Aviation assets have drawn a new institutional commitment. The New York State Common Retirement Fund—the third-largest public pension fund in the United States with $207 billion in assets under management—disclosed by way of its July 2020 monthly transaction report that it has made a new allocation of $150 million to Castlelake Aviation Stable Yield IV LP, a closed-end aviation assets fund that acquires, manages and leases in-production, mid-life aircraft and engines.
Castlelake—headquartered in Minneapolis, with offices in London, Dublin, Luxembourg, and Singapore, manages $17.5 billion in assets on behalf of institutional investors including endowment, foundations, public and private pension funds, family offices, private funds, insurance companies and sovereign wealth funds.
The firm typically invests in complex, small- to midsize, asset based opportunities in industries impacted by “changing fundamentals” or with “fewer natural buyers”—particularly the global aviation industry.
Since 2005, Castlelake has invested more than $14 billion in aircraft assets and obligations, including 600 aircraft and 1,000 engines, which it obtains through its relationships with airlines, aircraft leasing companies, airlines, manufacturers, asset managers, co-investors, disassembly firms, industry consultants and brokers.
Stable Yield IV
Castlelake’s fourth fund opportunistically invests across various aviation investment types, including sale-leaseback portfolios, ABS debt, aviation leasing platforms and aircraft on operating leases, which the GP manages throughout the investment life cycle. The fund typically invests in aircraft assets between 3-14 years of age on long-term leases, diversified by investment and aircraft type.
Late last year, the San Francisco Employees Retirement System (SFERS), whose $27.21 billion AUM is roughly 40% allocated to alternative investments in the $50-100 million per-investment range, made a $100 million commitment to Stable Yield IV.
Castlelake is new relationship for NYSCRF and marks its only new real assets commitment for the reporting period. But this is fund’s second allocation to aviation assets in recent months: in February, just before the onset of the covid pandemic, NYSCRF made a $150 million commitment to SASOF V LP, a closed-end aviation assets fund managed by Carlyle Aviation Partners.