The deal is expected to total about ¥150 billion (US$1.3 billion). More than 10 hotels, including the Prince Park Tower Tokyo, Prince Hotel Sapporo and Grand Prince Hotel Hiroshima, are on the chopping block.
Seibu will continue to operate the hotels and other facilities after the sale.
As the Covid-19 pandemic depresses its railway and hotel businesses, Seibu is looking to unload assets and improve efficiency, a trend that is spreading across the sector.
The company was initially planning to sell off about 40 hotels but decided to hold on to some. “No decisions have been made at this point,” Seibu said in a statement.
Subsidiary Prince Hotels operates 49 facilities in Japan, owning 41 of them. To improve return on assets, Seibu will separate facility operation and asset management.
Newly established Seibu Prince Hotels Worldwide will manage the hotels under the Prince Hotel brand.
GIC is a sovereign wealth fund established to manage Singapore’s government financial assets. It apparently concluded that Japanese hotels, while currently suffering under the pandemic, will bounce back over the mid to long term.
Overseas funds have been aggressively investing in Japanese real estate as the country’s low interest rates give those investments relatively higher returns.
Other railway operators are also offloading assets. Kintetsu Group Holdings sold eight hotels to US investment fund Blackstone Group for around ¥60 billion last year.
With the surge of the Omicron variant reversing a nascent rebound in the travel industry, concerns are rising about the financial health of many companies in the sector.
Seibu has already started shedding noncore businesses, including building unit Seibu Construction, which will be sold to Mirait Holdings.
GIC has been stepping up investments in Japan since it jointly developed the Shiodome City Center office complex with Mitsui Fudosan, which was completed in 2003.
In 2017, it acquired the Sheraton Grande Tokyo Bay Hotel, near Tokyo Disneyland, in partnership with a real estate investment trust.