MHS Capital Partners is bullish on love, specifically the kind that can be measured in hourly increments. For the last year, the real estate investment firm has been acquiring Japanese “love hotels”, many of which, following a construction boom in the 1980s and early 1990s, have suffered flaccid performance. Conservative Japanese institutional investors have avoided these properties, leaving an alluring opportunity for three Hong Kong-based gai-jin – Australian Miro Mijatovic, New Zealander Hamish Ross and American Scott Delaney – to scoop up the overleveraged hotels. The firm's analysis predicts a return of up to 45 percent if all goes right. Love hotels have long been part of Japan's social fabric, although you won't hear people talk about them at the dinner table. They are often used by young people eager to escape families, schoolmates and co-workers for a bit of oneon-one interaction. According to a published interview with Ross, the hotels are also frequented by office managers having trysts with subordinates. MHS Partners' initial fund drew ¥500 million ($4.75 million), and the firm is reportedly seeking $20 million for a follow-on effort. Insert joke about due diligence here.
Quotable
“It's a bad idea if they close it. This is, like, a staple for LA. The track has a lot of history. I grew up coming here, jumping the fence when I was 10.”
– TJ Jackson, a Hollywood Park regular, on the possibility that the racing track would be converted into commercial real estate, to the Associated Press
“Condo Flip could become the most significant advancement in real estate technology since the Multiple Listing Service concept was introduced for residential resales.”
– Mark Zilbert, a “nationally recognized authority on residential real estate” and founder of Condo Flip, an online marketplace for preconstruction condominiums that went live in June
“We're in the 13th year of a 10-year cycle.”
– Michael Cannon, managing director of Integra Realty Resources in Miami, commenting on the boom in South Florida real estate in the Christian Science Monitor
“Some of us remember an equal degree of enthusiasm in the late 1980s just before the market collapsed.”
– Dale Anne Reiss, head of Ernst & Young's real estate group, commenting on the flow of money into real estate, in Forbes
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