Compressco Partners LP and Farmland Partners Price Share Offerings
By: Tim McPartland,
July 24, 2014 8 pm
We have been anxiously awaiting the pricing on a couple of offerings and tonight we have the details.
MLP Compressco Partners LP(ticker:GSJK) has priced a massive offering (up to 17,000,000 units) at $23.50. The unit price has gotten totally trashed in the last week with the price hitting $27.42 8 days ago before closing today at $23.70–the 52 week high is $31.00. The proceeds will be used to consummate the acquisition of Compressor Systems, a privately held company that is 3-4 times the size of Compressco Partners LP. Compressco has a current yield of 7.51% and has ‘promised’ to raise the distribution 15% for the end of the year after this acquisition.
We touched on this issue a couple of days ago in a short article with our thoughts. With the pricing at $23.50 and a potential 17,000,000 units coming to market (average daily volume is just 15,000-25,000 units) the pricing could trade down another 50 cents or a $1.00 tomorrow (of course who really knows).
We are a buyer of a couple hundred units for ‘holding’ and 300-500 units to ‘flip’. We are in no hurry as we want to see the price action tomorrow and with the huge share overhang it is likely to be ‘on sale’ for quite some time.
Farmland Partners (ticker:FPI) is the newer agricultural land REIT which IPO’ed at $14 just a few months ago is coming with 3.7 million shares at $12.50/share. Nice to get slammed for a 10% loss only months after coming public. We have no interest in this issue at all—unless it eventually trades down to $8. There has been no news on this REIT that makes it in any way attractive to an income investor. We had made our feelings quite strongly known previously and nothing at all has changed.