DBRS Confirms Hospital Infrastructure Partners (NOH) Partnership at A (low) with a Stable Trend

DBRS Limited (DBRS) has today confirmed the rating of the Series A Senior Secured Bonds of Hospital Infrastructure Partners (NOH) Partnership (ProjectCo) at A (low) with a Stable trend. ProjectCo is the special-purpose entity created to design, build, finance and maintain a new 1.6 million square foot hospital facility in the Town of Oakville, Ontario, under the 34-year project agreement (PA) with Halton Healthcare Services Corporation (the Hospital). The trend is Stable, indicative of the on-time completion of construction and a transition to the service phase.

The design-build joint venture, to whom all material construction-related tasks were passed down, consists of EllisDon Corporation (EllisDon) and Carillion Construction Inc. The project achieved Substantial Completion on the target date of July 31, 2015. The conditions for occupancy have been satisfied and the grand opening of the Hospital occurred on December 13, 2015. Under the PA, ProjectCo is required to achieve LEED Silver certification for the facility within two years of Substantial Completion.

The completion of the facility marked the beginning of the 30-year operating phase, during which an experienced service provider jointly owned by Carillion Canada Inc. and EllisDon (the Service Provider) will perform all facilities management services, including lifecycle, on behalf of ProjectCo. The PA features a bedding-in period of three months to allow the Service Provider to acclimatize to its new role, during which deduction levels for quality and service failures will be reduced. The bedding-in period started right after Substantial Completion.

Financial projections for the service phase remain unchanged, with a debt-to-cash flow available for debt servicing ratio of 11.3 times projected in the first year of operation, and a debt service coverage ratio of 1.25 times anticipated over the project’s term — both ratios are in the standard range for an “A”-range bond-financed public-private partnership in recent years.

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.

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

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

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.