In its December 2020 "Global Social Housing Risk Indicators" article, S&P Global Ratings gives comparative statistics for the 82 rated social housing providers in the U.K. (42), the U.S. (24), Sweden (6), France (3), Germany (3), Australia (1), Canada (1), The Netherlands (1), and New Zealand (1). Nearly 90% of global social housing association ratings maintain a stable outlook despite a slight deterioration in credit metrics that resulted in five downgrades since our July 2020 publication. Housing associations globally are increasing their debt levels to take advantage of low interest rates and build stronger liquidity positions in a time of uncertainty.

Since our most recent publication on July 14, 2020, we have taken 16 rating actions, including two new ratings in Germany and one new rating in the U.S., offsetting the withdrawal of one rating in Sweden at the issuer's request and one withdrawal in the U.K. based on a merger. In the U.K., there were also five downgrades, three negative outlook revisions, and one stable outlook revision. Housing associations in the U.K. continue to face headwinds from COVID-19-induced delays to planned development, lower margins on open market sales and the need to invest in existing stock. The remaining two rating actions were outlook changes in the U.S.

In the U.S., higher federal funding and access to grants have helped offset the costs of increased maintenance expenditure and kept ratings stable. The revision to positive from stable of one U.S. public housing association came from improving credit metrics from revenue diversification and cost savings, while another U.S. entity outperformed our forecast, so we revised our outlook on it to stable from negative. Unlike its peers, the U.S. market witnessed stable leverage metrics on a whole as many PHAs balance refinancing legacy debt with accessing capital markets to finance their development and redevelopment needs.

For Sweden and the rest of the world (France, Australia, Canada, Germany, The Netherlands, and New Zealand) higher ratings are driven by high levels of government support and limited exposure to sales activity.

Table 1

Table 2

Table 3 contains ratings and outlooks on social housing providers as well as indicators for our assessment of their industry risk, economic fundamentals and market dependencies, asset quality, and operational performance. Table 4 contains indicators of their financial performance, debt profile, and liquidity, as well as our assessment of the likelihood of extraordinary government support that social housing providers may receive in case of financial distress.

We explain the reported concepts in the glossary. The data are as of Nov. 30, 2020.

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

Table 3

Table 4

Glossary Of Terms

Adjusted EBITDA:  Earnings before interest income, interest expense, income taxes, depreciation and amortization, and asset impairment less capitalized repairs.

Annual population growth (%):  Percentage increase in population in the main area of operation.

Average age of the portfolio:  The average age of the housing stock owned by the entity.

Average general needs rent as a percentage of market rent:  (Average social rent including service charges & affordable rent in main area(s) of operation) to (market rent in main area(s) of operation).

Liquidity sources to uses:  (Cash available from various sources over the next 12 months) to (expected uses over next 12 months). Cash available from various sources includes:

• Forecast cash generated from continuing operations excluding working capital movements, if positive;
• Cash and liquid investments;
• Forecast working capital inflows, if positive;
• Proceeds from asset sales;
• The undrawn, available portion of committed bank facilities or bank lines maturing beyond the next 12 months and which can be drawn; and
• Expected ongoing cash injections from a government or group member as appropriate.

Expected uses over next 12 months include:

• Forecast cash generated from continuing operations, if negative;
• Forecast working capital outflows excluding working capital movements, if negative;
• Expected capital expenditure; and
• All interest and principal payable on short- and long-term debt obligations coming due.

Proportion of revenue from low-income activity:  (Revenue derived from the social housing provider's core service, that is, very largely submarket rentals, which we see as a traditional activity, as opposed to, for example, sales revenue,) to (total revenue generated by the social housing provider [at the group level, if applicable]).

No. of units owned and managed:  The size of the stock of units owned and managed by the social housing provider (at the group level, if applicable).

Vacancy rates:  (Rent loss due to empty units at a particular time corresponding to the average of the past three years) to (the net rental income generated by the social housing provider [at the group level, if applicable]).

Related Criteria

• Group Rating Methodology, July 1, 2019
• Rating Government-Related Entities: Methodology And Assumptions, March 25, 2015
• Methodology For Rating Public And Nonprofit Social Housing Providers, Dec. 17, 2014
• Key Credit Factors For The Homebuilder And Real Estate Developer Industry, Feb. 3, 2014
• Methodology: Industry Risk, Nov. 19, 2013
• Country Risk Assessment Methodology And Assumptions, Nov. 19, 2013
• Principles Of Credit Ratings, Feb. 16, 2011

• Stand-Alone Credit Profiles: One Component Of A Rating, Oct. 1, 2010

Related Research

• Global Social Housing Ratings Score Snapshot: December 2020, Dec. 10, 2020
• Outlook 2021: Strong Liquidity Should Help Social Housing Providers Remain Resilient, Dec. 8, 2020
• United Kingdom 'AA/A-1+' Ratings Affirmed; Outlook Stable, Oct. 23, 2020
• Economic Research: COVID-19 Deals A Larger, Longer Hit To Global GDP, April 16, 2020
• COVID-19: Emerging Market Local Governments And Non-Profit Public-Sector Entities Face Rising Financial Strains, April 6, 2020
• U.K. Social Housing Ratings History: February 2020, March 3, 2020
• Why Most Rated U.K. Social Housing Providers Are At Home In The 'A' Category, Dec. 3, 2019