New MLP’s Just Keep Coming

One of the most active arena’s for new issues this year has been the Master Limited Partnerships (MLP’s) area.

3 new issues have come to market so far in November and more are on tap.  Issued on the 4th was Antero Midstream Partners LP (ticker:AM). Issued at $25/unit it is now trading at $28.86.  Antero Midstream assets came from Antero Resources, a rapidly growing natural gas producer operating in the Marcellus and Utica shale areas of Ohio and West Virginia. Antero Midstream Partners is composed of gathering pipelines and compression stations thoughout these areas.  The minimum quarterly distribution is 17 cents/unit–pretty meager and providing a 2.36% current yield. You can check out their prospectus here. Alternatively you can check out sponsor Antero Resources here.  We have no interest in this issue even though it is a quality issue.  The reward simply is inadequate for the risk.

Last Thursday, November 13th, Landmark Infrastructure Partners LP (ticker:LMRK) came to market.  The IPO price was $19/unit and it closed the week at $19.09.  Landmark owns real estate that is leased to wireless companies, billboard firms and wind power/solar farm companies.  Most of their tenants are some of the biggest wireless companies in the world.  We find this company ‘interesting’—revenues are relatively small, just $13,000,000 annually, but 50% of this is true net income.  The minimum quarterly distribution is set to 28 3/4 cents/unit quarterly.  Based on the current closing price Friday the current yield is 6%.  We like this issue and plan to buy some for the model as well as a bit for our personal accounts. You can read their registration statement here.

Also on the 13th Navios Maritime Midstream Partners LP (ticker:NAP) came public. The issue came public at $15/unit and now trades at $14.25. Navios Maritime Midstream Partners will own 4 VLCC (Very Large Crude Carriers) tankers to start out.  This issue is spun off by Navios Maritime Acquisition (ticker:NNA) which trades at $2.75 (a hint of the quality of this issue). The partnership will have the opportunity to purchase more tankers from Navios Maritime Acquisition and thus will have growth opportunities.  Unlike Landmark Infrastructure Partners there is no real profit here–although there is free cash generated.  We are staying away–we are not high on ocean shippers. We simply do not have confidence in ocean shippers to run their businesses in a profitable manner over a longer period of time. The minimum quarterly distribution on this issue is slated to be 41 1/4 cents/unit quarterly—a whopping 11.57% at Friday’s closing price.  You can read the registration statement for this issue here.