Commercial Close Reached on I-24 Concession in Tennessee, With Construction Cost of $9.2 Billion
Key Facts
Ferrovial announced on September 30 that it had reached commercial close on the I-24 Southeast Choice Lanes project agreement with the Tennessee Department of Transportation, moving the deal into work toward financial close, according to statements from the company and the department. Ferrovial leads the DriveTN consortium, which includes Transurban and Tikehau Star Infra, and will finance, design, build, operate and maintain the lanes. The agreement sets a 50-year concession beginning when the lanes open to traffic. The Tennessee Department of Transportation said commercial close establishes the project's long-term contractual framework, while financial close remains the final stage of the contracting process. The commercial-close statement did not disclose a payment schedule; an EL PAÍS report published on October 21 also said the precise schedule had not been announced.
The project spans 26 miles between Nashville and Murfreesboro, adding two optional tolled lanes in each direction to four existing general-purpose lanes that will remain free. The road design therefore provides tolled lanes alongside the existing free lanes, without removing the right to use the latter. Ferrovial estimated construction costs at about $9.2 billion, with an estimated construction period of eight years. In an earlier announcement in August, Tennessee's governor described the project as a $9.2 billion investment and estimated the concession's expected value to the state at $24.8 billion. These figures link the scale of construction to the expected value of the concession over the long term, while the concession term is measured from the start of operations, not the date of commercial close.
Ferrovial's pricing framework set an initial flexible toll cap of $1.60 per mile, with the company and the Tennessee Department of Transportation to share revenue above that threshold. The framework sets a basis for pricing and revenue sharing, but is not a published payment schedule for the project. Traffic data for the corridor include an estimate of 150,000 to 190,000 vehicles a day, and show daily congestion lasting 8 to 11 hours. These are estimates the company presented to investors on October 5, not traffic figures recorded after the new lanes began operating. The assumptions are tied to the concession's operating economics, as revenue estimates depend on traffic and pricing under the scenarios cited by the sources.
The project had raised questions among investors about its cost and risks. On October 6, JPMorgan downgraded Ferrovial from "Overweight" to "Neutral" and cut its price target to 50 euros from 65 euros. The bank said the stock had fallen 16% since the company won the project, compared with an 8% decline in the infrastructure sector over the corresponding period through October 6. The bank also estimated the project's internal rate of return at about 11% in its base case, saying the estimate could rise to about 14% if traffic and pricing increased 10%, or fall to about 7% if they declined 10%. These figures reflect the estimate's sensitivity to traffic and pricing assumptions and are JPMorgan estimates, not realized returns. In EL7 data, the stock closed at $50.35 on October 26, with no verified data on that day's trading range.
Tables presented by Ferrovial indicate that the contractual deadline for financial close is July 2027, while the company expects financial close in the second quarter of that year. The presentation set construction to begin in early 2029, leaving a period between the expected financial close and the planned start of construction. The company expects the first phase to begin operations in 2034, with full operations starting in 2035. The Tennessee Department of Transportation said the department and the consortium would work toward financial close in 2027 in the next phase. At the company level, Ferrovial scheduled the release of its nine-month 2026 results for October 27, after the U.S. market close.