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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.

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
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MLP REALITY CHECK UPDATE

FEBRUARY 2019

Hinds Howard

Principal, Associate Portfolio Manager, Infrastructure

Viewed 887 Times

INFRASTRUCTURE CONTINUES TO DELIVER STABLE INCOME WITH LOWER VOLATILITY
Our House View outlook on midstream and global infrastructure securities is broadly positive entering 2019, but with a caveat: a standalone, concentrated, midstream-only exposure carries high volatility, oil price correlation and income risk – more risk than investors may want as part of their investment allocation to real assets. We believe that investors considering these risks can benefit by accessing midstream as part of a diversified global listed infrastructure strategy. Through active management within our Global Listed Infrastructure strategy, we have the ability to increase or decrease midstream exposure to add value while also participating in other secular trends across infrastructure sectors.
TALE OF THE TAPE
GLOBAL LISTED INFRASTRUCTURE
  • Has a sustainable, growing yield
  • Trades with lower volatility
  • Has produced higher total return over the past 5 years than MLPs1
  • Offers stable current cash flow, visible growth tied to secular trends
NORTH AMERICAN MLPS AND MIDSTREAM
  • Have a higher, but more elusive yield
  • Trade with higher volatility
  • Trade with high correlation to oil prices
  • Higher business risk tied to cyclical forces
  • Increasingly driven by global demand trends
MLP INCOME UPDATE

A familiar mantra for MLP investors: “I don’t care what the price does, as long as the income is steady.” That worked well if you owned MLPs through the 2008 financial crisis when very few MLPs cut their distributions. However, the last 5 years were different, and income has been anything but steady.

In 2017, we published a paper highlighting the disparity between the perception of growing MLP distributions versus the reality of more than 55 MLP distribution cuts occurring to that point. We’ve updated the output of that paper below with another 12+ distribution cuts transpiring since. We estimate income to MLP investors has declined 24% over the last 5 years. Over the same period, infrastructure investors have seen a 44% increase in their income.

5-YEAR INCOME GROWTH

 

 

Source: Alerian and CBRE Clarion as of 12/31/2018.

1Global Listed Infrasturcture performance refers to the FTSE Global Core Infrastructure 50/50 Index – net of withholding tax. MLP performance refers to the Alerian MLP Index.