SC Capital Plans $1 Billion New Fund for Properties

  • PE firm is looking for more properties in Japan, Australia
  • Boom in tourism will continue to boost hotel demand in Japan

SC Capital Partners, a private-equity real estate firm with investments throughout Asia, plans to raise about $1 billion to expand its portfolio in the region as investors clamor for riskier assets.

New funds will come from institutional investors in early 2017 for real estate opportunities in countries such as Japan and Australia, said Suchad Chiaranussati, chairman and founder of the Singapore-based company with about $5 billion in assets. The company currently manages money for investors including endowments and pension funds from the U.S., Europe and Asia, he said.

SC Capital is responding to demand among global investors for higher-yielding assets as it becomes increasingly evident that central banks will keep their benchmark interest rates low for longer. Even with the recent selloff in global debt markets, bond yields from the U.S. to Japan and Europe are close to record lows, enhancing the appeal of riskier assets such as real estate.

“There are a number of office buildings, hotels and other properties in the region which have potential for good investment returns,”Suchad, 52, said in an interview in Bangkok Thursday. “With a low-yield environment, most of our existing investors have expressed a strong desire to participate in the next fundraising.”

Japan Tourism

Suchad, who is a Thai national living in Singapore, worked at the Bank of Thailand and JPMorgan Chase & Co. before founding SC Capital in 2004. The company has raised about $1.8 billion of funds worldwide to invest in properties in the Asia-Pacific region, according to its website. Its fund holdings include hotels, beach villas and office buildings in countries such as Australia, South Korea, the Maldives, Japan and Thailand.

Rising tourist arrivals have boosted demand for commercial properties in Japan and Thailand.

Commercial land prices in Japan’s three biggest cities rose for a fourth year, as a record influx of tourists boosts demand for shops and hotels, the Ministry of Land, Infrastructure, Transport and Tourism said in a report Sept. 20. Visitor numbers to Japan are set for a record year, with tourist arrivals rising 27 percent to 14 million in the first seven months, according to the Japan National Tourism Organization.

"Booming tourists will continue to drive the growth of hotel properties in Japan,” said Suchad. "It’s much harder to acquire hotels in Japan at attractive prices compared with when we first invested there right after the tsunami-earthquake incident” in 2011.

REIT Activity

The company’s biggest investment was in Japan Hotel REIT Investment Corp., which owns 41 hotels in the country. SC Capital’s funds last year sold its investments in the fund, which has a market value of about $3.1 billion and is listed on the Tokyo Stock Exchange.

In Thailand, SC Capital plans to sell the leasing right to Mercury Tower, an office building in Bangkok, through a real estate investment trust, said Suchad. Thailand Prime Property Freehold and Leasehold Real Estate Investment Trust will raise about 5.5 billion baht from local institutional investors in the fourth quarter, he said. The new REIT will buy the leasing right to Mercury Tower and the ownership of Exchange Tower, another Bangkok office building, from different owner, Suchad said.

(Source corrects story published on Sept. 26 to show in second-to-last paragraph that SC Capital sold out of the Japan hotel REIT.)
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