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Non-U.S. Social Housing Providers Ratings Risk Indicators: November 2023


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Table Of Contents: S&P Global Ratings Credit Rating Models

Non-U.S. Social Housing Providers Ratings Risk Indicators: November 2023

In this article, S&P Global Ratings provides comparative statistics for the 62 rated social housing providers (SHPs) in the U.K. (42), Germany (9), Sweden (4), France (4), Canada (1), Netherlands (1), and New Zealand (1).

Over the past 12 months, the number of rated SHPs has edged down to 62 from 63. We assigned two new ratings in Germany and withdrew one rating in Australia at the issuer's request and one in the U.K. following a merger. In addition, one U.K.-based SHP became a subsidiary of another. We took 27 rating actions over the same period, mainly due to economic and regulatory conditions that continue to put pressure on the creditworthiness of the non-U.S. SHPs.

The rating actions have predominantly been on the U.K. SHPs. We saw eight downgrades, two of which were on the same SHP, and revised two outlooks to negative. We had two upgrades, one of which was due to the SHP becoming a subsidiary of another SHP. We also had two outlook revisions to positive from stable, and three outlook revisions to stable from negative. We placed two ratings on CreditWatch with negative implications, both due to proposed mergers. We resolved one of these by affirming the rating with a stable outlook when the merger talks ceased, and the other by withdrawing the rating when the merger completed.

In France, we had an upgrade and a downgrade, while two SHPs have negative outlooks linked to the negative outlook on France (see "France Outlook Revised To Negative On Rising Budgetary Risks; 'AA/A-1+' Ratings Affirmed," published Dec. 2, 2022). We revised the outlooks to negative from stable on a German and a Swedish SHP due to pressure on their respective financial indicators.

While we still think that our ratings on the non-U.S. SHPs are likely to remain largely within the 'A' category, there is a slight bias toward the weaker end (see chart 1). There is also a large proportion of negative outlooks (30%), four of which are on 'A-' ratings, so there is a risk that we could downgrade more SHPs to the 'BBB' category over the next two years (see chart 2).

Ten of the 26 U.K. SHPs that we rate at 'A' or above have negative outlooks, and so we could see ratings slip among this group. This could be the case if, contrary to our expectations, inflation and interest rates remain persistently high over the next two fiscal years, and management is unable to take corrective measures (see "U.K. Social Housing Providers' Credit Headroom Could Tighten If The Operating Environment Deteriorates," published Oct. 4, 2023).

Of the non-U.S. SHP ratings, 65% have a stable outlook, which is an improvement from March 2023, when we last published our ratings risk indicators, and when only 60% had a stable outlook (see chart 2). The addition of ratings with a stable outlook has reduced the negative bias somewhat, and two outlook revisions to stable from negative in the U.K. occurred alongside downgrades.

Following a negative outlook revision on the U.K. just over a year ago, we revised the outlooks on eight SHPs to negative. While we revised the outlook on the U.K. back to stable on April 21, 2023, we lowered the ratings on three of the eight SHPs due to weaker intrinsic creditworthiness. We revised the outlooks on two others to stable to reflect strengthening financial indicators. We have kept the negative outlooks on the remaining three U.K. SHPs, reflecting our view that large investments in their existing homes, higher interest rates, and cost inflation could weaken their financial indicators beyond our expectations.

Only two of the outlook revisions back to stable from negative among the U.K. SHPs reflected stronger financial indicators, supporting a more positive reassessment of their management and governance. This, in turn, led to an upward revision of their stand-alone credit profiles (SACPs) and, in one case, an upgrade. Because of the pressures across the sector, we believe that SHPs' management and governance practices are increasingly important to ensure solid financial performance, cash flow generation, and debt metrics, as well as the long-term viability of the business.

Chart 1


Chart 2


Below, we provide comparative statistics for each rating, showing how our assessment of financial performance, the debt profile, and liquidity correlate with the different ratings.

We consider that a non-U.S. SHP's financial performance, measured by the consolidated group's S&P Global Ratings-adjusted EBITDA margin, is a solid indicator of creditworthiness and underpins the rating (see chart 3). Non-U.S. SHPs rated 'AA-' typically have adjusted EBITDA margins of close to 35%, gradually declining to an average of just over 20% for the 'A-' rated entities. However, the difference between the lowest and highest adjusted EBITDA margins at each rating increases with the rating.

Chart 3


The stronger the SHPs' debt metrics, the greater the likelihood of them having a higher rating (see chart 4). Most 'AA-' rated entities have a debt-to-nonsales adjusted EBITDA ratio of 15x or below, gradually deteriorating to about 25x for entities rated 'A-', and to more than 35x on average for entities rated in the 'BBB' category. Equally, the 'AA-' rated entities have very strong adjusted nonsales EBITDA interest coverage of 4.5x on average, typically because their debt funding comes from their respective government and local authority at low interest rates. The interest coverage ratio falls to 1.2x for entities rated at the lower end of the 'A' category, and below 1.0x on average for the group of entities rated in the 'BBB' category.

Chart 4


Our assessment of the SHPs' liquidity ratios does not have the same correlation with the ratings as the debt ratios (see chart 5). This is mainly because the entities that we rate 'AA-' typically have lower liquidity coverage, offset by strong ties with their respective government or local authority, which either provides ongoing liquidity support, or would likely provide extraordinary support in a case of need. Otherwise, liquidity coverage remains solid across our non-U.S. SHPs, supported by an average liquidity ratio of 2x, unchanged since March 2023.

Chart 5


Table 1 contains our ratings and outlooks on SHPs, as well as indicators for our assessment of their market dependencies, financial performance, debt profiles, and liquidity. We calculate the ratios as a five-year average, including two historical years, the current year, and two forecasted years. The data is as of Oct. 31, 2023.

Because non-U.S. providers of social housing have a public policy role and strong ties with governments, the issuer credit ratings on these entities combine our assessment of an SACP and the likelihood of extraordinary government support. In the case of SHPs, the application of our criteria for government-related entities (GREs) may raise the final issuer credit rating relative to the SACP. (For more detail on our GRE methodology, see "Rating Government-Related Entities: Methodology And Assumptions," published March 25, 2015.)

Table 1

Non-U.S. social housing risk indicators
Country Entity Name Issuer credit rating, long-term local currency Outlook Number of units owned and managed Average general needs rent as % of market rent Vacancy rates (%) Adjusted EBITDA / adjusted operating revenue (%) Debt / adjusted nonsales EBITDA (x) Adjusted nonsales EBITDA / interest (x) Liquidity ratio (x)

Toronto Community Housing Corp.

AA- Stable 54,841 37 2.3 24.2 10.9 2.4 1.7

Grand Delta Habitat

A Stable 38,587 43 4.1 32.2 26.8 2.5 1.0

Maisons & Cites S.A. d'HLM

A+ Stable 64,839 56 8.6 43.2 16.8 3.5 1.6


AA- Negative 8,403 67 2.2 42.4 12.0 2.7 1.3

Toulouse Metropole Habitat O.P.H.

A+ Negative 18,968 59 2.8 27.8 27.4 2.0 1.6

Berlinovo Immobilien Gesellschaft mbH

A- Stable 29,808 80 4.1 29.4 18.4 2.4 2.7

degewo AG

A+ Positive 81,075 91 2.2 41.8 13.8 6.3 1.4

GBG Mannheimer Wohnungsbaugesellschaft mbH

A+ Negative 19,420 84 1.1 20.4 19.3 3.3 1.4


A Stable 43,088 84 0.7 34.9 9.4 8.9 1.5

Gewobag Wohnungsbau-AG Berlin

A Stable 75,911 90 2.0 34.0 24.9 2.7 1.9

GEWOFAG Holding GmbH

AA- Stable 38,060 54 0.2 32.5 16.9 3.7 2.5


A Stable 76,560 89 1.8 42.2 18.3 4.2 1.1

Nassauische Heimstätte Wohnungs- Und Entwicklungsgesellschaft Mit Beschränkter Haftung

A+ Stable 60,262 84 2.5 28.2 15.1 4.1 1.4

Wohnungsbau Ludwigsburg

A- Stable 2,506 80 3.2 23.5 28.1 2.5 1.1

Stichting Stadgenoot

AA Stable 35,269 40 2.7 41.1 14.7 1.9 1.7
New Zealand

Kainga Ora-Homes and Communities

AAA Stable 69,509 47 2.0 24.1 28.3 1.8 1.0

AB Stangastaden

AA- Stable 18,437 N.A. 1.1 26.9 9.7 6.4 1.3

Fastighets AB Forvaltaren

AA- Stable 6,646 N.A. 1.8 23.1 12.8 6.0 1.2

Forvaltnings AB Framtiden

AA- Negative 75,767 N.A. 1.5 19.7 16.9 3.8 1.1

Stockholms Kooperativa Bostadsforening

AA- Stable 8,355 N.A. 0.2 40.0 12.0 4.0 1.3
United Kingdom

Accent Group Ltd.

A Stable 20,689 59 1.2 22.4 20.4 1.5 2.2

Anchor Hanover Group

A+ Stable 54,753 76 0.9 11.8 12.5 2.0 1.9

Apex Housing Association Ltd.

A- Stable 7,331 62 1.0 18.7 28.7 1.1 1.6

Aster Group Ltd.

A+ Negative 36,414 58 1.0 26.4 18.4 1.7 1.9

bpha Ltd.

A+ Stable 19,757 60 1.0 36.2 17.4 1.4 2.1

Bromford Housing Group Ltd.

A+ Stable 46,437 54 1.3 32.0 17.0 1.7 1.9

Chelmer Housing Partnership

A- Stable 11,522 54 1.2 28.7 21.9 1.0 2.3

Clarion Housing Group Ltd.

A- Stable 124,777 50 1.7 21.8 23.3 1.2 2.5

ClwydAlyn Housing Ltd

A Stable 6,390 62 2.9 20.2 23.7 1.3 1.7

Cross Keys Homes Ltd.

A Positive 12,538 60 0.7 29.6 18.7 1.2 1.6

East Midlands Housing Group Ltd

A+ Negative 21,795 66 1.5 28.0 16.2 1.3 2.5

Futures Housing Group

A+ Negative 10,502 65 1.2 22.0 22.4 1.3 2.0

Gentoo Group

A- Stable 29,700 69 1.6 15.4 21.8 0.9 2.5

Guinness Partnership (The)

A- Stable 64,709 61 0.8 19.1 21.3 1.1 2.1

Hexagon Housing Assocation Limited

BBB+ Stable 4,492 39 1.6 23.8 30.8 1.3 2.2

Home Group Ltd.

A- Stable 56,200 64 2.9 15.1 21.7 1.2 1.7

Housing 21

A- Stable 22,885 67 3.0 11.6 24.9 1.0 1.5

Housing Solutions

A+ Stable 6,389 50 1.3 38.4 16.4 1.3 2.3

Hyde Housing Association Ltd

A Negative 43,972 48 0.5 18.2 28.6 1.0 2.5

Incommunities Group Ltd.

A Negative 22,672 65 1.5 17.0 18.2 1.6 2.7

Karbon Homes Ltd.

A Positive 31,771 79 1.8 24.3 12.4 2.0 2.0

Lincolnshire Housing Partnership Ltd.

A- Negative 12,571 71 2.1 14.5 24.2 1.2 2.9

Link Group Ltd.

A Stable 15,057 75 0.8 23.3 19.1 1.7 1.6

Local Space

AA- Negative 2,798 81 0.2 58.4 15.1 1.8 1.7

London & Quadrant Housing Trust

A- Negative 108,326 46 2.3 17.4 40.8 0.8 2.3

Metropolitan Thames Valley

A- Negative 56,947 50 1.3 21.7 24.6 1.0 1.8

Notting Hill Genesis

A- Stable 67,110 53 1.6 22.6 22.8 1.0 2.1

Octavia Housing

BBB Negative 5,384 47 1.6 14.1 37.2 0.7 4.0

Paradigm Housing Group Ltd.

A+ Stable 16,237 60 0.8 34.8 21.4 1.3 1.9

Paragon Asra Housing Ltd.

BBB+ Stable 23,993 62 2.5 18.6 41.4 0.7 1.7

Peabody Trust

A- Negative 107,449 50 1.5 17.5 31.1 0.8 2.4

Places for People Group Ltd.

A- Stable 240,129 52 1.4 20.5 21.2 1.1 1.8

Platform Housing Group Ltd.

A+ Stable 47,980 69 1.4 37.4 14.2 2.1 2.2

Plymouth Community Homes Ltd.

A+ Stable 16,180 49 0.6 16.5 10.8 3.4 2.7

Richmond Housing Partnership

A+ Negative 11,142 43 1.4 19.5 20.4 1.5 5.0

Sanctuary Housing Assn.

A Negative 119,695 50 1.5 19.4 21.5 1.1 1.3

Sovereign Housing Association Ltd.

A+ Negative 62,190 60 1.5 30.1 17.7 1.6 1.6

Stonewater Ltd.

A Negative 36,981 64 0.9 30.5 19.7 1.5 1.9

Thrive Homes Ltd.

A+ Stable 5,780 55 1.0 37.0 18.8 1.3 3.0


A Stable 34,325 58 1.4 32.4 17.0 1.6 1.6

Wheatley Housing Group Ltd.

A+ Stable 64,977 57 1.2 22.5 19.1 1.4 1.7

Wrekin Housing Group Ltd.

A Stable 13,941 64 1.3 26.0 22.2 1.3 1.5
Source: S&P Global Ratings.

Related Criteria

Related Research

This report does not constitute a rating action.

Primary Credit Analyst:Karin Erlander, London + 44 20 7176 3584;
Secondary Contacts:Felix Ejgel, London + 44 20 7176 6780;
Noa Fux, London + 44 20 7176 0730;
Additional Contacts:Mahek Bhojani, London +44 2071760846;
Abril A Canizares, London + 44 20 7176 0161;
Tim Chow, CFA, London +44 2071760684;
Sabine Daehn, Frankfurt + 49 693 399 9106;
Freja L Dobreff, Stockholm +46 84405938;
Ekaterina Ermolenko, Stockholm 46 708 770 286;
Adam J Gillespie, Toronto + 1 (416) 507 2565;
Rebecca Hrvatin, Melbourne + 61 3 9631 2123;
Matthew R Hyde, London +44 20 71760456;
Stefan Keitel, Frankfurt + 49 693 399 9254;
Natalia Legeeva, London 44 20 7176 0618;
Dennis Nilsson, Stockholm + 46 84 40 5354;
Carl Nyrerod, Stockholm + 46 84 40 5919;
Etienne Polle, Paris (+33) 01 40 75 25 11;
Didre Schneider, Frankfurt +49 69 33 999 244;
Colleen Sheridan, London +44-20-7176-0561;
Hugo Soubrier, Paris +33 1 40 75 25 79;
Michael Stroschein, Frankfurt + 49 693 399 9251;
Eileen X Zhang, CFA, London + 44 20 7176 7105;

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