BoE stress tests: all you need to know

The Bank of England has released the results of its latest round of its annual banking stress tests and its semi-annual financial stability report this morning. Used to measure the resilience of a bank’s balance sheet in adverse scenarios, the stress tests measured the impact of a severe slowdown in Chinese growth, a global recession […]

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Draghi: Eurozone will decline without vital productivity growth

It’s productivity, stupid. European Central Bank president Mario Draghi has become the latest major policymaker to warn of the long-term economic damage posed by chronically low productivity growth, as he urged eurozone governments to take action to lift growth and stoke innovation. Speaking in Madrid on Wednesday, Mr Draghi noted that productivity rises in the […]

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Asia markets tentative ahead of Opec meeting

Wednesday 2.30am GMT Overview Markets across Asia were treading cautiously on Wednesday, following mild overnight gains for Wall Street, a weakening of the US dollar and as investors turned their attention to a meeting between Opec members later today. What to watch Oil prices are in focus ahead of Wednesday’s Opec meeting in Vienna. The […]

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Banks, Financial

RBS emerges as biggest failure in tough UK bank stress tests

Royal Bank of Scotland has emerged as the biggest failure in the UK’s annual stress tests, forcing the state-controlled lender to present regulators with a new plan to bolster its capital position by at least £2bn. Barclays and Standard Chartered also failed to meet some of their minimum hurdles in the toughest stress scenario ever […]

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Barclays: life in the old dog yet

Barclays, a former basket case of British banking, is beginning to look inspiringly mediocre. The bank has failed Bank of England stress tests less resoundingly than Royal Bank of Scotland. Investors believe its assets are worth only 10 per cent less than their book value, judging from the share price. Although Barclays’s legal team have […]

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Categorized | Financial, Property

Blackstone looks to sell $2.3bn Japan property portfolio to Anbang

Posted on November 22, 2016

Blackstone is close to selling a large part of its residential property portfolio in Japan to Anbang Insurance of China, in a $2.3bn transaction that could come as early as the end of this week.

The mooted sale is further evidence that real estate continues to be one of the biggest beneficiaries of negative interest rates in Japan and comes as the country’s central bank continues to buy local real estate investment trusts as part of its unconventional monetary policies.

The transaction was “part of a global rotation from fixed income into other asset classes”, said a person familiar with the matter. “It is a very sensible purchase, because it produces stable income flows.”

The assets in question are mostly 10-storey apartment buildings leased to young professionals in Osaka and Tokyo, the person added. Both locations are relatively immune to Japan’s ageing demographics. Part of the portfolio consists of buildings bought from General Electric in 2014.

Blackstone has spent the past few years renovating those properties, taking advantage of favourable central bank policies and the requirement of long-term investors, including insurers and pension funds, for investments that produce both yield and security.

Such assets are also relatively immune to inflation, should the Bank of Japan ever succeed in overcoming deflationary pressures.

Blackstone’s real estate arm has produced solid returns in recent years, in part due to its close relationship with Anbang and other Chinese entities that have paid high prices for Blackstone-owned properties both in the US and in Asia.

The trend began with Anbang’s $1.95bn purchase of New York’s Waldorf Astoria two blocks from Blackstone’s headquarters on Park Avenue in 2014. Anbang also bought Strategic Hotels & Resorts from Blackstone, paying $6.5bn earlier this year.

In October, Blackstone agreed to sell a 25 per cent stake in Hilton Worldwide for $6.5bn to Chinese conglomerate HNA.

Chinese insurers are also among the big contributors to Blackstone funds, as they seek to diversify their portfolios and protect themselves from a depreciating renminbi.

At the same time, hotels are expected to be among the biggest gainers as Chinese tourists venture abroad. Wu Xiaohui, Anbang’s chairman who stays at the royal suite of the Waldorf when he is in New York, plans to convert much of the hotel into condominiums that will be marketed to his cash-rich countrymen.

The transaction was originally reported by Reuters.