Global investment manager Castlelake entered the commercial real estate collateralized loan obligation market with a $1.1B issuance.
Castlelake is backing the offer with collateral interests secured by 26 properties with an aggregate principal balance of $1.1B in floating rate senior loans. The portfolio includes bridge loans for multifamily, industrial, hospitality, self-storage and student housing assets.
“We see an attractive opportunity to provide bridge financing solutions for reliable commercial real estate assets as borrowers look to the evolving lending environment,” Castlelake partner Alan Gearing said in a statement. “The portfolio reflects our focus on building a diversified portfolio supported by disciplined underwriting and asset selection.”
The CLO vehicle, CLCRE 2026-FL1, is divided into six classes of notes offered, all with investment ratings from Moody’s Ratings and Fitch Ratings ranging from AAA to BBB-.
Castlelake was founded in 2005 and has approximately $40B in assets under management. Canadian investment giant Brookfield Asset Management paid $1.5B to enter into a strategic partnership that gives it a 51% stake in Castlelake by 2024, but the company continues to operate independently.
The investment manager’s portfolio extends beyond real estate, with $11B in asset-backed securities issued since 2014 across commercial real estate, residential mortgage-backed securities, specialty finance and aviation.
CLO issuance has increased since 2025 and has grown as property owners use short-term and bridge loans to offset higher debt service costs before interest rate cuts finally arrive.
Private label CMBS and CRE CLO issuances were up 18% year over year and totaled $137B at the end of September, according to the Commercial Real Estate Finance Council. CLO issuance alone totaled $33.5B year-to-date, up from $23.1B for the same period last year. Issuance on pace for busiest year since 2021, according to Fitch.
Most of the movement is in bridge-to-bridge lending as property owners come to grips with whether interest rates and borrowing costs will become more palatable in the next few years, Jim Costello, who heads real assets research at MSCI, said. Bisnow financial conference in New York.
But the war in Iran, macroeconomic policy changes and the Fed’s preference for raising rates all contributed to the rise in borrowing costs in the market today as bond traders pushed the yield on the 10-year US Treasury bond, which is used to price interest rates for all types of debt, to highs not seen since 2007.