Last week saw the announcement of a deal between the Carlyle Group and Spanish infrastructure company Ferrovial which, if approved, would entail Carlyle ending its tenure as the majority shareholder in the New Terminal One group, a consortium of investors looking to remodel JFK Airport’s former terminals one, two and three.
This would give Ferrovial a 49 percent stake in NTO, according to a spokesperson from the Port Authority of New York and New Jersey, the procurement authority. The spokesperson, alongside a market source, confirmed to Infrastructure Investor that Ferrovial will be the lead investor in the NTO group once the deal has closed.
However, Infrastructure Investor understands the transaction is not structured as a sale, but rather NTO is raising additional equity and bringing in Ferrovial as a strategic partner. Ferrovial will thus be allocating funds directly to the New Terminal One group, with Bloomberg pegging the Spanish firm’s investment at over $1 billion.
Building JFK’s revitalisation
In a statement, the Spanish developer said: “Ferrovial, through its Airports division, and Carlyle have reached an exclusivity agreement to negotiate the transfer to Ferrovial of the 96 percent of the stake held by Carlyle in New Terminal One… Carlyle holds a 51 percent stake in New Terminal One. If an agreement is reached on the transaction, Ferrovial would therefore acquire 96 percent of said stake.”
The announcement of the deal comes just two months after the NTO consortium and the Port Authority announced a revision of the agreement, increasing the amount of capital to be deployed from just under $8 billion to $9.5 billion.
Infrastructure Investor understands that the revised agreement signaled that the project has ended its development phase and is heading into a new construction phase. According to our source, the start of the construction phase played a large role in NTO’s decision to bring in additional capital through Ferrovial. It is unclear whether or not inflation or the higher cost of the revised agreement played any role.
The announcement also comes two months after the Port Authority voted to authorise the deployment of $2.9 billion in funds earmarked for the JFK revitalisation scheme – which includes three other terminal upgrade projects outside of the New Terminal One – in its 2017-26 Capital Plan.
When asked where the funds will be deployed, a Port Authority spokesperson did not comment, stating only: “We have been asked by the New Terminal One partners to consider adding Ferrovial, a global airport operator with experience constructing terminals, as the lead investor on their team. The Port Authority is in the process of evaluating that request.”
The project as it currently stands is a lease agreement with airlines Lufthansa, Air France, Japan Airlines and Korean Air, and development and financial partners the Carlyle Group, JLC Infrastructure and the Union Labor Life Insurance Company (Ullico). No other partners so far have indicated that they plan to either divest from the project or commit further capital.
Additionally, no partners of NTO, nor NTO itself, have indicated whether this deal between the Carlyle Group and Ferrovial will change the pricing or timelines of certain construction projects.
Ferrovial, the New Terminal One Group and the Carlyle Group declined to comment.