APM to sell Va. terminal to financial investors
APM Terminals, the world's third-largest container terminal operator in terms of throughput, announced Tuesday that it has agreed to sell its ultra-modern facility in Portsmouth, Va., to two investment funds.
Alinda Capital Partners is a U.S.-based infrastructure investment firm, and Universities Superannuation Scheme Limited, which has a global infrastructure portfolio, is the largest private sector pension fund in the United Kingdom.
APMT said the transaction is expected to close in the third quarter, subject to regulatory approval, and the facility will be renamed the Virginia International Gateway.
The deal underscores the continued interest by equity investors in U.S. port infrastructure. The number of deals has cooled off since the recession, as have the super-heated prices to consummate long-term concession agreements with port authorities. But investors with long-term horizons, such as pension funds, are still very drawn to the steady returns of container terminals as trade continues to grow, albeit at a slower pace than before 2008. Last year, the state of Virginia rejected offers by APM Terminals and a consortium headed by JPMorgan Chase to privatize the entire Port of Virginia. Virginia officials opted to make structural reforms and continue operating the port themselves.
The Wall Street Journal and Reuters reported in late June that Deutsche Bank is looking to sell part or all of Maher Terminals, the largest terminal operation in the Port of New York and New Jersey, as well as the container terminal in Prince Rupert, British Columbia. A source familiar with the bidding process told American Shipper that a winner could be selected sometime next month.
Earlier this year, APM Terminals sold a half-interest in its Elizabeth, N.J., terminal to Brookfield Asset Management.
In July, Holt Logistics, which runs the Philadelphia Regional Port Authority’s Packer Avenue Marine Terminal, announced that it’s partnering with the South Jersey Marine Corp. to build a new terminal in Paulsboro, N.J. on the Delaware River.
The APM Terminal site in Portsmouth is unique in the United States because it is a privately owned facility, built from scratch by APMT on private land. Container terminals in the United States are typically owned by port authorities, which have increasingly sought multi-decade concessions under which companies are leased land and given exclusive operating rights in exchange for some combination of infrastructure investment, cash, revenue-sharing or other considerations.
Commissioned in 2007, the semi-automated APMT facility uses remote controlled, rail-mounted gantry cranes to handle container yard operations. At the time, it was considered the most modern facility in the United States, and to date, only one or two other facilities have the same level of technology to improve efficiency.
In 2010, APMT leased the Portsmouth marine terminal to the Virginia Port Authority for 20 years in response to lower-than-expected container volumes due to the global recession and maneuvering by port officials to attract most other shipping lines to the rival Norfolk International Terminal at the Port of Virginia. The container terminals will continue to operate under one umbrella for the next 16 years.
Those decisions were the genesis for today's sale announcement.
“We are proud of the facility we built and the relationship we established with the Commonwealth of Virginia and the Virginia Port Authority. However, ownership of this terminal does not fit with our global strategy and ambition to operate and develop ports. We have chosen to sell our Portsmouth terminal because we are a non-operating lessor of the facility to the Commonwealth of Virginia for the next 16 years. We are confident Alinda and USS are the right owners to maximize the business opportunities in the future and that they will be good partners for the Port Authority and Commonwealth," APMT Chief Financial Officer Christian Moller Laursen said in a statement.
Being a passive landlord that collects rent is better suited for financial investors, spokesman Erik Eisenberg elaborated.
“USS and Alinda see this acquisition as an important addition to our infrastructure portfolios. We are attracted to the terminal’s modern design and high levels of automation, which ensure that the facility will be a key component of the port’s infrastructure now and in the future. We look forward to continuing the excellent relationship with the VPA and the Commonwealth of Virginia that APM Terminals has developed over the years and intend to collaborate with the Commonwealth to explore any future expansion of the terminal to support the Port of Virginia’s continued growth," the companies said in a joint statement.
Under the terms of the sale, the partnership will purchase all of the issued and outstanding capital stock of APM Terminals Virginia, Inc., which owns the Portsmouth facility. The deal will not have any impact on customers or staff, the partners said.