REIT Buys Tokyo Hilton Hotel for $560M

Tokyo-listed Japan Hotel REIT Investment Corp. picked up the 453-key property in the city's Odaiba area, marking the hotel's second sale in 15 months.
Hilton Tokyo Odaiba. Image courtesy of Japan Hotel REIT Investment Corp.

Japan Hotel REIT Investment Corp. has scooped up the 453-key Hilton Tokyo Odaiba for $560.4 million (JPY 62.4 billion), boosting the real estate investment trust’s portfolio to 43 hotels across Japan. The 4-star property is located in Odaiba, a popular entertainment district on a man-made island in Tokyo Bay.

A 50-50 joint venture of Japanese developer Hulic Co. Ltd. and Fuyo General Lease acquired the hotel and its land for more than $541 million (JPY 60 billion) from U.S. investment firm Elliott Management in January 2018, according to Nikkei. Hulic announced the pending sale to Japan Hotel REIT Investment Corp. in a notice to the Tokyo Stock Exchange this past January.

Hilton Tokyo Odaiba is located at 1-9-1, Daiba, Minato-ku. Amenities of the 15-story, full-service hotel include a swimming pool and spa, a 12,917-square-foot ballroom, two wedding chapels, and multiple restaurants offering Japanese, Chinese and Western fare. The property is directly connected to the Daiba station of the Yurikamome automated rail line and is situated 10 miles away from Tokyo International Airport.

Hotel REIT builds portfolio

Hilton Worldwide signed a management agreement with Tokyo Humania Enterprise Inc. in early 2015 to rebrand the former Hotel Nikko Tokyo, which was built in 1996, and manage it as Hilton Tokyo Odaiba. The converted and rebranded hotel opened its doors in October 2015.

In a prepared statement about the newly closed sale, Japan Hotel REIT Investment Corp. indicated that the hotel market in the Odaiba area is expected to grow further, amid the increase in tourism driven by the 2020 Tokyo Olympics and Paralympics. “Under these favorable circumstances, JHR will pursue to enhance attractiveness of Hilton Tokyo Odaiba, one of its trophy assets, in cooperation with Hotel Management Japan Co. Ltd., operator of the hotel,” the statement added.

Tokyo-listed Japan Hotel REIT Investment Corp. manages Japan’s largest hotel real estate investment trust, with a total of $3.4 billion (JPY 374.5 billion) in assets following the latest purchase. The company also announced that it has completed the acquisition of the Hotel Oriental Express Osaka Shinsaibashi, a limited-service hotel in the city of Osaka, in tandem with its Tokyo hotel deal. The acquisition was first announced in January with an anticipated price of $25.2 million (JPY 2.7 billion).

Japan gets more hospitable pre-Olympics

A report by CBRE in January of last year found that the number of hotel guestrooms in Tokyo, Osaka and Kyoto is expected to grow by 38 percent between 2017 and 2020. Tokyo has a shortage of about 3,500 keys, according to the brokerage firm.

Namba Hospitality K.K., a subsidiary of Japan’s Pacifica Capital K.K., entered into a franchise agreement with Marriott International in February to open the country’s first Fairfield by Marriott, a 300-key venue slated to start welcoming guests in the summer of 2020.