Groves Memorial Community Hospital

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  • Client

    Groves Memorial Community Hospital

  • Region

    London, ON

  • City

    Fergus

  • Year Completed

    2020

  • Size

    135,840 sq. ft.

  • Sector

    Buildings

  • Sub-Sector

    Healthcare & Research

The Story

The Groves Memorial Community Hospital project involved the construction of a new hospital in Aboyne, Ontario, between Elora and Fergus, to replace the existing hospital in Fergus. The project focused on the services most urgently needed by the Centre Wellington community. The new hospital provides more space for emergency, ambulatory, diagnostic and inpatient services to accommodate a growing community. The facility is three storeys above grade and has been designed to incorporate a modernized layout with better coordination between key clinical areas as well as 45 acute and chronic care beds, an increased number of private patient rooms; expanded emergency department and an ambulatory care area.
This new hospital is integrated into the Grand River trail network and its natural surroundings.

Sustainability

The project achieved LEED Silver certification in February 2022.

Development and Equity

EllisDon Capital Inc. (“ED Capital”) was the Developer and Financial Advisor on the Groves Memorial Community Hospital project. ED Capital was involved in all aspects of the project financing process, which included evaluating various debt structures and structuring the security package. ED Capital also managed all negotiations with the lenders, managed the funding competition to ensure that CIBC Asset Management and its funds provided pricing that created the lowest effective cost of financing to the project. Lastly, EllisDon developed a robust financial model in-house, that was used to evaluate and optimize the financial proposal.

Summary of Financing
The project was debt financed with a direct private placement with CIBC Asset Management. The debt raised in the issuance was $115 million.
No equity injections were required on the project. To date, there have been no incidents of default.

Ellisdon Energy & Digital Services

EllisDon Energy & Digital Services provided a variety of services for the facility, including:

• Communications: Audio-Video System-Infrastructure Only;
• Communication: Complete Voice & Data System Including Cabling & Equipment;
• Communications: Special Communication Systems;
• Electronic Safety & Security: Complete Security Systems including cabling & equipment; and
• Electronic Safety & Security: Fire Alarm System.

Ellisdon Facilities Services Inc. (“EDFS”)

EllisDon Facilities Services Inc. will ensure that maintenance tasks are scheduled using a computerized maintenance management system. The programming of this CMMS will be determined by the following criteria:
• Asset criticality;
• Use in service;
• Predicted lifecycle performance;
• Functional area risk category;
• Manufacturing servicing information;
• Compliance requirements; and
• Redundancy status

Required Information in the CMMS:
• Asset information;
• Work instructions; and
• Associated instructions.

Challenges and Solutions

Challenge: Achieving the lowest cost of financing through an innovative financing structure
Solution: ED Capital compared the value of a term loan against a short-term bullet bond throughout the Request for Proposals process. Due to competitive spreads from CIBC, ED Capital ultimately selected a short-term bond as the most cost-effective solution. This was the first short-term privately placed financing for a Design-Build-Finance transaction.

Challenge: Reducing the negative carry associated with an upfront draw
Solution: Bank facilities have an inherent advantage of interest payable only on amounts drawn, benefitting from a delayed draw structure. The upfront nature of a bond requires a reinvestment product to offset interest payable with interest earned, to simulate a delayed draw structure. EllisDon received very attractive pricing, which greatly reduced the interest expense for the product.

Challenge: No precedent transaction documentation
Solution: The Groves Memorial Hospital represented the first transaction EllisDon has done with CIBC Asset Management and thus there was no template financing documentation between institutions. Both lenders and equity counsel had quoted fees higher than what is customary for a DBF transaction. EllisDon invested time to negotiate a lower fee, which saved a considerable amount of money, savings which were ultimately passed on to the project.

Lessons Learned

Credit Spread Basket: The Credit Spread Basket moved sharply from bid submission to financial close, eroding the coupon for CIBC Asset Management. The basket exists to provide protection in market movements, however these rates can tighten, decreasing the expected spread for end investors. EllisDon and its investors will continue to evaluate the merits and risks of using a basket in future submissions.

Monitoring Market Rates: ED Capital monitored market levels of GoC Bonds during the RFP process to enable flexibility in choosing a financing structure. This ensured the most cost-effective solution was selected, in spite of moving rates.