Large landlord’s interest cover hit by damp and mould costs

EBITDA MRI is regarded as a key indicator of a landlord’s liquidity and investment capacity. The figure measures a provider’s surplus, excluding asset sales, compared to its interest payments. 

Across the sector, landlords have been reporting a drop in their EBITDA MRI cover as they grapple with extra repairs and maintenance costs.

Last month, 49,000-home landlord Platform revealed that its interest cover figure had fallen from 187 per cent in its 2022-23 financial year to 129 per cent. 

Analysis of accounts for the 2022-23 year by the regulator showed that interest cover among England’s largest registered providers had fallen to their lowest level since 2010.

Orbit’s latest accounts showed that its spending on repairs and maintenance jumped by a third year-on-year to £119.4m. 

However it flagged that 86 per cent of its homes now have an Energy Performance Certificate of Band C or above, which meets a government-set target for 2030. 

Orbit, which operates across the Midlands, the East of England and South East, completed 870 homes in its most recent year, a fall of 31 per cent on last year’s figure of 1,257. 

Overall, the Coventry-based landlord reported a 39 per cent drop in post-tax surplus to £54.9m in its 2023-24 financial year. 

The group’s operating cost rose by £26.7m to £213m, while its turnover fell by seven per cent to £391.1m. 

Its overall operating margin dropped to 22.7 per cent, a fall of 2.4 per cent year-on-year.

Orbit said this was due to “inflationary cost pressures as experienced by the wider sector”, extra spending on homes and “slightly reduced property sales margins reflecting the rising cost to build”. 

Jonathan Wallbank, group finance director at Orbit, said: “In this challenging economic environment our financial delivery has remained solid.”

In March, Orbit retained its G1/V2 rating with the regulator. It has an A3 ‘stable’ credit rating with Moody’s. 

Looking ahead, the group is aiming to build around 5,700 homes over the next six years as part of its wider corporate strategy.

Two years ago Orbit announced that it had ended merger talks with troubled landlord Swan. The non-compliant Essex-based group was subsequently taken on by Sanctuary as a subsidiary.