N-Q 1 fp0025361_nq.htm

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-Q

QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS
OF REGISTERED MANAGEMENT INVESTMENT COMPANY

Investment Company Act file number 811-22843

Center Coast MLP & Infrastructure Fund
(Exact name of registrant as specified in charter)

Center Coast Capital Advisors, LP
1600 Smith Street
Suite 3800
Houston, TX 77002
(Address of principal executive offices) (Zip code)

Dan C. Tutcher
Center Coast Capital Advisors, LP
1600 Smith Street
Suite 3800
Houston, TX 77002
(Name and address of agent for service)

Registrant's telephone number, including area code: (713) 759-1400

Date of fiscal year end: November 30

Date of reporting period: February 28, 2017

ITEM 1. SCHEDULE OF INVESTMENTS.

The Schedule(s) of Investments is attached herewith.

Center Coast MLP & Infrastructure Fund
Schedule of Investments (Unaudited)
February 28, 2017
 
Number of
Shares
      
Value
  
   
COMMON STOCK - 8.6%
      
   
Midstream C-corps - 8.6%
      
 
416,393
  
Targa Resources Corp. 1,2
    
23,526,205
  
           
23,526,205
  
     
Total Common Stock
        
     
(Cost $7,551,061)
    
23,526,205
  
               
     
MASTER LIMITED PARTNERSHIP SHARES - 126.9%
        
     
Compression - 1.3%
        
 
203,288
  
USA Compression Partners LP
    
3,612,428
  
           
3,612,428
  
               
     
Diversified Midstream- 41.3%
        
 
387,138
  
Energy Transfer Partners LP
    
14,637,688
  
 
1,091,580
  
Enterprise Products Partners LP 1,2
    
30,596,987
  
 
778,971
  
MPLX LP 1,2
    
28,985,511
  
 
175,081
  
ONEOK Partners LP 1
    
9,170,743
  
 
515,971
  
Tesoro Logistics LP 1
    
29,054,327
  
           
112,445,256
  
               
     
E&P-sponsored Gathering & Processing - 15.3%
        
 
1,328,061
  
EnLink Midstream Partners LP 1,2
    
24,861,302
  
 
96,443
  
Rice Midstream Partners LP
    
2,373,462
  
 
230,641
  
Western Gas Partners LP 1,2
    
14,338,951
  
           
41,573,715
  
     
Gathering & Processing - 9.2%
        
 
153,712
  
Crestwood Equity Partners LP 1
    
3,981,141
  
 
361,700
  
DCP Midstream Partners LP 1
    
14,178,640
  
 
193,785
  
Enable Midstream Partners LP
    
3,162,571
  
 
162,129
  
Summit Midstream Partners LP 1
    
3,866,777
  
           
25,189,129
  
               
     
General Partner (K-1) - 2.1%
        
 
201,944
  
NuStar GP Holdings LLC 1
    
5,836,182
  
           
5,836,182
  
               
     
Large-cap Petroleum Transportation & Storage - 34.0%
        
 
350,960
  
Buckeye Partners LP 1,2
    
24,188,163
  
 
186,934
  
Magellan Midstream Partners LP 1
    
14,489,254
  
 
360,346
  
NuStar Energy LP 1
    
18,824,475
  
 
640,764
  
Plains All American Pipeline LP 1,2
    
20,555,709
  
 
575,878
  
Sunoco Logistics Partners LP 1
    
14,586,990
  
           
92,644,591
  
               
     
Natural Gas Transportation & Storage - 14.3%
        
 
438,894
  
Spectra Energy Partners LP 1,2
    
19,631,728
  
 
314,529
  
TC Pipelines LP 1
    
19,205,141
  
           
38,836,869
  
               
     
Other fee-based - 1.3%
        
 
180,000
  
Martin Midstream Partners LP
    
3,447,000
  
           
3,447,000
  
               
     
Other unit classes - 1.7%
        
 
145,137
  
Plains GP Holdings LP - Class A
    
4,770,653
  
           
4,770,653
  
               
     
Sponsored Petroleum Transportation & Storage - 6.4%
        
 
179,998
  
PBF Logistics LP 1
    
3,734,958
  
 
176,055
  
Phillips 66 Partners LP 1
    
9,793,940
  
 
115,818
  
Shell Midstream Partners LP 1
    
3,794,198
  
           
17,323,096
  
               
     
Total Master Limited Partnership Shares
        
     
(Cost $296,864,846)
    
345,678,919
  

 
Center Coast MLP & Infrastructure Fund
Schedule of Investments - Continued (Unaudited)
February 28, 2017
 
Number of
Shares
      
Value
  
   
PREFERRED STOCK - 0.7%
      
   
E&P-sponsored Gathering & Processing - 0.7%
      
 
44,660
  
Anadarko Pete Corp., 7.50% 1
  
$
1,960,797
  
           
1,960,797
  
     
Total Preferred Stock
        
     
(Cost $1,397,552)
    
1,960,797
  
               
     
UNREGISTERED/RESTRICTED SECURITIES - 11.4%
        
 
31,004,597
  
KKR Eagle Co-Invest LP 3
    
31,004,597
  
     
Total Unregistered/Restricted Securities
        
     
(Cost $31,004,597)
    
31,004,597
  
 
Principal
Amount
      
Value
  
   
Short-Term Investments - 0.5%
      
$
1,435,432
  
UMB Money Market Fiduciary, 0.01% 4
  
$
1,435,432
  
     
Total Short-Term Investments
    
1,435,432
  
     
(Cost $1,435,432)
        
               
     
Total Investments * - 148.1%
        
     
(Cost $338,253,488)
    
403,605,950
  
     
Line of Credit - (30.0)%
    
(81,700,000
)
     
Series A Mandatory Redeemable Preferred Shares - (17.9) %
    
(48,924,834
)
     
Liabilities in Excess of Other Assets - (0.2)%
    
(510,253
)
     
Total Net Assets - 100%
  
$
272,470,863
  
 
Number of
Contracts
      
Notional
Amount
    
Value
  
   
Written Option Contracts - (0.0)% **
            
   
Call Options - (0.0)% **
            
   
EnLink Midstream Partners LP
            
 
(1,330
)
 Exercise Price: $20, Expiration Date: March 17, 2017
  
$
2,660,000
    
$
(19,950
)
     
Energy Transfer Partners LP
                
 
(10
)
 Exercise Price: $41, Expiration Date: March 17, 2017
    
41,000
      
(100
)
     
Martin Midstream Partners LP
                
 
(180
)
 Exercise Price: $20, Expiration Date: March 17, 2017
    
360,000
      
(3,600
)
     
MPLX LP
                
 
(790
)
 Exercise Price: $40, Expiration Date: March 17, 2017
    
3,160,000
      
(11,850
)
     
ONEOK Partners LP
                
 
(180
)
 Exercise Price: $55, Expiration Date: March 17, 2017
    
990,000
      
(6,750
)
     
Plains All American Pipeline LP
                
 
(2
)
 Exercise Price: $33, Expiration Date: March 17, 2017
    
6,600
      
(60
)
     
PBF Logistics LP
                
 
(46
)
 Exercise Price: $22.50, Expiration Date: March 17, 2017
    
103,500
      
(1,610
)
     
Phillips 66 Partners LP
                
 
(21
)
 Exercise Price: $60, Expiration Date: March 17, 2017
    
126,000
      
(420
)
     
Rice Midstream Partners LP
                
 
(474
)
 Exercise Price: $25, Expiration Date: March 17, 2017
    
1,185,000
      
(23,700
)
     
Sunoco Logistics Partners LP
                
 
(116
)
 Exercise Price: $27, Expiration Date: March 17, 2017
    
313,200
      
(1,450
)
     
TC Pipelines LP
                
 
(160
)
 Exercise Price: $65, Expiration Date: March 17, 2017
    
1,040,000
      
(22,400
)
     
Targa Resources Corp.
                
 
(210
)
 Exercise Price: $62.50, Expiration Date: March 17, 2017
    
1,312,500
      
(3,675
)
     
Western Gas Partners LP
                
 
(115
)
 Exercise Price: $70, Expiration Date: March 17, 2017
    
805,000
      
(5,175
)
     
Total Call Options
                
     
(Proceeds $103,144)
    
12,102,800
      
(100,740
)
                       
     
Total Written Option Contracts *
        
      (Proceeds $103,144)   $
12,102,800
     $
(100,740)
  
 
LLC - Limited Liability Company
LP - Limited Partnership

1
All or a portion of the security has been pledged as collateral with the Fund's line of credit agreement. As of February 28, 2017, the total value of securities pledged as collateral for the line of credit agreement was $212,475,933.
2
All or a portion of this security has been pledged as collateral for written option contracts. As of February 28, 2017 the total value of securities pledged as collateral for written options contracts was $9,873,420.
3
Indicates a fair valued security. Total value for fair valued securities is $31,004,597, representing 11.4% of fund net assets.
4
The rate quoted is the annualized seven-day yield of the Fund at the period end.

*
All investments domiciled in the United States.
**
Rounds to less than 0.05%.
 
Fair Value Measurements and Disclosures defines fair value, establishes a framework for measuring fair value in accordance with Generally Accepted Accounting Principles (“GAAP”) , and expands disclosure about fair value measurements. It also provides guidance on determining when there has been a significant decrease in the volume and level of activity for an asset or liability, when a transaction is not orderly, and how that information must be incorporated into a fair value measurement.

Under Fair Value Measurements and Disclosures, various inputs are used in determining the value of the Fund’s investments. These inputs are summarized into three broad Levels as described below:

·
Level 1 – Unadjusted quoted prices in active markets for identical assets or liabilities that the Fund has the ability to access.
·
Level 2 – Observable inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These inputs may include quoted prices for the identical instrument on an inactive market, prices for similar instruments, interest rates, prepayment speeds, credit risk, yield curves, default rates and similar data.
·
Level 3 – Unobservable inputs for the asset or liability, to the extent relevant observable inputs are not available, representing the Fund’s own assumptions about the assumptions a market participant would use in valuing the asset or liability, and would be based on the best information available.

The availability of observable inputs can vary from security to security and is affected by a wide variety of factors, including, for example, the type of security, whether the security is new and not yet established in the marketplace, the liquidity of markets, and other characteristics particular to the security. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised in determining fair value is greatest for instruments categorized in Level 3.

The inputs used to measure fair value may fall into different Levels of the fair value hierarchy. In such cases, for disclosure purposes, the Level in the fair value hierarchy within which the fair value measurement falls in its entirety, is determined based on the lowest Level input that is significant to the fair value measurement in its entirety.

In addition, the Fund has adopted Accounting Standards Update No. 2011-04 Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in GAAP and IFRSs which amends Fair Value Measurements and Disclosures to establish common requirements for measuring fair value and for disclosing information about fair value measurements in accordance with U.S. GAAP and International Financial Reporting Standards. Enhanced disclosure is required to detail any transfers in to and out of Level 1 and Level 2 measurements and Level 2 and Level 3 measurements and the reasons for the transfers.

The inputs or methodology used for valuing securities are not an indication of the risk associated with investing in those securities. The following is a summary of the fair valuation levels, as of February 28, 2017:
Assets
  
Level 1
    
Level 2
    
Level 3
    
Total
  
 Common Stock1
  
$
23,526,205
    
$
-
    
$
-
    
$
23,526,205
  
 Master Limited Partnerships1
    
345,678,919
      
-
      
-
      
345,678,919
  
 Preferred Stock1
    
1,960,797
      
-
      
-
      
1,960,797
  
 Unregistered/Restricted Securities
    
-
      
-
      
31,004,597
      
31,004,597
  
 Short-Term Investments
    
1,435,432
      
-
      
-
      
1,435,432
  
Total Assets
  
$
372,601,353
    
$
-
    
$
31,004,597
    
$
403,605,950
  
 
Liabilities
  
Level 1
    
Level 2
    
Level 3
    
Total
  
 Written Call Options
  
$
(100,740
)
  
$
-
    
$
-
    
$
(100,740
)
Total Liabilities
  
$
(100,740
)
  
$
-
    
$
-
    
$
(100,740
)

1
All Common Stock, Master Limited Partnerships and Preferred Stock held by the Fund are Level 1 securities. For a detailed break-out of Master Limited Partnerships by major industry classification, please refer to the Schedule of Investments.

Transfers are recognized at the end of the reporting period. There were no transfers during the period.

The following table summarizes the change in value associated with Level 3 securities carried at fair value for the period ended February 28, 2017:
 
   
Level 3 Securities
  
Unregistered/Restricted Securities
      
Balance, December 1, 2016
  
$
31,004,597
  
Purchases
    
-
  
Balance, February 28, 2017
  
$
31,004,597
  
 
The following is a summary of quantitative information about significant unobservable valuation inputs approved by the adviser's valuation committee for Level 3 Fair Value Measurements for investments held as of February 28, 2017:
 
Type of Security
Fair Value
at 2/28/2017
Valuation
Technique(s)
Unobservable
Input
Range (weighted average)
Unregistered/Restricted Securities
$31,004,597
Discounted Cash Flow
Discount Rate
9.8% – 13.8% (11.8%)
     
Exit Multiple
11.00x – 13.00 x (12.00 x)
     
Liquidity Discount
12.3% – 22.3% (17.3%)
 

Level 3 Unregistered/Restricted Securities valued by using an unobservable input factor are directly affected by a change in that factor.
 
The discounted cash flow analysis used to value the Fund’s private investment in KKR Eagle Co-Invest LP uses the projected cash flows of the portfolio company to estimate the enterprise value and equity value attributable to the Fund’s interest in the portfolio company. Such cash flows include a terminal value for the portfolio company, which is typically based on an EV/EBITDA multiple. A present value of these cash flows is determined by using estimated discount rates (a weighted average cost of capital or the expected return market participants would require of similar public securities).

As part of this valuation process, the Fund estimates operating results of the portfolio company (including EBITDA and unlevered cash flow). These estimates utilize unobservable inputs such as historical operating results, which may be unaudited, and projected operating results, which will be based on operating assumptions for such portfolio company. The Fund also consults with management of the portfolio company to develop these financial projections. These estimates will be sensitive to changes in assumptions specific to such portfolio company as well as general assumptions for the industry. Other unobservable inputs utilized in the valuation techniques outlined above include: discounts for lack of marketability (liquidity discount), selection of publicly-traded companies, selection of relevant M&A transactions, selected ranges for valuation multiples, and expected required rates of return (discount rates).

At February 28, 2017, gross unrealized appreciation and depreciation of investments, based on cost for federal income tax purposes were as follows:

Cost of investments
  
$
299,634,690
  
         
Gross unrealized appreciation
  
$
120,786,213
  
Gross unrealized depreciation
    
(16,814,953
)
         
Net unrealized appreciation/(depreciation) on investments
  
$
103,971,260
  

The difference between cost amounts for financial statement and federal income tax purposes is due primarily to income/(loss) from Master Limited Partnership (“MLP”) K-1s, which is treated as an increase/(decrease) in cost basis of the MLP shares held, and timing differences in recognizing certain gains and losses in security transactions.

ITEM 2. CONTROLS AND PROCEDURES.

(a) The registrant's principal executive and principal financial officers have concluded that the registrant's disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended (the "1940 Act") are effective, as of a date within 90 days of the filing date of this report, based on their evaluation of these controls and procedures required by Rule 30a-3(b) under the 1940 Act and Rules 13a-15(b) or 15d-15(b) under the Securities Exchange Act of 1934, as amended.

(b) There were no changes in the registrant's internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act) that occurred during the registrant's last fiscal quarter that have materially affected, or are reasonably likely to materially affect, the registrant's internal control over financial reporting.
 
ITEM 3. EXHIBITS.

Certifications pursuant to Rule 30a-2(a) under the 1940 Act, for the Principal Executive Officer and Principal Financial Officer, are attached hereto.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Center Coast MLP & Infrastructure Fund
  
     
By :
/s/ Dan C. Tutcher
  
 
Dan C. Tutcher, President and Chief Executive Officer
  
 
(Principal Executive Officer)
  
     
Date
April 28, 2017
  
     
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
     
By:
/s/ Dan C. Tutcher
  
 
Dan C. Tutcher, President and Chief Executive Officer
  
 
(Principal Executive Officer)
  
     
Date
April 28, 2017
  
     
By:
/s/ William H. Bauch
  
 
William H. Bauch, Treasurer and Chief Financial Officer
  
 
(Principal Financial Officer)
  
     
Date
April 28, 2017