DBRS Confirms Plenary Properties LTAP LP Short-Term and Long-Term Senior Bonds at “A,” Stable Trends

DBRS has today confirmed its ratings of “A,” with Stable trends, on the Short-Term Senior Bonds and Long-Term Senior Bonds of Plenary Properties LTAP LP (ProjectCo), the special-purpose entity created to design, build, finance, maintain and provide information technology (IT) and lifecycle services to the Communications Security Establishment Canada (CSEC) Long-Term Accommodation Project (LTAP). The project is governed by a 33.5-year Project Agreement (PA) signed between ProjectCo and the Government of Canada (the Crown; rated AAA, Stable), as represented by Defence Construction Canada (1951) Ltd. The new facility (the LTAP facility), will substantially consolidate all services currently provided at several separate locations by CSEC, Canada’s foreign intelligence and national cryptologic agency.

Construction work has progressed smoothly and remains on schedule to reach the July 31, 2014, Target LTAP Service Commencement Date. The project is approximately 93% complete as measured by fees earned by the design-build contractor, PCL Constructors Canada Inc., a subsidiary of PCL Construction Group Inc. All approved variations, which are relatively modest in cost and low in risk, have been separately funded by the Crown and will be absorbed into the current construction schedule.

Aside from service commencement contemplated in July 2014, all other major contractual project milestones have been achieved on time per the schedule. Major construction tasks such as structural, mechanical and electrical (M&E) works have advanced to the final stages. The construction is now focused on completing the interior finishes in the LTAP facility, and testing and commissioning in the Data Centre in addition to some exterior and M&E work in the retail building.

Honeywell has begun delivering the partial facility management (FM) services in association with the adjacent Mid-Term Accommodation Project (MTAP), after the facility was turned over to ProjectCo in November 2011. The partial FM services have been proceeding well with no major deductions noted and will continue until full integration with the completed LTAP facility.

The 30-year operating phase will formally begin upon substantial completion of the LTAP facility. Key service responsibilities include customary routine and lifecycle maintenance as well as fairly comprehensive IT and security services. Ancillary services such as help desk, energy consumption management and food services, are also part of the scope of services. The extensive benchmarking process under the PA will periodically update the service prices over the 30-year operating phase and partially mitigate re-pricing risks, in case the service provider needs to be replaced. Financial projections for the service phase remain consistent with the financial model and adequate for the rating.

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.