St Louis airport lease RFQ attracts a healthy 18 responses
It is been a stop-start process, mainly stop, for the leasing of airports to the private sector in the U.S. in recent years. The procedure that took the San Juan Luis Muñoz Marín airport into private operational hands is really the only notable success.
Now, after there has been protracted wrangling within the municipality for more than a year, the stage has been reached in St Louis, Missouri, where Requests for Qualifications at least have been sought.
While some of those firms providing them were expected to participate, there have been some surprises as well, and the number of RFQ submissions suggests that interest remains throughout the world – despite the collapse of previous procedures.
- St Louis Lambert airport lease RfQ attracts 18 responses.
- The municipality and population remain divided on the issue.
- P3 schemes at U.S. airports may have reignited interest in the wider privatisation process.
- Firms and consortiums with prior exposure to the U.S. market may have an advantage.
- The ubiquitous Canadian pension funds are again well represented.
- As with many P3 projects, consortiums have been established; in this instance, three of them.
Big interest from big hitters, in spite of a split over whether to privatise the airport
The delayed lease procedure for St Louis Lambert International Airport (SLLIA) that was reported by CAPA previously has moved to the Request for Qualifications (RFQ) stage and has, perhaps surprisingly, elicited 18 responses from individual entities and consortiums.
The RFQ outlined the potential opportunities of a privatisation deal and asked companies to explain how they are qualified to achieve those goals.
Among other things, companies were asked to detail their ability to improve and manage airports on a budget, to maintain productive relationships with government entities, and to express knowledge of airport safety.
RFQ predates the Request for Proposals, which is usually only offered to those firms meeting the qualification criteria.
“Surprisingly”, because the city council is split on the issue and a referendum might still be held on whether to proceed further. Interested parties will recall that the last attempt to privatise a major U.S. city airport (St Louis was once the main base of Howard Hughes’ Trans World Airlines – TWA) ended in failure in Chicago, twice.
The number and success of P3 schemes may have boosted interest in this lease
On the other hand, airport ‘privatisation’ has received a boost in the U.S. from the growing number of public-private partnership (P3) deals to build and operate terminals and other airport infrastructure.
It is not far from the truth, though, to say that this proposed lease is a case of 'drinking in the last chance saloon', and if it falls through, other municipalities that are thinking on the same lines might lose interest permanently.
The responders represent almost all continents; only Asia Pacific is missing. Several of the responders are consortiums mainly made up of U.S. firms, and some of those are completely new to the sector.
Among the ‘big hitters’ are AENA Internacional, AMP Capital, Global Infrastructure Partners and Corporación América Airports – all ‘solo’ at this stage at least. Also Royal Schiphol Group, which once enjoyed that status as a big hitter but which has latterly focused on Amsterdam Schiphol Airport. At least it does have experience of operating a terminal at New York JFK airport.
GIP has scaled back in recent years, disposing of London City airport and reducing its holding at London Gatwick Airport, but it often used to pitch for U.S. leases when they were thicker on the ground.
AENA Internacional has amassed a great deal of experience in Latin America but none in North America. The Australian investor AMP Capital is restricted to airports in Australia and the UK, but one of them, London-Luton, is of a similar size and scope to SLLIA.
IFM is a 35% shareholder in MAG and they worked together (though solely under the IFM banner) in a bid for the second lease attempt on Chicago Midway Airport. MAG has a U.S. division, MAG USA, which engages in airport P3s, airport lounges and car parking services. It is the classic operator/investor dual bid scenario except that the consortium is formed from the same organisation; both their previous lease bid experience and the U.S. operations could count in their favour.
Canadian pension funds are well represented
The Canadian pension funds are represented by Ontario Teachers’ Pension Plan Board, with its subsidiary Ontario Airports Investments Limited and Copenhagen Airports International, which it part-owns (Copenhagen Airport as an individual entity was once an investor in Latin America).
Also OMERS, the Ontario Municipal Employees’ Retirement Scheme, which is active at just two airports in Canada and the UK, in partnership with Fraport, which is active at more than 30 airports worldwide, including several in the U.S. where, like MAG, it operates in-terminal services, mainly retail malls.
Finally, Canada’s Public Sector Pension Investment Board (PSPIB) or PSP Investments as it is known, which is involved with nine airports around the world, including its 40% stake in the (so far) successful lease on the San Juan Luis Muñoz Marín airport in Puerto Rico (which could count in its favour), together with the German AviAlliance, which was sold to PSP in 2013 and has interests in Germany and Greece.
Active airports for PSP Investors
Canada’s Vantage Airport Group, which has spread its wings beyond Canada into the Caribbean, Europe (two airports in Cyprus) and management contracts in the U.S. It has also notified interest, along with its own investment arm, Corsair.
There are three smaller operators in the mix on their own.
The Colombian Odinsa (Grupo Argos), which is so far limited to two airports in its home country; daa international (Ireland), which has limited investments in Germany and Cyprus and specialises in duty-free stores; and New Zealand’s Morrison & Co (Infratil), which was once quite a large investor in small European airports but retrenched to Wellington Airport some time ago.
Three consortiums have been put together for this purpose
Three big consortiums are vying for the lease. They will be aware that consortiums with unique-interest members have been successful in vying for P3 deals.
Lambert Gateway Partners is made up of Groupe ADP (which has been entering into other multi-firm agreements for P3s in the U.S.), and Blackstone Infrastructure Partners – the private equity house that has amassed a USD14 billion fund and has been on the fringe of airport investment for many years without quite getting there.
Making up the numbers are Bridgeman Hospitality Group, the Louisville firm behind the Wendy’s chain; Cleveland Avenue, a seed investor for food and beverage operators; another pension fund, the Public School and Education Employee Retirement Systems of Missouri; and the unknown Hall of Fame Group.
Momentum Aviation Partners comprises Mexico’s ASUR group, which again has involvement at San Juan, Puerto Rico; the Californian builder AECOM Hunt, which pitched for a P3 terminal at Kansas City in 2017; and the Swiss private equity Partners Group.
STL Aviation Group is the largest of all, involving Oaktree Capital, a one-time investor in London City Airport; JLC Infrastructure, which is part of the consortium building the central terminal at New York LaGuardia Airport; Ullico, a labour-owned investment company; Vinci Airports; TBI Airports, the remnants of the firm that was taken over by the now defunct Abertis and has management contracts at several U.S. airports, and others.
To complete the picture there is an outsider registering solo interest: GRID Realty, a private real estate group with interest in St Louis. It is reported to be interested only in the real estate value of the land for office development and not in operating an airport, which begs the question why it is not in a consortium with an operator.
What this list confirms is that in the U.S. there is a healthier degree of interest in the airport sector and in its privatisation, as allowed for, both from within the sector and outside it.