Company Announcements

£700m joint venture agreed with Gatehouse Bank plc

Thursday, November 28, 2013

Sigma Capital Group plc ("Sigma" or “the Group”)

£700m joint venture agreed with Gatehouse Bank plc to support the roll-out of one of the UK’s largest portfolios of new private rented residential homes

Sigma, the residential and urban regeneration specialist, is pleased to announce that it has agreed a major joint venture with Gatehouse Bank plc (“Gatehouse”) which will support the roll-out of an initial c. 2,000 new privately rented residential properties in the UK, with the potential to grow the portfolio to c.6,600 new rental homes once fully developed. The initial c.2,000 new rental homes have a total development cost of c.£200m and the development cost of the entire proposed portfolio is estimated at c.£700m. Gatehouse is a leading London-based Shariah compliant investment bank with a real estate portfolio worth in excess of £1 billion across the UK and US. The new homes will be built on land procured and developed by Sigma and the model is underpinned by Sigma’s existing three local authority partnerships, with Sigma currently in discussions with other potential local authority partners. 

The Rt Hon. David Cameron, MP, Prime Minister and The Rt Hon. Vince Cable, UK Secretary of State for Business, Innovation and Skills, have confirmed their support of the joint venture.

Under the terms of the joint venture, Gatehouse will deliver the equity element of the venture and both parties are in negotiations with a number of leading banks for bank financing to complete the initial c.£200m development phase. Once bank finance is in place, construction is expected to take place over 24 months, with the new homes being delivered in phases.

The initial c.2,000 units are being supported in particular by Sigma’s local authority partnerships with Liverpool and Salford City Councils, and 22 sites, totalling over 90 acres, have already been identified across the North West. The joint venture will deliver significant high quality housing stock and assist with the regeneration objectives of local authority partners in a cost efficient and timely way. 

Sigma believes that the c.2,000 new rental homes would comprise one of the largest single new build residential housing portfolios in the UK. The Group will generate revenues from asset management fees during both the construction and investment phases and will also participate in the capital upside of the joint venture vehicle.

The joint venture also provides for the creation of a portfolio of a further c.4,600 new privately rented homes, with Gatehouse retaining an option to commit to the equity element of the estimated c.£500m of financing required.

The Rt Hon. David Cameron, MP, Prime Minister, said,

As part of our plan to help Britain succeed, we are determined to build a rebalanced economy across the country. As we compete in a tough global race, Sigma’s joint venture with Gatehouse is brilliant news for the North West and for Britain, showing that we are open for business.
"The rental market is a vital asset to this country and this new investment will help to boost local economies, create jobs and deliver more homes for hardworking people.  And it's on top of the wide range of measures we've already introduced to get Britain building, including our new Build to Rent fund, and the billions we're investing towards delivering the fastest rate of affordable house building for two decades."

The Rt Hon Vince Cable, UK Secretary of State for Business, Innovation and Skills, said, 

Today’s announcement from Sigma Capital Group and Gatehouse Bank will create thousands of modern new homes to rent as well as new jobs in Liverpool and Greater Manchester, with similar plans for other regions in the country.

Graham Barnet, Chief Executive of Sigma, said,
"We are delighted to have the support of the Prime Minister and the Business Secretary as we deliver this innovative joint venture model, supplying high quality homes in areas of the country where rental housing is in extremely short supply. Gatehouse has substantial knowledge of and expertise in the UK property market and has shared our vision for this project. I am delighted that we are now working together to deliver the roll-out of our model, which has the potential to create one of the largest new build privately rented residential portfolios in the UK. 

Underpinning this new venture are our Local Authority partnerships and I am extremely pleased that this agreement creates the conditions for us to help efficiently deliver their regeneration objectives, with high quality new homes. Once bank funding is in place, we look forward to delivering the initial tranche of around 2,000 new homes over the next two years.

As this agreement is brought to fulfilment it also has the potential to transform Sigma’s rate of growth and should help to establish Sigma as a major presence in the delivery of high quality new homes for the rental sector.

Fahed Boodai, Chairman of Gatehouse Bank plc, said,

Expanding into the residential market, particularly in the UK, is a significant milestone for Gatehouse Bank. Seeking innovative investment opportunities which promote wealth preservation remains a core priority for the Bank whilst reacting to market conditions. This Joint Venture with Sigma is in line with our objectives both to partner with experienced sector operators and to build a private rental residential portfolio.

Scott Nicol, Vice President, Real Estate, Gatehouse Bank plc, said,

We are delighted to be working in Joint Venture with Sigma. Private rented homes are an increasingly important component of the UK residential sector and it is a sector which we have been looking at for some time.  We believe this joint venture breaks new ground in the sector and will help to deliver thousands of much needed high quality new homes for rent across the country.

Company website:

Sigma Capital Group plc
Graham Barnet, Chief Executive    T: 0131 220 9444
Marilyn Cole, Finance Director   
Katie Tzouliadis/ Deborah Walter    T: 020 3178 6378

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James Maxwell/ Nick Donovan    T: 0207 496 3000

About Sigma Capital Group plc

Based in Edinburgh, Sigma is a finance, property and urban regeneration specialist. In particular, it has three unique local authority partnerships, with Liverpool City Council, Solihull Metropolitan Borough Council and Salford City Council, each ranging from 10 to 20 years’ duration, which have been established to assist in the delivery of each local authority’s property-related regeneration objectives. 

Each partnership holds long term option arrangements with its respective local authority for a mix of residential, commercial, education and health opportunities. In total, the partnerships provide for the delivery of around 10,000 new homes, a significant number of new local retail centres, health/medical centres, schools and major retail/ mixed use commercial facilities. The total development value of the opportunities held within the three partnerships is estimated at over £2 billion.

Sigma’s activities also encompass property finance and property asset management. It has been appointed to act as project manager for the £1bn Winchburgh Development, near Edinburgh, encompassing 350 hectares of land and one of the UK’s single largest residential and mixed use developments.

About Gatehouse Bank plc

Gatehouse Bank operates as a Shariah-compliant investment bank based in the City of London, authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority, focusing on: Real Estate, Structured Finance, Wealth Management, Treasury products and Shariah advisory services.

In order to meet the continuing investor demand for high quality property investments, Gatehouse Bank provides opportunities across a diverse range of properties ranging from residential, retail and offices, to student and logistics sectors. The bank specialises in originating, structuring and funding investments in a Shariah compliant manner and, driven by an active real estate strategy, the Bank has established a global portfolio worth in excess of £1 billion since its inception in 2008, spread across Real Estate assets, capital investment, and term deposits. 

Contact: Abbie Smith, Marketing Manager T: 020 7070 6088