Castlelake and Redwood Form $8B Partnership on Jumbo Mortgage Loan Acquisitions
Castlelake and Redwood Trust Inc have formed a joint venture that will purchase as much as $8 billion worth of prime jumbo mortgage loans.
The partnership will use Redwood's Sequoia platform to acquire seasoned loans, with the focus being on high-quality assets. Both firms said that the $8 billion amount may even "scale" as opportunities emerge.
According to Redwood, Sequoia is one of the longest-standing non-agency platforms in the industry since the company's founding in 1994. Also, the REIT has been a leader in the jumbo mortgage market, with its focus on expanding access for both home purchases and renters.
Castlelake fancies itself in providing asset-based private credit and has bought or financed over $10 billion worth of commercial and residential loans since 2024.
"Sequoia has experienced significant momentum over the past year, with loan acquisition volumes more than doubling as we continue to build share in the jumbo market," Brooke Carillo, executive vice president and chief financial officer at Redwood Trust, said in a statement.
"We see a dynamic and expanding opportunity set ahead, and this initiative is aligned with our strategy of scaling our platforms alongside leading capital providers. Castlelake's large, diversified institutional capital base and experience in asset-based investing make them a strong partner as we continue to grow Sequoia."
While volatility has emerged from the Iran war, the latest report from CRED iQ shows that mortgage loan spreads are tightening across CRE. During the trailing 12 months in April, spreads compressed between 12 and 18 basis points across the four major property types. Multifamily enjoyed the largest drop at 18 basis points.
Source: GlobeSt/ALM