Optivo will continue to partner with for-profit providers after deal with Sage

Tom Paul, director of treasury at Optivo, told Social Housing that at practical completion of the sites, everything – including the long-lease or freehold status of the land – will be handed over to Sage.

Mr Paul said: “We needed to get Homes England and the GLA to take a look at and support the deal because we have planned to attribute social housing grant liability, which will transfer to Sage when we sell the homes to them at practical completion.

“At practical completion we will draw down the final instalment of grant, but also at practical completion point that’s where the homes are acquired by Sage.

“At that point the grant will transfer to Sage as well, so Homes England and City Hall have had to both review what we’re doing and they’ve supported the deal.”

Sage Housing, which is backed by private equity giant Blackstone and real estate investor Regis, is a for-profit registered provider of affordable housing.

It says it is on target to deliver 5,000 new affordable homes in 2021 and has a further pipeline of more than 20,000 homes to be delivered over the next few years.

In 2019, Optivo entered a management agreement with the for-profit provider Legal & General (L&G) Affordable Homes, contributing to a panel of 12 other non-profit housing associations appointed by the company.

Mr Paul confirmed that, after the completion of the sale, Optivo’s deal with Sage would follow a similar arrangement.

He said: “This is a new thing for us and a new thing in the industry – we’ve not sold pipeline social housing before to [the likes of] Legal & General and I don’t think anyone else has. So that’s the unique thing.

“Once we get to the point of practical completion, our relationship with Sage will be managing the homes, and that’s what we do with L&G.”

The deal comes amid increasing activity in the social housing sector to work with for-profit providers.

Other notable deals have included Hyde Group’s partnership with M&G, unveiled in March 2021, to deliver a £500m pipeline of shared ownership properties, owned by the institutional investor’s for-profit provider and managed by Hyde.

Mr Paul said that the deal with Sage is the type of arrangement Optivo would “absolutely” do again.

“We think we’ve got a replicable model and there’s no exclusivity here. We’re certainly quite interested in continuing discussions with high-calibre partners for this type of transaction,” he said.