Council JV specialist Sigma has agreed an equity deal with Kuwaiti-owned Gatehouse Bank to build at least 2,000 units for the private rented sector in the North West, at an estimated development cost of £200m.
Gatehouse is a London-based Shariah compliant investment bank with a real estate portfolio in excess of £1bn across the UK and US.
The initial 2,000 privately rented homes will be constructed primarily on land retained by Sigma's local authority partners Liverpool and Salford City Councils. Approximately 22 sites covering 90 acres have already been identified across Greater Manchester and Liverpool.
There will be 1,450 new homes across Greater Manchester, including sites in Salford and Trafford. A further 550 homes will be constructed at sites across Merseyside, predominantly in Liverpool, as well as Knowsley and St Helens.
Under the terms of the joint venture, Gatehouse will deliver the equity element of the venture and both parties are currently in negotiations with a number of leading banks for bank financing to complete the initial £200m development phase. Once bank finance is in place, construction is expected to take place over 24 months, commencing in the first quarter of 2014, with the new homes being delivered in phases.
The joint venture also provides for the creation of a second phase of around 4,600 additional new homes for the private rented residential sector in the UK, with Gatehouse retaining an option to commit to the equity element of this second phase which will have a development cost of £500m. Sigma is currently in discussions with other potential local authority partners who are interested in deploying the joint venture's resources to drive the construction of new rental homes.