Jan 7, 2019 | Press Releases
The Japan Boutique Hospitality Fund got off to a successful and promising start in 2018 and the fourth quarter was a busy period in terms of acquisitions and preparing the deal pipeline for accelerated activity in 2019.
At the end of October (2018) we acquired a boutique hotel in Kyoto called Hotel Owan on behalf of our institutional Client, Shinhan Financial Group. The property has been renamed as Hotel Owan Hanami (https://resistay.jp/en/room/owan-amaterrace/) and is a popular choice for Asian and Western Families visiting Kyoto due to the offering of large rooms, a superb design concept combining Japanese and contemporary design motifs, and ease of access to major tourism destinations in Kyoto.
Hotel Owan
One of our investment assumptions for the Hotel Owan acquisition was that the ADR’s (Average Daily Room Rate) were undervalued and that we could raise the rates. We have already started to increase the ADR’s in our first two months of ownership and this is increasing the Net Operating Income of the asset.
Hotel Owan
Hotel Owan
Previously in August (2018) we acquired the first ryokan for the Japan Boutique Hospitality Fund, Shousenkaku Kagetsu (https://www.shousenkaku-kagetsu.com/en/). We are particularly keen on the ryokan sector of the Japanese hospitality market as we feel it is undervalued, fragmented and there is tremendous opportunity to apply a value-add investment approach to well selected ryokans.
Shousenkaku Kagetsu
In the case of Kagetsu, the historical occupancy levels were 53% on average. By enhancing the marketing strategy and taking a more proactive marketing approach, in just three months of ownership, we have already moved the needle on the occupancies from 53% to 68% in pre-ski season months. Now that we are in the ski season in Japan, we anticipate to be running at near 100% capacity through April 2019. We will be making physical enhancements to the property in May by renovating 10 of the 28 rooms in Kagetsu ryokan, further enhancing the value of the property.
Shousenkaku Kagetsu
Shousenkaku Kagetsu
Our investment team’s ability to identify undervalued hospitality assets where we can actively improve the property and operations is already bearing fruit in these first two acquisitions.
In addition to acquiring these two properties and beginning the value-creation process, the Japan CRE investment team has been busy building the pipeline of investable assets for 2019, with on-site due diligence visits throughout Japan, where we have identified attractive boutique hospitality assets at attractive prices.
As we kick off the New Year of 2019, we now have a pipeline of 52 potential assets that are under various stages of due diligence.
Pipeline asset locations: Tokyo, Kyoto, Osaka, Izu, Niigata, Kitakyushu & Kobe
The first quarter of 2019 is going to be a busy time as we start to ramp up the acquisition process for the Japan Boutique Hospitality Fund and our institutional mandates. At a minimum we anticipate acquiring and closing on 3-4 assets by March 2019.
While we can not disclose all of these assets at this point in time, one of the acquisitions we are most excited about is Project Falcon which is our acquisition of 24 machiyas in Kyoto which will be transformed into an Urban Luxury Machiya Resort. We have been working on this project for 8 months and we are scheduled to close and become the majority equity owner of the project at the end of January 2019.
Mockup of Project Falcon
We will also be acquiring a larger boutique hotel in Tokyo for an institutional partner, and a number of ryokans for the Japan Boutique Hospitality Fund.
Ryokan Pipeline Asset
We will be announcing our first capital call and first soft closing on 10 January 2019 in order to facilitate the closing and acquisition of Project Falcon at the end of January.
We appreciate all those investors who have already made a commitment to the Fund and to those who will be joining us at the 10 January capital call.
We want to take this opportunity to wish all our Clients and Partners a wonderful 2019 filled with abundant success and good health.
Sincerely,
Christopher A. Aiello
Managing Director – Japan Real Estate
Odyssey Asset Management Limited
Odyssey Asset Management Ltd, a sister company to the Odyssey Capital Group, is a Hong Kong SFC 1, 4 & 9 licensed company. The Japanese CRE team is headed up by Christopher A. Aiello, and also includes Alex Walker, Daniel Vovil and Sam Luck.
Odyssey Capital Group Ltd is Asia’s leading independent Alternative Asset Manager that provides differentiated and bespoke investment solutions across multiple asset classes, including asset management, real estate, private equity and hedge funds. The Firm’s primary focus is to seek out undervalued investment opportunities to co-invest in with its clients.
The Odyssey team comprises over 30 experienced executives, asset managers, lawyers, private bankers, trust & tax planning specialists and experienced investors with over 400 years of combined financial and operational experience across the Asia Pacific, Europe and North America.
For more information about the Odyssey Japan Boutique Hospitality Fund, phone or email Daniel Vovil via the contact details listed below.
Daniel Vovil, Co-Founder and President, Odyssey Capital Group
daniel.vovil@odysseycapital-group.com | (852) 9725-5477
Oct 31, 2018 | Press Releases
Odyssey Capital Group Ltd is pleased to announce that the Odyssey Japan Private Equity Real Estate division has been selected by Shinhan Investment Corp (a division of Shinhan Financial Group) to be their Japan Hospitality Advisor and Fund Manager for an institutional mandate.
The joint venture will allow Shinhan’s clients to benefit from Odyssey’s Japan Hospitality investment strategy, which includes seeking investments in boutique hotels, Ryokan’s (Traditional Japanese Inns) and Machiya’s (Traditional Japanese Townhouses) in the Kansai region and other areas of Japan. The investment model is to acquire, re-position and operate. By deploying a value-add strategy, Odyssey aims to increase the value of the assets acquired both at the asset level and the operational level. Odyssey’s goal is to increase the value of the underlying assets through a combination of property enhancements and improving the operational efficiencies of the underlying assets.
On the back of its strong and stable corporate governance and financial structure, Shinhan Investment Corp is fast emerging as a leader in Korea’s securities industry and provides securities trading, wealth management, and investment banking services, mergers and acquisitions, investment trusts, and corporate financing services. Shinhan Investment serves clients worldwide and is a subsidiary of Shinhan Financial Group, the second largest Bank in South Korea. Shinhan is, historically, the first bank in Korea, established in 1897 and now boasting more than 10,000 employees with more than US$260 billion in total assets.
Coinciding with the partnership between Odyssey and Shinhan is the initial acquisition of an attractive boutique hotel in Kyoto, Hotel Owan (https://resistay.jp/en/room/owan-amaterrace/) with the closing completed on the Friday 26th of October.
Kyoto is the historical capital of Japan and, as a result, many of Japan’s greatest entertainers, artists, chefs, designers and architects have resided and honed their craft in and around the city.
Odyssey’s boutique hotel asset embodies Japanese traditional culture and combines traditional, historical, Kyoto-based design and art motifs with modern and funky, boutique construction. Hotel Owan has 19 rooms which spread across 4 floors and comprise 8 wholly unique styles to cater to all types of affluent taste, whether they be for a room that includes tatami floor space, or one fitted with spacious, family-sized, double bunk beds or sleek and minimalist rooms for couples. With traditional Kyoto crafts, such as Nishijin fabric, and delicately featured interiors, you can feel an authentic beautiful Kyoto experience during your stay.
The appeal for local and foreign guests is well established as Hotel Owan has operated at an occupancy rate above 80% since it’s opening in 2017 and frequently experiences periods of 100% occupancy with consistent, ubiquitous, rave reviews on its quality of construction and design, it’s feel and styling and its central location and service.
Odyssey’s Japan Real Estate investment team, led by Christopher A. Aiello, was able to acquire the asset at a below market price and felt that current market demand will allow for increasing Average Daily Room Rates (ADR’s) by 20% to 25% over the next 12 months. Odyssey also plans to add concierge service upgrades and also employ a focused and upgraded digital marketing and direct bookings strategy.
The Managing Director of Odyssey Japan CRE, Christopher Aiello said, “We are excited to have completed the acquisition of this wonderful boutique hotel today. We have been able to secure this asset over other bidders due to the long term vision we have for the Japanese Boutique Hospitality industry, the strength of the Odyssey team and our seasoned relationships in Japan. We were able to secure a very attractive debt package for this acquisition from Mitsublishi UFG, one of the leading banks in Japan with an LTV ratio of 65%, non-recourse debt, and with an annual cost of 1.6% pa.”
Odyssey has long-term working relationships with the top leading individuals and firms in the Japanese commercial real estate and hospitality market and these partnerships include our panel banks, trust institutions, local asset managers, legal counsel, tax specialists and accountancy professionals.
The Odyssey CRE team commenced operations in early 2017 in Japan, and its well established and deep local presence, networks and insights allowed for the identification of the best and most appropriate real estate opportunities for the Odyssey Japan Hospitality strategy. Since this time, the Manager has reviewed more than 50 assets and has built up a robust pipeline.
The Odyssey Japan Real Estate investment team looks forward to providing our valued clients with more unique and exciting opportunities in what, we believe, will be one of the most successful Japanese hospitality investment projects to date. Please contact Odyssey, should you be interested in investing in Japanese real estate.
Odyssey Asset Management Limited
Odyssey Asset Management Ltd, a sister company to the Odyssey Capital Group, is a Hong Kong SFC 1, 4 & 9 licensed company. The Japanese CRE team is headed up by Christopher A. Aiello, and also includes Alex Walker, Daniel Vovil and Sam Luck.
Odyssey Capital Group Ltd is Asia’s leading independent Alternative Asset Manager that provides differentiated and bespoke investment solutions across multiple asset classes, including asset management, real estate, private equity and hedge funds. The Firm’s primary focus is to seek out undervalued investment opportunities to co-invest in with its clients.
The Odyssey team comprises over 30 experienced executives, asset managers, lawyers, private bankers, trust & tax planning specialists and experienced investors with over 400 years of combined financial and operational experience across the Asia Pacific, Europe and North America.
If you would like to learn more about Owan Hotel or if you would like to learn about our upcoming property purchases, please get in touch with us at: japan@odysseycapital-group.com
For more information about the Odyssey Japan Boutique Hospitality Fund, phone or email Daniel Vovil via the contact details listed below.
Daniel Vovil, Co-Founder and President, Odyssey Capital Group
daniel.vovil@odysseycapital-group.com | (852) 9725-5477
Sep 25, 2018 | Press Releases
Dear Clients & Friends,
We are very pleased to announce that, as part of our Japanese Boutique Hotel strategy, we have made our first acquisition, a uniquely charmingRyokan (traditional Japanese inn) called “Kagetsu” in Echigo Yuzawa, Niigata Prefecture – see the website here: https://www.shousenkaku-kagetsu.com
(Kagetsu Ryokan Room with outside Bath)
(Kagetsu Ryokan In-house Onsen)
Kagetsu is surrounded by three exceptional ski resorts and bordered by Takizawa Park and a quaint river that flows from the nearby Fudotaki Falls. Kagetsu has been owned and operated by the same family for more than 30 years.
During the winter season, our guests have access to 3 different ski resorts where they are able to enjoy the renowned Japanese slopes or beautiful hot-springs.
(Fudotaki Falls in Echigo Yuzawa)
(Local Echigo Yuzawa Hot Springs)
But it’s also the Spring, Summer and Fall that attract tourists from all over, as these seasons are filled with hiking and mountain biking, golfing, fishing, delicious farm to table local cuisine, sake tasting at famous sake breweries. The area is well known for young couples to make pledges and prayers at the famous Fudotaki Falls.
(Yuzawa River)
(Yuzawa Chuo Park)
After completing thorough due diligence, the key parameters for the purchase of Kagetsu included: the abundant tourist experiences that guests can enjoy during all four seasons in the surrounding area and community, securing a below market acquisition price which will contribute to the a targeted IRR of 20.3%, an attractive cash-on-cash yield of 12% based on the application of our value-enhancement strategies along with favourable debt financing at 1.8% p.a., all combine as key factors behind the acquisition of this unique property as the first of many for Odyssey’s Japan Boutique Accommodation strategy.
(Kagetsu Ryokan Entrance)
(Kagetsu Ryokan Deluxe Room)
Clients of Odyssey are eligible for a 20% discount on room stays so please contact your Private Client Adviser if you are planning to be in Japan and would like to experience the charm of Kagetsu.
If you would like to learn more about Kagetsu or if you would like to learn about our upcoming property purchases, please get in touch with us at: japan@odysseycapital-group.com
(Kagetsu Ryokan Banquet Hall)
For more information about the Odyssey Japan Boutique Hospitality Fund, phone or email Daniel Vovil via the contact details listed below.
Daniel Vovil, Co-Founder and President, Odyssey Capital Group
daniel.vovil@odysseycapital-group.com | (852) 9725-5477
