Ichigo Hotel to acquire the Valie Hotel Hiroshima
TOKYO: Ichigo Hotel has decided to acquire the Valie Hotel Hiroshima in central Hiroshima for JPY1.5 billion. Ichigo Hotel plans to rebrand and reopen the hotel as Valie Hotel Hiroshima in September 2019.
Ichigo Hotel continues to execute on its strategy to grow earnings and dividends for its shareholders.
As part of that strategy, Ichigo Hotel is today acquiring the Valie Hotel Hiroshima in central Hiroshima, an area with strong inbound tourism growth. The acquisition is at a 13% discount to appraisal value, and is forecast to increase Ichigo Hotel’s annual NOI by JPY 117 million. Ichigo Hotel’s forecast post-acquisition LTV is 43.6%.
The Valie Hotel Hiroshima is a 15-minute walk from the JR Hiroshima Station, the largest train station in the Chugoku region of western Japan, and a three-minute walk from the Jogakuin-mae Station on the Hiroden Tram line. It is located in downtown Hiroshima in an area with government buildings and offices, and offers convenient access to the Hatchobori area with offices, retail stores, and restaurants, as well as tourist spots such as the Hiroshima Peace Memorial. The strong location enables the hotel to capture stable business demand as well as leisure demand.
Tourist demand in Hiroshima has been firm, with inbound demand forecast to continue increasing due to the popularity of Hiroshima’s historical and cultural attractions. Ichigo Hotel expects to carry out renovations to increase guest convenience, and rebrand and reopen the hotel as Valie Hotel Hiroshima in September 2019. In order to capture greater leisure demand, Ichigo Hotel is converting single-bed rooms, the most common room type in the hotel, into double rooms, thus increasing the guest capacity of all rooms to at least two guests.
The hotel’s operator, The Court, operates 13 hotels across Japan, including Ichigo Hotel’s Valie Hotel Tenjin and Court Hotel Kurashiki. Ichigo Hotel has a variable-rent lease with The Court, which will allow Ichigo Hotel to benefit from earnings growth from increased inbound tourism.