The Retirement Systems of Alabama has embarked on yet another type of investment.
Last year, the $23 billion pension system expanded into the airline industry, buying a 36.6% stake in US Airways for $240 million. This year, it's teaming up with the cruise industry, building Alabama's first cruise ship terminal for Carnival Cruise Lines, at the request of the city of Mobile. RSA Executive Director David Bronner said the system's real estate affiliate, Alabama Real Estate Holdings Inc., has begun designing the new terminal, in order to have it up and running for Carnival's October launch of Mexico-bound cruises from Mobile.
"We got asked to do it because we're already building a $150 million hotel and office project for Mobile," Mr. Bronner said. That's set to be completed in 2005 or 2006.
He estimated the terminal will cost about $20 million, and the return on the investment is expected to be around 8% to 9%. Carnival will pay interest on the completed building, and the retirement system will get a stake in the terminal.
The terminal will be a great boon to Alabama, bringing in 1,400 passengers on 70 voyages a year, which could translate to $12 million or so coming into the state, Mr. Bronner said. It will also be a boon to the retirement system, he added, because new money into the state means new funding sources for the pension system.