Trucking company Yellow agreed to an initial bid of $1.3 billion for its U.S. and Canadian terminals as part of a bankruptcy case, marking the first step in a widespread auction of industrial real estate parcels as large as 70 acres in some of North America’s biggest markets.
Yellow accepted that offer from rival trucker Estes Express Lines to open the process for parting with its 166 properties that mainly consist of truck terminals, Yellow attorney Allyson Smith said Thursday in a hearing related to its Chapter 11 bankruptcy protection filing. The bid sets the minimum purchase price for the real estate and allows other companies to make competing offers to Estes’ bid.
The Nashville, Tennessee-based company, one of the biggest truckers that carries freight from multiple customers on the same trailer, also agreed to a loan offer to get it through the bankruptcy proceeding. Hedge fund Citadel Advisors agreed to loan Yellow about $100 million in debtor-in-possession financing. Investment firm MFN Partners will contribute an additional $42.5 million to the loan.
Yellow’s bid acceptance sets the stage for one of the largest sales of truck terminals in the United States since Consolidated Freightways filed for bankruptcy in 2002, said Ted Morandin, managing member at Morprop Advisors, a brokerage that specializes in transportation properties.
Rival trucking companies will be interested in Yellow’s properties in large markets where there’s little available land for truck terminals, he said. These properties are already zoned for truck distribution activity.
“There is a robust investor market for truck terminals,” Morandin said.
Executives from the trucking companies Knight-Swift Transportation, XPO and Saia all said in recent earnings conference calls they would be interested in buying some of Yellow’s truck terminals.
Yellow also leases 140 truck terminals, freeing up additional properties for other trucking companies to lease or purchase.
Details of the loan and stalking-horse bid have not yet been filed with the U.S. Bankruptcy Court for the District of Delaware. Both must be approved by Judge Craig Goldblatt of the Bankruptcy Court.
Yellow’s real estate portfolio includes trucking terminals across the United States and Canada that range in size from 70 acres to a single acre. Many are located in large markets, including Atlanta, Chicago, Cincinnati, Dallas, Houston, Los Angeles, Minneapolis, Nashville, Oklahoma City, Phoenix, St. Louis and Winston-Salem, North Carolina.
Most Yellow truck terminals are located near interstate highways. Its Winston-Salem terminal, for example, is less than a mile from I-40 and the Los Angeles terminal is less than two miles from I-15.
Estes, based in Richmond, Virginia, competed with Yellow in the less-than-truckload market where carriers haul goods from more than one customer on the same truck. Privately held Estes owns about 155 industrial and office properties nationwide, according to CoStar data. One of Estes’ largest is a 33-acre truck terminal in Groveland, Florida.
Yellow filed for bankruptcy after 94 years in business due to high debt levels accrued from the acquisition of Roadway and other rival trucking companies. Yellow also received a $700 million loan from the U.S. Treasury Department during the pandemic.
Yellow was operating at a loss during its final days in business, reporting that in this year’s first quarter its net loss widened to $54.6 million from $27.5 million in the same time a year earlier. Yellow management blamed the Teamsters for causing the company to file for bankruptcy; Yellow had employees that were members of the International Brotherhood of Teamsters union.
“We faced nine months of union intransigence, bullying and deliberately destructive tactics,” CEO Darren Hawkins said in a statement at the time of the company’s bankruptcy filing. Teamsters “leadership was able to halt our business plan, literally driving our company out of business, despite every effort to work with them.”
Teamsters General President Sean O’Brien said in a statement that “Yellow has historically proven that it could not manage itself despite billions of dollars in worker concessions and hundreds of millions in bailout funding from the federal government.”
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