SC Capital JV With Goldman, ADIA Buys Japan Hotel Portfolio From Daiwa House for $900M

A consortium formed by Singapore’s SC Capital Partners with Goldman Sachs Asset Management and the Abu Dhabi Investment Authority has acquired a portfolio of 27 resort hotels in Japan from property giant Daiwa House Industry for $900 million.

The hotels comprise 7,124 rooms in major tourist destinations across Japan, SC Capital said Wednesday in a release. The investment strategy will focus on increasing top-line revenue, rebranding initiatives, improving distribution channels and refurbishment works.

Japan Hotel REIT Advisors, an asset manager majority-owned by SC Capital, 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 is a rare opportunity to acquire one of the largest and most prominent hotel portfolios in Japan,” said SC Capital founder and chairman Suchad Chiaranussati. “The extensive platform and network we have built in Japan over the last 13 years, particularly in the hospitality space, puts us in a unique position to capitalise on the long-term relative value of this highly sought-after sector.”

Partnership Grows

SC Capital previously hooked up with the Abu Dhabian sovereign wealth fund on a $2 billion Asia Pacific data centre strategy in a deal announced last November. ADIA was also revealed to be investing in SC Capital’s sixth pan-Asian opportunistic investment strategy, which has set a goal of raising $1 billion.

Mohamed AlQubaisi, ADIA’s executive director of real estate, expects the Japan hotel portfolio to benefit from increased domestic and international tourism in the world’s third-largest economy.

“Japan’s real estate sector continues to deliver superior returns, and the country’s hotel market is well positioned for growth from the rebound of travel,” AlQubaisi said. “This acquisition presented a unique opportunity to access a large, leisure-oriented hotel portfolio alongside SC Capital, a pan-Asia partner across multiple real estate asset classes, and Goldman Sachs Asset Management.”

The asset management arm of banking giant Goldman Sachs has been making investments in Japan since 1998, including last year’s acquisition of $300 million worth of rental residential properties in partnership with Tokyo-based conglomerate Sojitz.

“As we continue to see strong recovery in the Japanese hospitality sector, we are confident these high-quality assets located in top tourist destinations throughout Japan are well-situated to benefit from the rebound,” said Takashi Murata, global co-head of real estate at Goldman Sachs Asset Management.

Homing In on Hospitality

Global investors have been snapping up hotels in the Land of the Rising Sun throughout 2023, with Hong Kong-based AB Capital Investment last week announcing the addition of a fourth Japanese asset in the hospitality-focused private equity firm’s portfolio since COVID-19.

The firm led by co-founder and CEO Alan Kam bought APA Hotel Kamataeki-Higashi in the Kamata area west of Haneda Airport for an undisclosed amount from Aoki Kabushiki Kaisha and Aoki Building Kabushiki Kaisha in a transaction that closed on 31 May.

Other first-half deals 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).

Last year, Singapore sovereign wealth fund GIC acquired a portfolio of railway operator Seibu Holdings’ hotels, resorts and golf courses managed under the Prince hospitality brand in a JPY 150 billion ($1.3 billion) deal.

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.