Red Planet Japan Inc., the Tokyo Stock Exchange listed subsidiary of Bangkok’s Red Planet Hotels, Friday announced a $111 million (JPY 11.77 billion) sale-and-leaseback transaction with global investment bank Goldman Sachs.
Under the terms of the transaction, Red Planet has sold ownership rights in the four hotels and simultaneously entered into a lease-and-operate agreement with Goldman Sachs for an initial period of 20 years, it said in a statement.
The transaction includes Red Planet’s hotels in Asakusa, Naha, and Nagoya as well as a forward purchase of the Susukino Central development project in Sapporo, resulting in gains of JPY 2.55 billion, it added.
“We anticipate a long and fruitful relationship with Goldman Sachs over the coming years as we recycle capital at competitive cap rates,” said Yoshi Ikurumi, Chief Financial Officer, Red Planet Japan Inc.
In September 2016, Goldman Sachs announced investment of $70 million in Red Planet Hotels to help the company fund its planned expansion to 10 hotels in the next 24 months.
Founded in 2010, Red Planet Hotels will reinvest the sales proceeds in new developing new hotels across Japan. It currently has two hotels under construction in Sapporo and seven more hotels in its Japan development pipeline. At present, the company owns and operates 29 hotels in Japan, Thailand, the Philippines and Indonesia.
Quoting the Japan National Tourism Organization (JNTO), the statement said, the number of international travellers reached 28.7 million in Japan in 2017. They mostly comprised Asian residents, with Chinese (7.4 million) and South Koreans (7.1 million) accounting for the majority of visitors.
Tim Hansing, Chief Executive Officer, Red Planet Japan Inc., said: “Japan is our fastest growing market. Through this transaction, we are able to accelerate the roll out of Red Planet Hotels across Japan to cater to the increasing numbers of discerning guests who demand compelling value without compromising on room and service quality.”
US-based Goldman Sachs has been an old investor in the hospitality space in Asia, particularly India. In July, last year Casa2 Stays Pvt. Ltd, which owns and operates FabHotels.com, raised a $25 million Series B round led by Goldman Sachs Investment Partners, with participation from existing investor Accel Partners.
In January 2016, Goldman invested $66 million for a significant minority stake in Indian hotel investment and development firm Samhi Hotels
It, however, recently exited India’s Vatika Hotels by selling its entire stake in the firm. Goldman Sachs had invested Rs300 crore in Vatika Hotels in the form of compulsory convertible debentures (CCD), which later got translated into equity in 2015.