Infrastructure Capital Group, on behalf of the Diversified Infrastructure Trust, and AMP Capital, have executed key agreements with the Town of Port Hedland Council to lease the Port Hedland International Airport for 50 years. The transaction was previously approved at a special council meeting in August.
Port Hedland International Airport is the gateway to Western Australia’s North West and the nationally significant Pilbara region. Located approximately 1,650 kilometres north of Perth on the Pilbara coast, the airport has around 450,000 passenger movements a year on nearly 70 flights a week, with flights daily to Perth and weekly to Brisbane, Melbourne and Bali. Port Hedland is the world’s largest bulk tonnage export port and achieved record throughput of 447 million tonnes in FY15.
The consortium will pay the Town $165 million upfront and significantly upgrade the existing terminal over the next five years. The upfront price represents 10 times current year EBITDA. DIT will hold a 50% stake in the asset with the remaining stake held by two of AMP Capital’s infrastructure funds.
ICG’s Managing Director and DIT’s Portfolio Manager, Tom Laidlaw said: “Port Hedland International Airport is a unique asset. It is a critical piece of infrastructure for the Town of Port Hedland and the local resources industry and, as such, has characteristics that make it a great fit for our investors such as stable cash flows and the fact the nearest airport is some 250 kilometres away. We are also very excited at the prospect of developing and implementing a new master plan for Port Hedland International Airport that, once completed, will significantly enhance the passenger experience at the airport.”
Andrew Pickering, ICG’s Chairman and Chief Investment Officer, commented: “This acquisition further diversifies the DIT portfolio and importantly positions ICG well for upcoming regional airport transactions. The investment in the airport is particularly pleasing as it builds upon the depth of in-house experience the team has in this sector and strengthens ICG’s presence in Western Australia, with this asset being our fifth investment in the state.”
Completion of the transaction occurred in March 2016.