In hindsight, management’s signing of a long term lease to take advantage of a fleeting opportunity (arbitraging oil price differentials within the US) was not a good idea.
Global Partners (GLP) is currently pursuing a growth-by-acquisition model. GLP pays for acquisitions with its revolving credit, and then pays off its revolving credit by issuing debt.
GLP pays a high debt service in exchange for its acquisitions – not a good sign. The average coupon on its senior notes is 7.00%.
Management would better serve shareholders by taking measures to reduce financing costs, and approaching empire-building at a more leisurely pace.
Nevertheless, the distribution looks secure. GLP is a great addition to any income portfolio.
Back in May 2016 I wrote a first piece about Global Partners LP, and looking back at it now it feels rather amateurish. But much about the business has changed since I wrote that