Corporate

A2Dominion’s regulatory rating updated

The housing regulator has today announced that it has updated A2Dominion Group’s regulatory grading to G1 for governance and V2 for financial viability, following an annual stability assessment.
A2Dominion’s regulatory rating updated
A2Dominion’s regulatory rating updated
The Regulator of Social Housing reconfirmed the highest grade for Governance and a change from V1 as part of the annual review of the Group’s financial returns.

The report said: “The regulator has assurance that A2Dominion complies with the financial viability element of the governance and financial viability standard. A2Dominion’s financial plans are consistent with, and support, its financial strategy.”

It added: “As a consequence of a large and diverse development programme, A2Dominion is facing a range of risks and a high level of exposure to sales” and “still retains capacity to deal with downside risk, but this capacity has been reduced”.

According to recent reports, the regulator has re-graded a large number of associations’ viability ratings from V1 to V2 over the past 18 months, due to the providers taking on more risk to cross-subsidise social and affordable housing delivery through open-market activity.

Darrell Mercer, A2Dominion’s Chief Executive, said: “We recognise that having one of the sector’s largest development pipelines comes with a certain amount of risk, but we have a strong risk management framework in place to support this activity.

“We have also retained our G1 rating for governance and are confident of our resilience to effectively manage any adverse impact, whilst ensuring continued compliance with the regulator’s standards.

“We nonetheless remain committed to building private homes for sale as a means to cross-subsidising the development of new affordable housing. As a result, we now have our largest ever development programme with 7,800 homes in the pipeline, helping us to continue to meet a wide range of housing needs.”

A2Dominion achieved a surplus of £92.5m in 2018 and an operating margin of 33%. It also retained its Fitch A+ credit rating, one of the highest in the sector.

For the full report from the Regulator of Social Housing see here.