Thistle HA, which is in the Toryglen area of Glasgow, has 947 social rent homes and 786 factored owners.
In August 2018, the Scottish Housing Regulator (SHR) used its powers to appoint a manager and five members to Thistle's governing body.
The SHR subsequently increased the number of appointments to the governing body to eight following concerns about Thistle's governance and leadership capacity.
Sanctuary Scotland manages more than 7,000 homes in Scotland, with around 2,000 in Glasgow. Sanctuary Scotland is part of Sanctuary Group, one of the UK's leading providers of housing and care, managing more than 100,000 homes.
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Sanctuary Scotland and Thistle will now undertake a period of due diligence and, if the transfer is given the go-ahead, Thistle would likely transfer next financial year (2020/2021).
Bob McGuire, Interim Director of Thistle HA, said: "We are delighted to announce Sanctuary Scotland as our preferred partner to progress our proposed transfer.
"Thistle and Sanctuary will develop the proposals for transfer and consult with our tenants and residents.
"I look forward to working with the team at Sanctuary Scotland to progress the transfer in the interests of Thistle HA's tenants, factored owners, staff and the wider Toryglen community."
Pat Cahill, Director – Sanctuary Scotland, said: "We are pleased to have been selected as the preferred partner by Thistle.
"If the transfer to Sanctuary Scotland goes ahead, we will ensure that tenants and factored owners are placed at the heart of decision-making.
"Sanctuary Group has a strong track record of supporting and assisting housing associations in difficulty, and we believe doing so enables us to deliver our social purpose even more widely."
(MH/JG)
