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For-profit Sage aiming to raise £220m with bond market debut

For-profit Sage Housing is hoping to raise £220m through the bond market as it looks to acquire more homes and reach its target of owning 20,000 properties. 

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Picture: Getty
Picture: Getty
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For-profit housing provider Sage Housing is hoping to raise £220m in its debut foray into the bond market #UKhousing

The London-based group, which is backed by US private equity giant Blackstone, is expected to issue a prospectus for the secured notes in the next few days. It will be the first time Sage has gone to the bond markets for finance.

Speaking to Inside Housing, John Goodey, chief financial officer at Sage, said it had “always been our plan to go to the capital markets”.

He added: “We have big ambitions to get to 20,000 units and to get to that scale you have to have longer-term financing in place. We’re following a normal course that many housing associations have followed.”


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Sage, which predominantly acquires homes in England through Section 106 agreements, currently has 3,000 managed units – with most operated through a deal with Places for People.

The for-profit has around 14,000 new homes in its pipeline, with 7,000 currently under construction.

Blackstone’s acquisition of Sage in early 2018 has given rise to a wave of for-profits entering the sector, including Legal & General Affordable Homes and ReSi.

As part of the financing, Sage is placing 1,609 of its properties into commercial mortgage-backed securities (CMBS) – a type of debt structure. “This allows us to access the capital and offer notes to the market,” said Mr Goodey.

“It’s very usual to have a mix of equity and debt,” said Mr Goodey. “Even social housing providers that are not-for-profits are not all financed by their group equity.”

He added: “The markets have generally been supportive of housing associations, I think it’s definitely a good time.”

Sage has been working on a new ESG strategy – including efforts to cut carbon emissions from the homes it builds – and the finance deal is part of what it calls its “social bond framework”.

Meanwhile, the group is currently on the hunt for a permanent chief executive after it was revealed last month Rod Cahill was stepping down after acting as interim boss for the past 18 months. Mark Sater, a strategic advisor to property investment firm Regis, will act as interim boss.

Sage’s immediate parent, Sage Investments Sàrl, is a joint venture between Regis and Blackstone.

 

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