lmrk-10q_20190930.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, 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)

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange on which registered

Common Units, Representing Limited Partner Interests

 

LMRK

 

NASDAQ Global Market

8.0% Series A Cumulative Redeemable Preferred Units, $25.00 par value

 

LMRKP

 

NASDAQ Global Market

7.9% Series B Cumulative Redeemable Preferred Units, $25.00 par value

 

LMRKO

 

NASDAQ Global Market

Series C Floating-to-Fixed Rate Cumulative Redeemable Perpetual Convertible Preferred Units, $25.00 par value

 

LMRKN

 

NASDAQ Global Market

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 25,353,140 common units outstanding at November 1, 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

 

8

 

 

 

 

 

 

 

Notes to the Consolidated Financial Statements

 

9

 

 

 

 

 

Item 2.

 

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

 

34

 

 

 

 

 

Item 3.

 

Quantitative and Qualitative Disclosures About Market Risk

 

54

 

 

 

 

 

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, 2019

 

 

December 31, 2018

 

Assets

 

 

 

 

 

 

 

 

Land

 

$

136,221

 

 

$

128,302

 

Real property interests

 

 

523,303

 

 

 

517,423

 

Construction in progress

 

 

58,507

 

 

 

29,556

 

Total land and real property interests

 

 

718,031

 

 

 

675,281

 

Accumulated amortization real property interests

 

 

(46,753

)

 

 

(39,069

)

Land and net real property interests

 

 

671,278

 

 

 

636,212

 

Investments in receivables, net

 

 

8,741

 

 

 

18,348

 

Investment in unconsolidated joint venture

 

 

62,524

 

 

 

65,670

 

Cash and cash equivalents

 

 

4,920

 

 

 

4,108

 

Restricted cash

 

 

5,417

 

 

 

3,672

 

Rent receivables, net

 

 

5,098

 

 

 

4,292

 

Due from Landmark and affiliates

 

 

1,876

 

 

 

1,390

 

Deferred loan costs, net

 

 

4,854

 

 

 

5,552

 

Deferred rent receivable

 

 

5,970

 

 

 

5,251

 

Derivative assets

 

 

 

 

 

4,590

 

Other intangible assets, net

 

 

19,469

 

 

 

20,839

 

Assets held for sale (AHFS)

 

 

392

 

 

 

7,846

 

Other assets

 

 

13,467

 

 

 

8,843

 

Total assets

 

$

804,006

 

 

$

786,613

 

Liabilities and equity

 

 

 

 

 

 

 

 

Revolving credit facility

 

$

175,313

 

 

$

155,000

 

Secured notes, net

 

 

219,535

 

 

 

223,685

 

Accounts payable and accrued liabilities

 

 

8,922

 

 

 

7,435

 

Other intangible liabilities, net

 

 

7,923

 

 

 

9,291

 

Liabilities associated with AHFS

 

 

 

 

 

397

 

Lease liability

 

 

10,076

 

 

 

 

Prepaid rent

 

 

5,549

 

 

 

5,418

 

Derivative liabilities

 

 

4,765

 

 

 

402

 

Total liabilities

 

 

432,083

 

 

 

401,628

 

Commitments and contingencies (Note 15)

 

 

 

 

 

 

 

 

Mezzanine equity

 

 

 

 

 

 

 

 

Series C cumulative redeemable convertible preferred units, 1,988,700 and 2,000,000

   units issued and outstanding at September 30, 2019 and December 31, 2018, respectively

 

 

47,571

 

 

 

47,308

 

Equity

 

 

 

 

 

 

 

 

Series A cumulative redeemable preferred units, 1,674,156 and 1,593,149 units issued

   and outstanding at September 30, 2019 and December 31, 2018, respectively

 

 

39,018

 

 

 

37,207

 

Series B cumulative redeemable preferred units, 2,544,793 and 2,463,015 units

   issued and outstanding at September 30, 2019 and December 31, 2018, respectively

 

 

60,926

 

 

 

58,936

 

Common units, 25,353,140 and 25,327,801 units issued and outstanding at

   September 30, 2019 and December 31, 2018, respectively

 

 

394,036

 

 

 

411,158

 

General Partner

 

 

(163,370

)

 

 

(167,019

)

Accumulated other comprehensive loss

 

 

(6,459

)

 

 

(2,806

)

Total partners' equity

 

 

324,151

 

 

 

337,476

 

Noncontrolling interests

 

 

201

 

 

 

201

 

Total equity

 

 

324,352

 

 

 

337,677

 

Total liabilities, mezzanine equity and equity

 

$

804,006

 

 

$

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 September 30,

 

 

Nine Months Ended September 30,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rental revenue

 

$

14,402

 

 

$

17,560

 

 

$

43,820

 

 

$

50,051

 

Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Property operating

 

 

435

 

 

 

360

 

 

 

1,505

 

 

 

875

 

General and administrative

 

 

1,288

 

 

 

735

 

 

 

4,269

 

 

 

3,523

 

Acquisition-related

 

 

119

 

 

 

88

 

 

 

614

 

 

 

469

 

Amortization

 

 

3,395

 

 

 

4,293

 

 

 

10,368

 

 

 

12,548

 

Impairments

 

 

442

 

 

 

877

 

 

 

646

 

 

 

980

 

Total expenses

 

 

5,679

 

 

 

6,353

 

 

 

17,402

 

 

 

18,395

 

Other income and expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest and other income

 

 

198

 

 

 

434

 

 

 

764

 

 

 

1,280

 

Interest expense

 

 

(4,259

)

 

 

(6,906

)

 

 

(13,439

)

 

 

(19,586

)

Unrealized gain (loss) on derivatives

 

 

(2,188

)

 

 

774

 

 

 

(8,963

)

 

 

5,208

 

Equity income from unconsolidated joint venture

 

 

154

 

 

 

59

 

 

 

263

 

 

 

59

 

Gain on sale of real property interests

 

 

473

 

 

 

100,039

 

 

 

18,008

 

 

 

100,039

 

Foreign currency transaction gain

 

 

1,113

 

 

 

 

 

 

1,045

 

 

 

 

Total other income and expenses

 

 

(4,509

)

 

 

94,400

 

 

 

(2,322

)

 

 

87,000

 

Income before income tax expense

 

 

4,214

 

 

 

105,607

 

 

 

24,096

 

 

 

118,656

 

Income tax expense

 

 

228

 

 

 

460

 

 

 

3,635

 

 

 

663

 

Net income

 

 

3,986

 

 

 

105,147

 

 

 

20,461

 

 

 

117,993

 

Less: Net income attributable to noncontrolling interest

 

 

7

 

 

 

8

 

 

 

23

 

 

 

20

 

Net income attributable to limited partners

 

 

3,979

 

 

 

105,139

 

 

 

20,438

 

 

 

117,973

 

Less: Distributions declared to preferred unitholders

 

 

(2,985

)

 

 

(2,868

)

 

 

(8,900

)

 

 

(7,742

)

Less: General partner's incentive distribution rights

 

 

(197

)

 

 

(197

)

 

 

(591

)

 

 

(587

)

Less: Accretion of Series C preferred units

 

 

(96

)

 

 

 

 

 

(546

)

 

 

 

Net income attributable to common and subordinated unitholders

 

$

701

 

 

$

102,074

 

 

$

10,401

 

 

$

109,644

 

Net income (loss) per common and subordinated unit

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common units – basic

 

$

0.03

 

 

$

4.06

 

 

$

0.41

 

 

$

4.51

 

Common units – diluted

 

$

0.03

 

 

$

3.71

 

 

$

0.41

 

 

$

4.18

 

Subordinated units – basic and diluted

 

$

 

 

$

 

 

$

 

 

$

(0.59

)

Weighted average common and subordinated units outstanding

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common units – basic

 

 

25,341

 

 

 

25,138

 

 

 

25,339

 

 

 

24,405

 

Common units – diluted

 

 

25,341

 

 

 

27,741

 

 

 

25,339

 

 

 

26,658

 

Subordinated units – basic and diluted

 

 

 

 

 

 

 

 

 

 

 

517

 

Cash distributions declared per common and subordinated unit

 

$

0.3675

 

 

$

0.3675

 

 

$

1.1025

 

 

$

1.1025

 

 

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,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Net income

 

$

3,986

 

 

$

105,147

 

 

$

20,461

 

 

$

117,993

 

Other comprehensive income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustment

 

 

(2,981

)

 

 

(1,035

)

 

 

(3,653

)

 

 

(2,317

)

Other comprehensive income

 

 

(2,981

)

 

 

(1,035

)

 

 

(3,653

)

 

 

(2,317

)

Comprehensive income

 

 

1,005

 

 

 

104,112

 

 

 

16,808

 

 

 

115,676

 

Less: Comprehensive income attributable to noncontrolling interest

 

 

7

 

 

 

8

 

 

 

23

 

 

 

20

 

Comprehensive income attributable to limited partners

 

$

998

 

 

$

104,104

 

 

$

16,785

 

 

$

115,656

 

 

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 from Sponsor

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,202

 

 

 

 

 

 

 

 

 

1,202

 

 

 

 

 

Unit-based compensation

 

 

4

 

 

 

 

 

 

 

 

 

 

 

 

70

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

70

 

 

 

 

 

Net income (loss)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

$

 

Foreign currency translation adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2,320

)

 

 

 

 

 

(2,320

)

 

 

 

 

Issuance of Preferred Units, net

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

47,534

 

Issuance of Common Units, net

 

 

125

 

 

 

 

 

 

 

 

 

 

 

 

1,773

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,773

 

 

 

 

 

Distributions

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(9,189

)

 

 

 

 

 

(806

)

 

 

(1,256

)

 

 

(194

)

 

 

 

 

 

(8

)

 

 

(11,453

)

 

 

 

(868

)

Capital contribution from Sponsor

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

578

 

 

 

 

 

 

 

 

 

578

 

 

 

 

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

2,972

 

 

 

 

 

 

806

 

 

 

1,256

 

 

 

195

 

 

 

 

 

 

8

 

 

 

5,237

 

 

 

 

868

 

Balance as of June 30, 2018

 

 

25,131

 

 

 

 

 

 

1,593

 

 

 

2,463

 

 

$

330,207

 

 

$

 

 

$

37,207

 

 

$

58,936

 

 

$

(169,239

)

 

$

(314

)

 

$

201

 

 

$

256,998

 

 

 

$

47,534

 

Foreign currency translation adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,035

)

 

 

 

 

 

(1,035

)

 

 

 

 

Issuance of Common Units, net

 

 

135

 

 

 

 

 

 

 

 

 

 

 

 

1,830

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,830

 

 

 

 

 

Distributions