Sage Social Housing Securitisation

Sage Housing raises £280 million for affordable housing with inaugural sustainable, social and green bond.

  • It is the first European Social Housing Securitisation that is sustainable, social and green and will support the delivery of over 20,000 new homes

Sage Housing, one of England’s fastest growing providers of affordable homes and a Blackstone portfolio company, has today announced that it has successfully raised £280 million with its first sustainable, social and green bond – the first of its kind in Europe.

Sage has raised the £280 million with a new Social Housing Securitisation (SHS) arranged by Deutsche Bank, building on the success of its first entry into the bond market in October 2020, when it raised £220 million.

The Sage Housing Sustainable Finance Framework has secured a second party opinion that confirms alignment with the Sustainability Bond Guidelines 2021, Green Bond Principles 2021, and Social Bond Principles 2021, as administered by ICMA, and the Green Loan Principles 2021 and Social Loan Principles 2021, as administered by LMA, APLMA, and LSTA.

The new bond reflects Sage’s commitment to its ESG strategy, including efforts to drive energy efficiency in the affordable homes it delivers. It will help the registered provider to meet its target of delivering over 20,000 new, high-quality and energy efficient homes in England in the next few years.

John Goodey, Chief Financial Officer at Sage 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.

“Our 2020 bond received a social purpose designation and we are proud that our latest bond offering has received a sustainable, social and green bond designation. In being the first of its kind in Europe, it demonstrates Sage’s commitment to leading the sector on sustainable housing delivery.”

Sage is committed to operating as a values-driven (social) business, which is recognised as a strategically important partner to government, communities and other providers of affordable housing. Its strong ESG proposition delivers benefit across the business – for residents, stakeholders and investors alike.

Key facts

  • The bond will be secured against 1,712 affordable and social rent homes
  • The expected bond term is 5 years
  • All of the refinanced homes will remain as affordable and social rent in perpetuity.
  • Deutsche Bank is acting as sole arranger on this issuance.
  • The September 2020 CMBS consisted of 1,609 affordable properties.

Additional Background

  • Sage has delivered more than 5,000 new affordable homes to date and has a committed pipeline of over 20,000 homes.
  • Sage’s portfolio is 100% focused on affordable and social rent and shared ownership properties. We have no open market exposure.
  • All our rented homes are let to people on the local authority housing registers, who have been identified as being in housing need.
  • Our shared ownership homes are sold to people who would otherwise be unable to afford to buy a home of their own.
  • Our rents are set according to the planning (Section 106) Agreement for the homes, as either Social or Affordable Rents.
  • Sage is governed by a regulated board with 6 experienced NEDs with a combined total of over 100 years of public and housing sector experience.
  • Structural Supply & Demand Imbalance in the Social Housing Rental Market: 1.6 million households are currently on social housing waiting lists in the England.
  • Diversified and Highly Granular Portfolio: Highly granular portfolio comprising 1,712 units across many development sites in England.
  • Newly Built Portfolio: All units have been completed in or post 2017 with limited capex requirements projected over the loan term. Average unit age is 8 years.
  • Strong and stable income: Income stream is partially supported by the government via the benefits system. CPI +1.0% linked rental streams and an 11yr industry average rental tenor.
  • Strong ESG credentials: Achieved sustainable bond, social bond and green bond status
  • High Quality Sponsorship: Blackstone is one of the world’s largest and most sophisticated institutional real estate investors and owns Sage alongside Regis who has experience setting up Invitation Homes.
  • Experienced Property Manager: The day‐to‐day property management of the units is currently undertaken by Places for People (“PFP”), which itself is a leading UK registered provider (“RP”) of social housing with a portfolio over 220,000 , over 50 years of industry experience and the highest ratings awardable by the sector’s regulatory pertaining to governance and financial viability.