SEATTLE (Nov 21): Blackstone Group, the biggest US single-family rental-home landlord, agreed to buy GE Japan Corp’s residential-property business for more than 190 billion yen (US$1.61 billion) to expand its apartment holdings in Japan.

The business being acquired owns and operates more than 200 properties with more than 10,000 residential units, mainly in Tokyo, Osaka, Nagoya and Fukuoka, Blackstone said today in a statement.

The New York-based company said it’s making the purchase partly with its new Asia real estate fund.

“We continue to believe strongly in the residential sector’s fundamentals, especially in Japan’s major cities,” Alan Miyasaki, senior managing director at Blackstone, said in the statement.

Blackstone, the world’s biggest private-equity property investor, is expanding acquisitions in residential real estate on the expectation that demand for rental housing will continue to exceed supply with increasing household formations.

It’s spent more than US$8 billion to acquire foreclosed houses in the US through its Invitation Homes unit.

US rental homes represent the biggest investment in Blackstone’s current US$13.3 billion real estate fund.

Blackstone also agreed to buy apartment blocks in Madrid after Spanish home prices tumbled.

Blackstone had raised about US$4 billion of an Asian property fund targeted at US$5 billion as of early June, according to a presentation by Jon Gray, the firm’s global head of real estate, at a June 12 investor meeting.

'Very large'
“Longterm, Asia will grow to be a very large piece of our business,” Gray said at the meeting.

Apartment rents in Tokyo's five central wards rose 2.9 percent in the second quarter from a year earlier, according to Savills, a property broker.

The average occupancy rate for residential properties owned by Japanese real estate investment trusts in the Tokyo prefecture was 96.3 percent in the second quarter, having stayed higher than 95 percent since the third quarter of 2010.

“The favourable balance between supply and demand is likely to be supported by rising construction costs and increased competition for developable sites in the lead-up to the 2020 Olympics,” to be held in Tokyo, Will Johnson, head of research for Savills’s Japan unit, wrote in a Sept 16 report.

The sale of the Japanese housing is part of General Electric's global plan to reduce its equity investments in real estate as it builds its debt business, said Francois Trausch, chief executive officer of the Asia-Pacific region at GE Capital Real Estate, a unit that oversees assets of about US$36 billion.