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Natural Resource Partners LP Message Board

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  • jrad52 jrad52 Mar 20, 2007 9:48 PM Flag

    NRP is near its all time high! How about an entry point?

    Why are you shocked? Almost every MLP has a separate GP that owns IDRs entitling it to a disproportionate share (usually up to 48%, as with NRP) of increases in distributions. I can only think of 2 offhand that don't have this structure.

    Also, the 48%% is not "half of future cash flows", as you put it. The 48% IDR means that the GP gets an extra 48% of increases in the distribution, not 48% of the total distribution.

    And, as to how NRP will grow its distribution, it hit the 48% point with its Q4 2005 distribution. Since then, it has grown the distribution by 15% in 1 year, which is essentially the same as the other 2 coal MLPs, PVR and ARLP. Both of these also have IDRs.

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    • Also, the 48%% is not "half of future cash flows", as you put it. The 48% IDR means that the GP gets an extra 48% of increases in the distribution, not 48% of the total distribution.

      I understand that. But now to get a dollar increase in dividend the company needs to have two dollars of distributable cash flow. Also the new participants are getting common units also so they are participating to the tune of more than half. If I wasn't clear perhaps I should have said "future dividend growth" as that is what I was referring to.

      I was not commenting on the structure in general but to the fact that once this company got over $3.00 in annual dividends future growth in dividends became more difficult.

      The compensation is that it is now very dificult for the dividend to decline below $3.00.

      NRP is now a much larger vibrant company but the abilty to grow dividends is less than it was before IMO.

      I will sell by April 9.

 
NRP
16.81+0.35(+2.13%)Jul 23 4:02 PMEDT

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