The Homes and Communities Agency has downgraded Central & Cecil Housing Trust over its development programme and its exit from the residential care sector.
C&C’s governance rating has been lowered to G2 according to a regulatory judgement published today. The document stated the Trust needed to “strengthen its existing risk management framework” and address “material financial exposures relating to its sales and development activity”.
C&C, who plans to withdraw from the care market in order to redevelop high-quality sheltered housing for the over 55s, has been told to ensure “its exit…is appropriately controlled” and to “develop a comprehensive asset management strategy which informs decision making across the group”.
HCA also highlighted in its judgement that there is “a high level of interdependency between the various phases of the change programme”, which would see C&C secure over 150 new units, sell substantial land and assets to balance its budget and see its income slashed by half due to the loss of residential care fee income.
HCA has concluded:
“These represent a material financial exposure and the board will need to monitor and manage C&C’s development, sale and residential care exit plans closely to ensure that the presenting liquidity risks and the risk of any financial covenant breach are adequately mitigated.”
C&C said in a statement:
“We understand and value the regulators view how we can continually improve our management of risk through strategic change. We found the IDA process to be a very positive experience and recognise our repositioning to G2 as an opportunity to work through improvements with a view to regaining G1 in the near future. We had already identified the improvements that were needed and are already some way through our action plans.”
C&C’s financial viability rating remains unchanged as “the regulator has assurance that C&C’s financial plans are consistent with, and support, its financial strategy and that it is forecast to meet its financial covenants under a reasonable range of scenarios”.
This story has been amended to include a comment from C&C.