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$2.3 Billion in Japanese Property may be Bought by China’s Anbang from Blackstone: Reuters

$2.3 Billion in Japanese Property may be Bought by China’s Anbang from Blackstone: Reuters
In what would be Japan's biggest property deal since the global financial crisis, China's Anbang Insurance Group Co is in talks to buy as much as $2.3 billion in Japanese residential property assets from Blackstone Group, reported Reuters quoting two people involved in the discussions.
According to the sources, who asked not to be identified, Reuters reported that including in a deal with General Electric Co in 2014, the U.S. asset manager is discussing the sale of properties it had bought from investors.
One of the sources reportedly told Reuters that the talks are in an advanced stage.
The deal would be its first foray into Japanese real estate for Anbang whcich is seeking to diversify its assets globally. Last year, in bidding for property asset manager Simplex Investment, the Chinese firm last year lost out to a Japanese developer Hulic Co.
There were no comments reportedly made by a Blackstone official while Anbang officials did not provide an immediate comment to the story to Reuters.
Since a fund managed by Morgan Stanley bought 13 hotels from ANA Holdings Inc for 281 billion yen in 2007 while at the height of the property investment boom, this prospective deal could fetch about 260 billion yen and could mark the biggest Japan property transaction, claimed Reuters quoting the sources with the knowledge of the matter.
Japan’s Prime Minister Shinzo Abe championed ultra-easy money policies that have driven down interest rates and boosted asset prices in a bid to pull Japan out of decades of deflation since he took office in late 2012 and Japan's property market has rebounded since that time.
While some analysts say that residential prices can rise further on housing demand in the biggest cities, where growth is robust, prices for office properties have rebounded to levels where investors find it hard to justify future returns.
Primarily apartment buildings aimed at middle-class residents are that assets that Blackstone is planning to sell. Blackstone bought properties in 2014 from GE's property unit for 190 billion yen in the cities of Tokyo, Nagoya and Osaka – Japans largest cities and these are included in the list of properties that are of the sale list. Also part of the deal are some residential assets that were from other investors by the U.S. asset manager.
How much of a return on its investment Blackstone may make through a sale to Anbang is however still not clear.
Assets worth more than 800 billion yuan ($116 billion) are owned by privately owned Anbang. As it expands its U.S. hotels portfolio, in March, it agreed to buy Strategic Hotels & Resorts also from Blackstone for $6.5 billion. The Chinese insurance group aborted a $14 billion bid for Starwood Hotels & Resorts Worldwide Inc. in the same month. It also owns New York's famous Waldorf Astoria Hotel

Christopher J. Mitchell

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