Ridiculously advantageous to the partners of the LLC, and good on them for securing this. Easily one of the best rev deals in history..
Can't knock it
In 2021, Chicago Parking Meters LLC had $136M revenue minus $50M of various expenses, leaving $86M of net operating income.
But of that $50M, $15M is "amortization of intangible asset", and I think "intangible asset" refers to the right to operate the meters. So it's effectively only $35M of "running-the-business" expenses, leaving $101M of effective profit.
I guess what I'm saying is that these are long term grifts and the city could deal with it (the fleecing of their voters), but chooses not to, because they know where their bread gets buttered.
Source: have had visibility into businesses that look like they ought to print money reliably, but actually don't.
> private investors have already extracted $2.1 billion from the deal, in part by refinancing three times.
> CPM does not – and never has – set pay station parking rates. The City retains exclusive authority to determine and establish rates, set hours of operation, and place, add or remove metered spaces. The initial five‐year rate schedule, which ended in 2013, was approved by the City Council to align with rates comparable with other large U.S. cities. Prior to the agreement, parking rates in Chicago were much lower than the national average. Seventy percent of meters had not seen an increase in 20 years.
And it's definitely not true on a risk adjusted or cash flow basis. Also these deals can be (and probably was) levered to levels which equity investments cannot. Borrow at SOFR+x% and earn on the spread between that value and 16%. Extremely profitable and uncommon carry trade