Sage Homes sells founding RP to UK pension fund in £405m deal

The RP was originally registered with the RSH as a for-profit provider in 2010 under its original name, Fern Gateways.

It was acquired in 2017 by Sage Investments SARL, which is backed by Blackstone and Regis, and has been through several name changes in recent years. In May 2017, it became Sage Housing and later the same month added the suffix of ‘Association’, before dropping this after a year following opposition from the National Housing Federation over its use of the term ‘housing association’.

According to Sage, Blackstone and Regis remain committed to investing in affordable and shared ownership housing, and the sale of the company’s shared ownership portfolio is part of the continued evolution of its business strategy. Sales like this latest deal will allow for greater reinvestment in the business and support Sage Homes to provide further affordable housing across England.

Alison Thain, chair of Sage Homes, said that the sale was an endorsement of Sage Homes’ strategy. “Several years ago, we started on a journey to attract increasing amounts of institutional investment and capital into the sector,” she said.

“For the last three years, Sage has been the largest provider of new affordable homes in England and this investment proves our model, enabling continued growth and delivery of the homes that the country needs.”

The deal comes just over two months after Sage registered three new for-profit providers, as first reported by Social Housing. Sage Green Homes, Sage Places and Sage Shared Ownership were established with the intention of providing further flexibility with regard to accessing finance.

As Social Housing has previously reported, Sage’s strategy has been to separate portfolios of properties into different RPs, for example splitting rented properties from shared ownership, in order to raise finance against these according to their different investment profiles. This funding mix has previously included securitisations, bonds and loans.

The company also has two other RPs, which were registered in 2019: Sage Homes RP Limited (first registered as Sage Shared Ownership before changing its name in 2022) and Sage Rented.

Social Housing understands from Sage that Blackstone still maintains more than a 90 per cent shareholding in the remaining business, which has a contracted development pipeline of 5,400 homes, including 2,600 shared ownership properties.

The homes acquired by USSL span 250 Sage Homes sites. 

The investment is not the first in the sector by the pension fund.

In July 2020, USS made an ultra-long £300m loan to the real estate investment trust behind fellow for-profit ReSI Housing, Residential Secure Income (ReSI plc).

USS provides pensions for universities and higher education institutions and across its business has more than £75.5bn of assets under management.

Commenting on its acquisition from Sage, Eamon Ray, head of private credit and alternative income at USSIM, said: “Sparrow Shared Ownership will provide further capital into the UK shared ownership sector, and we look forward to supporting the Sparrow team in delivering on their vision for the organisation. This investment allows USS to use its long-term capital to support the multi-decade nature of Sparrow’s business plan whilst supporting the UK social housing sector.”

Barclays acted as lead financial advisor to Blackstone and Regis, with Deutsche Bank as their financial advisor. USS was advised by Evercore and Five Sigma Finance.

Experienced board

Sage Housing – which will now be known as Sparrow Shared Ownership – has an experienced sector board that includes former Clarion board member David Avery as chair.

Other non-executive directors include Amanda Davies, the immediate past chief executive of Welsh housing association Pobl; Andrew Rose, who was chief executive of the Homes and Communities Agency (now Homes England) from 2013 to 2016; and Sarah Wall, a former independent member of the RSH’s regulation committee and a previous head of investment risk at the Pension Insurance Corporation.

Under its new name and ownership, the RP intends to take over the management and operational responsibilities of the portfolio, with Sage Homes continuing to manage customers within the portfolio for the meantime.

Today’s media release said that Sparrow Housing intends to be the “UK’s shared ownership provider of choice”, which it aims to achieve by setting a “gold standard” on the quality of its homes and service delivery within the tenure.

Mr Avery said: “The launch of Sparrow Shared Ownership is an exciting moment for the UK’s shared ownership sector. Thanks to this significant investment of patient, long-term capital from the UK’s largest private pension fund, Sparrow Shared Ownership starts life with more than 3,000 high-quality shared ownership homes that are helping thousands of people across the country onto the housing ladder.

“Our number-one focus from day one is on our residents, and we will be working with Sage Homes to ensure a smooth transition of management services.”

James Seppala, head of real estate Europe at Blackstone, said: “Through Sage Homes, which was established in 2017, Blackstone has been the largest provider of newly built affordable housing in the country for the last three years. By deploying capital to fund the development of new homes, we are proud to have created an institutional-grade portfolio which has, in turn, attracted more long-term institutional capital into the sector.

“This transaction will allow us to continue to invest capital into Sage Homes to help alleviate the structural undersupply of housing across the UK.”

According to Sage Homes, the company has to date committed circa £3.7bn to fund the development of 22,600 affordable rent and shared ownership homes, of which more than 17,000 have been delivered to date. It was first founded as a joint venture between private equity and asset management giant Blackstone and real estate investor Regis in 2017.