Defence Housing Australia

The stable outlook on DHA reflects that on the Commonwealth of Australia and our expectation that DHA will remain the government's primary provider of accommodation for ADF personnel. While DHA's role will continue to evolve over time, we expect it to remain very important to the government. We could lower that ratings if the same were to occur to the sovereign ratings, or if we consider DHA's very important role or integral link with the government to have weakened. This could occur if changes to the service agreement or revised financial arrangements placed DHA at greater arms-length from the Australian government. All else being equal, a worsening of the 'bbb+' stand-alone credit profile (SACP) to 'bb' would need to occur

... service agreement with the Commonwealth of Australia underpins its credit quality. The strong credit quality of, and stable revenue streams from, the government mitigates DHA's tenant concentration to the government. Somewhat offsetting DHA's strong competitive position is its exposure to a single-asset class, limited control over development exposure, and the mixed residential market conditions. DHA is mandated by the Commonwealth of Australia to develop housing accommodation in locations required by Australian Defence Force (ADF) personnel. This may not necessarily be in favorable residential markets. We expect DHA to diversify away from its sale-and-leaseback program. DHA's recent capital management review and subdued conditions in some of DHA's key markets are likely to reduce DHA's reliance on sale-and-leaseback arrangements....

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