Virginia sees ‘material change’ in value of port

A deal to lease a container terminal from APM, due to be signed on 30 June, will give the Virginia Port Authority the ability to handle up to 1 million more cargo containers a year. That could make three business proposals the port received last year ‘not rich enough’, according to a spokesperson.

The board of the Virginia Port Authority has approved a lease agreement for an additional terminal at the busy East coast port, prompting a “material change” in the value of the port’s assets that could upend a bidding process for the port that began last year.

At a special meeting of the board yesterday, the port authority’s directors gave Virginia Port Authority (VPA) executive director Jerry Bridges the authority to sign a 20-year lease agreement for a port terminal in Portsmouth, Virginia that is owned by terminal operator APM.

The terminal is capable of handling 1 million twenty-foot equivalent, or TEU cargo containers a year, according to an APM press release. That’s more than half the 1.75 million TEUs the VPA handled in 2009, according to the port's statistics website.

“Now that we have this in place and it will be signed there is a material change in the value of the asset being sought,” said VPA spokesperson Joe Harris.

Port of Virginia: becoming

Last year, private equity firm The Carlyle Group, Goldman Sachs Infrastructure Partners-backed marine terminal operator Carrix, and Chicago-based industrial real estate manager CenterPoint Properties submitted unsolicited proposals to the port to operate its existing port terminals and to aid the development of a new terminal in Craney Island.

Evaluation of the proposals had been put on hold while APM and VPA have been at the negotiation table over the Portsmouth terminal. But the deal, valued at $865 million in today’s dollars just in base rent payments to APM, could make the bids obsolete.

“I believe its consensus that . . . the bids are not rich enough,” Harris said.

CenterPoint had indicated an upfront payment of $500 million, Carlyle indicated a payment between $500 million and $700 million and Carrix and Goldman indicated $250 million, in addition to various revenue sharing arrangements.

Harris added that the VPA is ultimately not in charge of evaluating the proposals; that job falls to the Virginia Secretary of Transportation, who must appoint a board of qualified people who will review the bids. So far, though, no board has been chosen.

The lease for the Portsmouth terminal will be signed on 30 June. VPA’s operating arm, Virginia International Terminals, will begin operating the facility on 6 July, 2010, according to the APM press release.