Inside Housing – News – For-profit company Sage posts annual losses despite strong condominium sales
For-profit Sage Homes, owned by private equity giant Blackstone, reported annual losses at both of its entities despite an 85% increase in the number of condominium properties sold.
One entity, Sage Housing, which derives most of its income from condominiums, recorded a loss of £17.1million compared to a loss of £26million the previous year. Revenue for the year to the end of December 2021 jumped 85% to £174.3m.
However, operating costs rose 38% to £40m as the group hired more staff and invested in improving customer service. The cost of sales nearly doubled to £125.9 million.
Writing in the vendor’s annual report, John Goodley, Sage’s chief financial officer, said the latest loss was lower than expected, without giving further details.
Of its turnover, £158.8 million came from sales of the first tranche of condominiums, with 1,404 homes sold compared to 758 last year. Costs meant operating profit from sales was £32.9m.
Sage Housing also operates 1,051 social and affordable housing units. These had revenue of £15.6m but produced an operating loss of £7.9m due to costs. On an operating basis, Sage Housing’s profit was £9 million, compared to a loss of £1 million the previous year.
Mr Goodley said this “strengthens Sage’s near-term trajectory towards future net profitability”.
Its overall operating margin was 5.1%, but is targeting a 16.5% margin for the current year.
Mr. Goodley added, “As Sage grows, we are focused on increasing our operational efficiency.
Overall, Sage Housing said it delivered 3,287 new homes last year, up 52% from the previous year. It has delivered 7,294 homes so far.
A separate entity, Sage Rented, which operates 3,321 affordable and social housing units, saw its loss widen to £4.4m on income of £13.4m as housing costs interest on loans increased.
“We expect this to improve next year with a larger rental base in place for the full year,” Mr Goodley said.
Sage Rented acquired 1,712 homes from Sage Housing last November.
Sage secured £73.5million in grants last year under the government’s affordable housing scheme.
The group, which launched in 2017, was looking to partner with housing associations and last year signed a £107million deal with G15 owner Optivo. He also struck a deal with property construction giant Taylor Wimpey in July.
Sage aims to deliver 30,000 new homes by 2030.
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