FirstGroup plc (LON:FGP) has announced three major property disposals, for total gross proceeds of USD137m or c.GBP102m, as part of its programme to rationalise Greyhound’s property portfolio.
The largest is the sale of Greyhound’s oversized legacy garage and customer terminal facility in the downtown arts district of Los Angeles, California to a subsidiary of Prologis, Inc. Under the agreement finalised and closed yesterday, Greyhound receives net USD88m in cash and will lease back the facility from Prologis for two years, during which time Greyhound will complete the moves of its terminal to a more convenient and attractive location for customers and of its garage operations to a more appropriately-sized site elsewhere. The Los Angeles site had a book value of USD11m as at 30 September 2020.
The other two property disposals announced today are of facilities in Denver, Colorado for net proceeds at the end of December of USD37m and in Ottawa, Ontario for net proceeds of USD7m. The customer terminal in downtown Denver has moved to Union Station resulting in a more convenient intermodal passenger offering and cost savings for Greyhound. Activities at the Ottawa garage were relocated as part of Greyhound’s withdrawal of service from parts of Canada in 2018/19.
In total, all three properties’ book value was USD24m as at 30 September 2020, resulting in a total profit on sale for all three transactions of approximately USD100m (net of leaseback, property tax and selling costs). The cash proceeds from the transactions will be used for general corporate purposes.
These transactions are a further step in the FirstGroup’s rationalisation of the Greyhound property portfolio for value, reducing the operational footprint by moving operations to intermodal transport hubs or new facilities better tailored to customers’ needs. The transactions follow the exit of six smaller surplus locations in the first half of the financial year. A number of other property sales processes are also underway.
