DBRS Confirms Hospital Infrastructure Partners (NOH) at A (low), Stable

DBRS has today confirmed the rating of the Series A Senior Secured Bonds (the 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 1.8 million square foot hospital facility in Oakville, Ontario, under the 34-year project agreement with Halton Healthcare Services Corporation.

Construction has progressed on track to meet the Scheduled Substantial Completion Date of July 31, 2015. As of the time of last technical advisor report (June 30, 2013), the design-build joint venture, consisting of EllisDon Corporation and Carillion Construction Inc. (the Construction Contractor), had logged 20 variation enquiries, including six variation confirmations having no cost or schedule impact. As measured by the cost incurred, 42.5% of construction has been completed. Concrete structure and precast stairs installation are generally complete and structural steel installation is underway. The delivery and erection of the parking garage precast units has commenced and the offsite fabrication of the precast units is essentially complete. Some delays were encountered in the design process (due to prolonged user group meetings) and in receipt of building permit, but such delays are not anticipated to affect the critical path construction schedule, and the Construction Contractor is on track to achieve the building enclosure by the end of 2013. The tendering of subcontracts is approximately 95% complete and the performance of existing subcontractors has generally been satisfactory.

The completion of the six-storey, 457-bed facility in 2015 will mark the beginning of the 30-year operating phase, during which an experienced service provider owned by Carillion Canada Inc. and EllisDon Corporation (the Service Provider) will perform all facilities management services, including life cycle, on behalf of ProjectCo. 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 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.

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

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 (November 2012), which can be found on our website under Methodologies.