KKR and Gaw Capital have acquired Hyatt Regency Tokyo from Odakyu Electric Railway Company for an undisclosed price.

Japanese media have reported that the owner was originally seeking around JPY100bn (€708m) for the asset when it was first offered for sale in May last year.

KKR, which is investing from its Asia Real Estate Partners, is believed to have reached a sale price of around JPY78bn for the 746-room hotel that was built in 1980.

KKR declined to comment on the price.

Kensuke Kudo, director, real estate, at KKR, said: “As Japan emerges strongly from the pandemic as a leading travel destination and domestic and international business travel bounce back, we see great potential to refurbish and to enhance the hotel’s offerings to both corporate and leisure guests, while retaining its unique heritage.“

Isabella Lo, managing director, principal – investments and head of Japan at Gaw Capital Partners, said: “With a full renovation of the hotel rooms and the public areas, the hotel will enjoy upside from the jump in the number of inbound travellers from overseas and its advantageous location in a global commercial hub.”

The acquisition marks KKR’s entry into the Japanese hospitality market and its first joint venture with Hong Kong-based Gaw Capital. Early this year, KKR brought Gaw Capital to form a joint venture and tap into its experience with the Japanese hospitality industry. KKR has the majority interest in the partnership.

A source told IPE Real Assets: “Our focus is identifying real estate assets and operating companies owned by Japanese conglomerates whose main business is not in real estate.”

In this instance, Odakyu is a railway company. Last year, KKR acquired Mitsubishi Corp-UBS Realty, a Japanese real estate manager that oversees two Japanese real estate investment trusts. KKR also owns multifamily properties in Tokyo, and office assets across Japan.

In Asia Pacific, KKR currently owns the Sofitel in Sydney and Josun Palace hotel in Seoul, which it redeveloped in Gangnam with Korean asset manager IGIS.

Gaw Capital Partners entered the Japan market in 2014 through its first investment in Hyatt Regency Osaka, which it exited in what was the second-largest hotel deal in Osaka in 2016.

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