SC Capital’s Japan Hotel REIT Buying Fukuoka Hilton From Mizuho Leasing for $420M

Japan Hotel REIT, the hospitality trust managed by Singapore-based SC Capital Partners, has agreed to buy the Hilton Fukuoka Sea Hawk from Mizuho Leasing for JPY 64.4 billion ($420 million), confirming Mingtiandi reporting from last year.

The Mizuho affiliate, which on several occasions has acted as an intermediary to purchase properties on behalf of Tokyo-listed REITs, acquired the 1,053-key property from Singapore sovereign giant GIC in September. The $452 million transaction represented Asia Pacific’s biggest single-hotel deal during the fourth quarter, according to data provider MSCI.

As early as last May, market sources had indicated to Mingtiandi that Tokyo-listed JHR was in exclusive discussions to purchase the Hilton Fukuoka Sea Hawk from GIC for JPY 70 billion. The trust announced the agreed price in a stock filing Friday afternoon, a few hours after Japan’s central bank raised a key interest rate by 25 basis points to 0.5 percent — boosting the cost of borrowing to its highest level in 17 years.

“The asset for anticipated acquisition is a large high-quality property located in areas where stable accommodation demand and growth can be expected going forward, and JHR believes that the acquisition will enhance the quality of the portfolio,” the REIT’s manager said in the filing.

Deal Takes Flight

The 35-storey hotel is part of a 169,157 square metre (1.8 million square foot) entertainment complex in Fukuoka’s Momochi coast area that also houses the Hawks Town Mall and the Mizuho PayPay Dome stadium, home to the Fukuoka SoftBank Hawks baseball team. Mizuho had acquired the naming rights for the stadium last April.

The hotel reigned as Asia Pacific’s largest Hilton until the Hilton Singapore Orchard re-opened in 2022 with 1,080 rooms. The Sea Hawk’s transaction price works out to JPY 61.2 million ($400,000) per key and a 10.2 percent discount to the independent appraisal value of JPY 71.7 billion.

GIC had reportedly sought as much as JPY 90 billion for the property when it began marketing the asset 16 months ago. The $801 billion sovereign fund had acquired the JAL Resort Sea Hawk Hotel Fukuoka, as it was formerly known, in 2007 through GIC’s 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 divestment marked GIC’s complete 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.

JHR has secured JPY 64.4 billion in fresh loans to fund the acquisition of the Hilton Fukuoka Sea Hawk, per a separate filing Friday. The term loans from lenders including Sumitomo Mitsui Banking, Mizuho Bank, Sumitomo Mitsui Trust Bank and MUFG Bank are to be drawn down on the anticipated acquisition date, 21 February.

Six by the Sea

The Sea Hawk will increase the number of Fukuoka hotels in JHR’s portfolio to six, including four with JHR strategic partner Hotel Management Japan as lessee.

Last month, JHR announced plans to sell the 247-key Washington Hotel Plaza Hakata Nakasu, a limited-service property in Fukuoka, to fund manager Risa Partners for JPY 4.6 billion ($29 million). The trust expects to realise a capital gain of more than JPY 2.3 billion on the deal, which is scheduled to close on 30 January.

When the two Fukuoka transactions are complete, the REIT’s portfolio will consist of 51 properties with 14,130 rooms acquired for a total of JPY 515.4 billion.

JHR sponsor SC Capital, founded by Thai financier Suchad Chiaranussati, is in the process of being acquired by CapitaLand Investment, with the deal set to provide the Temasek-controlled giant with its first toehold in Japan’s listed property trust market.