Q&A of the Day – Brightline’s Treasure Coast Station Proposals, Ownership & Ridership
Each day I feature a listener question sent by one of these methods.
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Today’s Entry: Brian: Is the claim of this person, the Brightline to Fortress Investment Group to the UAE correct? Also, do you have an update on ridership?
Bottom Line: Today’s note was brought about after a posting on the Nextdoor app said this: I was (in) downtown Stuart today at 8:30 am when (a) southbound Brightline train passed – sun angle allowed me to see inside all the train cars for the first time – zero passengers. How long until we are asked to subsidize this railroad??? Brightline is owned by Fortress Investment Group which is 70% owned by the sovereign wealth fund of the United Arab Emirates. Now, before going any further in this conversation there’s an element of truth in that commentary, however it’s principally incorrect and also includes an inherent contradiction. The conversation has heated up with Brightline on the Treasure Coast, and specifically Martin County over the past week, because Martin County officials have taken major steps in proposing stops within the county.
Last week Martin County officials formally opened up an exploration process for the consideration of a Brightline station within the county. Sites are being considered near the Martin County Courthouse and the Martin County Fairgrounds. Brightline will consider those proposals along with those submitted in St. Lucie County at the end of the month with the expectation for a decision early next year. On that note, in October, the Fort Pierce City Commission approved an exploratory process for a station as well. It remains to be seen what their proposal or proposals will look like, but we’ll know before long because meetings with Brightline officials and local governments proposing stations, will begin to take place November 28th, with a hard deadline of December 22nd for proposals. As of now, we know that there will be competition for the next station between the two counties which makes local support, or potentially the lack thereof, an important consideration for Brightline as well. Many in Martin County have been critical of Brightline’s expansion right along including local officials making the sentiment expressed by the resident of Stuart which brought about today’s note, not all that unusual. So, with that backstory behind us let’s dive into specifically addressing the claims of the person who posted on Nextdoor.
- Brightline is owned by Fortress Investment Group which is turn is 70% owned by the sovereign wealth fund of the United Arab Emirates.
This statement is incorrect; however, it’s based on recent developments. Here’s the short version of how this came about. In 2017 Fortress Investment Group purchased Brightline for $3.3 billion. Fortress is a subsidiary of the Japanese conglomerate Softbank. When the post pandemic tech bubble burst, Softbank was badly exposed with losses totaling greater than $7 billion last year. This put pressure on Softbank to raise capital to sure up its balance sheet. They’ve done so by selling investments and seeking a buyer for a controlling interest in Fortress. Earlier this year the highest bidder was the Mubadala Investment Company’s subsidiary Mubadala Capitol which previously held a 9.99% interest in Fortress. The deal agreed to between Softbank and Mubadala would sell an additional 60.01% of Fortress Group to Mubadala which is in fact a UAE based state owned investment company. With that said the transaction hasn’t closed. Should the deal clear all regulatory reviews it could close as early as the 1st quarter of next year. Were that to happen the UAE firm would effectively hold a 70% interest in Brightline.
Notably, right along, Brightline has maintained its own South Florida executive team and independent leadership team from Fortress. Should the deal go through, that will remain the case as a term of the Fortress sale to Mubadala calls for Fortress to remain an autonomous American investment firm (just as it has since Softbank originally purchased the firm). And that takes us to the inherent contradiction in the Nextdoor commentary. Subsidies.
Brightline has on occasion pursued federal grants, most recently receiving $25 million last year to enhance security around railroad tracks, however the premise of Brightline that made it different from the onset, is that it is a completely privately financed company. Investors are on the hook for Brightline, not governments. In the event the company wouldn’t be able to sustain, it would cease operations, it wouldn’t suddenly become a government operated entity. There’s already Amtrak which is the government controlled and taxpayer subsided railroad. The irony behind those who seek the failure of Brightline is that what they’re indirectly advocating for is the status quo that would have us subsiding a government run enterprise in perpetuity. Should Brightline open the door nationwide to privately run railroads – which is a distinct possibility – it would present the opportunity for the government, and taxpayers, to get out of the train operating business. It’s one of multiple reasons why it’s generally in the public interest for Brightline to succeed. As for occupancy levels...
This was something I covered a couple of weeks ago and there aren’t any notable updates yet. For a refresh:
Year-to-date through August total passengers were up 68% year-over-year with a total of 1,262,419 riders. Based on the August pacing the annual number of riders had grown to a 1.8 million annualized rate. That illustrates that progressively throughout the year the trains have become fuller. And that was before the Orlando expansion. I haven’t seen a full month’s worth of data on the Brightline expansion to Orlando, but initial reports suggested that demand doubled for the Orlando route within the first three weeks of operation of the service.
By all accounts the interest in and demand for Brightline’s service is growing and is likely to exceed 2 million passengers for the year. For perspective on how far it’s come. In 2018 a total of 579,000 total passengers rode the train that year. It’s essentially quadrupled since then.