David Schulte, president and CEO of CorEnergy Infrastructure Trust (NYSE: CORR), joined REIT.com for a CEO Spotlight video interview during REITWeek 2015: NAREIT’s Investor Forum, held in New York.
CorEnergy primarily owns midstream and downstream energy infrastructure assets that perform utility-like functions, such as pipelines, storage terminals, and transmission and distribution assets. CorEnergy is the first publicly traded infrastructure REIT focused exclusively on energy infrastructure assets.
Schulte explained that CorEnergy concentrates on assets with long-duration leases that can provide long-term recurring revenue streams, in order to provide a stable, predictable dividend stream. Its infrastructure assets are “absolutely essential to the operations of our tenants,” Schulte emphasized.
“We take a lower risk approach by enabling them to have predictable costs of accessing our infrastructure assets for a very long time,” Schulte said. Although CorEnergy’s tenants may experience some fluctuations in their returns based on energy prices, Schulte stressed that the REIT has no real direct commodity exposure in its leases.
Schulte noted that because its assets are essential to supporting their tenants’ production efforts, the company is able to charge for its services much like a utility would.
Meanwhile, Schulte pointed out that CorEnergy’s portfolio has grown from about $90 million in assets to $460 million. “We do believe that we’ve created a platform that’s viable, and that has a demonstrated track record,” he said. At the same time, CorEnergy has been able to increase its dividend with each new acquisition, and expects to continue to grow the dividend 3 percent to 5 percent per year, Schulte added.
“We don’t want to grow for the sake of asset growth, our goal is a long-term, stable dividend,” Schulte stressed. Looking ahead, Schulte said CorEnergy will increase the diversification of its portfolio, “thereby mitigating risk and growing the dividend along the way. So far we’ve been able to do that.”