Japan Hotel REIT Buys 170-Room Yokohama Asset for $28M as Demand Recovers

Japan Hotel REIT has completed its acquisition of a 170-room property in central Yokohama for JPY 4 billion ($28 million), the trust’s manager announced late last week.

Hotel JAL City Kannai Yokohama is a limited-service hotel aimed at business and leisure travellers, JHR said in a stock exchange filing. The asset is within a five-minute walk of Yokohama’s Chinatown and seaside attractions like Yamashita Park and its Future Rose Garden.

Based on factors like the recovery from the COVID-19 pandemic and the expansion of domestic and international business and leisure demand, JHR views the Kannai area of Japan’s second-largest city as a hotel market likely to grow further.

“The hotel is steadily capturing demand for accommodation in the current hotel market,” said the trust’s manager, Japan Hotel REIT Advisors, which is majority-owned by Singapore-based SC Capital Partners. “JHR believes that the hotel will continue to attract growing demand for accommodation.”

Centre of Attention

Built in 2006, Hotel JAL City Kannai Yokohama is a two-minute walk from Nihon-odori railway station and a 10-minute walk from Kannai interchange station.

Kannai is surrounded by administrative institutions like the Kanagawa Prefectural Office and Yokohama City Hall and can generate business demand on weekdays, leisure demand on weekends and demand for events held at Yokohama Stadium and the Pacifico Yokohama exhibition centre, JHR said.

The acquisition of JPY 23.5 million ($170,000) per room was funded with a JPY 1.2 billion loan from MUFG Bank and a JPY 2.8 billion loan from the Development Bank of Japan. The hotel will be leased to a wholly owned subsidiary of JHR strategic partner Hotel Management Japan.

JHR’s latest transaction increases the portfolio to 47 hotels with 12,272 rooms and a total purchase price of JPY 396.9 billion ($2.8 billion). Asset manager Japan Hotel REIT Advisors is held to 87.6 percent by SC Capital and chaired by that firm’s founder, Thai financier Suchad Chiaranussati.

Year of Big Bets

SC Capital made its own splash in the Japanese market back in July, partnering with Goldman Sachs Asset Management and the Abu Dhabi Investment Authority to acquire a portfolio of 27 resort hotels from Daiwa House Industry for $900 million.

Japan Hotel REIT Advisors is to play an integral role in maximising the further growth of the portfolio, which includes the 465-room Royal Hotel Okinawa Zanpamisaki on that southern island’s white-sand Zanpa Beach.

This year’s other big-ticket deals in Japan hotels included buyout giant KKR’s tie-up with Hong Kong’s Gaw Capital Partners to buy the Hyatt Regency Tokyo for JPY 57.1 billion ($410 million) and Canada’s BentallGreenOak acquiring the Rihga Royal Hotel Osaka for JPY 50 billion ($360 million).