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Swan in merger talks with Sanctuary after Orbit discussions end
Large association Sanctuary has announced that it is in merger talks with Swan, the same day as Orbit announced that its merger discussions with the latter had ceased.
In a stock market update today, Sanctuary said it has “entered into discussions with Swan Housing Association to form a business combination”.
“Any agreement will be subject to detailed due diligence and the approval of boards of both organisations,” the 105,000-home landlord said.
The announcement was made on the same day as Orbit announced that its nearly year-long merger talks with Swan had ceased, quashing plans to create a 60,000-home landlord.
Orbit, which owns and manages 45,000 homes, said the talks had ended “following a lengthy and detailed due diligence process”.
The talks between Orbit and Swan emerged in December, on the same day that Swan was rated non-compliant on governance and financial viability by the Regulator of Social Housing (RSH).
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The regulator had given Swan a rating of G3/V3, meaning it is non-compliant with the Governance and Financial Viability Standard. It remains under “intensive regulatory engagement”.
The regulator judged that there had been a “material deterioration in Swan’s financial position since its last business plan was submitted to the regulator”.
It also identified a “significant adverse variance” in its future development costs, which it judged was “largely due to the ineffective management of its development programme and its development subsidiary”.
Craig Moule, chief executive of Sanctuary, said: “As one of the largest housing and care providers in the country we’re focused on ensuring the strength of the sector and that any collaboration opportunities ultimately benefit residents of both organisations.
“Swan has a good geographic fit with our existing footprint, and we are aligned on social purpose. The challenges that the sector faces at the moment are unprecedented – a challenging macro-economic environment, investment in building safety, the need to future-proof our homes and of course, the cost of living pressures which are disproportionally affecting the most vulnerable in society. This means housing associations need to think creatively and be open to opportunities.”
Susan Hickey, chief executive of Swan, said: “We’re committed to exploring opportunities that will ensure Swan can continue our vital work in serving our customers, regenerating local communities and delivering on our local partnership commitments.
“As a leading provider of housing and care which already has an established presence in London and Essex, we believe Sanctuary presents an excellent strategic match.”
In May, Swan pulled out of a partnership with G15 landlord Catalyst to deliver 359 shared ownership homes on an industrial site in east London.
Later that month it emerged that it had breached the Home Standard after it was found to have around 1,500 overdue fire safety remedial actions.
Sanctuary was in merger talks with G15 landlord Southern last year but this was called off after both parties agreed that coming together would not deliver the benefits they required.
