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• | Corridor Public Holdings, Inc. and its wholly-owned subsidiary Corridor Private Holdings, Inc, hold our securities portfolio. |
• | Mowood Corridor, Inc. and its wholly-owned subsidiary, Mowood, LLC, which is the holding company for our operating company, Omega Pipeline Company, LLC. |
• | Corridor MoGas, Inc. holds the operating companies, MoGas Pipeline, LLC ("MoGas") and United Property Systems, LLC. |
• | CorEnergy BBWS, Inc., Corridor Private, and Corridor Leeds Path West, Inc. may, from time to time, hold financing notes receivable. |
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Summary of Leased Properties, Major Tenants and Lease Terms | |||
Property | Grand Isle Gathering System | Pinedale LGS(1) | Portland Terminal Facility |
Location | Gulf of Mexico/Louisiana | Pinedale, WY | Portland, OR |
Tenant | Energy XXI GIGS Services, LLC | Ultra Wyoming LGS, LLC | Arc Terminals Holdings LLC |
Asset Description | Approximately 153 miles of offshore pipeline with total capacity of 120 thousand Bbls/d, including a 16-acre onshore terminal and saltwater disposal system | Approximately 150 miles of pipelines and four central storage facilities | A 42-acre rail and marine facility property adjacent to the Willamette River with 84 tanks and total storage capacity of approximately 1.5 million barrels |
Date Acquired | June 2015 | December 2012 | January 2014 |
Initial Lease Term | 11 years | 15 years | 15 years |
Renewal Option | equal to the lesser of 9-years or 75 percent of the remaining useful life | 5-year terms | 5-year terms |
Current Monthly Rent Payments | 7/1/15 - 6/30/16: $2,625,417 7/1/16 - 6/30/17: $2,826,250 | $1,723,833 | $513,355 |
Initial Estimated Useful Life | 30 years | 26 years | 30 years |
(1) Non-Controlling Interest Partner, Prudential, funded a portion of the Pinedale LGS acquisition and, as a limited partner, holds 18.95 percent of the economic interest in Pinedale LP. The general partner, Pinedale GP, a wholly-owned subsidiary of the Company, holds the remaining 81.05 percent of the economic interest. |
Future Minimum Lease Receipts | ||||
Years Ending December 31, | Amount | |||
2016 | $ | 15,219,940 | ||
2017 | 60,984,095 | |||
2018 | 61,139,762 | |||
2019 | 63,468,195 | |||
2020 | 70,629,654 | |||
Thereafter | 451,794,133 | |||
Total | $ | 723,235,779 |
As a Percentage of (1) | ||||||||||||
Leased Properties | Lease Revenues | |||||||||||
For the Three Months Ended | For the Nine Months Ended | |||||||||||
September 30, 2016 | December 31, 2015 | September 30, 2016 | September 30, 2015 | September 30, 2016 | September 30, 2015 | |||||||
Pinedale LGS | 39.8% | 40.0% | 30.4% | 30.4% | 30.4% | 49.8% | ||||||
Grand Isle Gathering System | 50.2% | 50.1% | 59.8% | 59.9% | 59.8% | 32.7% | ||||||
Portland Terminal Facility | 9.8% | 9.6% | 9.7% | 9.6% | 9.7% | 15.3% | ||||||
Public Service of New Mexico(2) | — | — | — | — | — | 2.1% | ||||||
(1) Insignificant leases are not presented; thus percentages may not sum to 100%. | ||||||||||||
(2) The Public Service of New Mexico lease terminated on April 1, 2015. |
For the Three Months Ended | For the Nine Months Ended | ||||||||||||||
September 30, 2016 | September 30, 2015 | September 30, 2016 | September 30, 2015 | ||||||||||||
Depreciation Expense | |||||||||||||||
GIGS | $ | 2,153,928 | $ | 2,158,338 | $ | 6,451,578 | $ | 2,158,338 | |||||||
Pinedale | 2,217,360 | 2,217,360 | 6,652,080 | 6,652,080 | |||||||||||
Portland Terminal Facility | 318,914 | 429,717 | 524,170 | 1,258,953 | |||||||||||
Eastern Interconnect Project | — | — | — | 569,670 | |||||||||||
United Property Systems | 8,515 | 7,425 | 23,365 | 22,275 | |||||||||||
Total Depreciation Expense | $ | 4,698,717 | $ | 4,812,840 | $ | 13,651,193 | $ | 10,661,316 | |||||||
Amortization Expense - Deferred Lease Costs | |||||||||||||||
GIGS | $ | 7,641 | $ | 7,482 | $ | 22,923 | $ | 7,482 | |||||||
Pinedale | 15,342 | 15,342 | 46,026 | 46,026 | |||||||||||
Total Amortization Expense - Deferred Lease Costs | $ | 22,983 | $ | 22,824 | $ | 68,949 | $ | 53,508 |
September 30, 2016 | December 31, 2015 | ||||||
Net Deferred Lease Costs | |||||||
GIGS | $ | 298,088 | $ | 321,011 | |||
Pinedale | 688,427 | 734,454 | |||||
Total Deferred Lease Costs, net | $ | 986,515 | $ | 1,055,465 |
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Deferred Tax Assets and Liabilities | ||||||||
September 30, 2016 | December 31, 2015 | |||||||
Deferred Tax Assets: | ||||||||
Net operating loss carryforwards | $ | 1,123,214 | $ | 543,116 | ||||
Net unrealized loss on investment securities | — | 251,539 | ||||||
Loan Loss Provision | 605,107 | 1,257,436 | ||||||
Other loss carryforwards | 2,930,342 | 1,833,240 | ||||||
Sub-total | $ | 4,658,663 | $ | 3,885,331 | ||||
Deferred Tax Liabilities: | ||||||||
Basis reduction of investment in partnerships | $ | (2,103,511 | ) | $ | (2,159,058 | ) | ||
Net unrealized gain on investment securities | (7,142 | ) | — | |||||
Cost recovery of leased and fixed assets | (958,452 | ) | (119,297 | ) | ||||
Sub-total | $ | (3,069,105 | ) | $ | (2,278,355 | ) | ||
Total net deferred tax asset | $ | 1,589,558 | $ | 1,606,976 |
Income Tax Expense (Benefit) | ||||||||||||||||
For the Three Months Ended | For the Nine Months Ended | |||||||||||||||
September 30, 2016 | September 30, 2015 | September 30, 2016 | September 30, 2015 | |||||||||||||
Application of statutory income tax rate | $ | 3,400,018 | $ | (497,607 | ) | $ | 7,425,355 | $ | 2,492,537 | |||||||
State income taxes, net of federal tax (benefit) | 28,642 | (141,807 | ) | (29,384 | ) | (113,744 | ) | |||||||||
Federal Tax Attributable to Income of Real Estate Investment Trust | (2,945,508 | ) | (1,209,539 | ) | (7,757,507 | ) | (3,956,244 | ) | ||||||||
Total income tax expense (benefit) | $ | 483,152 | $ | (1,848,953 | ) | $ | (361,536 | ) | $ | (1,577,451 | ) |
Components of Income Tax Expense (Benefit) | ||||||||||||||||
For the Three Months Ended | For the Nine Months Ended | |||||||||||||||
September 30, 2016 | September 30, 2015 | September 30, 2016 | September 30, 2015 | |||||||||||||
Current tax expense (benefit) | ||||||||||||||||
Federal | $ | 88,032 | $ | 94,277 | $ | (350,698 | ) | $ | 580,535 | |||||||
State (net of federal tax benefit) | 7,093 | 10,743 | (28,256 | ) | 64,720 | |||||||||||
Total current tax expense (benefit) | $ | 95,125 | $ | 105,020 | $ | (378,954 | ) | $ | 645,255 | |||||||
Deferred tax expense (benefit) | ||||||||||||||||
Federal | $ | 366,478 | $ | (1,801,423 | ) | $ | 18,546 | $ | (2,044,242 | ) | ||||||
State (net of federal tax benefit) | 21,549 | (152,550 | ) | (1,128 | ) | (178,464 | ) | |||||||||
Total deferred tax expense (benefit) | $ | 388,027 | $ | (1,953,973 | ) | $ | 17,418 | $ | (2,222,706 | ) | ||||||
Total income tax expense (benefit), net | $ | 483,152 | $ | (1,848,953 | ) | $ | (361,536 | ) | $ | (1,577,451 | ) |
Aggregate Cost of Securities for Income Tax Purposes (Unaudited) | ||||||||
September 30, 2016 | December 31, 2015 | |||||||
Aggregate cost for federal income tax purposes | $ | 4,334,950 | $ | 4,750,252 | ||||
Gross unrealized appreciation | 5,580,785 | 5,133,908 | ||||||
Gross unrealized depreciation | — | (97,500 | ) | |||||
Net unrealized appreciation | $ | 5,580,785 | $ | 5,036,408 |
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Property and Equipment | ||||||||
September 30, 2016 | December 31, 2015 | |||||||
Land | $ | 580,000 | $ | 580,000 | ||||
Natural gas pipeline | 124,574,243 | 124,386,349 | ||||||
Vehicles and trailers | 570,267 | 524,921 | ||||||
Office equipment and computers | 264,662 | 87,696 | ||||||
Gross property and equipment | $ | 125,989,172 | $ | 125,578,966 | ||||
Less: accumulated depreciation | (8,454,299 | ) | (5,948,988 | ) | ||||
Net property and equipment | $ | 117,534,873 | $ | 119,629,978 |
For the Three Months Ended | For the Nine Months Ended | ||||||||||||||
September 30, 2016 | September 30, 2015 | September 30, 2016 | September 30, 2015 | ||||||||||||
Depreciation Expense | $ | 838,462 | $ | 831,480 | $ | 2,515,408 | $ | 2,497,138 |
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September 30, 2016 | ||||||||||||||||
September 30, 2016 | Fair Value | |||||||||||||||
Level 1 | Level 2 | Level 3 | ||||||||||||||
Assets: | ||||||||||||||||
Other equity securities | $ | 9,465,736 | $ | — | $ | — | $ | 9,465,736 | ||||||||
Total Assets | $ | 9,465,736 | $ | — | $ | — | $ | 9,465,736 | ||||||||
Liabilities: | ||||||||||||||||
Interest Rate Swap Derivative | $ | 49,143 | $ | — | $ | 49,143 | $ | — | ||||||||
Total Liabilities | $ | 49,143 | $ | — | $ | 49,143 | $ | — |
December 31, 2015 | ||||||||||||||||
December 31, 2015 | Fair Value | |||||||||||||||
Level 1 | Level 2 | Level 3 | ||||||||||||||
Assets: | ||||||||||||||||
Other equity securities | $ | 8,393,683 | $ | — | $ | — | $ | 8,393,683 | ||||||||
Interest Rate Swap Derivative | 98,259 | — | 98,259 | — | ||||||||||||
Total Assets | $ | 8,491,942 | $ | — | $ | 98,259 | $ | 8,393,683 |
Level 3 Rollforward | ||||||||||||||||||||||||||||
For the Nine Months Ended September 30, 2016 | Fair Value Beginning Balance | Acquisitions | Disposals | Total Realized and Unrealized Gains/(Losses) Included in Net Income | Return of Capital Adjustments Impacting Cost Basis of Securities | Fair Value Ending Balance | Changes in Unrealized Losses, Included In Net Income, Relating to Securities Still Held (1) | |||||||||||||||||||||
Other equity securities | $ | 8,393,683 | $ | — | $ | — | $ | 958,443 | $ | 113,610 | $ | 9,465,736 | $ | 958,443 | ||||||||||||||
Total | $ | 8,393,683 | $ | — | $ | — | $ | 958,443 | $ | 113,610 | $ | 9,465,736 | $ | 958,443 | ||||||||||||||
For the Nine Months Ended September 30, 2015 | ||||||||||||||||||||||||||||
Other equity securities | $ | 9,217,181 | $ | — | $ | — | $ | (842,438 | ) | $ | 283,325 | $ | 8,658,068 | $ | (842,438 | ) | ||||||||||||
Warrant Investment | 355,000 | — | — | (355,000 | ) | — | — | (355,000 | ) | |||||||||||||||||||
Total | $ | 9,572,181 | $ | — | $ | — | $ | (1,197,438 | ) | $ | 283,325 | $ | 8,658,068 | $ | (1,197,438 | ) | ||||||||||||
(1) Located in Net realized and unrealized gain on other equity securities in the Consolidated Statements of Income |
September 30, 2016 | December 31, 2015 | |||||||
(Unaudited) | (Unaudited) | |||||||
Assets | ||||||||
Current assets | $ | 20,504 | $ | 24,276 | ||||
Noncurrent assets | 700,502 | 696,461 | ||||||
Total Assets | $ | 721,006 | $ | 720,737 | ||||
Liabilities | ||||||||
Current liabilities | $ | 14,048 | $ | 19,993 | ||||
Noncurrent liabilities | 266,609 | 246,808 | ||||||
Total Liabilities | $ | 280,657 | $ | 266,801 | ||||
Partner's equity | 440,349 | 453,936 | ||||||
Total liabilities and partner's equity | $ | 721,006 | $ | 720,737 |
For the Three Months Ended | For the Nine Months Ended | |||||||||||||||
(Unaudited) | (Unaudited) | |||||||||||||||
September 30, 2016 | September 30, 2015 | September 30, 2016 | September 30, 2015 | |||||||||||||
Revenues | $ | 26,673 | $ | 24,084 | $ | 78,983 | $ | 56,751 | ||||||||
Operating expenses | 21,287 | 21,526 | 64,171 | 54,194 | ||||||||||||
Income (Loss) from Operations | $ | 5,386 | $ | 2,558 | $ | 14,812 | $ | 2,557 | ||||||||
Other income | 2,207 | 2,683 | 6,950 | 9,837 | ||||||||||||
Net Income | $ | 7,593 | $ | 5,241 | $ | 21,762 | $ | 12,394 | ||||||||
Less: Net Income attributable to non-controlling interests | (7,551 | ) | (5,206 | ) | (21,630 | ) | (12,269 | ) | ||||||||
Net Income attributable to Partner's Capital | $ | 42 | $ | 35 | $ | 132 | $ | 125 |
Carrying and Fair Value Amounts | ||||||||||||||||||
Level within fair value hierarchy | September 30, 2016 | December 31, 2015 | ||||||||||||||||
Carrying Amount | Fair Value | Carrying Amount | Fair Value | |||||||||||||||
Financial Assets: | ||||||||||||||||||
Cash and cash equivalents | Level 1 | $ | 10,107,754 | $ | 10,107,754 | $ | 14,618,740 | $ | 14,618,740 | |||||||||
Escrow receivable | Level 2 | $ | — | $ | — | $ | 1,392,917 | $ | 1,392,917 | |||||||||
Financing notes receivable (Note 4) | Level 3 | $ | 1,500,000 | $ | 1,500,000 | $ | 7,675,626 | $ | 7,675,626 | |||||||||
Derivative asset | Level 2 | $ | — | $ | — | $ | 98,259 | $ | 98,259 | |||||||||
Financial Liabilities: | ||||||||||||||||||
Secured Credit Facilities(1) | Level 2 | $ | 91,698,387 | $ | 91,698,387 | $ | 105,440,842 | $ | 105,440,842 | |||||||||
Unsecured convertible senior notes | Level 2 | $ | 111,048,098 | $ | 112,860,000 | $ | 111,423,910 | $ | 87,622,591 | |||||||||
Derivative liability | Level 2 | $ | 49,143 | $ | 49,143 | $ | — | $ | — | |||||||||
(1) Includes current maturities |
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Total Commitment or Original Principal | Quarterly Principal Payments | September 30, 2016 | December 31, 2015 | ||||||||||||||||||||
Maturity Date | Amount Outstanding | Interest Rate | Amount Outstanding | Interest Rate | |||||||||||||||||||
7% Unsecured Convertible Senior Notes | $ | 115,000,000 | $ | — | 6/15/2020 | $ | 114,000,000 | 7.00 | % | $ | 115,000,000 | 7.00 | % | ||||||||||
Regions Secured Credit Facilities: | |||||||||||||||||||||||
Regions Revolver | $ | 105,000,000 | $ | — | 12/15/2019 | 44,000,000 | 3.80 | % | — | 3.07 | % | ||||||||||||
Regions Term Loan | $ | 45,000,000 | $ | 1,615,000 | 12/15/2019 | 38,355,000 | 3.78 | % | 43,200,000 | 3.07 | % | ||||||||||||
MoGas Revolver | $ | 3,000,000 | $ | — | 12/15/2019 | — | 3.78 | % | — | 3.07 | % | ||||||||||||
Omega Line of Credit | $ | 1,500,000 | $ | — | 7/31/2017 | — | 4.53 | % | — | 4.43 | % | ||||||||||||
Pinedale Secured Credit Facility: | |||||||||||||||||||||||
$70M Term Loan | $ | 70,000,000 | $ | — | 3/30/2016 | — | — | 62,532,000 | 4.67 | % | |||||||||||||
$58.5M Term Loan – related party (1) | $ | 11,085,750 | $ | 167,139 | 3/30/2021 | 9,574,465 | 8.00 | % | — | — | |||||||||||||
Total Debt | $ | 205,929,465 | $ | 220,732,000 | |||||||||||||||||||
Less: | |||||||||||||||||||||||
Unamortized deferred financing costs (2) | $ | 412,086 | $ | 510,401 | |||||||||||||||||||
Unamortized discount on 7% Convertible Senior Notes | 2,770,894 | 3,356,847 | |||||||||||||||||||||
Long-term debt, net of deferred financing costs | $ | 202,746,485 | $ | 216,864,752 | |||||||||||||||||||
Debt due within one year | $ | 7,128,556 | $ | 66,132,000 | |||||||||||||||||||
(1) $47,414,250 of the $58.5 million term loan is payable to CorEnergy under the same terms, and eliminates in consolidation. | |||||||||||||||||||||||
(2) A portion of the unamortized deferred financing costs, related to our revolving credit facilities, are included in Deferred Costs in the Assets section of the Consolidated Balance Sheets. See the next table for deferred financing costs included in the Asset section of the Consolidated Balance Sheets. |
Deferred Financing Costs, net (1) | ||||||||
September 30, 2016 | December 31, 2015 | |||||||
Regions Credit Facilities | $ | 2,422,105 | $ | 2,975,476 | ||||
Pinedale Credit Facility | — | 156,330 | ||||||
Total Deferred Debt Costs, net | $ | 2,422,105 | $ | 3,131,806 | ||||
(1) This is the portion of deferred financing costs which relate to a revolving credit facility and are not presented as a reduction to Long-term debt but rather as Deferred Costs in the Asset section of the Consolidated Balance Sheets. |
Deferred Financing Cost Amortization Expense(1)(2) | |||||||||||||||
For the Three Months Ended | For the Nine Months Ended | ||||||||||||||
September 30, 2016 | September 30, 2015 | September 30, 2016 | September 30, 2015 | ||||||||||||
Regions Credit Facilities | $ | 272,074 | $ | 368,486 | $ | 806,452 | $ | 723,694 | |||||||
Pinedale Credit Facility | — | 129,216 | 156,330 | 387,648 | |||||||||||
Total Deferred Debt Cost Amortization | $ | 272,074 | $ | 497,702 | $ | 962,782 | $ | 1,111,342 | |||||||
(1) Amortization of deferred debt issuance costs is included in interest expense in the Consolidated Statements of Income. | |||||||||||||||
(2) For the amount of deferred debt costs amortization relating to the Convertible Notes included in the Consolidated Statements of Income, see the Convertible Debt footnote. |
Total Remaining Contractual Payments | ||||||||||||||||
Year | Regions Revolver | Regions Term Loan | Pinedale Credit Facility | Total | ||||||||||||
2016 | $ | — | $ | 1,615,000 | $ | 167,139 | $ | 1,782,139 | ||||||||
2017 | — | 6,460,000 | 668,556 | 7,128,556 | ||||||||||||
2018 | — | 6,460,000 | 668,556 | 7,128,556 | ||||||||||||
2019 | 44,000,000 | 23,820,000 | 668,556 | 68,488,556 | ||||||||||||
2020 | — | — | 668,556 | 668,556 | ||||||||||||
Thereafter | — | — | 6,733,102 | 6,733,102 | ||||||||||||
Total | $ | 44,000,000 | $ | 38,355,000 | $ | 9,574,465 | $ | 91,929,465 |
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Convertible Note Interest Expense | ||||||||||||||||
For the Three Months Ended | For the Nine Months Ended | |||||||||||||||
September 30, 2016 | September 30, 2015 | September 30, 2016 | September 30, 2015 | |||||||||||||
7% Convertible Notes | $ | 2,017,167 | $ | 2,012,500 | $ | 6,013,195 | $ | 2,057,222 | ||||||||
Discount Amortization | 185,391 | 192,418 | 559,353 | 192,418 | ||||||||||||
Deferred Debt Issuance Amortization | 11,539 | 9,266 | 36,497 | 9,266 | ||||||||||||
Total | $ | 2,214,097 | $ | 2,214,184 | $ | 6,609,045 | $ | 2,258,906 |
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Summary of Leased Properties, Major Tenants and Lease Terms | |||
Property | Grand Isle Gathering System | Pinedale LGS(1) | Portland Terminal Facility |
Location | Gulf of Mexico/Louisiana | Pinedale, WY | Portland, OR |
Tenant | Energy XXI GIGS Services, LLC | Ultra Wyoming LGS, LLC | Arc Terminals Holdings LLC |
Asset Description | Approximately 153 miles of offshore pipeline with total capacity of 120 thousand Bbls/d, including a 16-acre onshore terminal and saltwater disposal system | Approximately 150 miles of pipelines and four central storage facilities | A 42-acre rail and marine facility property adjacent to the Willamette River with 84 tanks and total storage capacity of approximately 1.5 million barrels |
Date Acquired | June 2015 | December 2012 | January 2014 |
Initial Lease Term | 11 years | 15 years | 15 years |
Renewal Option | equal to the lesser of 9-years or 75 percent of the remaining useful life | 5-year terms | 5-year terms |
Current Monthly Rent Payments | 7/1/15 - 6/30/16: $2,625,417 7/1/16 - 6/30/17: $2,826,250 | $1,723,833 | $513,355 |
Initial Estimated Useful Life | 30 years | 26 years | 30 years |
(1) Non-Controlling Interest Partner, Prudential, funded a portion of the Pinedale LGS acquisition and, as a limited partner, holds 18.95 percent of the economic interest in Pinedale LP. The general partner, Pinedale GP, a wholly-owned subsidiary of the Company, holds the remaining 81.05 percent of the economic interest. |
Future Minimum Lease Receipts | ||||
Years Ending December 31, | Amount | |||
2016 | $ | 15,219,940 | ||
2017 | 60,984,095 | |||
2018 | 61,139,762 | |||
2019 | 63,468,195 | |||
2020 | 70,629,654 | |||
Thereafter | 451,794,133 | |||
Total | $ | 723,235,779 |
As a Percentage of (1) | ||||||||||||
Leased Properties | Lease Revenues | |||||||||||
For the Three Months Ended | For the Nine Months Ended | |||||||||||
September 30, 2016 | December 31, 2015 | September 30, 2016 | September 30, 2015 | September 30, 2016 | September 30, 2015 | |||||||
Pinedale LGS | 39.8% | 40.0% | 30.4% | 30.4% | 30.4% | 49.8% | ||||||
Grand Isle Gathering System | 50.2% | 50.1% | 59.8% | 59.9% | 59.8% | 32.7% | ||||||
Portland Terminal Facility | 9.8% | 9.6% | 9.7% | 9.6% | 9.7% | 15.3% | ||||||
Public Service of New Mexico(2) | — | — | — | — | — | 2.1% | ||||||
(1) Insignificant leases are not presented; thus percentages may not sum to 100%. | ||||||||||||
(2) The Public Service of New Mexico lease terminated on April 1, 2015. |
For the Three Months Ended | For the Nine Months Ended | ||||||||||||||
September 30, 2016 | September 30, 2015 | September 30, 2016 | September 30, 2015 | ||||||||||||
Depreciation Expense | |||||||||||||||
GIGS | $ | 2,153,928 | $ | 2,158,338 | $ | 6,451,578 | $ | 2,158,338 | |||||||
Pinedale | 2,217,360 | 2,217,360 | 6,652,080 | 6,652,080 | |||||||||||
Portland Terminal Facility | 318,914 | 429,717 | 524,170 | 1,258,953 | |||||||||||
Eastern Interconnect Project | — | — | — | 569,670 | |||||||||||
United Property Systems | 8,515 | 7,425 | 23,365 | 22,275 | |||||||||||
Total Depreciation Expense | $ | 4,698,717 | $ | 4,812,840 | $ | 13,651,193 | $ | 10,661,316 | |||||||
Amortization Expense - Deferred Lease Costs | |||||||||||||||
GIGS | $ | 7,641 | $ | 7,482 | $ | 22,923 | $ | 7,482 | |||||||
Pinedale | 15,342 | 15,342 | 46,026 | 46,026 | |||||||||||
Total Amortization Expense - Deferred Lease Costs | $ | 22,983 | $ | 22,824 | $ | 68,949 | $ | 53,508 |
September 30, 2016 | December 31, 2015 | ||||||
Net Deferred Lease Costs | |||||||
GIGS | $ | 298,088 | $ | 321,011 | |||
Pinedale | 688,427 | 734,454 | |||||
Total Deferred Lease Costs, net | $ | 986,515 | $ | 1,055,465 |
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Deferred Tax Assets and Liabilities | ||||||||
September 30, 2016 | December 31, 2015 | |||||||
Deferred Tax Assets: | ||||||||
Net operating loss carryforwards | $ | 1,123,214 | $ | 543,116 | ||||
Net unrealized loss on investment securities | — | 251,539 | ||||||
Loan Loss Provision | 605,107 | 1,257,436 | ||||||
Other loss carryforwards | 2,930,342 | 1,833,240 | ||||||
Sub-total | $ | 4,658,663 | $ | 3,885,331 | ||||
Deferred Tax Liabilities: | ||||||||
Basis reduction of investment in partnerships | $ | (2,103,511 | ) | $ | (2,159,058 | ) | ||
Net unrealized gain on investment securities | (7,142 | ) | — | |||||
Cost recovery of leased and fixed assets | (958,452 | ) | (119,297 | ) | ||||
Sub-total | $ | (3,069,105 | ) | $ | (2,278,355 | ) | ||
Total net deferred tax asset | $ | 1,589,558 | $ | 1,606,976 |
Income Tax Expense (Benefit) | ||||||||||||||||
For the Three Months Ended | For the Nine Months Ended | |||||||||||||||
September 30, 2016 | September 30, 2015 | September 30, 2016 | September 30, 2015 | |||||||||||||
Application of statutory income tax rate | $ | 3,400,018 | $ | (497,607 | ) | $ | 7,425,355 | $ | 2,492,537 | |||||||
State income taxes, net of federal tax (benefit) | 28,642 | (141,807 | ) | (29,384 | ) | (113,744 | ) | |||||||||
Federal Tax Attributable to Income of Real Estate Investment Trust | (2,945,508 | ) | (1,209,539 | ) | (7,757,507 | ) | (3,956,244 | ) | ||||||||
Total income tax expense (benefit) | $ | 483,152 | $ | (1,848,953 | ) | $ | (361,536 | ) | $ | (1,577,451 | ) |
Components of Income Tax Expense (Benefit) | ||||||||||||||||
For the Three Months Ended | For the Nine Months Ended | |||||||||||||||
September 30, 2016 | September 30, 2015 | September 30, 2016 | September 30, 2015 | |||||||||||||
Current tax expense (benefit) | ||||||||||||||||
Federal | $ | 88,032 | $ | 94,277 | $ | (350,698 | ) | $ | 580,535 | |||||||
State (net of federal tax benefit) | 7,093 | 10,743 | (28,256 | ) | 64,720 | |||||||||||
Total current tax expense (benefit) | $ | 95,125 | $ | 105,020 | $ | (378,954 | ) | $ | 645,255 | |||||||
Deferred tax expense (benefit) | ||||||||||||||||
Federal | $ | 366,478 | $ | (1,801,423 | ) | $ | 18,546 | $ | (2,044,242 | ) | ||||||
State (net of federal tax benefit) | 21,549 | (152,550 | ) | (1,128 | ) | (178,464 | ) | |||||||||
Total deferred tax expense (benefit) | $ | 388,027 | $ | (1,953,973 | ) | $ | 17,418 | $ | (2,222,706 | ) | ||||||
Total income tax expense (benefit), net | $ | 483,152 | $ | (1,848,953 | ) | $ | (361,536 | ) | $ | (1,577,451 | ) |
Aggregate Cost of Securities for Income Tax Purposes (Unaudited) | ||||||||
September 30, 2016 | December 31, 2015 | |||||||
Aggregate cost for federal income tax purposes | $ | 4,334,950 | $ | 4,750,252 | ||||
Gross unrealized appreciation | 5,580,785 | 5,133,908 | ||||||
Gross unrealized depreciation | — | (97,500 | ) | |||||
Net unrealized appreciation | $ | 5,580,785 | $ | 5,036,408 |
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Property and Equipment | ||||||||
September 30, 2016 | December 31, 2015 | |||||||
Land | $ | 580,000 | $ | 580,000 | ||||
Natural gas pipeline | 124,574,243 | 124,386,349 | ||||||
Vehicles and trailers | 570,267 | 524,921 | ||||||
Office equipment and computers | 264,662 | 87,696 | ||||||
Gross property and equipment | $ | 125,989,172 | $ | 125,578,966 | ||||
Less: accumulated depreciation | (8,454,299 | ) | (5,948,988 | ) | ||||
Net property and equipment | $ | 117,534,873 | $ | 119,629,978 |
For the Three Months Ended | For the Nine Months Ended | ||||||||||||||
September 30, 2016 | September 30, 2015 | September 30, 2016 | September 30, 2015 | ||||||||||||
Depreciation Expense | $ | 838,462 | $ | 831,480 | $ | 2,515,408 | $ | 2,497,138 |
|
September 30, 2016 | ||||||||||||||||
September 30, 2016 | Fair Value | |||||||||||||||
Level 1 | Level 2 | Level 3 | ||||||||||||||
Assets: | ||||||||||||||||
Other equity securities | $ | 9,465,736 | $ | — | $ | — | $ | 9,465,736 | ||||||||
Total Assets | $ | 9,465,736 | $ | — | $ | — | $ | 9,465,736 | ||||||||
Liabilities: | ||||||||||||||||
Interest Rate Swap Derivative | $ | 49,143 | $ | — | $ | 49,143 | $ | — | ||||||||
Total Liabilities | $ | 49,143 | $ | — | $ | 49,143 | $ | — |
December 31, 2015 | ||||||||||||||||
December 31, 2015 | Fair Value | |||||||||||||||
Level 1 | Level 2 | Level 3 | ||||||||||||||
Assets: | ||||||||||||||||
Other equity securities | $ | 8,393,683 | $ | — | $ | — | $ | 8,393,683 | ||||||||
Interest Rate Swap Derivative | 98,259 | — | 98,259 | — | ||||||||||||
Total Assets | $ | 8,491,942 | $ | — | $ | 98,259 | $ | 8,393,683 |
Level 3 Rollforward | ||||||||||||||||||||||||||||
For the Nine Months Ended September 30, 2016 | Fair Value Beginning Balance | Acquisitions | Disposals | Total Realized and Unrealized Gains/(Losses) Included in Net Income | Return of Capital Adjustments Impacting Cost Basis of Securities | Fair Value Ending Balance | Changes in Unrealized Losses, Included In Net Income, Relating to Securities Still Held (1) | |||||||||||||||||||||
Other equity securities | $ | 8,393,683 | $ | — | $ | — | $ | 958,443 | $ | 113,610 | $ | 9,465,736 | $ | 958,443 | ||||||||||||||
Total | $ | 8,393,683 | $ | — | $ | — | $ | 958,443 | $ | 113,610 | $ | 9,465,736 | $ | 958,443 | ||||||||||||||
For the Nine Months Ended September 30, 2015 | ||||||||||||||||||||||||||||
Other equity securities | $ | 9,217,181 | $ | — | $ | — | $ | (842,438 | ) | $ | 283,325 | $ | 8,658,068 | $ | (842,438 | ) | ||||||||||||
Warrant Investment | 355,000 | — | — | (355,000 | ) | — | — | (355,000 | ) | |||||||||||||||||||
Total | $ | 9,572,181 | $ | — | $ | — | $ | (1,197,438 | ) | $ | 283,325 | $ | 8,658,068 | $ | (1,197,438 | ) | ||||||||||||
(1) Located in Net realized and unrealized gain on other equity securities in the Consolidated Statements of Income |
September 30, 2016 | December 31, 2015 | |||||||
(Unaudited) | (Unaudited) | |||||||
Assets | ||||||||
Current assets | $ | 20,504 | $ | 24,276 | ||||
Noncurrent assets | 700,502 | 696,461 | ||||||
Total Assets | $ | 721,006 | $ | 720,737 | ||||
Liabilities | ||||||||
Current liabilities | $ | 14,048 | $ | 19,993 | ||||
Noncurrent liabilities | 266,609 | 246,808 | ||||||
Total Liabilities | $ | 280,657 | $ | 266,801 | ||||
Partner's equity | 440,349 | 453,936 | ||||||
Total liabilities and partner's equity | $ | 721,006 | $ | 720,737 |
For the Three Months Ended | For the Nine Months Ended | |||||||||||||||
(Unaudited) | (Unaudited) | |||||||||||||||
September 30, 2016 | September 30, 2015 | September 30, 2016 | September 30, 2015 | |||||||||||||
Revenues | $ | 26,673 | $ | 24,084 | $ | 78,983 | $ | 56,751 | ||||||||
Operating expenses | 21,287 | 21,526 | 64,171 | 54,194 | ||||||||||||
Income (Loss) from Operations | $ | 5,386 | $ | 2,558 | $ | 14,812 | $ | 2,557 | ||||||||
Other income | 2,207 | 2,683 | 6,950 | 9,837 | ||||||||||||
Net Income | $ | 7,593 | $ | 5,241 | $ | 21,762 | $ | 12,394 | ||||||||
Less: Net Income attributable to non-controlling interests | (7,551 | ) | (5,206 | ) | (21,630 | ) | (12,269 | ) | ||||||||
Net Income attributable to Partner's Capital | $ | 42 | $ | 35 | $ | 132 | $ | 125 |
Carrying and Fair Value Amounts | ||||||||||||||||||
Level within fair value hierarchy | September 30, 2016 | December 31, 2015 | ||||||||||||||||
Carrying Amount | Fair Value | Carrying Amount | Fair Value | |||||||||||||||
Financial Assets: | ||||||||||||||||||
Cash and cash equivalents | Level 1 | $ | 10,107,754 | $ | 10,107,754 | $ | 14,618,740 | $ | 14,618,740 | |||||||||
Escrow receivable | Level 2 | $ | — | $ | — | $ | 1,392,917 | $ | 1,392,917 | |||||||||
Financing notes receivable (Note 4) | Level 3 | $ | 1,500,000 | $ | 1,500,000 | $ | 7,675,626 | $ | 7,675,626 | |||||||||
Derivative asset | Level 2 | $ | — | $ | — | $ | 98,259 | $ | 98,259 | |||||||||
Financial Liabilities: | ||||||||||||||||||
Secured Credit Facilities(1) | Level 2 | $ | 91,698,387 | $ | 91,698,387 | $ | 105,440,842 | $ | 105,440,842 | |||||||||
Unsecured convertible senior notes | Level 2 | $ | 111,048,098 | $ | 112,860,000 | $ | 111,423,910 | $ | 87,622,591 | |||||||||
Derivative liability | Level 2 | $ | 49,143 | $ | 49,143 | $ | — | $ | — | |||||||||
(1) Includes current maturities |
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Deferred Financing Cost Amortization Expense(1)(2) | |||||||||||||||
For the Three Months Ended | For the Nine Months Ended | ||||||||||||||
September 30, 2016 | September 30, 2015 | September 30, 2016 | September 30, 2015 | ||||||||||||
Regions Credit Facilities | $ | 272,074 | $ | 368,486 | $ | 806,452 | $ | 723,694 | |||||||
Pinedale Credit Facility | — | 129,216 | 156,330 | 387,648 | |||||||||||
Total Deferred Debt Cost Amortization | $ | 272,074 | $ | 497,702 | $ | 962,782 | $ | 1,111,342 | |||||||
(1) Amortization of deferred debt issuance costs is included in interest expense in the Consolidated Statements of Income. | |||||||||||||||
(2) For the amount of deferred debt costs amortization relating to the Convertible Notes included in the Consolidated Statements of Income, see the Convertible Debt footnote. |
Total Commitment or Original Principal | Quarterly Principal Payments | September 30, 2016 | December 31, 2015 | ||||||||||||||||||||
Maturity Date | Amount Outstanding | Interest Rate | Amount Outstanding | Interest Rate | |||||||||||||||||||
7% Unsecured Convertible Senior Notes | $ | 115,000,000 | $ | — | 6/15/2020 | $ | 114,000,000 | 7.00 | % | $ | 115,000,000 | 7.00 | % | ||||||||||
Regions Secured Credit Facilities: | |||||||||||||||||||||||
Regions Revolver | $ | 105,000,000 | $ | — | 12/15/2019 | 44,000,000 | 3.80 | % | — | 3.07 | % | ||||||||||||
Regions Term Loan | $ | 45,000,000 | $ | 1,615,000 | 12/15/2019 | 38,355,000 | 3.78 | % | 43,200,000 | 3.07 | % | ||||||||||||
MoGas Revolver | $ | 3,000,000 | $ | — | 12/15/2019 | — | 3.78 | % | — | 3.07 | % | ||||||||||||
Omega Line of Credit | $ | 1,500,000 | $ | — | 7/31/2017 | — | 4.53 | % | — | 4.43 | % | ||||||||||||
Pinedale Secured Credit Facility: | |||||||||||||||||||||||
$70M Term Loan | $ | 70,000,000 | $ | — | 3/30/2016 | — | — | 62,532,000 | 4.67 | % | |||||||||||||
$58.5M Term Loan – related party (1) | $ | 11,085,750 | $ | 167,139 | 3/30/2021 | 9,574,465 | 8.00 | % | — | — | |||||||||||||
Total Debt | $ | 205,929,465 | $ | 220,732,000 | |||||||||||||||||||
Less: | |||||||||||||||||||||||
Unamortized deferred financing costs (2) | $ | 412,086 | $ | 510,401 | |||||||||||||||||||
Unamortized discount on 7% Convertible Senior Notes | 2,770,894 | 3,356,847 | |||||||||||||||||||||
Long-term debt, net of deferred financing costs | $ | 202,746,485 | $ | 216,864,752 | |||||||||||||||||||
Debt due within one year | $ | 7,128,556 | $ | 66,132,000 | |||||||||||||||||||
(1) $47,414,250 of the $58.5 million term loan is payable to CorEnergy under the same terms, and eliminates in consolidation. | |||||||||||||||||||||||
(2) A portion of the unamortized deferred financing costs, related to our revolving credit facilities, are included in Deferred Costs in the Assets section of the Consolidated Balance Sheets. See the next table for deferred financing costs included in the Asset section of the Consolidated Balance Sheets. |
Deferred Financing Costs, net (1) | ||||||||
September 30, 2016 | December 31, 2015 | |||||||
Regions Credit Facilities | $ | 2,422,105 | $ | 2,975,476 | ||||
Pinedale Credit Facility | — | 156,330 | ||||||
Total Deferred Debt Costs, net | $ | 2,422,105 | $ | 3,131,806 | ||||
(1) This is the portion of deferred financing costs which relate to a revolving credit facility and are not presented as a reduction to Long-term debt but rather as Deferred Costs in the Asset section of the Consolidated Balance Sheets. |
Total Remaining Contractual Payments | ||||||||||||||||
Year | Regions Revolver | Regions Term Loan | Pinedale Credit Facility | Total | ||||||||||||
2016 | $ | — | $ | 1,615,000 | $ | 167,139 | $ | 1,782,139 | ||||||||
2017 | — | 6,460,000 | 668,556 | 7,128,556 | ||||||||||||
2018 | — | 6,460,000 | 668,556 | 7,128,556 | ||||||||||||
2019 | 44,000,000 | 23,820,000 | 668,556 | 68,488,556 | ||||||||||||
2020 | — | — | 668,556 | 668,556 | ||||||||||||
Thereafter | — | — | 6,733,102 | 6,733,102 | ||||||||||||
Total | $ | 44,000,000 | $ | 38,355,000 | $ | 9,574,465 | $ | 91,929,465 |
|
Convertible Note Interest Expense | ||||||||||||||||
For the Three Months Ended | For the Nine Months Ended | |||||||||||||||
September 30, 2016 | September 30, 2015 | September 30, 2016 | September 30, 2015 | |||||||||||||
7% Convertible Notes | $ | 2,017,167 | $ | 2,012,500 | $ | 6,013,195 | $ | 2,057,222 | ||||||||
Discount Amortization | 185,391 | 192,418 | 559,353 | 192,418 | ||||||||||||
Deferred Debt Issuance Amortization | 11,539 | 9,266 | 36,497 | 9,266 | ||||||||||||
Total | $ | 2,214,097 | $ | 2,214,184 | $ | 6,609,045 | $ | 2,258,906 |
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