Castlelake hits origination milestone for UK lending partnership

A long-term partnership with Earlsfort Capital Partners has allowed Minneapolis-based Castlelake to expand its lending platform in the UK and Ireland.

Minneapolis-based commercial real estate lender Castlelake has reached a key origination milestone in its partnership with London-based non-bank lender Earlsfort Capital Partners, with the duo passing the €300 million mark for their lending platform.

Over the past 18 months, the partners have closed an €80 million facility to refinance debt on a Dublin commercial and residential portfolio for Cosgrave Property Group, and a €23.1 million facility to refinance a Grade A office space at Bonham Quay, Galway, for Gerry Barrett’s Edward Capital.

For Castlelake, the partnership with Earlsfort is in line with its general strategy of investing in transitional real estate, infrastructure and sub- and non-performing loans across Europe and the US. The manager has completed more than $13 billion transactions of this kind since inception in 2005. The firm believes that specializing in capital-constrained or niche hard assets and loan portfolios where it can address capital dislocation or unlock value from complex situations present a unique opportunity.

The news follows its final closing of Castlelake Income Opportunities II in November with $782 million in capital commitments. The fund seeks to generate attractive risk-adjusted returns with less correlation to and less volatility than the public markets, and expands on Castlelake’s commitment to identifying opportunities in asset-backed financing in the US and Europe.

European perspective

Despite the fast changing economic and interest rate environment globally, the partners’ pipeline remains robust.

Paul Brophy, co-founder of Earlsfort, attributes demand for its capital to more traditional lenders stepping back from the market. Brophy also added that while the past two years of the pandemic and supply-chain disruptions have been challenging, it has prompted many businesses to rethink their activity.

“New hybrid working, rebalancing of tourism with increased domestic travel, increased demand for logistics and the continued growth of online retail are some of the trends we see shaping the commercial real estate space over the next few years,” said Brophy. “More than ever, businesses need partners that take the time to really understand their needs and provide tailored support in this fast-evolving environment.”

Founded in 2014, ECP has issued more than €1.4 billion of loan facilities secured across property sectors including residential, office, industrial, hospitality and student housing. Earlsfort’s business focuses on providing real estate debt capital in Ireland and the UK with teams operating out of Dublin, London and Boston.

ECP in February 2021 launched Earlsfort Real Estate Finance DAC with support from Castlelake which typically provides investment loan facilities with terms of three to five years and loan-to-value ratios of up to 75 percent. ECP can provide loans quickly and with a full and dedicated focus on their clients’ needs and goals with an average of two to four weeks to credit approval and four to six weeks to drawdown.