Last updated 6 July 2022
Sanctuary Housing
Sanctuary is one of the UK’s largest registered social landlords (RSLs) and owns or manages more than 105,000 homes. The group is based in Worcester and has one of the largest development pipelines of any RSL in the UK and is developing over 15,000 new homes between 2020 and 2028.
Financials
Turnover at Sanctuary has grown steadily in recent years and in 2022 revenue reached £812.5 million (2021: £765.4 million and the operating surplus before tax increased to £178.6 million (2021: £170.2 million).
To view the financials for Sanctuary, visit the group”s website here.
Operations
RSLs such as Sanctuary face a particular challenge as a switch to affordable housing being provided at up to 80% of the market rate. The government has agreed to provide debt guarantees worth up to £10 billion to support the building of new homes for rent in the private and affordable sectors.
Sanctuary has regularly issued bonds to raise funds. In 2020, Sanctuary issued a £350 million bond with 32 investors investing. These borrowings are covered by the group’s social housing portfolio and used to fund investment.
Major social housing developments starting on site in 2022 include the £35 million Iceland Wharf scheme offering 120 flats at Tower Hamlets in east London (Project ID: 05112685).
In addition to social housing, Sanctuary also provides student accommodation and nursing and residential care. The group’s development portfolio increasingly reflects this provision with projects, such as a £22 million Health & Wellbeing campus in Worcester set to provide 60-bed care home, a 60-unit extra care scheme and 40 close care homes, including 32 apartments and eight bungalows. The group is working on other nursing homes projects.
In 2022, revenue from development rose to £55.4 million (2021; £37.0 million) and 768 homes were completed (2021: 620 homes). Earnings before interest, tax and amortisation edged up to £7.6 million (2021: £7.0 million).
In terms of core social housing, the 2021 survey of the top 50 developing housing associations by Inside Housing showed that between April 2020 and March 2021, Sanctuary completed 834 units and was ranked 14th on completions – up from 16th in 2020. This total comprised with 204 units for social rent, 280 for affordable rent and 181 units for low cost home ownership.
At March 2022, Sanctuary had 5,183 homes in development (2021: 5,130) and 2,362 of these units were on site (2021: 2,855).
Glenigan Data
Sanctuary let six contracts valued at £250,000 or more in the 12 months to June 2022 (2021: 11). The total value of these contracts was at a total of £63.7 million (2021: £109.9 million) and the group was ranked just outside Glenigan’s ranking of the construction industry’s top 50 clients.
Glenigan’s research also shows that Sanctuary submitted three detailed planning applications of 10 or more units (2020: 8). These applications contained a total of 483 units (2019: 629 units) and ranked the group in 14th place in Glenigan’s 2020 ranking of the top RSLs by planning pipeline (2019: fifth).
Conclusion: Rolling on
Sanctuary is two years into a decade long plan to build 15,000 new homes but as the group is embarking on this major programme the 2016-2021 Affordable Homes Programme was coming to an end.
In 2021 revenue from development fell to £37.0 million (2020; £40.4 million) and the gross margin shrank to 18.9% (2020: 26.5%) but an increasing shift towards modern methods of construction should improve this. In the latest year, more than a fifth of properties under construction – 1,346 units – utilised MMC.
The property boom during the COVID-19 outbreak has helped the group enter the current financial year 40% forward sold but a hiatus is emerging in Sanctuary’s development pipeline as the group’s priorities shift amidst the consequences of addressing the consequences of the Grenfell disaster and the coronavirus pandemic.
Inside Housing’s research in 2020 showed Sanctuary falling from 11th to 16th position in terms of completions. Sanctuary expected to complete 990 units in 2021 but fell short of this figure.
The pandemic is a mitigating factor, but there has also been a significant reduction in the size of the group’s planning pipeline. The number of units in detailed planning applications submitted by Sanctuary has shrunk by 81% between 2019 and 2021 and the group dropped out of Glenigan’s top 10 of RSLs by planning pipeline.
Sanctuary is looking to build smaller schemes in terms of units and the average planning application in 2021 contained 39 units (2020: 60 units) as the group moved towards building more apartments.
In 2020, apartments made up 67% of the units in Sanctuary’s pipeline in 2020 with the balance some form of house but in 2021 the group only sought planning to build new apartments. Apartments take up less space on land than houses, which suggests the group is buying smaller plots.
With the planning pipeline shrinking, this suggests that the group is seeking over-ready land, which tends to be more expensive, or seeking alliances and partnerships with commercial developers and housebuilders.
The group also appears to be spending less on construction. Despite a rise in the 12 months to June 2021, Sanctuary has not appeared in Glenigan’s ranking of the industry’s top 50 clients for the past three years, although the average contract awarded was valued by Glenigan at £10.6 million (2021: £10.9 million).
Sanctuary has cash and undrawn credit facilities totalling £1,789 million and an A2 stable credit rating from Moody’s. With the group also developing nursing homes, Sanctuary will remain a key developer of social housing accommodation for the foreseeable future.
Winning Work with Sanctuary
Sanctuary has its own in-house maintenance team, Sanctuary Maintenance Contractors, which also works increasingly for external clients.
To support the development cycle, the group has also entered into four joint ventures with Galliford Try.
In January 2021, Sanctuary’s started procurement for a building trades contractor framework expected to produce spending of £840 million over the next decade (Project ID: 19189480) and a £9 million lift servicing and maintenance framework to run from 2022 to 2025 (Project ID: 21110232).
Sanctuary uses the Procurement for Housing framework for some procurement. Companies interested in working for Sanctuary are asked to register with the group at its own online portal, which can be viewed here.
Key Sanctuary procurement contacts include:
Group Procurement Manager – Mark Ridge, tel: 01905-334000
Mark.ridge@sanctuary-housing.co.uk
Group Procurement Manager (Systems & Process Improvement) – Mark Perrin, tel: 01905-334000