Our Business
Property Investment / Management in Japan
Our Property Investment / Management in Japan through Capital Advisers is composed of three major businesses as 1) medium-large size residential property fund, 2) small size designers apartment fund, and 3) hotel fund and hotel operation.
As for the medium-large size residential properties, Grosvenor Asia and our company jointly established an investment partnership with another investor and our investment started in 2000 followed by the establishment of the GCAP fund in 2004. This fund is jointly managed by Grosvenor and Capital Advisers. Grosvenor Asia is a subsidiary of Grosvenor Group which is an international property development and investment group.
In July 2005, we have set up another residential fund called "Stable Residential Fund" working jointly with Grosvenor Asia and Diamond Realty Management Inc. (DREAM), a 100% subsidiary of Mitsubishi Corporation, one of the major trading companies in Japan, focusing on the real estate investment fund business. This fund also invests in medium to large-sized properties with relatively high and stable occupancy in the Tokyo metropolitan area. The Fund's average occupancy ratio stands at 92.5% as at December 2008.
The salient feature of the properties in a small size residential fund is that they are mainly located in the Tokyo metropolitan area where population growth is expected, and also located at convenient places within walking distance from train stations. The target customer group is the single working men and women in Tokyo. These funds are a collection of small properties that represent a well diversified portfolio.
Location of Residential Projects under Management (All residential types)
From 2001, Capital Advisers directed its attention to the assets investment / management business in the hotel property sector. The focus was on investment in limited-service hotels. Capital Advisers, as an asset manager in hotel property investment, employed a team which is experienced in the hotel sector. Capital Advisers not only manages the hotel fund but also monitors hotel operations through its wholly owned subsidiary, Vista Hotel Management Co., Ltd. As of December 2008, Capital Advisers is engaged as an asset manager of 14* hotels, three of which are operated by other parties. As of December 2008, the number of hotels we currently operate is 13 and two more hotels will be added in 2009.
* Including one hotel owned by Capital Advisers and two hotels under construction
Location of hotels we operate
List of hotels operated by Capital Advisers
| Hotel | Location | Ownership | Number of Rooms | Business Type* | Opening / Acquisition | Original Opening | |
|---|---|---|---|---|---|---|---|
| 1 | Asakusa Vista Hotel | Asakusa, Tokyo | REIT | 136 | Lease | August-05 | December-86 |
| 2 | Toyocho Vista Hotel | Toyocho, Tokyo | Private Fund | 144 | Operation | August-05 | July-92 |
| 3 | Oita Toyo Hotel | Oita, Oita | Private Fund | 144 | Operation | December-05 | May-89 |
| 4 | Hotel Vista Kamata | Kamata, Tokyo | J-REIT | 106 | Lease | June-06 | May-91 |
| 5 | Hotel Urbain Kamata Annex | Kamata. Tokyo | J-REIT | 70 | Lease | June-06 | May-04 |
| 6 | Hotel Vista Sapporo Nakajima Koen | Sapporo, Hokkaido | Private Fund | 113 | Lease | December-06 | - |
| 7 | Hotel Vista Shimizu | Shimizu, Shizuoka | Private Fund | 152 | Lease | March-07 | - |
| 8 | Hotel Vista Premio Dojima | Dojima, Osaka | Private Fund | 141 | Operation | August-07 | August-90 |
| 9 | Hotel Vista Hashimoto | Hashimoto, Kanagawa | J-REIT | 99 | Lease | August-07 | December-86 |
| 10 | Hotel Vista Atsugi | Atsugi, Kanagawa | Private Fund | 165 | Operation | September-07 | - |
| 11 | Hotel Vista Kumamoto Airport | Kumamoto, Kumamoto | Capital Advisers | 139 | Own/operation | January-08 | - |
| 12 | Vista Hotel Ebina | Ebina, Kanagawa | Private Fund | 176 | Lease | October-08 | - |
| 13 | Vista Hotel Grande Osaka | Soemoncho, Osaka | Private Fund | 304 | Lease | November-08 | - |
| Sub Total | 1,889 | ||||||
| 14 | Kyoto | Kyoto, Kyoto | Private Fund | 215 | Operation | June-09 (Planned) | - |
| 15 | Fukuoka | Nakasu, Fukuoka | Private Fund | 168 | Operation | September-09 (Planned) | |
| Grand Total | 2,272 |
* Business Type
Lease: Capital Advisers Group lease-in the hotel from the owner and operates.
Operation: Capital Advisers Group operates the hotel under the operating contract.
Opened 
Not opened yet
Among the 13 hotels we operate, six are in Tokyo's and Osaka's busiest areas. Three in Kanagawa are located near factory areas where we can expect customers on business trips who are visiting the factories.
Business Flow
We develop or purchase properties and usually co-invest in private property fund with other investors, where we act as an asset manager. In the case of GCAP fund, the fund was established first, and then acquired properties thereafter. Though there are some variations depending on the funds, the typical business flow of our property investment / management business is set out as below:
Assets under Management
One of our major sources of income is from asset management fees which are derived from the management of property funds. Since the fee is usually charged to the fund at the rate of the total amount we manage, the bigger the fund, the larger our income can be. The funds we manage usually acquire properties by financing with non-recourse loan from financial institutions. In the wake of the sub-prime loan crisis, CMBS lenders, of which most are US banks, have stopped lending in Japanese market. Japanese banks are also taking a strict credit policy, especially for property business. Due to this financial crisis caused by sub-prime crisis in the US and credit crunch on a global basis, it became difficult to increase the asset portfolios, which require bank borrowings for acquisition. However, there are some opportunities to increase our assets under management without our ownership participation, especially in hotel assets. In 2008, we signed one asset management agreement for hotel property together with a hotel operation contract. This is a new business flow which increases our asset under management without requiring our equity investment and finance arrangement.
Our Equity Investment
As our business flow shows, the assets we are managing are usually developed or purchased with our equity investment participation. Some of the equity investments have been redeemed or some do not require our equity investment. In view of the sharp contraction in the asset value of real estate, the Group was hit by an asset revaluation loss at the end of the year. For details related to fair valuation, please refer to the section "operation review" and our financial statements.
Property under Management by Capital Advisers
Note: Include Capital Advisers' own investment projects and properties under construction
China Business
Other than our property investment / management businesses in Japan, we have started property investments in China by making use of our network and capability through our finance arrangement business and distressed assets fund business in China. In January 2007, we established a wholly owned property investment company, Uni-Asia Guangzhou Property Management Company Limited ("Uni-Asia Guangzhou"), in Guangzhou, Guangdong province, PRC with a paid up capital of US$3.0 million. Uni-Asia Guangzhou has acquired 14 office units with gross floor area of 1,320 sqm in China Shine Plaza, a commercial development in the Tianhe commercial district in Guangzhou. All 14 units are now leased out to third parties. We are also going to develop the asset management business to provide more investment opportunities for investors.
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