[TaylorGood]

“With 61 years left on the 75-year lease, Chicago Parking Meters LLC now has recouped its entire $1.16 billion investment and $502.5 million more.”

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

[Aunche]

This is only tracking revenue. The numbers are meaningless without expenses. I'm sure they make a sizable profit margin, but conflating revenue with profit is sensationalism.

[a_puppy]

I found the actual statements by searching "chicago parking meters llc" on chicago.gov: https://www.chicago.gov/content/dam/city/depts/fin/supp_info...

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.

[cma]

And 20% inflation since then. If self driving really takes off the later years of it might be worthless. Still a terrible deal for the city.

[nickdothutton]

I was going to say, absolutely tremendous yield. Can’t cost them much to operate.

[ISL]

Without seeing the financial statements, that's hard to say.

Source: have had visibility into businesses that look like they ought to print money reliably, but actually don't.

[kurthr]

Well, they might have to grease the wheels more than once. There's nothing to stop the city from setting a maximum rate on parking, or tickets, or recovery in court or during vehicle registration. Changing a city, county, or state ordinance/law or simply not enforcing rules is the purview of the state and mostly the executive.

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.

[HDThoreaun]

They replaced all the meters with the boxes and made an app. They also pay for all the meter maids even though the ticket revenue goes to the city. So there are definitely some expenses, but yea margins are surely crazy.

[tengbretson]

Why can't you knock it?

[TaylorGood]

Jay-Z said not to :)

[skipkey]

I haven’t checked, but I suspect the return is less than they would have gotten just sticking the money in an S&P 500 index fund over the same 14 years. Still, the risk is lower.

[adam_arthur]

Even if true today, very unlikely to be true in the long run. From the numbers provided in the title, this deal is like an effectively risk free 16% yielding bond, except the revenues will also grow with inflation.

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

[birdyrooster]

If everyone invested in the S&P 500 we would all be rich. Companies should raise capital just to buy S&P 500 index fund so we can finally have universal prosperity.

[zhoujianfu]

Depending when they got in exactly (or if they averaged it in over a year), the $1.16B would now be around $4.2B!

[atdrummond]

Except the profit can also be reinvested. That kind of free cash flow is pretty insane - and will help dollar cost average any equity investments during down markets, compared to just lump sum investing $1.5B and letting it ride.