Sigma Capital profits rise ten-fold as push into private rental sector pays off

Kasmira Jefford
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Manchester-About Town
Sigma has been building homes in Manchester as well as Sheffield and Liverpool (Source: Getty)

Kuwaiti-backed property developer Sigma Capital has posted a jump in full-year profits after its push into the growing private rental sector (PRS) paid off.

The Aim-listed company, which has offices in London, Manchester and Edinburgh, said revenues increased by 74 per cent to £6.72m last year while profit from operations rose 877 per cent from £1.63m to £1.82m.

Profit before tax increased by nearly 10 times to £2.14m from £0.21m in 2014, prompting a four per cent rise in its share price last night to 99.9p.

Read More: Why build-to-rent is key to solving London’s housing affordability crisis

Sigma's main activities are centred on its partnership with the Sharia compliant Gatehouse Bank after the pair formed a £700m venture in 2013 to build thousands of rental homes in the UK.

The group said the first phase under the joint venture, comprising of 918 homes, is on track to complete by the end of the year, with 549 already constructed and let. Once fully let, it expects to generate around £7.5m of rental income per year from the homes.

Work is also underway on a second phase of 813 homes in Greater Manchester and Liverpool, with the first homes due to be completed this summer.

Property investors in search of stable returns have been piling into the rental sector to tap into demand for affordable housing from a growing nation of renters. According to Knight Frank, investment in the sector will increase to £50m by 2020, growing from two to five per cent share of the private rental sector.

Sigma aims to deliver around 10,000 new family homes across the regions in the next few years, with the backing of Gatehouse, and raised £20m in August to develop a self-funded PRS portfolio, which launched in December.

Chairman, David Sigsworth, said:

The creation of our own portfolio of PRS assets marks an important step in Sigma's development. It will significantly enhance our returns from our PRS infrastructure as well as generate material additional long-term recurring income. We are targeting a self-funded portfolio of c. 550 family homes, with a total development value in excess of £60m by the end of 2017.

Macro drivers of undersupply of new homes and historic poor management of rental stock mean that our PRS platform is gaining significant traction. With our PRS venture with Gatehouse performing ahead of expectations on the first phase, our launch of a second phase, with UK PRS Properties, and our own PRS portfolio underway, we are confident of further progress during 2016."

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