New Jersey increases size of transit deal

More than 100 parking facilities owned by the state’s transit arm are now being considered for a potential lease, up from the previously disclosed 81. The increased deal size has also slowed the pace of the transaction, as bidders have requested more time to understand the assets involved.

New Jersey Transit has increased the size of its potential parking concession to more than 100 facilities, such as parking lots next to its rail and bus lines which may be leased as part of the deal, according to a person close to the transaction.

New Jersey is the largest transit agency in the country to contemplate such a deal, making it a first-of-its kind transaction in the US market. The deal was originally advertised in October 2010 with a list of 81 parking facilities the state’s transit arm was looking to lease to private investors for upfront cash. New Jersey Transit then envisioned soliciting formal bids by the end of March and awarding the concession by the end of June.

However, with more assets being considered for the deal, bidders have requested more time to understand the assets, conduct due diligence and provide feedback on the concession agreement they will be asked to bid on, according to the person close to the transaction.

The original agreement proposed by New Jersey Transit was deemed to have certain elements that might have made a parking deal less attractive, such as uncertainty over which parking assets the buyer would actually be leasing and an inability to back out of the deal.

The person declined to comment on the agreement but said there is a “deliberative” and “iterative” dialogue going on with the bidders to come up with a revised agreement that will be mutually agreeable to both sides. That has also slowed the pace of the transaction from the tentative schedule New Jersey Transit advertised in October 2010 when it began qualifying bidders.

The source declined to provide details on a new timetable for completing the transaction but said the process is “ongoing” and is targeted for financial close either later this year or early next year. 

Late last year, New Jersey Transit qualified seven groups to bid for the concession, according to a list provided to Infrastructure Investor by the transit agency's contracting office:

– Morgan Stanley Infrastructure
– The Carlyle Group
– Macquarie Capital
– Kohlberg Kravis Roberts
– JP Morgan 
– Cintra Developments
– Edison Parkfast

New Jersey Transit has expressed strong support for the deal in the past. The transit agency’s executive director, James Weinstein, called it an “incredibly important business strategy” at a December board meeting, citing a “need to do more with less” during a time of “extraordinary fiscal pressures” at the State of New Jersey.

Chicago and Indianapolis have previously leased their parking meters under long-term arrangements with private bidders. Chicago got a $1.16 billion upfront payment for a 75-year lease while Indianapolis signed a 50-year lease in exchange for a $20 million upfront payment and ongoing revenue share.

A spokesperson for New Jersey Transit did not respond to a request for comment.