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Blackstone Real Estate Debt Strategies and Pluto Finance, a specialist development and bridge lender, are looking to deploy £2 billion primarily into UK and European logistics and living assets over the next two years after forming a partnership to provide financing to property owners and developers.
According to the firms, the partnership will “focus on whole loan lending ranging between £25 million to £100 million in size”. They added: “It will combine BREDS’ scale and deep real estate expertise with Pluto’s borrower network and existing origination and structuring capabilities in the mid-market lending space”.
The strategy will focus on both development and investment loans mostly targeting subsectors such as rental and for-sale housing, purpose-built student accommodation and coliving in the UK and across core markets in continental Europe.
Blackstone and Pluto’s partnership follows what they call a rising demand for private credit solutions across Europe.
“With approximately €1 trillion of commercial real estate debt outstanding and €310 billion in annual origination, the European market is increasingly turning to alternative lenders as banks continue to reduce their exposure to real estate debt.
“In addition, a systemic undersupply of housing across major cities, driven by population growth, shrinking household sizes, and persistent delivery shortfalls continues to create compelling lending opportunities in the living sectors,” the partners added.
Borrowing demand
Justin Faiz, chief executive of Pluto Finance, said in a statement: “We are very excited to partner with BREDS as we expand our real estate lending platform across the UK and into continental Europe. The combination of Pluto’s specialist expertise paired with BREDS’ scale and resources, positions us strongly to bring highly flexible, institutional-grade private credit solutions to real estate owners and developers.”
Ciaran Singh, managing director Europe, at Pluto Finance, said: “We are seeing significant demand from borrowers across Europe for private credit funding to support investment in mid-market property assets and developments across multiple sectors. This hugely exciting partnership with BREDS means that we will be able harness Pluto’s origination, structuring and management expertise to deliver debt solutions to meet this growing demand.
“Our in-country teams have deep knowledge of our core continental European target markets, and we look forward to building on our strong track record in the UK, where Pluto has lent nearly £3.4 billion across more than 300 transactions.”
David Gorleku, head of BREDS Europe, Blackstone, added: “Pluto Finance has an established and successful track record in small-to-medium balance real estate lending, and we are excited to partner with them to bring institutional capital to an otherwise underserved market. As a platform, we continue to broaden our investment approach, and we view this as an attractive opportunity to expand our lending capabilities into the mid-market segment where we see compelling relative value.”