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;
john.kell@dowjones.com
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