Newcastle property owner Grainger has announced a partnership with a residential and urban regeneration specialist.
Grainger, the UK’s largest listed residential property owner and manager, has signed an agreement with Sigma Capital Group to create a large scale private rented sector portfolio.
The North East business has been granted the exclusive option, for an initial four-year term, to acquire development opportunities of 100 units or more sourced by Sigma, to create the large portfolio across key UK cities outside Greater London.
Under the agreement, Grainger will appraise each development opportunity individually.
A number of sites have already been identified that Grainger and Sigma are looking to progress.
At present, Grainger expects to fully own the initial developments sourced by Sigma, although in the future it may also seek to syndicate its investment to third party investors, which could include Sigma.
Sigma, in addition to sourcing development opportunities, is expected to act as development manager on the majority of projects and will earn a profit share on each development, split into a sourcing fee and a development management fee.
Andrew Cunningham, chief executive of Grainger plc, said: “This agreement leverages both Sigma’s excellent relationships with Local Authorities and housebuilding partners across the UK and Grainger’s proven track record in managing residential property, whilst providing an innovative new avenue for investment.
“We are at the forefront of the private rented sector and remain committed to delivering high quality new homes, benefitting local communities whilst delivering shareholder value.”
Graham Barnet, chief executive of Sigma, said: “The creation of this strategic partnership with Grainger is tremendously exciting, marking another milestone development for Sigma as it positions itself as a major presence in the delivery of high quality new homes for the rental sector.
“The partnership enables us to accelerate the delivery of large scale PRS schemes throughout the UK, particularly in England’s major cities outside London.
“This acceleration of our activities will help further expand the breadth of opportunity with our partners as we deliver on this.
“The combination of Grainger’s funding ability and asset and property management expertise, and our local authority relationships and development management skills, brings gains to both sides – as well as to our associated partners.
“We are already appraising our first schemes and look forward to rolling out this programme with our new partner, Grainger, in due course.”
Grainger will announce its results for the year ended September 30 2014 on November 20.