Plymouth Community Homes announces A+ credit rating

Plymouth Community Homes (PCH) is today celebrating the release of its credit rating which sees the organisation achieving a healthy A+

The rating, carried out by global credit rating agency Standard and Poors, comes as a result of a professional analytical assessment of our financial and operating position earlier in the year.

An A+ rating is an investment grade and means an organisation has strong capacity to meet financial commitments though can still be affected by changes in economic conditions and circumstances. The risk of default for investors is very low.  

This follows the Regulator of Social Housing’s announcement last month which saw PCH improve its financial viability rating from a V2 to a V1 – indicating the housing provider’s strong financial position. This means the association has the highest possible governance and viability ratings from the Regulator.

Nick Jackson, Director of Business Services and Development, said: “Receiving an A+ credit rating demonstrates our financial security to all those with an interest in PCH and is a good rating in the housing association sector.

“We have worked continuously over the years to retain our social values whilst being more commercial in our business activities. This has enabled us to reduce costs, generate income and improve our overall financial position through refinancing, allowing us to invest more in our homes and neighbourhoods across Plymouth. This couldn’t have been achieved without the hard work, commitment and innovation of our staff team and the leadership and effective decision-making of our Board of Directors.”

In the report published today, Standard and Poors said: “In our view PCH demonstrates strong enterprise and financial profiles, driven by solid operational performance, low levels of debt, and robust liquidity.”

The rating report highlights PCH’s ‘low leverage’ (debt compared to asset values) and ‘robust interest coverage’ and predicts its margins, which are lower than average due to the organisation’s social rents being some of the lowest in the country, will ‘increase gradually’. Whilst the rating has a negative outlook this is intrinsically linked with the Sovereign rating for the U.K.

Mr Jackson explains some of the decisions and actions which, in his view, have led to the housing association’s strong financial position. “This rating is testament to our handling of the recladding of the Mount Wise Towers, now supported by Government funding, and our regeneration of North Prospect – both huge undertakings that carry financial risks.  

“The size and scale of the regeneration of North Prospect is pretty unique in England and has received local and national attention and support. Its success is evident in the number of residents choosing to remain in the area, the reduction in crime and anti-social behaviour and the sense of community we’ve been able to create through a truly mixed tenure neighbourhood.”

Mr Jackson explains that two of the five phases of North Prospect have been completed, two further phases are underway and the final phase already has financial support from Plymouth City Council and the Housing Infrastructure Fund but is currently awaiting funding decisions from Homes England in order to proceed.

“Homes England have been a great supporter and funder of North Prospect and we are hopeful they will be able to use the promised flexibility under CME to grant fund the remaining phase

“The support from our local authority, Plymouth City Council, Has been fantastic. They share our vision of a fully regenerated North Prospect and our ambitions to develop more affordable housing in the city.” explains Mr Jackson.

In its five year Strategic Business Plan, PCH outlines an ambition to build 600 new homes in Plymouth and the surrounding areas by 2022.

Mr Jackson sums up by saying: “This rating reflects our ability to bring investment into Plymouth and the surrounding areas which will enable us to fulfil our development ambitions, with the support of our trusted partners and supporters.

“The refinancing exercise we carried out in 2017 means we’ve secured favourable terms on the loans we currently have and our low gearing (the amount of debt per property we own) means that we have the financial flexibility to borrow when needed.

“As an organisation with some of the lowest social rents in the country, we’ve carefully focussed our resources on activities that will achieve the maximum benefits for our residents and the city, whilst securing our financial future.”