‘Remarkable year’ for Sigma Capital Group
Manchester property group Sigma Capital reported better pre-tax profits today, despite a fall in revenues in the 12 months to December 31, 2017.
The city centre-based firm was the first UK quoted REIT (real estate investment trust) to focus on the PRS (private rented sector) market, which is now its main focus.
In its last financial year it achieved a turnover of £4.4m, compaed with £5.38m the previous year, although pre-tax profits rose from £3.67m to £4.06m.
Its net cash stood at £6.2m by the year end, compared with £6.1m in 2016.
Chief executive Graham Barnet said today: “It has been a remarkable year for Sigma.
“The successful launch of the PRS REIT, which is the UK’s first REIT dedicated entirely to investment in new rental homes, has created a huge opportunity for the group to capture, and cements our position as a leader in the private rented sector.
“2017’s results do not reflect the profound change to Sigma’s growth prospects and earnings profile.
“However, our financial performance from the new financial year onwards will reflect the new model.
“We are wholly focused on delivering the PRS REIT’s initial goal of creating an initial 10,000 high-quality new rental homes for middle-income families, and are confident that, with our unrivalled PRS Platform, supported by our house building partners as well as by central and local government, Sigma is well-placed to achieve its objectives.”
Sigma’s aim is to create a £1bn+ portfolio of 10,000+ high-quality, newly-built rental homes.
The PRS REIT’s resources are targeted to be around £900m, with gearing, equivalent to about 6,200 new homes.
Sigma today has up to 1,383 homes under construction for delivery to the PRS REIT, while sites for at least a further 4,000 homes have been identified.
The firm believes that significant and growing demand for rental homes for families should support its long-term prospects
During the financial year Sigma committed the PRS REIT’s entire IPO (independent public offering) equity, around £250m, by early January 2018, well ahead of schedule.
This represents around 1,720 properties, with an estimated rental value of £15.7m per annum. Construction is underway across 26 sites in North West, Midlands and South Yorkshire
Meanwhile, sites for a further 1,380 new homes, worth around £200m in costs, for the PRS REIT were secured, underpinned by debt facilities.
Since the end of the financial year the group secured credit-approved terms for £200m of debt facilities in January, and completed a second £250m placing in February.
Further development opportunities, with a general development cost (GDC) of £600m have been identified, representing an additional 4,000 homes, over and above the 3,100 homes already under construction or in planning.
Sigma said the PRS platform deepened and broadened, including a new framework agreement with Keepmoat Homes for increased housing delivery in South Yorkshire and East Midlands, a first collaboration with Galliford Try Partnerships, while discussions are underway with Countryside, a key house building partner, to expand activity.
Also, Homes England remains supportive, and three three development sites have been acquired with a GDC of around £31m, with additional site acquisitions expected in 2018.
