Virgin Rail (Brightline) IPO, Bonds, Success, Branding

This is a forum for all operations, both current and planned, of Virgin Rail USA formerly known as Brightline, and Virgin Worldwide Rail operations, past and present.
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gokeefe
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Re: Virgin Rail née Brightline/AAF Orlando - Miami FL FEC

Post by gokeefe » Tue May 28, 2019 6:21 pm

Mr. Norman,

I wondered if you would post this one. Agreed that the yield environment has made for some "interesting" choices lately. "Unrated"' isn't exactly a term one normally associates with yields as low as 7%.
gokeefe

Gilbert B Norman
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Re: Virgin Rail née Brightline/AAF Orlando - Miami FL FEC

Post by Gilbert B Norman » Tue Jun 18, 2019 10:00 am

Mr. O'Keefe, to my knowledge unrated means that, since the issues have been privately placed with investors "in the know", no rating agency (Moody's, S&P) have rated them.

gokeefe
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Re: Virgin Rail née Brightline/AAF Orlando - Miami FL FEC

Post by gokeefe » Tue Jun 18, 2019 9:59 pm

Mr. Norman,

I took another read through the article just to be sure ...

Impression remains the same. This is speculative investing offered on the open market in the tax-exempt sector. Note the 2.5% default rate. Also notable that the story appears to be pointing at early indications of an asset bubble.

"Unrated" in this case is simply "buyer beware".
gokeefe

Gilbert B Norman
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Re: Virgin Rail née Brightline/AAF Orlando - Miami FL FEC

Post by Gilbert B Norman » Wed Jun 19, 2019 7:06 am

Mr. O'Keefe, I've been "stung" once in my investing life (Lehman; sold eventually @ .12 on the dollar). Wasn't fun waking up that '08 morning Sep 16.

Yes, I will concede; Brightline/Virgin is here to stay - and it will build out to Orlando Airport. I'm not sure what Sir Richard's horning in has proven; maybe if I worshipped celebrities I would.

What lacks today is public circulation of ridership and revenues since true "comparos", i.e MIA-WPB year to year, starting with May, are available. Who knows just how "pretty" those will look.

Don't rule out a "Tallytrough" feeding - yet.

Jeff Smith
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Re: Virgin Rail/ Brightline IPO, Bonds, Success

Post by Jeff Smith » Sun Jun 23, 2019 11:26 am

I retitled the thread to discuss overall prospects as the original main thread really is about operations now including Orlando.

That said this fellow doesn’t give them much of a shot: https://www.miamiherald.com/opinion/opn ... 20203.html
Next stop, Willoughby
~Jeff Smith (fka "Sarge") :: RAILROAD.NET Site Administrator/Co-Owner

Gilbert B Norman
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Re: Virgin Rail/ Brightline IPO, Bonds, Success

Post by Gilbert B Norman » Sun Jun 23, 2019 12:41 pm

From the Miami Herald column immediately linked by Mr. Smith:
Fast trains are fun to ride, and much easier on the environment than the family SUV. But in the long term, people won’t keep buying tickets if it’s not cheaper, faster and more convenient than driving their own cars.
Cheaper, now how you measure that?

I could tell you my current auto is almost a year old, and its fully allocated cost at this time is $1.771/mi. That figure includes fuel, an allowance for maintenance ($.24/mi), economic depreciation (8 years), registration, insurance, subscriptions (XM and Enform), and interest (real and/or imputed). This is a different "kettle of fish" than Tax cost, and is definitely different than a teen aged kid's idea of cost, i.e. gas.

Of course, for families keeping their books on "cookie jar" accounting, I suppose tolls, parking, and "if it needs an oil chamge" would be added to fuel.

While Florida tolls are high, there is always US27 roundly following the SAL, or 95 and back roads to it. It's not like in the Corridor, where tolls (and Amtrak fares) are "killers" and are unavoidable.

So "cheaper" is in the mind of the beholder.

gokeefe
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Re: Virgin Rail/ Brightline IPO, Bonds, Success

Post by gokeefe » Sun Jun 23, 2019 5:10 pm

I saw the column. Wasn't particularly impressed at the strident tone. The mention of impact in two specific counties led me to believe this was just "more of the same" from passenger rail opponents.
gokeefe

JasW
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Carl Hiassen calls Miami to Orlando plan "crazy" and says Branson has lost his marbles

Post by JasW » Mon Jun 24, 2019 6:24 am

Carl Hiassen needs no introduction to those of us in South Florida. This piece of his that came out in the Miami Herald this past Friday is, well, depressing.
Virgin’s Brightline train dreams are going to be derailed

BY CARL HIAASEN
JUNE 21, 2019 09:56 PM, UPDATED JUNE 22, 2019 08:09 AM

Sir Richard Branson, the charismatic British billionaire who founded Virgin Atlantic airlines, has come to Florida to lose his marbles.

Branson is investing actual money in the crazy plan to run a high-speed train from downtown Miami to the Orlando airport via Cocoa, of all places.

Originally the project was called All Aboard Florida, then Brightline and now Virgin Trains USA. (At least they didn’t change the name to All Board Virgins.)

Currently Virgin travels between Miami and West Palm Beach, a segment that was opened with the promise of reducing wretched commuter traffic on South Florida’s most congested I-95 corridor.

If any part of the rail plan had a chance of turning a profit, it was the Miami-to-West Palm leg. Not happening.

In a disclosure form filed with the state, Virgin Trains stated that ridership in 2018 was about half of what had been predicted, and that the company lost $87 million in the first nine months. And yet on June 24, a groundbreaking ceremony will be held to officially begin extending the rail service north-by-northwest.

Here’s what Branson said while he was in Miami recently riding one of the trains: “We decided, ‘Everyone in America uses cars because the rail network is run by the government – and they have nothing like what we have in Europe.”

Actually, Americans like to take trains when the route is convenient and the price is right, but even then passenger railways bleed money. Tons of money.

As designed, the Miami-Orlando project is just plain dumb, and financially doomed. That’s why the company gave up trying to lure public investors and instead raised capital by selling “private activity bonds” sweetened with tax breaks.

Sixty-seven optimists kicked in a total of $1.75 billion. Whatever they’re smoking, it’s stronger than anything you’ll find in your local dispensary.

Branson is sticking with the plan of using the existing Florida East Coast Railway line up the coast to Cocoa, where the trains will make a hard turn west on new tracks that will end at a special terminal in the Orlando airport.

This odd, indirect route has angered many residents of Indian River and Martin counties, through which the high-speed trains are scheduled to pass 32 times a day. Those seeking to block the project cite noise and safety concerns, plus the potential hindrance to first-responders stuck at railway crossings.

Last week Virgin Trains proudly announced that its trains will reach speeds up to 125 mph. Passengers supposedly will make it from Miami to Orlando in three hours – only about 30 minutes less than if they drove themselves.

Then, once you disembark at the Orlando airport, you get to stand in line and wait for a rental car. Brilliant.

So forget about saving time by hopping on the train. You won’t.

Will you save money? Nope. The company avoids discussing future ticket prices, but they won’t be inexpensive -- definitely more than you’d pay for a tank of gas.

Still, if the high-speed project somehow gets finished, expect an early surge of interest among tourists, commuters and South Floridians heading on Disney vacations.

Fast trains are fun to ride, and much easier on the environment than the family SUV. But in the long term, people won’t keep buying tickets if it’s not cheaper, faster and more convenient than driving their own cars.

Branson’s grand business concept is a synergistic rail link between Miami, where Virgin will someday have cruise ships, and Orlando and Tampa, where tourists can board a Virgin flight and go home. Dream on.

Oh, lots of people will make money off expanding the Virgin train line – the landholders along the route, the contractors working on the tracks and infrastructure – but not Branson and the other investors.

Furthermore, the argument that the project isn’t costing taxpayers any money is nonsense. Every community through which the train speeds will face losses because of traffic and noise problems that will negatively impact real estate values.

Worse, if the project goes bankrupt, guess who gets stuck with the bill for maintaining those 235 miles of new and upgraded tracks.

Branson is a smart, bold guy whose brand brought some desperately needed credibility to the struggling Brightline operation, but he’s also had some flops. Remember Virgin Cola? Of course you don’t.

Virgin Vodka? Virgin Cosmetics? Virgin bridal shops?

He’s been running a passenger rail service for years in the United Kingdom, but Florida is a different universe.

“If you have a big vision about something,” Brandon said during his Miami trip, “you’ve just got to stick with it and prove people wrong and get it done.”

Alas, poor Sir Richard. You have come to a place that’s famous for making smart guys look stupid.
https://www.miamiherald.com/opinion/opn ... 20203.html

bostontrainguy
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Re: Carl Hiassen calls Miami to Orlando plan "crazy" and says Branson has lost his marbles

Post by bostontrainguy » Mon Jun 24, 2019 8:46 am

Don't know who CARL HIAASEN is, but it really sounds like an article about the "Overseas Railroad" written in 1905!

So Mr. Hiaasen makes no mention of the most important real estate part of this project that has revitalized and improved quite a bit of desolate unsafe barren parcels of land in a few undeveloped Florida cities? And no mention of the "Greeness" of taking the train instead of having all those polluting cars driving around the state?

I now live in Florida. Florida is huge. Driving between Tampa and Orlando or Orlando and Miami is boring and tedious and can even be dangerous (lots of accidents down here). To think the country's greatest tourist magnets can't generate much traffic between these tourist hot spots is ridiculous. I was very skeptical about this project getting built, but now that it looks like it is going to happen, people will support it.

People come to Disney World and park their rental car for days and use the WDW transportation system because it's fun, relaxing and enjoyable. Now that same vacation relaxation gestalt will be available through the entire state. That's progress.

phillyrube
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Re: Carl Hiassen calls Miami to Orlando plan "crazy" and says Branson has lost his marbles

Post by phillyrube » Mon Jun 24, 2019 9:35 am

This odd, indirect route has angered many residents of Indian River and Martin counties, through which the high-speed trains are scheduled to pass 32 times a day. Those seeking to block the project cite noise and safety concerns, plus the potential hindrance to first-responders stuck at railway crossings.

If it's a high speed train, how long can it take to cross a highway?

Bonevalleyrailfan
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Re: Virgin Rail/ Brightline IPO, Bonds, Success

Post by Bonevalleyrailfan » Mon Jun 24, 2019 5:20 pm

Mr. Norman, am curious what your thoughts are about Moody's rating the latest PAB bonds at Aaa/VMIG 1, which is a superior rating for municipal bonds. Seems like the 1.9% coupon is a big improvement over the earlier 2019A series bonds that had an average 6.4% coupon.

https://emma.msrb.org/ES1277493-ES999729-ES1401186.pdf or try this https://emma.msrb.org/ES1277493-ES999729-ES1401186.pdf

$950M in PAB'S were sold last week and closed on June 20th. Seems that this successfully completes the financing of phase 2. Something many thought was not possible.

More info here

https://emma.msrb.org/FileHandler.ashx?issueId=ER391532

Bonevalleyrailfan
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Re: Virgin Rail/ Brightline IPO, Bonds, Success

Post by Bonevalleyrailfan » Mon Jun 24, 2019 5:40 pm

Also, the Miami Herald opinion piece mentioned in an earlier post is written by a noted Florida writer who happens to live in Vero Beach. That is in the heart of the staunchest opposition to Brightline/Virgin. This is his 3rd story I know of where he slams Brightline in the past 5 years. It is obvious he has an agenda against Brightline. His first opinion piece was full of lies that have been spewed for years, such as Brightline trains causing massive traffic delays and killing people on their way to the hospital on the other side of the tracks.

I would not pay Carl Hiassen any attention as he either is either ignorant or is intentionally spreading lies.

gokeefe
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Re: Virgin Rail/ Brightline IPO, Bonds, Success

Post by gokeefe » Mon Jun 24, 2019 6:23 pm

Bonevalleyrailfan wrote:
Mon Jun 24, 2019 5:20 pm
Mr. Norman, am curious what your thoughts are about Moody's rating the latest PAB bonds at Aaa/VMIG 1, which is a superior rating for municipal bonds.
Or as Moody's says it themselves "judged to be of the highest quality, subject to the lowest level of credit risk." That is astonishing. They just got the same rating as U.S. Treasuries. Go figure.

Someone correct me if I'm wrong but I thought these bonds are not backed by the "full faith and credit" of the State of Florida. Has that changed?
gokeefe

gokeefe
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Re: Virgin Rail/ Brightline IPO, Bonds, Success

Post by gokeefe » Mon Jun 24, 2019 6:41 pm

Possibly the most telling profile yet ...
Edens, for his part, said he was inspired to launch passenger service after reading the book “Last Train to Paradise: Henry Flagler and the Spectacular Rise and Fall of the Railroad that Crossed an Ocean” by Les Standiford. Edens had bought the Florida East Coast rail line, and he thought it would make sense to add passenger service to what long had been a freight line.

“There’s not many times in life when you can stand up on a stage and imagine being Henry Flagler,” Edens said.
gokeefe

Bonevalleyrailfan
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Re: Virgin Rail/ Brightline IPO, Bonds, Success

Post by Bonevalleyrailfan » Mon Jun 24, 2019 6:55 pm

gokeefe, the bonds have not and will never be backed by any government entity. The FDFC (FL Development Finance Corp) is the state agency used to issue the bonds as required by federal law. Its primary role is to ensure the bonds to be issued are of sufficient quality that the investors have a reasonable ability to make money on them.

Here is a link to a video of the full ceremony earlier today. I am not sure how long the link will be active.

http://yottastream.com/914260v/

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