LMRK_Current Folio_10K

Table of Contents

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 


FORM 10-K


(Mark One)

 

 

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2014

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.)

2141 Rosecrans Avenue, Suite 2100,

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:

Common Units Representing Limited Partner Interests
(Title of each class)

NASDAQ Global Market
(Name of each exchange on which registered)

 

Securities Registered Pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes      No  

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.    Yes      No      

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 and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes      No  

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.    

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Large accelerated filer  

 

Accelerated filer  

 

Non-accelerated filer  

 

Smaller reporting company  

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  

As of June 30, 2014, the last business day of the registrant’s most recently completed second fiscal quarter, the registrant’s equity was not listed on any domestic exchange or over-the-counter market.

The registrant had 4,703,675 common units and 3,135,109 subordinated units outstanding at February 20, 2015.

 

DOCUMENTS INCORPORATED BY REFERENCE

None

 

 


 

Table of Contents

Table of Contents

 

 

 

 

 

Page
Number

 

PART I

 

Item 1. 

Business and Properties

4

Item 1A. 

Risk Factors

24

Item 1B. 

Unresolved Staff Comments

50

Item 2.

Properties

50

Item 3. 

Legal Proceedings

51

Item 4. 

Mine Safety Disclosures

51

 

PART II

 

Item 5. 

Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

51

Item 6. 

Selected Financial Data

56

Item 7. 

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

60

Item 7A. 

Quantitative and Qualitative Disclosures About Market Risk

76

Item 8. 

Financial Statements and Supplementary Data

76

Item 9. 

Changes in and Disagreements with Accountants on Accounting and Financial Disclosures

76

Item 9A. 

Controls and Procedures

77

Item 9B. 

Other Information

77

 

PART III

 

Item 10. 

Directors, Executive Officers and Corporate Governance

77

Item 11. 

Executive Compensation

84

Item 12. 

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

85

Item 13. 

Certain Relationships and Related Transactions, and Director Independence

86

Item 14. 

Principal Accountant Fees and Services

91

 

PART IV

 

Item 15. 

Exhibits, Financial Statement Schedules

93

 

 

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Unless the context otherwise requires, references in this report to Landmark Infrastructure Partners LP, our partnership, we, our, us, or like terms, when used in a historical context (periods prior to November 19, 2014), refer to Landmark Infrastructure Partners LP Predecessor, which we sometimes refer to as our Predecessor. When used in the present tense or future tense, these terms refer to Landmark Infrastructure Partners LP and its subsidiaries. References to our general partner refer to Landmark Infrastructure Partners GP LLC. References to Landmark refer collectively to Landmark Dividend LLC and its subsidiaries, other than us, our subsidiaries and our general partner. References to Fund A refer to Landmark Dividend Growth Fund-A LLC and references to Fund D refer to Landmark Dividend Growth Fund-D LLC. References to the Contributing Landmark Funds refer to Fund A and Fund D, collectively and references to the Remaining Landmark Funds, which have granted us a right of first offer on their assets, refer to Landmark Dividend Growth Fund-C LLC, Landmark Dividend Growth Fund-E LLC, Landmark Dividend Growth Fund-F LLC, Landmark Dividend Growth Fund-G LLC and Landmark Dividend Growth Fund-H LLC, collectively. 

Some of the information in this Annual Report on Form 10-K may contain forward‑looking statements. Forward‑looking statements give our current expectations, contain projections of results of operations or of financial condition, or forecasts of future events. Words such as may,” “will,” “assume,” “forecast,” “position,” “predict,” “strategy,” “expect,” “intend,” “plan,” “estimate,” “anticipate,” “believe,” “project,” “budget,” “potential,” or “continue,” and similar expressions are used to identify forward‑looking statements. They can be affected by and involve assumptions used or known or unknown risks or uncertainties. Consequently, no forward‑looking statements can be guaranteed. When considering these forward‑looking statements, you should keep in mind the risk factors and other cautionary statements in this Annual Report on Form 10-K. Actual results may vary materially. You are cautioned not to place undue reliance on any forward‑looking statements. You should also understand that it is not possible to predict or identify all such factors and should not consider the following list to be a complete statement of all potential risks and uncertainties. The risk factors and other factors noted throughout this Annual Report on Form 10-K could cause our actual results to differ materially from the results contemplated by such forward‑looking statements, including the following:

·

the number of real property interests that we are able to acquire, and whether we are able to complete such acquisitions on favorable terms, which could be adversely affected by, among other things, general economic conditions, operating difficulties, and competition;

·

the prices we pay for our acquisitions of real property;

·

our management’s and our general partner’s conflicts of interest with our own;

·

the rent increases we are able to negotiate with our tenants, and the possibility of further consolidation among a relatively small number of significant tenants in the wireless communication and outdoor advertising industries;

·

our relative lack of experience with real property interest acquisition in the renewable power segment and abroad;

·

changes in the price and availability of real property interests;

·

changes in prevailing economic conditions;

·

unanticipated cancellations of tenant leases;

·

a decrease in our tenants’ demand for real property interest due to, among other things, technological advances or industry consolidation;

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·

inclement or hazardous weather conditions, including flooding, and the physical impacts of climate change, unanticipated ground, grade or water conditions, and other environmental hazards;

·

inability to acquire or maintain necessary permits;

·

changes in laws and regulations (or the interpretation thereof), including zoning regulations;

·

difficulty collecting receivables and the potential for tenant bankruptcy;

·

additional difficulties and expenses associated with being a publicly traded partnership;

·

our ability to borrow funds and access capital markets, and the effects of the fluctuating interest rate on our existing and future borrowings;

·

restrictions in our revolving credit facility on our ability to issue additional debt or equity or pay distributions; and

·

certain factors discussed elsewhere in this Annual Report on Form 10-K.

All forward‑looking statements are expressly qualified in their entirety by the foregoing cautionary statements.

 

PART I

ITEM 1. Business and Properties

Formation and Initial Public Offering

 

We are a Delaware limited partnership formed in July 2014 by Landmark to acquire, own and manage a portfolio of real property interests that we lease to companies in the wireless communication, outdoor advertising and renewable power generation industries. On November 19, 2014, we completed our initial public offering (the “IPO”)  and issued 2,750,000 common units representing limited partner interests in us, including 100,000 common units issued upon exercise of the underwriters’ over-allotment option. Our common units are listed on the NASDAQ Global Market under the symbol "LMRK". See Notes to Consolidated and Combined Financial Statements for further discussion of the IPO.

 

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The following simplified diagram depicts our organizational structure and ownership percentages after the IPO.

 

Picture 1


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Overview

We are a growth‑oriented master limited partnership formed by Landmark to acquire, own and manage a portfolio of real property interests that we lease to companies in the wireless communication, outdoor advertising and renewable power generation industries. Our real property interests underlie our tenants’ infrastructure assets, which include freestanding cellular towers and rooftop wireless sites, billboards and wind turbines. These assets are essential to the operations and profitability of our tenants. We seek to acquire real property interests subject to effectively triple net lease arrangements containing contractual rent increase clauses, or “rent escalators,” which we believe provide us with stable, predictable and growing cash flow.

Our real property interests consist of a diversified portfolio of long‑term and perpetual easements, tenant lease assignments and, to a lesser extent, fee simple properties located in 42 states and the District of Columbia. These real property interests entitle us to receive rental payments from leases on our 701 tenant sites. Approximately 88% of our leased tenant sites are leased to large, publicly traded companies (or their affiliates) that have a national footprint. These tenants, which we refer to as our “Tier 1” tenants, are comprised of AT&T Mobility, Sprint, T‑Mobile and Verizon in the wireless carrier industry, American Tower, Crown Castle and SBA Communications in the cellular tower industry and Outfront Media (formerly CBS Outdoor), Clear Channel Outdoor and Lamar Advertising in the outdoor advertising industry.

We believe the terms of our tenant lease arrangements provide us with stable, predictable and growing cash flow that will support consistent, growing distributions to our unitholders. Substantially all of our tenant lease arrangements are effectively triple net, meaning that our tenants or the underlying property owners are contractually responsible for property‑level operating expenses, including maintenance capital expenditures, property taxes and insurance. Over 95% of our tenant leases have contractual rent escalators, and some of our tenant leases contain revenue‑sharing provisions in addition to the base monthly or annual rental payments. In addition, we believe the physical infrastructure assets at our tenant sites are essential to the ongoing operations and profitability of our tenants. When combined with the challenges and costs of relocating these infrastructure assets and the key strategic locations of our real property interests, we expect continued high tenant retention and occupancy rates. As of December 31, 2014, we had a 99% occupancy rate, with 695 of our 701 total available tenant sites leased.

We benefit significantly from our relationship with Landmark, our sponsor. Landmark, a private company formed in 2010, is one of the largest acquirers of real property interests underlying the operationally essential infrastructure assets in the wireless communication, outdoor advertising and renewable power generation industries. Our initial assets and liabilities were contributed to us from Fund A and Fund D, two private investment funds sponsored, managed and controlled by Landmark. As of December 31, 2014, Landmark controlled 918 additional tenant sites through the Remaining Landmark Funds. The Remaining Landmark Funds have granted us a right of first offer on real property interests that they currently own or acquire in the future before selling or transferring those assets to any third party. We refer to these real property interests as the “right of first offer assets.” We believe Landmark’s asset acquisition and management platform will benefit us by providing us with drop‑down acquisition opportunities from Landmark’s substantial and growing acquisition pipeline, as well as the capability to make direct acquisitions from third parties. Please read “Our Relationship with Landmark.”

We conduct business through three reportable business segments: Wireless Communication, Outdoor Advertising and Renewable Power Generation. Our reportable segments are strategic business units that offer different products and services. They are commonly managed, as all of these businesses require similar marketing and business strategies. We evaluate our segments based on revenue because substantially all of our tenant lease arrangements are effectively triple net. We believe this measure provides investors relevant and useful information because it is presented on an unlevered basis. See Notes to the Consolidated and Combined Financial Statements for additional information on our business segments.

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Our Portfolio of Real Property Interests

Our portfolio of property interests consists primarily of (i) long‑term and perpetual easements combined with lease assignment contracts, which we refer to as our “lease assignments,” (ii) lease assignments without easements and (iii) to a lesser extent, properties we own in fee simple. In connection with each real property interest, we have also acquired the rights to receive payment under pre‑existing ground leases from property owners, which we refer to as our “tenant leases.” Under our easements, property owners have granted us the right to use and lease the space occupied by our tenants, and when we have not been granted easements, we have acquired economic rights under lease assignments that are substantially similar to the economic rights granted under our easements, including the right to re‑lease the same space if the tenant lease expires or terminates.

The table below provides an overview of our portfolio of real property interests as of December 31, 2014.

Our Real Property Interests

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Available Tenant

 

Leased Tenant

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sites(1)

 

Sites

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average

 

 

 

Average

 

 

 

 

Average

 

 

 

 

 

 

 

 

 

 

 

 

Remaining

 

 

 

Remaining

 

 

 

 

Monthly

 

 

 

 

Percentage

 

 

Number of

 

 

 

Property

 

 

 

Lease

 

Tenant Site

 

Effective Rent

 

Quarterly

 

of Quarterly

 

 

Infrastructure

 

 

 

Interest

 

 

 

Term

 

Occupancy

 

Per Tenant

 

Rental

 

Rental

Real Property Interest

  

Locations(1)

  

Number

  

(Years)

  

Number

  

(Years)(2)

  

Rate(3)(4)

  

Site(5)(6)

  

Revenue(6)

  

Revenue(6)

Tenant Lease Assignment with Underlying Easement

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Wireless Communication

 

356 

 

480 

 

75.0 

(7)

474 

 

19.1 

 

 

 

 

 

 

 

$

2,338,636 

 

68 

%

Outdoor Advertising

 

84 

 

111 

 

86.9 

(7)

111 

 

14.0 

 

 

 

 

 

 

 

 

429,024 

 

12 

%

Renewable Power Generation

 

 

 

29.5 

 

 

23.1 

 

 

 

 

 

 

 

 

8,944 

 

 —

%

Subtotal

 

441 

 

593 

 

77.1 

(7)

587 

 

18.1 

 

 

 

 

 

 

 

$

2,776,604 

 

80 

%

Tenant Lease Assignment only(8)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Wireless Communication

 

64 

 

95 

 

54.8 

 

95 

 

18.2 

 

 

 

 

 

 

 

$

579,710 

 

17 

%

Outdoor Advertising

 

 

 

81.9 

 

 

17.1 

 

 

 

 

 

 

 

 

37,367 

 

%

Subtotal

 

71 

 

102 

 

56.6 

 

102 

 

18.1 

 

 

 

 

 

 

 

$

617,077 

 

18 

%

Tenant Lease on Fee Simple

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Wireless Communication

 

 

 

99.0 

(7)

 

11.5 

 

 

 

 

 

 

 

$

21,817 

 

%

Outdoor Advertising

 

 

 

99.0 

(7)

 

18.5 

 

 

 

 

 

 

 

 

28,120 

 

%

Subtotal

 

 

 

99.0 

(7)

 

12.7 

 

 

 

 

 

 

 

$

49,937 

 

%

Total 

 

515 

 

701 

 

74.3 

(9)

695 

 

18.1 

 

 

 

 

 

 

 

$

3,443,618 

 

100 

%

Aggregate Portfolio

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Wireless Communication

 

422 

 

580 

 

71.9 

 

574 

 

18.9 

 

99 

%

 

$

1,642 

 

$

2,940,163 

 

86 

%

Outdoor Advertising

 

92 

 

119 

 

86.7 

 

119 

 

14.2 

 

100 

%

 

 

1,348 

 

 

494,511 

 

14 

%

Renewable Power Generation

 

 

 

29.5 

 

 

23.1 

 

100 

%

 

 

1,491 

 

 

8,944 

 

 —

%

Total 

 

515 

 

701 

 

74.3 

(9)

695 

 

18.1 

 

99 

%

 

$

1,592 

 

$

3,443,618 

 

100 

%

 


(1)

“Available Tenant Sites” means the number of individual sites that could be leased. For example, if we have an easement on a single rooftop, on which three different tenants can lease space from us, this would be counted as three “tenant sites,” and all three tenant sites would be at a single infrastructure location with the same address.

(2)

Assumes the exercise of all remaining renewal options of tenant leases. Assuming no exercise of renewal options, the average remaining lease terms for our wireless communication, outdoor advertising, renewable power generation and aggregate portfolios as of December 31, 2014 were 2.6, 7.2, 23.1 and 3.5 years, respectively.

(3)

Represents number of leased tenant sites divided by number of available tenant sites.

(4)

Occupancy and average monthly effective rent per tenant site are shown only on an aggregate portfolio basis by industry.

(5)

Represents total monthly revenue excluding the impact of amortization of above and below market lease intangibles divided by the number of leased tenant sites.

(6)

Represents GAAP rental revenue recognized under existing tenant leases for the three months ended December 31, 2014. Excludes interest income on receivables.

(7)

Fee simple ownership and perpetual easements are shown as having a term of 99 years for purposes of calculating the average remaining term.

(8)

Reflects “springing lease agreements” whereby the cancellation or nonrenewal of a tenant lease entitles us to enter into a new ground lease with the property owner (up to the full property interest term) and a replacement tenant lease. The remaining lease assignment term is, therefore, equal to or longer than the remaining lease term. Also represents properties for which the “springing lease” feature has been exercised and has been replaced by a lease for the remaining lease term.

(9)

Excluding perpetual ownership rights, the average remaining property interest term on our tenant sites is approximately 57 years.

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Our real property interests entitle us to receive rental payments from tenant leases in the wireless communication, outdoor advertising and renewable power generation industries. The table below summarizes our Tier 1 tenants which comprised approximately 88% of our tenants as of December 31, 2014.

Our Tier 1 Tenants by Industry

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Wireless Communication Industry

 

Outdoor Advertising Industry

Wireless Carriers

 

Tower Companies

 

 

 

 

 

 

 

% of Total

 

 

 

% of Total

 

 

 

% of Total

 

 

Leased

 

 

 

Leased

 

 

 

Leased

Tenant

 

Tenant Sites

 

Tenant

 

Tenant Sites

 

Tenant

 

Tenant Sites

T-Mobile

 

16 

%

 

Crown Castle

 

15 

%

 

Lamar Advertising

 

%

Verizon

 

15 

%

 

American Tower

 

%

 

Outfront Media

 

%

AT&T Mobility

 

12 

%

 

SBA Communications

 

%

 

Clear Channel Outdoor

 

%

Sprint

 

10 

%

 

 

 

 

 

 

 

 

 

 

Total 

 

53 

%

 

   Total 

 

22 

%

 

   Total 

 

13 

%

 

Our real property interests underlie a diverse range of tenant structures. We evaluate assets based on a variety of attributes, including, but not limited to, the marketability of the underlying title, the stability of the rental cash flow stream and opportunity for rent increases, tenant quality, the desirability of the structure’s geographic location, the importance of the structure to the ongoing operations and profitability of our tenants and the challenge and costs associated with tenants vacating sites. In certain instances, we lease a tenant site for our tenant’s base station and equipment, but not the tenant’s antenna array located on infrastructure owned by a third party. We refer to this type of arrangement as an “equipment only” lease. Within the wireless communication industry, our tenants’ structure types include rooftop sites, wireless towers (including monopoles, self supporting towers, stealth towers and guyed towers), other structures (including, for example, water towers and church steeples) and equipment only sites. In the outdoor advertising industry, our tenants’ structure types include both static and digital billboards. Our real property interests in the renewable power generation industry currently underlie wind turbines but in the future we expect to also acquire real property interests that underlie solar arrays.

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The table below presents an overview of the structures underlying our real property interests, as of December 31, 2014:

Our Real Property Interests by Structure Type

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Available Tenant

 

Leased Tenant

 

 

 

 

 

 

 

 

 

 

Sites(1)

 

Sites

 

 

 

 

 

 

 

 

 

 

 

 

Average

 

 

 

Average

 

 

 

 

 

 

 

 

 

 

 

 

Remaining

 

 

 

Remaining

 

 

 

 

Percentage

 

 

Number of

 

 

 

Property

 

 

 

Lease

 

Quarterly

 

of Quarterly

 

 

Infrastructure

 

 

 

Interest

 

 

 

Term

 

Rental

 

Rental

Structure Type

 

Locations(1)

 

Number

 

(Years)(2)

 

Number

 

(Years)(3)

 

Revenue(4)

 

Revenue(4)

Rooftops

    

141 

    

217 

    

64.6 

    

214 

    

17.3 

    

$

1,360,206 

    

40 

%

Towers

 

187 

 

214 

 

74.9 

 

212 

 

19.5 

 

 

948,016 

 

28 

%

Billboards

 

92 

 

119 

 

86.7 

 

119 

 

14.2 

 

 

494,511 

 

14 

%

Other structures

 

78 

 

86 

 

81.7 

 

86 

 

22.1 

 

 

355,981 

 

10 

%

Equipment only(5)

 

16 

 

63 

 

73.4 

 

62 

 

17.8 

 

 

275,960 

 

%

Wind turbines

 

 

 

29.5 

 

 

23.1 

 

 

8,944 

 

 —

%

Total

 

515 

 

701 

 

74.3 

(6)

695 

 

18.1 

 

$

3,443,618 

 

100 

%

 


(1)

“Available Tenant Sites” means the number of individual sites that could be leased. For example, if we have an easement on a single rooftop, on which three different tenants can lease space from us, this would be counted as three “tenant sites,” and all three tenant sites would be at a single infrastructure location with the same address.

(2)

Fee simple ownership and perpetual easements are indicated as having a term of 99 years for purposes of calculating the average remaining term. Also includes “springing lease agreements” whereby the cancellation or nonrenewal of a tenant lease entitles us to enter into a new ground lease with the property owner (up to the full term) and a replacement tenant lease. The remaining lease assignment term is, therefore, in many cases, higher than the remaining tenant lease term.

(3)

Assumes the exercise of all remaining renewal options. Assuming no exercise of renewal options, the average remaining lease terms for our wireless communication, outdoor advertising, renewable power generation and total portfolio as of December 31, 2014 were 2.6, 7.2, 23.1 and 3.5 years, respectively.

(4)

Represents GAAP rental revenue recognized under existing tenant leases for the three months ended December 31, 2014. Excludes interest income on receivables.

(5)

In certain instances, we lease our tenant site for our tenant’s base station and equipment, but the tenant’s antenna array and related hardware are located on infrastructure owned by a third party. We refer to this type of arrangement as an “equipment only” lease. At 31 infrastructure locations, we have leased space for equipment together with other structures.

(6)

Excluding perpetual ownership rights, the average remaining property interest term on our tenant sites is approximately 57 years.

We are geographically diversified with assets located in 42 states, plus the District of Columbia, and no single state accounted for more than 15% of our tenant sites as of December 31, 2014. Additionally, the majority of our wireless communication and outdoor advertising assets are located in major cities, significant intersections, and traffic arteries in the United States that benefit from high urban density, favorable demographic trends, strong traffic counts and strict zoning restrictions with legacy zoning rights (commonly referred to as “grandfather clauses.”) These attributes enhance the long‑term value of our real property interests, as our wireless communication and outdoor advertising tenants are focused on placing their assets in dense areas with large populations and along high‑traffic corridors. Additionally, local zoning regulations often restrict the construction of new cellular towers, rooftop wireless structures and outdoor advertising and billboard structures, creating barriers to entry and a supply shortage. We believe this leads to improved value of our assets and further increases the likelihood for continued high occupancy.

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Our Real Property Interest Locations(1)

The table below summarizes our real property interests by state. Our two renewable power generation tenant sites in Kansas are included in the “Total” column.

Our Real Property Interests by State

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Wireless Communication

 

Outdoor Advertising

 

Total(1)

 

 

Number of

 

 

 

 

Number of

 

 

 

 

Number of

 

 

 

 

Percentage of

 

 

Available

 

Quarterly

 

Available

 

Quarterly

 

Available

 

Quarterly

 

Quarterly

 

 

Tenant

 

Rental

 

Tenant

 

Rental

 

Tenant

 

Rental

 

Rental

 

 

Sites

 

Revenue(2)

 

Sites

 

Revenue(2)

 

Sites

 

Revenue(2)

 

Revenue

Alabama

    

    

$

9,238 

    

    

$

9,174 

    

    

$

18,412 

    

0.5 

%

Alaska

 

 

 

3,314 

 

 —

 

 

 —

 

 

 

3,314 

 

0.1 

%

Arizona

 

24 

 

 

100,699 

 

 

 

6,160 

 

25 

 

 

106,859 

 

3.1 

%

Arkansas

 

 

 

18,369 

 

 —

 

 

 —

 

 

 

18,369 

 

0.5 

%

California

 

87 

 

 

454,422 

 

 

 

40,423 

 

92 

 

 

494,845 

 

14.4 

%

Colorado

 

15 

 

 

83,999 

 

 

 

9,429 

 

19 

 

 

93,428 

 

2.7 

%

Connecticut

 

 

 

58,047 

 

 —

 

 

 —

 

 

 

58,047 

 

1.7 

%

District of Columbia

 

 

 

6,234 

 

 —

 

 

 —

 

 

 

6,234 

 

0.2 

%

Florida

 

30 

 

 

181,356 

 

12 

 

 

40,056 

 

42 

 

 

221,412 

 

6.4 

%

Georgia

 

 

 

43,909 

 

20 

 

 

76,254 

 

28 

 

 

120,163 

 

3.5 

%

Illinois

 

46 

 

 

258,505 

 

14 

 

 

105,781 

 

60 

 

 

364,286 

 

10.6 

%

Indiana

 

 

 

16,505 

 

 

 

7,600 

 

 

 

24,105 

 

0.7 

%

Iowa

 

 

 

4,093 

 

 

 

2,250 

 

 

 

6,343 

 

0.2 

%

Kansas

 

 

 

11,667 

 

 

 

2,100 

 

 

 

22,711 

(1)

0.7 

% (1)

Kentucky

 

 —

 

 

 —

 

 

 

1,500 

 

 

 

1,500 

 

 —

%

Louisiana

 

 

 

12,479 

 

 

 

1,298 

 

 

 

13,777 

 

0.4 

%

Maine

 

 

 

9,173 

 

 —

 

 

 —

 

 

 

9,173 

 

0.3 

%

Maryland

 

 

 

16,158 

 

 —

 

 

 —

 

 

 

16,158 

 

0.5 

%

Massachusetts

 

34 

 

 

181,366 

 

 —

 

 

 —

 

34 

 

 

181,366 

 

5.3 

%

Michigan

 

13 

 

 

59,918 

 

 

 

13,482 

 

22 

 

 

73,400 

 

2.1 

%

Minnesota

 

 

 

13,971 

 

 

 

7,913 

 

 

 

21,884 

 

0.6 

%

Mississippi

 

 

 

4,026 

 

 —

 

 

 —

 

 

 

4,026 

 

0.1 

%

Missouri

 

14 

 

 

67,724 

 

21 

 

 

67,912 

 

35 

 

 

135,636 

 

3.9 

%

Montana

 

 

 

4,570 

 

 —

 

 

 —

 

 

 

4,570 

 

0.1 

%

Nebraska

 

 —

 

 

 —

 

 

 

3,448 

 

 

 

3,448 

 

0.1 

%

Nevada

 

39 

 

 

131,400 

 

 

 

3,600 

 

40 

 

 

135,000 

 

3.9 

%

New Jersey

 

53 

 

 

385,370 

 

 —

 

 

 —

 

53 

 

 

385,370 

 

11.3 

%

New Mexico

 

 

 

13,700 

 

 —

 

 

 —

 

 

 

13,700 

 

0.4 

%

New York

 

48 

 

 

324,862 

 

 —

 

 

 —

 

48 

 

 

324,862 

 

9.4 

%

North Carolina

 

 

 

10,967 

 

 

 

5,628 

 

 

 

16,595 

 

0.5 

%

North Dakota

 

 

 

1,078 

 

 —

 

 

 —

 

 

 

1,078 

 

 —

%

Ohio

 

10 

 

 

44,839 

 

 

 

22,607 

 

16 

 

 

67,446 

 

2.0 

%

Oklahoma

 

 

 

27,831 

 

 —

 

 

 —

 

 

 

27,831 

 

0.8 

%

Oregon

 

13 

 

 

57,092 

 

 

 

27,428 

 

14 

 

 

84,520 

 

2.5 

%

Pennsylvania

 

14 

 

 

58,114 

 

 

 

15,378 

 

16 

 

 

73,492 

 

2.1 

%

South Carolina

 

 

 

1,977 

 

 —

 

 

 —

 

 

 

1,977 

 

0.1 

%

South Dakota

 

 

 

9,902 

 

 —

 

 

 —

 

 

 

9,902 

 

0.3 

%

Tennessee

 

 

 

13,447 

 

 

 

10,387 

 

 

 

23,834 

 

0.7 

%

Texas

 

45 

 

 

135,251 

 

 

 

14,015 

 

48 

 

 

149,266 

 

4.3 

%

Utah

 

 

 

22,063 

 

 

 

688 

 

 

 

22,751 

 

0.7 

%

Vermont

 

 

 

45,992 

 

 —

 

 

 —

 

 

 

45,992 

 

1.3 

%

Washington

 

 

 

20,900 

 

 —

 

 

 —

 

 

 

20,900 

 

0.6 

%

Wisconsin

 

 

 

15,636 

 

 —

 

 

 —

 

 

 

15,636 

 

0.5 

%

Total

 

580 

 

$

2,940,163 

 

119 

 

$

494,511 

 

701 

(1)

$

3,443,618 

(1)

100 

%

 


(1)

Total includes 2 tenant sites in the renewable power generation industry.

(2)

Represents GAAP rental revenue recognized under existing tenant leases for the three months ended December 31, 2014. Excludes interest income on receivables.

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Table of Contents

Approximately 69% and 79% of our tenant sites are located in Top‑50 and Top‑100 ranked BTAs, respectively, including New York, Los Angeles and Chicago. We believe our locations in major metropolitan population centers are highly desirable for our tenants in the wireless communication and outdoor advertising industries seeking to reach a large customer base.

The table below summarizes our real property interests by BTA rank as of December 31, 2014.

Our Real Property Interests Ranked by Basic Trading Area(1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Wireless Communication

 

Outdoor Advertising

 

Total(2)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Percentage of

 

 

 

Number of

 

Quarterly

 

Number of

 

Quarterly

 

Number of

 

Quarterly

 

Quarterly

 

 

 

Tenant

 

Rental

 

Tenant

 

Rental

 

Tenant

 

Rental

 

Rental

 

BTA Rank

 

Sites

 

Revenue(3)

 

Sites

 

Revenue(3)

 

Sites

 

Revenue(3)

 

Revenue

 

1 - 5

    

211 

    

$

1,333,963 

    

19 

    

$

146,757 

    

230 

    

$

1,480,720 

    

43 

%

6 - 10

 

42 

 

 

159,924 

 

18 

 

 

74,424 

 

60 

 

 

234,348 

 

%

11 - 20

 

75 

 

 

432,546 

 

18 

 

 

88,078 

 

93 

 

 

520,624 

 

15 

%

21 - 50

 

77 

 

 

330,869 

 

23 

 

 

101,444 

 

100 

 

 

432,313 

 

12 

%

51 - 100

 

51 

 

 

220,143 

 

15 

 

 

41,490 

 

66 

 

 

261,633 

 

%

Subtotal (Top 100)

 

456 

 

 

2,477,445 

 

93 

 

 

452,193 

 

549 

 

 

2,929,638 

 

85 

%

101+

 

124 

 

 

462,718 

 

26 

 

 

42,318 

 

150 

 

 

505,036 

 

15 

%

Total

 

580 

 

$

2,940,163 

 

119 

 

$

494,511 

 

699 

 

$

3,434,674 

 

100 

%

 


(1)

Ranked by population.

(2)

Excludes tenant sites in the renewable power generation industry. BTA rank is not a relevant metric for the renewable power generation industry.

(3)

Represents GAAP rental revenue recognized under existing tenant leases for the three months ended December 31, 2014. Excludes interest income on receivables.

Easements and Lease Assignments

In most locations, our tenant leases were acquired together with an easement granted by the property owner in favor of Landmark, granting us the rights to the tenant site occupied by the tenant under the lease. For our tenant sites that were not accompanied by an easement, our lease assignments provide us with economic rights that are substantially similar to the economic rights granted under our easements, including the right to re‑lease the same space if the tenant lease expires or terminates. In limited circumstances we lease the sites from property owners and then sub‑lease those spaces to our tenants.

The terms of our easements and lease assignments generally range from 40 years to 99 years with certain assets having perpetual easement terms. The average remaining term of our easements and lease assignments is approximately 74 years (assuming perpetual easements, which comprise approximately 41% of our total easements, have a term of 99 years). When we acquire an easement or lease assignment in connection with a property subject to a mortgage, we generally also enter into a non‑disturbance agreement with the mortgage lender in order to protect us against potential foreclosure on the property owner at the infrastructure location, which foreclosure could, absent a non‑disturbance agreement, extinguish our easement or lease assignment. In some instances where we obtain non‑disturbance agreements, we still remain subordinated to some indebtedness. As of December 31, 2014, at least 90% of our tenant sites were either subject to non‑disturbance agreements or had been otherwise recorded in local real estate records in senior positions to any mortgages.

Our easements and lease assignments strengthen and protect our real property interests in any given infrastructure location by allowing us to control the use of the tenant site after the expiration of the primary lease term (plus extension options) and to prevent a property owner from interfering with the operations of our tenants.

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Additionally, we believe that our easements and lease assignments have been and will continue to be acquired and structured in a manner that mitigates additional risks in many ways, including the following:

·

We record our easements and lease assignments in local real property records, giving constructive notice of our real property interest to all successor property owners and other parties of interest (such as future lenders).

·

We perform a title search prior to the acquisition of the easement or lease assignment and obtain title insurance on the easement or lease assignment except where doing so would not be economic or otherwise feasible, and all material exceptions to title are typically addressed prior to purchase.

·

Our possessory use rights to the underlying property mitigate our liability exposure, and we are typically indemnified by the property owners or our tenants for environmental liability, if any, relating to the property. In addition, general liability insurance is typically provided by our tenants.

·

Our easements and lease assignments, together with our non‑disturbance agreements, generally protect our real property interest in case of a foreclosure against the property owner.

·

The property owner is generally contractually responsible for their property‑level operating expenses, including maintenance capital expenditures, taxes and insurance.

Finally, in the event that one of our tenant leases expires without renewal or is terminated, all of our easements and substantially all of our lease assignments allow us to enter into a new lease of the same space for the same use within a specified period of time. If we do not enter into a new lease during the tenant replacement period (typically three to five years), in the case of an easement, the easement terminates and control of the space reverts back to the property owner, or in the case of a lease assignment, we forfeit our right to re‑lease the space.

In limited circumstances we have granted a landowner the right to re‑acquire our lease assignment at a purchase price which we believe makes us economically whole for the loss of an asset. To date, no landowner has exercised this right.

Fee Simple Properties

Our portfolio of real property interests includes only three properties we own in fee simple. These properties have associated tenant leases in the wireless communication and outdoor advertising industry. These properties have associated operating and property tax expense for which we are responsible. For the three months ended December 31, 2014, we received less than $0.1 million in quarterly rental revenue related to these properties, representing only 1.5% of our quarterly rental revenue.

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Table of Contents

The table below provides an overview of the remaining term and rental quarterly revenue under our easements, lease assignments and fee simple properties as of December 31, 2014.

Our Real Property Interests by Remaining Term

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Leased Tenant Sites(2)

 

 

 

 

 

 

 

 

 

 

 

 

Average

 

 

 

 

Percentage of

 

 

 

Number of

 

 

 

Remaining

 

Quarterly

 

Quarterly

 

 

 

Infrastructure

 

 

 

Lease Term

 

Rental

 

Rental

 

Remaining Term of Real Property Interest(1)

 

Locations

 

Number

 

(years)(3)

 

Revenue(4)

 

Revenue(4)

 

Wireless Communication

    

    

    

    

    

    

    

 

    

    

    

 

Less than or equal to 20 years

 

 

 

19.1 

 

$

45,148 

 

%

20 to 29 years

 

23 

 

31 

 

18.1 

 

 

203,723 

 

%

30 to 39 years

 

80 

 

104 

 

17.5 

 

 

607,252 

 

18 

%

40 to 49 years

 

53 

 

89 

 

16.7 

 

 

493,228 

 

15 

%

50 to 99 years

 

99 

 

119 

 

22.2 

 

 

552,052 

 

16 

%

Perpetual(5)

 

162 

 

224 

 

18.7 

 

 

1,038,760 

 

30 

%

Subtotal

 

421 

 

574 

 

18.9 

 

$

2,940,163 

 

86 

%

Outdoor Advertising

 

 

 

 

 

 

 

 

 

 

 

 

20 to 29 years

 

 

 

7.2 

 

$

9,338 

 

 —

%

30 to 39 years

 

 

 

8.7 

 

 

56,478 

 

%

40 to 49 years

 

 

 

9.3 

 

 

22,062 

 

%

50 to 99 years

 

28 

 

35 

 

17.8 

 

 

149,729 

 

%

Perpetual(5)

 

49 

 

63 

 

14.1 

 

 

256,904 

 

%

Subtotal

 

93 

 

119 

 

14.2 

 

$

494,511 

 

14 

%

Renewable Power Generation

 

 

 

 

 

 

 

 

 

 

 

 

30 to 39 years

 

 

 

23.1 

 

$

8,944 

 

 —

%

Subtotal

 

 

 

23.1 

 

$

8,944 

 

 —

%

Aggregate Portfolio