Urakusatsu Tou underwent extensive renovation in 2022 (Image: Rakuten)
Fund manager AB Capital has expanded its portfolio of Japanese hospitality properties, teaming up with a local player to acquire a hot spring resort near Nagano for an undisclosed sum.
Hong Kong-based AB partnered with Kenedix, an asset management unit of Sumitomo Mitsui Finance and Leasing, to acquire Urakusatsu Tou, a modern Japanese Ryokan inn at the onsen hot spring hub of Kusatsu in Gunma prefecture.
The deal marks AB’s ninth Japanese hotel acquisition, with the property adding to the portfolio held under the private equity firm’s AB Capital Fund II vehicle, according to a statement.
“Urakusatsu Tou represents a quintessential AB Capital investment – rare, resilient, and ripe with upside,” AB Capital managing partner Kusumine Enami said. “Kusatsu’s status as a cultural icon, combined with this asset’s modern infrastructure and operational performance, aligns perfectly with our strategy to deliver exceptional risk-adjusted returns through curated hospitality investments.”
Modern Springs
Located within a five-minute walk of Kusatsu bus terminal, which serves as the resort area’s primary transport hub, Urakusatsu Tou has 56 keys and an average room size of 34.7 square metres (374 square feet). Financial details of the acquisition were not provided.
Kusumine Enami of AB Capital
The property underwent a comprehensive renovation in 2022, including upgrades to its mechanical, electrical, and plumbing systems, according to AB, and has direct access to Kusatsu’s Jizo Hot Spring.
Consistently ranked as Japan’s top onsen destination by local media, Kusatsu attracted 3.9 million visitors in 2024, representing a 20 percent increase from 2019. During last year guest nights in the resort destination exceeded pre-Covid levels by 18 percent, according to AB.
“As the asset manager for AB Capital, Kenedix is proud to be able to support the acquisition of Urakusatsu Tou, a sophisticated modern ryokan in the center of Kusatsu Onsen,” said Takaaki Shoji, a senior manager with Kenedix Investment Partners. “We leveraged our deep market expertise and accumulated know-how to provide opportunities to invest in highly scarce assets in the increasingly competitive Japanese real estate market.”
The onsen acquisition, which is expected to close on Tuesday, follows AB’s November buy of a 219-key hotel near Tokyo’s Haneda airport.
Hotels Stay Hot
The hot spring buy comes as hotels continue to rank among the most sought-after assets in Japan’s real estate market.
CapitaLand Ascott Trust said two months ago that it had acquired a pair of Japanese hotels for JPY 21 billion ($140 million), adding more than 600 rooms to its hospitality holdings in the country.
Just a few days before that deal was announced, Japan Hotel REIT, a Tokyo-listed trust managed by Singapore’s SC Capital, said it was acquiring the Hilton Fukuoka Sea Hawk hotel from Mizuho Leasing for JPY 64.4 billion.
During December, Blackstone announced a pair of Japan hotel acquisitions, adding three more hospitality properties to its Japan holdings, including a budget hostelry in Osaka, and a pair of resort properties in Okinawa.
AloJapan.com