Transurban Group is relinquishing underperforming State Route 895 (SR 895) in Richmond, Virginia, its first ever US toll road asset, the publicly traded company has revealed.
The toll road, also called ‘Pocahontas 895’, is not generating enough revenue to cover its debt, explained Pierce Coffee, US marketing director for Transurban in Washington, D.C.
Australia-headquartered Transurban will hand over its concession agreement SR 895 to its creditor, a consortium of banks holding $300 million in debt.
In addition, the toll road must settle up a $150 million TIFIA (Transportation Infrastructure Finance and Innovation Act of 1998) loan.
Transurban is “working to effect a transfer by October,” noting “there will be no cash impact”. Coffee stressed the transfer will not impact service.
The toll road operator recorded a $138 million write down on SR 895. Transurban acquired a 99-year lease of Pocahontas 895 in 2006 for $600 million.
SR 895 was a ‘greenfield’ project and the debut public-private partnership (PPP; P3) under the Virginia Public-Private Transportation Act of 1995.
A consortium of Fluor Daniel and Morrison Knudsen agreed to design and build State Route 895, an 8.8-mile road linked to Interstate 95 (I-95) and Interstate 295 (I-295).
Transurban in 2011 paid $50 million to connect Pocahontas 895 to Richmond International Airport.
Transurban said the 2008 global financial crisis, which halted commercial and residential real estate development in Richmond, impacted Pocahontas 895.
The Virginia Department of Transportation had sought to designate SR 895 as a US interstate highway, but the Federal Highway Administration refused.
In Virginia, Transurban is also an investor in the ‘495 Express Lanes’ project and the ’95 Express Lanes’ P3.