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West Midlands landlord scraps EBITDA MRI covenant as it develops largest number of homes to date
Citizen Housing Group has stopped including major repairs in its EBITDA loan covenant, as the landlord reports a bumper development year.
The Birmingham-based landlord said that covenants for bank and building society debt had “recently been refreshed”, with an EBITDA-only covenant from 2023-24 onwards.
The new loan covenant must exceed 150%. This year’s was 248.7%, marking a slight downturn from the previous period’s result of 259.8%.
Citizen did not report an EBITDA MRI result for 2023-24, but it stipulates that it “must exceed 105%”. Last year’s was 151.8%. At the same time, its capitalised major repairs totalled £40.4m in 2023-24.
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Citizen developed 653 new social and affordable homes in 2023-24, plus 50 for outright sale, which it said was the largest development programme it had “ever achieved in a single year”.
During the previous period, 571 homes were built for rent and shared ownership, and 59 for outright sale.
Citizen’s turnover increased by 5% to £192.6m year on year. It said these results were “better than budgeted” because of “revenue grant recognition” from the Social Housing Decarbonisation Fund (SHDF) and the Social Housing Quality Fund, as well as Right to Buy sales.
While its total comprehensive income had been boosted last year by £55m in gains from pension schemes, in 2023-24 Citizen reported a £3.1m loss.
As a result, the landlord’s income dropped from £78.2m to £17.8m year on year.
Its operating surplus dropped by slightly more than £1m to £48.3m, and its operating margin was 23.6%.
Citizen’s overall surplus fell from £23.1m to £19.1m, which it said was due to the effect of the fair value housing property depreciation charge.
In 2023-24, Citizen carried out more than 1,750 fire risk assessments, which in turn “generated nearly 30,000 remedial actions”.
It also capitalised decarbonisation works of £29.7m, which was £4m less than budgeted.
Coventry City Council, in partnership with Citizen, submitted a successful bid to Wave 2.1 of the SHDF for £23.9m last year to retrofit more than 2,000 homes. Work on the homes includes improving ventilation to reduce the potential for mould growth.
The social landlord also noted that it had secured new facilities with ABN AMRO, Lloyds and Nationwide during 2023-24.
Last October, Citizen was regraded by the Regulator of Social Housing from V1 to V2 due to “the significant accelerated delivery” of the landlord’s energy efficiency programme.
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