GIC Chooses SC Capital-Sponsored J-REIT as Preferred Bidder for Fukuoka Hotel

GIC has chosen a real estate investment trust sponsored by Singapore’s SC Capital as the preferred bidder for a hospitality complex in Fukuoka, Japan, according to sources familiar with the process who spoke with Mingtiandi.

Tokyo-listed Japan Hotel REIT is said to be in due diligence to purchase the Hilton Fukuoka Sea Hawk hotel in the country’s sixth-largest city for a price said to be as much as JPY 70 billion ($449 million), the sources said.

The Singapore sovereign wealth fund had put the oceanfront property on the market earlier this year at a reported asking price of as much as JPY 90 billion, after having acquired the 1,053-key asset in 2007. Representatives of both SC Capital and GIC declined to comment on the reported discussions.

In July 2023 SC Capital Partners had teamed up with Goldman Sachs Asset Management and the Abu Dhabi Investment Authority to purchase a set of 27 Japanese hotels for $900 million, in the country’s largest hospitality acquisition of last year.

Selling a Mega-Hilton

Japan Hotel REIT, which had a portfolio with an acquisition value of JPY 397 billion as of 31 December, is said to have edged out a rival offer by Hong Kong’s Gaw Capital Partners for the property, with the reported compensation valuing the property at as much as JPY 66.5 million per key.

The hotel is part of a 169,157 square metre entertainment complex in the city’s Momochi coast area that also houses the Hawks Town Mall and what is now Fukuoka PayPay Dome stadium, which is home to the Fukuoka SoftBank Hawks baseball team.

GIC had acquired the asset (then known as JAL Resort Sea Hawk Hotel Fukuoka) in 2007 through it purchase of the Hawks Town complex, undertaking a $20 million renovation of the 1995-vintage hotel before it reopened as a Hilton in 2010.

The hostelry reigned as Asia Pacific’s largest Hilton until the Hilton Singapore Orchard re-opened in 2022 with 1,080 rooms. Hilton’s management agreement for the 35-storey hotel near the famed Fukuoka Tower is said to be expiring soon.

Should the deal be completed, GIC will have completed its exit from the Hawks Town complex, having sold the mall element to Mitsubishi Estate in 2015, and disposed of the 52,500-seat stadium to Softbank in 2012 for JPY 87 billion, according to local media reports.

In December, Japan Hotel REIT had completed its acquisition of Hotel JAL City Kannai Yokohama, betting on continuing demand from business and leisure travellers in the city outside of Tokyo.

Japanese Hotels Stay Hot

The potential acquisition would come comes as hotel investment volume in Japan exceeded JPY 500 billion in 2023, surpassing the 2022 total by 240 percent and eclipsing the previous record set in 2019 by 4 percent, according to CBRE.

“Japan’s hotel market is one of the most growing and promising markets,” Kusumine Enami, head of Japan for private equity firm AB Capital told Mingtiandi. He expressed confidence that the country will surpass the government target of 60 million inbound visitors annually, before the 2030 target date.

With his firm specialising Japanese hospitality investments, Enami pointed to the upcoming world expo and the country’s recent approval of a casino resort as catalysts for the industry. “Major cities in Japan including Tokyo, Osaka, Sapporo, Fukuoka as well as many resort destinations will benefit well from this tourism resurgence,” he added.

KKR last week announced that it is launching 14 Japanese hotels under Marriott International’s Four Points Express by Sheraton brand, after acquiring the properties last year through its takeover of Japanese hospitality operator Unizo.

On Thursday, Star Asia Group announced that it has agreed to acquire Tokyo-based hotel operator Minacia from Unison Capital Partners for an undisclosed price. The deal gives the Japan-focused property investor control of a hotel firm that manages 39 limited-service hotels with 5,180 rooms in major Japanese cities.