Ryland Group said Monday it had formed a limited liability company with Oaktree Capital Management LLC to acquire and develop distressed residential real estate projects.

The new company, whose name was not announced, will take advantage of the Calabasas-based homebuilder's real estate development expertise. A Los Angeles-based hedge fund, Oaktree Capital was formed in 1995 by former executives of investment giant TCW Group Inc. It has more than $55 billion in assets under management and is known for investing in distressed sectors.

The partnership provides a boost for Ryland, which has struggled since the end of the Southern California housing boom. Ryland, which has been cutting staff and selling properties, last week reported its eight consecutive quarterly loss.

An executive committee comprising representatives of both firms will make the purchase decisions, Ryland said. The new company will provide the necessary improvements and eventually sell the projects as finished lots. Ryland operates in 15 states and is the nation's ninth largest homebuilder.

"We are excited about the opportunities that will arise as a result of this partnership," said Ryland Chief Executive Chad Dreier in a statement. Its "considerable capital base and strong track record as an investor in distressed assets make Oaktree an ideal partner for us."

Ryland shares were up 35 cents, or 2 percent, at $15.95 in morning trading on the New York Stock Exchange.

- Read the Los Angeles Business Journal's Feb. 2 interview with Oaktree Capital co-founder Howard Marks .

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