Vistry Group has taken a significant leap in its business strategy by signing a £819 million partnership deal with Leaf Living and Sage Homes, backed by Blackstone-managed funds and Regis Group plc. This monumental agreement is set to deliver more than 2,900 mixed-tenure new homes across the UK.

Details of the Partnership

Under this partnership, Leaf and Sage will acquire 2,915 units from Vistry Group, totaling a gross development value of £819 million. These homes, part of Vistry’s former Housebuilding landbank, are spread across 70 developments, with the majority expected to be completed within the next two years. The deal aligns with Vistry’s strategy of pre-selling about 65% of all units across its business.

Impact on the Housing Sector

This agreement addresses the acute need for housing in the UK and stands as one of the largest new build residential investment transactions on record. The deal includes 1,522 units for the private rented sector (PRS) to be delivered to Leaf and 1,393 affordable homes for rent and shared ownership to be delivered to Sage, England’s largest provider of newly built affordable homes.

Funding and Financial Outlook

Vistry and Sage plan to utilize existing Homes England grant funding under the Affordable Homes Programme for an initial tranche of affordable homes. Vistry expects an initial cash receipt of approximately £160 million in FY23, with further staged payments throughout the development program. The agreement is anticipated to yield an adjusted operating margin over 12% and a return on capital employed of around 40%, aligning with Vistry’s medium-term financial targets.

CEO’s Statement on the Deal

Greg Fitzgerald, Vistry Group Chief Executive Officer, expressed excitement about expanding their partnership with Leaf and Sage through this market-leading opportunity. He emphasized the unique Partnerships model of Vistry in accelerating the delivery of affordable housing in the UK. Fitzgerald also highlighted the deal’s role in enhancing the Group’s earnings visibility and driving towards medium-term targets, including the distribution of £1 billion to shareholders over the next three years.

  Greg Fitzgerald, Regis Group, United Kingdom, Vistry Group