Defence Housing Australia

The negative outlook on DHA reflects that of Australia and our expectation that DHA will remain the government's primary provider of accommodation for ADF personnel. While the role of DHA will continue to evolve over time, we expect it to remain very important to the government. We could lower the ratings if the same were to occur for the sovereign ratings, or if we consider DHA's very important role or integral link with the government to have weakened. This worsening 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 Australian government and its strategic importance to Defence will continue to underpin its credit quality. The strong credit quality of, and stable revenue streams from, the federal government mitigates DHA's tenant concentration to government entities. DHA will continue to play a pivotal role in providing housing and the administration of key home ownership initiatives for the Department of Defence. Somewhat offsetting DHA's strong competitive position is its exposure to a single-asset class, and the cyclical residential market conditions. DHA is mandated by the Australian government to provide housing accommodation in locations required by Australian Defence Force (ADF) personnel. DHA has recently developed sustainable projects in connected, central locations such as Alexandria, New South Wales. DHA sold half of the apartments to private buyers to increase resident diversity and improve the return on its investments....

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