Carlyle-led consortium agrees ‘revised’ $9.5bn JFK redevelopment plan

The plan, first announced in 2018, has undergone a significant restructuring in light of complications caused by covid-19.

The Port Authority of New York and New Jersey announced last week that it had reached an agreement with The New Terminal One group – a consortium of investors led by the Carlyle Group – to revise plans to upgrade JFK’s international terminal. The original plan, announced in 2018, was one of the largest public-private partnerships the US had ever seen.

Before revising the agreement, The New Terminal One group planned to deploy just under $8 billion towards the building of a new international terminal, consolidating what is currently terminals 1, 2 and 3, NTO executive chair Gerrard Bushell told Infrastructure Investor. That has now increased to $9.5 billion as part of “a new phased approach to align recovering traffic demand with capacity”, he said, an “approach [which] better navigates the post-pandemic environment”.

Bushell added that costs have also increased due to a combination of supply-chain issues, increased labour costs, pandemic-related construction delays and the need to align traffic demand capacity with public health concerns. Additionally, the project expects to see completion in 2026, rather than the previously promised 2025.

The financial backers of the project remain the same. As was announced in 2018, the NTO consortium is sponsored by Carlyle, JLC Infrastructure and Ullico. Munich Airport International and CAG Holdings will act as operating and technical services partners to the trio.

The project will be the largest and most expensive in the airport’s modernisation programme, where the overall value of capital to be deployed is more than $15 billion. This figure includes three other projects: the revitalisation of Terminal 4, which Delta Airlines is fully funding at $1.5 billion; the remaking of Terminal 6, which will be fully funded with $3.9 billion in private-sector investments; and the $425 million project with American Airlines to restructure Terminal 8.

The Port Authority itself is also seeking to deploy capital towards the four schemes, stating that it plans to vote to authorise the $2.9 billion of funds that were earmarked for JFK in the Port Authority’s 2017-26 Capital Plan. This would go towards roadway improvements, utilities, improved parking facilities, a ground transportation center and airfield work.

Of the aforementioned four projects, this is the third deal to be restructured in light of the pandemic. In August, then-Governor Andrew Cuomo announced a “restructured” PPP for a $3.9 billion deal with JFK Millennium Partners – a consortium comprising Vantage Airports, American Triple I and RXR Realty – to rebuild JFK’s Terminal 6, which was believed to have included revisions to the revenue and risk-sharing mechanisms. In April, he also approved a major scale back to Delta’s plans to revamp Terminal 4, which kicked off construction last week.