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Assessing GasLog Partners' 3Q16: What Does the Future Hold?

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Part 4
Assessing GasLog Partners' 3Q16: What Does the Future Hold? PART 4 OF 8

How GasLog Partners Benefited from Its Recent Acquisition

GasLog Partners’ vessel acquisition

GasLog Partners (GLOP) and GasLog (GLOG) have entered into an agreement in which GasLog Partners will acquire 100% of GasLog Seattle for an aggregate price of $189 million. This acquisition marks the partnership’s third accretive dropdown.

How GasLog Partners Benefited from Its Recent Acquisition

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GasLog and GasLog partners

GasLog Partners is a growth-oriented MLP focused on owning, operating, and acquiring LNG (liquefied natural gas) carriers under multiyear charters. After this acquisition’s closing, GLOP will have a fleet of nine LNG carriers. Gaslog is an international LNG carrier with a consolidated fleet of 27 LNG carriers. In the business of LNG carriers other players are Hoegh LNG Partners (HMLP), Dynagas LNG Partners (DLNG), Teekay LNG (TGP), and Golar LNG (GLNG).

Gaslog Seattle

Gaslog Seattle is a modern LNG carrier with PSV (platform supply vessel) propulsion. It’s was built in 2013, and since then, it’s been operated by GasLog. It’s currently on a multiyear time charter contract with a subsidiary of Royal Dutch Shell through December 2020. Shell has two consecutive five-year extension options, which, if exercised, could extend the charter for a period of either five or ten years.

Benefits of the acquisition

The partnership believes that the acquisition will be immediately accretive to unitholder distributions. This is consistent with the strategy to grow cash distributions through dropdown and third-party acquisitions.

GasLog Partners estimates that, assuming full utilization, GasLog Seattle will add ~$120 million in EBITDA (earnings before interest, tax, depreciation, and amortization) and $10 million in distributable cash flow in the first 12 months. The acquisition extends GLOP’s average remaining charter duration. Its management expects to recommend a ~5% annualized rise in cash distributions to the board after the acquisition’s completion.

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In the next article, we’ll see more dropdown options for GasLog Partners.

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