China’s Anbang Insurance Group Co is in talks to buy as much as US$2.3 billion worth of Japanese residential property assets from Blackstone Group, two people involved in the discussions have told Reuters. The transaction would be Japan’s biggest property deal since the global financial crisis.
According to the sources, who asked not to be identified, the US asset manager is engaged in discussions over the sale of properties, including those it bought from General Electric Co, in 2014. The talks are in an advanced state, one of the sources said.
For Anbang, which is seeking to diversify its assets globally, the deal would be a first foray into Japanese real estate. The Chinese firm last year lost out to a Japanese developer, Hulic Co, in bidding for the property asset manager Simplex Investment.
A Blackstone official declined to comment. Anbang officials did not provide an immediate comment.
The deal could fetch about 260 billion yen, the sources said, marking the biggest Japanese property transaction since a fund managed by Morgan Stanley bought 13 hotels from ANA Holdings Inc for 281 billion yen in 2007 – at the height of the property investment boom.
Japan’s property market has rebounded since Prime Minister Shinzo Abe took office in late 2012, championing ultra-easy monetary policies that have driven down interest rates and boosted asset prices in an effort to pull Japan out of decades of deflation.
Prices for office properties have rebounded to levels where investors find it hard to anticipate future returns, but some say residential prices may rise further on housing demand in the biggest cities, where growth remains robust.
The assets Blackstone is planning to sell are chiefly apartment buildings aimed at middle-class residents. They include properties in Japan’s largest cities – Tokyo, Nagoya and Osaka – that Blackstone bought in 2014 from GE’s property unit, for 190 billion yen.
It is not immediately clear how much of a return on its investment Blackstone may make through a sale to Anbang.
Privately owned Anbang has assets worth more than 800 billion yuan (US$116 billion). It agreed in March to buy Strategic Hotels & Resorts, also from Blackstone, for $US6.5 billion as it expands its US hotels portfolio. In the same month the Chinese insurance group aborted a US$14 billion bid for Starwood Hotels & Resorts Worldwide Inc. It also owns New York’s famous Waldorf Astoria Hotel.
(Reporting by Junko Fujita; Editing by William Mallard and Martin Howell)