lmrk-10q_20170630.htm

Table of Contents 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2017

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                    to                    

Commission File Number: 001-36735

 

Landmark Infrastructure Partners LP

(Exact name of registrant as specified in its charter)

 

 

Delaware

 

61-1742322

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

2141 Rosecrans Avenue, Suite 2100,

P.O. Box 3429

El Segundo, CA 90245

 

90245

(Address of principal executive offices)

 

(Zip Code)

(310) 598-3173

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes      No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer  

 

Accelerated filer  

 

Non-accelerated filer  

 

Smaller reporting company  

Emerging growth company  

 

 

 

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ◻    No  ☒

The registrant had 19,749,563  common units and 3,135,109 subordinated units outstanding at July 31, 2017.

 

 

 

 

 


Table of Contents 

 

LANDMARK INFRASTRUCTURE PARTNERS LP

Table of Contents

 

 

 

 

 

Page

 

 

 

 

 

 

 

PART I. FINANCIAL INFORMATION

 

 

 

 

 

 

 

Item 1.

 

Financial Statements:

 

 

 

 

 

 

 

 

 

Consolidated and Combined Balance Sheets

 

3

 

 

 

 

 

 

 

Consolidated and Combined Statements of Operations

 

4

 

 

 

 

 

 

 

Consolidated and Combined Statements of Comprehensive Income

 

5

 

 

 

 

 

 

 

Consolidated and Combined Statements of Partners’ Capital

 

6

 

 

 

 

 

 

 

Consolidated and Combined Statements of Cash Flows

 

7

 

 

 

 

 

 

 

Notes to the Consolidated and Combined Financial Statements

 

8

 

 

 

 

 

Item 2.

 

Management's Discussion and Analysis of Financial Condition and Results of Operations

 

30

 

 

 

 

 

Item 3.

 

Quantitative and Qualitative Disclosures About Market Risk

 

47

 

 

 

 

 

Item 4.

 

Controls and Procedures

 

48

 

 

 

 

 

 

 

PART II. OTHER INFORMATION

 

 

 

 

 

 

 

Item 1.

 

Legal Proceedings

 

48

 

 

 

 

 

Item 1A.

 

Risk Factors

 

49

 

 

 

 

 

Item 6.

 

Exhibits

 

52

 

 

 

 

 

Signatures

 

 

 

53

 

2


Table of Contents 

 

PART I. FINANCIAL INFORMATION 

Item 1. Financial Statements

Landmark Infrastructure Partners LP

Consolidated and Combined Balance Sheets

(in thousands, except unit data)

 

 

 

June 30, 2017

 

 

December 31, 2016

 

Assets

 

 

 

 

 

 

 

 

Land

 

$

98,532

 

 

$

88,845

 

Real property interests

 

 

525,148

 

 

 

490,030

 

Total land and real property interests

 

 

623,680

 

 

 

578,875

 

Accumulated amortization of real property interests

 

 

(31,510

)

 

 

(25,967

)

Land and net real property interests

 

 

592,170

 

 

 

552,908

 

Investments in receivables, net

 

 

20,151

 

 

 

17,440

 

Cash and cash equivalents

 

 

7,462

 

 

 

2,711

 

Restricted cash

 

 

1,202

 

 

 

2,851

 

Rent receivables, net

 

 

3,899

 

 

 

2,372

 

Due from Landmark and affiliates

 

 

722

 

 

 

566

 

Deferred loan costs, net

 

 

3,524

 

 

 

2,797

 

Deferred rent receivable

 

 

2,298

 

 

 

1,379

 

Derivative assets

 

 

1,518

 

 

 

1,860

 

Other intangible assets, net

 

 

16,425

 

 

 

15,730

 

Other assets

 

 

1,476

 

 

 

2,446

 

Total assets

 

$

650,847

 

 

$

603,060

 

Liabilities and equity

 

 

 

 

 

 

 

 

Revolving credit facility

 

$

279,000

 

 

$

224,500

 

Secured notes, net

 

 

112,251

 

 

 

112,435

 

Accounts payable and accrued liabilities

 

 

3,876

 

 

 

4,374

 

Other intangible liabilities, net

 

 

12,296

 

 

 

13,061

 

Prepaid rent

 

 

4,822

 

 

 

3,984

 

Derivative liabilities

 

 

84

 

 

 

376

 

Total liabilities

 

 

412,329

 

 

 

358,730

 

Commitments and contingencies (Note 14)

 

 

 

 

 

 

 

 

Equity

 

 

 

 

 

 

 

 

Series A cumulative redeemable preferred units, 1,074,602 and 863,957 units

   issued and outstanding at June 30, 2017 and December 31, 2016, respectively

 

 

24,557

 

 

 

19,393

 

Series B cumulative redeemable preferred units, 2,004,060 and 1,840,000 units

   issued and outstanding at June 30, 2017 and December 31, 2016, respectively

 

 

47,790

 

 

 

44,256

 

Common units, 19,749,563 and 19,450,555 units issued and outstanding at

   June 30, 2017 and December 31, 2016, respectively

 

 

287,972

 

 

 

294,296

 

Subordinated units, 3,135,109 units issued and outstanding

 

 

20,750

 

 

 

22,524

 

General Partner

 

 

(142,665

)

 

 

(135,630

)

Accumulated other comprehensive income (loss)

 

 

11

 

 

 

(509

)

Total partners' equity

 

 

238,415

 

 

 

244,330

 

Noncontrolling interests

 

 

103

 

 

 

 

Total equity

 

 

238,518

 

 

 

244,330

 

Total liabilities and equity

 

$

650,847

 

 

$

603,060

 

 

See accompanying notes to consolidated and combined financial statements.

3


Table of Contents 

 

Landmark Infrastructure Partners LP

Consolidated and Combined Statements of Operations

(In thousands, except per unit data)

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2017

 

 

2016*

 

 

2017

 

 

2016*

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rental revenue

 

$

12,803

 

 

$

9,768

 

 

$

24,644

 

 

$

19,508

 

Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Management fees to affiliate

 

 

 

 

 

73

 

 

 

 

 

 

146

 

Property operating

 

 

74

 

 

 

69

 

 

 

161

 

 

 

74

 

General and administrative

 

 

1,437

 

 

 

1,041

 

 

 

2,845

 

 

 

2,145

 

Acquisition-related

 

 

285

 

 

 

355

 

 

 

752

 

 

 

427

 

Amortization

 

 

3,239

 

 

 

2,785

 

 

 

6,368

 

 

 

5,307

 

Impairments

 

 

692

 

 

 

 

 

 

848

 

 

 

 

Total expenses

 

 

5,727

 

 

 

4,323

 

 

 

10,974

 

 

 

8,099

 

Other income and expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest and other income

 

379

 

 

275

 

 

738

 

 

559

 

Interest expense

 

 

(4,234

)

 

 

(3,315

)

 

 

(8,154

)

 

 

(6,620

)

Unrealized loss on derivatives

 

 

(544

)

 

 

(1,797

)

 

 

(50

)

 

 

(4,967

)

Gain on sale of real property interests

 

 

 

 

 

 

 

 

 

 

 

374

 

Total other income and expenses

 

 

(4,399

)

 

 

(4,837

)

 

 

(7,466

)

 

 

(10,654

)

Net income

 

 

2,677

 

 

 

608

 

 

 

6,204

 

 

 

755

 

Less: Pre-acquisition net income from Drop-down Assets

 

 

 

 

 

580

 

 

 

 

 

 

1,155

 

Less: Net income attributable to noncontrolling interest

 

 

4

 

 

 

 

 

 

7

 

 

 

 

Net income (loss) attributable to limited partners

 

 

2,673

 

 

 

28

 

 

 

6,197

 

 

 

(400

)

Less: Distributions declared to preferred unitholders

 

 

(1,510

)

 

 

(382

)

 

 

(2,854

)

 

 

(382

)

Less: General partner's incentive distribution rights

 

 

(98

)

 

 

(5

)

 

 

(187

)

 

 

(5

)

Net income (loss) attributable to common and subordinated unitholders

 

$

1,065

 

 

$

(359

)

 

$

3,156

 

 

$

(787

)

Net income (loss) per common and subordinated unit

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common units – basic and diluted

 

$

0.05

 

 

$

(0.02

)

 

$

0.14

 

 

$

(0.05

)

Subordinated units – basic and diluted

 

$

0.05

 

 

$

(0.03

)

 

$

0.14

 

 

$

(0.06

)

Weighted average common and subordinated units outstanding

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common units – basic

 

 

19,650

 

 

 

11,915

 

 

 

19,554

 

 

 

11,872

 

Common units – diluted

 

 

22,785

 

 

 

15,050

 

 

 

22,689

 

 

 

15,007

 

Subordinated units – basic and diluted

 

 

3,135

 

 

 

3,135

 

 

 

3,135

 

 

 

3,135

 

Cash distributions declared per common and subordinated unit

 

$

0.3550

 

 

$

0.3325

 

 

$

0.7075

 

 

$

0.6625

 

 

*Prior-period financial information has been retroactively adjusted for transactions between entities under common control. See Notes 2 and 3 for additional information.

See accompanying notes to consolidated and combined financial statements.

4


Table of Contents 

 

Landmark Infrastructure Partners LP

Consolidated and Combined Statements of Comprehensive Income

(in thousands)

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2017

 

 

2016*

 

 

2017

 

 

2016*

 

Net income

 

$

2,677

 

 

$

608

 

 

$

6,204

 

 

$

755

 

Other comprehensive income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustment

 

 

312

 

 

 

(3

)

 

 

520

 

 

 

(2

)

Other comprehensive income (loss)

 

 

312

 

 

 

(3

)

 

 

520

 

 

 

(2

)

Comprehensive income

 

 

2,989

 

 

 

605

 

 

 

6,724

 

 

 

753

 

Less: Comprehensive income attributable to Drop-down Assets

 

 

 

 

 

577

 

 

 

 

 

 

1,153

 

Less: Comprehensive income attributable to noncontrolling interest

 

 

4

 

 

 

 

 

 

7

 

 

 

 

Comprehensive income (loss) attributable to limited partners

 

$

2,985

 

 

$

28

 

 

$

6,717

 

 

$

(400

)

 

*Prior-period financial information has been retroactively adjusted for transactions between entities under common control. See Notes 2 and 3 for additional information.

See accompanying notes to consolidated and combined financial statements

 

 

 

5


Table of Contents 

 

Landmark Infrastructure Partners LP

Consolidated and Combined Statements of Partners’ Capital

(in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Preferred

 

 

Preferred

 

 

 

 

 

 

 

 

 

 

Preferred

 

 

Preferred

 

 

 

 

 

 

Other

 

 

 

 

 

 

 

 

 

 

 

Common

 

 

Subordinated

 

 

Units -

 

 

Units -

 

 

Common

 

 

Subordinated

 

 

Unitholders -

 

 

Unitholders -

 

 

General

 

 

Comprehensive

 

 

Noncontrolling

 

 

Total

 

 

 

Units

 

 

Units

 

 

Series A

 

 

Series B

 

 

Unitholders

 

 

Unitholder

 

 

Series A

 

 

Series B

 

 

Partner

 

 

Income

 

 

Interest

 

 

Equity

 

Balance as of December 31, 2015*

 

 

11,820

 

 

 

3,135

 

 

 

 

 

 

 

 

$

179,045

 

 

$

25,942

 

 

$

 

 

$

 

 

$

(47,633

)

 

$

8

 

 

$

 

 

$

157,362

 

Pre-acquisition net income from Drop-down Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,155

 

 

 

 

 

 

 

 

 

1,155

 

Net investment of Drop-down Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

15,749

 

 

 

 

 

 

 

 

 

15,749

 

Foreign currency translation adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2

)

 

 

 

 

 

(2

)

Distributions

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(7,764

)

 

 

(2,053

)

 

 

(382

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(10,199

)

Capital contribution to fund general and administrative expense reimbursement

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,619

 

 

 

 

 

 

 

 

 

1,619

 

Issuance of Preferred Units, net

 

 

 

 

 

 

 

 

800

 

 

 

 

 

 

 

 

 

 

 

 

17,832

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

17,832

 

Issuance of Common Units, net

 

 

236

 

 

 

 

 

 

 

 

 

 

 

 

3,474

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,474

 

Unit-based compensation

 

 

10

 

 

 

 

 

 

 

 

 

 

 

 

105

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

105

 

Net loss attributable to partners

 

 

 

 

 

 

 

 

 

 

 

 

 

(600

)

 

 

(187

)

 

 

382

 

 

 

 

 

 

5

 

 

 

 

 

 

 

 

 

(400

)

Balance as of June 30, 2016*

 

 

12,066

 

 

 

3,135

 

 

 

800

 

 

 

 

 

$

174,260

 

 

$

23,702

 

 

$

17,832

 

 

$

 

 

$

(29,105

)

 

$

6

 

 

$

 

 

$

186,695

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance as of December 31, 2016

 

 

19,451

 

 

 

3,135

 

 

 

864

 

 

 

1,840

 

 

$

294,296

 

 

$

22,524

 

 

$

19,393

 

 

$

44,256

 

 

$

(135,630

)

 

$

(509

)

 

$

 

 

$

244,330

 

Net investment of Drop-down Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(9,086

)

 

 

 

 

 

 

 

 

(9,086

)

Foreign currency translation adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

520

 

 

 

 

 

 

520

 

Issuance of Preferred Units, net

 

 

 

 

 

 

 

 

211

 

 

 

164

 

 

 

 

 

 

 

 

 

5,164

 

 

 

3,534

 

 

 

 

 

 

 

 

 

 

 

 

8,698

 

Issuance of Common Units, net

 

 

292

 

 

 

 

 

 

 

 

 

 

 

 

4,591

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4,591

 

Issuance of non-controlling interests, net

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

103

 

 

 

103

 

Distributions

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(13,749

)

 

 

(2,201

)

 

 

(948

)

 

 

(1,906

)

 

 

(165

)

 

 

 

 

 

(7

)

 

 

(18,976

)

Capital contribution to fund general and administrative expense reimbursement

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,029

 

 

 

 

 

 

 

 

 

2,029

 

Unit-based compensation

 

 

7

 

 

 

 

 

 

 

 

 

 

 

 

105

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

105

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,729

 

 

 

427

 

 

 

948

 

 

 

1,906

 

 

 

187

 

 

 

 

 

 

7

 

 

 

6,204

 

Balance as of June 30, 2017

 

 

19,750

 

 

 

3,135

 

 

 

1,075

 

 

 

2,004

 

 

$

287,972

 

 

$

20,750

 

 

$

24,557

 

 

$

47,790

 

 

$

(142,665

)

 

$

11

 

 

$

103

 

 

$

238,518

 

 

*Prior-period financial information has been retroactively adjusted for transactions between entities under common control. See Notes 2 and 3 for additional information.

See accompanying notes to consolidated and combined financial statements

 

 

 

6


Table of Contents 

 

Landmark Infrastructure Partners LP

Consolidated and Combined Statements of Cash Flows

(in thousands)

 

 

 

Six Months Ended June 30,

 

 

 

2017

 

 

2016*

 

Operating activities

 

 

 

 

 

 

 

 

Net income

 

$

6,204

 

 

$

755

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

 

 

Unit-based compensation

 

 

105

 

 

 

105

 

Unrealized loss on derivatives

 

 

50

 

 

 

4,967

 

Amortization expense

 

 

6,368

 

 

 

5,307

 

Amortization of above- and below- market lease

 

 

(652

)

 

 

(737

)

Amortization of deferred loan costs

 

 

909

 

 

 

783

 

Amortization of discount on secured notes

 

 

2

 

 

 

 

Receivables interest accretion

 

 

(7

)

 

 

(23

)

Impairments

 

 

848