Australian Firm Buys Greenway
Thursday, September 1, 2005
An Australian firm that owns highways around the world has purchased the privately owned Dulles Greenway, adding a major player to the Washington market at a time when officials are considering privatizing many of the region's roads.
Macquarie Infrastructure Group said it paid $533 million to acquire 86.7 percent of the Greenway from Toll Road Investors Partnership II, the limited partnership that controls the road. Macquarie officials said they are negotiating with Kellogg, Brown & Root for the remaining 13 percent of the road.
Company officials said yesterday that drivers will notice little difference. Officials said they plan to complete all construction projects, including widening the road from four lanes to six and adding lanes to the main toll plaza. They also said tolls would change only according to existing plans, which call for peak tolls of $2.40 to increase to $3 in 2007.
The Greenway is a 14-mile road with seven interchanges running between Dulles International Airport and Leesburg. It connects to the Dulles Toll Road and links the booming suburban communities of Loudoun County to the thriving businesses in the Dulles corridor and Tysons Corner area.
Stephen Allen, Macquarie's chief executive, said his firm has been interested in the Greenway for years because of its location. "We like growth regions, and Washington fits the bill," Allen said.
The 10-year-old Greenway was ahead of its time when it was built and struggled to attract drivers who were willing to pay to bypass Routes 7 and 28. Owners were forced to default on their original loan.
More recently, as the area has grown by tens of thousands of residents and as traffic problems have proliferated, the Greenway has started to enjoy some success. The road's problems now have to do with limited capacity -- about 70,000 drivers take the highway each day -- and managers hope that widening it will ease backups.
Allen said that Macquarie also plans to rearrange the toll barrier so drivers can zip through at full speed and that the company is prepared to widen the road to eight lanes when traffic demands it.
State officials said Macquarie's interest is a sign of the highway's improving fortunes as well as a sign of the attractiveness of regional roads to private investors.
"This is an indication that Virginia's goals to attract private investment to transportation infrastructure are working," said state Transportation Secretary Pierce R. Homer. "We're extremely pleased to see Macquarie here in Virginia" because the firm will create more competition.
Macquarie now owns 14 highways in Australia, England, Germany, Canada, Portugal and the United States. The company has quickly become a primary player in the United States as officials across the country have turned to private companies to finance, build and operate highways.
The firm struck a deal this year for the first privatization of an existing road in the country when it paid $1.8 billion to take control of the Chicago Skyway for 99 years. The company also owns the South Bay Expressway, which is under construction in San Diego.
This year, Virginia entered into an agreement with private firms to build and operate toll lanes on the Capital Beltway. Officials are also considering private-sector proposals to build toll lanes in the Interstate 95 corridor.
Additionally, a consortium of local builders and developers submitted a proposal in August to purchase the Dulles Toll Road for more than $1 billion in exchange for toll revenue.
Allen said his firm is interested in buying other roads in the Washington area, including the Dulles Toll Road. Groups have about two months to submit offers before the state begins deciding which, if any, to pursue.
"We are very interested across the U.S.," he said, "and the [Toll Road] is an obvious one for us to follow."