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Characteristics

  • Current Income Stream – Generally, quarterly distributions are paid to unitholders.
  • Potential Distribution Growth – Accretive assets and organic growth increase partnership cashflow, leading to potentially higher distributions for unitholders.
  • Tax Efficient – Effectively 70%-90% of quarterly distributions are shielded from current tax.
  • Favorable Wealth Transfer Tool – Cost basis stepped up to fair market value at death, eliminating the deferred income tax liability when transferred to heirs.
  • Potential for Capital Appreciation – Price appreciation may occur with growth in partnership distributions.
  • Potential Inflation Hedge – Exposure to physical assets can be attractive during periods of inflation.  Tariffs for FERC-regulated pipelines are adjusted annually according to a Producer Price Index (PPI)-based formula, providing an inflation hedge.
  • Portfolio Diversifier – Low correlation with other asset classes offers potential for diversification.
  • Liquidity - Increased familiarity and initial public offereing activity has led to higher liquidity.