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MLPs and Pipeline Companies Under Pressure After Regulatory Ruling
Many pipelines are regulated by the Federal Energy Regulatory Commission (FERC), which has the ability to set rates. Any change in regulations by the FERC could significantly impact cash flows and the rate of an MLP’s distribution growth. The FERC’s job is to ensure that companies charge “just and reasonable” fees and that exploration and production companies have fair access to transport products. Rates are usually set on a cost-of-service basis, factoring in capital and maintenance costs to keep the infrastructure running. While regulations have generally been a good thing for pipeline company by providing clear returns on their infrastructure investments, they are a major uncontrollable factor the businesses depend on. FERC revised a 2005 tax policy today to [...]
Enbridge (ENB)
Founded in 1949 in Canada as IPL Energy (changed name to Enbridge in 1998), Enbridge (ENB) is North America's largest midstream energy company. Enbridge's network of oil & gas gathering, storage, processing, and transportation systems connect the continent's most vital oil & gas producing regions. By division, liquids pipelines are expected to account for 51% of 2018 EBITDA, followed by gas transmission & midstream (32%), gas distribution (13%), and renewables and other (4%). Source: Enbridge Inc Enbridge is structured as a conglomerate, composed of numerous subsidiary MLPs and energy funds which it helps manage. These divisions also raise funds independently of the parent company in exchange for management fees, distributions, and incentive distribution rights (IDR) fees. Source: Enbridge Investor [...]
Brookfield Infrastructure Partners L.P. (BIP)
Brookfield Infrastructure Partners L.P. (BIP) is one of the fastest growing and most diversified utilities in the world. In fact, the limited partnership (a corporate structure similar to that of a Master Limited Partnership, or MLP) owns 35 infrastructure assets on five continents. Some examples of the partnership's assets include electrical transmission lines, railroads, toll roads, natural gas pipelines, global ports, telecom towers, and fiber optic lines. Source: Brookfield Infrastructure Investor Presentation As Brookfield points out, it essentially owns “critical and diverse infrastructure networks over which energy, water, goods, people and data flow or are stored.” Brookfield Infrastructure Partners’ healthy diversification by business segment (no business unit is more than 25% of cash flow) and geography helps to [...]
Ventas (VTR)
Ventas (VTR) was founded in 1983 and is the second largest medical REIT in the country, with more than 1,200 properties in the U.S. and the U.K. Ventas' property portfolio consists primarily of seniors housing communities, medical office buildings, life science centers, and inpatient rehab and long-term acute care facilities. The largest source of Ventas' cash flow is derived from senior housing properties, which are run by third-party operators under a triple net lease arrangement (tenant pays all maintenance, taxes, and insurance), as well as by the company itself. Over the past few years, Ventas has embarked on an aggressive portfolio evolution in which it's been selling off assets in struggling industries (such as skilled nursing) and investing more [...]