Defence Housing Australia

The stable 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 evolve, 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 arm's 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 before a downward

... service agreement with the Australian government and its strategic importance to the Department of Defence (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 ADF. Development and construction risks associated with DHA's development pipeline are somewhat offset by its track record of successfully executing and utilizing its existing land bank. DHA's recent track record of developing sustainable projects in well served, central locations such as Alexandria and Ermington in New South Wales is partially mitigating the risk of construction and project execution. The ability to develop using DHA's sizeable pool of land sites also enhances its return on capital. DHA's renewed...

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