A Just Cause

This memo summarizes the mission, the market we are building into, and the strategy and culture that, in unison, we call our just cause. It builds on the founder memo of April 2024 and the internal summary of August 2025, and develops both with the strategic, operational and platform thinking that has hardened in the years since.

Part I

The market at a crossroads

The US credit landscape is undergoing a profound shift. Fannie Mae and Freddie Mac built the pipes for single-family and conventional multifamily and turned them into the deepest, most liquid credit markets in the world. But the agency mandate stops at the edge of those two asset classes, and for everything beyond — commercial real estate outside conventional multifamily, middle-market corporate credit, non-agency residential and specialty ABS — a vacuum has opened between the retreating regional banks and a rapidly-growing non-bank lending community. Demand is enormous, yet the current infrastructure is fragmented, bilateral, and priced at a real discount to the agency-backed alternative.

Post-2023, US regional and mid-tier banks are narrowing their focus to "core" offerings under the weight of Basel III Endgame capital pressure, the SVB / First Republic / Signature aftershock, elevated CRE exposure concerns, and steadily tightening supervisory expectations from the OCC, FDIC, and Federal Reserve. That pullback has opened a multi-hundred-billion-dollar addressable gap in CRE and C&I distribution.

Constraints on US regional and mid-tier banks

Regional and mid-tier banks are managing down CRE and C&I concentration under supervisory guidance while sitting on portfolios that need to move — to trade, to syndicate, to securitize. The traditional distribution channels serve the money centers well, but leave the tier below them dependent on bilateral deals with a narrow set of asset-manager counterparties. Banks now look for partners like Gallantree to support portfolio rebalancing, warehouse aggregation, and rated distribution, but doing so requires competitive pricing, back-office support, and credit re-underwriting — capabilities that the traditional bilateral counterparties are not built to provide at institutional scale.

The bulge-bracket banks (Goldman, Morgan Stanley, JPMorgan, Citi) participate selectively and price to their own balance-sheet economics. The appetite for distributable non-agency paper is there in the institutional bid; the breadth of origination-to-distribution infrastructure that turns bank and non-bank flow into rated tranches sitting on pension and insurance balance sheets is not.

The non-bank sector gap

The US non-bank direct-lending sector has grown from roughly $0.4T in 2018 to approximately $1.7T today, but the infrastructure supporting it lags the scale of the AUM. A recurring pattern emerges: strategies are copycat, warehouse terms are bilateral, compliance is borrowed, and the design of rated distribution structures is outsourced. Underwriting rigor varies. Many middle-market lenders structure bilateral facilities to capture collateral rather than to build rated, distribution-ready pools, and the warehouse market outside the top handful of sponsors compares poorly on terms, pricing, and advance rates.

By contrast, the platforms that have won at scale — Apollo, Blackstone, Ares, Blue Owl, KKR, Carlyle, PIMCO, Oaktree — operate like streamlined banks. They combine bespoke platforms, advanced underwriting, and diversified funding, without the heavy regulatory overhead that constrains the depository institutions. Most are less than twenty-five years old, yet several already exceed the AUM of the second-tier commercial banks. Their portfolio managers write Python, build proprietary platforms, and extract decision-grade signal from data in ways the next cohort of specialty originators simply do not.

"Institutional distribution infrastructure" is what defines the difference between a warehouse and a program. That gap, for the asset classes beyond the agency mandate, is what Gallantree is here to close.

The distribution challenge

Capital access for the next tier of US non-bank lenders has hardened. Institutional allocator diligence bars — insurance NAIC treatment, ERISA fiduciary standards, rating-agency methodology, Reg AB II disclosure — favor the largest platforms with too-big-to-fail profiles. Allocations are typically gated by return-rate hurdles at or above SOFR + 400–600 bps net, requiring managers with sustainable interest margins to originate materially above that. At that level only higher-risk loans qualify unless a genuine institutional distribution channel exists to term out the risk and recycle warehouse capital.

The platforms that have won think differently about capital access. Rather than queueing for one-off insurance-company allocations, they build a tapestry of access points: CLOs, CRE-CLOs, private-label CMBS, non-agency RMBS, specialty ABS, and Rule 144A / Regulation D 506(c) private placements that draw allocations from pension, insurance, endowment, and asset-manager balance sheets simultaneously.

Newer specialty lenders, tracked over the last five years, overwhelmingly spin out of dysfunctional predecessors or acquire a portfolio, and then continue a familiar strategy without innovation on the distribution side. Institutional vehicles such as CRE-CLOs, corporate CLOs, and structured hybrids remain concentrated in a small number of platforms; the next cohort needs the same tools, delivered with the same operational discipline, without the heavy overhead.

Borrower dynamics

The best US mid-market borrowers — across industrial, energy, healthcare, infrastructure, data centers, life sciences, senior housing, and specialty commercial real estate — are increasingly sourcing credit outside the traditional bank channel. Bank appetite is constrained by single-obligor exposure limits, CRE concentration guidance, and product gaps in non-conforming property types. For energy, data centers, and life sciences in particular, the majority of mid-to-large-scale project financing now runs through private-credit and structured-credit channels rather than the balance sheet of a single bank.

Companies are also choosing to stay private for longer, preferring private equity and private credit over public listings. The IPO pipeline of the last three years has been the weakest in a generation, with the strongest companies remaining private and refinancing through the private markets. The disconnect between borrower appetite and traditional bank capital underscores the size of the originate-to-distribute opportunity.

Trustee and custodian gaps

The traditional US indenture trustees are well-versed in agency and vanilla private-label RMBS administration, where static pools are packaged into bonds. The back-office machinery for that product exists, but is largely spreadsheet-driven and outsource-heavy. Moving to dynamic, actively managed portfolios — CRE-CLOs with managed reinvestment periods, warehouse aggregations toward term securitization — is, both operationally and from a liability standpoint, an entirely different proposition. Most trustees run legacy systems and have little appetite to invest in technology development for products that lack a mass market. That gap is one of the reasons we built our own platform; trustees acting on Gallantree CLOs, CRE-CLOs, and warehouses are given direct login access to perform their role and meet their responsibilities.

Part II

The Gallantree mission

Gallantree was founded in 2021. Our just cause is to build the institutional originate-to-distribute infrastructure for the US asset classes beyond the agency mandate — commercial real estate, middle-market corporate credit, and non-agency residential and specialty ABS. The mission is built on a series of strategies that use thinking, speed and entrepreneurial spirit to our advantage, qualities that are difficult to manufacture inside a thirty-year career at Goldman Sachs or KPMG, and that the smart money managers now look for the way venture investors look for founders.

We operate partially like Accenture, but for business and capital alignment and elevation, not to please middle management or government bodies.

We frame our positioning as modern merchant banking: blending advanced capital capability with long-term relationships with clients and partners. The model is intentionally narrow at the top of the funnel and deep at the bottom. We choose to partner with a handful of clients, not the entire market.

Part III

Strategy across six pillars

Our strategy is the catalyst that opens institutional debt capital markets for the US asset classes beyond the agency mandate. It runs across six interlocking pillars.

Part IV

The infinite game

We intend to play the infinite game. That means deliberate care in the foundational work, and refusing to chase fads or short-term wins at the expense of long-term position. It means setting up each person in the company for success, aligned to a shared sense of why. It means being more like a trusted family member than a capital provider or advisor to our clients and investment partners.

New entrants, cheaper capital and better technology will come for us in time. Our defence is the thing we are deliberately building today: deep client relationships, an unambiguous set of values, and a constant striving for excellence. Like a surfer, the search for the perfect wave never ends, we remain hungry, curious and never complacent, and we will not rest until we reach $5bn AUM. At that point, we will write a new memo.

In summary

Gallantree's advantage lies in combining institutional capital issuance, technology-driven infrastructure and entrepreneurial talent to reshape the US non-agency structured credit market. Where banks and non-banks are constrained, Gallantree acts as the catalyst, enabling scale, innovation and industry-specific capital solutions that position mid-market businesses and non-bank originators for long-term success. At scale, the best mid-market businesses and capital partners will wonder how they functioned without Gallantree. Selected originators will be enabled with an unfair advantage over their competitors, and vanilla strategy will, at last, be the minority.

Brett Hales, on behalf of Gallantree