US equity firm Blackstone Group has paid around 300 billion Yen (approx. US$2.75 billion) to buy back a portfolio of real estate assets across Japan in what is the biggest single real estate transaction in the country’s history.
Blackstone had previously sold the portfolio to China’s Anbang Insurance Group in 2017 for 260 billion Yen. A year later, the insurer was taken over by the Chinese government in an effort to restructure after a record real estate buying spree and overwhelming debt.
The transaction included 220 rental apartment buildings in Tokyo, Osaka and other large urban centers. Blackstone had originally acquired many of the assets from General Electric in 2014 for approximately 200 billion Yen, adding additional assets to the portfolio later.
The previous record-high transaction was set in 2007 when Morgan Stanley paid All Nippon Airways 280 billion Yen for 13 hotels.
Japanese real estate continues to appeal to foreign investors due to its relatively high yield gap compared to other developed countries. As of September 2019, JLL estimated the yield gap on prime office assets in central Tokyo to be 2.8%, compared with 2.3% for New York and 1.8% for Singapore.
Since 2013, foreign funds have spent a total over 5 trillion Yen (approx. US$45.8 billion) acquiring real estate across Japan. At the end of 2019, the 438-room Westin Hotel Tokyo was sold to a Singapore-based family office for somewhere in the region of 95 billion Yen (approx. US$870 million). In 2008, Singapore investment fund GIC Real Estate purchased the hotel from Morgan Stanley for 77 billion Yen. Morgan Stanley paid 50 billion Yen for the property in 2004.
Source: The Nikkei Shimbun, January 29, 2020.
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