Singapore Wealth Fund GIC to Acquire 30-Hotel Prince Hotels Portfolio Across Japan For 150 Bn Yen – Around US$1.3 Billion
Main Photo: Shimoda Prince Hotel, Shimoda, Japan
Date: February 2022
Name: Prince Hotels
Location: Japan
Number of Keys: TBA
Seller: Prince Hotels, part of Seibu/Staywell Hotels
Buyer: GIC
Singaporean sovereign wealth fund GIC has emerged as the potential buyer for the majority of Seibu Holdings’ hotel portfolio, branded Prince Hotels. Around 30 of Seibu’s hotels are expected to be sold for somewhere around 150 billion Yen (approx. US$1.3 billion).
The sale is expected to conclude this summer. The 30 hotel and golf properties include The Prince Park Tower Tokyo, Sapporo Prince Hotel, and Grand Prince Hotel Hiroshima. The Shinagawa/Takanawa and Karuizawa properties will not be sold. Seibu currently owns 41 of the 49 hotels it operates.
GIC has been actively investing in Japan’s real estate market for several years now and appears to be accelerating its acquisitions. In 2014 the fund paid approximately 170 billion Yen for Pacific Century Place Marunouchi. GIC also provided partial funding for the acquisition of 13 ANA hotels by a Morgan Stanley fund in 2007 and took over several of the properties after the global financial crisis.
In mid-2021 it was reported that Seibu planned to offload as many as 40 of its hotels. The sale is planned to fund bigger projects for the Seibu Prince Hotels Worldwide Inc brand.
Blackstone Group and an investment fund affiliated with Morgan Stanley were said to be amongst the interested bidders.
This move follows a strategy to continue the path of Asset-Light that Seibu have been following over the past few years – expansion through management contracts. Indeed they are actively pursuing new opportunities in key international gateway markets.
Amidst a global climate of rapidly rising real estate prices, Japan has stood out as a destination of choice for institutional funds due to it’s low cost of funds and comparatively cheap real estate. The yield gap (the difference between the cost of borrowing and the return) is also comparatively high at around the 3% range. As of the end of December 2021, the yield gap in Tokyo and New York was in the 3% range. In London, it was 2.9%, and 0.9% in Hong Kong. The real estate market in Japan also provides safe and stable returns.
According to industry sources, institutional investors spent a total of 1.1 trillion Yen purchasing Japanese real estate in 2021, exceeding the trillion Yen level for the third year in a row. Approximately 30% of the big-scale transactions (those that sold for over 1 billion Yen) for the year involved foreign funds.
Price: US$1.3 billion
Price per Key: TBA
THPT Comment: Blackstone’s acquisition of up-scale hotels around the globe continues….and Seibu further advance their desire for going asset-lite and positioning themselves as a global hotel management company…with a plan to expand the current 84 locations to 250 in the next decade
First Seen: Hotelsmag.com
The Hotel Property Team (THPT) is a small group of highly experienced business professionals. Between us, we provide a range of skills and experience which is directly relevant to those involved in the hotel property market. For more information – Visit www.thpt.co.uk or email [email protected]
