Maryland’s Purple Line reaches financial close

A Meridiam-led consortium has passed another milestone on the $2bn light rail project three months after being awarded the contract.

Purple Line Transit Partners, a consortium led by Paris-based Meridiam Infrastructure, has sealed financial close on Maryland's Purple Line, clearing the way for construction on the $2 billion project to begin later this year.

The announcement comes just three months since the consortium, which includes infrastructure fund manager Star America and US developer Fluor Enterprises, was selected to design, build, finance, operate and maintain the light rail project. It concludes a two-year-long procurement process.

“The Purple Line project closing reflects the strong partnership that our team has forged with MDOT/MTA following a comprehensive and competitive tender and closing process,” said Jane Garvey, chairman of Meridiam North America and Purple Line Transit board director, referring to the Maryland Department of Transportation and the Maryland Transit Administration.

Financing for the project includes an $875 million TIFIA (Transportation Infrastructure Finance and Innovation Act) loan from the US Department of Transportation and $367 million in Private Activity Bonds, designated as Green Bonds, underwritten by JP Morgan and RBC Capital Markets.

“Supported by contracts backed by the investment-grade credit ratings of the Maryland Commonwealth Transportation Trust Fund and Fluor Corporation, the bonds were sold at the lowest interest rates ever achieved in the US P3 market which generated significant savings for MTA,” Meridiam said in a statement.

Prince George's and Montgomery counties, which are expected to benefit most from the light rail project, have pledged a combined $330 million in cash and non-cash contributions. Meridiam will provide 70 percent of the $140 million in equity, while Star America and Fluor will contribute the balance.

In a note published earlier this month, Fitch said that in its opinion, “the concessionaire is comprised of members with vast experience in the development of major P3 infrastructure projects in North America, particularly in the U.S.”

“The consortium members' track record of successfully working together on a number of projects further strengthens its overall management expertise,” Fitch added, saying that it had assigned the PABs and subordinate TIFIA loan an expected rating of BBB+.

“The owner adds considerable strength as combined project grantor, and provides comfort that the obligations per the project agreement will be met,” Fitch said referring to MDOT and MTA.

The 16.2-mile light rail line will run east to west inside the Capital Beltway – between Bethesda in Montgomery County and New Carrollton in Prince George's County – with 21 stations. In addition, the Purple Line will provide direct connections to four branches of the Washington Metropolitan Metrorail system as well as connections to three regional commuter rail lines and Amtrak's Northeast Corridor.

Once completed in 2022, Purple Line Transit Partners will operate and maintain the line under a 30-year concession agreement.

Meridiam is also part of the consortium that has been awarded the redevelopment of New York’s LaGuardia. LaGuardia Gateway Partners reached financial close on the $4 billion project, the largest P3 in the US, earlier this month.