Blackstone has struck a £2 billion partnership with Pluto Finance to expand its presence in mid-market property lending across the UK and continental Europe.

The deal will see Blackstone Real Estate Debt Strategies (BREDS), the firm’s global real estate credit arm, work alongside specialist lender Pluto Finance to provide whole loans ranging from £25 million to £100 million. The partners aim to deploy the initial £2 billion within two years.

The strategy will target both development and investment loans, with a particular focus on the logistics and “living” sectors – including rental and for-sale housing, purpose-built student accommodation and co-living schemes – on the UK and key European markets.

The move comes amid an ongoing retreat by European banks from property lending, leaving borrowers increasingly reliant on alternative sources of finance.

The European commercial real estate market has around €1 trillion of debt outstanding, with €310 billion of annual originations, according to industry estimates.

Private credit funds have been stepping in to fill the gap, offering greater flexibility at a time of heightened refinancing and development pressures.

Housing undersupply is also sharpening the need for new financing models. Across major European cities, rising populations, smaller household sizes and persistent shortfalls in delivery have left a structural shortage of homes, creating what lenders see as attractive opportunities for investment.

TRACK RECORD AND EXPANSION

Pluto Finance has built a strong foothold in the UK mid-market, providing nearly £3.4 billion of loans across more than 300 transactions since its founding. The partnership with Blackstone is expected to accelerate its expansion into continental Europe, where Pluto already has local teams in place.

Justin Faiz, chief executive of Pluto Finance, said the partnership would allow the firm to scale significantly.

He added: “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.”

And Ciaran Singh, managing director for Europe at Pluto, said demand for private credit across the mid-market was rising rapidly: “This hugely exciting partnership with BREDS means that we will be able to harness Pluto’s origination, structuring and management expertise to deliver debt solutions to meet this growing demand.”

LENDING FOOTPRINT

David Gorleku, head of BREDS Europe at Blackstone, said the tie-up reflected the firm’s strategy to broaden its lending footprint.

And he 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.

“We see this as an attractive opportunity to expand our lending capabilities into the mid-market segment where we see compelling relative value.”

The partnership is the latest sign that global private equity groups are looking to mid-sized property developers and investors for growth, as the retreat of traditional lenders reshapes real estate finance in Europe.