Virgin Trains: “If I was Nuveen (who has been reported as owning over $600 million of their bonds), I would be getting very nervous.”



Robert Auwaerter wrote in an inter-office email on July 20, 2019, “If I was Nuveen (who has been reported as to owning over $600 million of their bonds) I would be getting very nervous. If Nuveen starts unloading any of their position the Street will pull away very fast and bond prices will plummet.”

Mr. Auwaerter is Indian River Shores’ representative on the Indian River County, FL Metropolitan Planning Commission (MPO).  For 32 years, Mr. Auwaerter managed the bond and money market group at Vanguard responsible for $750 billion of assets.

“After only 18 months, the ridership and revenue for Virgin Trains has hit a wall.  Rather than continuing its predicted ramp up, Virgin Trains has plateaued well below its lofty projections,” replied Dylan Reingold, Indian River County, FL County Attorney.

In a document issued to bond investors in late 2017, Virgin Trains Base Case Projection, projected its 2019 ridership at 2,095,555 with revenue of $ 77.9 million.  The 2020 projection is 2,936,802 riders and revenue of $ 144.8 million.

Here is the actual performance data from Virgin Trains collected from monthly revenue and ridership reports and other Virgin Trains data.

QUARTER                 RIDERSHIP           REVENUE

First: 2018                      74,780                     $ 663

Second: 2018                106,090                     $ 1.5

Third: 2018                   159,586                     $ 2.9

Fourth: 2018                 238,749                     $ 4.7

First: 2019                     244,178                    $ 5.8

Second: 2019                237,142                     $ 5.1


Ridership 2



October 2018:                60,013                      $ 1.0

November 2018             80,660                      $ 1.5

December 2018:            98,076                       $ 2.2

January 2019:                73,568                       $ 1.7

February 2019:              78,707                            –

March 2019                    91,903                      $ 2.2

April 2019                      71,308                       $ 1.8

May 2019                       85,740                        $ 1.7

June 2019                       80,094                       $ 1.6

July 2019                        83,742                       $ 1.7



You can see for yourself from the numbers “Virgin Trains has plateaued.”

This must be why Virgin is changing its business model in favor of adding additional stops in South Florida.

Jeff Ostrowski wrote in the Palm Beach Post on June 24, 2019 that “in a shift from its original plan of connecting Miami, Fort Lauderdale and West Palm Beach with express service, the rail company previously known as Brightline now says it will add stops at PortMiami, Aventura and on city-owned property next to Boca Raton’s library.”

“We expect that these stations, which are anticipated to be operational in 2020, have the potential to ultimately generate in excess of two million additional annual trips along our rail system,” Virgin Trains said late Friday in a monthly report to bondholders.

Acela, along the Northeast Corridor stops in, among others locations, Philadelphia (population = 1.6 million), Washington, DC (population = 633,049), Baltimore (population = 619,493) and Boston (population = 685,094).  All cities have metropolitan transportation available from their stops.

Boca Raton’s population is 98,150.  Aventura’s is 38,202.

The additional stops will put Virgin Trains in direct competition with Tri-Rail, the heavily government-funded commuter service. While it does a run a little slower, its fares are roughly about 25% of Virgin Trains.

Tri-Rail has 18 stops including West Palm, Ft. Lauderdale and Miami Airport.  A Second Tri-Rail has been proposed between Jupiter and Downtown Miami.

What about Richard Branson and Virgin Trains?


In Form S-1 it indicates Virgin Trains will be a 5% or less stockholder. wrote that: “There are no percentages of ownership listed [in the Form S-1], so we do not know officially how large a stake Virgin Group has in the Brightline venture, or how much Virgin Group paid for it, if anything. We have learned from a source close to the deal that Virgin’s share is about 3%, a small amount, but we also can reasonably expect that Virgin Group would exercise a great deal of power concerning the venture, since it will control the brand, which is the ‘public face’ of the railroad.”

The Virgin License Agreement has an initial term of 20 years, subject to renewal for up to two additional ten-year periods.  There are certain circumstances under which the Virgin License Agreement may be terminated.

Even with a small minority position Virgin Trains controls the railroad’s reputation before the public, including customers and potential investors, while charging substantial fees (emphasis added) for the use of its brand, trademarks and other intellectual property associated with the “Virgin Trains USA” brand.

Now most recently, according to an August 16, 2019 article in the Palm Beach Post officials want Virgin Trains to pay for rebuilding nearly all of Loxahatchee River Bridge.

St. Lucie County officials want Virgin Trains to pay to replace the St. Lucie River Railroad Bridge, and the Taylor Creek Bridges.

Broward officials was Virgin to replace the New River Railroad Bridge.

Then too is the Sebastian River Railroad Bridge.


The Ledger 2/18/2019

There’s no compelling reason to believe it’s actually going to work,” said Matt Fabian, a partner at Municipal Market Analytics, a bond research firm in Concord, Mass.

[MMA’s core business is to provide strategic market and credit analysis and commentary on current, historical and quantitative conditions of the US municipal sector.  In 2012, MMA established its professional consulting division that provides independent analysis on important municipal issues.  The division’s projects have involved municipal risk and liquidity management, credit risk assessments and default/loss modeling.]





































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