For-profit association Sage raises £280m with ‘sustainable’ bond

Blackstone-owned ‘for-profit’ association Sage Housing has raised £280m of finance to help fund its 20,000-home build programme.

The £94m turnover affordable housing provider said it had raised the cash by issuing a bond, arranged by Deutsche Bank, which was the first of its kind in Europe to be accredited as a sustainable, green and social bond at the same time.

The new finance follows its issuance of a £220m bond a year ago, and comes as it ramps up development activity and attempts to further its ethical credentials by improving the energy efficiency of the homes it builds.

Sage, which is owned by US hedge fund giant Blackstone, said its bond had been confirmed as conforming to the Sustainability Bond Guidelines 2021, Green Bond Principles 2021, and Social Bond Principles 2021, all of which are administered by the International Capital Market Association.

Sage is one of a number of housing providers, including traditional housing associations, attempting to benefit from the estimated £2 trillion wave of demand for investments accredited as meeting ethical or ESG criteria. It is also one of a growing number of ’for-profit’ housing associations, which are together forecast to deliver up to 130,000 houses in the next five years.

Blackstone bought Sage in May 2018, and by the end of 2020, it had already built up a portfolio of more than 4,000 homes, with contracts exchanged to deliver a further 8,656. Sage has committed to exchanging contracts to develop more than 20,000 homes in total by the end of 2022.

The last calendar year saw it deliver 2,162 new homes, investing £333m in development. It made a pre-tax loss of £25.9m on turnover of £94m, up 57% from the £34.8m recorded in 2019. It claims to be on course to build 5,000 homes this calendar year.

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.”