Castlelake Commits $2.1 Billion Through Aviation Lending Program

Castlelake LP, a global alternative investment manager, has committed $2.1 billion in loans through its aviation lending program launched in November as demand for debt financing within the industry heats up.

Among the transactions is a loan package to Turkish Airlines, secured by three new Boeing 737 MAX 8 aircraft and one new 737 MAX 9 aircraft, according to a statement viewed by Bloomberg. The deal is part of Castlelake’s newly-formed partnership with Boeing Co through which the firm is looking to provide as much as $5 billion of capital for new commercial aircraft deliveries.

The Turkish Airlines loan has an appraised value of about $210 million, according to a person familiar with the matter who was not authorized to speak on the record as the details are private. Among the transactions is a $170 million loan to Falko, a commercial aircraft leasing, financing and management company, to refinance existing debt, the person said.

The loans through Castlelake’s aviation lending program are senior secured and mezzanine financing. The transactions range from $50 million to $1 billion across a number of leasing companies and four airlines, the person said. The average maturity of the debt is ten years.

Private lenders have moved in to provide debt financing to the aviation industry as some banks have stepped back. Apollo Global Management Inc. announced this week that its aviation business completed about $1 billion of aircraft-related loan origination in the second quarter.

Meanwhile, Pacific Investment Management Co. recently raised about $3 billion with GE Capital Aviation Services Inc. for aviation leasing, while KKR & Co. last month launched a commercial aviation platform and acquired an almost $800 million loan portfolio from CIT Group Inc.

Castlelake has been building out its aviation business since 2005 where it has served as an investor, debt financier and leaser for aircraft and aviation assets. The firm has invested about $14 billion in the industry and is actively managing more than 300 aircrafts. The firm has about $20 billion of assets under management as of March 31.

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