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Property

Blackstone to seal Japan's largest ever real estate deal for $2.8bn

US investment fund will acquire 220 rental apartments from China's Anbang

  © AP

TOKYO -- U.S. investment fund Blackstone Group is to reacquire a portfolio of rental apartments in Japan for 300 billion yen ($2.8 billion), the Nikkei Asian Review has learned, marking the largest real estate deal in the country's history.

The record purchase of the apartments, which Blackstone previously sold in 2017, highlights the moves being made by foreign companies that are further pushing up Japan's rising real estate prices.

Japanese properties have been experiencing high yields, taking low interest rates into consideration.

The deal will see Blackstone purchasing approximately 220 rental apartment buildings across Japan through its operating fund from Beijing-based Anbang Insurance Group.

Blackstone first acquired most of the apartments in 2014 for an estimated 200 billion yen before selling them, together with some additional properties, to Anbang for close to 260 billion yen in 2017.

The previous largest deal in Japan was made by Morgan Stanley in 2007 when the finance company acquired 13 hotels in the country at the cost of nearly 280 billion yen from ANA.

Japan's ultralow interest rates are luring foreign investors, as they tend to look carefully at the difference between investment yields and interest rates. Even if they buy properties at high prices, lowering investment yields, they are able to earn significant profits thanks to low borrowing rates.

The yield spread when investing in major office buildings in Tokyo was 2.8% in Sept. 2019, higher than New York's 2.3% and other global major cities. These investment moves inflated real estate prices.

The Japan Commercial Property Price Index compiled by the Ministry of Land, Infrastructure, Transport and Tourism, which surveys property prices in the country's three biggest cities including office buildings and rented apartments, has surged by 30% since 2010. Industry experts forecast that the hike will continue thanks to foreign money.

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