The recent financing of the Royal Inland Hospital Patient Care Tower project featured the first internationally accredited green bond in the Canadian P3 market.
A consortium led by EllisDon is developing the project which is set to deliver a state-of-the-art facility that will improve patient care for the city of Kamloops and the surrounding region of British Colombia.
The project will take place in two phases:
- phase 1 – the design and construction of the patient care tower including single-patient rooms which will bring the Royal Inland Hospital up to current standards of care. The facility will improve working conditions, infection control and prevention measures
- phase 2 – a significant renovation and expansion to the emergency department, pediatrics, post-anaesthetic recovery and the morgue. New parking stalls will also be added to the site
As part of British Columbia's Interior Health Authority’s commitment to environmental sustainability and green buildings, the newly constructed hospital will meet Leadership in Energy and Environmental Design (LEED) Gold certification.
The sponsors reached financial close on the project on 6 November. Work has begun and the first phase is expected to be open for patients in early 2022, with phase 2 following in 2024.
The province of British Columbia's Health Ministry gave the go-ahead to advance the DBFM (and renovation) project in February 2017 with an RFQ issued in May 2017.
A shortlist was then announced in October of the same year with bidding teams comprising:
Inter-River Healthcare Partners
- Concert Infrastructure, Brookfield Financial Securities and Bird Capital – equity providers
- Bird Design-Build Construction – design-build
- Perkins + Will and Kirsten Reite Architecture – architects
- BGIS Brookfield Global Integrated Solutions Canada – service provider
Plenary PCL Health
- Plenary Group (Canada) and PCL Investment Canada – equity providers
- PCL Constructors Westcoast – design-build
- HDR and CEI Architecture Associates – architects
- Johnson Controls Canada – service provider
EllisDon Infrastructure Healthcare
- EllisDon Capital – team lead and equity provider
- EllisDon Design Build – design-build
- Kaisan Architecture Interior Design and Planning and Parkin Architects Western – architects
- EllisDon Facilities Services – service provider
The EllisDon Infrastructure Healthcare consortium was selected as preferred bidder in September 2018.
Bonds on the deal priced on 14 November with financial close reached two days later (16 November).
Advisers to Partnerships BC were:
- Boughton Law Corporation
- John Singleton QC
- LTA Consultants
- Fasken Martineau DuMoulin
- IBI Group and subcontractors WSP Group, CWMM Consulting Engineers, GUNN Consulting, RWDI Air and Singleton Urquhart
HSBC was sole underwriter and bookrunner on the C$153 million bond financing. It was split between two tranches:
- C$64 million – series A bonds with a coupon of 3.930%, maturity of 31 October 2038, and pricing of 144.7bp above the Government of Canada benchmark
- C$89 million – series B bonds with a coupon of 4.148%, maturity of 30 November 2051, and pricing of 165.1bp above the Government of Canada benchmark
The bonds obtained a second party opinion confirming their alignment with the International Capital Markets Association (ICMA) – Green Bond Principles 2018.
They were then sold to a select group of institutional investors, and in another first, a UK investor.
Green bonds ensure that new and existing projects are provided with environmental benefits at the point when financing is being raised. It also enables the transition to a sustainable global economy.
They are still subject to the same capital market and financial regulation as other types of financing.
EllisDon was sole equity provider, injecting C$14.3 million in equity which is backed by a letter of credit.
Moody’s rated the bonds A3 on 26 October and reaffirmed at the time of bond pricing.
The Interior Health Authority is expected to pay 43% of capital costs – amounting to around C$124.5 million in construction milestone payments.