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Airport finance terminal decline
23 November 2009
Given the retreat from leverage, the drop in passenger numbers and withering investor demand, are airports merely witnessing a cyclical decline or something more pernicious and long-lasting? Paul Smith reports.
Read more:
Airports
Macquarie Airports
Babcock & Brown
North America
Europe
Austock Securities
BAA
Gatwick
General Electric
A common way of extracting quick upside for airport owner/operators over the past five years has been to secure five or six year acquisition financing and then refinance as growth in EBITDA outstrips projections. During the boom years airport revenue generally grew at a multiple of GDP growth of the host country – but having a high beta to the underlying economy cuts both ways.
One of the keenest proponents of a quick refinancing has been Macquarie. However, while Macquarie has avoided the fate of its smaller rival Babcock & Brown, the infrastructure model it propagated has been effectively retired.
Listed satellite funds have been quick to sever management contracts with their parent or risk investor ire and endure share prices trading at a significant discount to net asset values. Macquarie Airports (MAp) has made such a move and severed its ties with Macquarie with a one-off payment that ends the...
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