Samty Holdings, a Japanese developer and operator backed by private equity giant Hillhouse Investment, has closed its debut real estate fund, capitalizing on the growing interest in the country’s hospitality sector.
Targeting hotels in Japan, the yen-denominated core-plus fund has secured ¥58 billion ($390 million; €338 million) in capital commitments from domestic institutional investors within just two months of its launch, according to Hillhouse. Seeded with a portfolio of 10 hotels comprising 1,530 rooms, the properties are located in major cities across western Japan, including Tokyo, and boast an average occupancy rate of 85 percent. The fund is co-managed by Samty and EastGate Group, a Japanese integrated real estate management company.
The vehicle marks Samty’s first fundraise since its privatization by Hillhouse in January this year, a milestone that has transformed the company from real estate developer to fund manager. The $1.1 billion buyout by Hillhouse and its real estate unit Rava Partners, with an equity contribution from Daiwa Securities, saw Samty delisted from the Tokyo Stock Exchange earlier this year.
“Samty’s transformation helps to serve intense investor interest and allows us to scale our operating platform while creating an attractive foundation for growth,” said Joe Gagnon, co-head of Rava Partners. “As Japan continues to draw greater attention from international investors, this strategy positions us for sustainable long-term growth by shifting from a capital-gains-focused model to one emphasizing sustainable income through mergers and acquisitions that enhance and streamline operations.”
Samty is expected to launch further hospitality funds on the back of strong momentum for Japan’s tourism sector. Apart from hotels, Samty will also introduce multifamily funds in the future, Gagnon said. These will include a mix of seeded and discretionary funds.
“Samty’s establishment of a private real estate fund focused on hotels marks an important step that symbolizes the transformation of its business model – a development we view as highly significant,” Daiwa Securities Group president and CEO Akihiko Ogino added in a statement.
The fund’s launch comes as the global hospitality sector continues to rebound from the pandemic. According to services firm JLL, global hotel transaction volume plummeted from $79 billion in 2019 to $32 billion in 2020. While it has yet to return to pre-pandemic levels, annual transaction volume recovered to $57 billion last year, reflecting renewed investor confidence.
Hospitality-focused vehicles targeting the Asia-Pacific region remain scarce. According to PERE data, there are currently four such funds in the market. Notable examples include Fortress Japan Opportunity Fund V and Salter Brothers Core Hospitality Real Estate Fund.
Many managers are instead opting for deal-by-deal investments or leveraging capital from diversified funds. For instance, KKR, which has increased its hospitality assets by 12 times over the past decade, entered Japan’s mid-scale market last year through a partnership with Marriott International. The firm acquired 14 Unizo hotels to capitalize on the resurgence of travel to Japan, using capital from its diversified funds rather than a dedicated hospitality vehicle.
Meanwhile, niche managers and hotel specialists, such as Tokyo-based Axe Management Partners, have also been active in the sector on a deal-by-deal basis. In 2024, Axe acquired three hotel properties for ¥10.7 billion, further underscoring the growing interest in Japan’s hospitality market.
AloJapan.com