Private rented sector developer Sigma Capital Group, which has major agreements with local authorities in Liverpool and Salford, produced a small pre-tax profit last year after a £1m turnaround.
The audited final results for the year ended 31 December 2014 published to the London Stock Exchange today show.
In November, Sigma started the first phase of its PRS joint venture with Kuwaiti bank Gatehouse comprising 927 new rental homes at 14 sites in Salford and Liverpool, with total development cost of £100m.
The company said: "We are creating a mix of high quality two, three and four bedroom houses and construction is currently underway on a total of six of the 14 sites, with the development of further sites scheduled to begin during spring and summer 2015. Construction is ahead of schedule and tenant demand is strong and generating higher than originally expected rents.
"In February 2015, together with Gatehouse and our lettings partner Direct Lettings, we also launched a dedicated bespoke lettings brand DIFRENT which will be used for all rental units constructed under the PRS Fund.
"This first phase of the PRS Fund is being built on land procured and developed by Sigma through its existing local authority partnerships with Liverpool City Council and Salford City Council, and its house building partner, Countryside Properties (UK). The second and further phases are now under discussion with Gatehouse. Each phase will deliver an initial transaction fee to Sigma as well as development management fees. On completion of the new homes, Sigma earns recurring asset management fees and will retain a share of the net disposal profits on the assets, subject to a minimum return to investors."
Sigma also has a strategic partnership with Grainger to create a large PRS portfolio focused on key English cities outside Greater London.
A share placing was completed last year to raise £8m gross to support Sigma's next stage of development.
Revenues were down to £3.87m in 2014 compared to £5.81m in 2013. Pre-tax profit was £0.21m, improved from 2013's loss of £0.86m, a £1.07m turnaround. Cash balances increased to £5.22m (2013: £1.07m).
David Sigsworth, chairman, said: "We believe that the scale of venture with Gatehouse, which is targeting a PRS portfolio of 6,600 new homes and our new relationship with Grainger firmly establishes Sigma as a leading participant in unlocking the PRS opportunity in the UK… Looking ahead, we have set ourselves the target of delivering in excess of 10,000 new homes in the next five years, with these new homes comprising a mix of PRS, market for sale and social housing. We also expect to participate in these opportunities using the group's own capital."
Shares in Sigma Capital Group were down 1p at 62p at 11am.