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East of England landlord handed ‘negative’ outlook by S&P over extra spending on homes
A 6,000-home landlord has been moved to a negative outlook by S&P over concerns that rising spending on new and existing stock will “weaken” its financial performance.
A 6,000-home landlord has been moved to a negative outlook by S&P over concerns that rising spending on new and existing stock will “weaken” its financial performance #UKhousingThrive Homes’ outlook has been revised from a stable rating, as S&P said the group’s business strategy risked “increased debt”.
However, the Hertfordshire-based landlord kept its A+ credit rating from S&P.
In a new report, the rating agency said it expected Thrive’s increased investment in existing homes to weaken its margins to below 30% up until the end of the 2026-27 financial year.
As part of the spending, Thrive was tackling a “backlog” of repairs and maintenance, S&P said.
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On development, the agency also expected the group’s plan to deliver more shared ownership homes to hamper its margins.
However, S&P added: “Our forecast indicates that rent increases, which slightly exceed cost inflation, combined with cost efficiencies, will help the group stabilise its financial performance, albeit at levels lower than we previously expected.”
S&P said it also expected Thrive, which operates across Hertfordshire, Bedfordshire, Buckinghamshire and Oxfordshire, to mainly use debt to build more homes.
Despite higher levels of capital expenditure weakening Thrive’s liquidity, S&P said it expected this to remain “at a very strong level”.
The agency forecasted that “higher debt combined with weaker non-sales adjusted EBITDA [earnings before interest, tax, depreciation and amortisation] will result in a modest recovery in [Thrive’s] debt metrics from the weaker position over the last two fiscal years”.
On a positive note, S&P flagged that more than 90% of Thrive’s capital expenditure for new developments was uncommitted.
This means the landlord “has the capacity to remove or reprofile discretionary spending on its existing properties”, S&P said.
The agency added: “At the same time, we understand Thrive has a small number of high rise buildings, which limits its exposure to fire safety risk.
“Additionally, about 85% of its properties have an Energy Performance Certificate [(EPC) rating of Band] C or above.”
Stephen King, executive director of finance at Thrive Homes, said: “Our annual credit rating for 2025 is A+, reflecting our strong financial foundation and placing us among the highest-rated providers in our sector.
“The change in our outlook from stable to negative is driven by two factors: the significant investment we are currently making across our portfolio – both in existing properties and new developments – as well as the wider challenges facing our sector.
“The report also recognises the benefits we hope to achieve due to greater flexibility in our investments together with our strong sustainability credentials.
“Notably, 85% of our properties already meet EPC C or above, positioning us well ahead of the government’s 2030 target and helping to reduce energy costs for our residents.”
The landlord has a new boss due to start next month, as Paul Richmond is joining from Watford Community Housing. He is replacing Elspeth Mackenzie, who announced last summer she planned to retire after 15 years at the helm of the organisation.
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