Wheatley retains A+ stable credit rating from Standard & Poor’s

It forecast the increase in Wheatley’s rental income to offset the pressures from rising investment in existing stock, alongside a “modest rise” in debt. It expected Wheatley’s margins to recover to “about 27%” by the end of March 2027, up from 21% estimated for 2023-24.

S&P’s research update highlighted “strong demand for Wheatley’s properties”. It said: “We expect an uptick in rental revenues, on the back of the group’s expanding asset base and planned rent increases, alongside the group’s ability to secure grants for investments in existing stock, to gradually strengthen Wheatley’s financial performance.

“Furthermore, with the considerable grant support from the Scottish government to fund development and the flexibility in the group’s plan to reprofile its development program, we anticipate that debt will increase at a modest pace, supporting the improvement of Wheatley’s interest coverage.”

The rating agency said Wheatley’s existing assets were of “solid quality”, noting that the energy performance of homes was “more favourable than sector peers” with almost 92% having an Energy Performance Certificate rating of Band C or above.

Wheatley’s rating could be raised if additional income from rents or grants secured for investment in existing stock result in improved margins, the agency said.

“We could also raise the rating if we think Wheatley’s role for, and link with, the Scottish government have strengthened, implying a higher likelihood of extraordinary support,” it added.

S&P could lower Wheatley’s rating if it saw a “material weakening” of the group’s credit metrics, for example if management was unable to control costs or if debt-funded spending on development increased “materially beyond projections”.

Lowther Homes, Wheatley’s commercial arm that provides mid-market housing and property management services, also retained its A rating from S&P.

Pauline Turnock, group director of finance at Wheatley, said: “Today’s announcement by S&P serves as further evidence of Wheatley’s position as one of the highest-rated and best-performing housing groups in the UK.

“The past year has been extremely challenging for the sector, and this credit rating demonstrates confidence in our strong financial performance and our ability to navigate uncertainty caused by broader political events.

“Importantly, it also acknowledges the exceptional efforts of our staff in providing high levels of customer service and their contributions to supporting our communities across Scotland.”