CBRE Global Investors, combined with CBRE Clarion Securities and CBRE Caledon, is one of the world’s leading real asset investment managers providing real estate and infrastructure investment solutions to over 500 clients worldwide.
CBRE Global Investors is the investment management division of CBRE Group, Inc. the world’s premier commercial real estate services and investment firm. The company’s shares trade on the New York Stock Exchange under the symbol “CBRE.”
March 18, 2017
Viewed 2151 times
MLPs made it two straight negative weeks with a 0.9% decline. Oil prices finished up slightly on the week, stepping back from the abyss with a bullish inventory report Wednesday. We got an oil relief rally, a FED relief rally, even a Canadian jacket company IPO. Still, MLPs failed to attract broad-based buying. NGL prices were down sharply, perhaps contributing to MLP weakness. Or maybe weakness was due to this week being Spring Break across Texas and the beginning of the NCAA tournament…
For March so far, MLPs are down 3.1%, but continue to cling to a small gain for the year so far. The S&P 500 has retaken the MLP Index on year over year returns and is well ahead year to date.
Yield-Based Equities Rally, MLPs Fall Short
What was characterized as a “dovish” rate raise by the Fed was applauded by the market Wednesday. MLPs were already up that morning after the oil inventory report. MLPs, REITs and utilities rallied after the Fed announcement that afternoon, but REITs and utilities caught and past MLPs by the end of the day and showed more follow-through the rest of the week, leaving MLPs as relative losers despite the rebound in oil prices that logically should have provided some positive beta for MLPs.
The harsh reality is oil prices at $48.50/bbl doesn’t light a fire under those waiting on the sidelines, to the extent there are investors paying attention to MLPs and debating an allocation. The sector has become an execution story that will play out during the second half of 2017. In the meantime, investors bold enough to believe in volume recovery tied to a recovery of U.S. production will get paid to wait, if they can withstand some near-term pain.
Winners & Losers
Of the top 5 this week, just one (SPH) is in the MLP Index. SRLP announced an acquisition, and SDLP got some contract relief on one of its assets and caught a bounce. On the downside, CELP discussed a potential distribution cut next quarter and was punished for it. ENLK and GEL were down on no news.
Not pictured in the chart was Azure Midstream, which was up 215% this week to $0.47/unit on the pink sheets after EPD announced it would be acquiring assets in a bankruptcy auction for more than the stalking horse bid. Azure remains down 98% from its peak and down 47% YTD.
YTD Leaderboard
Not much of a change on the YTD leaderboard. OKS dropped back, presumably on weak NGL prices, but remains up 20.9% for the year. On the downside, AMID and USDP replaced SPH and CNXC among the biggest losers.
General Partners and Midstream Corporations
GPs and corporations outperformed this week overall, but it was a fairly even split of winners and losers. ETE led the way, with strong showings from SEMG as well. EQGP continues to be volatile week to week, and OKE had a rare off week.
New of the (MLP) World
For a third week in a row, there were no public equity offerings in the MLP space, although there was a private placement. EPD picked up a rounding error amount of assets that have some synergies. A few more open seasons were announced, with Cheniere’s announcement of actual commitments probably the most material organic growth announcement this week. TRP’s new mainline toll agreement was big news early in the week.
Capital Markets
Growth Projects / M&A
Other