lmrk-10q_20180930.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 September 30, 2018

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.)

400 N. Continental Blvd., Suite 500

 

 

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 every Interactive Data File required to be submitted 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 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 25,266,060 common units outstanding at November 2, 2018.

 

 

 

 


Table of Contents 

 

LANDMARK INFRASTRUCTURE PARTNERS LP

Table of Contents

 

 

 

 

 

Page

 

 

 

 

 

 

 

PART I. FINANCIAL INFORMATION

 

 

 

 

 

 

 

Item 1.

 

Financial Statements:

 

 

 

 

 

 

 

 

 

Consolidated Balance Sheets

 

3

 

 

 

 

 

 

 

Consolidated Statements of Operations

 

4

 

 

 

 

 

 

 

Consolidated Statements of Comprehensive Income

 

5

 

 

 

 

 

 

 

Consolidated Statements of Equity and Mezzanine Equity

 

6

 

 

 

 

 

 

 

Consolidated Statements of Cash Flows

 

7

 

 

 

 

 

 

 

Notes to the Consolidated Financial Statements

 

8

 

 

 

 

 

Item 2.

 

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

 

33

 

 

 

 

 

Item 3.

 

Quantitative and Qualitative Disclosures About Market Risk

 

55

 

 

 

 

 

Item 4.

 

Controls and Procedures

 

55

 

 

 

 

 

 

 

PART II. OTHER INFORMATION

 

 

 

 

 

 

 

Item 1.

 

Legal Proceedings

 

56

 

 

 

 

 

Item 1A.

 

Risk Factors

 

56

 

 

 

 

 

Item 6.

 

Exhibits

 

57

 

 

 

 

 

Signatures

 

 

 

58

 

2


Table of Contents 

 

PART I. FINANCIAL INFORMATION 

Item 1. Financial Statements

Landmark Infrastructure Partners LP

Consolidated Balance Sheets

(in thousands, except unit data)

 

 

 

September 30, 2018

 

 

December 31, 2017

 

Assets

 

 

 

 

 

 

 

 

Land

 

$

128,791

 

 

$

114,385

 

Real property interests

 

 

517,283

 

 

 

596,422

 

Construction in progress

 

 

26,413

 

 

 

7,574

 

Total land and real property interests

 

 

672,487

 

 

 

718,381

 

Accumulated amortization real property interests

 

 

(35,965

)

 

 

(37,817

)

Land and net real property interests

 

 

636,522

 

 

 

680,564

 

Investments in receivables, net

 

 

18,964

 

 

 

20,782

 

Investment in unconsolidated joint venture

 

 

65,670

 

 

 

 

Cash and cash equivalents

 

 

6,907

 

 

 

9,188

 

Restricted cash

 

 

6,205

 

 

 

18,672

 

Rent receivables, net

 

 

4,014

 

 

 

4,141

 

Due from Landmark and affiliates

 

 

145

 

 

 

629

 

Deferred loan costs, net

 

 

2,199

 

 

 

3,589

 

Deferred rent receivable

 

 

5,391

 

 

 

4,252

 

Derivative assets

 

 

8,366

 

 

 

3,159

 

Other intangible assets, net

 

 

21,474

 

 

 

17,984

 

Assets held for sale (AHFS)

 

 

7,846

 

 

 

 

Other assets

 

 

3,970

 

 

 

5,039

 

Total assets

 

$

787,673

 

 

$

767,999

 

Liabilities and equity

 

 

 

 

 

 

 

 

Revolving credit facility

 

$

140,500

 

 

$

304,000

 

Secured notes, net

 

 

225,729

 

 

 

187,249

 

Accounts payable and accrued liabilities

 

 

7,312

 

 

 

4,978

 

Other intangible liabilities, net

 

 

9,717

 

 

 

12,833

 

Liabilities associated with AHFS

 

 

397

 

 

 

 

Prepaid rent

 

 

5,563

 

 

 

4,581

 

Total liabilities

 

 

389,218

 

 

 

513,641

 

Commitments and contingencies (Note 15)

 

 

 

 

 

 

 

 

Mezzanine equity

 

 

 

 

 

 

 

 

Series C cumulative redeemable convertible preferred units, 2,000,000 and zero units

   issued and outstanding at September 30, 2018 and December 31, 2017, respectively

 

 

47,534

 

 

 

 

Equity

 

 

 

 

 

 

 

 

Series A cumulative redeemable preferred units, 1,593,149 and 1,568,402 units

   issued and outstanding at September 30, 2018 and December 31, 2017, respectively

 

 

37,207

 

 

 

36,604

 

Series B cumulative redeemable preferred units, 2,463,015 units

   issued and outstanding at September 30, 2018 and December 31, 2017, respectively

 

 

58,936

 

 

 

58,936

 

Common units, 25,266,060 and 20,146,458 units issued and outstanding at

   September 30, 2018 and December 31, 2017, respectively

 

 

424,875

 

 

 

288,527

 

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

   at September 30, 2018 and December 31, 2017, respectively

 

 

 

 

 

19,641

 

General Partner

 

 

(168,949

)

 

 

(150,519

)

Accumulated other comprehensive income (loss)

 

 

(1,349

)

 

 

968

 

Total partners' equity

 

 

350,720

 

 

 

254,157

 

Noncontrolling interests

 

 

201

 

 

 

201

 

Total equity

 

 

350,921

 

 

 

254,358

 

Total liabilities, mezzanine equity and equity

 

$

787,673

 

 

$

767,999

 

 

See accompanying notes to consolidated financial statements.

3


Table of Contents 

 

Landmark Infrastructure Partners LP

Consolidated Statements of Operations

(In thousands, except per unit data)

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2018

 

 

2017

 

 

2018

 

 

2017

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rental revenue

 

$

17,560

 

 

$

13,499

 

 

$

50,051

 

 

$

38,143

 

Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Property operating

 

 

360

 

 

 

86

 

 

 

875

 

 

 

247

 

General and administrative

 

 

735

 

 

 

1,422

 

 

 

3,523

 

 

 

4,267

 

Acquisition-related

 

 

88

 

 

 

255

 

 

 

469

 

 

 

1,007

 

Amortization

 

 

4,293

 

 

 

3,458

 

 

 

12,548

 

 

 

9,826

 

Impairments

 

 

877

 

 

 

 

 

 

980

 

 

 

848

 

Total expenses

 

 

6,353

 

 

 

5,221

 

 

 

18,395

 

 

 

16,195

 

Other income and expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest and other income

 

 

434

 

 

 

430

 

 

 

1,280

 

 

 

1,168

 

Interest expense

 

 

(6,906

)

 

 

(4,777

)

 

 

(19,586

)

 

 

(12,931

)

Unrealized gain (loss) on derivatives

 

 

774

 

 

 

(61

)

 

 

5,208

 

 

 

(111

)

Equity income from unconsolidated joint venture

 

 

59

 

 

 

 

 

 

59

 

 

 

 

Gain on sale of real property interests

 

 

100,039

 

 

 

 

 

 

100,039

 

 

 

 

Total other income and expenses

 

 

94,400

 

 

 

(4,408

)

 

 

87,000

 

 

 

(11,874

)

Income before income tax expense

 

 

105,607

 

 

 

3,870

 

 

 

118,656

 

 

 

10,074

 

Income tax expense

 

 

460

 

 

 

72

 

 

 

663

 

 

 

72

 

Net income

 

 

105,147

 

 

 

3,798

 

 

 

117,993

 

 

 

10,002

 

Less: Net income attributable to noncontrolling interest

 

 

8

 

 

 

4

 

 

 

20

 

 

 

11

 

Net income attributable to limited partners

 

 

105,139

 

 

 

3,794

 

 

 

117,973

 

 

 

9,991

 

Less: Distributions declared to preferred unitholders

 

 

(2,868

)

 

 

(1,818

)

 

 

(7,742

)

 

 

(4,672

)

Less: General partner's incentive distribution rights

 

 

(197

)

 

 

(109

)

 

 

(587

)

 

 

(295

)

Net income attributable to common and subordinated unitholders

 

$

102,074

 

 

$

1,867

 

 

$

109,644

 

 

$

5,024

 

Net income (loss) per common and subordinated unit

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common units – basic

 

$

4.06

 

 

$

0.08

 

 

$

4.51

 

 

$

0.22

 

Common units – diluted

 

$

3.71

 

 

$

0.08

 

 

$

4.18

 

 

$

0.22

 

Subordinated units – basic and diluted

 

$

 

 

$

0.08

 

 

$

(0.59

)

 

$

0.22

 

Weighted average common and subordinated units outstanding

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common units – basic

 

 

25,138

 

 

 

19,750

 

 

 

24,405

 

 

 

19,620

 

Common units – diluted

 

 

27,741

 

 

 

22,885

 

 

 

26,658

 

 

 

22,755

 

Subordinated units – basic and diluted

 

 

 

 

 

3,135

 

 

 

517

 

 

 

3,135

 

Cash distributions declared per common and subordinated unit

 

$

0.3675

 

 

$

0.3575

 

 

$

1.1025

 

 

$

1.0650

 

 

See accompanying notes to consolidated financial statements.

4


Table of Contents 

 

Landmark Infrastructure Partners LP

Consolidated Statements of Comprehensive Income

(in thousands)

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2018

 

 

2017

 

 

2018

 

 

2017

 

Net income

 

$

105,147

 

 

$

3,798

 

 

$

117,993

 

 

$

10,002

 

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustment

 

 

(1,035

)

 

 

705

 

 

 

(2,317

)

 

 

1,225

 

Other comprehensive income (loss)

 

 

(1,035

)

 

 

705

 

 

 

(2,317

)

 

 

1,225

 

Comprehensive income

 

 

104,112

 

 

 

4,503

 

 

 

115,676

 

 

 

11,227

 

Less: Comprehensive income attributable to noncontrolling interest

 

 

8

 

 

 

4

 

 

 

20

 

 

 

11

 

Comprehensive income attributable to limited partners

 

$

104,104

 

 

$

4,499

 

 

$

115,656

 

 

$

11,216

 

 

See accompanying notes to consolidated financial statements

 

 

 

5


Table of Contents 

 

Landmark Infrastructure Partners LP

Consolidated Statements of Equity And Mezzanine Equity

(in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

Mezzanine

 

 

 

 

 

 

 

 

 

 

 

Preferred

 

 

Preferred

 

 

 

 

 

 

 

 

 

 

Preferred

 

 

Preferred

 

 

 

 

 

 

Other

 

 

 

 

 

 

 

 

 

 

Equity -

 

 

 

Common

 

 

Subordinated

 

 

Units -

 

 

Units -

 

 

Common

 

 

Subordinated

 

 

Unitholders -

 

 

Unitholders -

 

 

General

 

 

Comprehensive

 

 

Noncontrolling

 

 

Total

 

 

Series C

 

 

 

Units

 

 

Units

 

 

Series A

 

 

Series B

 

 

Unitholders

 

 

Unitholder

 

 

Series A

 

 

Series B

 

 

Partner

 

 

Income (loss)

 

 

Interest

 

 

Equity

 

 

Preferred

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(16,023

)

 

 

 

 

 

 

 

 

(16,023

)

 

 

 

Foreign currency translation adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,225

 

 

 

 

 

 

1,225

 

 

 

 

Issuance of Preferred Units, net

 

 

 

 

 

 

 

 

563

 

 

 

529

 

 

 

 

 

 

 

 

 

13,736

 

 

 

12,376

 

 

 

 

 

 

 

 

 

 

 

 

26,112

 

 

 

 

Issuance of Common Units, net

 

 

292

 

 

 

 

 

 

 

 

 

 

 

 

4,591

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4,591

 

 

 

 

Issuance of non-controlling interests, net

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

103

 

 

 

103

 

 

 

 

Distributions

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(20,761

)

 

 

(3,315

)

 

 

(1,660

)

 

 

(3,012

)

 

 

(264

)

 

 

 

 

 

(11

)

 

 

(29,023

)

 

 

 

Capital contribution to fund general and administrative expense reimbursement

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,025

 

 

 

 

 

 

 

 

 

3,025

 

 

 

 

Unit-based compensation

 

 

7

 

 

 

 

 

 

 

 

 

 

 

 

105

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

105

 

 

 

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

4,346

 

 

 

678

 

 

 

1,660

 

 

 

3,012

 

 

 

295

 

 

 

 

 

 

11

 

 

 

10,002

 

 

 

 

Balance as of September 30, 2017

 

 

19,750

 

 

 

3,135

 

 

 

1,427

 

 

 

2,369

 

 

$

282,577

 

 

$

19,887

 

 

$

33,129

 

 

$

56,632

 

 

$

(148,597

)

 

$

716

 

 

$

103

 

 

$

244,447

 

 

$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance as of December 31, 2017

 

 

20,146

 

 

 

3,135

 

 

 

1,568

 

 

 

2,463

 

 

$

288,527

 

 

$

19,641

 

 

$

36,604

 

 

$

58,936

 

 

$

(150,519

)

 

$

968

 

 

$

201

 

 

$

254,358

 

 

$

 

Net investment of Drop-down Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(20,394

)

 

 

 

 

 

 

 

 

(20,394

)

 

 

 

Foreign currency translation adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2,317

)

 

 

 

 

 

(2,317

)

 

 

 

Issuance of Preferred Units, net

 

 

 

 

 

 

 

 

25

 

 

 

 

 

 

 

 

 

 

 

 

603

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

603

 

 

 

47,534

 

Issuance of Common Units, net

 

 

1,981

 

 

 

 

 

 

 

 

 

 

 

 

34,529

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

34,529

 

 

 

 

Conversion of subordinated units

 

 

3,135

 

 

 

(3,135

)

 

 

 

 

 

 

 

 

18,186

 

 

 

(18,186

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Distributions

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(26,384

)

 

 

(1,152

)

 

 

(2,370

)

 

 

(3,636

)

 

 

(889

)

 

 

 

 

 

(20

)

 

 

(34,451

)

 

 

(1,736

)

Capital contribution to fund general and administrative expense reimbursement

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,069

 

 

 

 

 

 

 

 

 

2,069

 

 

 

 

Other deemed contributions

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

197

 

 

 

 

 

 

 

 

 

197

 

 

 

 

Unit-based compensation

 

 

4

 

 

 

 

 

 

 

 

 

 

 

 

70

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

70

 

 

 

 

Net income (loss)