US buyout firm Bain Capital is selling part of its Japan hotel assets through a real estate investment trust (REIT) initial public offering (IPO) in Tokyo that may raise nearly 20 billion yen ($190.35 million), sources familiar with the matter said.
Bain joins other property investors who are cashing in on investors’ demand for higher yields from REITs at a time of ultra-low and even negative rates in Japan.
The IPO, which will be managed by Nomura Holdings Inc and SMBC Nikko Securities, will be announced on Friday, one of the sources told Reuters.
Bain last year bought Japanese hotel and spa operator Ooedo Onsen Holdings, which operates 31 hotels and spa facilities nationwide, for about 50 billion yen. Ooedo Onsen is best known for its spa on the man-made island of Odaiba in Tokyo Bay.
The buyout firm has set up a company called Ooedo Onsen Asset Management Co, which will operate a real estate investment trust named Ooedo Onsen REIT Investment, the sources said. The REIT will buy some of the properties from Ooedo Onsen Holdings, they said.
Officials from Bain Capital and Ooedo Onsen declined to comment. Ooedo Onsen REIT’s IPO plan was earlier reported by the Nikkei business daily.
Japan’s real estate investment trusts offer an average yield of 3.4 percent, compared to the negative yield on a 10-year Japanese government bond. The Topix real estate index has risen 6.5 percent so far this year, versus a 15.3 percent decline in the Topix stock index over the same period.
The listing of Ooedo Onsen will follow Marimo Regional Revitalization REIT, which owns offices, hotels and retail facilities mostly in regional small cities. That REIT will start trading on Friday.
And Mitsui Fudosan Logistics Park, which owns warehouses, will start trading on Aug. 2. It was not immediately known when Ooedo Onsen REIT will begin trading on the stock market.