Tallgrass Energy Partners LP (TEP) has closed on the acquisition of an additional one-third interest in Tallgrass Pony Express Pipeline LLC for $700 million in cash, increasing its stake to 66.7%.

“We are excited to complete our third dropdown acquisition at TEP, which increases our size and scale and provides TEP with additional firm, fee-based cash flows supported by long-term contracts,” Tallgrass CEO David Dehaemers Jr. said Monday. “This acquisition furthers one of our commitments: to grow TEP’s cash distributions to its unitholders through dropdown transactions at attractive multiples.

“Consistent with our first Pony Express acquisition, we expect this transaction to be immediately accretive to unitholders and expect to recommend that our board of directors increase our distribution over the next two quarters by an aggregate of at least 15%, providing clear visibility toward achieving our previously announced distribution growth guidance of approximately 20% for 2015.”

According to TEP, the $700 million was funded through its follow-on equity offering of 10 million common units, which closed on Feb. 27, and borrowings under its revolving credit facility. Under the terms of the deal, TEP has been provided with an additional minimum quarterly preference payment of $20 million, bringing its total quarterly preference payment amount to about $36.7 million for its two-thirds interest.

TEP said the preference payment would continue through distributions made with respect to 4Q2015, with distributions of available cash generally shared pro rata thereafter. The aggregate pro-rated preference payment to TEP for 1Q2015 would be around $23.5 million.

The partnership provides natural gas transportation and storage services in the Rockies and Midwest through Tallgrass Interstate Gas Transmission and Trailblazer Pipeline systems. TEP also provides natural gas processing in the Denver-Julesburg Basin, the Niobrara formation and the Mississippian Lime formation at three facilities in Wyoming — the Casper and Douglas processing plants and the West Frenchie Draw treating facility.