Avolon has agreed to acquire Castlelake Aviation, an entity managed by Castlelake, along with its portfolio of 118 aircraft.
As of March 31, 2024, Castlelake Aviation's total assets were $5bn, which included a portfolio of 105 aircraft on lease, commitments for 13 new technology aircraft, two engines on lease, and nine loans. The portfolio is 68% narrowbody aircraft, 70% new technology aircraft, has a weighted average aircraft age of 4.7 years and a weighted average remaining lease term of 8.4 years.
"This transaction accelerates our growth plans adding a portfolio of assets that will further strengthen our cashflow and earnings profile," commented Avolon CEO Andy Cronin. "Our balance sheet strength, high levels of liquidity, and established capital markets access have enabled us to acquire these assets. They are complementary to our existing portfolio and will increase our fleet at attractive yields, supporting our positive ratings trajectory."
As of June 30, 2024, Avolon had an available liquidity of $8.2bn. Pro forma for the transaction Avolon’s balance sheet metrics remain within its target investment grade ranges, with net debt to equity of 2.8x and next 12 months sources to uses of 1.5x.
Castlelake partner and deputy co-chief investment officer Joe McConnell said the transaction is a "win-win for all parties", with it returning capital to Castlelake and Castlelake Aviation's investor stakeholders and providing Avolon with a fleet of aircraft assets.
The portfolio has up to $3.3bn of transferable debt available to Avolon on closing, with the balance funded from Avolon's existing sources of liquidity.
The transaction is expected to close in the first quarter of 2025.