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 March 31, 2019
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.) |
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P.O. Box 3429 |
|
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El Segundo, CA 90245 |
|
90245 |
(Address of principal executive offices) |
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(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 ☐ |
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Accelerated filer ☒ |
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Non-accelerated filer ☐ |
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Smaller reporting company ☐ |
Emerging growth company ☒ |
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|
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 25,338,432 common units outstanding at April 26, 2019.
LANDMARK INFRASTRUCTURE PARTNERS LP
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Item 1. |
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3 |
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4 |
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5 |
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6 |
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7 |
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8 |
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Item 2. |
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Management's Discussion and Analysis of Financial Condition and Results of Operations |
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31 |
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Item 3. |
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48 |
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Item 4. |
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49 |
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Item 1. |
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50 |
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Item 1A. |
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50 |
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Item 6. |
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51 |
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52 |
2
Landmark Infrastructure Partners LP
(in thousands, except unit data)
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March 31, 2019 |
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December 31, 2018 |
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Assets |
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Land |
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$ |
131,731 |
|
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$ |
128,302 |
|
Real property interests |
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509,369 |
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|
517,423 |
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Construction in progress |
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35,456 |
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29,556 |
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Total land and real property interests |
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676,556 |
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675,281 |
|
Accumulated amortization real property interests |
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(40,926 |
) |
|
|
(39,069 |
) |
Land and net real property interests |
|
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635,630 |
|
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|
636,212 |
|
Investments in receivables, net |
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9,611 |
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|
18,348 |
|
Investment in unconsolidated joint venture |
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64,133 |
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|
65,670 |
|
Cash and cash equivalents |
|
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6,034 |
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|
4,108 |
|
Restricted cash |
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|
4,994 |
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|
3,672 |
|
Rent receivables, net |
|
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5,194 |
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|
4,292 |
|
Due from Landmark and affiliates |
|
|
2,584 |
|
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|
1,390 |
|
Deferred loan costs, net |
|
|
5,350 |
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5,552 |
|
Deferred rent receivable |
|
|
5,254 |
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|
5,251 |
|
Derivative assets |
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|
2,432 |
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|
4,590 |
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Other intangible assets, net |
|
|
20,485 |
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|
20,839 |
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Assets held for sale (AHFS) |
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20,448 |
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7,846 |
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Right of use asset, net |
|
|
7,495 |
|
|
|
— |
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Other assets |
|
|
9,470 |
|
|
|
8,843 |
|
Total assets |
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$ |
799,114 |
|
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$ |
786,613 |
|
Liabilities and equity |
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Revolving credit facility |
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$ |
165,000 |
|
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$ |
155,000 |
|
Secured notes, net |
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222,752 |
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223,685 |
|
Accounts payable and accrued liabilities |
|
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5,173 |
|
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|
7,435 |
|
Other intangible liabilities, net |
|
|
8,733 |
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|
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9,291 |
|
Liabilities associated with AHFS |
|
|
180 |
|
|
|
397 |
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Lease liability |
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7,525 |
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|
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— |
|
Prepaid rent |
|
|
5,884 |
|
|
|
5,418 |
|
Derivative liabilities |
|
|
1,019 |
|
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|
402 |
|
Total liabilities |
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416,266 |
|
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|
401,628 |
|
Commitments and contingencies (Note 15) |
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Mezzanine equity |
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Series C cumulative redeemable convertible preferred units, 2,000,000 and zero units issued and outstanding at March 31, 2019 and December 31, 2018, respectively |
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47,664 |
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47,308 |
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Equity |
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Series A cumulative redeemable preferred units, 1,593,149 units issued and outstanding at March 31, 2019 and December 31, 2018, respectively |
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37,207 |
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37,207 |
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Series B cumulative redeemable preferred units, 2,463,015 units issued and outstanding at March 31, 2019 and December 31, 2018, respectively |
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58,936 |
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58,936 |
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Common units, 25,338,432 and 25,327,801 units issued and outstanding at March 31, 2019 and December 31, 2018, respectively |
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405,731 |
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411,158 |
|
General Partner |
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(165,828 |
) |
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(167,019 |
) |
Accumulated other comprehensive income |
|
|
(1,063 |
) |
|
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(2,806 |
) |
Total partners' equity |
|
|
334,983 |
|
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337,476 |
|
Noncontrolling interests |
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|
201 |
|
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|
201 |
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Total equity |
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335,184 |
|
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|
337,677 |
|
Total liabilities, mezzanine equity and equity |
|
$ |
799,114 |
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$ |
786,613 |
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See accompanying notes to consolidated financial statements.
3
Landmark Infrastructure Partners LP
Consolidated Statements of Operations
(In thousands, except per unit data)
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Three Months Ended March 31, |
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2019 |
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2018 |
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Revenue |
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Rental revenue |
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$ |
14,393 |
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$ |
15,695 |
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Expenses |
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Property operating |
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665 |
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286 |
|
General and administrative |
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1,478 |
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1,699 |
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Acquisition-related |
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127 |
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185 |
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Amortization |
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3,517 |
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4,022 |
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Impairments |
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204 |
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— |
|
Total expenses |
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5,991 |
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6,192 |
|
Other income and expenses |
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Interest and other income |
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|
394 |
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438 |
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Interest expense |
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(4,488 |
) |
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(6,272 |
) |
Unrealized gain (loss) on derivatives |
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(2,762 |
) |
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3,148 |
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Equity loss from unconsolidated joint venture |
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(55 |
) |
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— |
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Gain on sale of real property interests |
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5,862 |
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|
— |
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Foreign currency transaction loss |
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(21 |
) |
|
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— |
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Total other income and expenses |
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(1,070 |
) |
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(2,686 |
) |
Income before income tax expense |
|
|
7,332 |
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6,817 |
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Income tax expense |
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122 |
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|
76 |
|
Net income |
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7,210 |
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|
6,741 |
|
Less: Net income attributable to noncontrolling interest |
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8 |
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4 |
|
Net income attributable to limited partners |
|
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7,202 |
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|
6,737 |
|
Less: Distributions declared to preferred unitholders |
|
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(2,894 |
) |
|
|
(1,944 |
) |
Less: General partner's incentive distribution rights |
|
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(197 |
) |
|
|
(195 |
) |
Less: Accretion of Series C preferred units |
|
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(356 |
) |
|
|
— |
|
Net income attributable to common and subordinated unitholders |
|
$ |
3,755 |
|
|
$ |
4,598 |
|
Net income (loss) per common and subordinated unit |
|
|
|
|
|
|
|
|
Common units – basic |
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$ |
0.15 |
|
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$ |
0.21 |
|
Common units – diluted |
|
$ |
0.15 |
|
|
$ |
0.19 |
|
Subordinated units – basic and diluted |
|
$ |
— |
|
|
$ |
(0.19 |
) |
Weighted average common and subordinated units outstanding |
|
|
|
|
|
|
|
|
Common units – basic |
|
|
25,338 |
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|
22,996 |
|
Common units – diluted |
|
|
25,338 |
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|
24,564 |
|
Subordinated units – basic and diluted |
|
|
— |
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|
1,568 |
|
Cash distributions declared per common and subordinated unit |
|
$ |
0.3675 |
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$ |
0.3675 |
|
See accompanying notes to consolidated financial statements.
4
Landmark Infrastructure Partners LP
Consolidated Statements of Comprehensive Income
(in thousands)
|
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Three Months Ended March 31, |
|
|||||
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2019 |
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2018 |
|
||
Net income |
|
$ |
7,210 |
|
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$ |
6,741 |
|
Other comprehensive income: |
|
|
|
|
|
|
|
|
Foreign currency translation adjustment |
|
|
1,743 |
|
|
|
1,038 |
|
Other comprehensive income |
|
|
1,743 |
|
|
|
1,038 |
|
Comprehensive income |
|
|
8,953 |
|
|
|
7,779 |
|
Less: Comprehensive income attributable to noncontrolling interest |
|
|
8 |
|
|
|
4 |
|
Comprehensive income attributable to limited partners |
|
$ |
8,945 |
|
|
$ |
7,775 |
|
See accompanying notes to consolidated financial statements
5
Landmark Infrastructure Partners LP
Consolidated Statements of Equity And Mezzanine Equity
(in thousands)
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Accumulated |
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Mezzanine |
|
||
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|
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Preferred |
|
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Preferred |
|
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Preferred |
|
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Preferred |
|
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Other |
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Equity - |
|
||||||
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Common |
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Subordinated |
|
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Units - |
|
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Units - |
|
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Common |
|
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Subordinated |
|
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Unitholders - |
|
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Unitholders - |
|
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General |
|
|
Comprehensive |
|
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Noncontrolling |
|
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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, 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 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,038 |
|
|
|
— |
|
|
|
1,038 |
|
|
|
|
— |
|
Issuance of Preferred Units, net |
|
|
— |
|
|
|
— |
|
|
|
25 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
603 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
603 |
|
|
|
|
— |
|
Issuance of Common Units, net |
|
|
1,721 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
30,926 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
30,926 |
|
|
|
|
— |
|
Conversion of subordinated units |
|
|
3,135 |
|
|
|
(3,135 |
) |
|
|
— |
|
|
|
— |
|
|
|
18,186 |
|
|
|
(18,186 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
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|
|
— |
|
Distributions |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(7,959 |
) |
|
|
(1,152 |
) |
|
|
(768 |
) |
|
|
(1,176 |
) |
|
|
(302 |
) |
|
|
— |
|
|
|
(4 |
) |
|
|
(11,361 |
) |
|
|
|
— |
|
Capital contribution to fund general and administrative expense reimbursement |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,202 |
|
|
|
— |
|
|
|
— |
|
|
|
1,202 |
|
|
|
|
— |
|
Unit-based compensation |
|
|
4 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
70 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
70 |
|
|
|
|
— |
|
Net income |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
4,901 |
|
|
|
(303 |
) |
|
|
768 |
|
|
|
1,176 |
|
|
|
195 |
|
|
|
— |
|
|
|
4 |
|
|
|
6,741 |
|
|
|
|
— |
|
|
Balance as of March 31, 2018 |
|
|
25,006 |
|
|
|
— |
|
|
|
1,593 |
|
|
|
2,463 |
|
|
$ |
334,651 |
|
|
$ |
— |
|
|
$ |
37,207 |
|
|
$ |
58,936 |
|
|
$ |
(169,818 |
) |
|
$ |
2,006 |
|
|
$ |
201 |
|
|
$ |
263,183 |
|
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of December 31, 2018 |
|
|
25,328 |
|
|
|
— |
|
|
|
1,593 |
|
|
|
2,463 |
|
|
$ |
411,158 |
|
|
$ |
— |
|
|
$ |
37,207 |
|
|
$ |
58,936 |
|
|
$ |
(167,019 |
) |
|
$ |
(2,806 |
) |
|
$ |
201 |
|
|
$ |
337,677 |
|
|
|
$ |
47,308 |
|
Foreign currency translation adjustment |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,743 |
|
|
|
— |
|
|
|
1,743 |
|
|
|
|
— |
|
Distributions |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(9,312 |
) |
|
|
— |
|
|
|
(788 |
) |
|
|
(1,189 |
) |
|
|
(197 |
) |
|
|
— |
|
|
|
(8 |
) |
|
|
(11,494 |
) |
|
|
|
(917 |
) |
Capital contribution from Sponsor |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
994 |
|
|
|
— |
|
|
|
— |
|
|
|
994 |
|
|
|
|
— |
|
Other deemed contributions |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
197 |
|
|
|
— |
|
|
|
— |
|
|
|
197 |
|
|
|
|
— |
|
Unit-based compensation |
|
|
10 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
130 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
130 |
|
|
|
|
— |
|
Net income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
3,755 |
|
|
|
— |
|
|
|
788 |
|
|
|
1,189 |
|
|
|
197 |
|
|
|
— |
|
|
|
8 |
|
|
|
5,937 |
|
|
|
|
1,273 |
|
Balance as of March 31, 2019 |
|
|
25,338 |
|
|
|
— |
|
|
|
1,593 |
|
|
|
2,463 |
|
|
$ |
405,731 |
|
|
$ |
— |
|
|
$ |
37,207 |
|
|
$ |
58,936 |
|
|
$ |
(165,828 |
) |
|
$ |
(1,063 |
) |
|
$ |
201 |
|
|
$ |
335,184 |
|
|
|
$ |
47,664 |
|
See accompanying notes to consolidated financial statements
6
Landmark Infrastructure Partners LP
Consolidated Statements of Cash Flows
(in thousands)
|
|
Three Months Ended March 31, |
|
|||||
|
|
2019 |
|
|
2018 |
|
||
Operating activities |
|
|
|
|
|
|
|
|
Net income |
|
$ |
7,210 |
|
|
$ |
6,741 |
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
Unit-based compensation |
|
|
130 |
|
|
|
70 |
|
Unrealized (gain) loss on derivatives |
|
|
2,762 |
|
|
|
(3,148 |
) |
Amortization expense |
|
|
3,517 |
|
|
|
4,022 |
|
Amortization of above- and below- market lease |
|
|
(224 |
) |
|
|
(328 |
) |
Amortization of deferred loan costs |
|
|
665 |
|
|
|
798 |
|
Amortization of discount on secured notes |
|
|
93 |
|
|
|
93 |
|
Receivables interest accretion |
|
|
(3 |
) |
|
|
— |
|
Impairments |
|
|
204 |
|
|
|
— |
|
Gain on sale of real property interests |
|
|
(5,862 |
) |
|
|
— |
|
Allowance for doubtful accounts |
|
|
5 |
|
|
|
(10 |
) |
Equity loss from unconsolidated joint venture |
|
|
55 |
|
|
|
— |
|
Return on investment in unconsolidated joint venture |
|
|
1,482 |
|
|
|
— |
|
Foreign currency transaction loss |
|
|
21 |
|
|
|
— |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
Rent receivables, net |
|
|
(899 |
) |
|
|
107 |
|
Accounts payable and accrued liabilities |
|
|
(416 |
) |
|
|
743 |
|
Deferred rent |
|
|
110 |
|
|
|
81 |
|
Prepaid rent |
|
|
466 |
|
|
|
1,728 |
|
Due from Landmark and affiliates |
|
|
(598 |
) |
|
|
1,126 |
|
Other assets |
|
|
(551 |
) |
|
|
(343 |
) |
Net cash provided by operating activities |
|
|
8,167 |
|
|
|
11,680 |
|
Investing activities |
|
|
|
|
|
|
|
|
Acquisition of land |
|
|
(3,346 |
) |
|
|
(6,931 |
) |
Acquisition of real property interests and development activities |
|
|
(12,159 |
) |
|
|
(27,309 |
) |
Proceeds from sale of real property interests |
|
|
13,385 |
|
|
|
— |
|
Repayments of receivables |
|
|
150 |
|
|
|
299 |
|
Net cash used in investing activities |
|
|
(1,970 |
) |
|
|
(33,941 |
) |
Financing activities |
|
|
|
|
|
|
|
|
Proceeds from the issuance of Common Units, net |
|
|
— |
|
|
|
437 |
|
Proceeds from the issuance of Preferred Units, net |
|
|
— |
|
|
|
603 |
|
Proceeds from revolving credit facility |
|
|
10,000 |
|
|
|
40,000 |
|
Principal payments on secured notes |
|
|
(1,361 |
) |
|
|
(969 |
) |
Deferred loan costs |
|
|
(128 |
) |
|
|
(253 |
) |
Capital contribution to fund general and administrative expense reimbursement |
|
|
764 |
|
|
|
491 |
|
Distributions to preferred unitholders |
|
|
(2,919 |
) |
|
|
(1,996 |
) |
Distributions to common and subordinated unitholders |
|
|
(9,312 |
) |
|
|
(9,413 |
) |
Distributions to non-controlling interests |
|
|
(8 |
) |