2. Introduction
• We aim to create the largest new build, professionally
managed PRS portfolio in the UK
• Agreed Equity Terms with Gatehouse bank announced
November
• Initial Phase of 2000 units, with Equity options for a
further 5000 units
• Access to land through existing Partnerships /
Partners, We have long term relationships that will
ensure the project pipeline
• Agreed Construction Terms with our Construction
Partners
• Agreed Lettings strategy and delivery team;
• The project will provide thousands of new homes, new
jobs and will provide a massive boost to the local
economies.
The Rt Hon. David Cameron, MP, Prime
Minister, said,
“As part of our plan to help Britain succeed, we
are determined to build a rebalanced economy
across the country. As we compete in a tough
global race, Sigma’s joint venture with
Gatehouse is brilliant news for the North West
and for Britain, showing that we are open for
business.
3. Integrated Approach
• Sigma and its partners have been working on this for
over 2 years
• As an investment class incredibly immature
• Most institutional investors do not have the ability to
deal with the complexities
• Major communications issues
Sigma Integrated Approach
• Management
• Funding
• Land
• Development
• Lettings
• Maintenance
• Proven partnerships in operation
4. Sigma Capital Group Plc
• Sigma Capital Plc is an AIM Listed specialist in
the Investment and Regeneration Sector
• Currently have 3 Groundbreaking Long Term
Partnerships with English Local Authorities
creating long term land supply;
• Currently Managing Largest Residential mixed
use Development in Scotland;
• Sigma is an industry leader in the creation of
public sector partnerships and its Salford
partnership is widely recognised as the UK’s
first Asset Backed Vehicle.
• Unique Management Team – Investment, Fund
Raising / Management, Planning, Housebuilding/ Development, Schools Procurement,
Regeneration and Local Government;
• High Quality Team Established to Roll Out the
largest new build PRS Portfolio in the UK
The Rt Hon Vince Cable, UK Secretary
of State for Business, Innovation and
Skills, said,
“Today’s announcement from Sigma
Capital Group and Gatehouse Bank will
create thousands of modern new homes
to rent as well as new jobs in Liverpool
and Greater Manchester, with similar
plans for other regions in the country.”
5. Project – Salford Partnership
• Partnership with Salford City Council & RBS
• Innovative Structure – First of its Kind
• Asset Backed Vehicle
• Land, Finance, Management
• 32-Acre Master Plan – Phased Delivery
• Attractive to Investors & Grant Bodies
• 330 New Homes Built and sold
• New Community & Sports Facility completed
• School improvements as a consequence
• New 3-GP Practice, Tesco Food-store, Dental
Practice, & local retail. On Site 2013
• Award winning
• Final Site for development – for PRS
6. Project – Liverpool Partnership
•
Partnership with Liverpool City Council
•
City Wide Partnership Initial 100 Acres Optioned;
•
Additional Land put in at discretion of Council
•
Mix of Residential and Commercial
•
Partnership Delivery Aligned with Mayoral Targets;
•
1500 new homes; 1100 new jobs
•
JV with Countryside Homes for housing delivery
•
300 new homes completed by 2013
•
New Schools and Health Care Facilities
•
£250m of planned city centre investment
7. Project - Solihull Partnership
•
1,000 acres
•
8,500 new homes
•
2,500 retained homes improved
•
10 primary schools
•
5 village centres
•
New health care facilities
•
Mixed use development
•
Local environment and transport improvements
•
Partnership with SMBC, Bellway Homes and WM
8. Project - Winchburgh
•Project Founded by Sigma
•1,000 acre development,
• 3,450 new homes
• 5 new schools
• New town centre & park
• Retail facilities & commercial park
• Associated Infrastructure
• New motorway junction & train station,
•Park and ride facilities
• 20 Year programme of development and
regeneration activity which is one of the UK’s
largest mixed use projects located 6 miles
west of Edinburgh.
• Total potential investment currently estimated
at £1.5Bn –
• Sigma – Founder & Development Manager
9. 1.
Sigma Capital Group Plc
GATEHOUSE BANK
Gatehouse Bank
•
•
•
•
Gatehouse Bank plc was founded in 2008, and is a
wholesale Shariah compliant investment bank based in the
city of London;
The Bank is authorised and regulated by the Prudential
Regulation Authority and further regulated by the Financial
Conduct Authority;
The two majority shareholders are - the Securities House in
Kuwait; and Kuwait Investment Authority
The Bank has maintained a successful track record in realestate acquisitions and has profitably realised a number of
investments. To date, Gatehouse Bank plc manages $1.7
Billion assets in the USA and United Kingdom.
10. Business Case – PRS
The growing importance of the Private Rental Sector (PRS)
•Housing is at the top of the political agenda given the supply of UK housing stock continues to fall further
behind the growth in demand. The Joseph Rowntree Foundation predicts the UK will be 1.1 million homes
short by 2022 without a dramatic increase in supply
•Resulting in the growth of the PRS: growing from 10% of all households in 2000, to 17.4% in 2012 and
predicted to grow to 20% by 2020 and continue to grow
•PRS has now overtaken the social rented category in terms of size & importance
•This at a time the Government is under pressure to continue to cut state assistance into social housing
ensuring PRS will continue to have an important role to play in the UK housing sector for some time to
come
11. Business Case – PRS
Who occupies Private Rental properties?
The pattern of occupancy in PRS has driven the selection
of property type and the marketing strategy to attract the
optimum tenant profile we are targeting
•Given the reduction in available mortgage lending, under
40’s are a strong driver of growth in PRS and they now
account for half of all tenants.
•Multi – person households make up 75% of private rented
households with children forming part of 33% of all rental
households.
• As a result we are creating a portfolio of 2, 3 & 4 bed
roomed houses designed for our optimum tenant profile
of young couples and aspiring families.
12. Business Case – PRS
The Rental Sector
•Despite the growing importance of the PRS it remains fragmented
– 80% of all properties being owned by landlords with 4 or less properties
– There are several thousand individual / independent letting agents servicing the
sector
•This fragmentation of the sector has resulted in
– Poor quality and under investment in housing stock
– Poor customer service to both landlords & tenants
•This has resulted in growing political pressure to legislate and police the lettings sector
•The property management solution has been designed to provide a dedicated,
coordinated professional approach , to ensure that
– The properties are professionally managed and cared for
– Tenants are properly looked after and become advocates
13. Business Case
The Solution;
•Build a geographically balanced Portfolio of privately rented properties in locations across
the UK where there is a strong demand for rental Property and a lack of quality product
available. It is intended that the Portfolio will stabilise at a high occupancy level,
underpinned by this demand.
•Implement a branded, institutional management platform which will maintain a high
occupancy level and maintain the original high quality of the Portfolio.
•The JV strongly believe that a well managed, new build Portfolio of privately rented
Properties will create an attractive investment opportunity with multiple exit strategies.
•There is an evident gap in the market and the unique structure put in place by Sigma
provides the perfect platform;
14. Business Case
Economies of Scale:
•Due to the size of commitment, and the D&B nature of the procurement
process, the JV is able to deliver the units at a discount to Market value. With all
national forecasts pointing to capital and rental growth, the investment is
effectively de-risked.
•The volume of units allows the JV to implement an institutional management
platform which will target 95% plus occupancy once stabilised
•High Quality product, matched with professional tenant management will
ensure minimal voids and significant repeat business. – in what is currently a
hugely fragmented sector;
•Direct Lettings will be appointed as lettings and property manager, allowing us
to access their 30 strong branch network
15. Programme
A delivery programme has been established for each of the phase 1 22 sites. It
should be noted that some of the sites will commence immediately the debt finance is
committed.
All Sites have planning status, detailed, outline or are zoned for residential in
established communities. There are no green-field sites in the portfolio;
There is virtually no planning risk in the structure, all planning authorities are known to
us, and have had pre-development discussions where appropriate.
Phase 1 to be completed within 12 months from commencement – with first
occupancies summer 2014.
Phases 1-4 (Tranche 1) to be completed within 24 months
16. Site Example – New Broughton Ph6
PIPELINE FOR NEW SITES
NEW BROUGHTON VILLAGE: PHASE 6
MANCHESTER, M7 1GJ
Phase 1: 66 Units
Location
Location
New Broughton Village is situated approximately 1 mile (1.6km) north west of Manchester City Centre in a highly accessible location adjacent to
the A5066 which is a principal thoroughfare linking onto the inner ring road and from there into Manchester City Centre or out to the wider road
and motorway network. Salford Crescent Railway Station is 1.5 miles (2.4km), Piccadilly Main Station is 2.5 miles (4km) and Manchester Airport
is 12.5 miles (20.1km).
Salford was originally a township in the parish of Manchester but now has its own City status and has in recent years seen significant
regeneration and development most notably in the Salford Quays area including MediaCityUK (home amongst others to the new major BBC
complex and Granada Television), Imperial War Museum North and Lowry Centre. Other major attractions include Salford University which has
approximately 19,000 students.
New Broughton Village is conveniently located in the south east periphery of Salford close to Manchester City Centre, Salford University 1 mile
(1.6km) and Salford Quays 1 mile (1.6km). In addition the site is adjacent to Peel Park and more locally Albert Park and excellent local
amenities and shopping. The £500m development of Lower Broughton is one of the largest regeneration projects in the UK and is widely
acclaimed for the transformation of the area including the new River View Primary School and Lower Broughton Children’s Centre on site.
17. Site Example – New Broughton Ph6
PIPELINE FOR NEW SITES
The original housing on the site has been demolished leaving
cleared sites ready for development. The subject sites form part
of the larger New Broughton Village development by Countryside
Properties which has been a great success. The development is
to comprise a mix of houses and apartments with to date
approximately 206 private for sale houses and 200 private for
sale apartments completed. The majority of the latter in the Vibe
residential block which also comprises local amenities. In
addition to residential and local amenities the new River View
Primary School and Lower Broughton Children’s Centre have
been completed on the site with excellent facilities for the local
community.
This site is held subject to a ground lease from Salford Council
for a term of 999 years at a peppercorn.
New Broughton Outline Planning Consent
Application No: 06/52316/OUT
Proposal: Demolition, conversion and redevelopment of 22.8ha
of land and buildings for residential, leisure, education, business,
retail, cafes, restaurants etc
Status: Outline Consent Approved March 2006. Reserved
Matters application for Phase 6 Approved for 66 Dwellings and
associated works. Ref: 12/62502/EIAHYP, Dated 08 March 2013
18. Lettings Suitability & Strategy
•
•
•
•
•
New build Product. Specification
equivalent to same price point for sale
units.
Care in selection of finishes, to ensure
quality, durability and low maintenance;
All units come with 10 year NHBC & all
equipment / white goods with 5 year
manufacturers warranties;
Design attention to quality of
environment, and outlook.
Above industry standard in external
site landscaping, plot positioning
19. Letting Suitability
5.DL letting stuff
Key Messages
•New housing product being built in areas of high demand, but often poor / ageing
choice of rental product;
•Sites in area of high employment, adjacent or within regeneration areas. JV
benefits from but helps to underpin previous investment, in the likes of schools, local
retail and health care facilities;
•In order to achieve the predicted absorption rates - we only need a maximum of 5%
of a sustainably buoyant and plentiful local rental market with a superior and local
market appropriate housing product . We have significant confidence in the
absorption rates implicit in the model;
•We will generate sufficient interest from quality tenants to let the available stock and
given the phased ramp up of development look to create a waiting list to minimise
voids at completion
•We will do that in a way that looks to establish a local brand presence and
reputation for customer experience to support the growth in yield over time, that is
warranted by the premium product being offered.
20. Lettings Strategy - Securing tenants
Lettings Strategy
Lettings Strategy - Securing tenants
Local Markets – Salford & Liverpool
Local Demand for Private Rental Properties
Between May 2012 and May 2013 the average rents have
increased by 2.5% nationally
All three areas exceed the national proportion of households in
the PRS
•
•
Salford has 19% in PRS or 19,420 properties with an
estimated 900 new tenancies created every month
Liverpool has 23% in PRS or 48,290 properties and has an
estimated 2,400 new tenancies created every month
These figures ignore the obvious benefit that we have by having a
new premium product compared to the indigenous rented housing
stock which is generally of poor quality and the opportunity this
gives us to create an accelerated demand for “switchers” looking
to trade up to a higher quality home
England
Salford
Liverpool
Households Percentage Households Percentage Households Percentage
Owner Occupied
13,975,024
63.3
52,126
50.3
96,947
46.9
Social Housing
3,903,550
17.7
29,819
28.8
57,485
27.8
Private Rented
3,715,924
16.8
19,420
18.8
48,290
23.4
21. Lettings Strategy
Local Markets – Salford, Liverpool
Quality & Availability of Housing Stock Properties listed on Rightmove within 3 miles of
the site
Salford: We need less than 2.5% of the monthly
churn of the rental properties within 3 miles and
price range - with a superior product
Liverpool: We need less than 5% of the monthly
churn of the rental properties within 3 miles and
price range - with a superior product
22. Lettings Strategy - Securing tenants
Marketing Strategy: Taking account of the national and local data & aims not to just attract tenants
- but the right tenants
Persistency of rental payments and property upkeep being key goals - well kept homes in
a tidy street scene, drives a growth in yield over time
To do this we will not only attract the right tenants but expertly manage them in a way
that encourages longevity and creates advocacy - minimises voids
By differentiating this brand as a product - and as a landlord
By building significant awareness of each development to create a waiting list
Via Press & PR, online marketing, local media and portals, signage
Advertising & PR: To generate and maintain demand and awareness
Fulfilment: We ensure that our Lettings Negotiators have the relevant skills and resources to let the
available stock and create pent up demand
Real-time enquiry management & data mining
Proactive sales management
Personalised local service for prospective tenants
Professional landlord
- In it for the long term
Purpose built, quality properties
- Designed and built to attract quality tenants
- Well maintained and energy efficient
Expertly managed & maintained
- Customer-centric approach - we care about tenants
- 24 hour emergency support
Key features - Establishes the brand and reputation
23. Taking Care of the Tenants
All properties will be managed centrally from Shepherds offices in Nottingham with local
presence being provided by our Letting Agents and our own in-house maintenance
team.
24. Conclusion
• Integrated Approach
• Ability to kick start Regeneration and Housing projects
• Short time span of delivery
• Based on sound funding principles
• Increasing value of investment
• Good management and quality of portfolio
• Large scale housing delivery outside London
