Agreement to acquire first site in London for Private Rented Sector Portfolio
Sigma, the residential and urban regeneration specialist, is pleased to announce that it has agreed terms to acquire its first London site for its private rented sector (“PRS”) residential portfolio. The site is earmarked for 318 new homes and is located within the Barking Riverside development in east London, which is a 443 acre site with outline planning permission for one of the largest residential regeneration schemes in the UK.
Sigma has signed Heads of Terms, with an exclusivity period which runs until 31 March 2015, that allows Sigma or its funding partners to acquire the site and develop four new apartment blocks comprising a total of 318 apartment homes, including a high percentage of three bedroom family units. The overall delivery cost of the site, construction costs and associated costs are estimated to be in excess of £50 million. The agreement has been signed with Barking Riverside Ltd (“BRL”), a joint venture company between Greater London Authority and Bellway Homes plc, with BRL and Sigma undertaking to enter into a conditional contract by 31 May 2014.
The Heads of Terms sets out the obligations of the respective parties in relation to infrastructure delivery by the seller, site layout and site design, all of which will be incorporated in a detailed acquisition agreement with Sigma and its funders in due course.
Sigma expects site construction to commence in late 2014 subject to completion of detailed site acquisition agreements and funding arrangements. The construction delivery timeframe is likely to be approximately 24 months.
The Barking Riverside development is a major new neighbourhood being created alongside two kilometres of Thames river frontage in the heart of the Thames Gateway at Barking Riverside, near Barking town centre and close to the City of London, Canary Wharf and the Lower Lea Valley. It has planning permission for 10,800 new mixed tenure homes, with a high proportion of larger homes for families. The development will feature new schools, healthcare, shopping, community and leisure facilities, all supported by new public transport links.
This agreement follows the creation of a major joint venture with Gatehouse Bank plc announced on 28 November 2013 for a proposed c.£700m development of up to 6,600 new rental homes for a PRS residential portfolio, utilizing Sigma’s existing local authority partnerships. Gatehouse is contributing equity funding for this venture. Bank funding for the initial roll-out of c. 2,000 new rental homes in Greater Manchester and Liverpool is currently under negotiation.
Sigma expects to agree terms to acquire further sites in Greater London, the South East and elsewhere in the UK for its PRS residential portfolio.
The Mayor of London, Boris Johnson, said,
“This is a great boost for London’s newest suburb Barking Riverside, one of the largest regeneration sites in Europe. This dynamic site continues to win design awards and has capacity for almost 11,000 homes. I welcome Sigma’s innovative purpose built private rental housing model that will see us reach 1,000 high quality homes at Barking Riverside.”
Ted Ayres, Chief Executive of Bellway Homes, said,
“We are pleased to welcome Sigma on board at Barking Riverside which is fantastic for the momentum of the project. We hope this will add further to the mix of housing being delivered in this emerging community.”
Graham Barnet, chief executive of Sigma, commented,
“We have been working with BRL for some time and are delighted to have reached this agreement for the creation of the first privately rented housing development on the Barking Riverside development.
The inclusion of this site within our private rented portfolio begins to broaden our geographic presence as we aim to build a UK wide private rented residential portfolio. Barking Riverside is one of the largest and most ambitious development projects in the UK and we are delighted to be playing a small part in its delivery with such prestigious partners.”
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 Barking Riverside Ltd
Barking Riverside Ltd is a joint venture between the Greater London Authority and Bellway Homes plc. Its role is to deliver serviced development plots for housebuilders. Around 10,800 new, mixed-tenure homes will be created at Barking Riverside within a high quality urban environment alongside a range of amenities. These will include healthcare, shopping, new schools, community and leisure facilities and environmental benefits, new public transport links and employment opportunities for 1,500 people.