Skift Take
With tourism tipped for a significant rebound, hotel operators might hold out a bit longer before selling up. But SC Capital will be one to see if it begins buying hotel management platforms and other travel-related companies.
Matthew Parsons
Singapore’s SC Capital Partners intends to raise around $550 million for a new fund targeting hard-hit Japanese hotels, its chairman told Reuters, wagering tourism will return strongly once the coronavirus pandemic subsides.
The asset supervisor is among a variety of foreign financiers, consisting of Blackstone Group, aiming to scoop up Japanese hotels as owners put possessions up for sale to produce cash.
“I believe extremely highly that the pattern of foreign visitors concerning Japan will recuperate and gather strength and continue for a very long time,” Suchad Chiaranussati, chairman and founder of SC Capital Partners, told Reuters in an interview.
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“And among all the Asia Pacific markets, today I am most optimistic on the recovery of tourism in Japan.”
Before the pandemic, Japan had remained in the midst of a tourist boom with the annual number of foreign visitors more than doubling in five years to 32 million in 2019.
That number was just anticipated to increase with the 2020 Olympics, which assisted sustain a hotel construction boom. However those hopes deciphered after the pandemic sent out tenancy rates toppling. After a year’s delay, the Olympics completed this month– without spectators or a tourism boost.
SC Capital Partners, which owns almost 90 percent of the company that manages realty trust Japan Hotel Reit Investment Corp, intends to raise around 60 billion yen ($550 million) in its first yen-denominated fund.
The asset supervisor intends to generate yearly returns to investors of around 14-16 percent, Chiaranussati stated.
“In my opinion, the beginning of relaxation of worldwide travel will likely take place early next year,” he stated.
While SC Capital looks at sectors throughout Japan’s residential or commercial property markets, Chiaranussati said he sees more chances in hotels provided the impact of Covid-19 on evaluations.
Plenty of Buyers
But some home experts say it’s not so easy to get hotels at rock-bottom rates.
“There are lots of possible purchasers, so sellers do not have to lower rates, which is why the variety of recent deals are restricted,” said Tetsuya Kaneko, handling director at Savills Japan, a home services firm.
“Only those that had actually been currently having a hard time before the pandemic could be cost a discount.”
While hotel earnings have fallen sharply, in most cases underlying residential or commercial property worths haven’t. For instance, the appraisal value of a Kyoto hotel owned by the Invincible Investment Corp fell around 15 percent in 2015, a fraction of the 82 percent drop the hotel suffered in its average revenue per offered space– a crucial indicator called RevPAR– during the very same period.
Shares in Invincible in addition to Japan Hotel Reit Investment have recovered from their lows in March last year, suggesting that financiers are currently considering a healing.
Previously this year, Blackstone Group bought 8 hotels from the Japanese railway operator Kintetsu Group Holdings.
Seibu Holdings, which also runs trains, has stated it prepares to sell some hotel possessions while continuing to manage them. Hankyu Hanshin Holdings, a train and department store operator, has said it plans to close 7 of its money-losing hotels, consisting of ones in the heart of Tokyo and Osaka.
SC Capital will start buying hotels as well as hotel management platforms and travel-related business as soon as the fund is raised by the end of this year, Chiaranussati stated.
Possible investors in the fund will be Japanese and abroad institutions, such as insurance groups, pension funds and sovereign wealth money, he stated.
(Reporting by Junko Fujita; Modifying by David Dolan and Kim Coghill)
This article was composed by Junko Fujita from Reuters and was lawfully accredited through the Industry Dive publisher network. Please direct all licensing concerns to [e-mail protected]
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