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Singapore's GIC to buy 51% of Sheraton Grande Tokyo Bay Hotel for $460m

Sovereign wealth fund eyes inbound tourist demand

Sheraton Grande Tokyo Bay Hotel is a popular hotel next to Tokyo Disney Resort.

SINGAPORE -- Singaporean sovereign wealth fund GIC announced Thursday it would invest approximately $460 million in a 51% stake in Sheraton Grande Tokyo Bay Hotel in Japan.

GIC will acquire the majority stake through a joint venture to be set up with Invincible Investment Corporation, a hotel and residential real estate investment trust listed on the Tokyo Stock Exchange. Invincible will take the remaining 49% of the property. The property is currently owned by investment management firm Fortress Investment Group.

The hotel has 1,016 guest rooms including a 175-room annex tower that opened in December 2016. Located next to Tokyo Disney Resort, it is the largest hotel among the list of "official" Disney accommodations, and has "remained popular among its domestic and inbound customer base," said GIC in a press release on Thursday. The hotel "has shown strong and resilient cash-flows", said Lee Kok Sun, chief investment officer of GIC Real Estate, in the statement. 

The total acquisition price of approximately 100 billion yen (around $890 million) is roughly double the reported amount paid by Fortress when it acquired the hotel in 2013. The luxury hotel has since added the annex tower.

The upcoming Tokyo Olympics in 2020, along with plans to spend 75 billion yen at Tokyo Disneyland on new attractions that will be opened in the spring of 2020, is expected to increase demand for hotels in the area. According to a report by Nikkei in June last year, the proportion of foreign guests at the Sheraton Grande hotel has risen to around 20% of the total, from around 5% a few years ago. 

GIC has been an active investor in the Japanese property sector. In 2014, it acquired the office component of the Pacific Century Place Marunouchi building in Tokyo's central business district, for an estimated price tag of around 170 billion yen. The sovereign wealth fund, an investor in Japan for more than 20 years, said on Thursday it was "continually on the look-out for quality assets with stable cash-flow potential". 

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