Tenants both want to renew individually

[Abbie Carr]

I've got a sticky situation I was hoping for some perspective on. 

I just (4/23) received an email in response to mine (3/31) to my tenants asking if they planned to renew next month. It stated that they (tenants 2&3) wished to renew alone.  It also informed me that tenant 1 wanted to renew alone with a SO. 

Tenant 1 was the one initially interested a year ago and was individually financially approved. He brought on the 2 roommates (who were background but not credit checked) and all 3 signed the lease. 

Although the unit is supposed to be pet-free apparently tenants 2&3 have had a cat there - though I have been there and didn't note the cat or any smell/damage. Tenant 1 is supposedly planning to move kittens in as well. 

I would be tempted to raise the price and find someone new but our rental exclusion criteria have been dramatically restricted recently so I'd like to make it work if possible. 

What would you do?