Gatehouse and Sigma announce £700 mln residential Joint Venture (UK)

Sigma announced that it has agreed a major joint venture with Gatehouse Bank plc which will support the roll-out of an initial c. 2,000 new privately rented residential properties in the UK, with the potential to grow the portfolio to c.6,600 new rental homes once fully developed. The initial c.2,000 new rental homes have a total development cost of c.£200m and the development cost of the entire proposed portfolio is estimated at c.£700 mln (approx. €841,1 million).

Gatehouse is a leading London-based Shariah compliant investment bank with a real estate portfolio worth in excess of £1 billion (approx. €1.2 billion) across the UK and US. The new homes will be built on land procured and developed by Sigma and the model is underpinned by Sigma's existing three local authority partnerships, with Sigma currently in discussions with other potential local authority partners.

The Rt Hon. David Cameron, MP, Prime Minister and The Rt Hon. Vince Cable, UK Secretary of State for Business, Innovation and Skills, have confirmed their support of the joint venture.

Under the terms of the joint venture, Gatehouse will deliver the equity element of the venture and both parties are in negotiations with a number of leading banks for bank financing to complete the initial c.£200m (approx. €240 million)development phase. Once bank finance is in place, construction is expected to take place over 24 months, with the new homes being delivered in phases.

The initial c.2,000 units are being supported in particular by Sigma's local authority partnerships with Liverpool and Salford City Councils, and 22 sites, totaling over 90 acres, have already been identified across the North West. The joint venture will deliver significant high quality housing stock and assist with the regeneration objectives of local authority partners in a cost efficient and timely way.

Sigma believes that the c.2,000 new rental homes would comprise one of the largest single new build residential housing portfolios in the UK. The Group will generate revenues from asset management fees during both the construction and investment phases and will also participate in the capital upside of the joint venture vehicle.

The joint venture also provides for the creation of a portfolio of a further c.4,600 new privately rented homes, with Gatehouse retaining an option to commit to the equity element of the estimated c.£500 mln (approx. €600.8 million) of financing required.

The Rt Hon. David Cameron, MP, Prime Minister, said: "As part of our plan to help Britain succeed, we are determined to build a rebalanced economy across the country. As we compete in a tough global race, Sigma's joint venture with Gatehouse is brilliant news for the North West and for Britain, showing that we are open for business.

"The rental market is a vital asset to this country and this new investment will help to boost local economies, create jobs and deliver more homes for hardworking people. And it's on top of the wide range of measures we've already introduced to get Britain building, including our new Build to Rent fund, and the billions we're investing towards delivering the fastest rate of affordable house building for two decades."

The Rt Hon Vince Cable, UK Secretary of State for Business, Innovation and Skills, said: "Today's announcement from Sigma Capital Group and Gatehouse Bank will create thousands of modern new homes to rent as well as new jobs in Liverpool and Greater Manchester, with similar plans for other regions in the country."

Source: Sigma

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