HOUSTON, Aug. 8, 2016 /PRNewswire/ -- Salient
Midstream & MLP Fund (the "Fund") (NYSE: SMM) today announced a
dividend of $0.244 for the third
quarter ending August 31, 2016.
At the close of business on July 29,
2016, the Fund's total consolidated assets were $318.9 million and the Net Asset Value (NAV) per
share was $12.60. On July 29, 2016, the closing share price of the
Fund was $11.73, representing a 6.9%
discount to NAV.[1] For the month ending July 29, 2016, the Fund's NAV and market price
total returns were 1.0% and 4.6%, respectively, and the Fund's
yield was 11.1%.[2] Year-to-date, the Fund's NAV and
market price total returns were 24.0% and 32.5%, respectively,
compared to 15.4% for the Alerian MLP Index[3].
Across the Master Limited Partnership (MLP) space, management
teams have taken a more holistic approach towards distribution
cuts. They recognize that distribution cuts are sometimes the best
strategy when seeking to de-lever[4] the balance sheet,
improve the credit profile, and increase financial flexibility
while simultaneously positioning the company towards long-term
growth. Recently, the market has mostly responded favorably to
dividend and distribution reductions in the midstream space, which
have typically been announced in conjunction with other strategic
initiatives.
As a result of recent distribution and dividend cuts by some of
the Fund's top holdings — The Williams Companies, Inc. (WMB),
Plains GP Holdings L.P. (PAGP), and NGL Energy Partners L.P. (NGL)
— the Fund has elected to reduce its quarterly distribution from
$0.325 per share to $0.244.[5],[6],[7] Another top
holding, EMG Utica I Offshore Co-Investment, L.P., continues to
perform well thus far despite not paying a yield. We currently
believe we can monetize this asset at some point over the next few
years. The cash proceeds will be redeployed in yield-paying
midstream securities, which should help support future dividend
growth for the Fund.
Although the Fund has incurred a decrease in its underlying cash
receipts from investments, we are pleased with the Fund's
year-to-date 2016 performance. Since the year-to-date low in both
MLPs and crude oil on February 11,
2016, the Fund has generated NAV and market price total
returns of 102.6% and 108.2%, respectively, as compared to 53.1%
for the Alerian MLP Index.[8]
The Fund's third quarter dividend will be payable on
August 31, 2016 to common
stockholders of record on August 19,
2016. It is anticipated that this dividend will be a
combination of return of capital and ordinary income for tax
purposes. The final tax status of the dividend may differ
substantially from this preliminary information, and the final
determination of such amount will be made in early 2017 when the
Fund can determine its earnings and profits for the 2016 fiscal
year.
The Fund's quarterly dividends per share over the past year are
shown below:[9]
|
Amount
|
Payable
Date
|
Ex-Date
|
Record
Date
|
|
$0.244
|
August 31,
2016
|
August 17,
2016
|
August 19,
2016
|
|
$0.325
|
May 31,
2016
|
May 18,
2016
|
May 20,
2016
|
|
$0.325
|
February 29,
2016
|
February 17,
2016
|
February 19,
2016
|
|
$0.369
|
November 30,
2015
|
November 16,
2015
|
November 18,
2015
|
|
$0.368
|
August 28,
2015
|
August 17,
2015
|
August 19,
2015
|
|
|
Past performance is
not indicative of future results.
|
|
The Fund
distributions are comprised of distributable cash flow generated
from its portfolio investments plus any realized capital gains. The
tax characteristics of the historical distributions can be found on
http://www.salientpartners.com/strategies/salient-midstream-mlp-fund/
|
The Fund's investment allocation as of July 29, 2016 is shown in the pie chart
below:
The Fund's Top 10 consolidated holdings as of
July 29, 2016 are shown
below:[10]
|
Company
Name
|
Sector
|
Percent of
Consolidated
Gross
Assets
|
|
ONEOK,
Inc.
|
General
Partner
|
8.3%
|
|
The Williams
Companies, Inc.
|
General
Partner
|
8.2%
|
|
Plains GP Holdings,
L.P.
|
General
Partner
|
8.1%
|
|
Enbridge Energy
Management, LLC
|
MLP
Affiliate
|
7.7%
|
|
EMG Utica I Offshore
Co-Investment, LP
|
MLP
Affiliate
|
6.8%
|
|
Targa Resources
Corp.
|
Midstream
Company
|
4.5%
|
|
EnLink Midstream
LLC
|
General
Partner
|
4.1%
|
|
SemGroup
Corp.
|
Midstream
Company
|
4.0%
|
|
Spectra Energy
Corp.
|
Midstream
Company
|
3.7%
|
|
Energy Transfer
Partners, L.P.
|
MLP
|
3.5%
|
|
Total
|
|
58.9%
|
|
|
For illustrative
purposes only.
|
|
Current and future
holdings are subject to change and risk.
|
|
Source: Salient
Capital Advisors, LLC, July 29, 2016.
|
The Fund's consolidated unaudited balance sheet as of
July 29, 2016 is shown below:
|
Salient Midstream
& MLP Fund
|
|
|
Consolidated
Balance Sheet
|
|
|
July 29,
2016
|
|
|
(Unaudited)
|
|
|
|
|
|
|
Assets
|
(in
millions)
|
|
|
Investments
|
$314.1
|
|
|
Receivable for
Investments Sold
|
0.8
|
|
|
Other
Assets
|
1.5
|
|
|
Cash and Cash
Equivalents
|
2.5
|
|
|
Total
Assets
|
318.9
|
|
|
|
|
|
|
Liabilities
|
|
|
|
Line of Credit
Payable
|
89.5
|
|
|
Payable for
Investments Purchased
|
2.9
|
|
|
Deferred Tax
Liability
|
2.3
|
|
|
Other
Liabilities
|
0.9
|
|
|
Total
Liabilities
|
95.6
|
|
|
Net
Assets
|
$223.3
|
|
|
|
|
|
|
The Fund had 17.7
million common shares outstanding as of July 29, 2016.
|
|
|
|
|
|
Past performance is
not indicative of future results.
|
Salient Midstream & MLP Fund is a Delaware statutory trust registered as a
non-diversified, closed-end management investment company under the
Investment Company Act of 1940, as amended. The Fund's investment
objective is to provide a high level of total return with an
emphasis on making quarterly cash distributions to its common
shareholders. The Fund seeks to achieve that objective by investing
at least 80% of its total assets in securities of MLPs and
midstream companies. There can be no assurance that the Fund will
achieve its investment objective.
This press release contains "forward-looking statements" as
defined under the U.S. federal securities laws. Generally, the
words "believe," "expect," "intend," "estimate," "anticipate,"
"project," "will," and similar expressions identify forward-looking
statements, which generally are not historical in nature.
Forward-looking statements are subject to certain risks and
uncertainties that could cause actual future results to differ
significantly from the Fund's present expectations or projections
indicated in any forward-looking statements. These risks include,
but are not limited to, changes in economic and political
conditions; regulatory and legal changes; leverage risk; valuation
risk; interest rate risk; tax risk; the volume of sales and
purchase of shares; the continuation of investment advisory,
administration and other service arrangements; and other risks
discussed in the Fund's filings with the Securities and Exchange
Commission. You should not place undue reliance on forward-looking
statements, which speak only as of the date they are made. The Fund
undertakes no obligation to publicly update or revise any
forward-looking statements made herein. There is no assurance that
the Fund's investment objective will be attained.
About Salient
Salient Partners, L.P. ("Salient") is a
diversified asset management firm and leading provider of
alternative and real asset investment strategies for institutional
investors and investment advisors. The firm offers a comprehensive
suite of single-asset and multi-asset solutions designed to serve
as powerful building blocks for smarter, more efficient portfolios.
Strategies are offered in the form of open- and closed-end funds
and separately managed accounts. Salient provides unconventional
market insights in its highly acclaimed Epsilon Theory
newsletter and blog. Learn more about Salient at
www.salientpartners.com and follow us on LinkedIn and Twitter.
Salient was founded in 2002 and has offices in Houston, San
Francisco, New York and
Newport Beach.
FOR SHAREHOLDER INQUIRIES:
Salient Capital Advisors, LLC
info@salientpartners.com
800-994-0755
FOR MEDIA INQUIRIES:
Catherine P. Jones
Polisi Jones Communications
cjones@polisijones.com
917-330-8934
|
|
|
|
[1] Past
performance is not indicative of future results. Current
performance may be higher or lower than the data shown. The data
shown are unaudited. Returns do not reflect the deduction of taxes
that shareholders may have to pay on Fund distributions or upon the
sale of Fund shares.
|
|
[2]
Source: Salient Capital Advisors, LLC. The rate is annualized
based on the latest dividend paid by the Fund divided by the July
29, 2016 stock price. Past performance is not indicative of future
results.
|
|
[3]
Source: Salient Capital Advisors, LLC and Alerian, July 29, 2016.
Past performance is not indicative of future results. No investment
strategy can guarantee performance results. The index reflects the
reinvestment of dividends and income and does not reflect
deductions for fees, expenses or taxes. The index is unmanaged and
not available for direct investment.
|
|
[4] To
de-lever refers to the reduction of outstanding company
debt.
|
|
[5]
Williams Reports Strong Second Quarter 2016 Results. The
Williams Companies, August 1, 2016.
http://williams.investorhq.businesswire.com/press-release/williams/williams-reports-strong-second-quarter-2016-financial-results-provides-financ
|
|
[6]
Second Quarter 2016 Results. Plains GP Holdings, August 2,
2016.
http://ir.pagp.com/profiles/investor/ResLibraryView.asp?
ResLibraryID=82151&GoTopage=1&Category=2126&BzID=2219&G=766
|
|
[7] NGL
Energy Partners LP Announces First Quarter Fiscal 2017 Results.
NGL Energy Partners, August 4, 2016.
http://www.nglenergypartners.com/investor-relations/news/
|
|
[8]
Source: Salient Capital Advisors, LLC and Alerian, July 29, 2016.
Past performance is not indicative of future results. No investment
strategy can guarantee performance results. The index reflects the
reinvestment of dividends and income and does not reflect
deductions for fees, expenses or taxes. The index is unmanaged and
not available for direct investment.
|
|
[9] The
amount of dividends may vary depending on a number of factors. As
portfolio and market conditions change, the rate of distributions
on Fund common shares could change. A portion of the Fund's returns
may be comprised of ordinary income, return of capital and net
realized capital gains. The Fund will determine the tax
characteristics of all Fund dividends after the end of the calendar
year and will provide shareholders such information at that
time.
|
|
[10] Fund
shares do not represent a deposit or obligation of, and are not
guaranteed or endorsed by, any bank or other insured depository
institution, and are not federally insured by the Federal Deposit
Insurance Corporation, the Federal Reserve Board or any other
government agency. Data are based on total market value of Fund
investments unless otherwise indicated. The data provided are for
informational purposes only and are not intended for trading
purposes.
|
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SOURCE Salient Partners, L.P.