Castlelake L.P. is teaming up with residential credit-focused firm Invictus Capital Partners to invest in $2 billion worth of new mortgages.
Castlelake said in a statement that the collaboration will help provide its investors access to "attractive pricing" in the residential loan market. Invictus, which manages over $20 billion in gross assets, has acquired more than 70,000 loans, reflecting a balance of more than $35 billion, over the past decade.
It's unclear what regions the two investment managers plan on targeting for their residential mortgage investments.
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"We believe this relationship with Castlelake highlights the recognition from sophisticated alternative investment managers of the significant opportunity to invest in high-quality loans in the residential credit market, the largest asset-based finance sector globally," said Michael Warden, senior managing director and CEO of Invictus.
"Castlelake's support affirms our belief that residential private credit deserves a featured position in an alternative credit portfolio."
This isn't the first time Castlelake has entered a deal to partner on industry loans. In fact, since last year, the Minneapolis-based firm has financed or purchased roughly $7 billion worth of residential and CRE loans through partnerships.
While inflation remains a concern, banks are showing resilience against CRE loan risks, according to a report from S&P Global Ratings. In 2025, the credit agency expects banks to return a “decent” 10.5 percent to 11.5 percent on equity. A risk that lies ahead is potential rate hikes imposed by the Federal Reserve if inflation spikes too much.
Last month, Castlelake raised $2 billion from an aviation fund that will be used for debt and asset opportunities.
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