Sigma profits boosted by focus on private rental sector

Sigma Capital Group has hailed a 'landmark year' for the business as it taps into Britain's booming demand for private rented homes.

Sigma chief executive Graham Barnet. Picture: Paul Dodds
Sigma chief executive Graham Barnet. Picture: Paul Dodds

Unveiling a surge in full-year profits, the Edinburgh-based firm said it had become a “significant housing delivery partner”, and was on track to deliver a run rate of 3,000 properties by the end of the year.

While the focus has been on sites in Manchester and Liverpool, with the group also about to push into the Midlands and south of England, chief executive Graham Barnet said an expansion into the Scottish market had not been ruled out.

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“I would love to do something here,” Scots-born Barnet told The Scotsman. “We are actually looking at a few things in Scotland and who knows what might happen, but the economic dynamics on the sites are very different to what we are encountering down south.

“Typically on a Scottish site you are going to have a fair proportion of social homes, properties marketed for sale and some private rented sector [PRS] homes as well. I’ve yet to see where that model works unless it is driven by the local authority itself.”

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Sigma, which completed a £20 million share placing in September to support a self-funded PRS portfolio, highlighted an “urgent and growing demand” for new housing stock, fuelled by a rising UK population. Demand for family rental homes has soared with the percentage of owner-occupied properties currently languishing at 65 per cent, its lowest level in almost 30 years.

The firm, which is also involved in urban regeneration schemes, reported a near ten-fold increase in profit before tax during 2015, to £2.14m – a result that had been flagged in a January trading update.

Revenues were up 74 per cent at just over £6.7m, while cash at year end leapt to £25.1m from £5.2m thanks to the fund raising.

No dividend is being paid “at this stage of Sigma’s development”, but the shareholder payout policy is to be kept under review.

Barnet said: “We were keen to do something that had the potential to be genuinely scalable. That kicked off in earnest about two years ago and it is beginning to pick up now.

“By the end of 2016 our run rate will be about 3,000 houses in terms of sites that we are developing.”

He added: “This model was always designed to be thousands of homes not a few hundred.”