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Sigma launches PRS REIT with HCA investment
Sigma Capital has launched the first Real Estate Investment Trust (REIT) dedicated to the private rented sector (PRS) on the London Stock Exchange.
The £250m PRS vehicle will be called the PRS REIT and will receive an initial investment of 9.99% into the company from the Homes and Communities Agency – nearly £25m.
A REIT is a tax-efficient vehicle that enables investors to gain direct investment exposure to certain sectors. The vehicles came to prominence last year when Civitas REIT was launched, which is the first residential REIT dedicated to social housing.
Sigma PRS Management, a subsidiary of Sigma, has been appointed as the investment adviser to the company, which will take control of a variety of assets already developed by Sigma. The company has been listed on the specialist fund segment of the main market of the London Stock Exchange.
READ MORE ABOUT THE CIVITAS REIT
Groundbreaking social housing REIT to launch
The REIT said its investment objective was to provide investors with an attractive level of income together with the prospect of income and capital growth through investment in a portfolio of newly constructed, residential PRS sites of multiple units.
It said the there was a pipeline of 2,535 homes worth £375m already identified and contracted, including a seed portfolio of £72m either completed or under construction.
It added that “strong relationships” with local authorities and housebuilding partners – namely Countryside Properties, Keepmoat Regeneration and Keepmoat Homes – would provide land access and development expertise.
Stephen Smith, chair of the PRS REIT, said: “Demand for high quality, professionally managed new rental homes, especially family homes, is strong and growing. This reflects the structural undersupply of homes in the UK and the growth in the private rented sector.
“The PRS REIT has been formed to invest in a portfolio of newly constructed, primarily family homes, across the main conurbations and largest employment centres in England outside London.
“We are targeting a dividend yield of 6% or more per annum and net total shareholder returns of 10% or more per annum once the REIT is fully invested and geared. The target dividend yield in the period to 30 June 2018 is 5%.”
