Macquarie Infrastructure Group cuts toll road valuations 24%

The Sydney Stock Exchange-listed toll road developer blamed the fall in valuations on current market conditions and lower traffic forecasts due to the recessionary environment in North America.

Listed toll road developer Macquarie Infrastructure Group (MIG) is slashing the valuation of its portfolio of toll roads by 24 percent from its June 2008 levels due to macroeconomic conditions and the market environment.

The Macquarie Group satellite fund said in a statement that it expects its portfolio valuation at 31 December 2008 to be about A$6.5 billion (€3.2 billion; $4.6 billion), translating to a net asset value of A$3.02 per share. At 30 June 2008, its portfolio valuation stood at A$8.6 billion, or $3.84 per share.

MIG blamed the fall in valuation to changes in asset discount rates reflecting the current market environment and lower forecast traffic volumes caused by the recessionary environment in North America, where it holds equity interests in five toll road assets – four in the US and one in Canada.

Toll roads: not
recession-proof

MIG is not the only toll road developer to cite falling portfolio valuations and traffic volumes across its assets. In September, Spanish toll road concessionaire Cintra, a frequent investor alongside MIG, reported traffic decreases in its portfolio as well. At the time, Jorge Gil Villen, Cintra’s head of corporate development, said that “it will be a surprise if traffic recovers in 2009” in the US.

Traffic on US roads has been weakening as Americans drove nearly 90 billion fewer miles in 11 months of this year compared to last year, according to figures published last month by the US Department of Transportation.

Globally, MIG has a portfolio of 11 toll roads across seven countries. The firm reported consolidated revenues of A$1.4 billion for its last full fiscal year ending June 2008. It will provide final portfolio valuations for its toll road assets on 19 February 2009, when it reports its first-half 2009 results.