Oaktree eyes Asia distressed, property for $93 billion.

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Oaktree Capital Management is looking to merge Tokyo-based Japan Rental Housing Investments with other J-REITs saying the industry was in need of “consolidation”, according to media reports.

In November, the Los Angeles-based private equity and real estate firm increased its stake in Re-Plus Residential Investment, which later became Japan Rental, to 48.4 percent.

Robert Zulkoski, head of Oaktree’s special situations and real estate team in Asia, told Bloomberg that it was seeking a partner for the J-REIT, and would even work with creditors of failed J-REIT New City Residence Investment Corp., if a Lone Star Funds plan fails this month.

“We’re more than happy to engage with New City Residence’s creditors if they choose,” Singapore-based Zulkoski was cited as saying. “We’ve always shown flexibility in terms of paying down New City Residence’s debt and fairly rescheduling the balance of the debt.”

Zulkoski added that more mergers were likely among Japan’s 41 real estate investment trusts. “Even before the financial crisis, it was evident that there needed to be consolidation within the J-REIT sector,” he said. “We and others who are looking to be catalysts for this are working very hard with relevant government agencies to make it happen.”

Zulkoski said a large portion of the “several hundred billion dollars” of loans pumped into Japanese real estate over the past five years would have difficultly being refinanced. Oaktree plans to target non-performing loans and work with borrowers or buy properties that back the debt as the loans come due for refinancing in the next few years, the report said.

Oaktree is also targeting distressed real estate assets in Australia, China and South Korea.