U.S.-based private equity fund Oaktree Group said Thursday that it will take control of a Japanese real estate investment trust after its sponsor announced bankruptcy.
Oaktree, which manages assets worth $58.7 billion, will become the sponsor of Re-plus Residential Investment Inc. after Re-plus Inc. filed for bankruptcy protection Wednesday.
REIT sponsors are responsible for supplying properties for the trusts and choosing managers.
Re-plus Inc. filed for bankruptcy protection at the Tokyo District Court with ¥32.6 billion in debt, making it the seventh publicly traded property company to go bust this year.
"The biggest concern for many investors in the market has been the refinancing ability of smaller REITs," said David Fan, a fund manager at CB Richard Ellis Investors Holdings KK in Tokyo.
Oaktree will take control of the REIT when it becomes the majority shareholder of Re-plus Inc.'s asset management arm, which manages the REIT. Oaktree said Thursday it aims to increase ownership in the REIT manager to as much as 90 percent, from 35 percent currently, after negotiating with banks.
Oaktree's takeover of the REIT is the third such case in Japan. The Tokyo Stock Exchange REIT index has fallen more than half since a peak in May 2007. That compares with a 32 percent drop in the Topix during the same period.
Mitsui Fudosan Co., Japan's largest developer, took control of Frontier Real Estate Investment Corp., a Tokyo-based retail REIT, in February after it bought the trust's manager.