All right, everybody, we'll go ahead and get started. Good morning, and thank you guys for attending the Southwest Ideas Conference hosted by Three Part Advisors. Up next, we have FTAI Infrastructure, traded on Nasdaq under symbol FIP. On behalf of the company, we have Alan Andreini, Head of Investor Relations. Alan, take it away.
Thank you. Generally, what I like to do with these is to find out sort of the level of information that's the knowledge that's in the room. How many people own the stock? Great. How many folks know the story? How many folks are saying, I have no idea what you guys do, but it works into my schedule? Okay. So we're all across the lot here. Okay. Right. What does FIP stand for? Let me give you a little history here, and let me give you start with a caveat. Okay. About two years ago, there was a company called Fortress Transportation and Infrastructure. Fortress Transportation Infrastructure was a company that specialized in the two things that Fortress does better than anybody on the street. One is aviation and aerospace, and the other is infrastructure. Okay.
The last thing you want to do is come to Fortress for advice on healthcare, technology. We know zip about that. We're awful at those areas. Okay. These two areas, we know cold. Okay. And we've got this great reputation. When we split the companies two years ago, it was August of two years ago, the stock was at $17. The combined entity was $17. Okay. We split them because we wanted, we said ultimately we want to be a pure play. We want to be an aerospace, aviation pure play, and we want to be an infrastructure pure play. We knew that we would get rid of the dreaded K-1s, which you all love so much to get to your accountants and how much fun that is. Okay. And we wanted to be a pure play.
We had analysts who understood infrastructure who said, Look, I have no interest in learning the aerospace business, and I'm not going to do it," and vice versa. So we knew that when we were a pure play, we would get uplift in the stock. We knew we'd get rid of the K-1s, we would get uplift in the stock. When we did it two years ago, the combined stock was, I think, $17.25. Those combined stocks today are over $180. So it would be safe to say that that worked out pretty well. One of our dear friends here just gave me something that shows that over the last two years plus, we were up 950%. And this little company called NVIDIA was only up 850%. So those are kind of outliers in our books. Let's talk about this. Now, here's the caveat that I would give you.
This is the fascinating disclaimer, which I'm sure you'll all want to read. Here's the caveat that we gave to investors two years ago when we did the split as it related to aerospace, okay, and the leasing business. Don't buy this with short-term money. Don't buy it. It's a complicated story. Complicated stories take time to develop. But when they do, you win big as the FTAI investors. When we did the split, this entity was trading around $2.60. It's now close to $9. So it's working. But the caveat that I gave you then, and I'm going to give it to you again as it relates to this investment, don't buy it with money that's got an outlook of one month or a quarter or even six months. Buy this with money that you can sit in here for 18 - 24 months because this is infrastructure.
Infrastructure, it's not like Spotify where you say, Hey, what were the, how many customers did you get this quarter?" And the stock moves one way or the other based upon that. Infrastructure is you build it, and it's two steps forward, one back. But once you get it built out, it's the gift that keeps on giving for 30 years. Okay. Firms like Brookfield, the big Canadian infrastructure play, they go out and buy assets that trade at 10, 11, 12 times. They grow them a little bit and hopefully sell them 15-20 times. We have a different approach. Our approach is we build it at three to four times. So you go through the build-out phase, you meet with the EPCs, you build it, you grow it over three, four, five years.
And then once you have it, then you've got a company that trades at 15 times. So that's the approach, and that's what we're doing here. Now, this page, you could argue, is the only important page on the deck, and we don't need to do the others, but we will. You can see the progression last year, third quarter of last year, 24.6, Q2, 34.3, 36.9. So we're annualizing at $148 million in EBITDA right now. What's happening? I'm going to tell you about the important things that you should focus on for the next three to six months. We're about to do three accretive financings, and I'm going to go through them as we go through the various assets, and I'll tell you about what those financings are. We're going to be doing $1.05 billion at the Long Ridge facility.
We're going to be doing $300 million in municipal debt at Repauno, and we're going to be doing about $600 million in debt at the Holdco level to get rid of 10.5% bonds that we did that are currently trading around 107-108. We think we can get that deal done at between 7%-7.5%, and we'll get rid of some very ugly Ares preferred that's got a 12% coupon. If you look at this page, we're currently annualizing at $148 million. If you look at the second column that shows $220 million, that is not—that is solid. Those are contracts that are executed or under LOI, and where construction has already begun, and every one of our construction contracts, it's an EPC with a serious guy like Kiewit or somebody like that, and it's time certain and it's price certain. The 220 is locked in.
Those are locked in because of several things we'll talk about when we go through the various assets. The 305 number for EBITDA is these are contracts that we're in negotiations right now. We may be sending red lines back and forth, or we may be under LOI, but we don't like to, until they're a little bit more mature, we're not going to count them. The 220 is locked in. Let's look at the assets, and I'll give you a little history of those for those of you in the room who are saying, What am I doing in this room? But not for the shareholders. Okay. Transtar is an asset that we bought two years ago. We bought it for $640 million. And it was an interesting asset because it's a short-line railroad, and we bought it at around eight times EBITDA.
And most short-line railroads at the time were trading, most short-line railroads right now are trading 12-15 times. So the question is, why were we able to buy it at eight times? There were two reasons. One, there was basically one customer. 95% of the business was U.S. Steel. We'll get into the U.S. Steel Nippon thing in a second here. And the other thing that they did, U.S. Steel did, was they said, "We're not going to let any money guys in the data room." By no money guys, that means Apollo, Brookfield, Stonepeak. None of the guys who were just money guys were permitted in there. They wanted operators. You had to understand the short-line railroad business, and you had to understand infrastructure. And it basically came down to a year's worth of negotiations with us and Genesee & Wyoming, who at the time was on their own.
They were subsequently sold to Brookfield. So it came down to us. There was a little bit of deal fatigue in the end. U.S. Steel works more slowly than some government agencies, which is impressive. But we were able to get the deal done. And in fact, we were able to, when we knew how much deal fatigue there was, and the guys on the other side were able to drop our price in the last two weeks, and we got it for $640 million. That industry has exploded, completely exploded. Okay. With the reverse inquiry that we've gotten on Transtar, we could sell half of Transtar tonight without a beauty contest, no investment banker, just taking incoming phone calls. We could sell half of it for between $500 million and $550 million. That's how tight this market has gotten. We don't want to do that.
What we would prefer to do is probably sell one or two of the other assets, reduce debt more, and do more tuck-in acquisitions and redo what Ken Nicholson, who's the CEO, and Joe Adams, who's the chairman, they're probably the best short-line railroad buyers in the world. Okay. They have gotten every single time they've done a short-line railroad or put together RailAmerica, it's been five to one, 10- 1 on the money. So that's probably the area that we would like to go. Now, before we'll come back to the Nippon deal in a second, but I just want to move ahead to the other assets. Jefferson, which is not too far from here, Beaumont, Texas. It is a facility that handles refined products, jet fuel, gasoline. We've got our two biggest customers.
One of the things that everybody asks is, Well, who are your customers? You have good credit diversification. We have got terrible credit diversification. Our two biggest customers are Exxon and Saudi Aramco. So if you can't get good credit diversification, at least have the two of the best credits in the world. So that's what we have. Our two biggest customers, as I said, are Exxon and Saudi Aramco. That thing has. You'll see steady progression. It's taken much longer than we thought to ramp it, but now we're finally there. As I said, it's in Beaumont, Texas. When this thing was originally purchased, there was a big ARB between Canadian crude, and we were bringing crude from Canada, bringing it down to the United States.
That ARB disappeared when the Prime Minister of British Columbia, she changed the restrictions in terms of how much crude could be produced up there. And I guess it was a tree-hugging thing on her part or something, but her carbon footprint. But in any event, it changed the dynamics. Now what we're doing is we're getting a lot of the crude, the heavy crude, which has even got a lower API coming from Salt Lake, from the Uinta Basin. And we'll talk about that. We'll talk about that in a minute. Well, I'm sorry. Let me go back to Repauno. Repauno is a fascinating asset. It is a terminal on the East Coast of the United States. It's right across from the Philadelphia Airport, right across the Delaware River from Marcus Hook, which is the big energy transfer natural gas liquids facility.
It is permitted to do natural gas liquids on the East Coast. It is not like Texas. Texas, you can get permitted to do anything in 20 minutes. Okay. In the East Coast of the United States, getting permitted to open up a Dairy Queen is life-threatening. Okay. It is permitted to do natural gas liquids on the East Coast. That's a big deal. Okay. It is now being built out, and we'll talk about that. One of the fascinating things about that, and we're going to come back to it in a minute, is that the Repauno facility sits on one of the largest, purest marble structures in the world. Why? We'll get to it in a second. Longridge. 485 MW power plant built up and running. It is the most efficient power plant in the PJM system, 6,400 heat rate. So it's a very efficient plant, very productive plant.
Everybody is talking about hyperscalers and the need for energy. That is a big play for us. The other thing that's going on, and we'll talk about this in a minute, is that the capacity auctions that just took place, they're through the roof. So starting next year, and this is part of the 220 that we talked about, we're going to get an incremental $16 million in capacity payments. Incremental $16 million , our investment zero, which is kind of cool. Right place, right time. This is the cap structure. Now, let me just comment on a couple of things on here in the cap structure. If you look at Jefferson, $550 million of that is municipal debt. All this debt is non-recourse debt down at the Holdco level. I mean, down at the asset level, and that's an important distinction here.
That debt at Jefferson is very valuable debt for us. We almost view it as an asset because it's got a three-handle. We happen to do the financing. And one of the things that we do when the financings come, we don't try to time our financings. Sometimes you get it at a terrible time. Sometimes you get it at the right time. That particular financing was a month in the municipal market when there was so much money to put out, they didn't know what to do with it. That financing has got a 15-year maturity, 3% rate. And the beauty of that financing is if we sell Jefferson, that financing goes with it. That's the reason why we view that as an asset. The other pieces of the financing, some of it is very ugly. We've got 10.5% Holdco debt, which I said we're going to refinance.
We've got some Ares preferred, which is painful to look at on the balance sheet. We're about to get rid of that. There's three accretive financings, which we'll go through when we go through the individual assets here. Let's look at the railroad. Now, the thing that attracted us to this was this. When we bought this, 95% of the business at Transtar was United States Steel. There was no third-party business, virtually no third-party business there. There were constant requests to do third-party business, but United States Steel's position was, We want you doing no third-party business, zero. We want you to bring in the coal, the coke, the iron ore. We want you taking out the steel. That's the reason why they would not let anybody else in. They wouldn't let any of the money buyers in here. Okay. They wanted no third-party business.
When we bought it, 95% of the business was U.S. Steel. It is now 85% and going down. Our goal is to get it to 50% because once you get it down to 50%, you're going to get a different multiple for that business. Now, let's talk a minute about Nippon. Okay. We think, and some of the things that we can talk about, some of the things we can't talk about, we think that deal is going to go through. Now, if it doesn't go through, we're expecting just by organic growth and third-party business, we'll be at $130 million in EBITDA by 2027. Okay.
If the deal goes through, and we have more and more reason every day to believe that based upon the things that we know are going on behind the curtain, if Nippon buys it and they do the things that they say they're going to do, our $130 million will go to $145 million in EBITDA in 2027. So we're hopeful that it happens. We are doing more third-party business. We've had a couple of fortunate breaks. In every business, there's good luck and there's bad luck. One of the great things about this business was that we got a call from the state of Pennsylvania, and they said, Guess what? We would like to move the Pennsylvania Turnpike. We said, Terrific. We think that's a great idea. Where do you want to move it?" They said, We want to move it right through your repair yard. We said, Great.
What are you going to do to make us feel good about that move and giving you permission to do it? They said, We'd like to build you a new one. We said, Great. $40 million later, we have got the state-of-the-art repair car facility, which is now completely booked. We're going from one shift to three shifts a day, and that is going to add $4 million-$5 million in incremental EBITDA. That's that story. You'll see more about Nippon Steel. We expect maybe in the next 72 hours, actually, based upon what we're hearing. Again, if it happens, that $130 million, if it doesn't happen and things just go on as normal, we stay at $130 million. If it does happen, we go to $145 million in EBITDA. That's our projection if Nippon does what they say they're going to do. Jefferson. This is an amazing terminal.
If you ever get a chance to go over there, let me know, and we'll get you a tour of it. It's an incredible facility. As I said, our biggest customer is Exxon, who is, depending upon your golf game, it's either an eight-iron away or a three-wood away, but it's right across the Neches River from us. We've got six pipes that connect us to that facility. We're expanding that relationship. We executed, actually, something with those guys last night, and you'll be hearing more about that in the days to come. We're doing a bunch of things there. We're moving refined products to Mexico for them between 18 and 20 trains a month that goes out via Kansas City Southern. It comes in across the river. There are six pipes that connect us to Exxon. It's stored over there that goes out via Kansas City Southern.
The other thing that we're doing is that we're bringing in heavy crude, a very low API crude. It comes in, like as I said, it's like peanut butter. You got to bring it in from Salt Lake. You heat it. You put it in the heated tanks. You bring in two more barrels of light crude. You blend it, and then it either goes across the river to Exxon or it goes down the Southern Star Pipeline to Saudi Aramco. The great thing about heavy crude is that every time you touch it, every time you do something to it, you hit the cash register. So all barrels are not created equal. We love the heavy crudes. Now, that asset, we're looking at a couple of other things there.
Because the guy who runs it, Hank Alexander, who runs the natural gas liquid facility at Repauno, knows natural gas liquids, we're also looking at a major LPG export opportunity at Jefferson South, which is a new asset that we bought down there near Exxon. We're looking at more of this waxy crude transloading, where this stuff could be shipped overseas, and we're looking at refined products transloading as well. Jefferson is finally reached an inflection point, which is great for us. Repauno. This is a fascinating story. We bought this facility for $25 million. It took us about a year to negotiate this. We bought it from DuPont because there were all sorts of environmental issues there, and we're kind of like the guys that when the more screwed up a situation is, the more difficult the situation is.
We like it when there are two guys bidding for something, not 10 guys bidding for something. So we'll invest the time, effort, and energy. We bought that for $25 million from DuPont. There was all sorts of remediation there. It was the place where dynamite was invented, actually. And Mr. DuPont blew himself up, literally blew himself up, proving that the dynamite worked. You definitely got to be committed to business to want to do that. But he did that. We got it. We went through negotiation. All the remediation is on their balance sheet, not ours. And we bought it at a great price. It's now being built out. Why is it important that you're on this massive formation of granite? It's important for this reason.
If you build above-ground storage for natural gas liquid, butane, propane, ethane, okay, every million barrels of storage costs you between $350 and $400 million to build it because those tanks have got to be pressurized and insulated. Every one of those million barrels of storage will generate 50-60 million in EBITDA. And that's it, that's a good return. That's a fine return. Okay. If you have the ability to go down 700-800 feet into pure granite, okay, and build it underground where it is naturally insulated, naturally pressurized, you can build it for half to third the price of building it above ground. And guess what? You make the same 50-60 million in EBITDA. We have the ability to put in, based upon the engineering reports we got from Lane Engineering, 6 million barrels of underground storage.
The 6 million barrels of underground storage, 6 times 50 or 60, very snotty number. That will probably trade at 15 times. About 24 months ago, we went to the state of New Jersey and said, "We'd like to put in underground caverns." And they said, Gee, we think that's a great idea. We have no idea how to permit that. It's being done in Pennsylvania. It's being done in New York. It's being done in Connecticut. And we said, Let us help you build the rigs. So for 18 glorious months, we worked with New Jersey DEP. If you ever want to kill yourself, spend 18 months working with New Jersey DEP. Okay? I mean, it's the wonderful collection of C- students who want to get out of there at 5:01 every day. All right? We got it done. We got it done.
It's now completely permitted. The permits were issued June of last year. Two weeks later, we submitted our application. We had the thing completely ready to go. We have been told that we are going to get final approval in December of this year. Now, they've yet to hit a deadline, but who knows? They may actually do it this time because they've gotten specifics as of the month. Now, why is that important? Across the river from us is Energy Transfer's facility, Marcus Hook. They know the math of underground storage. They understand because they have an underground cavern. It's a small one. It's an old one. It's the old technology, but they understand the math of half to a third. Okay?
Is it conceivable that they would come to us once the final approvals are in and say, Look, we're going to make you an offer you couldn't refuse? It'll be the godfather walking in and saying, Here's the deal. $1 billion. You now can declare victory. You bought it for 25. You put money into it. We're going to pay you a billion for it or $1.2 billion or something like that. And you'll declare victory, and we'll take the construction risk, and we'll take the risk of bringing in both sides of the trade, the product and the sale. That could happen. Are there conversations going on? You would have to expect that there are. But conversations like that, and you get money in the room, you get egos in the room, all sorts of things happen. But it is an interesting situation, let's say. Okay? Long Ridge.
Everybody in the world is talking about the hyperscalers and the need for power. Okay? We have a 485 MW power plant that is the most efficient one, and we're doing something that no other power plant in the country has. We're burning 5% hydrogen. So if you're one of the tree huggers from California and you want to say, I've got this is going to help my carbon footprint story they all looked at that and said, By the way, the power that we're buying is the hydrogen power. Leak fiction, but that's what they'll tell their shareholders. Okay? The other thing that's going on is that the demand for power is through the roof.
The capacity auction that took place three months ago, we found out that with the capacity payments that we're going to make next year for our 50% interest in that asset, we've got almost no money left in that because we sold half of it for $150 million to Grosvenor, Chicago. So we almost have no money left in that deal. That means our piece of it is where it gets an incremental $16 million a year starting June 1 of next year. Our capital to put in to get that $60 million, zero. It's the wonderful things about capacity payments when the auctions go the right way. Morgan Stanley's got a report out saying that they think those numbers going forward will double or triple because of the need for power in the PJM. That's an interesting situation.
The other interesting situation is for reasons that are completely unclear to me, both Japanese investors and South Korean investors are crazed for U.S. power plants. They love them. They absolutely love them. Have we gotten reverse inquiry from those guys? Yes. If the capacity payments keep going up or if we execute a contract with one of the big hyperscalers to have on-site data or on-site data center at that facility, that could get interesting for us. So the story is I would call it an evolving story. We're probably in the second inning here of this game, not dissimilar from where FTAI Aviation was two years ago when that thing was trading at $17. But again, I'm going to repeat the caveat that I started with the beginning of this thing. Don't put money in here that you need to respond to somebody every quarter. Okay?
Because as I said, these are two steps forward, one back. That's the way infrastructure is. But once you build these things out, okay, I mean, it's a monster situation. The three accretive financings that we're doing here, you'll see these on the tape probably, and we've talked about this. This is not any MNPI. You'll see these on the tape in the next three to four months. They're all very accretive, and the stock should react. The only question you always get is, What are you worried about? We're worried about a recession. We're worried about Putin deciding he wants a new Hoboken. We're worried about all the things that you guys worry about. Okay? So there's nothing in here that I would say we're not worried that New Jersey DEP is not going to give us approval. We think that's done. Okay?
We're not worried about capacity payments at Longridge. We're not worried about Exxon and Saudi Aramco deciding they're not going to grow their businesses. We think those are easy trades. So it's an interesting situation. I think you're going to see a lot over the next three to four months. And I think we're in the early innings here. I don't know how much time we have left, but I think we have a little six minutes. Yes, sir.
Do you sell any of these assets? What do you do with the capital? What are you looking for?
We pay down debt. We would pay down debt and probably do tuck-in acquisitions at Transtar. Transtar, I mean, we have never done less than, I think, five to one on our money in the short-line railroad business. We know the short-line railroad business better than anybody in the world.
So I think Transtar is the perfect platform for us. So we'll take out, we'll get a double or triple on our money in some of these other assets, put it into Transtar. You get Transtar to $300 million-$400 million in EBITDA. That's trading at 15 times. That is not a $9 stock.
There's capacity at Longridge?
Yeah, there is. We've applied for, again, this is a wonderful story. PJM is worried about brownouts, right? And they're saying, God, we brownouts, and we're really worried. We don't have enough capacity. These capacity payments are going through the roof. Right now, we could go from 485 MW- 505 MW. We have to make a software change on the turbines. One day, software.
We've said to the PJM, We'd like you to just give us authorization to go from 45 to 505. And they said, Well, geez, we got to do a study We said, Excuse me, you're worried about brownouts, okay, and you don't have enough capacity. We can go from 45- 505 in one day. I know, but we need to do a study because studies take time, and that gets me closer to my 10-year vesting on my pension, so that's what we're dealing with, so we're waiting, I mean, it's interesting. If you've never had the joy or luxury of dealing with state or government agencies, I mean, you should do that one day, and then you'll want to take a sharp pencil and jam it into your eye to feel better. It's an incredible exercise.
But look, these are the guys that have the keys to the kingdom. Once you get it, once you get it done, you're locked in. Yeah.
Are the capitalists expecting to? [Audio distortion]
We're going to do three accretive financings. We're going to do the $1.05 billion at Longridge. And look, there's some really big, important tectonic things that are happening there. But most of it is, I would love to tell you about it, but I'd have to kill you. And we don't know each other that well. But it's those three accretive financings. They're going to change the EBITDA profile of the company. All three of those are happening. We're waiting for an authorization on the $300 million in municipal financing at Repauno. We're waiting for the municipality to authorize that.
Once the Longridge financing's done, the Repauno financing is done, then we're going to go to the Holdco. That's going to be the easiest one because those 10.5% bonds are trading at 107-108 right now. So we'll get that deal done, 7-7.5%. Then we'll take enough money to get rid of the ugly Ares preferred. We had to take in the Ares preferred when we did the spinoff. That was painful. But look, Ares is going to make a fortune. They're going to give us $300 million and end up getting paid back with the true-up at probably $450 million. But they were there when we needed them. It'll be painful to pay them off, but.
The one you mentioned too is that's behind all of this?
Yeah. The guy who—there are two guys.
The chairman of the board is a guy by the name of Joe Adams. He was the guy that put the original company together. Ken Nicholson is the guy who is the CEO. Those two guys have been partners for almost 20 years. Those are the guys who built. They did the Central Maine and Quebec deal. They did Florida East Coast Industries. They did RailAmerica. These guys are experts in infrastructure. So Joe is the CEO. He is the chairman and CEO of FTAI Aviation. He is the chairman of FTAI Infrastructure. And Ken is the CEO. This thing is still externally managed by Fortress, the private equity firm. Okay? FTAI bought out Fortress for $300 million about nine months ago or six months ago. Bought them out at $300 million at $82 a share. Stock is now $170 a share. So that was a good trade.
And at some point in time, Ken will buy out Fortress as well. We'll buy out that management contract. That's 1.5% of equity every quarter and 10% above an 8% return on equity. So they'll eventually get bought out, but not right now. We're too levered right now. Once the leverage changes, which is probably the next three to four months, and you get this $220 million-$300 million in EBITDA, then we'll take them out. Yes, sir.
Be fair? You don't have to answer. Would it be fair to expect Ares to be a part of this financing that you're going to?
Yeah. They've suggested they would like to be. Okay? We're not 100% there that we would like to spend more time with them. There may be other people that are a little more user-friendly. Thank you all for coming. Appreciate it.