DBRS Confirms Plenary Health Bridgepoint LP at “A”

DBRS Limited (DBRS) has today confirmed its rating of “A” with a Stable trend on the Senior Amortizing Bonds (Series A) of Plenary Health Bridgepoint LP (ProjectCo), the special-purpose entity created to design, build, finance and maintain a new 472-bed hospital and refurbish the adjacent old Don Jail for administrative purposes under a 33.6-year Project Agreement (PA) with Bridgepoint Hospital (BH or the Hospital), one of Ontario’s largest complex care institutions.

The Project concluded all construction activities and reached Final Completion on October 27, 2015, which comes 32 months after achieving Substantial Completion. While it is unusual for Final Completion to be prolonged for such an extended amount of time, there were certain variations issued by the Hospital that prevented ProjectCo from achieving Final Completion sooner. With the conclusion of the construction phase, ProjectCo has paid the DB Contractor in full, all lien holdbacks have been discharged and the $12 million LC which was held as security for meeting the requirements of Final Completion will be returned to the DB Contractor.

The Project, which is now in its 34th month of operations, has been performing well with no major operating concerns. ProjectCo indicated that Johnson Controls LP (JCLP or the Service Provider) continues to accomplish its FM and lifecycle responsibilities as Service Provider to a high standard. ProjectCo has noted that JCLP maintains a good working relationship with the Hospital. DBRS does not expect any significant changes in operations of the facilities for the upcoming year.

Availability payments have been steady and as expected without major penalties incurred. Energy consumption targets continue to be met, and ProjectCo indicated that no painshare adjustments have been imposed. So far in 2015 there have been deductions and failure points attributable to elevator availability failure events. The deductions were fully passed down to JCLP. The deduction levels were nominal and the failure points were well below the thresholds set out under the PA. DBRS notes that the incidents are isolated.
ProjectCo’s financials have been tracking closely to initial projections. As of August 2015, ProjectCo achieved a DSCR of 1.23 times on a trailing 12 months basis. ProjectCo continues to meet its financial obligations. The Project continues to maintain an FM resiliency of 78% and lifecycle resiliency of 87%, which are supportive of the rating. The six-month debt service reserve and the performance security provided by the Service Provider afford a modest cushion against unforeseen events during the service phase.

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

The related regulatory disclosures pursuant to the National Instrument 25-101 Designated Rating Organizations are hereby incorporated by reference and can be found by clicking on the link to the right under Related Research or by contacting us at info@dbrs.com.

This rating is endorsed by DBRS Ratings Limited for use in the European Union.

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

The full report providing additional analytical detail is available by clicking on the link under Related Research at the right of the screen or by contacting us at info@dbrs.com.