KKR & Co. and Gaw Capital Partners are in talks to sell the Hyatt Regency hotel in Tokyo to Japan Hotel REIT Investment Corp for more than JPY100 billion ($879 million), according to people familiar with the matter.
The two investment firms bought the hotel in the Shinjuku area for an estimated JPY60 billion less than two years ago, and a quick sale reflects the heated interest in Japan’s hotels amid a tourism boom coupled with a weak yen and low borrowing costs.
CBRE Group and SMBC Trust Bank have been retained to advise on the sale, the people said, asking not to be identified because the discussions are private. The parties are seeking to finalise the deal early this year. Still, discussions are ongoing and they may decide against proceeding with a transaction, the people added.
Representatives for KKR, Gaw and Japan Hotel REIT declined to comment. SMBC Trust and CBRE didn’t respond to requests for comment.
New York-based KKR and Hong Kong-based Gaw purchased the Hyatt Regency from Odakyu Electric Railway Co. in early 2023. The 712-room hotel is undergoing a full renovation in phases.
Japan Hotel REIT owns 51 hotels, according to its website.
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Hotels in Japan have been among the most popular real estate assets during a tourism boom that’s been driven by the yen’s depreciation. A record 37 million people travelled to the country in 2024.
Hotels are typically viewed as inflation-proof real estate investments, because room rates can be easily adjusted versus rent contracts on other property that might be locked in for years. Average daily rates for Japan hotels in 2024 were more than 40% higher than in 2019, according to real estate data provider CoStar.
Japan saw around JPY1.2 trillion in hotel transactions in 2024, a 51% jump from a year earlier, according to MSCI Real Assets.
