lmrk-10q_20200331.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, 2020

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 25,478,042 common units outstanding at May 4, 2020.

 


Table of Contents 

 

 

LANDMARK INFRASTRUCTURE PARTNERS LP

Table of Contents

 

 

 

 

 

Page

 

 

 

 

 

 

 

 

 

 

 

 

PART I. FINANCIAL INFORMATION

 

 

 

 

 

 

 

Item 1.

 

Unaudited Financial Statements:

 

 

 

 

 

 

 

 

 

Consolidated Balance Sheets

 

3

 

 

 

 

 

 

 

Consolidated Statements of Operations

 

4

 

 

 

 

 

 

 

Consolidated Statements of Comprehensive Income (Loss)

 

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

 

29

 

 

 

 

 

Item 3.

 

Quantitative and Qualitative Disclosures About Market Risk

 

47

 

 

 

 

 

Item 4.

 

Controls and Procedures

 

48

 

 

 

 

 

 

 

PART II. OTHER INFORMATION

 

 

 

 

 

 

 

Item 1.

 

Legal Proceedings

 

49

 

 

 

 

 

Item 1A.

 

Risk Factors

 

49

 

 

 

 

 

Item 6.

 

Exhibits

 

51

 

 

 

 

 

Signatures

 

 

 

52

 

2


Table of Contents 

 

PART I. FINANCIAL INFORMATION 

Item 1. Unaudited Financial Statements

Landmark Infrastructure Partners LP

Consolidated Balance Sheets

(in thousands, except unit data)

 

 

 

March 31, 2020

 

 

December 31, 2019

 

Assets

 

 

 

 

 

 

 

 

Land

 

$

139,102

 

 

$

141,851

 

Real property interests

 

 

548,671

 

 

 

543,328

 

Construction in progress

 

 

63,699

 

 

 

68,907

 

Total land and real property interests

 

 

751,472

 

 

 

754,086

 

Accumulated depreciation and amortization of real property interests

 

 

(53,212

)

 

 

(50,015

)

Land and net real property interests

 

 

698,260

 

 

 

704,071

 

Investments in receivables, net

 

 

8,417

 

 

 

8,822

 

Investment in unconsolidated joint venture

 

 

61,533

 

 

 

62,059

 

Cash and cash equivalents

 

 

14,022

 

 

 

7,446

 

Restricted cash

 

 

4,680

 

 

 

5,619

 

Rent receivables

 

 

5,395

 

 

 

5,105

 

Due from Landmark and affiliates

 

 

1,611

 

 

 

1,132

 

Deferred loan costs, net

 

 

4,278

 

 

 

4,557

 

Deferred rent receivable

 

 

5,860

 

 

 

6,176

 

Other intangible assets, net

 

 

23,108

 

 

 

23,966

 

Assets held for sale (AHFS)

 

 

395

 

 

 

421

 

Right-of-use asset, net

 

 

10,828

 

 

 

11,358

 

Other assets

 

 

15,767

 

 

 

14,873

 

Total assets

 

$

854,154

 

 

$

855,605

 

Liabilities and equity

 

 

 

 

 

 

 

 

Revolving credit facility

 

$

177,625

 

 

$

232,907

 

Secured notes, net

 

 

279,652

 

 

 

217,098

 

Accounts payable and accrued liabilities

 

 

9,253

 

 

 

8,598

 

Other intangible liabilities, net

 

 

7,221

 

 

 

7,606

 

Operating lease liability

 

 

9,883

 

 

 

10,268

 

Finance lease liability

 

 

849

 

 

 

908

 

Prepaid rent

 

 

6,737

 

 

 

5,747

 

Derivative liabilities

 

 

10,223

 

 

 

3,149

 

Total liabilities

 

 

501,443

 

 

 

486,281

 

Commitments and contingencies (Note 15)

 

 

 

 

 

 

 

 

Mezzanine equity

 

 

 

 

 

 

 

 

Series C cumulative redeemable convertible preferred units, 1,988,700 units

   issued and outstanding at March 31, 2020 and December 31, 2019, respectively

 

 

47,763

 

 

 

47,666

 

Equity

 

 

 

 

 

 

 

 

Series A cumulative redeemable preferred units, 1,745,328 and 1,722,041 units issued

   and outstanding at March 31, 2020 and December 31, 2019, respectively

 

 

40,785

 

 

 

40,210

 

Series B cumulative redeemable preferred units, 2,628,932 and 2,544,793 units

   issued and outstanding at March 31, 2020 and December 31, 2019, respectively

 

 

63,014

 

 

 

60,926

 

Common units, 25,470,232 and 25,353,140 units issued and outstanding at

   March 31, 2020 and December 31, 2019, respectively

 

 

370,314

 

 

 

382,581

 

General Partner

 

 

(161,252

)

 

 

(162,277

)

Accumulated other comprehensive income (loss)

 

 

(8,114

)

 

 

17

 

Total partners' equity

 

 

304,747

 

 

 

321,457

 

Noncontrolling interests

 

 

201

 

 

 

201

 

Total equity

 

 

304,948

 

 

 

321,658

 

Total liabilities, mezzanine equity and equity

 

$

854,154

 

 

$

855,605

 

 

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,

 

 

 

2020

 

 

2019

 

Revenue

 

 

 

 

 

 

 

 

Rental revenue

 

$

15,678

 

 

$

14,393

 

Expenses

 

 

 

 

 

 

 

 

Property operating

 

 

731

 

 

 

665

 

General and administrative

 

 

1,612

 

 

 

1,478

 

Acquisition-related

 

 

315

 

 

 

127

 

Depreciation and amortization

 

 

3,892

 

 

 

3,517

 

Impairments

 

 

82

 

 

 

204

 

Total expenses

 

 

6,632

 

 

 

5,991

 

Other income and expenses

 

 

 

 

 

 

 

 

Interest and other income

 

 

232

 

 

 

394

 

Interest expense

 

 

(4,701

)

 

 

(4,488

)

Loss on early extinguishment of debt

 

 

(2,231

)

 

 

 

Unrealized loss on derivatives

 

 

(7,291

)

 

 

(2,762

)

Equity income (loss) from unconsolidated joint venture

 

 

150

 

 

 

(55

)

Gain on sale of real property interests

 

 

 

 

 

5,862

 

Foreign currency transaction gain (loss)

 

 

3,363

 

 

 

(21

)

Total other income and expenses

 

 

(10,478

)

 

 

(1,070

)

Income (loss) before income tax expense (benefit)

 

 

(1,432

)

 

 

7,332

 

Income tax expense (benefit)

 

 

(60

)

 

 

122

 

Net income (loss)

 

 

(1,372

)

 

 

7,210

 

Less: Net income attributable to noncontrolling interest

 

 

8

 

 

 

8

 

Net income (loss) attributable to limited partners

 

 

(1,380

)

 

 

7,202

 

Less: Distributions declared to preferred unitholders

 

 

(3,060

)

 

 

(2,894

)

Less: General partner's incentive distribution rights

 

 

 

 

 

(197

)

Less: Accretion of Series C preferred units

 

 

(97

)

 

 

(356

)

Net income (loss) attributable to common unitholders

 

$

(4,537

)

 

$

3,755

 

Net income (loss) per common unit

 

 

 

 

 

 

 

 

Common units – basic

 

$

(0.18

)

 

$

0.15

 

Common units – diluted

 

$

(0.18

)

 

$

0.15

 

Weighted average common units outstanding

 

 

 

 

 

 

 

 

Common units – basic

 

 

25,461

 

 

 

25,338

 

Common units – diluted

 

 

25,461

 

 

 

25,338

 

Cash distributions declared per common unit

 

$

0.2000

 

 

$

0.3675

 

 

See accompanying notes to consolidated financial statements.

4


Table of Contents 

 

Landmark Infrastructure Partners LP

Consolidated Statements of Comprehensive Income (Loss)

(in thousands)

 

 

 

Three Months Ended March 31,

 

 

 

2020

 

 

2019

 

Net income (loss)

 

$

(1,372

)

 

$

7,210

 

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

Foreign currency translation adjustment

 

 

(8,131

)

 

 

1,743

 

Other comprehensive income (loss):

 

 

(8,131

)

 

 

1,743

 

Comprehensive income (loss)

 

 

(9,503

)

 

 

8,953

 

Less: Comprehensive income attributable to noncontrolling interest

 

 

8

 

 

 

8

 

Comprehensive income (loss) attributable to limited partners

 

$

(9,511

)

 

$

8,945

 

 

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

 

 

Units -

 

 

Units -

 

 

Common

 

 

Unitholders -

 

 

Unitholders -

 

 

General

 

 

Comprehensive

 

 

Noncontrolling

 

 

Total

 

 

 

Series C

 

 

 

Units

 

 

Series A

 

 

Series B

 

 

Unitholders

 

 

Series A

 

 

Series B

 

 

Partner

 

 

Income (loss)

 

 

Interest

 

 

Equity

 

 

 

Preferred

 

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 Equity And Mezzanine Equity

(in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

Mezzanine

 

 

 

 

 

 

 

Preferred

 

 

Preferred

 

 

 

 

 

 

Preferred

 

 

Preferred

 

 

 

 

 

 

Other

 

 

 

 

 

 

 

 

 

 

 

Equity -

 

 

 

Common

 

 

Units -

 

 

Units -

 

 

Common

 

 

Unitholders -

 

 

Unitholders -

 

 

General

 

 

Comprehensive

 

 

Noncontrolling

 

 

Total

 

 

 

Series C

 

 

 

Units

 

 

Series A

 

 

Series B

 

 

Unitholders

 

 

Series A

 

 

Series B

 

 

Partner

 

 

Income (loss)

 

 

Interest

 

 

Equity

 

 

 

Preferred

 

Balance as of December 31, 2019

 

 

25,353

 

 

 

1,722

 

 

 

2,545

 

 

$

382,581

 

 

$

40,210

 

 

$

60,926

 

 

$

(162,277

)

 

$

17

 

 

$

201

 

 

$

321,658

 

 

 

$

47,666

 

Adoption of ASU 2016-13

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(76

)

 

 

 

 

 

 

 

 

(76

)

 

 

 

 

Foreign currency translation adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(8,131

)

 

 

 

 

 

(8,131

)

 

 

 

 

Issuance of Common Units, net

 

 

110

 

 

 

 

 

 

 

 

 

1,510

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,510

 

 

 

 

 

Issuance of Preferred Units, net

 

 

 

 

 

23

 

 

 

84

 

 

 

 

 

 

575

 

 

 

2,088

 

 

 

 

 

 

 

 

 

 

 

 

2,663

 

 

 

 

 

Distributions

 

 

 

 

 

 

 

 

 

 

 

(9,360

)

 

 

(871

)

 

 

(1,319

)

 

 

 

 

 

 

 

 

 

(8

)

 

 

(11,558

)

 

 

 

(870

)

Capital contribution from Sponsor

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,101

 

 

 

 

 

 

 

 

 

1,101

 

 

 

 

 

Unit-based compensation

 

 

7

 

 

 

 

 

 

 

 

 

120

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

120

 

 

 

 

 

Net income (loss)

 

 

 

 

 

 

 

 

 

 

 

(4,537

)

 

 

871

 

 

 

1,319

 

 

 

 

 

 

 

 

 

8

 

 

 

(2,339

)

 

 

 

967

 

Balance as of March 31, 2020

 

 

25,470

 

 

 

1,745

 

 

 

2,629

 

 

$

370,314

 

 

$

40,785

 

 

$

63,014

 

 

$

(161,252

)

 

$

(8,114

)

 

$

201

 

 

$

304,948

 

 

 

$

47,763

 

 

 

See accompanying notes to consolidated financial statements.

 

 

 

 


 

7


Table of Contents 

 

Landmark Infrastructure Partners LP

Consolidated Statements of Cash Flows

(in thousands)

 

 

 

Three Months Ended March 31,

 

 

 

2020

 

 

2019

 

Operating activities

 

 

 

 

 

 

 

 

Net income (loss)

 

$

(1,372

)

 

$

7,210

 

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

 

 

 

 

 

 

 

 

Unit-based compensation

 

 

120

 

 

 

130

 

Unrealized loss on derivatives

 

 

7,291

 

 

 

2,762

 

Loss on early extinguishment of debt

 

 

2,231

 

 

 

 

Depreciation and amortization expense

 

 

3,892

 

 

 

3,517

 

Amortization of above- and below- market lease, net

 

 

(236

)

 

 

(224

)

Amortization of deferred loan costs

 

 

497

 

 

 

665

 

Amortization of discount on secured notes

 

 

92

 

 

 

93

 

Receivables interest accretion

 

 

 

 

 

(3

)

Impairments

 

 

82

 

 

 

204

 

Gain on sale of real property interests

 

 

 

 

 

(5,862

)

Adjustment for uncollectible accounts

 

 

82

 

 

 

5

 

Equity (income) loss from unconsolidated joint venture

 

 

(150

)

 

 

55

 

Return on investment in unconsolidated joint venture

 

 

675

 

 

 

1,482

 

Foreign currency transaction (gain) loss

 

 

(3,363

)

 

 

21

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Rent receivables

 

 

(499

)

 

 

(899

)

Accounts payable and accrued liabilities

 

 

698

 

 

 

(416

)

Deferred rent

 

 

102

 

 

 

110

 

Prepaid rent

 

 

1,029

 

 

 

466

 

Due from Landmark and affiliates

 

 

(183

)

 

 

(598

)

Other assets

 

 

(1,525

)

 

 

(551

)

Net cash provided by operating activities

 

 

9,463

 

 

 

8,167

 

Investing activities

 

 

 

 

 

 

 

 

Acquisition of land

 

 

 

 

 

(3,346

)

Acquisition of real property interests and development activities

 

 

(3,989

)

 

 

(12,159

)

Proceeds from sale of real property interests

 

 

 

 

 

13,385

 

Repayments of receivables

 

 

142

 

 

 

150

 

Net cash used in investing activities

 

 

(3,847

)

 

 

(1,970

)

Financing activities

 

 

 

 

 

 

 

 

Proceeds from the issuance of Common Units, net

 

 

1,510

 

 

 

 

Proceeds from the issuance of Preferred Units, net

 

 

2,663

 

 

 

 

Proceeds from revolving credit facility

 

 

7,000

 

 

 

10,000

 

Proceeds from the issuance of secured notes

 

 

170,000

 

 

 

 

Principal payments on revolving credit facility

 

 

(59,000

)

 

 

 

Principal payments on secured notes

 

 

(108,427

)

 

 

(1,361

)

Payments on finance leases

 

 

(4

)

 

 

 

Deferred loan costs

 

 

(1,559

)

 

 

(128

)

Capital contribution to fund general and administrative expense reimbursement

 

 

896

 

 

 

764

 

Distributions to preferred unitholders

 

 

(3,098

)

 

 

(2,919

)

Distributions to common unitholders

 

 

(9,360

)

 

 

(9,312

)

Distributions to non-controlling interests

 

 

(8

)

 

 

(8

)

Net cash provided by (used in) financing activities

 

 

613

 

 

 

(2,964

)

Effect of changes in foreign currency exchange rates on cash, cash equivalents and restricted cash

 

 

(592

)

 

 

15

 

Net increase in cash, cash equivalents and restricted cash

 

 

5,637

 

 

 

3,248

 

Cash, cash equivalents and restricted cash at beginning of the period

 

 

13,065

 

 

 

7,780

 

Cash, cash equivalents and restricted cash at end of the period

 

$

18,702

 

 

$

11,028

 

 

See accompanying notes to consolidated financial statements.

8


Table of Contents 

 

Landmark Infrastructure Partners LP

Notes to Consolidated Financial Statements

 

 

1. Business

Landmark Infrastructure Partners LP (the “Partnership”) was formed on July 28, 2014 by Landmark Dividend LLC (“Landmark” or “Sponsor”) to acquire, develop, own and manage a portfolio of real property interest and infrastructure assets that are leased to companies in the wireless communication, outdoor advertising and renewable power generation industries. The Partnership is a master limited partnership organized in the State of Delaware and has been publicly traded since its initial public offering on November 19, 2014 (the “IPO”). On July 31, 2017, the Partnership completed changes to its organizational structure by transferring substantially all of its assets to a consolidated subsidiary, Landmark Infrastructure Inc., a Delaware corporation (“REIT Subsidiary”), which elected to be taxed as a REIT commencing with its taxable year ending December 31, 2017. References in this report to “Landmark Infrastructure Partners LP,” the “partnership,” “we,” “our,” “us,” or like terms refer to Landmark Infrastructure Partners LP.

Our operations are managed by the board of directors and executive officers of Landmark Infrastructure Partners GP LLC, our general partner (the “General Partner”). As of March 31, 2020, the Sponsor and affiliates own (a) our general partner; (b) 3,415,405 common units representing limited partnership interest in the Partnership (“Common Units”); and (c) all of our incentive distribution rights (“IDRs”).

2. Basis of Presentation and Summary of Significant Accounting Policies

Basis of Presentation and Principles of Consolidated Financial Statements

On an ongoing basis, we evaluate each legal entity that is not wholly owned by us in accordance with the consolidation guidance. The accompanying consolidated financial statements include the accounts of the Partnership, its wholly-owned subsidiaries and those entities in which it has a controlling interest. Investments in entities that the Partnership does not control are accounted for using the equity or cost method, depending upon the Partnership’s ability to exercise significant influence over operating and financial policies.

The unaudited interim consolidated financial statements have been prepared in conformity with GAAP as established by the Financial Accounting Standards Board (the “FASB”) in the Accounting Standards Codification (“ASC”) including modifications issued under the Accounting Standards Updates (“ASUs”) and with the instructions to Form 10-Q and Article 10 of Regulation S-X of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The accompanying unaudited financial statements include, in our opinion, all adjustments, consisting of normal recurring adjustments, necessary to present fairly the unaudited financial information set forth therein. Financial information for the three months ended March 31, 2020 and 2019 included in these Notes to the Consolidated Financial Statements is derived from our unaudited financial statements. Certain notes and other information have been condensed or omitted from the interim financial statements included in this report. Operating results for the three months ended March 31, 2020 are not necessarily indicative of the results that may be expected for the year ending December 31, 2020. All references to tenant sites are outside the scope of our independent registered public accounting firm’s review of our financial statements in accordance with the public company accounting oversight board (U.S.).

Use of Estimates

The preparation of the consolidated financial statements, in conformity with GAAP, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

 

 

9


Table of Contents 

 

Income Taxes

The Partnership is generally not subject to federal, state or local income taxes, except for our subsidiary Landmark Infrastructure Asset OpCo LLC (“Asset OpCo”) and our foreign subsidiaries. Asset OpCo conducts certain activities that may not generate qualifying income and will be treated as a corporation for U.S. federal income tax purposes. Each limited partner is responsible for the tax liability, if any, related to its proportionate share of the Partnerships’ taxable income or loss. Asset OpCo and certain consolidated foreign subsidiaries of the Partnership conduct certain activities in international locations that generate taxable income and will be treated as taxable entities. Additionally, our consolidated REIT subsidiary, Landmark Infrastructure Inc., a Delaware corporation, files as a corporation for U.S. federal income tax purposes. The REIT Subsidiary has elected to be treated as a REIT and we believe that it has operated in a manner that has allowed the REIT Subsidiary to qualify as a REIT for federal income tax purposes, and the REIT Subsidiary intends to continue operating in such manner. If the REIT Subsidiary fails to qualify as a REIT in any taxable year, and is unable to avail itself of certain savings provisions, all of its taxable income would be subject to federal income tax at regular corporate rates. The Partnership may also be subject to various non-income taxes, filing fees, and franchise taxes in various states that are reflected in operating expenses. The Partnership follows the requirements of ASC Topic 740, Income Taxes (“ASC 740”), relating to uncertain tax positions. Based on its evaluation under ASC 740, the Partnership has concluded that there are no signif