Sigma Capital shares up 17% on £1bn London JV

Shares of Manchester and Edinburgh-based rented housing developer Sigma Capital Group rose about 17% on Tuesday after it announced a £1 billion residential joint venture with EQT Real Estate to build up to 3,000 new rental homes in Greater London. 

EQT is a Swedish private equity firm.

“Sigma, the UK PRS, residential development and urban regeneration specialist, is pleased to announce the launch of a joint venture with EQT Real Estate, the real estate platform of global investment firm EQT, to deliver high quality, new-build homes for private rental in Greater London,” said Sigma Capital.

The joint venture is being supported by Homes England, a housing agency of the UK Government, and is targeting the establishment of an initial portfolio of 3,000 homes with a value in excess of £1 billion. 

The JV has been established to invest in new, high quality build-to-rent (BTR) residential apartment blocks and houses in more affordable parts of Greater London. 

“They will be predominantly located in transport Zones 3-6 and in close proximity to transport links, including train access to central London,” said Sigma Capital.

“Homes are expected to be built and completed over a period of at least five years.”

The homes will be let at market-rate rents.

Under the terms of the partnership, EQT Real Estate and Sigma have initially committed equity of £300 million and £16 million respectively to the joint venture. 

“Sigma will receive fees relating to the identification, delivery and operational management of assets,” said Sigma.

“Sigma will also retain a performance-based incentive payment.

“This mirrors Sigma’s UK regional model, which has successfully delivered in excess of 4,200 BTR homes so far over the last five years, with these generating an annual rental income of around £40m when fully let. 

“In addition, Sigma currently has a further 2,900 homes under way, at varying stages of development in the UK regions.” 

The JV launches with the acquisition of five sites from Countryside Properties plc that are expected to deliver 361 homes for a total gross development cost of £102 million and include locations in Ealing, Enfield and Havering. 

In addition, two further sites currently under development by Sigma, at Fresh Wharf, Barking, and Beam Park, Havering, will be acquired by the JV on completion. 

“This will add an additional £48m of assets to the JV,” said Sigma.

“The two sites together will comprise an additional 157 homes and are expected to be completed in H1 2021.”

Sigma Capital Group plc CEO Graham Barnet said: “We are delighted to be expanding our delivery of new rental homes in the UK with the launch of our London JV with EQT Real Estate, a strong and visionary partner. 

“Homes England, which has supported Sigma with every major initiative to deliver the new housing that is much needed across the country, is also providing invaluable backing to the JV. 

“Once again, Homes England is proving its commitment to supporting organisations looking to deliver homes at scale in the UK.  

“We are also pleased to be working with Countryside Properties in Greater London to replicate the success of our partnership in the regions. 

“We look forward to delivering thousands of high-quality, affordable new rental homes across the Capital with our partners at EQT Real Estate, and providing London renters with a higher standard of customer care.”