Lone Star’s Purchase of Japan REIT Is Blocked

TOKYO (Reuters) – U.S. investment fund Lone Star has been unable to get the green light from creditors for its planned acquisition of a failed Japanese real estate investment trust (REIT), the second time the deal has been blocked, an official of the REIT said.

The rejection could lead to the liquidation of New City Residence Investment Corp, though another REIT said it would step in as a new investor.

The head of New City had said in July it would start liquidation proceedings if creditors rejected Lone Star’s terms a second time.

Lone Star’s rescue plan was rejected at a creditors’ meeting held on Wednesday, an investor relations official at New City said, asking not to be named. She did not elaborate.

Separately, BLife Investment Corp (8984.T), a REIT affiliated with house builder Daiwa House Industry Co (1925.T), said on Wednesday it plans to step in as a new investor for New City.

BLife is backed by some creditors unhappy with the terms offered by Lone Star.

New City, which owns apartment buildings in Ginza and other up-market areas of Tokyo, failed in October, becoming the first Japanese REIT to do so. It had struggled to service its 112 billion yen ($1.2 billion) debt and finance the purchase of new assets to sustain growth.

Lone Star won the right in April to take over New City subject to agreement from creditors, outbidding Goldman Sachs (GS.N), Oaktree Capital Management and others.
($1=92.44 Yen) (Reporting by Junko Fujita; Editing by Michael Watson)