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Lone Star, Oaktree and Goldman Sachs vie for J-REIT

The three US firms are reportedly up against Development Bank of Japan and an investment arm of Daiwa Securities, in the $1.1 billion auction for troubled J-REIT, New City Residence.

Goldman Sachs as well as US private equity firms Oaktree Capital Management and Lone Star are in the running for troubled Japanese REIT, New City Residence Investment Corp, according to a Reuters report.

The auction is estimated to be worth about ¥100 billion ($1.1 billion).

The trio are up against Daiwa Securities SMBC Principal Investments, an investment wing of Daiwa Securities Group, and state-owned Development Bank of Japan. The Japanese bank is teaming up with conglomerate Mitsubishi Corporation and real estate investment company, Genkai Capital Management, according to the report.

New City become the first REIT in Japan to succumb to the financial crisis last year when it was delisted after filing for bankruptcy protection with liabilities of approximately ¥112.4 billion. The property company owns apartment blocks primarily in Tokyo and regional cities.

Oaktree has already been taking advantage of the financial chaos. Towards the end of last year, it completed a tender offer for 10.8 percent of the issued investment units of another troubled J-REIT, Re-Plus Residential Investment, taking its stake in the company to 48.4 percent.

Lone Star, Oaktree and Goldman Sachs were not available for comment at press time.