Blackstone Builds £1.3B UK Housing Business And Guns For 30,000 Homes

An affordable housing business backed by private equity giant Blackstone has reached a portfolio valuation of more than £1B and could more than double in size over the next five years. 

Blackstone Managing Director Gemma Kataky told Inside Housing that Sage Homes, the affordable housing provider Blackstone launched in 2017, was targeting a portfolio of 30,000 homes by the end of 2030.

Accounts for Sage Homes showed that the company had delivered close to 11,000 homes by the end of 2022. Kataky said that as of the start of this year, the company had either built or committed to fund 23,000 homes. 

The business had a portfolio of completed homes valued at £933M and a portfolio of homes under construction valued at £382M, for a total of £1.3B as of late 2022. By those metrics, a portfolio of 30,000 completed homes would be valued at £2.5B to £3B. 

Sage Homes had £1.3B of debt in January 2023, in the form of a revolving credit facility provided by banks, including Barclays, Harel Insurance, Deutsche Bank, Morgan Stanley, Wells Fargo and Royal Bank of Canada.

The business buys affordable units being built by housebuilders as part of their section 106 agreements ahead of completion, then rents them out at affordable rates or sells them as shared ownership units. 

Sage delivered 3,447 affordable homes in 2022, making it the largest provider of affordable homes in the country that year. That year, Sage produced revenue of £227M but reported a £6M pre-tax loss.

It aims to build sustainable homes, with 97% of its homes having an EPC rating of A or B. 

“The combination of structural undersupply of housing generally and the growing demand in particular for affordable rental housing have resulted in a widening imbalance in the overall supply of such housing,” Kataky told Inside Housing.  

“While there is no panacea to solving the problem of housing overnight, through public and private co-operation, we believe the capital that is needed to build more affordable homes can be found,” she added. 

In addition to Sage, Blackstone has a single-family housing business called Leaf Living, which leases homes at market rent. Blackstone paid £819M for 2,915 homes being built by house builder Vistry last November. Of those, 1,522 units are being delivered to Leaf and 1,393 affordable homes for rent and shared ownership are being delivered to Sage. 

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