If you are investing in Japanese hotels

01 — SOURCING

Sourcing

Including assets at the stage where an owner is still deciding, before anything reaches the market. The more precisely your criteria are set, the better the hit rate.

• CriteriaGeography, scale, cheque size, target return, acceptable operating structures, hold period, and appetite for value-add.
• Off-marketBilateral introductions arising from owners in the early stages of considering a sale.
• Development & conversionNot only standing assets: hotel sites, sites with a scheme attached, and office or residential stock suitable for conversion.

02 — UNDERWRITING

Underwriting support

What you can pay, built from the hotel as an operating business. We do not adopt the vendor's pro forma as the starting point.

• Market & competitionDemand structure, competitive supply and rate positioning, forward pipeline and seasonality, tested against the assumed ADR and occupancy.
• Rebuilding the P&LDepartmental revenue, payroll, utilities, FF&E reserve and management fees rebuilt to a realistic GOP and NOI.
• RiskLicensing, building and fire code compliance, deferred capex, assignability of the operating agreement, and forward supply in the catchment.
• Price ceilingThe maximum entry price implied by your return target, and the sensitivity around the assumptions that carry it.

03 — OPERATOR

Operator selection

Who runs it after closing. Until that is settled, the price assumptions are not settled either.

• StructureLease, management contract, franchise or self-operation — fundamentally different distributions of risk and return.
• IntroductionsOperators suited to the asset type, scale and location, and the setting up of terms discussions.
• Incumbent operatorsWhether the existing agreement can be assigned, and where there is room to reset terms.

04 — JAPAN PRACTICE

Navigating Japanese practice

Japanese real estate transactions involve a lot of parties and a sequence that is hard to read from outside. We set out what happens, when, and on whose responsibility.

• Transaction formDirect real estate, trust beneficiary interest, SPC/TK interests, or share transfer — differing in eligibility, tax treatment and procedural load.
• Who is involvedLicensed broker, judicial scrivener, tax accountant, appraiser and counsel, with roles and timing mapped out.
• LicensingHotel Business Act licences, the Private Lodging Business Act, and compliance under the Building Standards Act and Fire Service Act. Assignability varies by asset.
• Costs & taxBrokerage commission, registration and licence tax, real property acquisition tax, stamp duty, consumption tax and withholding. We list the items to consider; the numbers themselves should be confirmed with your tax adviser.