Free Writing Prospectus Filed Pursuant to Rule 433
Relating to the Prospectus dated March 10, 2016
Registration No. 333-209533
Explanatory Note: This Free Writing Prospectus supersedes in its entirety the Unit Exchange Program Frequently Asked Questions Free Writing Prospectus originally filed by Landmark Infrastructure Partners LP on March 11, 2016.
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LANDMARK INFRASTRUCTURE PARTNERS LP
UNIT EXCHANGE PROGRAM
FREQUENTLY ASKED QUESTIONS
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|I.||OVERVIEW & BACKGROUND|
|1.||Can you provide an overview of the Unit Exchange Program?|
The Landmark Unit Exchange Program (UEP) is a program offered by Landmark Infrastructure Partners LP (Nasdaq: LMRK) (LMRK) that will allow property owners to contribute their income-producing ground or rooftop lease to LMRK in exchange for common units representing limited partner interests of LMRK (Common Units). LMRK is a publicly-traded, growth-oriented master limited partnership formed to acquire, own and manage a portfolio of real property interests leased to companies in the wireless communication, outdoor advertising and renewable power generation industries. A property owner may exchange its lease for Common Units in what may be a tax-efficient transaction. We believe many property owners do not sell their assets because they do not want to incur income taxes on a sale or they do not have an immediate use for the cash proceeds. The UEP is intended to address these two issues. With our UEP, the property owner contributes an asset to LMRK and receives Common Units in exchange rather than cash. Gain on the contributed asset may potentially be tax-deferred and the proceeds of the exchange are now invested in a publicly-traded partnership that indirectly owns a large, diversified and growing pool of assets similar to the asset that was exchanged.
|2.||Why would property owners and investors choose the UEP?|
Property owners and investors may choose the UEP for one or more of the following reasons:
|||Potentially tax-Advantaged The exchange may not immediately trigger gain on the property;|
|||Cash Flow To the extent the board of directors of LMRKs general partner (the Board) determines that LMRK has available cash (as defined in its partnership agreement), holders of Common Units are entitled to receive quarterly distributions;|
|||Diversification LMRK owns over 2,100 sites and offers investors significant diversification versus the single property currently owned;|
|||Liquidity LMRK has a registration statement on file with the Securities and Exchange Commission with respect to the Common Units that will be issued pursuant to the terms of the UEP. After a property owner receives Common Units in exchange for its property, the owner may, in most instances, sell some or all of the Common Units at its discretion;|
|||Estate-Planning Benefits In the case of an individual who contributed property in exchange for Common Units, upon death, the owners estate may receive a step-up in the tax basis of the Common Units (consult your tax advisor);|
|||Efficient Investment Vehicle LMRK owns and acquires lease assets, has no employees, and is managed by Landmark Dividend LLC (Landmark Dividend); and|
|||Experienced Management Landmark Dividends management team is highly experienced in its industry and in managing LMRK.|
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|3.||Can you provide a history of Landmark Dividend LLC?|
Landmark Dividend is an industry leader, and Landmark Dividends management is highly experienced, in acquiring real property interests underlying infrastructure assets. In November 2014, two of the private funds that were managed by Landmark Dividend contributed their respective assets to LMRK in connection with LMRKs initial public offering (IPO). As of September 30, 2017, Landmark Dividend and affiliates controlled more than 860 additional tenant sites under management, and LMRK has a right of first offer on approximately 580 of these assets. As of September 30, 2017, Landmark Dividend had approximately 160 employees and operated in the United States, Australia, New Zealand and Canada. For more information on Landmark Dividend, please go to www.landmarkdividend.com.(1)
|II.||LANDMARK INFRASTRUCTURE PARTNERS LP|
|1.||Can you provide a description of Landmark Infrastructure Partners LP?|
LMRK is a growth-oriented master limited partnership formed by Landmark Dividend to acquire, own and manage a portfolio of real property interests that are leased to companies in the wireless communication, outdoor advertising and renewable power generation industries. LMRKs real property interests underlie its tenants infrastructure assets, which include freestanding cellular towers and rooftop wireless sites, billboards, wind turbines and solar arrays. LMRK seeks to acquire real property interests subject to effectively triple net tenant lease arrangements that contain contractual rent escalators, which we believe provide stable, predictable and growing cash flow. LMRK does not have any employees and is managed by Landmark Infrastructure Partners GP LLC, which is the sole general partner of LMRK (the GP). For more information on LMRK, please see www.landmarkmlp.com.(2)
|2.||What is the structure and governance of LMRK? What does the General Partner do from a governance standpoint?|
LMRK is organized as a limited partnership and has a general partner and limited partners. As of September 30, 2017, Landmark Dividend and affiliates owned approximately 15% of LMRKs outstanding limited partner interests and 100% of the GP, which owns a non-economic interest in LMRK and 100% of LMRKs incentive distribution rights. The public owned the remaining 85% limited partner interest in LMRK. The following simplified diagram depicts LRMKs ownership structure.
Pursuant to the terms of LMRKs partnership agreement, the GP has exclusive management powers over the business and affairs of LMRK. Although Landmark Dividend indirectly controls LMRK through its ownership of the GP, Landmark Dividend has no legal right to operate or otherwise directly control LMRK or its assets. The only legal rights that Landmark Dividend has with respect to LMRKs governance is (i) the right, through its ownership of the GP, to elect the Members of the Board, who, in turn, elect the officers of the GP and (ii) the right to vote its limited partner interests, represented by Common Units and subordinated units, in any matter requiring unitholder approval in accordance with LMRKs partnership agreement. As for the Board, unlike a public corporation that has a majority of independent directors, a master limited partnership is only required to have three independent directors. Also, unlike stockholders in a public corporation, unitholders do not have the right to appoint members to the Board.
|(1)||Information on the website is not incorporated herein by reference.|
|(2)||Information on the website is not incorporated herein by reference.|
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|3.||Why did Landmark Dividend form LMRK?|
Landmark Dividend formed LMRK for the following reasons:
|||To provide greater access to the debt and equity capital markets;|
|||To provide an exit alternative for Landmark Dividends private fund investors;|
|||To introduce new asset classes to the public markets; and|
|||To provide a means for landlords / owners of assets to exchange their assets into a publicly-traded security on attractive terms, such as the UEP.|
|4.||Why doesnt LMRK have any employees?|
The GP has the sole responsibility for providing the personnel necessary to conduct LMRKs operations. All of the employees and other personnel that conduct LMRKs business are employed or contracted by the GP and its affiliates, including Landmark Dividend. There are no plans for LMRK to have or hire any employees of its own.
|5.||Can you describe what happened during the IPO?|
On November 19, 2014, LMRK sold 2,650,000 Common Units in its IPO at $19.00 per unit (100,000 additional Common Units were subsequently issued and sold upon the underwriters exercise of their option to purchase additional units). In total, 2,750,000 Common Units were issued and sold for gross proceeds of $52,250,000.
In the IPO, the assets of Landmark Dividend Growth Fund - A (Fund A) and Landmark Dividend Growth Fund - D (Fund D), two funds that were privately held and managed by Landmark, were contributed to LMRK. Fund A and Fund D contributed, in the aggregate, 701 tenant sites to LMRK in exchange for $64.5 million in cash and $37.1 million of rollover equity in the form of Common Units. Landmark Dividend also contributed $59.6 million to LMRK, consisting of approximately $20.3 million from its equity interest in Fund A and Fund D and $39.3 million of new cash, in exchange for 3,135,109 subordinated units.
For further detail on the transaction, please see the final prospectus for LMRKs IPO and LMRKs other public filings which may be accessed at www.sec.gov.
LMRKs IPO Prospectus:
All LMRK Filings:
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|6.||Are the Common Units I receive in the UEP freely transferable? How do I get access to them? How do I eventually sell them?|
We have filed with the Securities and Exchange Commission a registration statement on Form S-4 (File No. 333-209533) to register the offer and issuance of the Common Units you will receive through the UEP. With the registration statement effective, subject to certain exceptions, the Common Units will be freely transferable and will not be considered restricted securities pursuant to the Securities Act of 1933. The Common Units are typically held in book-entry form through LMRKs transfer agent, Computershare. After closing a transaction under the UEP, you will receive correspondence from Computershare describing how to access your account and Common Units. If you have questions regarding your Computershare account, you can contact Computershares dedicated Customer Relations / Support line at the telephone number listed below:
|7.||Are holders of Common Units entitled to receive distributions? When will I get them?|
Pursuant to the terms of LMRKs partnership agreement, LMRK is required to distribute its available cash (as defined in LMRKs partnership agreement) to its unitholders within 45 days after the end of each quarter. LMRK will periodically announce the amount and the payment dates for any distributions. Other than the requirement to distribute all of its available cash, LMRK has no legal obligation to pay quarterly cash distributions in any specified amount, and the GP has considerable discretion to determine the amount of LMRKs available cash each quarter. LMRKs quarterly distribution for the quarter ended September 30, 2017 was $0.3575 per unit, or $1.43 annualized. Any distributions will be distributed to you through LMRKs transfer agent, Computershare.
|a.||When will distributions be paid by LMRK?|
LMRK will issue a press release announcing any distributions that are approved by the Board within 45 days after the end of each quarter. Unitholders of record on the record date will be entitled to receive the full distribution.
|b.||If I want to automatically reinvest that distribution is there something I need to do?|
LMRK does not have a distribution reinvestment program at this time.
|8.||What is LMRKs minimum quarterly distribution amount?|
LMRKs partnership agreement provides for a minimum quarterly distribution (the MQD) to the holders of its Common Units and subordinated units of $0.2875 per unit, or $1.15 per unit on an annual basis. LMRKs ability to pay cash distributions at the MQD will be subject to several factors, including having sufficient available cash after the establishment of cash reserves and the payment of costs and expenses, including reimbursements of expenses to the GP. There is no guarantee that LMRK will pay the MQD or any distribution on its outstanding units in any quarter. The amount of distributions, if any, paid under LMRKs cash distribution policy will be determined by the GP, taking into consideration the terms of LMRKs partnership agreement.
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|9.||Why does Landmark Dividend continue to place assets in both LMRK and its private funds? What is the process for dropping assets into LMRK?|
Landmark Dividend is a separate company from LMRK, and acquires assets and creates portfolios to potentially be presented for drop down into either LMRK or a private fund. There is no obligation for LMRK to buy these portfolios and LMRK cannot be compelled to raise capital in unfavorable markets. For these reasons Landmark Dividend maintains multiple channels to divest its asset portfolios, including to its privately managed funds. The general process for selling assets from Landmark Dividend to LMRK is described below:
(1) A portfolio of assets is presented by Landmark Dividend to LMRK for acquisition;
(2) The Board appoints a conflicts committee comprised of independent directors to review the transaction;
(3) The conflicts committee engages its own legal and financial advisors for the transaction;
(4) The financial advisors review the acquisition opportunity and, if they agree with the terms of the transaction, issue a fairness opinion to the conflicts committee;
(5) The conflicts committee votes on the transaction, reports the results to the Board and, if approved by the conflicts committee, the full Board votes to approve the transaction;
(6) The transaction is closed shortly after the Board approves the transaction.
|10.||Are there risks involved with holding Common Units?|
Yes, before deciding to participate in the UEP, you should carefully read LMRKs Annual Report on Form 10-K, including the risk factors set forth therein, and other quarterly and current reports filed with the Securities and Exchange Commission. If any of the risks discussed in LMRKs annual, quarterly or current reports were to materialize, LMRKs business, financial condition, results of operations and cash flows could be materially adversely affected and you could lose all or part of your investment.
|11.||How has LMRK grown since the IPO in terms of the number of leases and annual rents acquired?|
As shown on the diagram below, from November 2014 to September 2017, LMRK has added more than 1,400 lease assets from an initial portfolio of approximately 700 assets, representing growth of over 200% since the IPO.
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|III.||WHAT IS AN MLP?|
|1.||What is a master limited partnership (MLP)?|
A master limited partnership (MLP) is a partnership that is publicly traded and listed on a national exchange. An MLP combines the benefits of pass-through taxation with the liquidity of publicly-traded securities. To obtain these benefits, at least 90% of an MLPs income in each taxable year must be qualifying income, which includes real property rents as well as various types of income derived from natural resources. MLPs, generally, are designed to generate stable and predictable cash flow.
|2.||What is a minimum quarterly distribution and incentive distribution right? Does the MLPs general partner receive a quarterly distribution? What committees are required for an MLP?|
Distributions. Generally, MLPs adopt a cash distribution policy stating its intent to distribute a minimum level of distributions on a quarterly basis. This amount of cash flow is referred to as the minimum quarterly distribution, or MQD, and is defined in the MLPs partnership agreement. If an MLP has common units and subordinated units, the holders of common units have a first call on cash distributions to the extent of the MQD. In addition, if there is any shortfall payment of the MQD from prior quarters, all arrearages on the MQD must be paid to the common unitholders before any distributions can be made to the subordinated unitholders. The MLP will also typically issue incentive distribution rights, or IDRs, to the general partner at the time of an initial public offering. As the quarterly distributions increase, the IDRs entitle the general partner to an increasing share of cash distributions as certain cash distribution benchmarks for the limited partners are achieved. IDRs typically grow from 2% at inception to 15%, then to 25% and finally to 50%. This provides the general partner with an incentive to maximize distributions through pursuing income-producing acquisitions and organic growth projects. The IDRs can be viewed as a mechanism by which the general partner is compensated for taking a subordinated position in the capital structure at the outset of the MLP. Stated differently, the general partner takes a disproportionate amount of the downside risk at the outset of the MLP and, therefore, the general partner should take a disproportionate share of the upside, too.
General Partner. In addition to IDRs, a general partner in an MLP often owns a small equity interest - typically 2% - in the partnership. There is no requirement that the general partner own an economic interest in the MLP, and there has been a recent trend for general partners to hold a non-economic interest in an MLP, instead of a 2% interest. If a general partner holds an economic interest in a MLP, it is entitled to receive quarterly cash distributions similar to the holder of a common unit.
Board of Directors. Unlike a traditional corporation, MLPs are only required to have three independent directors and an audit committee. In addition to an audit committee, the board of directors of an MLPs general partner will typically appoint a conflicts committee composed of two or more independent directors to review specific related-party transactions that involve conflicts of interest. An MLPs partnership agreement establishes the requirements to serve as a member of the conflicts committee, which generally involve stricter independence standards than those required to serve on the audit committee. An MLP is not required to have a compensation committee or a governance and nominating committee.
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|3.||How are MLPs taxed?|
Pass-Through Entities. MLPs, unlike corporations, do not pay U.S. federal income tax and are not subject to certain states income taxes. Instead, the income earned by the MLP is passed through to its owners. Additionally, these owners are allocated a share of the MLPs deductions, such as depreciation and interest expense, which can offset a portion of the income passed through to the owners. Some real estate enterprises, real estate investments trusts, or REITs, may qualify for tax treatment that is similar in some ways to an MLP. See Section V Tax Matters (below) for additional information regarding the taxation of MLPs and their owners.
|4.||How large is the MLP market?|
As of October 31, 2017, there were more than 100 MLPs with an estimated aggregate market capitalization of approximately $370 billion.
|1.||How will you determine the number of Common Units I will receive based on the value of my lease?|
The number of Common Units you will receive for the exchange of your property will be determined using a formula set forth in the definitive agreement you enter with LMRK. The formula will divide the value of the property being contributed by a volume-weighted average price (VWAP) per Common Unit, as reported on the NASDAQ Global Market, for a specified period of trading days immediately preceding the closing of your transaction.
As shown below, the number of Common Units will vary depending on the VWAP per Common Unit (in the number of preceding trading days specified in the applicable purchase agreement) at the time of the exchange.
For Illustrative Purpose Only
Price Sensitivity Examples:
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|1.||What type of K-1 taxable income will pass through to the unitholders?|
Generally, LMRK earns, and passes through to its unitholders, ordinary dividends received from its REIT subsidiary. We recommend you consult your tax advisor on how LMRK income should be reported for tax purposes.
|2.||Can you cite a specific IRS code section regarding the tax treatment of the contribution of property to a partnership?|
Generally, pursuant to Internal Revenue Code Section 721(a), no gain or loss is recognized for U.S. federal income tax purposes when property is contributed to a partnership in exchange for an interest in the partnership. In the proposed transaction you will be contributing property to LMRK in exchange for a partnership interest in LMRK and this exchange may, therefore, qualify for non-recognition treatment. There are, however, exceptions to this general rule. Moreover, because LMRK now conducts its business through a REIT subsidiary, it is not free from substantial doubt whether Section 721(a) can apply under these circumstances. If Section 721(a) does not apply, your contribution of property to LMRK in exchange for Common Units would be taxable to you even if you received no cash in the exchange. We recommend you consult your tax advisor regarding the tax consequences to you of the proposed transaction.
|3.||What else do I need to know about the taxation of MLPs and their owners?|
There are many important tax considerations that are relevant to the acquisition, ownership and disposition of Common Units. We recommend that you read Material U.S. Federal Income Tax Consequences of Common Unit Ownership in our registration statement on Form S-4 (File No. 333-209533). You should also consult your tax advisor as to the tax consequences to you of acquiring, owning and disposing of Common Units.
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|VI.||UEP CLOSING PROCESS|
|1.||Please describe the underwriting and due diligence process for the acquisition of my lease?|
The underwriting and closing process for a UEP transaction is the same for a cash buyout transaction as described in the diagram below:
|2.||How long will it take to close my transaction? What is involved in the closing process?|
The diagram below shows the expected timeframes and key steps involved in the LMRK closing process.
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|3.||Why are there blackout periods during which a UEP cannot be closed? What is the schedule for blackout periods?|
Blackout periods are periods of time during which LMRK will not issue Common Units, in order to avoid violating insider trading rules under U.S. federal securities laws that prevent issuing, selling or trading securities while in possession of material non-public information.
Though LMRK will determine when a blackout period should be in place, blackout periods generally go into effect toward the end of each fiscal quarter and remain in place until a specified number of days after LMRK conducts its earnings call for that quarter. There may be other periods blacked out if other material information is not publicly available.
|1.||Is there research on LMRK?|
As of September 30, 2017, the following firms were covering LMRKs equity: Baird, B. Riley FBR, Janney Montgomery Scott, Raymond James, and RBC Capital Markets. Neither Landmark Dividend nor LMRK has reviewed or endorsed any research reports or other recommendations published by any of these firms, which are solely the responsibility of such firms.
|2.||How do I transfer my units to my brokerage account?|
The Common Units are held in book entry form with LMRKs transfer agent, Computershare. For details on transferring your Common Units held by Computershare to a brokerage account, please contact Computershare.
Landmark Dividend and LMRK do not provide tax advice. It is important that you consult a professional tax advisor regarding your individual tax situation.
LMRK has filed a registration statement (including a prospectus) with the Securities and Exchange Commission for the offering to which this communication relates. Before you invest, you should read the prospectus in that registration statement and other documents the issuer has filed with the Securities and Exchange Commission for more complete information about the issuer and this offering. You may get these documents for free by visiting EDGAR on the Securities and Exchange Commission website at www.sec.gov. Alternatively, LMRK will arrange to send you the prospectus if you request it by calling toll-free 1-800-843-2024.