07/18/2014 | By Allen Kenney
CorEnergy owns midstream and downstream energy infrastructure assets in the United States that are subject to long-term triple net participating leases with energy companies. Pipelines, storage tanks, transmission lines and gathering systems are among the assets held in the firm’s portfolio.
Much like other sectors in the REIT industry, infrastructure real estate allows a high level of cash flow to return to investors, Schulte noted. However, he said, infrastructure projects generally produce longer-duration cash flows compared with short-term rents. The low correlation of returns from infrastructure assets to the broader economy provides diversification, according to Schulte.
Schulte also discussed CorEnergy’s growth strategy.
“It’s pretty well known among investors generally that the U.S. economy is undergoing a renaissance in part due to the tremendous amount of onshore natural resources,” he said. “That transportation function requires the construction of a lot more energy infrastructure. We’re participating in that through projects we have a chance to finance.”
Additionally, Schulte said participating features create built-in growth in the company’s leases that provides long-run total returns with low volatility.
Looking at the makeup of his company’s management team, Schulte pointed out that CorEnergy is affiliated with investment management firm Tortoise Capital Advisors.
“We have access to that team and their resources,” he said. “That helps a lot with deal flow and with capital markets projects that we execute in order to finance our investments.”