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Sage’s for-profits rack up £106m in combined losses
Three for-profit registered providers owned by Blackstone-backed Sage recorded combined losses of £106m in 2023, although one has since been sold.
The biggest deficit was at Sage Housing, which saw its post-tax losses widen to £61.5m against turnover of £217m in the year to the end of December 2023, its accounts revealed. It compared to losses of £3.1m in 2022.
The provider was hit by £64m in interest loan payments in 2023, which was a 69% jump on the previous year.
On an operating basis, Sage Housing posted a profit of £48.2m.
Sage Housing has since been renamed Sparrow Shared Ownership after its 3,000-home portfolio was sold to the UK’s largest private pension fund, the Universities Superannuation Scheme (USS), for £405m in a deal announced this month.
Not all of Sage Housing’s homes included in the last reporting period were sold to USS, as its affordable and social rented homes were transferred to another Sage entity before the transaction.
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Writing in Sage Housing’s accounts, John Goodey, chief financial officer at Sage, said that the provider’s “debt levels, which partially finance operations and considerable construction in progress, combined with elevated interest rates” had led to the loss. “This was forecast for the year,” he added.
Sage Housing delivered a total of 3,755 affordable homes in 2023, up 8% on the previous year. However, its spending on delivering homes fell by 13% year on year to £456m.
The provider’s operating margin jumped to 47%, as Sage said it continued to “prioritise developing and delivering new homes”. The figure included rent and management costs, but not corporate functions.
The second-largest deficit was seen at Sage Rented, which reported a post-tax loss of £39.5m. The provider owns affordable and social rented homes, most of which are managed by Places for People.
Sage Rented’s loss came despite turnover increasing to £37.2m, up from £26.9m the previous year.
However, interest payments and charges on loans more than doubled to £46.9m. On an operating basis, Sage Rented reported a profit of £6.6m, a fall from £9.2m the year before.
The third entity, Sage Homes RP, recorded a post-tax loss of £5.1m on an increased turnover of £37.2m.
The provider is Sage’s development entity and delivered 417 new affordable homes in the year, compared to four the year before. A total of 2,787 homes were under construction in 2023, compared to 247 the year before.
All three providers were given a G1/V2 grading by the Regulator of Social Housing (RSH) last December, following their first in-depth assessments.
However, at the time, the regulator pointed out that the providers are “highly geared” as each has obtained loans from shareholders and the debt markets, and taken equity investment from shareholders.
Last month, Sage registered three more for-profits with the RSH.
Sage has grown rapidly since Blackstone, the world’s largest asset management firm, took a majority stake in late 2017. The group, which is also backed by real estate investor Regis, is aiming to have delivered 30,000 homes by 2030.
Since its inception, Sage reported that it had delivered 14,918 homes. On a group level, Sage invested £558m in building new homes in 2023.
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