The owners of the Turtle Bay Resort, who said yesterday they plan to develop five new hotels and as many as 1,000 new condominium units at the site, have a history of investing in distressed properties in Hawai'i.

Los Angeles-based Oaktree Capital Management LLC is a $30 billion private investment firm with an opportunistic philosophy.

"They look at opportunities to buy distressed property or debt so when the market turns around, they're able to ride the appreciation of the property," said Mike Hamasu, director of consulting and research with the local commercial real estate firm Colliers Monroe Friedlander Inc. "That's how they make their money."

During the mid-1990s recession, Oaktree invested in a number of distressed high-end resorts and trophy properties in Hawai'i, only to sell those investments several years later at huge profits.

In addition to the Turtle Bay Resort, which it acquired in 2000, Oaktree teamed up with Massachusetts-based DDJ Capital Management LLC in 1998 to acquire bankrupt Liberty House Stores for $170 million.

Oaktree and DDJ sold Liberty House for $200 million in 2001 to Federated Department Stores Inc., which now operates the department stores under its Macy's division.

The Liberty House deal came after Oaktree acquired the loan to the 35-story Waikiki Landmark luxury condominium complex in 1995 at a severe discount.

Oaktree earned tens of million of dollars in profits several years later when the high-end apartments were sold to individual home buyers.

Founded in 1995, Oaktree operates what's often referred to as a "vulture fund."

The firm invests money from institutional clients such as pension funds, insurance companies and endowments and foundations in distressed companies, troubled real estate and risky debt.

"We feel skill and hard work can lead to a 'knowledge advantage,' and thus to potentially superior investment results, but not in so-called efficient markets where large numbers of participants share roughly equal access to information and act in an unbiased fashion to incorporate that information into asset prices," the company said on its Web site under the heading "investment philosophy."

"We believe less efficient markets exist in which dispassionate application of skill and effort should pay off for our clients, and it is only in such markets that we will invest."

Reach Rick Daysog at rdaysog@honoluluadvertiser.com.