Share of profit on sale of Thistle PRS portfolio

AIM: SGM

SIGMA CAPITAL GROUP PLC

("Sigma" or the "Company")

The private rented sector ("PRS") and urban regeneration specialist

Share of profit on sale of Thistle PRS Portfolio

Sigma, the PRS, residential development and urban regeneration specialist, is pleased to announce the successful realisation of its beneficial interest in the Thistle Portfolio of 918 suburban family PRS homes, which was created for clients of Gatehouse Bank ("Gatehouse Bank") ("Thistle Portfolio"), following its sale. After completion, Sigma will receive a total net cash payment of £2.9m.

The £2.9m represents Sigma's share of total sale profits after certain hurdles. It stands at 53% above the book value of £1.9m ascribed to Sigma's beneficial interest in the Thistle Portfolio in the Company's last published report and accounts.

The Thistle Portfolio was created for Gatehouse Bank by Sigma alongside its initial delivery partner, Countryside Properties, and was developed and managed through Sigma's PRS platform. Sigma management believes that it was the UK's first large-scale portfolio of new single-family houses developed for the private rental market, with a gross development cost of c.£110m.

Its sale for a total consideration of c.£150m to Goldman Sachs Merchant Banking Division and Pitmore marks the first significant sale in the UK of a portfolio of new-build, single-family suburban PRS houses, and provides market evidence for the current and future valuation of the Company's assets, both on its balance sheet and managed for external parties.

The Thistle Portfolio generates approximately £8.3m per annum in rental income. It comprises 918 high-quality single-family homes (mainly houses), designed by Sigma for the private rental market. Homes are located across 15 sites sourced by Sigma in the North West of England, predominantly in Merseyside and Greater Manchester. As with other Sigma PRS sites, they are well-located with access to good schooling, transport links and other amenities. Construction of the portfolio commenced at the end of 2014 and was completed to budget in March 2017.

The Thistle Portolio has consistently generated attractive returns above original expectations, with average occupancy over 99% and rent collection in excess of 98%. This includes during the Covid-19 pandemic and is in line with the performance of Sigma's own assets and The PRS REIT plc's existing PRS portfolio of 3,163 family homes, which Sigma created and manages. It also reflects the dynamics of strong rental demand, high build-quality, well-chosen locations and enhanced customer service levels. 

Ian Sutcliffe, Chairman of Sigma Capital Group plc, commented:

"This highly successful sale of what we believe is the UK's first large-scale build-to-rent portfolio of single-family homes validates Sigma's strategy and demonstrates the value that our model is capable of creating. High quality, professionally-managed rental housing remains undersupplied and, as pioneers in the build-to-rent sector, we continue to be tremendously encouraged about future prospects."

Graham Barnet, CEO of Sigma Capital Group plc, commented:

"This portfolio, created and delivered by Sigma for clients of Gatehouse Bank, was our first large-scale development for the private rental market, and the first development of its kind in the UK. It proved the effectiveness of our PRS platform, which, since 2014, has delivered over 4,800 new family rental homes across England both for institutional investors and ourselves, with in excess of 2,000 further homes under way across the regions and London.

"We are delighted that the portfolio has yielded significant value to our partners and our own interest while fulfilling a fundamental social good - providing high-quality rental homes for families."

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About Sigma Capital Group plc

www.sigmacapital.co.uk

Sigma Capital Group plc ("Sigma") is a PRS, residential development, and urban regeneration specialist, with offices in Edinburgh, Manchester and London. Sigma's principal focus is on the delivery of large scale housing schemes for the private rented sector. The Company has a well-established track record in assisting with property related regeneration projects in the public sector, acting as a bridge between the public and private sectors.

Sigma has created an unrivalled PRS platform, which sources sites and brings together construction resource to develop them, enabling Sigma to deliver an integrated solution to partners. As well as sourcing sites and managing all stages of the planning and development process, Sigma also manages the rental of completed homes through its award-winning rental brand, 'Simple Life'.

The Company's subsidiary, Sigma PRS Management Limited, is Investment Adviser to The PRS REIT plc. In September 2020, the Company launched a joint venture with EQT Real Estate, the real estate platform of global investment firm EQT to establish a £1bn portfolio of high quality, new-build homes for private rental in Greater London.