CorEnergy acquires Crimson Midstream's California pipeline assets for $350M

Real estate investment trust CorEnergy Infrastructure Trust Inc. acquired the California pipeline assets of oil pipeline owner and operator Crimson Midstream Holdings LLC for nearly $350 million.

The assets acquired include four critical infrastructure pipeline systems of about 1,800 miles across northern, central and southern California.

The energy REIT said it funded the deal using $75.6 million of cash on hand, new term loan and revolver borrowings of $105.0 million, roughly $119.4 million of commitments to issue new common and preferred equity and contribution of the Grand Isle Gathering System to the sellers.

Crimson Midstream Holdings is regulated by the California Public Utilities Commission.

Following the transaction, Dave Schulte will remain chairman, CEO and president of CorEnergy. John Grier, founder and board chairman of Crimson Midstream LLC, will become COO and join the board of directors of CorEnergy. Other members of Crimson's executive and operating teams joining CorEnergy include Robert Waldron, CFO at Crimson Midstream, who will become CFO of CorEnergy, and Larry Alexander, president of Crimson California's operations.

The REIT said it also agreed to internalize its REIT manager, Corridor InfraTrust Management LLC, for $16.9 million. CorEnergy expects the pro forma management fees of approximately $5.5 million will be replaced with an estimated $3.4 million annualized selling, general and administrative expenses in 2021.

The internalization has been approved by a special committee of CorEnergy's board comprised of independent directors. It remains subject to stockholder approval in compliance with NYSE rules and other customary closing conditions and is expected to close in the second quarter. Evercore Inc. was financial adviser to the independent special committee and issued a fairness opinion in connection with the internalization.