Sigma’s PRS REIT adds £3m to rent roll
The PRS and urban regeneration firm active in Manchester, Liverpool and Cheshire increased its rental income by 143% in the last six months of 2019 to £5.6m from £2.3m.
Sigma’s PRS REIT increased its operating profit 70% to £12.4m. Net assets were valued at £470m on 31 December, a slight fall from £477m a year earlier due to disposal of sites.
In the half year, The REIT completed 1,617 homes, representing an 109% uptick on the second half of 2018. The company also increased the number of sites from 43 to 62, spending £771m on development, a 45% rise on the previous year. There are currently 3,000 homes under way across its sites.
Sigma PRS REIT currently has 34 sites in the region, with 21 in Greater Manchester including Baytree Lane in Middleton, 10 in Merseyside including Prescot Park in Prescot, and three in Cheshire, including Woodford Grange in Winsford.
“Despite the macro uncertainty, [Sigma] continues to view the long-term prospects with confidence as we meet the critical need for quality family houses in the UK,” said Steve Smith, chairman of Sigma.
He continued that while the coronavirus had created “significant uncertainty”, he believed Sigma was resilient. “Our delivery model and processes substantially mitigate the company’s exposure to construction and operational risks and we have a robust balance sheet and low gearing, which are unaffected by a pause in construction activity.”
Regarding the coronavirus, the board of the REIT has said that its priority is the welfare of colleagues tenants and communities. It has temporarily suspended work on all sites. Sigma said that given the company’s delivery model, which includes fix price contracts, there will be “little adverse cash flow implication” during the suspension period.
Gearing is at 21% and there is “considerable headroom” within the company’s committed bank facilities.
However, Smith added: “In light of the coronavirus situation, a decision regarding the payment of a dividend in respect of the third quarter will now be taken in the fourth quarter of the current financial year when the outlook is likely to be clearer.
“We have added 444 family rental homes in the first half of this financial year and a further 330 since then, taking the PRS REIT’s portfolio to 1,947 completed homes across the regions of England. We are targeting around 5,300 properties once the balance of the company’s existing funds is fully deployed. Our deployment approach has now strategically shifted to focus on the acquisition of completed assets.”
Sigma also announced today that Mike McGill has been appointed as the group chief financial officer with immediate effect, with specific responsibility for the PRS REIT.
Malcolm Briselden, finance director of Sigma, remains in operational charge of Sigma’s finance team and will work with McGill although he has stepped down from the board as of today. Briselden will now be focusing on Sigma’s work outside the REIT.
Graham Barnet, chief executive of Sigma, commented: “I am very pleased to welcome Mike to the board as group chief financial officer. He brings significant additional experience to Sigma that will be invaluable as the company continues to develop. Mike will have financial oversight of all of our activities, with a particular focus on our delivery for the PRS REIT. Mike has been working with us previously and is therefore well known to the team.”