Sigma Capital and EQT Real Estate launch £1bn residential JV

Sigma Capital and EQT Real Estate have launched a £1bn JV to deliver new Build to Rent homes in parts of Greater London.

Joint Venture Build to Rent scheme - Sigma Capital | EQT Real Estate | BTR News

UK PRS, residential development and urban regeneration specialist – Sigma Capital – has announced the launch of a joint venture (JV) with EQT Real Estate, the real estate platform of global investment firm EQT. 

The JV will deliver high quality, new-build homes for private rental in Greater London – and is being supported by Homes England. The venture is targeting the establishment of an initial portfolio of approx 3,000 homes with a value in excess of £1bn.

“This Government is committed to delivering 300,000 new homes a year in England by the mid-2020s, ensuring everyone has the opportunity for a decent and secure place to call home.  

“These 3,000 new homes, backed by £50 million from our housing accelerator Homes England, will help us deliver for families across Greater London.”

UK Housing Minister Rt Hon Christopher Pincher MP

The JV has been established to invest in new Build to Rent apartment blocks and houses in more affordable parts of Greater London. They will be predominantly located in transport zones 3-6 and close to transport links, including train access to central London. Homes are expected to be built and completed over a period of at least five years.

“EQT Real Estate is thrilled to be entering the London residential market, one with a severe supply shortage of professionally managed, high quality, good value homes to rent, with Sigma Capital.

“In addition to the initial seven schemes, we are currently evaluating a growing pipeline of projects in Greater London to build a large scale, resilient and downside-protected institutional Build to Rent portfolio with robust and diversified rental income. EQT Real Estate looks forward to partnering with the Sigma team to realise our shared vision over the coming years.” 

Peter Shacalis, Director at EQT Partners and Head of UK, EQT Real Estate

The Build to Rent homes will be let at market-rate rents under Sigma’s ‘Simple Life London’ brand. This new brand is an extension of Sigma’s existing ‘Simple Life’ rental brand and shares the same aim of bringing a higher standard of customer care and convenience to the private rental market. The venture aligns fully with EQT’s focus on responsible and sustainable investments that promote social good.

“This marks an exciting entrance into the UK for EQT Real Estate as it represents the first transaction in this market since the group was formed in 2015. 

“I can’t think of a more compelling investment opportunity at the moment than to deploy capital into this high conviction strategy, and one that should deliver significant social impact, by providing market-rate housing to renters in affordable locations principally within Greater London and its commuter towns with strong transport links.”

Rob Rackind, Partner at EQT Partners and Head of EQT Real Estate

Under the terms of the partnership, EQT Real Estate and Sigma have initially committed equity of £300m and £16m respectively to the JV. Including gearing, it’s intended that the JV will have an initial capacity to establish an investment portfolio of approximately 3,000 homes – with a total value in excess of £1bn. 

“This JV with EQT Real Estate leverages Sigma’s unrivalled property platform and adds another important region to the Company’s area of activity.”

Ian Sutcliffe, Chairman, Sigma Capital Group plc

Sigma anticipates leveraging its proven delivery model to capture economies of scale and visibility. Sigma will receive fees relating to the identification, delivery and operational management of assets – and will also retain a performance-based incentive payment.

This mirrors Sigma’s UK regional model, which has successfully delivered in excess of 4,200 Build to Rent homes so far over the last five years, with these generating an annual rental income of around £40m when fully let. In addition, Sigma currently has a further 2,900 homes under way in the UK regions – at varying stages of development.

The JV has launched with the acquisition of five sites from Countryside Properties plc. The sites are expected to deliver 361 homes for a total gross development cost of £102m – and include locations in Ealing, Enfield and Havering. 

“We are delighted to have expanded our strategic relationship with Sigma and its new partner, EQT Real Estate, to deliver much-needed PRS homes within London. Our Partnerships business has a proven track record and, together with our clear strategy for growth, we look forward to continuing to work with our partners as we focus on the delivery of high quality and sustainable mixed-tenure communities.”

Iain McPherson, Group Chief Executive, Countryside

Two further sites are also currently under development by Sigma – at Fresh Wharf, Barking and Beam Park, Havering – which will be acquired by the JV on completion. This will add an additional £48m of assets to the venture. The two sites together will comprise an additional 157 homes and are expected to be completed in H1 2021.

The JV will invest in buildings with strong sustainability credentials. Where possible, buildings will tap into local community heating networks and will use photovoltaic panels. The JV will also promote sustainable living practices within the apartments while the schemes will include ample cycle storage and will typically be located near green outdoor areas, an important wellness factor.

“We are excited to be strengthening our work with Sigma Capital. By supporting their JV with EQT Real Estate we are using our resources to accelerate the delivery of much needed high-quality rental accommodation and unlock substantial private sector investment in the housing sector.”

Simon Dudley, Interim Chair, Homes England

Sigma and EQT Real Estate have also secured direct support from Homes England, the UK Government’s housing body responsible for increasing the number of new homes in England, with an initial loan facility of £50m to assist with the delivery of the initial acquisitions. All parties share the same vision of delivering thousands of new rental homes in London where there is a critical undersupply of affordable, high-quality rental properties.

“We are delighted to be expanding our delivery of new rental homes in the UK with the launch of our London JV with EQT Real Estate, a strong and visionary partner. 

“Homes England, which has supported Sigma with every major initiative to deliver the new housing that is much needed across the country, is also providing invaluable backing to the JV. Once again, Homes England is proving its commitment to supporting organisations looking to deliver homes at scale in the UK.  We are also pleased to be working with Countryside Properties in Greater London to replicate the success of our partnership in the regions. 

“We look forward to delivering thousands of high-quality, affordable new rental homes across the Capital with our partners at EQT Real Estate, and providing London renters with a higher standard of customer care.”

Graham Barnet, CEO, Sigma Capital Group plc