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Cambridgeshire association keeps A+ credit rating

Cross Keys Homes (CKH) has retained its A+ credit rating from Standard & Poor’s (S&P).

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Picture: Getty
Picture: Getty
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Cross Keys Homes has retained its A+ credit rating from Standard & Poor’s #ukhousing

The ranking places CKH into the second-highest tier of social landlords ranked by S&P, alongside housing associations such as Bromford and Sanctuary.

The agency also gave Peterborough-based CKH a ‘stable’ outlook – meaning it is unlikely to be downgraded in the future.

The report said that among the factors for CKH’s positive rating were its investment in shared ownership to help subsidise its development programme, its investment in technology to improve efficiency, and strong financial management.


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It said: “The stable outlook reflects our expectation that CKH’s management will maintain strong financial performance supported by high demand for social housing, and only a limited increase in debt.

“The association has continued to increase its rental revenues even though rents have been reducing by 1% a year. It has released new developments during the rent reduction period ending in March 2020.

“This, combined with increased efficiencies in services and service provisions, enabled it to maintain its… margins. In our view, the association’s corporate strategy and the strategic planning process are well-suited to the economic characteristics of its areas of operation.

“The board has also adopted a comprehensive risk management strategy that is monitored and reviewed throughout the year.”

The 11,000-home housing association has forecast that it will build 507 new homes per year up to 2022, up from a previous commitment of 450 homes.

However, only half of the development pipeline is currently committed, with scope “to slow down the development programme if the housing market shows an unexpected downturn”.

CKH currently holds £96m in undrawn facilities, cash balances and cash from operations.

Low exposure to the private sales market was also viewed favourably by the ratings agency.

The report added: “We consider that CKH’s exposure to real estate market volatility remains modest, although management plans to increase revenues from market sales.

“Revenues from traditional activities cover over 75% of total turnover. That said, there has been a steady increase in non-traditional social housing activities, such as first tranche shared ownership sales.”

S&P stated that it considered shared ownership sales activity more risky than the traditional social rental business, however CKH had demonstrated a “strong track record of first tranche sales over the past three years”.

The agency has also affirmed its A+ issue rating on the £150m bond issued in September 2014 by CKH’s funding vehicle Cambridgeshire Housing Capital.

Claire Higgins, chief executive of CKH, said: “We have worked hard against many challenges to maintain our financial strength and stability to not only ensure the security of our tenants, but also to build the affordable homes that are desperately needed across the region while still providing the support services and community investment we are so proud of.”

Fellow housing association Orbit saw its credit rating downgraded by ratings agency Moody’s earlier this week due to its exposure to new development plans and private sales of new homes.

Moody’s stated that of all the housing associations in its portfolio, Orbit was found to be the most exposed, with 37% of its revenue derived from market sale.

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