Fengate and PCL line up over US$550 million financing for rental car facility PPP at LA airport
LA Gateway Partners, LLC are nearing the financial close of the Consolidated Rent-A-Car (ConRAC) facility PPP project at Los Angeles International Airport (LAX), with plans to issue approximately US$456 million senior secured bonds, maturing in 2046.
LA Gateway Partners, LLC is owned indirectly by funds managed by Fengate Asset Management ("Fengate LAGP US I, LLC", 83.3%) and PCL Investments USA, LLC ("PCL LAGP Partnership LP", 16.7%). The project company was formed to design, build, finance, operate and maintain the ConRAC under a 28-year availability-payment based public-private-partnership (PPP) agreement with Los Angeles World Airports (LAWA).
The ConRAC will consolidate all of the rental car agencies operating at LAX, located in southern California, USA, into one facility. The facility will include a customer service building, employee and visitor parking areas as well as new roadways for access to the site.
In addition, there will be a ready/return area for customer pick-up and return of vehicles, a quick turnaround area (QTA) where vehicles can be fueled, washed and maintained and an idle storage building. Once completed, the facility will be the largest of its kind in the US, spanning approximately 6.7 million square feet (622450m2).
The US$456 million senior secured bonds have been assigned an initial A3 rating by Moody's Investors Service. They will be drawn over time in line with a schedule in the note purchase agreement, which reduces the cost of carry for the project company.
Construction will also be funded with around US$112 million in total draws under a construction loan facility (a maximum of $72 million outstanding at any point in time). This loan will be repaid five days after receipt of the final completion milestone payment.
Both the construction loan facility and the senior secured bonds benefit from a first lien on the project company's revenues and its rights under the various project agreements as well as a pledge of the equity interest of the sponsor in the borrower LA Gateway Partners, LLC.
Projections of the total construction cost of the ConRAC have not been released. However, the approved not-to-exceed value of LA Gateway Partners' contract for the project exceeds US$2 billion.
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