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Major landlord retains credit rating amid ‘challenging operating environment’
Large Southern housing association Abri has retained its A3 credit rating despite what it described as “a challenging operating environment”.
In explaining its financial rating of the landlord, Moody’s said its decision was a reflection of Abri’s solid liquidity, as well as its moderate gearing, which was expected to decrease below its peers.
The 35,000-home landlord, which operates across the South West and South East, was handed an A3 rating with a negative outlook by the rating agency.
This takes into account its short-term deteriorated operating performance, and its moderate exposure to market sales and elevated capital expenditure.
Moody’s declared the landlord’s management “sound”, as demonstrated by the retention of its G1/V1 rating from the Regulator of Social Housing in November 2022.
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Moody’s also pointed out that the landlord planned to simplify its structure further, especially around dormant joint ventures or companies, which it said “would be positive”.
The landlord’s negative outlook could be changed to stable if Abri was able to maintain relatively stable financial metrics over the medium term.
This could be driven by operating performance improving more than anticipated, including the ability to contain cost pressures, and reductions in development plans leading to lower debt levels than anticipated.
At the same time, a downgrade could occur for a number of reasons, including a further weakening in operating margins and interest coverage ratio, increases in debt beyond levels that are currently anticipated, or a significant deterioration in liquidity.
Vimal Gaglani, director of treasury and financial planning at Abri, said: “We’re pleased to have retained our A3 rating. This demonstrates Abri’s ability to be flexible and resilient in delivering our strategic objectives as we navigate a challenging operating environment.
“Despite the UK’s high inflation exposing Abri to weaker financial conditions, Moody’s has recognised Abri’s solid liquidity and strong market position, which will enable us to continue delivering on our commitment to provide safe, warm and sustainable homes and support our customers through the cost of living crisis.”
The landlord confirmed its intention to invest £435m in its existing homes over the next 10 years to help improve fire safety and tackle issues such as damp and mould.
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