Exchange of 80% of Management Incentive Fee for 6 million units is good for unitholders
Since the Management Incentive Fee is based on the value of the assets of QRE, and that will go up will each acquisition, the exchange will have effect of keeping the Management Incentice Fee from rising in the future. This is good for the Unitholders in the same way that getting rid Of IDRs has been good for Unitholders of other MLPs.
only problem with your logic is that the GP can receive units once every 4 quarters as long as assets increase 15%. the 6 m shares issued today represents 12% of the new, total share base. ANd yes while the acquisitions maintained the coverage ratio at 1.2x, all that growth went mostly to the GP's new units- and did not lead to a distribution increase. the GP looks poised to collect the majority of the growth, while unit holders face the likelihood that distribution growth will be paltry: Yes CEO said its a focus of company to increase distribution but he also suggested it won't be soon
The likelihood of poor distribution growth in turn means the likelihood of capital appreciation is poor (with bond rates already at really low levels, what else is there to drive up price than a pattern of increasing distributions?)
so if 11% return (possibly spiced by the occasional covered call) is all you need, hold and collect the distribution. But don't expect it to go up any time soon, is what this deal makes me think