FG fund invests in 90-min LOVE

[Taro Toporific]

Investment fund hopes Japanese 'love' bears profits
Tuesday May 25, 9:29 PM EDT
TOKYO, May 26 (Reuters) - They wake up, grab their binoculars and head for a shady spot to watch people unobserved. Settling in, they count the number of couples visiting one of Japan's ubiquitous "love hotels" for secret assignations and afternoon trysts. For due diligence contractors hired by offshore private equity firm MHS Capital Partners, it's just another day at work....
....first of its kind, Mijatovic and partners Scott Delany and Hamish Ross set up a $10 million pilot fund that has attracted 12 European, U.S. and Asian investors, including two unnamed institutions.
MHS plans to invest in up to four love hotel properties worth up to $4 million each, paving the way for a bigger $100 million fund and targeting net returns of at least 20 percent...

[Ptyx]

Almost all rooms are fitted with karaoke machines

Actually if you do the math, Love Hotels are cheaper than most of the karaoke places.
Maybe that's why it's so succesful

[khusam]

Love hotels are often cheaper than business hotels...

Love hotels have big bathtubs with jets and bubble bath, they`re usually clean, they have a queen-sized bed, usually... Some have room for an extra guest.... (No rules regarding whether you have to have sex with the guest...)

The karaoke machines usually only have Japanese songs.. but I like enka...

Business hotels are often a bit dingy, have twin beds, a small bathtub, and don`t have karaoke. The check-out time is often earlier, too.

Use Love Hotels! They Rock!

[Taro Toporific]

WOW! BERRY INTERESTINGU DESU!

WE WANT A PONGI NEWS REPORT ON THIS Leisure Hotel Fair" !


Japan love hotels arouse investor interest
Reuters, UK - 30 June
TOKYO (Reuters) - Girls in mini-skirts hand out pamphlets as delegates in business suits mill around the convention floor, dropping in on lectures, checking out the latest engineering marvels and squinting at product videos.
It sounds like the Tokyo Motor Show.
Except that the video is showing how to use a mat designed for sex in the bathtub, and a typical piece of equipment on display is a two-person contraption with handles, straps and built-in vibrators known as the "love chair".
Welcome to the 10th annual "Leisure Hotel Fair", where operators and investors get updated on the most profitable niche of Japan's real estate market ...

See 6/29-30 LEISURE HOTEL FAIR 2004 Secretariat +81-3-3563-0420 +81-3-3564-2560
Map http://www.sogo-unicom.co.jp/pbs/fair/lhf/2004/

[mr. sparkle]

WOW! BERRY INTERESTINGU DESU!

WE WANT A PONGI NEWS REPORT ON THIS Leisure Hotel Fair" !

It would have to be an inside job.

It's such a tough industry you have to be on top of the trends," said Etsuko Tasaki, manager of the "Ring Bell" love hotel and one of about 7,000 people who attended the first day of the two-day conference, which is not open to the public

Bummer. It sounds very interesing. We need the super efficient GuyJean rig to get all the right shots.

[GuyJean]

It would have to be an inside job.

Bummer.. Although too late for this years, I was going to put it in my calendar for next years. Oh, well. I'll just have to do my own exploring.

GJ

[Taro Toporific]

It would have to be an inside job.

Bummer.. Although too late for this years, I was going to put it in my calendar for next years. Oh, well. I'll just have to do my own exploring.

Yep, it's on my Palm Pilot calendar already. Damn we missed it. :cry:
Wed Jun 30, 3:48 AM ET Reuters
Models demonstrate how to use a bed designed for sex, a contraption with handles and straps, at the 'Leisure Hotel Fair' in Tokyo June 30. At the 10th annual 'Leisure Hotel Faire', operators and investors discuss the ins and outs of the most profitable niche of Japan's real estate market -- 17,000 'love hotels' serving a population of 99 million adults.

[Mulboyne]

Finally these guys have done a deal. I wish them the best because they have put their own money on the line.
FT Link - free for a week then *gone*

Foreign fund pays $2m for first 'love inn'
By Barney Jopson in Tokyo
Japan's only unabashed "love hotel" investment fund, created by a foreign finance group based in Tokyo, has acquired its first property in the lucrative pay-by-the-hour inn sector. MHS Capital Partners revealed on Wednesday that its fund, backed by a handful of wealthy individuals and European financial institutions, had spent about $2m on a 20-room hotel catering to couples seeking privacy.
The purchase is the clearest sign yet that foreign capital, which has already burnished the seedy reputation of the pachinko pinball sector with its presence, is latching on to another profitable, black sheep industry.
Negotiations over price had required an iron nerve, he said, as Japanese property brokers were very aware of the burgeoning interest of professional investors in the sector. "These middlemen are running round the love hotels telling vendors, 'You don't have to accept standard Japanese pricing any more because we can get you a 30-40 per cent premium from these foreigners'," he said.

[Captain Japan]

[Taro Toporific]

Japan's notoriously regimented office culture has for decades made a taboo of sleep

"Taboo"? I've got three OLs sleeping in front of their screens right now. OL R.I.P. so to speak.

[Captain Japan]

"Taboo"? I've got three OLs sleeping in front of their screens right now. OL R.I.P. so to speak.

Yeah, it was for cliches like that that I didn't give it its own thread.

[Taro Toporific]

"Taboo"? I've got three OLs sleeping in front of their screens right now. OL R.I.P. so to speak.

Yeah, it was for cliches like that that I didn't give it its own thread.

As the Captain and I have bemoaned over beers before (and perhaps tonight), we both were initially shocked by the majority of the staff in our respective large Japanese companies sleeping, reading the newpaper, clipping their toenails, and surfing at their desks.

[Video-Link Japan]

and surfing at their desks.

Me-thinks we're all somewhat 'guilty' on that account..

[cstaylor]

This is sort of related...
Tokyo's new vice is a secret siesta

This is old news... I remember reading something about this in 2002... but it's still a very good idea.

[Captain Japan]

and surfing at their desks.

Me-thinks we're all somewhat 'guilty' on that account..

Sure, but I don't have a stereotype that says otherwise. That was the context of where this all started.

[Captain Japan]

Prospect of big profits lures foreign investors to Japan's love hotels
Kansas City Star (subscription only)

TOKYO - (KRT) - Japan's "love hotels" are hard to miss. Clustered around freeway ramps and dotting the suburbs, the neon-lit hotels often look like faux castles or garish villas from the Arabian Nights.

Customers slip into the windowless hotels without showing their faces or giving their identities, usually exercising discretion in their liaisons.

The hotels are no small affair for Japan, though. Numbering some 19,000, love hotels are a pillar of Japan's economy, thought to provide more tax revenue than all other industries except pachinko parlors, the noisy betting venues filled with pinball-like games.

So it is of note that some of Japan's love hotels face hard times. The owners got bank financing from the go-go 1980s, then plunged into other business. Now they struggle to make payments and can't upgrade their rooms to the amorous needs of 21st-century consumers. That's where foreign investors come in.

"They began expanding into other leisure businesses, like golf courses. The other things collapsed, and their properties are trapped," said Miro Mijatovic, the chief executive of MHS Capital Partners, a firm with offices in Tokyo and Hong Kong.

Sky-high real estate prices in Japan help shed light on the abundance of love hotels. The country's 120 million people crowd together in a land the size of California. Many families live with several generations cramped under one roof. Researchers say that more than half the love-hotel clientele is married couples or young unmarried couples with nowhere to go.

"In the suburbs, married couples use the love hotels to be romantic. Since they live together with grandma and grandpa, and with their children, they don't have privacy," said Jiro Miura, a commentator from the Love Hotel Total Research Office, a consultancy.

Major Japanese banks, for the most part, see the love-hotel industry as unsavory. Other lending agencies have let foreigners tread first. Sniffing for opportunities, investors such as Mijatovic are scouting love hotels for signs of distressed ownership and tallying the couples entering each day as a way to estimate revenues.

What they say they've found is an industry any investor could cherish.

Most love hotels are mom-and-pop businesses with an average of 10 to 25 rooms, although some have as many as 80. Chains are few, usually with no more than two dozen hotels each. In general, rooms rent for two or three hours, averaging about $66 a stay. Overnight stays are possible at a higher rate.

The average love-hotel room rents two and a half times per day, Mijatovic said. For a 40-room hotel, monthly revenue can come close to $200,000, he said. Profit margins routinely run at 45 percent.

Decades ago, Japanese craved the fantasy element of the "love hotels," which explains the kitschy, outlandish design of many of the older ones. But tastes in decor are evolving. Gone are the days of rotating beds, huge overhead mirrors and nothing but pornography on the television set.

"The gaudy look is out of date. The buildings themselves are changing," said Hirofumi Sasaki, an architect with a Tokyo firm that specializes in love-hotel design. "Anything that looks like a castle is out of date."

Modern love hotels look like European rooming houses, jungle-draped lodges or windowless office towers. The rooms often have themes, such as tropical resort, watery grotto or Asian getaway. Huge bathrooms contain scents and dried flowers, ready to throw in the whirlpool tub.

Some rooms don't easily fit into Western notions of romance.

Flipping through a photo album of renovated "love hotels," Sasaki comes across one room that's a shrine to the Hanshin Tigers baseball team, replete with a neon "Home run!" sign. Other theme rooms exalt Budweiser beer and the characters Snoopy and Hello Kitty.

Newer hotels try to offer memorable experiences.

Off the lobby of the P&A Plaza Hotel in Tokyo's bustling Shibuya district, a manager, Naohito Kurose, surveys the backlit displays of photos of revealing costumes that clients can have delivered to their rooms through vacuum tubes.

Nearly all are for women. They include cheerleader and sexy sailor outfits, low-cut tennis dresses, kimonos, beer hall fraulein get-ups and a red Santa's elf number.

"Couples come here and have fun picking out the costumes," Kurose said. "This may be unique to Japan, but the (girls') high school uniform is the most popular. The nurse's outfit is the second most popular."

Each room at the hotel includes menus for delivery of Domino's Pizza or KFC.

Probing the industry for financial details hasn't been easy for outsiders.

"It's a very secretive industry. It's not like you can go down to your real estate office and say, `Show me your love hotels,'" said Mijatovic, a Croatian-born Australian lawyer.

Earlier this year, Mijatovic and two partners, former bankers from New Zealand and the United States, pulled in $10 million to invest in the sector. They've bought two hotels near Tokyo, and seek $35 million to $40 million more for a second round.

Their plan is to renovate existing properties into boutique-style love hotels, creating the sense of being at a chic hot-spring resort.

"If we don't appeal to the females, the hotels won't be successful. The woman needs to feel very comfortable, nothing edgy," Mijatovic said.

At first, Mijatovic and his partners feared they'd find involvement by the yakuza - the criminal underworld - in the industry, but they've yet to uncover it.

Tax collectors monitor the love hotels closely, even measuring water usage for laundry to ensure that owners don't chisel on income declarations.

Already, there are signs that the industry is inching toward respectability, including an annual convention in Tokyo to display the latest wares.

"It used to be that no one understood or knew about love hotels. But people now know more about the industry," said Sasaki, the architect. "In the last two or three years, they have become more popular as investment properties."

He estimated that "maybe 30 or 40 percent" of love-hotel owners are overextended and unable to renovate their properties.

[Captain Japan]

Goldman may get hotels in CMA deal
Reported acquisition could cast love hotels in new light
Martetwatch

The Wall Street firm (GS: news, chart, profile) is reportedly planning to buy UFJ Holdings' (UFJHF: news, chart, profile) (JP:8307: news, chart, profile) CMA commercial lending unit, whose 45 billion yen ($429 million) of loans are said to be backed by properties including gaming parlors, golf courses and "short-stay" hotels. See full story.

A Goldman Sachs spokesperson would not comment when asked about the report.

Also known as "leisure hotels" and most commonly called "love hotels," such establishments offer rooms for short blocks of time. In a country where many young singles can't afford their own apartments, and small children sleep in their parents' beds, such hotels provide couples with something that's in short supply in Japan: privacy.

But the hotels don't exactly have a family image, partly due to some of their operators' alleged connections with organized crime.

At least one potential competitor in the leisure hotel investment business is cheering for the reported CMA deal, in the hope that a Goldman acquisition would cast the whole sector in a new light.

"I would say this would be a major step toward legitimizing to the capital markets that these are great acquisitions," said Scott Delany, managing director at Hong Kong-based private equity firm MHS Capital Partners. "These are money makers. The yields on these are 20 to 30 percent, usually."...the rest...

[Taro Toporific]

Your time starts now
Sydney Morning Herald, 3 Aug
Love hotels - check in, strip off, clock out - are hot property in a market that has [FG] investors snapping up Japan's bargains...
The things to look for in a love hotel are the bed, the bath and the fantasy. Typically, there are mirrors on the ceiling, a deep tub with seething spa jets, a rotating bed and enough jungle pattern wallpaper to drive Tarzan into a frenzy. Not a permanent frenzy, mind you, but one that lasts two or three hours. Time enough to park the car, check into a themed room, undress, take a bath and leap into bed....
....About "half of all the sex in Japan occurs in love hotels", calculates Professor Mark West, an American lawyer, in research that gave a rare and detailed ...

[Mulboyne]

Yomiuri: Moving beyond the love hotel trade

They are sometimes regarded as seedy or as eyesores, but Miro Mijatovic sees the love hotels that dot Japan as a model for a new type of endeavor that will give friends and families a place to entertain themselves--at flexible rates. "When we try to explain the concept to Japanese investors, many of them say, 'Oh, you guys are opening up love hotels?' and then suggest ways we can do business and recommend financial institutions for us. But we're actually doing something new for Japan," the managing director of overseas private equity firm MHS Capital Partners said. So promising is the proposition that many of the investors for the project are from outside Japan and include hedge-fund principals and foreign banks.

Mijatovic began to imagine this new type of facility about four years ago, when he had his hands full promoting Olympic gold-medalist Ian Thorpe and top K-1 fighters. "The most interesting thing about love hotels is their flexible-rate system. This is something unique to Japan," he said. "The idea of renting rooms in blocks of time was a major inspiration for our business." The idea--a leisure hotel business--was to rent luxurious rooms at flexible rates based on length of use for recreation purposes, such as watching football games on a plasma screen with friends, holding private yoga classes or bathing in a huge bath tub as a family.

"The general idea is to offer suburbanites someplace other than their home where they can go for privacy," said the Croatian-born Australian, who has lived in Japan for 16 years, explaining that Japan has few leisure facilities other than game centers or karaoke boxes. In 2004, the Hong Kong-based firm set up a 1 billion yen pilot fund to purchase three or four properties to build its hotels in a period of just a few months. The fund attracted a dozen investors from around the world. The first such hotel, Rplus, opened in suburban Yachiyo, Chiba Prefecture, in August. Investors can expect an about 20 percent return, the company claims, which would make it one of the highest-yield investments on the Japanese equity market.

The idea to rent space for a block of time seems set to take hold in this country in which it is not the custom for people to throw parties at home. Mijatovic says leisure is a profitable market here because there are surprisingly few entertainment outlets, despite the readiness of the Japanese to spend on having fun. MHS plans to look for failing love hotels and renovate them, doing away with the adult-oriented goods and anonymous cashiers, instead creating an East-meets-West style interior that has the feeling of a resort hotel. "It's hard for [many overseas] investors who want to put money into Japanese entertainment to find a good investment with which to do so," he said.

Investors can typically expect high returns from their shares in a love hotel business because the average room occupancy rate runs as high as 200 percent or more, compared with only 70 percent at a conventional hotel. However, Mijatovic says foreign investors used to be hesitant to sink money into these businesses whose dealings have so many "gray areas." "Some [love hotel] operators are on the aggressive side, and it's unclear to investors if their business activities are on the up-and-up," he said. "It's not a question of money or an attractive yield, but who is running things behind the scenes." Taking up a job at a law firm after graduating Macquarie University in Sydney, Mijatovic came to Japan as an in-house attorney for Mitsui & Co., an experience that has given him insight into the laws surrounding his business ventures, he said. Despite being an attractive investment opportunity, Mijatovic said the love hotel trade is approaching its limits and needs to make the leap into new service areas.

Though it does not advertise itself as a love hotel, 90 percent of the customers at the Yachiyo hotel are couples, meaning the company may need to better advertise to attract its target clientele. On the up side, 10 percent of his customers include families, who come to the hotel once a week to use its huge bath tubs. Mijatovic said people are coming to understand his business concept slowly but surely. "We've started to see several businesses that are similar to ours on the surface, but when it comes down to it, they're completely different," he said, adding that his venture risks falling into the typical love hotel category if it cannot set itself apart. So how is MHS different from others? "We have to contribute to the community as long as we are doing business there," Mijatovic said.

The first step for the start-up was to establish a good relationship with local police, health care centers and firefighters, among others. Mijatovic also turned to something he knows well: sports. "I believe in sports...Nothing touches people like sports does," the former sports agent said. He has set up a basketball team--the Chiba Pierce Arrow Badgers--which claims Mijatovic as its director and the hotel as its sponsor. Sponsoring a local sports team may project an image of a business rooted in its surrounding community, but it also serves to clearly set his business apart from both conventional hotels and love hotels. "If I'm going to do something," Mijatovic says, "I want to do something I believe in." And this business, according to Mijatovic, will fill that role as it will be beneficial not only to investors, but to the Japanese themselves.

[Captain Japan]

Japanese funds are now interested (or at least this article gives an example)...
Wise Japanese investors add love hotels, starlets to their portfolios
Mainichi

Nestled away in a traditional love hotel quarter in Tokyo's Uguisudani district, Hotel P Door looks just like any other establishment in its particular line of business.

A plague beneath the neon sign contains two prices, 4,600 yen for a rest and 7,500 yen a stay, a giveaway that the hotel is dedicated to amorous couples.

What makes Hotel P-Door stand out, according to Shukan Gendai 10/7), is that some of its operating capital comes through Hope Alpha 2, a fund that finances the love hotel's operations in return for payouts of up to 8.4 percent annual interest....more...

[Mulboyne]

Financial Post: Japan's love hotels flirt with retail investors

...Tokyo-based investment group Global Financial Support Co. (GFS) is launching the 11th and the last of its fund series this month with investments starting at 500,000 yen ($4,134). GFS's previous 10 love hotel funds have raised a total of 11.6 billion yen since 2004, offering average payouts of 8.4 percent annual interest with a five-year maturity. That compares with less than 1 percent on most Japanese savings accounts. GFS said it would offer a similar payout with the 11th fund, giving investors more bang for their hard-earned yen. "That's exceptionally attractive given that it would be almost impossible for most retail investors to earn such high returns from other products," salesman Daisuke Ishibashi told a news conference on Thursday. GFS's funds have all sold out as they attract investors left cold by other real estate funds' soaring prices and low returns...more...

[Jack]

Mulboyne, you never cease to amaze me with your resources. Are you subscribed to every news organisation in the world?

[GomiGirl]

Mulboyne, you never cease to amaze me with your resources. Are you subscribed to every news organisation in the world?

Am sure he uses RSS feeds.... that is what all the cool kids do.

[Mulboyne]

Am sure he uses RSS feeds.... that is what all the cool kids do.

I've actually never got around to setting those up. I do see the newswires and a stack of press releases everyday, though, so it's usually just a matter of time waiting for some non-subscription service to stick the story up on the web. Top that off with some eclectic browsing and bob's your uncle.

Japan news stories are easy to come by these days. I was talking with Taro about the guy at Japan Probe who does a very comprehensive job of providing links on his blog - as does the NewsOnJapan guy who has been around for much longer. It was a lot harder when Ultra set up FG and started posting links because few of the Japanese media sources had much well-organized content. Goodness knows how Taro managed to find all his stuff. Personally, I like stories which show Japan and the rest of the world meeting in a spirit of mutual incomprehension which tend to crop up outside the usual news sources. You can also turn up some real oddities just by adding "Japan" as a search term to whatever else you might be looking for on google. Don't ask me why, but I was doing some work on combine harvesters. Adding Japan to that query leads you to a piece on Japan's horsemeat market, an article about games of tag among children and Japanese monkeys and a description of a robot bonsai tree pesticide sprayer. Not exactly the motherload but you get the idea.

[kamome]

Mulb, have you seen the offering docs for any of these PE funds? Are they marketing only to non-US investors? I'm kind of surprised at how low the minimum investment is. You'd think they would ask for 10mm yen or more per investor. Maybe GFS is taking a hit on the carry?

[Mulboyne]

Mulb, have you seen the offering docs for any of these PE funds?

The GFS funds are being sold to retail like the earlier successful "idol funds". They generate a lot of PR and bring some new investors to an ostensibly high yielding product so they can be sold some other stuff. Here's the link. Note the "Love and Money" ladies only special event held last Thursday.

[Taro Toporific]

It's that time of year again! [floatl][/floatl]
[SIZE="3"]
The ‘ins and outs’ of the Tokyo ‘Leisure’ Hotel Fair 2007[/SIZE]

Official website of the fair being July 9 and 10
http://www.sogo-unicom.co.jp/pbs/fair/lhf/2007/index.html
Shameless plug of my site's report...

Japan love hotels arouse investor interest
Reuters, UK - 30 June 2004
TOKYO (Reuters) - Girls in mini-skirts hand out pamphlets as delegates in business suits mill around the convention floor, dropping in on lectures, checking out the latest engineering marvels and squinting at product videos.
It sounds like the Tokyo Motor Show.
Except that the video is showing how to use a mat designed for sex in the bathtub, and a typical piece of equipment on display is a two-person contraption with handles, straps and built-in vibrators known as the "love chair".
Welcome to the 10th annual "Leisure Hotel Fair", where operators and investors get updated on the most profitable niche of Japan's real estate market ...

See 6/29-30 LEISURE HOTEL FAIR 2004 Secretariat +81-3-3563-0420 +81-3-3564-2560
Map http://www.sogo-unicom.co.jp/pbs/fair/lhf/2004/

[Greji]