Mapping a mega-merger: Sanctuary and Southern’s proposed merger in numbers

Sanctuary: 6,000 new homes by 2023

Southern: 7,000 new homes by 2029

Southern’s programme is bolstered through its strategic partnerships with Homes England and the Greater London Authority. At March 2020, Sanctuary had 5,642 homes in development compared to Southern’s 1,221. Southern has undergone a strategic shift towards more ambitious growth targets which it said will increase debt, development and market sales risk over the near term.

Sanctuary: £763m

Southern: £236.8m

Sanctuary and Southern currently pull in around £1bn in turnover, combined. Sanctuary’s specific social housing lettings turnover stood at £411m at March 2020, while Southern’s was £163.4m.

Sanctuary: £57.4m [7% of turnover]

Southern: £23.6m [9.9% of turnover]

According to their accounts, both have a healthy surplus. Releasing its annual results in August 2020, Sanctuary described 2019/20 as “the most challenging in our 50-year history”, with its post-tax surplus falling by 31%. Southern also suffered a blow to its bottom line of 8.5%, with its surplus dropping from £203.7m to £186.2m.

Sanctuary

Craig Moule has been with the association for more than 30 years and has been group chief executive since 2019.

Southern

Alan Townshend was appointed group chief executive in 2018 and has more than 31 years’ experience in the affordable housing sector.

Sanctuary: £261.5m (at March 2020)

Southern: £485.61m

Both associations hold significant liquidity, comprising a mixture of loans and bonds. In April 2020, Sanctuary issued a £350m, 30-year bond, further increasing its cash reserves.

Sanctuary: G1/V2

Southern: G2/V2

Southern said its downgrade to V2 for financial viability, issued in April 2020, was in line with its expectations but labelled its downgrade to G2 for governance “a disappointment”. Sanctuary was downgraded from V1 to V2 in April 2020, with the Regulator of Social Housing warning that its investment in existing homes “weakens its interest cover position in the short term”, while spending on homes for outright sale makes it “too reliant” on income from market sale.

Southern said it has been systematically checking all its 44 tall buildings to ensure that they comply with government guidelines. The group spent £8.2m more than was originally budgeted on these services. Sanctuary said it continues to progress the implementation of essential fire safety works as a result of the Hackett Review.

Sanctuary: A+ (Standard & Poor’s), A2 (Moody’s)

Southern: A3 (Moody’s)

Southern received a credit rating downgrade in September 2019, from A2 to A3, with a change in outlook from negative to stable. However, the rating still falls under the agency’s ‘prime’ category which will be viewed favourably by potential creditors.

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