Morningstar | Excellent Distribution Outlook for Atlas Arteria but Short Life Reduces Attractiveness
Atlas Arteria owns toll roads in Europe and the United States. The 25% stake in APRR, the owner of concessions covering a major tolled motorway network in Eastern France, makes up the vast majority of our valuation. The balance of our valuation comes from the wholly-owned Dulles Greenway, with other investments having little equity value because of excessive debt. Revenue grows with CPI-linked toll increases and traffic volume growth, while operating costs are well contained, allowing the firm to benefit from operating leverage. Earnings and distributions to securityholders will grow strongly in coming years because of lower interest and tax rates at APRR. Distributions from Dulles should start in a few years as it gets its financial leverage under control. The APRR concession ends in 2035 and Dulles ends in 2056. When concessions end, roads are handed over to the government debt-free for no consideration.Atlas Arteria is a global infrastructure developer and operator. As of Dec 31 2015, Co.'s investments consisted of 20.14% interest in Autoroutes Paris-Rhin-Rhone, a 2,323 km motorway network located in the east of France; 50% interest in Dulles Greenway, a 22 km toll road in Loudoun County, northern Virginia, U.S.; 70% interest in Warnow Tunnel, a two km toll road and tunnel under the Warnow River in the northern German city of Rostock, Germany; and 100% interest in M6 Toll, a 43 km motorway that bypasses Birmingham and connects to the existing M6 at both ends in West Midlands, U.K.
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