East End Homes has been flagged over the size of its board, along with exposure to interest rate volatility.
The board has 18 members, of whom eight are residents. The HCA says this structure has constrained skills based recruitment to the board. It adds EEH does not have an explicit policy for board tenure, which is potentially an area of non-compliance. The group has a G2 rating.
The group was formed in 2005 through a phased transfer of homes from the London Borough of Tower Hamlets and owns and manages about 2,200 homes for rent.
EEH has an adequately funded business plan but has two specific exposures, including the April 2016 completion deadline for its Decent Homes Standard works and a wider programme of regeneration expected to be finalised by 2017, leading to a V2 rating.
The second challenge relates to EEH’s exposure to fluctuations in interest rates, with its level of fixed-rate debt expected to fall from the current level of 94 per cent to 46 per cent by 2018.
It says: ‘EEH will need to actively manage this exposure to ensure that its base plan can accommodate an increase in variable rates (as well as variations in other macro-economic variables) and still allow it to operate within its debt facility.
‘EEH is addressing these weaknesses. It recognises the potential impact that both of these exposures could have on its key financial covenants. It is currently undertaking multi-variant testing against its lenders’ covenants to ensure that it has sufficient available headroom over the next 30 years of its business plan.’
