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Blackstone eyes Morgan Stanley Japan loans

The New York-based private equity real estate firm is looking to buying a pool of distressed loans from Morgan Stanley’s balance sheet, with a face value of more than $1.1bn and backed by 30 properties in the greater Tokyo area.

The Blackstone Group is looking to buying more than $1.1 billion of distressed real estate loans from Morgan Stanley.

The New York-based private equity real estate firm is close to acquiring a pool of distressed property loans, with a face value of ¥100 billion (€900 million; $1.15 billion), from Morgan Stanley’s balance sheet, according to people familiar with the matter.

The news was first reported by the Nikkei business daily, which said the deal would mark Blackstone's first investment in Japan. Blackstone declined to comment.

The deal would see Blackstone acquire non-recourse loans which Morgan Stanley had extended with future securitisations in mind, Nikkei said. The loans are believed to be secured against 30 properties in the greater Tokyo area. It was unclear at press time how much of a discount Blackstone would get in buying the loans.

In February, the vice chairman of Blackstone Advisory Services Byron Wien slated Japan to be the best performing major industrialised market globally, telling PERE at the time “there’s no question about” Japan getting better.

“Exports are improving, industrial production is improving. The numbers are still not good but they are not as bad as they were. If the yen weakens further, they could get better,” Wien said. “Investors are so negative on [Japan] that if the thinking changes just a little bit, a tremendous amount of buying power could be introduced to the market. If the economy improves as I indicate it will, that is obviously good for real estate.”

Blackstone opened its Tokyo office in October 2007, specifically to build its real estate investment capabilities. Led by managing director Alan Miyasaki, Blackstone also hired the former head of private equity at Japanese lender Shinsei Bank, Daniel Fujii, as managing director to search for property deals in the region.