Blackstone In Talks To Buy Morgan Stanley’s Japanese Loans

(Reuters) – Private equity firm Blackstone Group LP (BX.N) is close to finalizing a deal to purchase real estate loans with a face value of around 100 billion yen ($1.14 billion) owned by Morgan Stanley’s (MS.N) Japanese operations, the Nikkei business daily reported.

This would mark Blackstone’s first investment in Japan and could help breathe life into the domestic real estate market, which has slowed since the global financial crisis, the paper said.

The proposed deal involves nonrecourse loans, which were backed by domestic commercial real estate such as office buildings, Morgan Stanley had extended with future securitizations in mind, the Nikkei said.

The collateral is believed to comprise around 30 properties in the greater Tokyo area, the paper reported.

Blackstone, however, is likely to pay considerably less than the 100 billion yen face value of the loans being discussed, and is expected to target a future profit from the deal by unloading the loans to a third party or selling the collateral, the business daily reported.

Blackstone is also believed to be negotiating with Bank of America (BAC.N) to handle about $2 billion of its real estate fund investments focussing on the Asian market, the Nikkei said.

Blackstone appears to be ramping up its investment in Japan on the belief that real estate prices are close to finding a bottom, the paper said. ($1=87.42 Yen) (Reporting by NR Sethuraman in Bangalore; Editing by Roshni Menon)