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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

☐	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

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.

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.

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

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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

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	)		(4	)
Consideration associated with Drop-down Acquisitions		—