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For-profit Sage raises £280m through first ESG bond

For-profit Sage Housing has raised £280m through its first sustainable, social and green bond as part of a bid to deliver 20,000 new energy efficient homes.

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For-profit Sage Housing has raised £280m through its first sustainable, social and green bond #ukhousing

The fast-growing firm, backed by US private equity giant Blackstone, said it raised the funds through a new social housing securitisation and by gaining sustainable bond, social bond and green bond status, which is overseen by the International Capital Market Association (ICMA).

Sage joins a growing number of registered providers who have gone to the bond markets to attract ESG-hungry investors, as the theme continues to influence investment decisions.

The bond, which has an expected term of five years with extension options, was secured against 1,712 properties. In terms of the rate, it has a floating structure with a weighted average of 145 basis points over the Sterling Overnight Index Average (SONIA) interest benchmark, a Sage spokesperson said. The bond was "well supported" by investors from the UK, US and Europe, the spokesperson added.

The move follows the £220m that Sage raised in October last year, when it made its foray to the bond market. The financing last year was secured over 1,609 properties.

The provider said it is on target to deliver 5,000 affordable homes in 2021 and has a pipeline of more than 20,000 homes. Blackstone acquired a stake in housing association Sage back in 2017, which saw Stephen Schwarzman - the chair and CEO of and co-founder of Sage - become a person of significant control.

John Goodey, Sage’s chief financial officer, said: “This successful fund raise further highlights our commitment to building a business that has ESG at its core, while providing thousands of affordable, sustainable homes across England.”

A report in July said that for-profit registered providers are expected to spend around £23bn on developing up to 130,000 homes over the next five years.

UPDATE: at 3.45pm, 3/11/2021 this story was updated to include details of the bond term length, pricing and further details.