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Hong Kong’s AB Capital Buys Kanagawa Hotels to Lift Japan Portfolio to 14 Assets (Mingtiandi)
Mingtiandi
3S Hotel Atsugi in Kanagawa prefecture has 263 guest rooms
Fund manager AB Capital has acquired a pair of hotels in Kanagawa prefecture, bringing the Japan hospitality specialist’s portfolio to 14 assets in Asia’s second-largest economy.
The Hong Kong-based firm purchased 3S Hotel Atsugi and 3S Hotel Hiratsuka, which together have 401 keys, on behalf of AB Capital Fund II for an undisclosed price, according to an announcement on Thursday.
Located in the southwestern corner of Greater Tokyo, the hotels were carved out from DD Group after the food and beverage company was taken private last year by Tokyo-based Polaris Capital Group.
“The acquisition perfectly exemplifies our team’s capability to untangle complex corporate carve-outs and secure high-potential hospitality assets at compelling entry prices,” said AB Capital CEO Alan Kam. “By capitalising on these in-demand facilities, the highly insulated domestic customer base, and favourable rent structures, this transaction strengthens our portfolio’s defensive positioning while mapping out a clear path toward robust, risk-adjusted returns for our investors.”
Leaseback Deal
The deal gives AB operational upside through an owner-operator separation under a full variable rent leaseback structure, with both hotels providing direct rail access to central Tokyo in under an hour, the firm said.
The hotels were upgraded from 2021 through 2024 with public baths and sauna facilities under the Shonan Sauna & Stay wellness concept, helping differentiate the assets from older local hotel stock. Domestic guests made up more than 95 percent of occupants at both properties as of February, insulating them from swings in inbound travel.
The 263-key 3S Hotel Atsugi sits next to Hon-Atsugi station in an R&D hub home to electronics and manufacturing firms including Sony Semiconductor, Nissan and NTT.
The 138-key 3S Hotel Hiratsuka provides direct access to Tokyo Station via the Tokaido Line and serves the Shonan area, a coastal district popular with families commuting to central Tokyo. Hiratsuka is also an industrial city anchored by chemical and auto factories, together with related warehousing, giving the hotel a mix of weekday commercial demand and weekend leisure traffic, AB said.
The Kanagawa purchase follows AB’s April acquisition of the 123-room Smile Hotel Sapporo Susukino Minami, which marked the firm’s 12th hospitality asset in Japan.
In November, AB announced the purchase of two hotels in Osaka’s Nishinari ward as its 10th and 11th assets in the country, with the properties set to reopen this year under Marriott International’s midscale City Express brand.
Tokyo Tailwinds
Japan welcomed 10.7 million foreign visitors in the first quarter, up 1.4 percent from a year earlier, according to official statistics, with growth slowing after a 55 percent drop in Chinese arrivals.
Tokyo’s total overnight stays remained nearly flat in 2025, as an 8 percent decline in domestic guests was offset by an 8 percent rise in foreign guests, pushing the foreign share of stays to 55.7 percent from 51.2 percent a year earlier, the government said.
Hotel performance in Tokyo continued to benefit from higher average daily rates across all segments in the first quarter of 2026, according to JLL, though the pace of rate growth slowed from earlier periods.
Occupancy improved slightly across all segments except luxury, with JLL pointing to source-market diversification as helping offset the decline in Chinese visitors. Luxury hotels still managed a 14.1 percent jump in average daily rates despite a mild occupancy dip.
