lmrk-10q_20190331.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 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.)

400 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 25,338,432 common units outstanding at April 26, 2019.

 

 

 

 


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

 

31

 

 

 

 

 

Item 3.

 

Quantitative and Qualitative Disclosures About Market Risk

 

48

 

 

 

 

 

Item 4.

 

Controls and Procedures

 

49

 

 

 

 

 

 

 

PART II. OTHER INFORMATION

 

 

 

 

 

 

 

Item 1.

 

Legal Proceedings

 

50

 

 

 

 

 

Item 1A.

 

Risk Factors

 

50

 

 

 

 

 

Item 6.

 

Exhibits

 

51

 

 

 

 

 

Signatures

 

 

 

52

 

2


Table of Contents 

 

PART I. FINANCIAL INFORMATION 

Item 1. Financial Statements

Landmark Infrastructure Partners LP

Consolidated Balance Sheets

(in thousands, except unit data)

 

 

 

March 31, 2019

 

 

December 31, 2018

 

Assets

 

 

 

 

 

 

 

 

Land

 

$

131,731

 

 

$

128,302

 

Real property interests

 

 

509,369

 

 

 

517,423

 

Construction in progress

 

 

35,456

 

 

 

29,556

 

Total land and real property interests

 

 

676,556

 

 

 

675,281

 

Accumulated amortization real property interests

 

 

(40,926

)

 

 

(39,069

)

Land and net real property interests

 

 

635,630

 

 

 

636,212

 

Investments in receivables, net

 

 

9,611

 

 

 

18,348

 

Investment in unconsolidated joint venture

 

 

64,133

 

 

 

65,670

 

Cash and cash equivalents

 

 

6,034

 

 

 

4,108

 

Restricted cash

 

 

4,994

 

 

 

3,672

 

Rent receivables, net

 

 

5,194

 

 

 

4,292

 

Due from Landmark and affiliates

 

 

2,584

 

 

 

1,390

 

Deferred loan costs, net

 

 

5,350

 

 

 

5,552

 

Deferred rent receivable

 

 

5,254

 

 

 

5,251

 

Derivative assets

 

 

2,432

 

 

 

4,590

 

Other intangible assets, net

 

 

20,485

 

 

 

20,839

 

Assets held for sale (AHFS)

 

 

20,448

 

 

 

7,846

 

Right of use asset, net

 

 

7,495

 

 

 

 

Other assets

 

 

9,470

 

 

 

8,843

 

Total assets

 

$

799,114

 

 

$

786,613

 

Liabilities and equity

 

 

 

 

 

 

 

 

Revolving credit facility

 

$

165,000

 

 

$

155,000

 

Secured notes, net

 

 

222,752

 

 

 

223,685

 

Accounts payable and accrued liabilities

 

 

5,173

 

 

 

7,435

 

Other intangible liabilities, net

 

 

8,733

 

 

 

9,291

 

Liabilities associated with AHFS

 

 

180

 

 

 

397

 

Lease liability

 

 

7,525

 

 

 

 

Prepaid rent

 

 

5,884

 

 

 

5,418

 

Derivative liabilities

 

 

1,019

 

 

 

402

 

Total liabilities

 

 

416,266

 

 

 

401,628

 

Commitments and contingencies (Note 15)

 

 

 

 

 

 

 

 

Mezzanine equity

 

 

 

 

 

 

 

 

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

 

 

47,664

 

 

 

47,308

 

Equity

 

 

 

 

 

 

 

 

Series A cumulative redeemable preferred units, 1,593,149 units issued and outstanding

   at March 31, 2019 and December 31, 2018, respectively

 

 

37,207

 

 

 

37,207

 

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

   issued and outstanding at March 31, 2019 and December 31, 2018, respectively

 

 

58,936

 

 

 

58,936

 

Common units, 25,338,432 and 25,327,801 units issued and outstanding at

   March 31, 2019 and December 31, 2018, respectively

 

 

405,731

 

 

 

411,158

 

General Partner

 

 

(165,828

)

 

 

(167,019

)

Accumulated other comprehensive income

 

 

(1,063

)

 

 

(2,806

)

Total partners' equity

 

 

334,983

 

 

 

337,476

 

Noncontrolling interests

 

 

201

 

 

 

201

 

Total equity

 

 

335,184

 

 

 

337,677

 

Total liabilities, mezzanine equity and equity

 

$

799,114

 

 

$

786,613

 

 

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 March 31,

 

 

 

2019

 

 

2018

 

Revenue

 

 

 

 

 

 

 

 

Rental revenue

 

$

14,393

 

 

$

15,695

 

Expenses

 

 

 

 

 

 

 

 

Property operating

 

 

665

 

 

 

286

 

General and administrative

 

 

1,478

 

 

 

1,699

 

Acquisition-related

 

 

127

 

 

 

185

 

Amortization

 

 

3,517

 

 

 

4,022

 

Impairments

 

 

204

 

 

 

 

Total expenses

 

 

5,991

 

 

 

6,192

 

Other income and expenses

 

 

 

 

 

 

 

 

Interest and other income

 

 

394

 

 

 

438

 

Interest expense

 

 

(4,488

)

 

 

(6,272

)

Unrealized gain (loss) on derivatives

 

 

(2,762

)

 

 

3,148

 

Equity loss from unconsolidated joint venture

 

 

(55

)

 

 

 

Gain on sale of real property interests

 

 

5,862

 

 

 

 

Foreign currency transaction loss

 

 

(21

)

 

 

 

Total other income and expenses

 

 

(1,070

)

 

 

(2,686

)

Income before income tax expense

 

 

7,332

 

 

 

6,817

 

Income tax expense

 

 

122

 

 

 

76

 

Net income

 

 

7,210

 

 

 

6,741

 

Less: Net income attributable to noncontrolling interest

 

 

8

 

 

 

4

 

Net income attributable to limited partners

 

 

7,202

 

 

 

6,737

 

Less: Distributions declared to preferred unitholders

 

 

(2,894

)

 

 

(1,944

)

Less: General partner's incentive distribution rights

 

 

(197

)

 

 

(195

)

Less: Accretion of Series C preferred units

 

 

(356

)

 

 

 

Net income attributable to common and subordinated unitholders

 

$

3,755

 

 

$

4,598

 

Net income (loss) per common and subordinated unit

 

 

 

 

 

 

 

 

Common units – basic

 

$

0.15

 

 

$

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

 

 

 

22,996

 

Common units – diluted

 

 

25,338

 

 

 

24,564

 

Subordinated units – basic and diluted

 

 

 

 

 

1,568

 

Cash distributions declared per common and subordinated unit

 

$

0.3675

 

 

$

0.3675

 

 

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 March 31,

 

 

 

2019

 

 

2018

 

Net income

 

$

7,210

 

 

$

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


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, 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

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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


Table of Contents 

 

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

)