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Oaktree prepares fresh approach for Japan's New City

The LA-based firm is preparing to “re-engage” with the creditors of Japan’s first failed REIT.

Oaktree Capital Management is planning to re-enter into discussions with the creditors of stricken J-REIT New City Residence Investment Corp after a deal with Lone Star Funds failed to materialise.

According to a report by Bloomberg, Oaktree head of special situations and real estate in Asia, Robert Zulkoski said: “We remain ready, willing and able to re-engage the discussion with the New City creditors.”

Lone Star Funds had a $130 million bid to purchase New City accepted in April but the bid for the REIT, which currently has $1.2 billion in debt outstanding, was blocked by its creditors on two seperate occasions, in July and yesterday.

Oaktree has stated before that it would like to merge the J-REIT with its Tokyo-based property trust, Japan Rental Housing Investments. However, if the Tokyo District Court decides an alternative rehabilitation plan can take place, Oaktree is likely to face competition from rival bids including Daiwa House, which is keen to merge the J-REIT with its own investment trust BLife Investment Corp.

Earlier this month Zulkoski stated that Oaktree was seeking to merge Japan Rental Housing with other J-REITs, stating the industry was in need of consolidation. There are currently 41 J-REITs in operation.