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CorEnergy Announces Third Quarter 2017 Results
KANSAS CITY, MO - November 1, 2017 - CorEnergy Infrastructure Trust, Inc. (“CorEnergy” or the “Company”) today announced financial results for the third quarter, ended September 30, 2017.
Third Quarter Performance Summary
Third quarter financial highlights are as follows:
 
For the Three Months Ended
 
September 30, 2017
 
 
 
Per Share
 
Total
 
Basic
 
Diluted
Net Income (Attributable to Common Stockholders)1
$
6,780,409

 
$
0.57

 
$
0.57

NAREIT Funds from Operations (NAREIT FFO)1
$
12,192,731

 
$
1.02

 
$
0.94

Funds From Operations (FFO)1
$
11,471,031

 
$
0.96

 
$
0.89

Adjusted Funds From Operations (AFFO)1
$
11,896,606

 
$
1.00

 
$
0.90

Dividends Declared to Common Stockholders
 
 
$
0.75

 
 
1 Management uses AFFO as a measure of long-term sustainable operational performance. NAREIT FFO, FFO, and AFFO are non-GAAP measures. Reconciliations of NAREIT FFO, FFO and AFFO, as presented, to Net Income Attributable to CorEnergy Stockholders are included at the end of this press release. See Note 1 for additional information.

Recent Developments
Declared common stock dividend of $0.75 per share ($3.00 annualized) for the third quarter 2017, in line with the previous eight quarterly dividends
Received first variable rent payments under the Pinedale LGS lease
Portland Terminal tenant, Arc Logistics, announced acquisition by Zenith Energy U.S., LP

“Ultra Petroleum’s success in increasing production, following its bankruptcy, has generated volumes above our threshold for participating rents. This further supports our conviction in the prolific Pinedale field and our mission critical gathering system,” said CorEnergy CEO Dave Schulte. “Our team is assessing several high-quality acquisition opportunities that fit our portfolio





criteria and which we believe could achieve long-term value for our shareholders. We have repositioned our balance sheet this year and have over $145 million of liquidity to execute a transaction efficiently.”
Dividend Declaration
Common Stock: A third quarter 2017 dividend of $0.75 per share (or $3.00 per share annualized) was declared for CorEnergy’s common stock. The dividend is payable on November 30, 2017, to shareholders of record on November 15, 2017.
Preferred Stock: For the Company’s 7.375% Series A Cumulative Redeemable Preferred Stock, a cash dividend of $0.4609375 per depositary share was declared for the third quarter. The preferred stock dividend, which equates to an annual dividend payment of $1.84375 per depositary share, is payable on November 30, 2017, to shareholders of record on November 15, 2017.
Portfolio Update
Portland Terminal & Lightfoot Partners: On August 29, 2017, the parent company of our Portland Terminal tenant, Arc Logistics, announced its definitive agreement to be acquired by Zenith Energy U.S., LP. The merger is targeted to close by February 7, 2018. It is not clear whether the proposed merger will have an impact on the Portland Terminal Lease.
In connection with the acquisition, units of Lightfoot Capital Partners LP and GP will also be purchased by Zenith Energy. CorEnergy owns approximately 6.6% of the LP and 1.5% of the GP. Accordingly, we will receive our pro-rata share of the proceeds upon the closing of the transaction. As of September 30, 2017, the fair value of CorEnergy’s interest in the Lightfoot entities was $10.5 million, based on the proposed transaction terms. This value is contingent upon the outcome of the Gulf LNG litigation and includes a required reinvestment in the ownership of Arc Terminal Joliet Holdings.
Grand Isle Gathering System: Energy XXI Gulf Coast announced that no significant damage was incurred as a result of Hurricane Harvey or Hurricane Nate. However, in preparation for and during the course of the storms, production was shut in by both EXXI and third-party operators, primarily in the western region for Hurricane Harvey and in all fields for Hurricane Nate. Fields served by the GIGS are located primarily in the central region of EXXI operations.
Pinedale Liquids Gathering System: CorEnergy received variable rent payments for the utilization of the Pinedale LGS by Ultra Petroleum. The payments were not material, but this is the first occurrence of volumes reaching thresholds, above which payments in addition to base rents are generated.





Outlook
CorEnergy believes acquisitions enhance the stability of its operations, reducing risk to existing stockholders, because of the diversification benefits and added potential for dividend growth. The Company is evaluating a broad set of infrastructure opportunities and targets transacting on one to two acquisitions per year, with a target range of $50 to $250 million per project. CorEnergy intends to finance these acquisitions through the use of capacity on its revolver, partnerships with co-investors, portfolio level debt, and, if beneficial to existing stockholders, prudent preferred and/or common equity issuances. There can be no assurance that any of these acquisition opportunities will result in consummated transactions.
CorEnergy intends to continue paying quarterly dividends of $0.75 per share ($3.00 annualized). The Company targets revenue growth of 1-3% annually from existing contracts through inflation-based and participating rent adjustments and additional growth from acquisitions. Dependent upon the level of revenue growth achieved, CorEnergy will assess its ability to responsibly grow its dividend above current levels.
Third Quarter 2017 Earnings Conference Call
CorEnergy will host a conference call on Thursday, November 2, 2017, at 1:00 p.m. Central Time to discuss its financial results. Please dial into the call at 877-407-8035 (for international, 1-201-689-8035) approximately five to ten minutes prior to the scheduled start time. The call will also be webcast in a listen-only format. A link to the webcast will be accessible at corenergy.reit.
A replay of the call will be available until 1:00 p.m. Central Time on December 2, 2017 by dialing 877-481-4010 (for international, 1-919-882-2331). The Conference ID is 21908. A replay of the conference call will also be available on the Company’s website.
About CorEnergy Infrastructure Trust, Inc.
CorEnergy Infrastructure Trust, Inc. (NYSE: CORR, CORRPrA), is a real estate investment trust (REIT) that owns essential energy assets, such as pipelines, storage terminals, and transmission and distribution assets. We receive long-term contracted revenue from operators of our assets, primarily under triple-net participating leases. For more information, please visit corenergy.reit.





Forward-Looking Statements
This press release contains certain statements that may include "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements, other than statements of historical fact, included herein are "forward-looking statements." Although CorEnergy believes that the expectations reflected in these forward-looking statements are reasonable, they do involve assumptions, risks and uncertainties, and these expectations may prove to be incorrect. Actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including those discussed in CorEnergy’s reports that are filed with the Securities and Exchange Commission. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Other than as required by law, CorEnergy does not assume a duty to update any forward-looking statement. In particular, any distribution paid in the future to our stockholders will depend on the actual performance of CorEnergy, its costs of leverage and other operating expenses and will be subject to the approval of CorEnergy’s Board of Directors and compliance with leverage covenants.

Notes
1NAREIT FFO represents net income (computed in accordance with GAAP), excluding gains (or losses) from sales of depreciable operating property, impairment losses of depreciable properties, real estate-related depreciation and amortization (excluding amortization of deferred financing costs or loan origination costs) and after adjustments for unconsolidated partnerships and non-controlling interests. Adjustments for non-controlling interests are calculated on the same basis. FFO as we have presented it here, is derived by further adjusting NAREIT FFO for distributions received from investment securities, income tax expense (benefit) from investment securities, net distributions and dividend income and net realized and unrealized gain or loss on other equity securities. CorEnergy defines AFFO as FFO Adjusted for Securities Investment plus (gain) loss on extinguishment of debt, provision for loan losses, net of tax, transaction costs, amortization of debt issuance costs, amortization of deferred lease costs, accretion of asset retirement obligation, income tax expense (benefit) unrelated to securities investments, non-cash costs associated with derivative instruments, and certain costs of a nonrecurring nature, less maintenance, capital expenditures (if any), amortization of debt premium, and other adjustments as deemed appropriate by Management. Reconciliations of NAREIT FFO, FFO Adjusted for Securities Investments and AFFO to Net Income Attributable to CorEnergy Stockholders are included in the additional financial information attached to this press release.

Contact Information:
CorEnergy Infrastructure Trust, Inc.
Investor Relations
Lesley Schorgl, 877-699-CORR (2677)
info@corenergy.reit










Consolidated Balance Sheets
 
 
 
 
 
September 30, 2017
 
December 31, 2016
Assets
(Unaudited)
 
 
Leased property, net of accumulated depreciation of $67,171,667 and $52,219,717
$
474,306,419

 
$
489,258,369

Property and equipment, net of accumulated depreciation of $11,803,423 and $9,292,712
113,943,021

 
116,412,806

Financing notes and related accrued interest receivable, net of reserve of $4,100,000 and $4,100,000
1,500,000

 
1,500,000

Other equity securities, at fair value
10,457,982

 
9,287,209

Cash and cash equivalents
15,533,509

 
7,895,084

Deferred rent receivable
20,260,686

 
14,876,782

Accounts and other receivables
3,853,572

 
4,538,884

Deferred costs, net of accumulated amortization of $457,277 and $2,261,151
3,657,017

 
3,132,050

Prepaid expenses and other assets
815,458

 
354,230

Deferred tax asset, net
1,892,611

 
1,758,289

Goodwill
1,718,868

 
1,718,868

Total Assets
$
647,939,143

 
$
650,732,571

Liabilities and Equity
 
 
 
Secured credit facilities, net (including $7,534,177 and $8,860,577 with related party)
$
17,534,177

 
$
89,387,985

Unsecured convertible senior notes, net of discount and debt issuance costs of $2,164,715 and $2,755,105
111,835,285

 
111,244,895

Asset retirement obligation
12,375,105

 
11,882,943

Accounts payable and other accrued liabilities
4,634,946

 
2,416,283

Management fees payable
1,761,756

 
1,735,024

Unearned revenue
543,050

 
155,961

Total Liabilities
$
148,684,319

 
$
216,823,091

Equity
 
 
 
Series A Cumulative Redeemable Preferred Stock 7.375%, $130,000,000 and $56,250,000 liquidation preference ($2,500 per share, $0.001 par value), 10,000,000 authorized; 52,000 and 22,500 issued and outstanding at September 30, 2017 and December 31, 2016, respectively
$
130,000,000

 
$
56,250,000

Capital stock, non-convertible, $0.001 par value; 11,909,244 and 11,886,216 shares issued and outstanding at September 30, 2017 and December 31, 2016 (100,000,000 shares authorized)
11,909

 
11,886

Additional paid-in capital
341,678,080

 
350,217,746

Accumulated other comprehensive loss
(2,180
)
 
(11,196
)
Total CorEnergy Equity
471,687,809

 
406,468,436

Non-controlling interest
27,567,015

 
27,441,044

Total Equity
499,254,824

 
433,909,480

Total Liabilities and Equity
$
647,939,143

 
$
650,732,571












Consolidated Statements of Income and Comprehensive Income (Unaudited)
 
 
 
 
 
For the Three Months Ended
 
For the Nine Months Ended
 
September 30, 2017
 
September 30, 2016
 
September 30, 2017
 
September 30, 2016
Revenue
 
 
 
 
 
 
 
Lease revenue
$
17,173,676

 
$
16,996,155

 
$
51,290,294

 
$
50,988,299

Transportation and distribution revenue
5,270,628

 
5,119,330

 
15,056,998

 
15,283,461

Financing revenue

 

 

 
162,344

Total Revenue
22,444,304

 
22,115,485

 
66,347,292

 
66,434,104

Expenses
 
 
 
 
 
 
 
Transportation and distribution expenses
2,384,182

 
1,482,161

 
5,082,732

 
4,222,792

General and administrative
2,632,546

 
3,021,869

 
8,252,125

 
9,084,961

Depreciation, amortization and ARO accretion expense
6,017,664

 
5,744,266

 
18,029,567

 
16,778,109

Provision for loan loss and disposition

 

 

 
5,014,466

Total Expenses
11,034,392

 
10,248,296

 
31,364,424

 
35,100,328

Operating Income
$
11,409,912

 
$
11,867,189

 
$
34,982,868

 
$
31,333,776

Other Income (Expense)
 
 
 
 
 
 
 
Net distributions and dividend income
$
213,040

 
$
277,523

 
$
477,942

 
$
867,265

Net realized and unrealized gain on other equity securities
1,340,197

 
1,430,858

 
1,410,623

 
1,001,771

Interest expense
(2,928,036
)
 
(3,520,856
)
 
(9,585,270
)
 
(10,987,677
)
Loss on extinguishment of debt
(234,433
)
 

 
(234,433
)
 

Total Other Expense
(1,609,232
)
 
(1,812,475
)
 
(7,931,138
)
 
(9,118,641
)
Income before income taxes
9,800,680

 
10,054,714

 
27,051,730

 
22,215,135

Taxes
 
 
 
 
 
 
 
Current tax expense (benefit)
65,131

 
95,125

 
89,022

 
(378,954
)
Deferred tax expense (benefit)
126,440

 
388,027

 
(134,322
)
 
17,418

Income tax expense (benefit), net
191,571

 
483,152

 
(45,300
)
 
(361,536
)
Net Income
9,609,109

 
9,571,562

 
27,097,030

 
22,576,671

Less: Net Income attributable to non-controlling interest
431,825

 
340,377

 
1,250,096

 
999,838

Net Income attributable to CorEnergy Stockholders
$
9,177,284

 
$
9,231,185

 
$
25,846,934

 
$
21,576,833

Preferred dividend requirements
2,396,875

 
1,037,109

 
5,557,113

 
3,111,327

Net Income attributable to Common Stockholders
$
6,780,409

 
$
8,194,076

 
$
20,289,821

 
$
18,465,506

 
 
 
 
 
 
 
 
Net Income
$
9,609,109

 
$
9,571,562

 
$
27,097,030

 
$
22,576,671

Other comprehensive income (loss):
 
 
 
 
 
 
 
Changes in fair value of qualifying hedges / AOCI attributable to CorEnergy stockholders
3,038

 
3,039

 
9,016

 
(205,032
)
Changes in fair value of qualifying hedges / AOCI attributable to non-controlling interest
710

 
710

 
2,106

 
(47,937
)
Net Change in Other Comprehensive Income (Loss)
$
3,748

 
$
3,749

 
$
11,122

 
$
(252,969
)
Total Comprehensive Income
9,612,857

 
9,575,311

 
27,108,152

 
22,323,702

Less: Comprehensive income attributable to non-controlling interest
432,535

 
341,087

 
1,252,202

 
951,901

Comprehensive Income attributable to CorEnergy Stockholders
$
9,180,322

 
$
9,234,224

 
$
25,855,950

 
$
21,371,801

Earnings Per Common Share:
 
 
 
 
 
 
 
Basic
$
0.57

 
$
0.69

 
$
1.71

 
$
1.55

Diluted
$
0.57

 
$
0.68

 
$
1.71

 
$
1.55

Weighted Average Shares of Common Stock Outstanding:
 
 
 
 
 
 
 
Basic
11,904,933

 
11,872,729

 
11,896,803

 
11,909,431

Diluted
11,904,933

 
15,327,274

 
11,896,803

 
11,909,431

Dividends declared per share
$
0.750

 
$
0.750

 
$
2.250

 
$
2.250








Consolidated Statements of Cash Flows (Unaudited)
 
For the Nine Months Ended
 
September 30, 2017
 
September 30, 2016
Operating Activities
 
 
 
Net Income
$
27,097,030

 
$
22,576,671

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Deferred income tax, net
(134,322
)
 
17,418

Depreciation, amortization and ARO accretion
19,350,053

 
18,334,719

Provision for loan loss

 
5,014,466

Loss on extinguishment of debt
234,433

 

Non-cash settlement of accounts payable
(221,609
)
 

Loss on sale of equipment
4,203

 

Gain on repurchase of convertible debt

 
(71,702
)
Net distributions and dividend income, including recharacterization of income
148,649

 
(117,004
)
Net realized and unrealized gain on other equity securities
(1,410,623
)
 
(1,001,771
)
Unrealized loss (gain) on derivative contract
13,154

 
(105,567
)
Common stock issued under directors compensation plan
67,500

 
60,000

Changes in assets and liabilities:
 
 
 
Increase in deferred rent receivable
(5,383,904
)
 
(6,564,143
)
Decrease in accounts and other receivables
685,312

 
1,130,115

Decrease in financing note accrued interest receivable

 
95,114

(Increase) decrease in prepaid expenses and other assets
(105,866
)
 
49,227

Increase (decrease) in management fee payable
26,732

 
(20,148
)
Increase in accounts payable and other accrued liabilities
2,437,100

 
1,913,875

Increase in unearned revenue
29,695

 
343,295

Net cash provided by operating activities
$
42,837,537

 
$
41,654,565

Investing Activities
 
 
 
Proceeds from assets and liabilities held for sale

 
644,934

Purchases of property and equipment, net
(50,924
)
 
(475,581
)
Proceeds from asset foreclosure and sale

 
223,451

Increase in financing notes receivable

 
(202,000
)
Return of capital on distributions received
91,201

 
3,393

Net cash provided by investing activities
$
40,277

 
$
194,197

Financing Activities
 
 
 
Debt financing costs
(1,342,681
)
 
(193,000
)
Net offering proceeds on Series A preferred stock
71,161,531

 

Repurchases of common stock

 
(2,041,851
)
Repurchases of convertible debt

 
(899,960
)
Dividends paid on Series A preferred stock
(5,830,859
)
 
(3,111,327
)
Dividends paid on common stock
(26,034,749
)
 
(26,311,075
)
Distributions to non-controlling interest
(1,126,231
)
 

Advances on revolving line of credit
10,000,000

 
44,000,000

Payments on revolving line of credit
(44,000,000
)
 

Principal payments on secured credit facilities
(38,066,400
)
 
(57,802,535
)
Net cash used in financing activities
$
(35,239,389
)
 
$
(46,359,748
)
Net Change in Cash and Cash Equivalents
$
7,638,425

 
$
(4,510,986
)
Cash and Cash Equivalents at beginning of period
7,895,084

 
14,618,740

Cash and Cash Equivalents at end of period
$
15,533,509

 
$
10,107,754






 
For the Nine Months Ended
 
September 30, 2017
 
September 30, 2016
Supplemental Disclosure of Cash Flow Information
 
 
 
Interest paid
$
6,301,929

 
$
7,829,619

Income taxes paid (net of refunds)
197,202

 
42,200

 
 
 
 
Non-Cash Investing Activities
 
 
 
Change in accounts and other receivables
$

 
$
(450,000
)
Net change in Assets Held for Sale, Property and equipment, Prepaid expenses and other assets, Accounts payable and other accrued liabilities and Liabilities held for sale

 
(1,776,549
)
 
 
 
 
Non-Cash Financing Activities
 
 
 
Reinvestment of distributions by common stockholders in additional common shares
$
727,518

 
$
494,251







NAREIT FFO, FFO Adjusted for Securities Investment and AFFO Reconciliation (Unaudited)
 
For the Three Months Ended
 
For the Nine Months Ended
 
September 30, 2017
 
September 30, 2016
 
September 30, 2017
 
September 30, 2016
Net Income attributable to CorEnergy Stockholders
$
9,177,284

 
$
9,231,185

 
$
25,846,934

 
$
21,576,833

Less:
 
 
 
 
 
 
 
Preferred Dividend Requirements
2,396,875

 
1,037,109

 
5,557,113

 
3,111,327

Net Income attributable to Common Stockholders
$
6,780,409

 
$
8,194,076

 
$
20,289,821

 
$
18,465,506

Add:
 
 
 
 
 
 
 
Depreciation
5,823,777

 
5,537,179

 
17,468,456

 
16,166,599

Less:
 
 
 
 
 
 
 
Non-Controlling Interest attributable to NAREIT FFO reconciling items
411,455

 
411,455

 
1,234,365

 
1,234,365

NAREIT funds from operations (NAREIT FFO)
$
12,192,731

 
$
13,319,800

 
$
36,523,912

 
$
33,397,740

Add:
 
 
 
 
 
 
 
Distributions received from investment securities
242,412

 
278,782

 
717,791

 
753,655

Income tax expense from investment securities
589,125

 
645,083

 
703,987

 
703,211

Less:
 
 
 
 
 
 
 
Net distributions and dividend income
213,040

 
277,523

 
477,942

 
867,265

Net realized and unrealized gain on other equity securities
1,340,197

 
1,430,858

 
1,410,623

 
1,001,771

Funds from operations adjusted for securities investments (FFO)
$
11,471,031

 
$
12,535,284

 
$
36,057,125

 
$
32,985,570

Add:
 
 
 
 
 
 
 
Loss on extinguishment of debt
234,433

 

 
234,433

 

Provision for loan losses, net of tax

 

 

 
4,409,359

Transaction costs
35,822

 
33,984

 
505,873

 
71,899

Amortization of debt issuance costs
382,745

 
469,004

 
1,320,487

 
1,556,607

Amortization of deferred lease costs
22,983

 
22,983

 
68,949

 
68,949

Accretion of asset retirement obligation
170,904

 
184,104

 
492,162

 
542,561

Unrealized (gain) loss associated with derivative instruments
29,608

 
(60,513
)
 
13,155

 
(2,818
)
Less:
 
 
 
 
 
 
 
Non-cash settlement of accounts payable
50,000

 

 
221,609

 

Income tax benefit
397,554

 
161,931

 
749,287

 
459,640

Non-Controlling Interest attributable to AFFO reconciling items
3,366

 
(10,715
)
 
10,075

 
35,153

Adjusted funds from operations (AFFO)
$
11,896,606

 
$
13,033,630

 
$
37,711,213

 
$
39,137,334

 
 
 
 
 
 
 
 
Weighted Average Shares of Common Stock Outstanding:
 
 
 
 
 
 
 
Basic
11,904,933

 
11,872,729

 
11,896,803

 
11,909,431

Diluted
15,359,479

 
15,327,274

 
15,351,348

 
15,379,792

NAREIT FFO attributable to Common Stockholders
 
 
 
 
 
 
 
Basic
$
1.02

 
$
1.12

 
$
3.07

 
$
2.80

Diluted (1)
$
0.94

 
$
1.01

 
$
2.81

 
$
2.60

FFO attributable to Common Stockholders
 
 
 
 
 
 
 
Basic
$
0.96

 
$
1.06

 
$
3.03

 
$
2.77

Diluted (1)
$
0.89

 
$
0.96

 
$
2.78

 
$
2.57

AFFO attributable to Common Stockholders
 
 
 
 
 
 
 
Basic
$
1.00

 
$
1.10

 
$
3.17

 
$
3.29

Diluted (2)
$
0.90

 
$
0.98

 
$
2.85

 
$
2.94

(1) Diluted per share calculations include dilutive adjustments for convertible note interest expense, discount amortization and deferred debt issuance amortization.
(2) Diluted per share calculations include a dilutive adjustment for convertible note interest expense.