https://www.miamiherald.com/news/business/article229588229.html?fbclid=IwAR0P8vTgBwEPEgeGqIhuKUaFR4t1MR0PsRilTpzNncPz1DQQEd2hU8oA1Ng
Good news. Still a drop in the bucket, but I suspect they need to get to Orlando before the cash really rolls in. (although how you pay off $4B in debt is a question of Trumpian proportions)
-Don (Random stuff, mostly about trains - what else? http://blerfblog.blogspot.com/)
Brightline is having ridership and revenue up 15% froom last March. Certainly appears pent up demand for service along the I-95 corridor ?
https://emma.msrb.org/ES1263283-ES988848-ES1390198.pdf
oltmannd I suspect they need to get to Orlando before the cash really rolls in. (although how you pay off $4B in debt is a question of Trumpian proportions)
Maybe they don't really pay it off! The present value of the debt over 30 years at the U.S. Treasury long bond rate is $1.7 billion. So, if they just make the interest payments and periodically roll the debt, over 30 years the $4 billion becomes $1.7 billion in real dollar terms.
Also, as the system expands and ridership increases, the company probably will be able to increase its fares to at least keep pace with inflation, which depending on the other financial constraints could provide the monies to service the real debt or even pay it off.
Most corporations don't look to paying off their debt; they look to managing it. Most successful corporations never completely pay down their debt.
Debt is not the problem. The problem is carrying more debt than can be serviced.
Isn't real estate an essential component?
The bonds were described as high-yield, which is to say high interest payments.
charlie hebdoIsn't real estate an essential component?
I thought they made the statement publicly that both the real estate and rail developments are self sustaining and neither is dependent on the other but they both compliment each other. So while rail access increases the RE rents they can charge and the RE increases passenger density. Each operation is thought of to be financially independent of the other.
Now in the Trains Forum some folks speculated they would use real estate rents to subsidize the rail. I don't think that is their intent though and I think they want the rail to be independent financially. I think they are using a variant of the real estate value capture model though. Because the value of the real estate is more with the close rail access. Likewise the rail passenger operation is more viable with the high density real estate around the stations. To me thats a good part of the value capture model.
CMStPnP charlie hebdo Isn't real estate an essential component? I thought they made the statement publicly that both the real estate and rail developments are self sustaining and neither is dependent on the other but they both compliment each other. So while rail access increases the RE rents they can charge and the RE increases passenger density. Each operation is thought of to be financially independent of the other. Now in the Trains Forum some folks speculated they would use real estate rents to subsidize the rail. I don't think that is their intent though and I think they want the rail to be independent financially. I think they are using a variant of the real estate value capture model though. Because the value of the real estate is more with the close rail access. Likewise the rail passenger operation is more viable with the high density real estate around the stations. To me thats a good part of the value capture model.
charlie hebdo Isn't real estate an essential component?
While they may be saying that Real Estate and Passenger Transportation can be self supporting - NOW.
The exercise was started for Real Estate development using passenger transportation as a means to an end. Don't know that I believe what they are currently saying.
Never too old to have a happy childhood!
I don't know why we are talking $4 billion when there has been issued only $1.75 billion as follows:
"Some $250 million priced with a 6.25% coupon and a put in 2024; $500 million priced with a 6.375% coupon and a put in 2026; and $1 billion priced with a 6.50% coupon and a put in 2029".
If they get an additional $950 million bond, then they will have $2.7 billion, which means an annual interest payment of about $170 million. Maybe they will gross about $24 million (not the projected $55.8 million) and net something less with an administrative cost of over $100 million. Someone is going to have to pay the interest, administration, and new construction costs. That ultimately looks like Japan's SoftBank group, unless it is FECI with an equity of $2 billion, and also has a stake in the real estate. Then again, maybe this liability is also a way to reduce taxes, using real estate special deductions. Then again, maybe Japan is looking for foreign commerce. This is tough to figure.
https://www.bondbuyer.com/news/wowed-investors-snap-up-bonds-for-virgin-trains-usa
Jim200 I don't know why we are talking $4 billion when there has been issued only $1.75 billion as follows: "Some $250 million priced with a 6.25% coupon and a put in 2024; $500 million priced with a 6.375% coupon and a put in 2026; and $1 billion priced with a 6.50% coupon and a put in 2029". If they get an additional $950 million bond, then they will have $2.7 billion, which means an annual interest payment of about $170 million. Maybe they will gross about $24 million (not the projected $55.8 million) and net something less with an administrative cost of over $100 million. Someone is going to have to pay the interest, administration, and new construction costs. That ultimately looks like Japan's SoftBank group, unless FECI with an equity of $2 billion, also has a stake in the real estate. Then again, maybe this liability is also a way to reduce taxes, using real estate special deductions. Then again, maybe Japan is looking for foreign commerce. This is tough to figure. https://www.bondbuyer.com/news/wowed-investors-snap-up-bonds-for-virgin-trains-usa
If they get an additional $950 million bond, then they will have $2.7 billion, which means an annual interest payment of about $170 million. Maybe they will gross about $24 million (not the projected $55.8 million) and net something less with an administrative cost of over $100 million. Someone is going to have to pay the interest, administration, and new construction costs. That ultimately looks like Japan's SoftBank group, unless FECI with an equity of $2 billion, also has a stake in the real estate. Then again, maybe this liability is also a way to reduce taxes, using real estate special deductions. Then again, maybe Japan is looking for foreign commerce. This is tough to figure.
A prominent real estate promoter and casino owner lost over $1 billion over a ten year period.
charlie hebdoA prominent real estate promoter and casino owner lost over $1 billion over a ten year period.
The owner of BNSF loses that much in one day when Wall Street has a bad day.
York1 John
SoftBank Group is doing well. They have 69 companies and just posted $20 billion profit for the past year, and have done a two for one stock split.
FECi has Flagler, the Florida real estate company with many properties, and Flagler Logistics, which is concerned with the Port of Miami. I have not seen their financials.
http://www.flaglerdev.com/development.html
York1 charlie hebdo A prominent real estate promoter and casino owner lost over $1 billion over a ten year period. The owner of BNSF loses that much in one day when Wall Street has a bad day.
charlie hebdo A prominent real estate promoter and casino owner lost over $1 billion over a ten year period.
Not unless he sells something at a loss. Do you have any examples of that?
MidlandMikeNot unless he sells something at a loss. Do you have any examples of that?
I only meant that his net worth drops that much.
Virgin Trains USA is constructing to Orlando and fast. Time is money. Time means more to pay for the use of money. Time means longer to get paid back for your fantastic vision.
http://trn.trains.com/news/news-wire/2019/05/22-virgin-trains-usa-announces-contractors-construction-details-for-orlando-expansion
Jim200Virgin Trains USA is constructing to Orlando and fast. Time is money. Time means more to pay for the use of money. Time means longer to get paid back for your fantastic vision. http://trn.trains.com/news/news-wire/2019/05/22-virgin-trains-usa-announces-contractors-construction-details-for-orlando-expansion
I seem to recall that GM used the same reasoning in constructing the plant at Lordstown, OH to build the Chevy Vega. They used the 24 hour day for their construction cycle as 'time was money'. 50 years later we see how well that turned out.
A bad joke and it's on the suckers who support him. But we all suffer.
When this is built out, Virgin Trains USA will be having to cover interest on the funds borrowed to pay for the train sets, the stations, double tracking the FEC from Miami to Cocoa, upgrading all the signaling and crossings on that section of the FEC for Higher-Speed-Rail operations and building all new double track to Orlando. They also will need to pay for daily operations including train operations, administration and track maintenance to keep the track rated for Class 6 speeds. And on the books they also have to expense depreciation and amortization, and pay taxes if they show a profit.
I don’t know what the cost of a ticket will be but if they can get 2 million passengers paying $150 each one way that is $300,000,000 in revenue to cover all of the above. That is 5,480 passengers per day. If they have 10 operational trainsets and they carry 200 people per trip, they need 28 one way trips to generate that number of daily passengers, or about three one-way trips per trainset per day.
I don’t know what the actual numbers are that they are using, but clearly they need a lot of passengers at the right ticket price.
zardozAh, yes--the 'art' of the deal. What a joke!
He wrote quite a bit about losing more than the billion.
Then, not a joke, he paid off 900 milllion in debt, and rose to a net worth of 3.1 billion.
Steve Jobs lost 250 million in net worth in the early 1980s. Joke?
In 2016, Bill Gates lost 6.8 billion in net worth.
In 2015, Warren Buffet lost 11.2 billion in net worth in one month.
Trump has always been very open about the mistakes he made in losing money. It isn't new news.
The system managed by both Teams is functioning perfectly (for those who matter).
York1 zardoz Ah, yes--the 'art' of the deal. What a joke! He wrote quite a bit about losing more than the billion. Then, not a joke, he paid off 900 milllion in debt, and rose to a net worth of 3.1 billion. Steve Jobs lost 250 million in net worth in the early 1980s. Joke? In 2016, Bill Gates lost 6.8 billion in net worth. In 2015, Warren Buffet lost 11.2 billion in net worth in one month. Trump has always been very open about the mistakes he made in losing money. It isn't new news.
zardoz Ah, yes--the 'art' of the deal. What a joke!
Those guys did not declre bankruptcy multiple times to avoid paying contractors. Scam artist.
charlie hebdoThose guys did not declre bankruptcy multiple times to avoid paying contractors. Scam artist.
So the goalposts move?
First, he's a joke because he lost a billion in net worth.
Next, because others have lost more, he's a scam artist because he legally filed bankruptcies.
How about these other scam artists who declared bankruptcy:
Thomas Jefferson ( who could not legally file bankruptcy, but who was completely broke and applied to run a lottery to pay off his creditors)
Abraham Lincoln
William McKinley
Henry Ford
George McGovern
The list is endless.
I really don't want to get into a political discussion here.
But when you, or others, call the president a "joke" or a "scam artist" because people are buying bonds for the Virgin project, it's silly.
Heaven knows what Trump's personal financial status has to do with this project, but somehow you have made the connection.
York1I really don't want to get into a political discussion here.
I never get why people say this. If you didn't want to get into a political discussion, you wouldn't have discussed politics.
The opinions expressed here represent my own and not those of my employer, any other railroad, company, or person.
The allegation made was that he did not pay his sub-contractors. Contractors usually ask for a personal guarantee of payment which can only be nullified by a Chapter 7 bankruptcy. Trump was careful never to declare a Chapter 7 because it would have effectively blocked him from re-entry until that credit marker was lifted from his records.
He used the bankruptcy law and the casinos themselves to transfer his personal debt to the casinos via loaning himself money from the casinos and turned around and took that money and transferred it to his real estate arm to invest in real estate. This is why he has TRUMP as the holding company and the individual arms as subsidiary companies and still has that setup. It protects the holding company from bankruptcy but allows the holding company to use the subsidiaries to spin off into bankruptcy or sell to other companies. It allows for use of the bankruptcy laws to shed debt from one business by dumping it on another. It's a misuse of the bankruptcy law but is also common practice.
Verizon transferred $8-10 Billion in debt to it's Yellow pages subsidiary before spinning it off as a seperate company that went bankrupt a few years later. Note that Trump did similar with the Casinos. He would have increased his net worth substantially by doing this except for the fact the real estate market crashed and led him to a severe cash flow crisis in which the creditors forced him to sell the airline, yacht, casinos and the like. That dried up his cash and caused the house of cards to come crashing down. Overall whatever his strategy was he failed at it. Hard to tell if he intended all along to use the Casinos as a vehicle to raise cash for real estate funding or if he was seriously investing in Casinos and saw them as the future.
Trump invested in the Casinos usuing credit card level interest rates and via Junk Bonds. That high rate of borrowing along with the saturation of casinos in Atlantic City is what doomed his Casino operation. He also bought them but never rehabbed or spent money to keep their interior decor fresh or current.
Not sure what this has to do with Brightline as the Brightline strategy is to use real estate value capture by using the rail line access to increase the market value of the real estate properties built nearby as well as using the real estate developments to drive passenger traffic on the rail lines. Trumps real estate arm does not use value capture. Instead he uses the classic opportunist real estate investor model. He looks for a building in a good location that with a major upgrade or repurposing could increase the rents or leasing rates in the building itself. He does the rehab himself and cuts costs there while doing so but he has the reputation of using higher quality materials and approaches but is also known for taking some shortcuts in other areas. For example, Trump Tower in NYC does not have a sprinkler system in it. Even though at the time of design it was known that was going to eventually become a building code, Trump built Trump tower without the system and saved himself multiple millions in construction costs as well as the ongoing cost of having to test it and get it certified. Smart decision or dumb decision? Will let you know after the first major fire in the building.
zugmannI never get why people say this. If you didn't want to get into a political discussion, you wouldn't have discussed politics.
Maybe if you reread the comments, you will see that I was not the one who brought Trump or political insults into the discussion of a privately financed railway system.
There may be or may not be politics involved. However, using this forum to call the president a "scam artist" and a "bad joke" and calling his supporters "suckers" is silly. It has absolutely nothing to do with the discussion.
Does that satisfy you and your understanding of "why people say this"?
York1Does that satisfy you and your understanding of "why people say this"?
Not in the least. I wan't talking about the one who brought politics in it, I'm talking about people who repsond, then say they don't want to talk politics. The person who origninally brought politics into this didn't say they didn't want to talk politics because they obviously wanted to talk politics. But others respond with political statements, then say they don't want to talk politics, which is odd, because if they didn't want to talk politics, why not just refrain from posting politics in the first place? But if you are, then at least own it. That's what I don't understand.
To state it simply, I get it you are defending your fandom, but that is your choice. You wanted to talk politics, otherwise, you wouldn't have. Perhaps a more accurate statement is that would wish for political talk to cease? Or that you regret/lament bringing politics into it?
zugmannNot in the least. I wan't talking about the one who brought politics in it, I'm talking about people who repsond, then say they don't want to talk politics.
OK, I get it now! Thank you for setting me straight. I promise not to say that again.
York1OK, I get it now! Thank you for setting me straight. I promise not to say that again.
You can say whatever you want. I'll just continue not to understand it.
zugmannYou can say whatever you want. I'll just continue not to understand it.
No, a promise is a promise. I don't want you not to understand something.
York1No, a promise is a promise. I don't want you not to understand something.
I'll just add it to the list.
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