DBRS Confirms Ratings of Plenary Properties LTAP LP at “A,” Stable Trends

DBRS has today confirmed its ratings of “A,” with Stable trends, on the Short-Term Senior Bonds and the Long-Term Senior Bonds of Plenary Properties LTAP LP (ProjectCo), the special-purpose entity created to design, build, finance, maintain and provide IT and lifecycle services to the Communications Security Establishment Canada (CSEC) Long-Term Accommodation Project (LTAP) under a 33.5-year Project Agreement (PA) with the Government of Canada (the Crown) as represented by Defence Construction Canada (1951) Ltd. The new facility, referred to as the LTAP facility, will consolidate all services currently provided at several separate locations by CSEC, Canada’s foreign intelligence and national cryptologic agency.

Construction began in February 2011 and remains on schedule to reach the July 31, 2014, target substantial completion date, with approximately 25% of the project completed, as measured by fees earned by the design-build contractor, PCL Constructors Canada Inc. (DB Contractor), a subsidiary of PCL Construction Group Inc. (PCL). The secure contractor site was established in June 2011, and all systems are operational. Work has also advanced smoothly, with contractual milestones achieved to date. Bulk excavation for the data centre and the LTAP building were finalized in September 2011, and the foundations are now completed in most areas. The parking garage structure was completed on November 1, 2011, and the Crown has since assumed operational responsibility. Design work is advancing as planned and the next contractual design milestone, 100% of LTAP core and shell design drawings, is targeted for completion in January 2012. Most major subcontracts have been locked in, representing about 85% of construction costs. The adjacent Mid-Term Accommodation Project (MTAP) facility was completed in September 2011 and was turned over to ProjectCo by the Crown in November 2011. Honeywell has assumed operational responsibility for the facility as per the PA. No major concerns have been raised by the technical advisor, BTY Group, regarding the construction of the overall project or the operations of the MTAP facility.

PCL has completed a total of $207 million of construction work for the period ending November 28, 2011. The project is tracking closely to the original budget, with the total cost still expected to remain at $833 million plus approved variations, which will be absorbed into the current construction schedule.

To secure its performance, the DB Contractor has provided a 50% parent guarantee and a 5% letter of credit and has insured the performance of all its subcontractors with Subguard, except for mechanical and electrical subtrades, which have been bonded. The whole project is also wrapped under a 50% performance bond.

Facilities management services have started being delivered at the MTAP facility, and will continue until its full integration with the completed LTAP facility. Key service responsibilities include customary routine and lifecycle maintenance as well as fairly comprehensive IT and security services. Ancillary services such as help desk, energy consumption management and food services are also part of the scope of services. Financial projections for the service phase remain consistent with the financial model and adequate for the rating.

Note:
All figures are in Canadian dollars unless otherwise noted.

The applicable methodology is Rating Canadian Public-Private Partnerships, which can be found on our website under Methodologies.