Sigma raises £20m for PRS portfolio

Private rented sector specialist Sigma Capital has announced a £20m share placement to fund the development of family homes across Greater Manchester and Liverpool, as part of the release of its results for the first half of the year.

The initial focus for the fund will be on the construction of homes across up to eight sites. The first phase of development is due on site in 2016. The developer said that it expects to deliver £50m of gross development cost in the first 18-24 months following the deployment of the funds.

The new rental homes are expected to produce net income in excess of £2m each year and an indicative £13m of capital uplift.

The shares have been placed with existing and new institutional investors at a price of 75p per share.

In 2014, Sigma agreed PRS joint ventures with both Grainger and Gatehouse Bank. With Gatehouse, Sigma is currently on site with 927 homes across Salford and Liverpool, and in June announced that the partnership planned to build up to 10,000 homes in total in the next five years.

The fundraising announcement came as part of the release of Sigma’s results for the six months to 30 June 2015.

According to the statement to the stock market, the first Sigma Grainger site in Greater Manchester is due to start in the second half of this year.

Sigma announced a turnover of £1m, down from £2.8m in 2014. It also posted a loss before tax of £400,000, compared to £200,000 in 2014.

The developer said that it was in a healthy financial position, with cash balances of £5m.

Graham Barnet, chief executive of Sigma, said: “I am delighted to announce this successful fundraising, which has been supported by new as well as existing investors. It will enable us to build our own substantial PRS portfolio, capitalising on the infrastructure and relationships we have spent the last three years putting in place for large scale PRS. We are already deploying this platform successfully with Gatehouse with the first phase of 927 PRS homes well underway. The development of our own portfolio will significantly enhance returns and generate additional material long-term recurring income.”

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