Miami-Dade County, Florida, issued $448.6 million in taxable bonds to fund a new headquarters for Royal Caribbean Ltd at the Port of Miami.
The bonds mature between 2026 and 2055, yielding between 5.245% and 6.224%. They received a rating of A from Fitch Ratings and A3 from Moody’s Investors Service.
“The rating reflects PortMiami’s fundamental operating strengths, including its global leading cruise port market position and its role as one of the largest ports in the state of Florida in terms of cargo volume,” Fitch analysts wrote.
The bond proceeds will finance the construction of Royal Caribbean’s new global headquarters. They will also fund a new building, parking garage, and other parking areas, the enhancement of existing buildings, and the overall development of the campus.
The total cost of the project is estimated at $600 million, of which the county will pay $450 million. The county will own the campus and lease it to Royal Caribbean. The company’s annual lease payments are adjusted annually to equal 125% of debt service over the first 30 years of the lease.
Cruises generate the majority of PortMiami’s revenue. In fiscal year 2023, the port’s cruise agreements reported 61% of annual revenue, net of parking and other indirect revenue.
Fitch noted that the port benefits from “substantial, long-term contractual minimum annual guarantees (MAGs) with both cruise and cargo operators, which have historically helped to insulate port revenues from volume and passenger volatility.”
The bonds are limited obligations of the county, payable by a pledge of net revenue from the seaport.
Stifel, Nicolaus & Company, Inc served as lead underwriter on the issuance, purchasing the bonds for $447 million. The price reflected a discount of $1.6 million. Hilltop Securities Inc served as financial advisor.