Sigma Capital taps into solid demand for rental homes

CEO Graham Barnet: 'Quite a compelling proposition'. Picture: Paul Dodds
CEO Graham Barnet: 'Quite a compelling proposition'. Picture: Paul Dodds
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Sigma Capital Group, the Edinburgh-based urban regeneration and private rental specialist, has seen its interim revenue and profits outstrip those for the whole of 2017 following the successful launch of a dedicated property fund.

The firm – which is behind a number of major housing projects south of the Border, as well as the stock-market listed PRS REIT (real estate investment trust), launched in May last year – saw profit before tax top £4.2 million in the six months to the end of June. That compares with just £1m a year earlier and the £4.1m banked for 2017 as a whole.

Similarly, revenue also surged, hitting £4.8m in the first half of 2018, against £1.8m in the same period last year and £4.4m for the whole of 2017.

The group, which is proposing the payment of a final shareholder dividend for the current year, flagged a possible push into its home market, where a handful of build-to-rent developments dedicated to the ­private rented sector have begun to appear.

Sigma’s Scots-born chief executive, Graham Barnet, described the company’s business model as “quite a compelling proposition” with a strong pipeline of development opportunities, leading to the creation of thousands more homes for rent.

“I doubt it is going to get any easier for people to get on the housing ladder,” he said. “For a large percentage of people renting is now a normal part of life.

“All the key metrics that we expected to happen are happening. Rents are stronger than we forecast, valuations are better than we originally thought and demand is extremely high. We also have extremely good partners working with us and a very long pipeline of assets going forward.”

On a possible expansion into Scotland, Barnet noted: “The conditions need to be right in terms of our interaction with local government and so on. For investors there are always the political and legal differences but we would certainly like to do something in Scotland and we are actively looking at what that might be.”

The group said the launch of the trust had “fundamentally transformed” the company’s growth prospects. The PRS REIT’s resources are expected to grow to some £900m, which would support the construction of about 6,000 new family homes for rent.

Last week, Sigma sealed the sale of one completed site, near Birmingham city centre, to the PRS REIT and acquired two development sites.

The two new sites that the company has taken on are located in Nuneaton, in the West Midlands, and Harlow, Essex, and will respectively deliver 50 and 28 new family homes. Both sites are being developed by the company’s main construction partner, Countryside Properties.