Universal Technical Institute, a provider of transportation technician training, announced the purchase of its Avondale, Arizona campus and plans to consolidate the operations of its Phoenix-based Motorcycle Mechanics Institute (MMI) into this facility. Separately, UTI announced that the company’s individual UTI and MMI Orlando campus facilities will be consolidated and reconfigured into one site.
“These initiatives are part of our ongoing real estate optimization strategy and consistent with our focus on utilizing our strong balance sheet to support our growth and diversification plans,” said UTI Chief Executive Officer, Jerome Grant. “As we enhance our blended learning model, where students participate in instructor-led lectures and demonstrations online and complete their hands-on training in our labs, we’re also able to consolidate and reformat space to decrease fixed expenses, support new offerings and allow for growth to meet increasing student interest and continuing employer demand for our graduates.
“By combining our Avondale UTI and Phoenix MMI campuses, Avondale will become our largest campus in terms of size, number of students and breadth of programs,” Grant explained. “Deploying capital to acquire this strategic site will yield significant economic benefits, and we are excited about the forward momentum we are building toward further growth, diversification and enhancement of our student offerings.”
UTI acquired the Avondale campus, which is comprised of a 283,000 square-foot specialty use building on a 23-acre parcel of land, in an all-cash transaction for $44.5 million. UTI has been the sole occupant of the facility since it was built for the company in 2004. Vacating the Phoenix MMI campus site, currently comprised of approximately 173,000 square feet, and consolidating the MMI operations into the Avondale campus, will be complete by the end of fiscal 2022.
Once fully implemented, the Company expects to reduce annual occupancy and related operating expenses by approximately $6.5 million from purchasing the Avondale campus, vacating the Phoenix MMI campus site and consolidating the MMI operations into the Avondale campus. The expense reductions will be phased in over the next two years and are expected to be fully realized by the end of fiscal 2022.
In Orlando, UTI currently has plans to consolidate its motorcycle and marine training programs into one location with its automotive, diesel and manufacturer advanced training programs, reducing the current aggregate 263,000 square-feet by an estimated 75,000 square feet. UTI is evaluating lease and purchase options for the necessary space to facilitate the consolidation. The Company expects to complete the Orlando consolidation and reconfiguration by the end of fiscal 2021. Additional details will be provided once the Orlando transactions are completed.
Industry and employer partners continue to report strong demand for UTI’s graduates, and the combined campuses in Arizona and Florida will offer training for automotive, diesel and motorcycle technicians, as well as advanced education in the vehicles and technology of leading manufacturer brands like BMW, Ford, Cummins, Harley-Davidson, Mercury Marine and Volvo. The Avondale campus also offers courses in welding and the Orlando campus is the sole location for the MMI Marine program.