Global investment manager Castlelake is entering the commercial real estate collateralized loan obligation market with a $1.1B issuance.

Castlelake is backing the offering 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 attractive opportunities to provide bridge financing solutions to credible commercial real estate assets as borrowers navigate an evolving lending environment," Castlelake partner Alan Gearing said in a statement. "The portfolio reflects our focus on constructing diversified portfolios underpinned by disciplined underwriting and asset selection."

The CLO vehicle, CLCRE 2026-FL1, is split into six offered note classes, all with investment-grade ratings from Moody’s Ratings and Fitch Ratings ranging from AAA to BBB-.

Castlelake was founded in 2005 and has roughly $40B in assets under management. Canadian investment giant Brookfield Asset Management paid $1.5B to enter a strategic partnership that gave it a 51% stake in Castlelake in 2024, but the company has continued 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 been elevated since 2025 and has grown as property owners leverage short-term and bridge loans to weather higher debt service costs before interest rate relief eventually arrives. 

Private-label CMBS and CRE CLO issuance is 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 since the start of the year, up from $23.1B for the same period last year. Issuance is on pace for the busiest year since 2021, according to Fitch.

Much of the movement is in bridge-to-bridge lending as property owners bet that interest rates and debt costs will become more palatable in the next few years, Jim Costello, who co-leads real assets research at MSCI, said at a recent Bisnow finance conference in New York. 

But the war in Iran, shifting macroeconomic policy and a Fed more willing to raise rates are all contributing to rising borrowing costs in today’s market as bond traders drive up the yield on 10-year U.S. Treasury bonds, which are used to price interest rates on loans of all types, to highs not seen since 2007.