Sovereign Housing Association has released a performance update covering the nine-month period to 31 December 2020.
The registered landlord says it continues to prioritise its commitment to keeping residents safe while still delivering services as closely as possible to normal.
Following the increase in cases after Christmas, Sovereign took the decision to protect residents and staff by only providing emergency services.
Despite disruption, Sovereign says it has been able to make considerable progress against the objectives of its corporate plan.
Its land-lead strategy continues at pace, it has finalised the Homes and Place Standard and a guide to how a Sovereign home and place “should look and feel”, and its customer satisfaction STAR rating has risen to 83.2%.
Sovereign expects to produce over 1,000 new homes over the course of 2021.
Performance
Sovereign’s operational and financial performance has improved from Q2, with an additional 346 new homes completed during this quarter compared with 325 in the previous quarter, combining for a total of 802 new homes completed for the nine-month period.
Sales performance improved in Q3, following 183 sales completions (compared with 138 in Q2), bringing the total for the period to 378 sales completions.
This was split between 354 shared ownership first tranche sales, 20 open-market sales, and four IMR sales in the nine months to December.
Sovereign achieved a net-margin on these sales of 17.1% and an overall sales margin of 18.9%, when including fixed-asset sales.
Buyer demand remains strong, demonstrated by high levels of reservations. Of the 96 units of unsold stock, 85% are reserved.
Fixed asset sales YTD generated a surplus of £3.7m.
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The surplus increased from £43.4m to £56.6m in the quarter. Turnover and operating surplus, though, are lower than the previous year primarily due to lower unit handovers reducing unit sales, Sovereign says.
Housing fixed assets stand at £4.0bn, and the net interest expense for the period was £45.9m.
Sovereign remains in a strong financial position, with net debt of £1.9bn and available cash and committed liquidity facilities of £888m at the end of December 2020 – which it says provides sufficient liquidity to support short-to-medium term development plans.
Development
Sovereign is taking a more land-led approach to its development, and over the last few months has exchanged or completed the purchase of five land-led sites capable of providing over 400 homes – of which 319 are for affordable tenures.
These sites are a mixture of developments, with the benefit of a detailed planning consent and those on which Sovereign will be progressing through the planning system to deliver homes in line with the company’s new Homes and Place Standard.
In addition to this, Sovereign has offers accepted on a further 10 land-led sites with over 600 units, on which the provider is progressing toward an exchange of contracts and subsequently will be submitting planning applications – either working with developer partners or as standalone Sovereign-led schemes.
Credit rating and investors
Sovereign has received re-affirmation from both S&P and Moody’s credit rating agencies during Q3.
S&P Global Ratings affirmed Sovereign’s ‘A+’ rating and upgraded its outlook to ‘stable’, while Moody’s re-affirmed its rating of A2, outlook ‘stable’.
On 11 November 2020, Sovereign held its first online Annual Investor update, with the CEO, CFO, and executive director (Development and Commercial) providing an update to investors.
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