SC Capital Buys Kyushu Island Hotel for $1B Japan Hospitality Fund

SC Capital Partners on Thursday announced its acquisition of a 165-room hotel in the southernmost part of Kyushu island for an undisclosed price, as the fund manager continues to make Japanese lodging a key focus of its regional strategies.

SC Capital picked up the Hotel Gran Cerezo Kagoshima on behalf of its $1 billion Japan Hospitality Fund I, said the Singapore-based firm, which is 40 percent owned by Temasek-controlled CapitaLand Investment. Situated in central Kagoshima, the capital city of the same-named prefecture, the 2017-built property has been repositioned as the Hotel Oriental Express Kagoshima Tenmonkan under SC Capital’s Hotel Management Japan operating arm.

Founder and chairman Suchad Chiaranussati said SC Capital enjoys a “unique position” to capitalise on hotel opportunities in Japan, building on the firm’s 15-year track record and over $1 billion invested through private funds targeting Asia’s second-biggest hospitality market.

“We are pleased to further strengthen our presence in Japan’s hospitality sector, leveraging our deep local expertise and extensive platform,” Suchad said in a release. “We remain confident in the market’s long-term growth potential and believe that, with the right opportunities, we can continue to create value.”

Opening Next Week

SC Capital has carried out operational enhancements and refurbishment to elevate the Kagoshima hotel’s performance and better capture increasing demand from leisure travellers, with the rebranded hostelry scheduled to open for business on 15 April.

Kagoshima’s expanding tourism industry is supported by its well-connected road and rail network, which includes the Shinkansen bullet train, and an increasing number of flights at the international airport, according to SC Capital. Steady local accommodation demand is also driven by government offices, hospitals, corporate headquarters and educational institutions.

Launched in 2021, Japan Hospitality Fund I closed on $1 billion in committed capital in 2022. The vehicle’s stated aim is to acquire, reposition or operate hospitality-related investments — including real estate, trust beneficiary interests representing real estate, companies and REITs — in a bid to capitalise on the post-pandemic recovery of Japan’s tourism market.

Suchad told Reuters at the time of the fund’s launch that he was more optimistic about the tourism recovery in Japan than in any other Asia Pacific market.

“I believe very strongly that the trend of foreign visitors coming to Japan will recover and gather strength and continue for a very long time,” he said in an interview with the news agency.

The Thai financier’s thesis has panned out well, with international tourist arrivals in 2024 reaching 36.8 million — the highest annual figure since records began in 1964, according to the Japan National Tourism Organization.

Target-Rich Environment

SC Capital’s latest hotel deal follows last month’s $900 million final closing of the firm’s sixth Asia Pacific opportunistic real estate fund. Real Estate Capital Asia Partners VI targets growth-oriented investments across APAC’s developed markets and has already committed more than 70 percent of total raised equity, with 44 percent allocated to Japan.

RECAP VI’s investments have included the $900 million acquisition of 27 Japanese hotels as part of a consortium with Goldman Sachs Asset Management and the Abu Dhabi Investment Authority. SC Capital subsidiary Japan Hotel REIT Advisors manages the 7,124-room portfolio, which spans major tourist destinations across the country.

The fund is also developing a 50-megawatt data centre campus in Osaka and a hyperscale facility in South Korea’s Bucheon in collaboration with SC Zeus Data Centers, an in-house operating platform of SC Capital.

SGX-listed CapitaLand Investment closed on the S$280 million ($214 million) purchase of its 40 percent stake in SC Capital last month, completing the first tranche of a deal that could see it attain full ownership by 2030.

The Singaporean giant is set to triple its funds under management in Japan while growing its business across APAC with the purchase of the firm founded in 2004 by Suchad, who is expected to retain full autonomy over the business until the sale of the remaining 60 percent.