Company Announcements

Commencement of construction of first new homes under Private Rented Sector joint venture with Gatehouse Bank

Wednesday, November 19, 2014


AIM: SGM

Sigma Capital Group plc ("Sigma" or “the Group”) Commencement of construction of first new homes under Private Rented Sector joint venture with Gatehouse Bank

Sigma, the residential and urban regeneration specialist, is pleased to announce that its Private Rented Sector (“PRS”) joint venture with Gatehouse Bank plc (“Gatehouse”) is commencing this week the construction of an initial phase of 927 new rental homes with a total development cost of approximately £100 million, creating one of the first and largest PRS platforms in the UK. This follows the agreement of up to approximately £67 million of bank financing from Barclays Bank plc which supplements equity of approximately £47 million from Gatehouse. The initial phase of construction is part of a wider proposal with Gatehouse to create a portfolio of new build privately rented residential properties across multiple sites in the UK and complements the recently announced strategic partnership with Grainger plc which is focused on larger sites.

As previously reported, the new homes will be built on land procured and developed by Sigma through its existing local authority partnerships with Liverpool City Council and Salford City Council and its housebuilding partner, Countryside Properties (UK) Ltd. The 927 new homes will comprise a mix of high quality family homes and apartments and will be constructed across 14 sites in the North West - 10 in Greater Manchester and four in the Liverpool area. The new homes will be built by Countryside Properties (UK) Ltd and construction is scheduled to be completed in approximately two years. Direct Lettings Limited (part of the Shepherd Direct Group), with whom Sigma has a well-established association, will manage all lettings.

Sigma will earn an initial upfront fee on commencement of construction and thereafter a management fee paid quarterly over the duration of the delivery period. On completion, Sigma will earn a quarterly asset management fee, with all fees based on the development cost. Sigma will also retain a share of the net disposal profits on the assets, subject to a minimum return to investors. In addition, Sigma is making an equity investment of up to £2m in the project alongside Gatehouse depending on final construction costs.

Further phases
Sigma is also exploring with Gatehouse efficient financial structures for the delivery of further phases of new homes.

Graham Barnet, Chief Executive of Sigma, commented,

"This is a significant moment for Sigma, which brings to fruition the work we have done with our local authority partners, Gatehouse Bank, Countryside and Shepherd Direct to establish our Private Rented Sector model. I would like to express our thanks to all our partners for their support.

We see considerable potential to create one of the largest new build privately rented residential portfolios in the UK and I am delighted that construction of the first phase of over 900 new homes for rent across Greater Manchester and Liverpool is now starting.

We believe the joint venture with Gatehouse and our new partnership with Grainger plc firmly establishes blueprints for further large scale housing programmes across cities throughout England with other partners and additional local authorities.”

Scott Nicol, Vice President of Real Estate Investment at Gatehouse Bank, commented,

“We are delighted to be embarking on the first phase of our new JV with Sigma to roll out in excess of 900 new private rented homes across 14 sites located in Liverpool and Manchester. The complexity of creating a debt and equity funded, institutional scale, private rented platform from scratch hasn’t been an easy task and therefore this transaction is a milestone for the JV and also for the sector in general. The importance of the sector is becoming increasingly more critical as the supply and demand imbalance of quality in UK housing stock continues. The JV will play its part in addressing the imbalance to deliver affordable, sustainable, efficient homes in scale and in areas where they are most needed.”

Graham Chilver, Relationship Director, Barclays’ Real Estate team, commented,

“It’s great to be involved in this truly ground-breaking project and exciting joint venture, which is providing significant new housing stock into the market. This facility demonstrates Barclays’ on-going support for experienced operators in the residential and house building sector, and our ability to structure a tailor-made development and investment finance solution.”

The Rt Hon Greg Clark MP, Minister of State for Universities, Science and Cities, said,

“Further to the Prime Minister’s statement on the forming of the Sigma Capital Group PLC and Gatehouse Bank’s joint venture I welcome the announcement of the first PRS homes to start on site in Liverpool, Salford and Greater Manchester.

This is a sure sign of investment flowing into cities in the north of England, building much needed housing through this growing form of tenure and delivering new construction which contributes to the local economy, creates jobs and delivers more homes for hardworking people.

I also welcome the announcement by Sigma and Grainger PLC last Monday which will add substantial new homes to cities in the Midlands and the North of England through the creation of a well-managed rental portfolio.”

Ends.

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Enquiries

Sigma Capital Group plc
Graham Barnet, Chief Executive
Marilyn Cole, Finance Director
T: 0131 220 9444
Company website: www.sigmacapital.co.uk

KTZ Communications
(PR adviser to Sigma)
Katie Tzouliadis/ Deborah Walter
T: 020 3178 6378

N+1 Singer
James Maxwell/Ben Griffiths
T: 0207 496 3000

FTI Consulting
(PR adviser to Gatehouse)
Kit Dunford
T: 020 3727 1143

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About Sigma Capital Group plc
www.sigmacapital.co.uk

Sigma is a residential development and urban regeneration specialist, with offices in Manchester, London and Edinburgh. It has a well-established track record in assisting with property-related regeneration projects in the public sector, acting as a bridge between the public and private sectors. Sigma’s principal focus is now on the delivery of large scale housing schemes, initially for the Private Rented Sector (“PRS”).

About Gatehouse Bank plc
Gatehouse Bank plc (the “Bank”) is an investment bank based in the City of London, authorised by the Prudential Regulation Authority (PRA) and regulated by the PRA and the Financial Conduct Authority. Founded in 2008, the Bank invests in accordance with Shariah principles with divisions in Real Estate Investment, Real Estate Finance, Treasury, Wealth Management, and Shariah Advisory. Seeking to preserve and grow wealth for its clients, the Bank is built on combining international financial market expertise with excellence in Shariah principles. The Bank advises funds with approximately $2 billion assets in the United States and United Kingdom.

For more information please visit our website www.gatehousebank.com

About Countryside Properties (UK) Limited
www.countryside-properties.com

Countryside Properties (UK) Limited is a residentially focussed developer with a strong pedigree and a track record of delivery. The business champions a tenure blind, quality driven approach for all schemes, creating a sense of place through good design and the use of quality materials and landscaping.

Countryside work with a range of stakeholder organisations from private land owners to land owning public bodies, with residential projects ranging from large scale regeneration initiatives to high value housing in premium quality market locations.

About Direct Lettings Ltd
www.direct-lettings.com

Direct Lettings provides services, across the UK, to financial institutions, portfolio holders and landlords operating in the Private Rented Sector. Their services include site and portfolio assessment, recommendations on design and specification, financial modelling, marketing, lettings solutions and the ongoing management and maintenance of the portfolio.

As part of Shepherd Direct, a fully integrated property services group, Direct Lettings delivers solutions which utilise the experience and expertise of its sister businesses, in particular, CENTURY 21 UK, itself part of the world’s largest residential estate agency, and Shepherd Chartered Surveyors, one of the UK’s largest residential surveying firms.

About Barclays
www.barclays.com

Barclays is an international financial services provider engaged in personal banking, credit cards, corporate and investment banking and wealth management with an extensive presence in Europe, the Americas, Africa and Asia. Barclays’ purpose is to help people achieve their ambitions – in the right way.

With over 300 years of history and expertise in banking, Barclays operates in over 50 countries and employs approximately 135,000 people. Barclays moves, lends, invests and protects money for customers and clients worldwide.