Nomura REIT Buying Hokkaido Hotel From Daiwa House for $43M

Tokyo-listed Nomura Real Estate Master Fund has agreed to acquire a Hokkaido hotel from Japanese builder Daiwa House Industry for JPY 6.3 billion ($43 million).

The REIT sponsored by Nomura Real Estate Development is buying La’gent Stay Hakodate Ekimae in Japan’s northernmost main island at a 26 percent discount to the independent appraisal value, according to a Tuesday announcement. Situated at the Hakoviva commercial complex in Hakodate, the 261-room hotel also has retail shops and a gym.

Master Fund favours the four-star hostelry in Hokkaido’s second-largest city because of solid tourism demand and the property’s location a one-minute walk from the area’s main railway station.

“The fund determined that the acquisition would help secure stable income and steady growth of the fund’s portfolio over the medium to long term in line with the asset management objectives and policies specified in the fund’s articles of incorporation,” the trust’s manager said.

Northern Exposure

Master Fund’s purchase price amounts to JPY 24.1 million ($160,000) per key for La’gent Stay Hakodate Ekimae, which spans 13,303 square metres (143,192 square feet) of floor area across 11 storeys.

The hotel’s net operating income of JPY 502 million implies a yield of nearly 8 percent for the 2019-vintage property. The acquisition is expected to close on 6 September.

The latest transaction comes amid heightened interest in Japanese hospitality assets, with acquisitions of hotels in the country having reached a record 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.

In June, a unit of Fosun International revealed plans to sell a Hokkaido ski resort with three on-site hotels as the Chinese conglomerate seeks to ease its RMB 211.9 billion ($29.9 billion) debt load.

Shanghai Yuyuan Tourist Mart aims to divest its 99.998 percent stake in Hoshino Resorts Tomamu for at least JPY 38 billion, with the resort’s hotels — the 200-key Risonare Tomamu, the 535-key The Tower and the 341-key Club Med Tomamu Hokkaido — included in the price tag.

Hospitable Market

One of Japan’s largest REITs, Master Fund comprises 293 properties across the office, retail, logistics, residential and hospitality segments. The addition of La’gent Stay Hakodate Ekimae will boost the portfolio to JPY 1.108 trillion ($7.6 billion) in value by acquisition price.

In April, the trust completed its JPY 2.3 billion purchase of Mimaru Suites Tokyo Asakusa, a long-stay hotel in central Tokyo’s Taito ward, from Daiwa House in a bid to reap gains from Japan’s tourism recovery.

That deal followed Master Fund’s JPY 3.2 billion acquisition of the Hotel Wing International Premium Kyoto-Sanjo in the country’s ancient capital last September.