PARTNERS’ EQUITY

Please refer to Note 28 for a discussion of the merger of a subsidiary of ours with and into NuStar GP Holdings, pursuant to which we will become the sole member of NuStar GP Holdings.

Amendment of Partnership Agreement

In the second quarter of 2017, our general partner amended and restated our partnership agreement in connection with the issuance of the Series B Preferred Units as described below and the Navigator Acquisition to waive up to an aggregate $22.0 million of the quarterly incentive distributions to our general partner for any NS common units issued from the date of the Acquisition Agreement (other than those attributable to NS common units issued under any equity compensation plan) for ten consecutive quarters, starting with the distributions for the second quarter of 2017. The partnership agreement was amended and restated again in connection with the issuance of our Series C Preferred Units described below.

Issuance of Common Units

On April 18, 2017, we issued 14,375,000 common units representing limited partner interests at a price of $46.35 per unit. We used the net proceeds from this offering of $657.5 million, including a contribution of $13.6 million from our general partner to maintain its 2% general partner interest, to fund a portion of the purchase price for the Navigator Acquisition.

During the year ended December 31, 2016, we issued 595,050 common units representing limited partner interests at an average price of $47.39 per unit for proceeds of $28.3 million, net of $0.5 million of issuance costs. We used these proceeds, which include a contribution of $0.6 million from our general partner to maintain its 2% general partner interest, for general partnership purposes, including repayments of outstanding borrowings under the Revolving Credit Agreement.

For the years ended December 31, 2017 and 2016, we issued 185,455 and 135,100 common units, respectively, representing limited partner interests in connection with the vestings of awards issued under our long-term incentive plan.

Preferred Units

The following is a summary of our fixed-to-floating rate cumulative redeemable perpetual preferred units issued and outstanding as of December 31, 2017:



Units	Original Issuance Date	Number of Units Issued and Outstanding	Price per Unit		Net Proceeds (in millions)		Fixed Distribution Rate per Annum (as a Percentage of the $25.00 Liquidation Preference per Unit)		Fixed Distribution Rate per Unit per Annum		Optional Redemption Date/Date at Which Distribution Rate Becomes Floating	Floating Annual Rate (as a Percentage of the $25.00 Liquidation Preference per Unit)
Series A Preferred Units	November 25, 2016	9,060,000	$	25.00	$	218.4	8.50	%	$	2.125	December 15, 2021	Three-month LIBOR plus 6.766%
Series B Preferred Units	April 28, 2017	15,400,000	$	25.00	$	371.8	7.625	%	$	1.90625	June 15, 2022	Three-month LIBOR plus 5.643%
Series C Preferred Units	November 30, 2017	6,900,000	$	25.00	$	166.7	9.00	%	$	2.25	December 15, 2022	Three-month LIBOR plus 6.88%

Distributions on the Series A, Series B and Series C Preferred Units (collectively, the Preferred Units) are payable out of any legally available funds, accrue and are cumulative from the original issuance dates, and are payable on the 15th day (or the next business day) of each of March, June, September and December of each year to holders of record on the first business day of each payment month. The Preferred Units rank equal to each other and senior to all of our other classes of equity securities with respect to distribution rights and rights upon liquidation.

We may redeem any of our outstanding Preferred Units at any time on or after the optional redemption date set forth above for each series of Preferred Units, in whole or in part, at a redemption price of $25.00 per unit plus an amount equal to all accumulated and unpaid distributions to, but not including, the date of redemption, whether or not declared. We may also redeem the Preferred Units upon the occurrence of certain rating events or a change of control as defined in our partnership agreement. In the case of the latter instance, if we choose not to redeem the Preferred Units, the preferred unitholders may have the ability to convert their Preferred Units to common units at the then applicable conversion rate. Holders of the Preferred Units have no voting rights except for certain exceptions set forth in our partnership agreement.

The following table summarizes financial information related to our preferred units:



	Preferred Limited Partners
	Series A			Series B			Series C			Total
Balance as of January 1, 2016	$	—		$	—		$	—		$	—
Issuance of units	218,400			—			—			218,400
Net income	1,925			—			—			1,925
Distributions to partners	(1,925		)	—			—			(1,925		)
Balance as of December 31, 2016	218,400			—			—			218,400
Issuance of units	—			371,823			166,737			538,560
Net income	19,253			19,815			1,380			40,448
Distributions to partners	(19,253		)	(19,815		)	(1,380		)	(40,448		)
Other	(93		)	(189		)	(75		)	(357		)
Balance as of December 31, 2017	$	218,307		$	371,634		$	166,662		$	756,603

Net Income Applicable to the General Partner

The following table details the calculation of net income applicable to the general partner:



	Year Ended December 31,
	2017			2016			2015
	(Thousands of Dollars)
Net income attributable to NuStar Energy L.P.	$	147,964		$	150,003		$	306,720
Less preferred limited partner interest	40,448			1,925			—
Less general partner incentive distribution	45,669			43,407			43,220
Net income after general partner incentive distribution and preferred limited partner interest	61,847			104,671			263,500
General partner interest allocation	2		%	2		%	2		%
General partner interest allocation of net income	1,237			2,091			5,270
General partner incentive distribution	45,669			43,407			43,220
Net income applicable to general partner	$	46,906		$	45,498		$	48,490

Cash Distributions

General Partner and Common Limited Partners. We make quarterly distributions to common unitholders and the general partner of 100% of our available cash, generally defined as cash receipts less cash disbursements (including distributions to the Preferred Units) and cash reserves established by the general partner, in its sole discretion. These quarterly distributions are declared and paid within 45 days subsequent to each quarter-end. The common unitholders receive a distribution each quarter as determined by the board of directors, subject to limitation by the distributions in arrears, if any, to the Preferred Units. Our available cash is distributed based on the percentages shown below:



	Percentage of Distribution
Quarterly Distribution Amount per Common Unit	Common Unitholders	General Partner Including Incentive Distributions
Up to $0.60	98%	2%
Above $0.60 up to $0.66	90%	10%
Above $0.66	75%	25%

The following table reflects the allocation of total cash distributions to the general partner and common limited partners applicable to the period in which the distributions were earned:



	Year Ended December 31,
	2017		2016		2015
	(Thousands of Dollars, Except Per Unit Data)
General partner interest	$	9,252	$	7,877	$	7,844
General partner incentive distribution	45,669		43,407		43,220
Total general partner distribution	54,921		51,284		51,064
Common limited partners’ distribution	407,681		342,598		341,140
Total cash distributions	$	462,602	$	393,882	$	392,204

Cash distributions per unit applicable to common limited partners	$	4.38	$	4.38	$	4.38

The following table summarizes information related to our quarterly cash distributions to our general partner and common limited partners:



Quarter Ended	Cash Distributions Per Unit		Total Cash Distributions		Record Date	Payment Date
			(Thousands of Dollars)
December 31, 2017 (a)	$	1.095	$	115,267	February 8, 2018	February 13, 2018
September 30, 2017	$	1.095	$	115,084	November 9, 2017	November 14, 2017
June 30, 2017	$	1.095	$	115,083	August 7, 2017	August 11, 2017
March 31, 2017	$	1.095	$	117,168	May 8, 2017	May 12, 2017


(a)	The distribution was announced on January 29, 2018.

Preferred Units. The following table summarizes information related to our quarterly cash distributions on our Preferred Units:



Period	Cash Distributions Per Unit		Total Cash Distributions		Record Date	Payment Date
			(Thousands of Dollars)
Series A Preferred Units:
December 15, 2017 - March 14, 2018 (a)	$	0.53125	$	4,813	March 1, 2018	March 15, 2018
September 15, 2017 - December 14, 2017	$	0.53125	$	4,813	December 1, 2017	December 15, 2017
June 15, 2017 - September 14, 2017	$	0.53125	$	4,813	September 1, 2017	September 15, 2017
March 15, 2017 - June 14, 2017	$	0.53125	$	4,813	June 1, 2017	June 15, 2017
November 25, 2016 - March 14, 2017	$	0.64930556	$	5,883	March 1, 2017	March 15, 2017

Series B Preferred Units:
December 15, 2017 - March 14, 2018 (a)	$	0.47657	$	7,339	March 1, 2018	March 15, 2018
September 15, 2017 - December 14, 2017	$	0.47657	$	7,339	December 1, 2017	December 15, 2017
April 28, 2017 - September 14, 2017	$	0.725434028	$	11,172	September 1, 2017	September 15, 2017

Series C Preferred Units:
November 30, 2017 - March 14, 2018 (a)	$	0.65625	$	4,528	March 1, 2018	March 15, 2018


(a)	The distribution was announced on January 29, 2018.

Accumulated Other Comprehensive Income (Loss)

The balance of and changes in the components included in “Accumulated other comprehensive income (loss)” were as follows:



	Foreign Currency Translation			Cash Flow Hedges			Pension and Other Postretirement Benefits			Total
	(Thousands of Dollars)
Balance as of January 1, 2015	$	(28,839	)	$	(39,073	)	$	—		$	(67,912	)
Other comprehensive (loss) income before reclassification adjustments	(31,987		)	1,303			—			(30,684		)
Net loss on cash flow hedges reclassified into interest expense, net	—			9,802			—			9,802
Other comprehensive (loss) income	(31,987		)	11,105			—			(20,882		)
Balance as of December 31, 2015	(60,826		)	(27,968		)	—			(88,794		)
Employee Transfer	—			—			4,201			4,201
Deferred income tax adjustments	—			—			2,414			2,414
Other comprehensive loss before reclassification adjustments	(8,243		)	(2,621		)	(7,852		)	(18,716		)
Net gain on pension costs reclassified into operating expense	—			—			(1,200		)	(1,200		)
Net gain on pension costs reclassified into general and administrative expense	—			—			(413		)	(413		)
Net loss on cash flow hedges reclassified into interest expense, net	—			8,331			—			8,331
Other comprehensive (loss) income	(8,243		)	5,710			(2,850		)	(5,383		)
Balance as of December 31, 2016	(69,069		)	(22,258		)	(2,850		)	(94,177		)
Other comprehensive income (loss) before reclassification adjustments	17,466			(8,670		)	(4,641		)	4,155
Net gain on pension costs reclassified into operating expense	—			—			(1,143		)	(1,143		)
Net gain on pension costs reclassified into general and administrative expense	—			—			(386		)	(386		)
Net loss on cash flow hedges reclassified into interest expense, net	—			6,624			—			6,624
Other comprehensive income (loss)	17,466			(2,046		)	(6,170		)	9,250
Balance as of December 31, 2017	$	(51,603	)	$	(24,304	)	$	(9,020	)	$	(84,927	)