Fitch Affirms Miami Intermodal Center TIFIA Loan at 'A-'; Outlook Stable

Fitch Ratings has affirmed Florida Department of Transportation's (FDOT) $270 million Transportation Infrastructure Finance and Innovation Act (TIFIA) Rental Car Facility (RCF) loan for the Miami Intermodal Center (MIC) at 'A-'. The Rating Outlook is Stable.

The rating affirmation reflects continued growth of transaction days (six straight years of growth, fiscal year (FY) 2013 up 5.1%) combined with Miami International Airport's (MIA) strong enplanement base. Both of these factors have experienced positive trends in recent years. The affirmation is further supported by a flexible repayment schedule with early amortization expected.

KEY RATING DRIVERS

Strong Rental Car Market: MIA is a major international gateway which supports a sizable rental car market to serve both arriving international and domestic passengers. Rental car transaction days rose by 5.1% in FY2013, to over 9.5 million annually, and have further increased by 4.8% through the first seven months of FY2014. The rental car market is well diversified with 16 participating companies, with Alamo the largest contributor to customer facility charge (CFC) revenues and representing about 26% of total collections.

Supportive Revenue Framework: Based on existing transaction levels, project loans can be repaid solely from CFC payments. The current rate is $4.60 per day and is permitted under the loan documents to be increased by $0.25 every 5th year starting in August 2015. To the extent CFC are insufficient, the rental car companies are obligated to pay contingent rent to support a minimum 1.30x project life coverage ratio (PLCR).

Flexible Repayment Schedule with Early Amortization Expected: The TIFIA loan structure focuses on ultimate recovery by Oct. 1, 2044 by sizing amortization payments to a percentage of available funds. Current financial forecasts indicate full repayment as much as 20 years ahead of the final maturity date even under scenarios that reflect conservative assumptions.

Essential Project with Construction Phase Completed: The RCF is an essential airport project and is similarly a core element to the Miami Intermodal Center (MIC) regional transportation hub. Both the RCF and the related Miami Mover rail-line, connecting the RCF with airport passenger terminals, were completed without unexpected cost overruns.

Improving Financial Profile: The project has recently experienced a rapid increase in rental car transaction days and pledged CFCs allowing for a favorable PLCR and net debt to cash flow available for debt service (CFADS) ratios over the remaining life of the project loan, and earlier debt repayment. Even with a modest 1% per annum growth rate in transaction days, average PLCR and net debt to CFADS ratios would be 3.4x and 4.6x, respectively. Reserves are very robust, including the project's operating reserve fund, secondary reserve fund, and debt service reserve fund.

RATING SENSITIVITIES

Positive:

--Continued strong financial performance resulting in higher PLCR levels, lower overall project leverage and earlier project debt repayment than the current project payment date in 2044.

Negative:

--Reductions in rental car activity in the range of 20% or more from current levels due to enplanement trends.

--Operational or cash flow underperformance that leads to a potential reliance on contingent rent from rental car companies to support loan payments.

SECURITY

The loans are secured by CFCs levied by Miami-Dade County, Florida on rental car transactions at MIA, and to the extent that CFC revenues are insufficient, contingent rent on participating rental car companies operating at the RCF.

CREDIT UPDATE

MIC serves as a hub for transit, rental cars, taxis and shuttle services for the metropolitan Miami area. The project was developed by FDOT in partnership with Miami Dade County, the federal Department of Transport, Miami Dade County Expressway Authority and South Florida Regional Transportation Authority. The RCF portion of the project opened for business on July 13, 2010. Miami-Dade County's aviation department (MDAD) operates the RCF.

Rental car transaction volumes have been trending upwards since 2007, and increasing 5% in FY2013 to total $44.7 million. Activity continues to exceed expectations, and FY2014 year-to-date figures through April indicate collections of $28.1 million compared to $26.9 million for the same period in FY2013; transaction days are also up to 6.1 million, or 4.8%, over the same period, following a 3.6% increase in FY2013. RCF operating expenses were at $3.6 million in FY2013, compared to $3.7 million in FY2012.

Rental car operations are well diversified - 16 operators are currently present at the facility, the two largest being Alamo and Hertz with market share of 26% and 21% respectively. With strong revenues and continuing growth in transaction days produced a strong PLCR of 2.65x.

Fitch's base case forecast reflects a projected 1% growth in transaction days and higher O&M expense, and indicates debt repayment by 2023. Under this base case, PLCR remains at or above 2.6x while net debt to CFADS peaks at 7.0x, including TIFIA and FDOT debt. Fitch's rating case analysis, which incorporates a 20% loss in CFC collections in 2015 followed by a moderate recovery as well as higher operating expenses, indicates the final repayment date could be pushed back to 2025 -- still well ahead of final maturity in 2044. Under this rating case, PLCR remains at or above 2.1x while net debt to CFADS peaks at approximately 9.1x. Fitch notes that the coverage levels and liquidity are both consistent with the current

'A-' rating.

The TIFIA loans consist of two borrowings totaling $270 million with a scheduled final maturity in 2044. The loans represent a highly structured financing with a cash waterfall managed by a trustee. There is no pre-set amortization schedule, a feature that limits default risk to the final maturity date. Reserves are very robust, at a combined level in excess of $70 million.

Additional information is available at 'www.fitchratings.com'.

Applicable Criteria and Related Research:

--'Rating Criteria for Infrastructure and Project Finance' (July 11, 2012);

--'Rating Criteria for Airports' (Dec. 13, 2013).

Applicable Criteria and Related Research:

Rating Criteria for Infrastructure and Project Finance

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=682867

Rating Criteria for Airports

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=725296

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=841776

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