It’s A+ again… CKH’s rating affirmed as ‘A+’ and stable
May 22, 2020
Thanks to its strong financial management, experienced and professional management team and prudent financial policies, Cross Keys Homes (CKH) has retained it’s A+ rating from Standard and Poor’s Global Ratings (S&P), along with its stable outlook for the fourth time. The leading regional housing association is proud to remain in the top tier of rated social landlords, despite operating in a challenging climate.
The S&P report noted although it is anticipated that the COVID-19 pandemic, combined with a higher cost base, will strain profitability at CKH over the three forecast years to March 2023, they expect average EBITDA margins will remain above 30 per cent of revenue.
At the same time, S&P affirmed their ‘A+’ issue rating on the £250 million bond which was first issued in September 2014 by Cambridgeshire Housing Capital PLC, CKH’s funding vehicle. Cambridgeshire Housing Capital PLC was set up for the sole purpose of issuing bonds and lending the proceeds to CKH, and is viewed as a core subsidiary of the CKH group.
S&P consider CKH’s Directors team to be well-established and experienced multidisciplinary professionals who are maintaining the solid performance of the organisation through the austerity years. They also note that the company’s investment in technology to improve service provision has offered cost-efficiency benefits during the period of rent cuts.
CKH benefits from its chosen geographic coverage, as the areas it has been long established in and its growth areas are located in the east of England, where rising market rents have created affordability challenges for local residents, resulting in high demand for social housing. Meanwhile, its strong performance in managing vacant properties has resulted in very low vacancy rates at about 0.6 per cent of rental income – one of the lowest in S&P’s rated social housing portfolio.
Even in areas where risk is higher – such as first tranche shared ownership sales – CKH has established a strong track record, thanks to its strong performance and the generated demand for below-market-rate housing in the areas it operates and a rise in availability of shared ownership mortgage products. Despite margins from shared ownership sales coming under pressure across the sector, CKH has maintained strong and steady margins at 35 per cent.
Claire Higgins, Chief Executive of CKH, said: “We are absolutely thrilled to have retained our A+ rating, particularly in such trying times. Our Board, Directors and employees across the company have shown exceptional fortitude to ensure we react with both prudence and agility to the ever changing landscape in which we work.
“We are continuing to work hard 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. And now, more than ever, we are seeing the importance of the community commitment shown by housing associations such as ourselves in ensuring the most vulnerable in society are protected.”