In October the Property & Infrastructure Fund was down -0.4%, compared to the benchmark which was up +1.3%.  

 Kinder Morgan (+12%) reported its third quarter earnings, with EBITDA (a proxy for cash earnings) 2% below expectations. The company is likely to miss its full year budget by a similar amount. Despite this, investors are increasingly focused on the growth potential for natural gas in the US. Growing power demand, LNG exports and re-shoring of supply chains from China to the US and Mexico are driving demand. Kinder Morgan recently increased its pipeline of future projects; which is now 34% higher than a year ago. Whilst demand is strong, it will take time for the impact of these thematics to impact Kinder Morgan’s earnings. Existing capacity is contracted on a multi-year basis, and future capacity requires heavy capital investment, with some projects taking years to deliver. The projects driving end use, such as datacentres, power plants and LNG terminals, will also take years to be built and come online. Whilst we are mindful that earnings won’t move materially in the near-term, we are encouraged by the one of the strongest demand environments we’ve seen since adding Kinder Morgan to the portfolio in 2016. 

Crown Castle (CCI) (-8%) reported third quarter earnings, which beat expectations by 2%. Full-year 2024 guidance is unchanged. The company announced a 15% reduction in its contracted backlog of small cell sites  by mutual agreement with customers. The cancelled sites were no longer economic to build, due to increases in CCI’s return hurdles, and greater construction costs and build timeframes than previously expected. The company has no plans to further cut the backlog. There was no update on the potential sale of the fibre and small cells business. We reduced our position -1.0% during the month as we think the small cells backlog cut shortens the growth runway and indicates a lower potential value for the fibre and small cells business.