Madison acquires 24.5% stake in UK lender Puma Property Finance

Madison International Realty has acquired a 24.5% equity stake in Puma Property Finance, marking a significant transatlantic partnership in the UK’s specialist lending market.

While the financial terms were not disclosed, the transaction includes a significant upfront capital commitment to anchor and support Puma’s debut institutional credit fund series.

Puma Property Finance is part of the London-based Puma Capital Group, which has supported over £2.5 billion of development across the UK since its launch in 2014. It operates a flexible lending mandate across various asset classes, including residential, care homes, student accommodation, and purpose-built rental housing. Its previous institutional funding platform totalled £500 million.

New York-headquartered Madison International Realty is a global real estate private equity firm with over $9 billion in assets under management. It specialises in capital solutions for real estate investors, emphasising entity-level investments and joint ventures. As part of the transaction, Mo Saraiya, Madison’s managing director and head of its growth platform investment strategy, will join Puma’s board.

The partnership will allow Puma to expand its development lending capacity, increasing its maximum loan size from £50 million to £100 million. It also lays the foundation for Puma’s first discretionary institutional debt fund.

“We are delighted to welcome Madison International Realty as a strategic partner to our property finance business,” said David Kaye, founder and chief executive of Puma Capital. “This important partnership from a highly respected institutional investor reflects and endorses our strong track record and the excellent team we have built at Puma.”

Paul Frost, managing director of Puma Property Finance, said the agreement marked “a significant milestone for our business, allowing us to access substantial additional capital at attractive pricing and providing us with the firepower to launch our first discretionary institutional debt fund.”

He added: “The Madison partnership will enable us to expand the reach of our core development finance offering, including upping our maximum loan size to £100m, whilst also increasing our provision of stabilisation lending for operational assets. Crucially, it means we can do even more to support UK developers at a time when demand for our lending solutions is high.”

Madison says the investment aligns with the firm’s strategy of offering liquidity and growth capital to established management teams through a tailored mix of asset- and corporate-level investments.

The firm believes Puma’s market position reflects the strength of its platform to date and sees growing demand for development finance in the UK as an opportunity for flexible lenders to support high-quality, sustainable projects in resilient sectors.

Analysis: The recent Madison–Puma transaction highlights a shifting UK real estate lending landscape, where non-bank lenders are playing a more strategic role in development finance.

Traditional banks have continued to retreat from higher-risk property lending due to regulatory constraints, capital requirements, and volatile construction costs. This has opened space for specialist lenders to step in with more flexible capital solutions.

According to the latest data from Bayes Business School, part of the University of London, non-bank lenders accounted for 17% of new UK commercial real estate lending in 2024, a drop from previous years. However, they now hold 43% of all outstanding commercial real estate loans and provided 52% of all development finance for projects without pre-lets or pre-sales — highlighting their growing role in the riskier parts of the market that traditional banks often avoid.

At the same time, borrower demand for tailored financing remains strong, particularly in sectors with structural undersupply. The British Property Federation reports a build-to-rent pipeline of over 286,900 units as of early 2025, with completions up 16% year-on-year.

According to Knight Frank, investment in UK purpose-built student accommodation reached £3.87 billion in 2024, a 14% increase from the previous year. Meanwhile, the UK’s over-85 population is projected to double by 2041, reinforcing long-term demand for senior living schemes and continued institutional appetite for stabilised residential assets.

Specialist lenders are well positioned to meet this demand, often offering higher loan-to-cost ratios, faster execution, and more flexible underwriting than traditional banks.

Average development loan sizes have increased significantly, reflecting construction inflation and greater confidence in private credit strategies. Deals in the £50 million to £100 million range — once dominated by clearing banks or syndicates — are now often funded by debt platforms, real estate funds, and institutional investors.

Preqin data shows that real estate debt funds raised over $33 billion globally in 2023, with the UK and Europe accounting for roughly one-third. Managers such as Cheyne Capital, ICG Real Estate, and BentallGreenOak remain active in strategies focused on transitional lending, mezzanine finance, and whole loans.

Meanwhile, repricing pressures and a looming refinancing wall — with £45 billion of UK commercial real estate loans maturing by the end of 2026, much of it under outdated terms — are expected to drive further demand for alternative capital. These pressures reflect tighter lending standards and a higher cost of capital, making it more difficult for borrowers to refinance legacy debt on favourable terms.

Loan pricing trends reinforce this dynamic. CBRE data shows that average spreads on closed UK commercial property loans were 184 basis points in late 2024, down 49 basis points year on year. Houlihan Lokey’s fourth-quarter 2024 Private Performing Credit Index reported a 10.84% average yield, with spreads of 6.51% — reflecting the premium required for refinancing and development risk.

In parallel, the Bank of England has cut its base rate to 4.25% as of May 2025, its fourth cut since August 2024. While this could reduce marginal borrowing costs, rates remain well above pre-2022 norms, sustaining the appeal of flexible debt capital.

In this context, Madison’s stake in Puma provides exposure to one of the most active and resilient segments of the UK real estate market. It also illustrates the broader trend of institutional capital backing non-bank lenders to access lending opportunities and generate stronger returns in a fragmented and cautious market. The key question is how far private credit can continue to expand in UK property finance before competition begins to dilute underwriting standards.

While this remains a valid concern — highlighted in recent commentary from the Bank for International Settlements — there is so far little evidence of erosion. Lender reports from the first half of 2025 suggest underwriting discipline is broadly being maintained, even as competition intensifies. For now, the capital shortfall left by retreating banks remains significant — and shows little sign of narrowing.