AMP, Northleaf close Chicago garage deal

The Australian and Canadian fund managers have completed the $370m acquisition of Millennium Garages, taking over the 99-year lease initially agreed with Morgan Stanley in 2006.

AMP Capital and Northleaf Capital Partners have reached financial close on the acquisition of the Chicago Downtown Public Parking System (Millennium Garages), a $370 million transaction the Australian and Canadian fund managers had announced in February.

The acquisition marks AMP Capital’s first infrastructure investment in North America, allowing the Australian manager to own an asset that “fits perfectly with the platform’s mandate to invest in sectors offering the best relative value such as transport,” said Dylan Foo, AMP Capital’s head of Americas infrastructure, in a statement.

The transaction gives AMP’s and Northleaf’s newly established joint venture MPG exclusive concessionaire rights and responsibilities to operate, manage, maintain and collect parking fees and other revenues in connection with the Millennium Garages system.

Covering approximately 3.8 million square feet and comprising four underground garages with a total of 9,176 parking spaces, Millennium Garages is the largest underground parking system in the US. It runs underneath Millennium, Grant and Maggie Daley Parks.

This is the third time the asset has changed ownership since Morgan Stanley Infrastructure, investing on behalf of its clients, paid the City of Chicago $563 million in 2006 to operate the parking system under a 99-year concession agreement. However, after seven years of lower-than-expected revenues and unable to repay its $403 million loan, Morgan Stanley transferred the concession rights to LMG2.

The parking facility underperformed partly due to the City of Chicago’s violation of the initial contract, which did not allow competing parking garages to operate within a certain distance from Millennium Garages.

In 2009, then Chicago Mayor Richard Daley granted a public garage license to a facility in the Aqua building, one block away from Milliennium. Chicago Loop Parking, the concession company for Millennium Garages, sued the city seeking $200 million in damages but in the end settled for $57.8 million.

LMG2, which is the seller in this most recent transaction, is roughly 90 percent foreign-owned. According to reports, an affiliate of Société Générale, the major lender for the initial loan, owns approximately 27 percent of the company. 

AMP Capital, Northleaf and PSP did not respond to a request for comment. LMG2 would only confirm, through a spokesperson, that all the necessary economic disclosures had been filed with the City of Chicago.