Goldman Sachs spends £150m on regional housing

The financial giant’s merchant banking division, working with operating partner Pitmore, has acquired a 918-home portfolio of North West rented houses from Gatehouse Bank.

The deal nets private rented sector specialist Sigma a total net cash payment of £2.9m. The Thistle portfolio was created for Gatehouse by Sigma Capital alongside its initial delivery partner Countryside Properties and was developed and managed through Sigma’s PRS platform.

The 918 units are all single-family homes, mostly suburban houses, and are located in 15 sites across the region, mostly in Liverpool and Manchester.

Sigma’s management believes that the portfolio represents was the UK’s first large-scale collection of new single-family houses developed specifically for the build-to-rent market, with a gross development cost of around £110m; and that its sale marks the first significant sale in the UK of a portfolio of new-build, single-family suburban PRS houses.

The price netted by Sigma is 53% above the book value of £1.9m ascribed to Sigma’s book interest, published in its most recent accounts.

The Thistle Portfolio generates approximately £8.3m per year in rental income. Construction of the portfolio started at the end of 2014 and was completed to budget in March 2017. According to Sigma, the portolio has consistently generated attractive returns above original expectations, with average occupancy above 99% and rent collection in excess of 98%.

Sigma group chief executive Graham Barnet said: “This portfolio was our first large-scale development for the private rental market, and the first development of its kind in the UK.

“It proved the effectiveness of our PRS platform, which, since 2014, has delivered over 4,800 new family rental homes across England both for institutional investors and ourselves, with in excess of 2,000 further homes under way across the regions and London.”

Charles Haresnape, Gatehouse Bank chief executive, said: “Thistle has not only been a highly performing investment throughout, it has also proved resilient during the Covid-19 pandemic, which is a key consideration is this market.

“As such, a strategic decision was made to exit Thistle and crystalise returns for the investors. The marketing process generated a high level of world-class institutional investor interest and we are pleased to announce a deal has been finalised with Goldman Sachs.”

PwC and CBRE advised Gatehouse, with Savills representing Goldman Sachs and Pitmore, a specialist working as an operating partner in the residential sector. Barclays is providing loan finance to the purchaser.

Sigma Capital Group has also announced today that the PRS REIT has moved into the premium segment of the main market at the London Stock Exchange. In a Q2 update, the business said that the pace of housing completion has “stepped up markedly” in the last six months, and that 529 homes have been added to the portfolio in Q2.

The company reached full commitment of its funding resource with the December acquisition of housing in Salford from BlackRock Real Assets.