Bankrupt trucker Yellow’s real estate is in high demand

The dismantling of bankrupt trucker Yellow is shaping up as a bidding battle over real estate as trucking companies look to capitalize on a rare chance to snap up coveted freight terminals across North America.

Old Dominion Freight Line last week agreed to buy Yellow’s network of about 170 truck terminals for $1.5 billion, surpassing an earlier offer of $1.3 billion from rival trucker Estes Express Lines. Both bids exceeded the value Yellow placed on its real estate in its bankruptcy filing, signaling the high-value trucking companies placed on the sites.

Old Dominion Freight Line is now the stalking horse in a bankruptcy court-supervised auction that will take place on Oct. 18. That means ODFL is the front-runner but by no means the certain winner in a contest expected to draw bids from across the trucking industry and the industrial real-estate sector.

“There is a tremendous amount of interest in those assets,” said Paul Svindland, chief executive of Bensenville, Ill.-based logistics provider STG Logistics.

A person familiar with the bankruptcy proceedings said hundreds of companies have struck confidentiality agreements so they can evaluate the assets.

Regional and national freight operators will have a rare opportunity to take on a series of built-out, ready-to-operate facilities in a sector in which experts say real estate is one of the biggest obstacles to expansion.

Trucking terminals have become more difficult and expensive to build as companies are squeezed by a shortage of the space needed for the buildings and truck yards. Towns and cities have grown more reluctant to approve new industrial construction as residents have raised outcries over traffic, noise, and pollution.

Mike Barker, an executive vice president of real estate services firm CBRE, said the large initial bids for Yellow’s entire portfolio could make it harder for regional carriers to acquire a smaller number of terminals because a single transaction is the quickest and least complicated way for Yellow to pay off its debts.

Barker said even if a single company buys Yellow’s network, that company is likely to sell off many of the terminals that don’t meet its needs, however.

“There’s a handful of really desirable large sites that would be very attractive,” Barker said. Other, smaller sites could draw interest from regional truckers, he said, and companies in related fields such as those that specialize in outdoor storage of truck trailers or construction equipment.