MIAMI—Two weeks after the Florida Development Finance Corporation paved the way for the sale of $1.75 billion in private activity bonds, Virgin Trains USA announced today that the offering was fully subscribed. It attracted 67 different investors.
“With the closing of the sale, Virgin Trains USA has the necessary funds to begin construction … of 170 miles of new track to a state-of-the-art intermodal facility located in the new South Terminal at the Orlando International Airport,” the company said in a press release, adding, “Construction will begin imminently and is expected to be complete in 2022.”
The Orlando station has been finished — except for tracks — for more than a year. The “new track” consists of a sealed, 125-mph right-of-way running parallel to Florida Highway 528, the Beachline (toll) Expressway east of the airport to Cocoa, Fla. From there, a second track and highway crossing enhancements will be added to Florida East Coast Railway’s mostly single-track main line south to West Palm Beach, where frequent Brightline service began to Fort Lauderdale and then Miami in 2018. The Cocoa-West Palm portion of the route is set to support 110-mph service.
The company announced its name change to Virgin Trains USA from Brightline in November 2018, and briefly flirted with raising cash via a public stock offering on Feb. 13, 2019. That idea was abruptly dropped several days before the scheduled issue.
Following a ceremony rebranding the Miami station as “Virgin Miami Central” hosted by Virgin Group founder Richard Branson, officials revealed that service would be extended to Walt Disney World and a connection with SunRail, metropolitan Orlando’s commuter rail operator, but no further details concerning the extension have been released.
In a statement, Fortress Investment Group co-founder Wes Edens says, “Today is affirmation that our vision for passenger rail holds great promise and highlights a tremendous appetite in the private markets for large-scale transportation projects.”
It is the second such bond sale for Virgin Trains in a month. It sold another $1.75 billion earlier. [See “Virgin Trains USA raises $1.75 billion in bond sale,” Trains News Wire, April 4, 2019.]
And how long before a vulture-fund asks Virgin to PSR itself by spînning-off money-losing operations and concentrate only on money-making activities? This is how Wall Street operates today and it’s then game-over for the rail line. Privatize the real estate profits, socialize the transportation losses.
With Brightline, sorry Virgin, showing a cost recovery ratio inferior to 10%, I still fail to see how those bonds will ever be repaid. The money-making real estate ventures may endure, but the money-losing passenger rail operations can only survive by public agencies taking over and operating with public subsidies. In a land where all other transportation infrastructure are heavily subsidized, economics work against privately-operated passenger rail lines.
jf turcotte,
The whole point of their rail service is to bring people to their real estate developments. They don’t care if rail by itself looses money, they’re expecting the combination to work profitably. And absent the rail, the real estate won’t work.
To correct and clarify: The Florida Development Finance Corporation’s approval on April 5 was for another $950 million in private activity bonds to help finance Virgin Trains USA’s Orlando extension. The finance authority had previously approved the $1.75 billion bond sale that was fully subscribed and legally binding–or closed–this week. Management says it needed the $1.75 billion to begin construction, but will utilize the new $950 million–once those bonds are sold–to finance additional expenditures and rework existing debt. Thanks to Trains subscriber Brian Thorniley for pointing this out.
Interesting. That means that each investor put up on average over $26.1 million.
Man this is some great news!!