Ferrovial standardizes present value of Tennessee concession payments at $21 billion
Key Facts
Ferrovial said in a filing dated October 27 that the unified present value of payments due to the Tennessee Department of Transportation under the I-24 Choice Lanes concession is $21 billion. It said the $24.8 billion figure announced at the award in August 2026 combined components calculated on a present-value basis with others stated in nominal terms. The company said using a consistent calculation basis reduces the reported value to $21 billion. That figure represents the value of payments using the present-value method, while nominal payments during the construction years total $7.7 billion. Investing.com reported that Ferrovial shares rose about 8% on Tuesday after the details were published. The report attributed to JPMorgan an estimate that deferring most payments could lift the project's internal rate of return to at least 15%, compared with 11% in its previous base-case estimate.
The nominal payments of $7.7 billion cover the construction period from 2027 to 2033 and peak at about $1.1 billion a year. The present-value schedule records $1.50 billion for 2027, declining to $0.77 billion in 2033. The schedule lists no payments for 2034 or 2035. The filing thus distinguishes between total nominal payments during construction and annual amounts adjusted to a present-value basis. The breakdown follows the release of two different figures: the award value was based on a mix of present and nominal values, while the new figure uses a consistent basis.
The operating payments listed at present value extend over long periods after the project begins operating, reaching $0.47 billion for 2036–2040. The value rises to $1.53 billion for 2046–2055, then to $2.34 billion for 2056–2065 and $3.72 billion for 2066–2075. The schedule reaches $5.63 billion for 2076–2085. Ferrovial calculated present values through July 12, 2027, the contractual deadline for financial close, using a blended discount rate of 5.2%. Operating payments of $0.5 billion are subject to an 8% discount rate, while discount rates for the remaining payments range from 5% to 5.5%, depending on payment priority.
The $21 billion value remains separate from the excess-revenue sharing arrangement, which is tied to the internal rate of return above the base case. Under the filing, the Department of Transportation receives 12.5% of the first additional tranche of 200 basis points, then 25% of the next tranche and 50% of the one after that. Its share rises to 75% of additional returns above 600 basis points. Toll revenue sharing also begins on the portion above $3.20 per mile in 2025 prices. The department's share is 50% when the toll is between $3.20 and $4.80 per mile, 75% between $4.80 and $6.40, and 90% above $6.40. The financial structure requires an investment-grade rating, and all payments remain subject to amounts available at financial close.
The proposed project spans about 26 miles on I-24 between Nashville and Murfreesboro, adding new choice lanes while existing general-purpose lanes remain available free of charge. The Tennessee Department of Transportation said in September that commercial close established the framework for a 50-year long-term contract and that the project would be the state's first Choice Lanes facility. The department said the parties would continue working toward financial close in 2027. Ferrovial is scheduled to hold a conference call on October 28, 2026, at 15:00 Central European Time to discuss the payment schedule, and will also discuss its I-285 East project in Georgia. The department said public open-house meetings to present the technical proposal are planned for November, with dates, locations and details to be announced later.