×
Triangles background
OUR COMPANY AND AFFILIATES
CBRE GLOBAL INVESTORS

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.

INVESTMENT MANAGEMENT

CBRE Global Investors

CBRE Clarion Securities

CBRE Caledon Capital Management

Trammell Crow Company

MLPguy
CBRE GROUP

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.”

REAL ESTATE SERVICES

CBRE

CBRE Blueprint
Our Company and Affiliates

This website uses cookies to improve the user experience. By using our website you consent in accordance with our Cookie Policy. Read More

ACCEPT
Triangles background
Back to Insights

April 8, 2017

Viewed 2257 times

Week Thoughts: Market Lacks, MLPs Luster

MLPs ticked up 0.8%, beating a flattish market in a week where not much moved, including utilities and interest rates.  Commodity prices did move up, helping nudge MLPs higher and keep momentum from last week going.  Oil broke through $52.00, finishing the week on a high note, but still down 2.8% for the year.  The broad market was eerily quiet this week, despite an employment report and some serious geopolitcal developments.
weekly_4-7-17
1Q distributions and earnings will start trickling out in the next few weeks, but I bet we see a few more stock-specific catalysts in the meantime.  One of those came through this past week (SUN asset sale), but there are others out there, as discussed here in recent weeks.  I’m on Spring Break this coming week, which probably means those catalysts will come through while I’m out…
IPO Market Open for Quality
The HESM IPO was important for the sector.  It priced at a higher multiple and lower yield than NBLX, was upsized and had a solid pop of 11.3% on its first day of trading.  Producer-backed midstream MLPs have been some of the more successful MLPs in recent years, and the model has been well established by WES, ACMP, EQM, CNNX, AM, RMP, NBLX.  The HESM IPO was a slight step-out from recent IPOs in that its underlying assets are not in the Marcellus or Permian, which required some additional MVC structuring.
There are clear synergies and a competitive advantage for HESM of having a supportive producer that can direct volumes across existing assets, provide commitments that can support a project, which also attracts third party volumes.
Producer IPOs
In the next few weeks, we’ll see Antero roll out a different structure, the super high growth GP IPO, with TEGP as the closest comp.  With IDRs being taken out for more mature MLPs, it seems like GPs are going public earlier in their life cycle to extend the high growth, high multiple phase of the GP’s life.  Or they are just eager to monetize the GP as early as possible.
Encouraging News Flow Continues
It was a pretty eclectic mix of news that highlighted some ongoing positive trends in MLP land.   We had a major asset sale, an IPO, a drop-down, growth projects and a buy-in announced this week.   The trends touched: healing capital markets (HESM), asset sales continue to be viable self-help (SUN), drop-downs when available still work (TEP), growth projects are returning with production (ENBL) and demand visibility (EPD), and finally some of the smaller MLPs that went public the last few years need to be rationalized over time (WPT being the latest).
Winners & Losers
SUN was clearly the big winner, up nearly 22%.  WPT rallied after its sponsor revealed a take-private bid for the small cap MLP.   Refinery-sponsored MLPs like MPLX traded well (DKL being the exception).  HESM (not pictured, will fix for next week), finished its first 3 trading days up 12.6% from pricing.  NBLX, the sector’s most recent MLP IPO prior to HESM, sold off, which is perhaps a coincidence.
Top5Bottom5_4-7-17
CELP went from top 5 to bottom 5 week over week.
Top5Bottom5_3-7-17_chart
YTD Leaderboard
NBLX remains the top performing MLP so far this year, but the range of returns tightened up (if you ignore SDLP), as this week saw some rotation from winners.   EEP moved up while winners mostly moved lower.  There are now only four MLPs with 20%+ returns.
Top5Bottom5_4-7-17_YTD
Top5Bottom5_4-7-17_YTD_chart
General Partners and Midstream Corporations
Median GP and midstream corporation returns were 0.0%, led by MLPs with higher sensitivity to natural prices like AROC and AHGP.  Beyond those two, the range of returns in this group was tight.
Top5Bottom5GPs_4-7-17
Top5Bottom5GPs_4-7-17_chart
News of the (MLP) World
News-of-the-World
Capital Markets

  • Hess Midstream (HESM) priced 14.8mm-share IPO at $23.00/unit, raising $339.9mm in gross proceeds (press release)
    • Initial offering was upsized from 12.5mm shares
    • HESM traded up 11.3% to close at $25.60/unit
  • Alliance Resources (ARLP) priced $400mm of 7.5% senior notes due 2025 at par (press release)
    • ARLP originally launched a $500mm offering

Growth Projects / M&A

  • Sunoco LP (SUN) announced the sale of 1,110 convenience stores in continental US to 7-Eleven for total consideration of $3.3bn in cash (press release)
    • SUN entered into a 15-year take-or-pay fuel supply agreement in which SUN will supply 2.2bn gallons of fuel annually, increasing to 2.7bn over the next four years, to a 7-Eleven subsidiary and in return SUN will receive guaranteed annual payments
    • About 200 more convenience stores will be sold in a separate process
    • SUN will use total proceeds to reduce debt and potentially buy back units to bring distribution coverage to long-term target of 1.1x
    • The market was pleased, sending SUN higher on renewed faith in the ongoing nature of its current distributions
  • Tallgrass Energy Partners (TEP) announced acquisition of additional 25% interest in Rockies Express Pipeline (REX) from Tallgrass Development for $400mm in cash (press release)
    • Increases TEP’s ownership interest in REX to approximately 50%
    • Also, Ultra Resources announced that its Chapter 11 reorganization plan was confirmed and plans to pay REX’s $150mm claim within three months after Ultra emerges from bankruptcy, expected to be during April, and no later than 10/30/17
  • Enterprise Products (EPD) announced customer commitments supporting two expansion projects to further their ethylene infrastructure (press release)
    • EPD plans to repurpose a high-capacity ethylene storage well at its Mont Belvieu complex and build a new 24-mile ethylene pipeline from Mont Belvieu to Bayport, TX
  • World Point Terminals (WPT) sponsor submits preliminary going-private proposal at $16.80/unit (filing)
    • WPT originally went public at $20/unit, in a $175mm offering in August 2013 at a 6.0% yield
    • WPT has not raised its distribution since IPO, resulting in $4.20/unit in distributions, which when added to the buy-in price, results in a total return of 5% since IPO in 3.5 years, seems fair enough
  • Enable Midstream (ENBL) announced new 10-year contract with Newfield Exploration pipeline to support recently announced Cana and STACK Expansion project (press release)
  • Navios Maritime (NMM) announced acquisition of two Panamax vessels for $27mm (press release)
RELATED CONTENT
No posts matching your criteria
MLPguy Post
Week Thoughts: Midstream Re-Run Energy stocks, midstream stocks, and MLPs ran back last week’s action with another big week. Like last week, it was 4 straight green days followed by a weaker Friday.
MLPguy Post
Week Thoughts: Big Score for Midstream Midstream broke a 4-week losing streak and rang in the new year with a bang, rallying 7-8% across the midstream indexes. The big week was just the 3rd best week for MLPs since the vaccine news turned things around in early November.
MLPguy Post
Week Thoughts: Another Lost Week, Year for Midstream The short final week of the year was good for most stocks, but Midstream stocks were left out again. The S&P 500, utilities and infrastructure stocks traded up, along with oil and natural gas prices.
MLPguy Post
Week Thoughts: Midstream Santa Rally Melts Midstream underperformed the market for a third straight week after its massive bounce in November and early December. The group is clinging to a positive month of performance with just 4 more trading days left...
MLPguy Post
Week Thoughts: Midstream Checks Out Stocks, oil prices and natural gas prices were all up this week, but midstream stocks took a step back and appear to be coasting to the finish line for the year after the rush to re-position over the last few months.
MLPguy Post
Week Thoughts: Midstream Stalls at Altitude Midstream was mixed this week, with MLPs closing slightly lower after 4 very strong weeks of positive performance. Positive performance from some of the larger corporations in the U.S. and Canada helped the broader midstream indexes finish positive and keep pace with energy stocks...
MLPguy Post
Week Thoughts: Midstream Furious Finish Midstream had another huge week on still more follow-through of positive sentiment shift that’s occurred over the last 5 weeks as positive vaccine news sparked a rotation into value and energy stocks.
MLPguy Post
Midstream Movember: Updated Returns Through Month End Because the end of the month fell on a Monday, we felt it might be useful to post a wrap up on monthly performance for midstream, outside of the normal weekly cycle.
MLPguy Post
Week Thoughts: Midstream Parade Goes On Energy stocks (midstream included) continued their recent run of positive stock performance in this short week, helped by ongoing positive vaccine data points. It was the best Thanksgiving week return for midstream since 2008 (when MLPs were up 20%).
MLPguy Post
Week Thoughts: Midstream Hosts Another Large Gathering Another vaccine update, another rally for energy stocks and midstream stocks. Midstream was green all week until taking a breather Friday. Stocks and the infrastructure index were slightly negative, and utilities were hit hard.
MLPguy Post
Week Thoughts: Midstream Goes Green on Vaccine Energy stocks were buoyed by the big vaccine news Monday, and the gains held for the week overall. XOP spiked 20.4% this week, XLE was up 17.1%. Midstream wasn’t quite that strong but posted with historically significant gains Monday and for the week
MLPguy Post
Week Thoughts: Stocks Get Mandate, Midstream Flips Red The market (and midstream for most of the week) seemed to shrug off the ongoing presidential election malaise this week.
MLPguy Post
Week Thoughts: Pain Distributed Across Markets, Midstream Midstream and MLPs returned to earth this week, following lower oil prices and the market lower. Solid earnings reports from some of the larger names weren’t enough to offset macro headwinds and ET’s large distribution cut.
MLPguy Post
Week Thoughts: MLPs Ramp into Earnings MLPs resumed their October rebound this week with their best week since early August. Energy stocks outside of midstream also had a strong week on the back of merger mania in upstream with another E&P merger announced this week and others rumored.
MLPguy Post
Week Thoughts: Midstream Flattens Friday Midstream and MLPs looked to be coasting to a third straight week of solid gains, but a sharp selloff across energy stocks Friday erased the gains for the week.
MLPguy Post
Week Thoughts: Midstream Unchained, MLP Eruption MLPs followed up last week’s modest bounce with a huge week in a risk-on surge for equity markets, commodity markets and everything else this week.
MLPguy Post
Week Thoughts: Midstream Asymptomatic as Oil Declines The stock market broke its losing streak, and MLPs and U.S. midstream came along for the ride this week, bouncing slightly after a rough week, month, quarter and year. Weakness in Canadian midstream dragged down the AMNA Index.
MLPguy Post
Week Thoughts: Midstream Canceled Again The S&P 500 closed negative for a 4th straight week, while midstream had its worst week since June in what has been a brutal September so far.
MLPguy Post
Week Thoughts: Midstream Yield High, Interest Low Midstream stocks bounced back early in the week after two rough weeks, but then as the market rolled over later in the week, midstream and MLPs were dragged back down.
MLPguy Post
Week Thoughts: Another Setback Setback for Midstream Midstream struggled again this week, in a risk-off week for stocks and commodity prices.
MLPguy Post
Week Thoughts: Midstream, The Final Season With the market taking a very well-publicized breather this week, midstream followed the market and oil prices lower. MLPs were down each day this week and finished down 4.7%.
MLPguy Post
Week Thoughts: Stocks Up, Midstream Down MLPs staged a comeback effort late in the week (+3.7% Wednesday to Friday), but finished down vs. last week, and well below the S&P 500’s 3.3% gain.
MLPguy Post
Week Thoughts: Midstream Militia Retreats After a few weeks of positive performance, midstream rolled over this week. Energy stocks in general were negative, despite benign commodity price movements and strength among market indexes (which clearly are dominated by tech stocks).
MLPguy Post
Week Thoughts: Blue Flame Special for Midstream Midstream followed up last week’s big week with another strong week of price action. Midstream’s gains were mostly isolated to Monday and Wednesday, but those two days were good enough for a 3% week for the group overall, better than the S&P 500, utilities and infrastructure.