Private Equity Firm Buying Up NYC Medallion Cabs to Take On Uber & Lyft

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Taxi medallions are becoming an increasingly valuable asset in New York City – which could mean changes ahead in the way people get around town. Photo Credit: Shutterstock

By Clark Savage, Jr.

Taxi medallions are becoming an increasingly valuable asset in New York City – which could mean changes ahead in the way people get around town.

Marblegate Asset Management of Greenwich, Conn., is a private-equity firm founded by distressed-asset specialists. Since 2017, it has reportedly bought up 46 taxi medallions that were formerly the property of Gene Freidman.

In 2018, according to Crain’s New York Business, the company purchased more medallions at auction, bringing its current total to at least 300 “and purchasing Capital One’s taxi-loan portfolio, according to three people familiar with the matter,” according to Crain’s. “Once one of the largest lenders in the industry, Capital One held the debt of around a thousand medallions, and its taxi- related portfolio in early 2017 was valued at nearly $700 million, sources said.”

Marblegate’s professed goal is to partner with medallion holders. But its purchase of Capital One assets might end up making the company a major player in the private transit business.

“Marblegate is doing direct buying of medallions at auction, and (shell company) DePalma (Acquisition) is buying distressed paper at a discount on the same asset,” Richard Feinsilver, a bankruptcy attorney on Long Island who has represented clients with loans taken over by DePalma, told Crain’s. “Field Point is now the servicing agent for essentially all of the medallions picked up by DePalma.”

“Owners of taxi medallions and their drivers in New York and other cities like Boston, Chicago and Philadelphia have been hobbled by the flood of app-based ride-hailing services such as those run by Uber Technologies Inc. and Lyft Inc.,” explained the Wall Street Journal last October. “There are more than 80,000 vehicles used for ride-hailing services in New York City, more than triple the number in 2015, regulators say. They now dwarf the roughly 13,500 yellow cabs, whose numbers have risen by only a few thousand since the 1940s. The competition has led to declines in yellow-cab trips and fare revenue even as the overall number of passenger trips in for-hire vehicles has soared.”

Naturally, this has impacted the value of each and every taxi medallion. “Medallions change hands most frequently through private sales and auctions, nowadays often following bankruptcies and foreclosures,” the Journal added. “Buyers such as Marblegate have paid less than $200,000 apiece for medallions in recent auctions, down from the record $1.3 million they garnered in 2013.”

The medallions, which are metal plates on yellow cab hoods allowing them to legally pick up street-hails, “have plunged in value since the arrival of Uber and other ride-sharing services in the city,” Business Insider reported back in 2017. “They once fetched as much as $1 million but were sold for $186,000 each at the auction, an industry source told Business Insider.”