GIC could soon be the owner of the Prince Park Tower Tokyo Hotel
Singapore’s GIC is in the final stages of a deal which would make it the owner of around 30 hospitality assets operated by one of Japan’s oldest hotel chains through a JPY 150 billion ($1.3 billion) deal, according to market sources familiar with the proposed transaction.
The $774 billion sovereign fund has been selected as the sole bidder in talks with Tokyo-based railway operator Seibu Holdings Inc to buy the set of hotels, resorts and golf courses managed under the Prince hospitality brand, after edging out shortlisted buyers including Blackstone and Softbank-backed Fortress Investment Group.
Seibu, which said this week that an agreement on a potential asset sale has yet to be established, has predicted that its operations, which span hotels, passenger rail, dining and leisure, will lose JPY 14 billion for the 12 months ending 31 March to mark its second straight year of losses.
With hospitality operators motivated to pay off debts accumulated during the pandemic and investors hopeful that travel will reopen as societies learn to live with COVID-19, hotel assets have become top targets in Asia, as witnessed in major transactions in recent weeks in Korea and Hong Kong, as well as in Japan.
Prime Hospitality Target
The Seibu hospitality portfolio includes the 33-storey Prince Park Tower Tokyo hotel in Shiba Park, the 587-room Prince Hotel Sapporo hotel in northern Japan and the 510-room Grand Prince Hotel Hiroshima, according to a report by the Japan Times. Sources identified property firm JLL as having been selected as asset manager for the hotel portfolio.
Seibu Holdings president and chief executive Takashi Goto needs to raise some cash
Tetsuya Kaneko, head of research and consultancy at Savills Japan, said that a number of private real estate funds showed interest in Seibu’s assets, with the Japanese conglomerate preferring overseas investors.
The industry analyst indicated that GIC’s track record in Japan and its experience with hotels may have given it an edge on competitors.
“It may be possible that Prince may have wanted a buy-back option. So the price is not necessarily the determining factor in choosing a buyer,” Kaneko told Mingtiandi. “Overall, GIC appeared the best candidate for Seibu this time.”
Kaneko noted that the sovereign wealth fund already owns the 844-room ANA Intercontinental Tokyo hotel while also being part of a consortium which owns a 55 percent stake in AccorInvest – a Europe-based hospitality specialist which owns and operates 843 hotels globally.
Seibu, which operates 49 hotels and owns 41 of those properties, would continue to manage the target properties following the disposal, with the group retaining a number of its hotels in Tokyo’s central Shinagawa and Takanawa districts as well as those in the resort town of Karuizawa, northwest of Tokyo, local news site The Asahi Shimbun reported.
In addition to selling off the set of hotels and resorts, Seibu has also decided to sell its construction unit to telecommunications infrastructure firm Mirait Holdings for around JPY 40 billion according to local news reports.
GIC and JLL both declined to comment on the matter while Seibu did not respond to inquires from Mingtiandi.
Hotels Rebound
The proposed sale mirrors one of Japan’s largest property deals of 2021 when Seibu’s rivals at Kintetsu Group Holdings sold a JPY 42.3 billion set of eight hotels to Blackstone in March.
Hong Kong-based Baring Private Equity Asia (BPEA) also bet that values for Japanese hospitality assets may have reached bottom in November when it paid around JPY 10 billion to acquire the 305-room B Osaka Midosuji hotel in Osaka and rebranded it as a Holiday Inn Express.
A JLL report last month predicted that sales of hotel properties will jump by up to 40 percent globally this year. Also during January the property consultancy announced that it had advised Japan’s Ichigo Estate on the sale of the The OneFive Osaka Midosuji Hotel to an unnamed investor advised by Travelodge Hotels (Asia), with the property to be rebranded as a Travelodge.
Savills this month noted that Japan’s recovering hospitality industry presents an opportunity for investors as pent up demand from local and global tourism revives occupancy and the supply of luxury hotels in the country remains limited.
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