Japan Hotel Real Estate Investment Trust Corp. has sold one hotel and acquired another, with the combined value of the two deals adding up to 45.22 billion Japanese yen ($278.37 million).
In a statement, the Tokyo-based company confirmed it sold to Mihama Terroir TMK the 280-room Beach Tower Okinawa for 30.9 billion yen, with a closing date of July 31. Japan Hotel REIT acquired from GK Hikari Hotel the 496-room Candeo Hotels Osaka Namba for 14.32 billion yen with a closing date of Aug. 3. Proceeds from the Okinawa sale will be used to purchase the new acquisition and to bolster the company's cash reserves.
According to CoStar, Japan Hotel REIT acquired the Okinawa resort in March 2004 for approximately 8.17 billion yen. The 2026 sale represents — inflation and currency fluctuations notwithstanding — an approximate 278% increase in transaction value.
In its statement, Japan Hotel REIT said it decided to exit the Okinawa hotel as part of a capital-recycling strategy despite every indication the property has a good future.
The hotel’s “fixed-term lease contract is scheduled to expire in June 2027, and the property is expected to offer upside potential through a change of operator or rebranding,” the company said.
Japan Hotel REIT “determined that, rather than continuing to hold the asset, it would be in the best interests of unitholders to unlock the asset’s value through a sale at a price significantly exceeding its appraised value,” the statement added.
Company officials said the Candeo Hotels Osaka Namba was built in 2017 and generates stable rent income under a fixed-rent lease. The hotel's appraisal-based loan-to-value ratio is “expected to decrease from 36.3% to 35.5%, thereby contributing to greater financial flexibility and increased borrowing capacity in the future,” the company said.
Candeo Hospitality Management will continue as the operator of the Osaka property. Candeo Hospitality Management's full management portfolio includes 27 hotels and approximately 5,770 rooms.
Japan Hotel REIT now has 52 hotels — all in Japan — including the 1,052-room Hilton Fukuoka Sea Hawk; 828-room Hilton Tokyo Bay; 712-room Hyatt Regency Tokyo; 511-room Oriental Hotel Tokyo Bay; 460-room Hilton Nagoya; 352-room Okinawa Harborview Hotel, and 285-room Mercure Sapporo. The company's total hotel portfolio adds up to 15,058 rooms and its anticipated acquisition value is approximately 648.1 billion yen, officials said.