Odyssey Asset Management Limited announced that it has successfully completed the first close of the Odyssey Japan Boutique Hospitality Fund, a private-equity, real-estate fund focused on the acquisition of boutique hospitality assets throughout Japan.
Odyssey launched the fund in June 2018 and achieved the first close at the end of January 2019. The fund has received a high degree of interest from high net worth individuals and family offices, as well as large financial institutions across the Asia-Pacific region.
The purpose of the first close was to complete the call capital from committed investors to acquire one of the fund’s flagship projects known as "Project Falcon." This is a portfolio of 24 machiya (traditional wooden house) situated on one contiguous lot in the heart of Kyoto.
Project Falcon was acquired in late January for approximately US$20 million. With the acquisition complete, the Odyssey team is moving ahead with the 15-month redevelopment and construction phase. Odyssey will refurbish and transform these properties into a single urban luxury machiya resort. The acquisition of Project Falcon makes the Odyssey Japan Boutique Hospitality Fund one of the largest owners of machiyas in Kyoto.
With Project Falcon, the Odyssey Japan Real Estate investment team has now purchased three hospitality assets in Japan since first launching the fund in June 2018.
Previously in August 2018, Odyssey acquired the first ryokan for the Japan Boutique Hospitality Fund, Shousenkaku Kagetsu. The fund team sees the most value in the ryokan sector of the Japanese hospitality market as this represents the most undervalued asset class in the Japanese boutique hospitality sector. The Odyssey Japan Real Estate investment team also purchased a boutique hotel in Kyoto, Hotel Owan Hanami on behalf of one of its Korean institutional clients, Shinhan Investments, in October 2018.
For 2019, the fund team expects to accelerate the pace and quantity of acquisitions for the fund.
In the first quarter, it is anticipated that there will be three new acquisitions, including a boutique hotel in Shibuya, one of Tokyo’s most popular suburbs, and a number of ryokans (traditional guesthouse) on the Izu Peninsula.
Odyssey anticipates that the next close for the Japan Boutique Hospitality Fund will take place around May 2019. This will add to the total aggregated commitments across Odyssey’s entire Japan investment strategy of over US$200 million to date.