Sigma Capital Forms $1.14B JV with Gatehouse Bank to Develop 6,600 Rental Homes in Britain

By Adriana Pop, Associate Editor

United Kingdom—Property developer Sigma Capital Group has formed a 700 million pound ($1.14 billion) joint venture with Shariah-compliant Gatehouse Bank for the development of up to 6,600 new rental homes in Britain.

The joint venture will initially invest 200 million pounds (approximately $326 million) in the construction of 2,000 residences in Liverpool and Salford in northwest England.

Under the terms of the agreement, Gatehouse will deliver the equity element of the venture. Both parties are currently in negotiations with a number of leading banks to secure financing for the initial phase of the development. Construction on this stage is expected to span over 24 months.

The deal has been facilitated by UK Trade and Investment’s (UKTI) Regeneration Investment Organisation (RIO), which has been established with the purpose of directing investors towards viable, industry-backed development opportunities throughout the UK.

According to Reuters, Britain aims to address its imbalance of housing supply and demand by providing loans for the purchase of homes and by financing a 1 billion pound (about $1.6 billion) Build-to-Rent fund to encourage investment into rental housing.

The transaction is also in line with the government’s policy to transform London into a leading hub for Islamic finance. In October, Britain became the first Western country to issue a sovereign sukuk, or Islamic bond.

“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,” British Prime Minister David Cameron says.

“We have developed an innovative joint venture model designed to deliver high quality homes in areas of the country where rental housing is in extremely short supply. Gatehouse has substantial knowledge of and expertise in the UK property market and has shared our vision for this project. I am delighted that we are now working together to deliver the roll-out of our model, which has the potential to create one of the largest new-build privately rented residential portfolios in the UK,” says Sigma Chief Executive Graham Barnet.

“Expanding into the residential market, particularly in the UK, is a significant milestone for Gatehouse Bank. We are seeking investment opportunities in mature and stable markets. This joint venture with Sigma breaks new ground in the UK residential sector and will help to deliver thousands of much needed high quality new homes for rent across the country,” Chairman of Gatehouse Bank Fahed Boodai says.

Based in London, Gatehouse Bank plc is an Islamic Kuwait-owned investment bank with a real estate portfolio of over £1 billion ($1.6 billion) across the UK and the US.  Founded in 2008, the bank specializes in originating, structuring and funding investments in a Shariah compliant manner.

Sigma Capital Group plc is a finance, property and urban regeneration specialist based in Edinburgh. The company has been appointed to act as project manager for the £1bn Winchburgh Development near Edinburgh, one of the UK’s largest residential and mixed-use developments.