Sigma & EQT Real Estate launch £1bn Residential JV

22 September 2020

AIM: SGM

SIGMA CAPITAL GROUP PLC

("Sigma" or the "Company")

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

Sigma Capital and EQT Real Estate

launch £1bn Residential Joint Venture

3,000 new rental homes planned for Greater London

Sigma, the UK PRS, residential development and urban regeneration specialist, is pleased to announce the launch of a joint venture with EQT Real Estate, the real estate platform of global investment firm EQT, to deliver high quality, new-build homes for private rental in Greater London (the "Joint Venture" or the "JV"). The Joint Venture is being supported by Homes England, the housing agency of the UK Government, and is targeting the establishment of an initial portfolio of approximately 3,000 homes with a value in excess of £1bn.

The JV has been established to invest in new, high quality build-to-rent ("BTR") residential apartment blocks and houses in more affordable parts of Greater London. They will be predominantly located in transport Zones 3-6 and in close proximity 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.

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 JV aligns fully with EQT's focus on responsible and sustainable investments that promote social good.

Under the terms of the partnership, EQT Real Estate and Sigma (the "Partners") have initially committed equity of £300m and £16m respectively to the Joint Venture. Including gearing, it is 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. 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. Sigma will also retain a performance-based incentive payment.

This mirrors Sigma's UK regional model, which has successfully delivered in excess of 4,200 BTR 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, at varying stages of development in the UK regions.

The JV launches with the acquisition of five sites from Countryside Properties plc. The sites are expected to deliver 361 homes for a total gross development cost ("GDC") of £102m and include locations in Ealing, Enfield and Havering. In addition, two further sites currently under development by Sigma, at Fresh Wharf, Barking, and Beam Park, Havering, will be acquired by the JV on completion. This will add an additional £48m of assets to the JV. 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 utilise photovoltaic panels. The JV will also promote sustainable living practices within the apartments themselves while the schemes will include ample cycle storage and will typically be located near green outdoor areas, an important wellness factor.

Sigma and EQT Real Estate are delighted to have 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.

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

"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."

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

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

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

"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 BTR 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."

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

"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."

Iain McPherson, Group Chief Executive, Countryside, said:

"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."

UK Housing Minister Rt Hon Christopher Pincher MP said:

"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."

Simon Dudley, Interim Chair at Homes England, said:

"We are excited to be strengthening our work with Sigma Capital. By supporting their Joint Venture 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."

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NOTES TO EDITORS

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 property 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, the real estate investment trust that is investing £0.9bn in a portfolio of high-quality new rental homes for private rental across the regions.

About Sigma PRS Management Limited

Sigma PRS Management Limited is a wholly-owned subsidiary of AIM-quoted Sigma Capital Group plc and is Investment Adviser to The PRS REIT plc. It sources investments and operationally manages the assets of The PRS REIT plc and advises the Alternative Investment Fund Manager ("AIFM") and The PRS REIT plc on a day-to-day basis in accordance with The PRS REIT plc's Investment Policy. The Investment Manager is G10 Capital Limited. Sigma PRS Management Ltd is an appointed representative of G10 Capital Limited, which is authorised and regulated by the Financial Conduct Authority (FRN:648953).

About EQT

(www.eqtgroup.com)

EQT is a differentiated global investment organization with more than EUR 62 billion in raised capital and around EUR 40 billion in assets under management across 19 active funds. EQT funds have portfolio companies in Europe, Asia-Pacific and North America with total sales of more than EUR 27 billion and approximately 159,000 employees. EQT works with portfolio companies to achieve sustainable growth, operational excellence and market leadership.

About EQT Real Estate

(www.eqtgroup.com/business-segments/real-assets/real-estate/)

EQT Real Estate, part of EQT Partners and Investment Advisor to EQT managed real estate funds, seeks direct and indirect controlling interests in value-add real estate assets, portfolios, operating companies and platforms across gateway cities in the UK and Europe that offer significant potential for value creation through repositioning, redevelopment, refurbishment and active asset management. The EQT Real Estate Advisory Team comprises 26 experienced Investment Advisory Professionals working out of EQT's offices in London, Madrid, Milan, Paris and Stockholm. The Investment Advisory Team, which has access to the full EQT network including 11 European offices and more than 500 EQT Advisors, has experience analyzing and investing across the pan-European real estate market and has, collectively, advised on over 130 real estate projects in multiple asset classes across Europe.

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