PRS Reit fund manager Sigma soars on 35% premium bid

Shares in Sigma Capital Group, manager of PRS real estate investment trust, leap after the build-to-rent housing specialist accepts £188m cash bid from PineBridge Benson Elliot.

Shares in Sigma Capital Group (SGM), the AIM-listed manager of PRS (PRSR ) real estate investment trust, have soared 35% after the build-to-rent housing specialist accepted a £188m cash bid from PineBridge Benson Elliot.

Pinebridge, a pan-European real estate private equity firm in London, is offering 202.1p in cash per share to Sigma shareholders, a 35.6% premium to yesterday’s closing price.

Shares in the Edinburgh-based residential property developer jumped 51.5p to 200.5p as the firm’s independent directors recommended shareholders accept the deal and fund managers Hargreave Hale and River & Mercantile gave their support, lifting total acceptances to around 61%.

Co-founded in 1996 by chief executive Graham Barnett, a near-7% shareholder, Sigma has delivered a total of 5,400 rental homes, first near Edinburgh before expanding into the north-west of England.

Four years ago it launched the now £505m PRS investment trust and last year formed a joint venture with EQT Real Estate to build 3,000 rental properties with the support of government quango Homes for England.

It believes the acquisition by Pinebridge will give it consistent access to capital to take the business into a new phase of growth by forming house builder partnerships in new regional markets.

PRS shares firmed 0.4p to 102.4p as the trust’s board said it was reassured there would be no changes to the Sigma investment team and noted Pinebridge ‘wishes to maintain and strengthen Sigma’s key and successful relationship with the PRS Reit.’

Including dividends, PRS shares have shot up 41% in the year since the pandemic crash, but have delivered a total return over three years of 20%. The trust yields 3.9% and stands on a 7% premium above net asset value.

In January the company extended Sigma’s management contract for five years with a one-year notice period after that and reduced the fees it paid on net assets above £500m. Analysts at Liberum had previously said the level of fees paid by PRS was too high. 

Pinebridge Benson Elliott was formed in December when PineBridge Investments, a New York-based global fund manager with $113bn of assets under management, bought Benson Elliott Capital Management with $3.5bn invested in commercial property in the UK and Europe.

Numis Securities said the sale of Sigma continued a trend of boutique fund managers selling up to bigger partners, such as alternative asset manager Gravis’ purchase by Orix, Aberdeen Standard’s acquisition of a majority stake in warehouse investor Tritax Management and Gresham House buying ReSI Capital Management, manager of PRS rival Residential Secure Income (RESI ).

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