Swedish EQT Real Estate and Sigma Capital Group plc, a London-listed residential development and urban regeneration specialist, have formed a £1 billion joint venture to develop a portfolio of 3,000 build-to-rent (BTR) residential homes in Greater London.
The joint venture will focus on the creation of new-build, high-quality well-located BTR residential apartment blocks and houses in more affordable parts of Greater London and its commuter towns.
The homes will be predominantly located in transport Zones 3-6 and in close proximity to transport links, including train access to central London.
”Completed homes will be let at market-rate rents under Sigma’s ‘Simple Life London’ brand, which aims to bring a higher standard of customer care and convenience to the private rental market,” said EQT in a statement.
EQT Real Estate and Sigma have initially committed equity of GBP 300 million and GBP 16 million, respectively, to the JV. 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 GBP 1 billion.
The JV has secured five projects with an aggregate of 361 homes from Countryside Properties plc (Countryside Properties) located in the London boroughs of Ealing, Enfield and Havering. In addition, two further sites currently under development by Sigma in the boroughs of Barking and Dagenham and Havering will be acquired by the JV on completion. These two sites together will comprise an additional 157 homes and are expected to be completed during H1 2021. The JV’s assets are expected to be delivered over a period of at least five years in order to create a stabilized portfolio of diversified rental income.
The initial acquisitions will be financed with a GBP 50 million loan facility from Homes England, the UK Government’s housing body that is responsible for increasing the number of new homes that are built in England and sponsored by the Ministry of Housing, Communities & Local Government.
“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,” said Peter Shacalis, Director at EQT Partners and Head of UK, EQT Real Estate.
“We are delighted to be expanding our delivery of new rental homes in the UK with the launch of our London-focused joint venture 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 joint venture. Once again, Homes England is leading the market in its support for organizations 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 new rental homes across the Capital with our partners at EQT Real Estate and providing London renters with a higher standard of customer care,” said Graham Barnet, CEO of Sigma Capital.
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.”