Sincerely,
	/s/ Steven F. Carman
	Steven F. Carman
cc:     Ms. Rebecca Sandring CorEnergy Infrastructure Trust, Inc.

Income Determined as follows:
			For the Years Ended
			November 30,				November 30,				December 31,
			2011				2012				2013
Annual Income				3,805,000				19,577,655				8,918,624
Less Non-Controlling Interest in Income				-				-				1,466,767
Plus Loss From Investee				363,812				867,024				-
Adjusted Annual Income				4,168,812				20,444,679				7,451,857
5 Year Average Income - Substitute $0 for Loss Years
2007				8,815,072
2008					-				-
2009				265,350				265,350				265,350
2010				19,439,522				19,439,522				19,439,522
2011				4,168,812				4,168,812				3,805,000
2012 - Year								20,444,679				19,577,655
2012 - Stub								-				-
2013												7,451,857
Numerator				32,688,756				44,318,363				50,539,384
Denominator				5.000				5.083				5.083
Average Amount				6,537,751				8,718,938				9,942,826
	Average Test
	Percentage Annual Represents of Average (Must be >10% less)			63.8%				234.5%				74.9%
	Use - Average or Annual			Average				Annual				Average

		For the Years Ended
		December 31,				November 30,				November 30,
		2013				2012				2011
Lease Revenue, Security Distributions, and Operating Results
Leases:
Lease revenue		$	22,552,976			$	2,552,975			$	1,063,740
Other Equity Securities:
Net cash distributions received			1,807,429				4,705,975				3,568,128
Operations:
Sales revenue			8,733,044				8,021,022				2,161,723
Cost of sales			(6,734,665	)			(6,078,102	)			(1,689,374	)
Operating expenses (excluding depreciation and amortization)			(924,571	)			(739,519	)			(196,775	)
Net Operations (excluding depreciation and amortization)			1,073,808				1,203,401				275,574
Total Lease Revenue, Security Distributions, and Operating Results		$	25,434,213			$	8,462,351			$	4,907,442
Expenses			(5,879,864	)			(2,881,811	)			(2,408,973	)
Non-Controlling Interest Attributable to Adjusted EBITDA Items			(3,734,884	)
Adjusted EBITDA Attributable to CORR Stockholders		$	15,819,465			$	5,580,540			$	2,498,469

Adjusted EBITDA Attributable to CORR Stockholders		$	15,819,465			$	5,580,540			$	2,498,469
Other Income (Expense)			(8,367,608	)			13,997,115				1,306,531
Income Tax Expense			(2,949,518	)			(7,228,934	)			(882,857	)
Income Attributable to CORR Stockholders		$	4,502,339			$	12,348,721			$	2,922,143
Adjusted EBITDA per share (basic and diluted)		$	0.66			$	0.61			$	0.27
Net earnings per share (basic and diluted)		$	0.19			$	1.34			$	0.32
FFO per share (basic and diluted)		$	0.54			$	0.60				N/A
AFFO per share (basic and diluted)(1)		$	0.52			$	0.43				N/A
Book value per share (basic and diluted)(2)		$	7.34			$	10.76				N/A

NAREIT FFO

 

As defined by NAREIT, FFO represents net income (computed in accordance with GAAP), excluding gains (or losses) from sales of depreciable operating property, real estate-related depreciation and amortization (excluding amortization of deferred financing costs or loan origination costs) and after adjustments for unconsolidated partnerships and joint ventures.

 

FFO ADJUSTED FOR SECURITIES INVESTMENTS

 

Due to the legacy investments that we hold, we have also historically presented a measure of FFO, which we refer to herein as FFO Adjusted for Securities Investments, derived by further adjusting NAREIT FFO for Distributions received from investment securities, Income tax expense, net and Net distributions and dividend income. Historically, we have labeled FFO Adjusted for Securities Investments as "FFO" in our periodic reports. Both NAREIT FFO and FFO Adjusted for Securities Investment are supplemental, non-GAAP financial measures.

 

We present NAREIT FFO and FFO Adjusted for Securities Investments because we consider them to be important supplemental measures of our operating performance and believe that they are frequently used by securities analysts, investors and other interested parties in the evaluation of REITs, many of which present FFO metrics when reporting their results. FFO Adjusted for Securities Investments is a key measure used by Corridor in assessing performance and in making resource allocation decisions.

 

Both NAREIT FFO and FFO Adjusted for Securities Investments are intended to exclude GAAP historical cost depreciation and amortization of real estate and related assets, which assumes that the value of real estate diminishes ratably over time. Historically, however, real estate values have risen or fallen with market conditions, and that may also be the case with the energy infrastructure assets which we expect to acquire. Because NAREIT FFO and FFO Adjusted for Securities Investments exclude depreciation and amortization unique to real estate, gains and losses from property dispositions and extraordinary items, they provide performance measures that, when compared year over year, reflect the impact to operations from trends in base and participating rent, company operating costs, development activities and interest costs, thereby providing perspective not immediately apparent from net income.

 

We calculate NAREIT FFO in accordance with standards established by the Board of Governors of the National Association of Real Estate Investment Trusts, in its March 1995 White Paper (as amended in November 1999 and April 2002) and FFO Adjusted for Securities Investments as NAREIT FFO with the additional adjustments described above due to our legacy investments. This may differ from the methodology for calculating FFO utilized by other equity REITs and, accordingly may not be comparable to such other REITs. NAREIT FFO and FFO Adjusted for Securities Investments do not represent amounts available for management's discretionary use because of needed capital replacement or expansion, debt service obligations or other commitments and uncertainties. Neither NAREIT FFO nor FFO as historically reported by the Company should be considered as an alternative to net income (loss) (computed in accordance with GAAP), as an indicator of our financial performance or cash flow from operating activities (computed in accordance with GAAP), as an indicator of our liquidity, or as an indicator of funds available for our cash needs, including our ability to make distributions or serve our indebtedness.

 

AFFO

AFFO is a supplemental, non-GAAP financial measure which we define as FFO Adjusted for Securities Investments plus transaction costs, amortization of debt issuance costs, deferred leasing costs, above market rent, and certain costs of a nonrecurring nature, less maintenance, capital expenditures (if any), amortization of debt premium and adjustments to lease revenue resulting from the EIP sale. Management uses AFFO as a measure of long-term sustainable operations performance.

 

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 We target a total return of 8% to 10% per annum on the infrastructure assets that we own, measured over the long term. We intend to generate this return from the base rent of our leases plus growth through acquisitions and participating portions of our rent. If we are successful growing our AFFO per share of common stock, we anticipate being able to increase distributions to our stockholders. In addition, the increase in our AFFO per share of common stock should result in capital appreciation. For our business as a whole, a key performance measure is AFFO yield, defined as AFFO divided by invested capital, which measures the sustainable return on capital that we have deployed.

 

 AFFO does not represent amounts available for management's discretionary use because such amounts are needed for capital replacement or expansion, debt service obligations or other commitments and uncertainties. AFFO should not be considered as an alternative to net income (loss) (computed in accordance with GAAP), as an indicator of our financial performance or to cash flow from operating activities (computed in accordance with GAAP), as an indicator of our liquidity, or as an indicator of funds available for our cash needs, including our ability to make distributions or service our indebtedness.

 

 In light of the per share AFFO growth that we foresee in our operations, we are targeting 1% to 3% annual dividend growth. We can provide no assurances regarding our total return or annual dividend growth. See our Risk Factors as disclosed in the Annual Report on Form 10- K for the calendar year ending December 31, 2013, as amended, for a discussion of the many factors that may affect our ability to make distributions at targeted rates, or at all.

 

 Net income attributable to CORR does not include a contracted rate increase on November 1, 2014 or communicated maximum daily quantity (MDQ) decreases effective in 2015. These items would result in an impact on Net income attributable to CORR of $2.5 million and $1.9 million for a full year and nine month period, respectively, assuming historical volumes. NAREIT Funds from Operations, Funds from Operations Adjusted for Securities Investments, and Adjusted Funds from Operations would also be increased by the same amounts for a full year and nine month period, respectively. All contracts are evergreen on an annual basis, and are subject to a 365-day termination period.

 

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   Following is a comparison of NAREIT FFO, FFO Adjusted for Securities Investments and AFFO for the historical and pro forma twelve months ended December 31, 2013 and nine months ended September 30, 2014 attributable to CorEnergy stockholders:

 

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NAREIT FFO

 

Pro forma NAREIT FFO for the twelve month period ended December 31, 2013 and nine-month period ended September 30, 2014 total approximately $26.8 and $21.6 million, respectively. NAREIT FFO was calculated in accordance with the National Association of Real Estate Investment Trust's definition above.

 

FFO Adjusted for Securities Investments

 

Pro forma FFO Adjusted for Securities Investments for the twelve month period ended December 31, 2013 and nine-month period ended September 30, 2014 total approximately $24.6 and $19.9 million, respectively. To calculate FFO Adjusted for Securities Investments, we have made further adjustments to NAREIT FFO for non-cash items impacting net income for the twelve month period ended December 31, 2013 and nine-month period ended September 30, 2014 by eliminating a net realized and unrealized gain on other equity securities of approximately $2.3 and $2.2 million, respectively; eliminating a net realized and unrealized loss on trading securities of approximately $251 and $0 thousand; removing net distribution and dividend income of approximately $567 thousand and $1.7 million; adding distributions received from investment securities of approximately $270 and $639 thousand respectively; and adding back income tax expense of approximately $168 and benefit of approximately $430 thousand, respectively.

 

AFFO

Pro forma AFFO for the twelve month period ended December 31, 2013 and nine-month period ended September 30, 2014 total approximately $24.8 and $17.7 million, respectively. In addition to the adjustments outlined in the AFFO definition above, we have included an adjustment to back out lease revenue associated with

 

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the EIP investment. Based on the economic return to CorEnergy resulting from the sale of our 40 percent undivided interest in EIP, we determined that it was appropriate to eliminate the portion of EIP lease income attributable to return of capital, as a means to more accurately reflect EIP lease revenue contribution to CorEnergy-sustainable FFO. CorEnergy believes that the portion of the EIP lease revenue attributable to return of capital, unless adjusted, overstates CorEnergy's distribution-paying capabilities and is not representative of sustainable EIP income over the life of the lease.

 

 

S-32

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