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).

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. (PCL or the Construction Contractor).

To date, construction has progressed on schedule to meet substantial completion by May 11, 2015 (the target Substantial Completion Date). All planned construction milestones have been achieved thus far, and the Project is on schedule to achieve building envelope water-tight enclosure by February 2014. The concrete superstructure is complete, with partitions and mechanical and electrical (M&E) installations ongoing throughout. Measured by the fees earned by the Construction Contractor, 43% of construction has been completed. HRRH has approved three variations, with a combined net value well under 1% of the contract price, which will be separately funded by HRRH and the Province and absorbed into the current construction schedule. Conditional permits, subject to the successfully finalized site plan agreement, have been received for the complete project, with the exception of the west parkade, which is currently under review by the City of Toronto. All major subcontracts have also been awarded. Union strike actions taken by the roofers, elevator installers and tile and terrazzo setters during early 2013 are not expected to significantly affect the construction schedule. The Technical Advisor (TA; BTY Group) is still of the opinion that the project can be completed on budget by the target Substantial Completion Date.

A 30-year operating phase will commence upon the achievement of substantial completion. All risks and responsibilities pertaining to core facility management (FM) and lifecycle maintenance will be assumed by Johnson Controls LP (JCLP or the Service Provider) for the full 30-year term. Financial projections for the service phase remain unchanged, with a debt-to-cash flow available for debt servicing (CFADS) ratio of 11.8 times projected in the first year of operation and a debt service coverage ratio (DSCR) of 1.25 times foreseen over the project’s term.

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.