Capital Properties sells East Prov. petroleum storage facility to Sprague for $23M

CAPITAL PROPERTIES is selling its million-barrel petroleum storage facility in East Providence, pictured above, to Portsmouth, N.H.-based Sprague Operating Resources for $23 million. / PILLSBURY ASSOCIATES AERIAL PHOTOGRAPHY/DON PILLSBURY
CAPITAL PROPERTIES is selling its million-barrel petroleum storage facility in East Providence, pictured above, to Portsmouth, N.H.-based Sprague Operating Resources for $23 million. / PILLSBURY ASSOCIATES AERIAL PHOTOGRAPHY/DON PILLSBURY

EAST PROVIDENCE – Capital Properties Inc. said it is selling its petroleum storage facility here to Sprague Operating Resources LLC for $23 million.

Sprague, a subsidiary of Portsmouth, N.H.-based Sprague Resources LP, has leased the facility since May 2014. The closing is expected to happen within 30 days, Capital Properties said Wednesday. Sprague had told Capital Properties that it planned to terminate its lease agreement effective April 30.

“We are pleased to announce the agreement today to sell our petroleum storage assets. The changing nature of the distillate market in southeastern New England requires the conversion of a significant portion of the terminal’s capacity to gasoline products, which would involve significant capital investment and substantial additional risk. The company’s board of directors determined that it was in the company’s and its shareholders’ best interest to divest these assets rather than undertake the conversion,” Robert H. Eder, company chairman, said in a statement.

The terminal has a combined distillate storage capacity of more than 1 million barrels.

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Sprague, in a press release, said it plans to invest $8 million to convert half of the terminal’s storage capacity to gasoline and ethanol service to create a new revenue stream at the facility, in addition to Sprague’s existing proprietary distillate marketing business. Sprague also announced a $3 million expansion capital investment to “optimize distillate storage and expand the materials handling business” at the facility.

David Glendon, president and CEO of Sprague, said he is excited to announce the acquisition, saying the terminal has given a “boost to Sprague’s distillate marketing activities in Providence over the past two years, and we are thrilled to covert our status from tenant to owner of this high-quality terminal and welcome the site employees to the Sprague team.”

Glendon said the company plans to make East Providence the highest volume gasoline facility in its system.

Capital Properties owns a significant part of the Capital Center Special Development District. It also leases locations along interstate and primary highways in Rhode Island and Massachusetts for outdoor advertising.

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