Ryland, Oaktree Cap Plan To Acquire Distressed Assets

   DOW JONES NEWSWIRES 
 

Home builder Ryland Group Inc. (RYL) announced a joint venture with investment manager Oaktree Capital Management LLC to acquire and develop residential real estate projects, with plans to invest in distressed assets to take advantage of the housing downturn.

Strategic investing in distressed assets can be risky, as many people plowing into beaten-down stocks and other securities can attest to, as their values have continued to drop. Timing and asset-management capabilities are key components to successfully acquiring the assets or buying debt on properties such as mortgages or construction loans.

Ryland said an executive committee, comprised with representatives of both companies, will make purchase decisions with the intent to sell the projects as finished lots. Ryland said it would maintain the right to option all lots sold by the partnership.

Home builders had been struggling before the recession hit, and the market has shown little signs of a turnaround. Builders have slashed prices, added upgrades and even vacations to lure buyers, but the sector continues to battle the worst downturn in decades.

Last week, Ryland reported its fourth-quarter loss narrowed as the company posted fewer write-downs, but revenue and new orders continued to tumble. Ryland has a strong presence in the South and Southwest and sells homes in hard-hit regions such as California, Nevada and Florida.

Oaktree has $55 billion in assets under management. The firm specializes in investments in distressed debt, real estate, and high-yield and convertible bonds.

Ryland's shares were up 2.4% to $15.98 in recent trading.

-By John Kell, Dow Jones Newswires; 201-938-5285; [e-mail]

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