Sanctuary Capital PLC Reports Robust Half-Year Growth with Improved Operating Margins

Sanctuary Capital’s H1 2026: margins up, resilience intact, pipeline softer

Sanctuary Group has delivered a steady half-year with improved profitability and stable revenues, despite a softer development pipeline and tighter liquidity. Revenue was flat at £592.7 million, but operating margins and interest cover both moved up, pointing to better operational grip across housing, care and student divisions.

The headline message: a stronger margin story on broadly flat income, underpinned by better occupancy and lower utilities, with the group still well within investment-grade territory. The trade-off is higher gearing, fewer homes under development, and fewer months of cash and facilities on hand.

Profitability: operating surplus and margins step up

Sanctuary’s underlying operating surplus rose to £112.8 million (H1 2025: £105.0 million), with operating surplus at £116.2 million (H1 2025: £107.4 million). The underlying operating margin improved to 19.0% (H1 2025: 17.7%), and the operating surplus margin to 19.6% (H1 2025: 18.1%).

Underlying surplus before tax nudged up to £22.7 million (H1 2025: £21.6 million), while surplus before tax rose to £33.5 million (H1 2025: £24.0 million). The housing margin as defined by the regulator (RSH operating surplus margin social) dipped slightly to 29.9% (H1 2025: 30.8%).

Key profit lines	H1 2026	H1 2025
Revenue	£592.7m	£592.3m
Underlying operating surplus	£112.8m	£105.0m
Operating surplus	£116.2m	£107.4m
Underlying surplus before tax	£22.7m	£21.6m
Surplus before tax	£33.5m	£24.0m
Operating surplus margin	19.6%	18.1%

Management points to improved occupancy, efficiencies and lower utility costs as the drivers. Note that H1 2025 had a one-off boost from a bulk sale of 66 Swan units, which flatters the prior period’s sales revenue comparison.

Cash, debt and liquidity: stronger cover, higher gearing

EBITDA-MRI interest cover improved to 138.9% (H1 2025: 133.6%). This metric looks at cash earnings after major repairs versus interest costs – higher is better for debt service resilience.

Cash from operations was £108.7 million, £48.5 million lower year-on-year due to working capital phasing. The Group closed with cash of £115.8 million and undrawn facilities of £345.5 million, equating to 17 months of financing against committed spend (H1 2025: 23 months).

Gearing rose to 53.7% (H1 2025: 49.5%) with net debt at £3,860.1 million (H1 2025: £3,832.8 million). Gearing here is total loans and borrowings less cash, divided by properties at depreciated cost – higher gearing reduces headroom. The proportion of debt fixed remains broadly stable at 80.1% (H1 2025: 80.3%), which helps manage interest rate risk.

Operations: occupancy firmer, repairs satisfaction up

Vacant stock was stable at 3.0%, though re-let days in England lengthened to 48 (H1 2025: 44). Void loss improved to 1.7% (H1 2025: 1.9%), meaning fewer rent days lost, but rent arrears ticked up to 3.67% (H1 2025: 3.63%).

Customer-facing metrics moved the right way: repairs satisfaction rose to 74.9% (H1 2025: 73.8%). Care performance was solid too, with average care occupancy at 90% (H1 2025: 89%), and regulator ratings strengthening – CQC rating 96% (H1 2025: 95%) and Care Inspectorate Scotland at 100% (H1 2025: 89%). Student occupancy stayed high at 97%.

Reinvestment spend on existing homes increased to £32.0 million (H1 2025: £29.8 million) – supportive for asset quality and customer outcomes.

Development and sales: slower completions, lower sales exposure

New homes completed fell to 287 (H1 2025: 493), and homes on site and in development were 2,892 (H1 2025: 3,493). That is a notable slowdown in delivery and pipeline size.

New homes completed	H1 2026	H1 2025
Social housing	183	361
Shared ownership	60	24
Outright sale	44	108
Total	287	493

Sales volumes were mixed: shared ownership first tranche sales were 38 (H1 2025: 26), while outright sales were 67 (H1 2025: 111). Sales revenue was £29.2 million (H1 2025: £56.2 million), with the prior year flattered by a bulk sale of 66 Swan units. Importantly, sales exposure remains limited – sales revenue was 4.9% of total revenue (H1 2025: 9.5%).

Balance sheet: stable assets, reclassification effects

Total assets were £6,326.7 million (H1 2025: £6,315.4 million). Current assets rose year-on-year reflecting properties moved to assets held for sale at the end of 2025, with a corresponding reduction in non-current assets. Reserves stood at £1,820.2 million (H1 2025: £1,834.5 million).

Regulation and credit: investment grade intact, new consumer rating noted

Credit ratings remain investment grade at A (S&P) and A2 (Moody’s), both with stable outlooks. The regulatory rating is stated as G1 / V2 / C2 (H1 2025: G1 / V2). The RNS does not elaborate on the C2 element, but the addition of a consumer rating is noteworthy for stakeholders to monitor.

Key numbers at a glance

Metric	H1 2026	H1 2025
Homes in management	126,091	125,821
Total divisional EBITDA	£165.4m	£154.6m
EBITDA-MRI interest cover	138.9%	133.6%
Gearing	53.7%	49.5%
Cash and undrawn facilities	£461.3m	£580.4m
Months of cash and facilities	17	23
Cash at half-year	£115.8m	£116.1m
Undrawn facilities	£345.5m	£464.3m

Why this matters for investors and bondholders

The improved operating margins and stronger interest cover point to a business managing its cost base and occupancy well. That supports covenant strength and credit stability, reflected in unchanged A/A2 ratings. The lower reliance on sales revenue also reduces exposure to market volatility.

On the flip side, gearing has crept higher to 53.7%, liquidity headroom has narrowed to 17 months, and the development pipeline has thinned. These are manageable, but they tighten flexibility if conditions worsen. The stated regulatory rating now includes C2 – while the RNS does not explain the implications, it is something to track closely alongside operational metrics.

Jargon buster

• EBITDA-MRI interest cover – a cash earnings measure after major repairs versus interest costs. Higher means more headroom to service debt.
• Gearing – total loans and borrowings less cash, divided by properties at depreciated cost. A proxy for leverage against the asset base.
• RSH operating surplus margin social – operating surplus from social housing lettings as a percentage of revenue.

What I’m watching into the second half

• Liquidity rebuild – progress on restoring months of cash and facilities above the current 17.
• Development delivery – whether homes on site recover from 2,892 and completions re-accelerate.
• Arrears and re-let times – reversing the slight slippage in rent arrears to 3.67% and re-let days to 48.
• Margins – maintaining the 19.0% underlying operating margin while reinvesting in existing homes.
• Regulatory position – any further disclosure on the G1/V2/C2 rating mix.

Net-net, this is a solid half-year: profitability up, service metrics improving, and credit ratings steady. The balance to strike in H2 will be rebuilding headroom while keeping the operational gains coming.