporation has agreed to acquire a hotel in Tokyo’s central Shinjuku ward for JPY 10.2 billion ($67.6 million).

The trust sponsored by developer Daiwa House Industry is buying the 280-key Daiwa Roynet Hotel Nishi-Shinjuku in the buzzy commercial district at an 18 percent discount to appraisal value, the REIT’s manager said Friday in a filing with the Tokyo Stock Exchange.

The disclosure identified the seller as Fuyo General Lease Co, a non-related party, and the operator as property services affiliate Daiwa House Realty Management. The 2018-built hotel was planned and developed by Fujita Corporation, a Daiwa House subsidiary, according to the manager. Fuyo Lease Group had acquired the property from Fujita in September 2023 for an undisclosed price, according to market sources.

“The anticipated acquisition is a hotel in Shinjuku area in central Tokyo where accommodation demand is strong throughout the year including inbound tourism and located a five-minute walk from Nishi-shinjuku station on the Tokyo Metro Marunouchi Line,” the manager said.

Calm and Quiet in Tokyo

The transaction price for Daiwa Roynet Hotel Nishi-Shinjuku values the 14-storey property at JPY 36.4 million ($241,730) per key and implies a net operating income yield of 5.3 percent.

The manager highlighted the competitive advantage of the hotel’s accessibility from Nishi-shinjuku station on Shinjuku’s west side, with the asset enjoying “extremely high” occupancy and average daily rates.

“Nishi-shinjuku area where the property is located, while less crowded than the bustling area around the Shinjuku station, is calm and quiet, making it popular among guests looking for peace and safety,” the manager said.

Upon completion of the acquisition on 4 November, Daiwa House REIT’s portfolio will comprise 230 properties with a total acquisition cost of JPY 912.7 billion ($6 billion). Hotels will make up 4.1 percent of the portfolio by acquisition value.

“The transaction reflects the fact that there is still liquidity in the Japanese hotel market, including arm’s-length transactions,” Dan Voellm, chief executive and founder of consulting firm AP Hospitality Advisors, told Mingtiandi. “Domestic players remain active, particularly where their REITs continue to have access to favourable lending rates.”

Tourism Nears New High

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.

The tourism trend continues to support hotel investment volume, with Singapore-listed CapitaLand Ascott Trust earlier this month completing the sale of Citadines Central Shinjuku Tokyo for JPY 25 billion ($166 million). Japan’s Mizuho Leasing paid a more than 40 percent premium over valuation for the 206-key property. The new owner is expected to renovate the ageing hospitality asset.

In September, hospitality giant Hilton signed a deal with Japanese builder Mitsui Fudosan to establish Waldorf Astoria-branded luxury rental residences in the highest levels of a 52-storey tower under construction in the capital’s central Chuo ward.

That same month, Hyatt Hotels announced the final closing of a JPY 22 billion ($149 million) fund to invest in development of luxury hot spring hotels in Japan under the Atona brand. The fund’s lead investors include Chicago-based Hyatt, building contractor Takeneka Corp and developer Kiraku, a specialist in the traditional Japanese inns known as ryokans, which feature onsen thermal baths.