Gaw Capital Partners has sold the Hyatt Regency hotel in Osaka to a real estate investment trust managed by Tokyo-based Hoshino Resort Asset Management for ¥16 billion ($153 million; €140 million).
In an official statement released earlier this week, the Hoshino Resort REIT said that it has acquired the 28-story luxury hotel in the Nanko bayside area of Osaka city. This is pegged to be the second largest hospitality deal in Osaka in 2016 after the sale of the Grand Vista Grande hotel to an undisclosed buyer for ¥20 billion earlier this year.
PERE has learned from an industry source that the Hyatt Regency deal reflected a net yield of around 6.2 percent according to the appraisal report done by Japan Valuers. According to another source familiar with the deal, Gaw significantly surpassed 20 percent IRR and 2x multiple from the sale, largely due to the growth in the Japanese tourism sector and the asset management work done by the firm’s hospitality arm GCP Hospitality.
The Hong Kong-based real estate investment management firm Gaw Capital Partners had acquired the hotel in April 2014 for about ¥3 billion from the Japanese construction company Obayashi Corporation. The investment, made via the $1.03 billion Gateway Real Estate Fund IV, marked Gaw’s maiden deal in Japan via its funds platform, according to earlier PERE reports.
“When we bought the hotel, it was losing ¥300 million per year in NOI. This year, the hotel will be making over ¥500 million in profit. We achieved this by improving both room rate and occupancy, streamlining operations and installing a power plant to improve energy efficiency, in combination with a substantial growth in Japan tourism growth. We are very grateful for the cooperation of all the hotel staff and Hyatt International as well,” Christina Gaw, the firm’s managing principal and head of Capital Markets told PERE.
The Gateway Real Estate Fund IV was fully invested last year. So far, less than 10 percent of the fund has been exited. Gaw is now in the market with its fifth pan-Asia opportunistic real estate fund and has raised approximately $900 million from the $1.3 billion equity target.
Savills Hotels acted as the agent for the transaction.