Hong Kong-based private equity real estate firm Gaw Capital Partners has made its first investment in Japan out of its funds platform with the $30 million purchase of the Hyatt Regency Osaka in Nanko bayside area of Osaka City.
The seller was Obayashi Corporation, one of Japan’s largest construction companies. Obayashi built the hotel approximately 20 years ago at the peak of the country’s property bubble. The 480-room, 969,000 square foot building is located nearby to Universal Studios as well as one of the city’s exhibition centers, but to date has been underused, according to Kenneth Gaw, managing principal and co-founder of Gaw Capital.
Obayashi is understood to have originally bought the land for the hotel for approximately $200 million, while the building’s construction is thought to have cost around JPY40 billion (€281 million; $385 million), according to Japanese media. However, the hotel asset is thought to not have been of strategic significance to Obayashi.
Gaw Capital has chosen to enter the Japan market now as it anticipates an upturn in the economy, and in particular in tourism, following the reforms of Abenomics, Gaw said.
Its strategy for the Hyatt Hotel is partially predicated on attracting more tourists, particularly from China, as well as making the asset more attractive to corporates wishing to use it for functions and for events like weddings.
Believing the asset already to be of institutional-grade, Gaw Capital is expecting to ultimately sell to lower-risk/return investors, perhaps to a J-REIT.
With approximately $6.7 billion assets under management, Gaw Capital is best known for its China-focused strategy. Most recently, the firm hit its $1 billion hard cap for China-focused Gateway Real Estate Fund IV, but that fund can invest up to 20 percent of its capital outside of China.
This investment is understood to come from Fund IV, which is now 40 percent invested, according to Gaw.