DBRS Confirms Plenary Health Care Partnerships Humber LP at “A”, Stable

DBRS has today confirmed the rating of “A” with a Stable trend on the Short-Term Senior Bonds, the Series A Long-Term Senior Bonds, and the Series B Long-Term Senior Bonds (collectively, the Bonds) of Plenary Health Care Partnerships Humber LP (ProjectCo). ProjectCo is a special-purpose entity created to design, build, finance and maintain a new 1.7 million square foot hospital facility in northwestern Toronto, Ontario, under a 33.6-year project agreement (PA) with Humber River Regional Hospital (HRRH or the Hospital).

To date, construction has progressed on schedule to meet substantial completion by May 11, 2015 (the Substantial Completion Date). Minor delays have been encountered arising from unexpected contaminated soil and the presence of unsuitable fill material; however, these delays are expected to be made up for during construction of the structural elements of the project and have not affected the critical path construction schedule. All major structural permits with regard to the foundation and structure have been obtained and design development drawings have been submitted as required. Contracts representing approximately 90% of the value of the work to be subcontracted have been entered into. Despite some challenges, mostly with respect to equipment, ProjectCo’s relationship with the Hospital remains positive. The Technical Advisor (TA; BTY Group) has opined that the project can be completed on budget by the Substantial Completion Date.

The facility has been designed to be the first fully digital hospital in the region. It will be split into two components, including a three-storey structure and a 14-storey structure on separate points of the site. The facility will accommodate 656 beds and have two parking garages providing approximately 2,000 parking spaces in total. All design, construction and commissioning obligations have been passed down under a fixed-price date-certain contract to PCL Constructors Canada Inc. A 30-year operating phase will commence upon substantial completion being achieved. All risks and responsibilities pertaining to core facility management and lifecycle maintenance will be assumed by Johnson Controls LP, for the full 30-year term. Financial projections for the service phase remain unchanged, with a debt-to-cash flow available for debt servicing ratio of 11.8 times projected in the first year of operation and a debt service coverage ratio of 1.25 times foreseen over the project’s term.

Notes:
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.