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2018 Top 202: An 'Existential Crisis' for MLPs

Use of financial structure returns to energy production and delivery

RADNOR, Pa. -- Master limited partnerships (MLPs) have been playing a role in the convenience-store merger-and-acquisition game for several years, with operators taking advantage of the tax breaks that the financial structure offered. However, the stock market has not been favorable to MLPs of late.

Hinds Howard, portfolio manager for midstream and MLPs for CBRE Clarion, Radnor, Pa., calls the current situation “pretty bad.”

MLPs are going through an “existential crisis,” Howard says, but as they return to their energy-production and -delivery roots, shed c-store assets and reshape parts of their original structures, they are due for a rebound.

“Once it all washes out,” Hinds says, “you’ll see a rebirth for what’s left over.”

Here's a digest of data points that illustrate how MLPs have fared recently:

2,283

Number of stores sold by MLP-connected CST Brands and Sunoco since 2017

8%

Overall drop in MLP value since 2014

47%

Average dividend yields for MLPs

Sources: CSP and Raymond James

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