Sanctuary begins merger talks with 5,000-home landlord

Yvonne Castle, chief executive of JJH, said that joining Sanctuary will allow JHH to be able to invest more in residents’ homes.

Ms Castle said: “We always look to do best, what matters most for our residents. We believe joining Sanctuary will allow us to fulfil our ambitions and invest more in our residents’ homes than we could on our own.

“As always, the interests of our own residents and those of Sanctuary will remain our top priority as we progress with these exciting discussions and robust due diligence. It’s a fantastic opportunity for both organisations.”

Craig Moule, group chief executive of Sanctuary, said: “Our customers are at the heart of all we do, and the interests of both Sanctuary and JJH residents will be at the forefront of our decision-making as we conduct due diligence and continue our discussions.

“As a national not-for-profit provider of affordable housing and care, Sanctuary has a unique role to play in ensuring the continued provision of these critical services to society.”

Both providers are graded G1 for governance and V2 for viability by the Regulator of Social Housing (RSH). JJH was among 13 providers downgraded to V2 in December.

The RSH said that JJH is investing significantly in its existing homes, including for building safety, and this, coupled with uncertainty, reduces the provider’s capacity to respond to adverse events.

According to their financial results for 2021-22, Sanctuary posted a pre-tax surplus of £58.6m and JJH achieved a surplus of £382,000 prior to tax and pension adjustments.

The partnership talks between the two providers come months after the completion of Sanctuary’s rescue merger of Swan on 8 February, in which the latter joined the former as a subsidiary.

Swan was downgraded to a non-compliant G3/V3 rating in December 2021. In October last year, it was facing a potential annual impairment of £178.4m and credit ratings agency Standard & Poor’s (S&P) downgraded Swan to a ‘BB-’ rating, which means it faced “major ongoing uncertainties”. 

Following the merger, S&P upgraded Swan’s credit rating from ‘BB-’ to ‘BBB+’ and downgraded its outlook for Sanctuary from stable to negative.

In long-awaited 2022 accounts for the provider, in February, the group posted a £130m deficit before tax, as well as restating the prior year’s surplus to a deficit of £23.5m. Impairments at the group level for 2022 totalled £138.6m in the year, in addition to £12m of provision against “onerous leases”.