General Electric Company (NYSE:GE) has entered into a real-estate agreement with The Blackstone Group L.P. (NYSE:BX), according to a report by The Wall Street Journal. The agreement will see the industrial giant sell residential property in Japan worth $1.6 billion. The move signals asset monetization by General Electric. It also reveals the confidence that foreign investors are having on the Japanese real estate industry.
In the agreement, General Electric Company (NYSE:GE) will surrender 200 residential assets that have over 10,000 rental units in the Japanese cities of Tokyo, Fukuoka, Osaka and Nagoya. Real-estate business in Japan is thought of as lucrative as the country continues to witness influx of people. The decline in the domestic currency provides an opportunity for investors to tap the benefits in the industry.
More investment in Japanese real-estate
According to industry data, the investment in the Japanese real-estate reached a3.5 billion yen as of September this year. That was 13% higher than the previous year and also became the highest investment in the sector since 2007.
New Fed rules for GE Capital
The deal to sell some apartments in Japan comes as General Electric Company (NYSE:GE) prepares for tougher regulatory measures in its financial arm, The Wall Street Journal stated in an article. The government proposed new rules for GE Capital because of the business is “systemically important”. Like a bank, the Federal Reserve wants GE Capital to up its capital ratio, liquidity and improve its structure. Such are expected to help the business survive even the hardest of financial crisis to avoid the troubles that befell financial institutions five years ago.
General Electric Company (NYSE:GE) said that its financial arm, GE Capital, had anticipated such measures and had prepared for the same. However, the move by Fed to propose the creation of an independent board for GE Capital is likely to be a bone of contention between the regulator and the company.
Meanwhile, analysts at RBC launched coverage of the stock of General Electric Company (NYSE:GE). The analysts issued an “Outperform” rating on the stock. The bullish rating comes at a time when shares of the industrial conglomerate have declined over 4% this year.