lmrk_Current folio_10Q

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, 2015

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)

 

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 (§232.405 of this chapter) 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 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  

The registrant had 4,703,675 common units and 3,135,109 subordinated units outstanding at April 30, 2015.

 

 


 

Table of Contents 

LANDMARK INFRASTRUCTURE PARTNERS LP

Table of Contents

 

 

 

 

 

 

 

    

 

 

Page

 

 

 

PART I. FINANCIAL INFORMATION

 

 

 

 

 

 

 

 

 

Item 1.

 

Financial Statements:

 

 

 

 

 

 

 

 

 

 

 

Consolidated and Combined Balance Sheets

 

3

 

 

 

 

 

 

 

 

 

Consolidated and Combined Statements of Operations

 

4

 

 

 

 

 

 

 

 

 

Consolidated and Combined Statement of Partner’s Capital

 

5

 

 

 

 

 

 

 

 

 

Consolidated and Combined Statements of Cash Flows

 

6

 

 

 

 

 

 

 

 

 

Notes to the Consolidated and Combined Financial Statements

 

7

 

 

 

 

 

 

 

Item 2. 

 

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

 

21

 

 

 

 

 

 

 

Item 3. 

 

Quantitative and Qualitative Disclosures About Market Risk

 

33

 

 

 

 

 

 

 

Item 4. 

 

Controls and Procedures

 

34

 

 

 

 

 

 

 

 

 

PART II. OTHER INFORMATION

 

 

 

 

 

 

 

 

 

Item 1. 

 

Legal Proceedings

 

35

 

 

 

 

 

 

 

Item 1A. 

 

Risk Factors 

 

35

 

 

 

 

 

 

 

Item 6. 

 

Exhibits

 

35

 

 

 

 

 

 

 

Signatures 

 

 

 

36

 

 

 

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Table of Contents 

Landmark Infrastructure Partners LP

Consolidated and Combined Balance Sheets

 

 

 

 

 

 

 

 

 

 

March 31, 2015

 

December 31, 2014*

Assets

    

 

    

    

 

    

Land

 

$

4,829,573 

 

$

4,829,573 

Real property interests

 

 

188,957,741 

 

 

183,378,480 

Total land and real property interests

 

 

193,787,314 

 

 

188,208,053 

Accumulated amortization of real property interest

 

 

(6,515,945)

 

 

(5,873,199)

Land and net real property interests

 

 

187,271,369 

 

 

182,334,854 

Investments in receivables, net

 

 

8,512,947 

 

 

8,665,274 

Cash and cash equivalents

 

 

274,670 

 

 

311,108 

Rent receivables, net

 

 

264,539 

 

 

80,711 

Due from Landmark and affiliates

 

 

652,955 

 

 

659,722 

Deferred loan cost, net

 

 

2,695,501 

 

 

2,838,879 

Deferred rent receivable

 

 

307,495 

 

 

285,790 

Other intangible assets, net

 

 

4,744,308 

 

 

4,677,499 

Other assets

 

 

328,509 

 

 

399,222 

Total assets

 

$

205,052,293 

 

$

200,253,059 

Liabilities and equity

 

 

 

 

 

 

Revolving credit facility

 

$

97,000,000 

 

$

74,000,000 

Accounts payable and accrued liabilities

 

 

904,339 

 

 

141,508 

Other intangible liabilities, net

 

 

7,809,523 

 

 

7,328,741 

Prepaid rent

 

 

1,585,576 

 

 

1,532,372 

Derivative liabilities

 

 

1,063,694 

 

 

289,808 

Total liabilities

 

 

108,363,132 

 

 

83,292,429 

Commitments and contingencies (Note 13)

 

 

 

 

 

 

Equity

 

 

96,689,161 

 

 

116,960,630 

Total liabilities and equity

 

$

205,052,293 

 

$

200,253,059 

*Prior-period financial information has been retroactively adjusted for certain assets acquired on March 4, 2015. See Note 3—Acquisition, for additional information.

See accompanying notes to consolidated and combined financial statements.

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Landmark Infrastructure Partners LP

Consolidated and Combined Statements of Operations

 

 

 

 

 

 

 

 

 

 

Three months ended  March 31,

 

 

2015

 

2014*

Revenue

    

 

    

    

 

    

Rental revenue

 

$

3,829,365 

 

$

3,313,336 

Interest income on receivables

 

 

207,310 

 

 

175,551 

Total revenue

 

 

4,036,675 

 

 

3,488,887 

Expenses

 

 

 

 

 

 

Management fees to affiliate

 

 

 —

 

 

101,505 

General and administrative

 

 

983,985 

 

 

17,547 

Acquisition-related

 

 

764,490 

 

 

 —

Amortization

 

 

1,015,151 

 

 

865,209 

Impairments

 

 

2,762,436 

 

 

 —

Total expenses

 

 

5,526,062 

 

 

984,261 

Other income and expenses

 

 

 

 

 

 

Interest expense

 

 

(1,011,656)

 

 

(1,132,654)

Unrealized loss on derivatives

 

 

(773,886)

 

 

(52,260)

Gain on sale of real property interest

 

 

72,502 

 

 

 —

Total other income and expenses

 

 

(1,713,040)

 

 

(1,184,914)

Net income (loss)

 

$

(3,202,427)

 

$

1,319,712 

Less: Net loss attributable to Predecessor

 

 

(310,764)

 

 

1,319,712 

Net loss attributable to partners

 

$

(2,891,663)

 

$

 —

Net loss per limited partners unit

 

 

 

 

 

 

Common units – basic and diluted

 

$

(0.37)

 

 

 

Subordinated units – basic and diluted

 

$

(0.37)

 

 

 

Weighted average limited partner units outstanding

 

 

 

 

 

 

Common units – basic and diluted

 

 

4,703,675 

 

 

 

Subordinated units – basic and diluted

 

 

3,135,109 

 

 

 

Cash distribution declared per unit

 

$

0.2975 

 

 

 

*Prior-period financial information has been retroactively adjusted for certain assets acquired on March 4, 2015. See Note 3—Acquisition, for additional information.

See accompanying notes to consolidated and combined financial statements.

 

 

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Landmark Infrastructure Partners LP

Consolidated and Combined Statements of Partners’ Capital

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Landmark Infrastructure Partners LP

 

 

 

 

 

 

 

 

Common

 

Subordinated

 

Common

 

Subordinated

 

General

 

Landmark Infrastructure

 

 

 

 

 

Units

 

Units

 

Unitholders

 

Unitholder

 

Partner

 

Partners LP Predecessor

 

Total Equity

Balance as of December 31, 2013*

 

 

 

 

 

$

 —

    

$

 —

    

$

 —

    

$

88,699,179 

    

$

88,699,179 

Distributions

 

 

 

 

 

 

 —

 

 

 —

 

 

 —

 

 

(1,848,057)

 

 

(1,848,057)

Net income*

 

 

 

 

 

 

 —

 

 

 —

 

 

 —

 

 

1,319,712 

 

 

1,319,712 

Balance as of March 31, 2014*

 

 

 

 

 

$

 —

 

$

 —

 

$

 —

 

$

88,170,834 

 

$

88,170,834 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance as of December 31, 2014*

 

4,702,665 

 

3,135,109 

 

$

74,683,957 

 

$

29,745,957 

 

$

12,349 

 

$

12,518,367 

 

$

116,960,630 

Net loss from Acquired Assets prior to March 4, 2015

 

 —

 

 —

 

 

 —

 

 

 —

 

 

(310,764)

 

 

 —

 

 

(310,764)

Net investment of Acquired Assets

 

 —

 

 —

 

 

 —

 

 

 —

 

 

(4,268,765)

 

 

(12,518,367)

 

 

(16,787,132)

Distributions

 

 —

 

 —

 

 

(632,174)

 

 

(421,358)

 

 

 —

 

 

 —

 

 

(1,053,532)

Capital contribution to fund general and administrative expense reimbursement

 

 —

 

 —

 

 

 —

 

 

 —

 

 

692,872 

 

 

 —

 

 

692,872 

Unit-based compensation

 

1,010 

 

 —

 

 

78,750 

 

 

 —

 

 

 —

 

 

 —

 

 

78,750 

Net loss attributable to partners

 

 —

 

 —

 

 

(1,735,147)

 

 

(1,156,516)

 

 

 —

 

 

 —

 

 

(2,891,663)

Balance as of March 31 , 2015

 

4,703,675 

 

3,135,109 

 

$

72,395,386 

 

$

28,168,083 

 

$

(3,874,308)

 

$

 —

 

$

96,689,161 

*Prior-period financial information has been retroactively adjusted for certain assets acquired on March 4, 2015. See Note 3—Acquisition, for additional information.

See accompanying notes to consolidated and combined financial statements

 

 

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Landmark Infrastructure Partners LP

Consolidated and Combined Statements of Cash Flows

 

 

 

 

 

 

 

 

 

 

Three months ended  March 31,

 

 

2015

 

2014*

Operating activities

    

 

    

    

 

    

Net income (loss)

 

$

(3,202,427)

 

$

1,319,712 

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

 

 

 

 

 

 

Unit-based compensation

 

 

78,750 

 

 

 —

Unrealized loss on derivatives

 

 

773,886 

 

 

52,260 

Amortization expense

 

 

1,015,151 

 

 

865,209 

Amortization of above- and below- market lease

 

 

(202,421)

 

 

(121,389)

Amortization of deferred loan costs

 

 

143,378 

 

 

216,739 

Receivables interest accretion

 

 

(15,381)

 

 

(22,857)

Impairments

 

 

2,762,436 

 

 

 —

Gain on the sale of real property interest

 

 

(72,502)

 

 

 —

Allowance for investments in receivables

 

 

 —

 

 

4,465 

Changes in operating assets and liabilities:

 

 

 

 

 

 

Rent receivables, net

 

 

(183,828)

 

 

107,530 

Accounts payable and accrued liabilities

 

 

762,831 

 

 

(37,311)

Deferred rent receivables

 

 

(21,705)

 

 

(26,745)

Prepaid rent

 

 

53,204 

 

 

(98,677)

Due to Landmark and affiliates

 

 

699,639 

 

 

(701,641)

Other assets

 

 

70,713 

 

 

 —

Net cash provided by operating activities

 

 

2,661,724 

 

 

1,557,295 

Investing activities

 

 

 

 

 

 

Acquisition of land

 

 

(2,934,456)

 

 

 —

Acquisition of real property interests

 

 

(17,804,796)

 

 

 —

Net proceeds from sale of real property interest

 

 

127,514 

 

 

 —

Repayment of receivables

 

 

167,708 

 

 

184,805 

Net cash provided by (used in) investing activities

 

 

(20,444,030)

 

 

184,805 

Financing activities

 

 

 

 

 

 

Proceeds from revolving credit facility

 

 

24,000,000 

 

 

 —

Principal payments on revolving credit facility

 

 

(1,000,000)

 

 

 —

Principal payments on secured debt facilities

 

 

 —

 

 

(167,841)

Deferred loan costs

 

 

 —

 

 

(3,426)

Distributions to Contributing Landmark Funds members

 

 

 —

 

 

(1,848,057)

Distributions to limited partners

 

 

(1,053,532)

 

 

 —

Consideration paid to general partner associated with Acquired Assets

 

 

(4,200,600)

 

 

(21,004)

Net cash provided by (used in) financing activities

 

 

17,745,868 

 

 

(2,040,328)

Net decrease in cash and cash equivalents

 

 

(36,438)

 

 

(298,228)

Cash and cash equivalents at beginning of period

 

 

311,108 

 

 

1,037,327 

Cash and cash equivalents at end of period

 

$

274,670 

 

$

739,099 

*Prior-period financial information has been retroactively adjusted for certain assets acquired on March 4, 2015. See Note 3—Acquisition, for additional information.

See accompanying notes to consolidated and combined financial statements.

 

 

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Landmark Infrastructure Partners LP

Notes to the Consolidated and Combined Financial Statements

1. Business

Landmark Infrastructure Partners LP (the “Partnership”) was formed on July 28, 2014 by Landmark Dividend LLC (“Landmark” or “Sponsor”) as a standalone master limited partnership organized in the State of Delaware. On November 19, 2014, the Partnership completed its initial public offering (the “IPO”) of 2,750,000 common units (including 100,000 common units issued pursuant to the partial exercise of the underwriters’ option to purchase additional common units) to the public representing limited partner interests.  In addition, Landmark purchased from us an additional 2,066,995 subordinated units for cash at the IPO price of our common units. References in this report to the “Partnership,” “we,” “us,” “our” refer to Landmark Infrastructure Partners LP.

The Partnership was formed to own a portfolio of real property interests that are leased to companies in the wireless communication, outdoor advertising and renewable power generation industries. In addition, the Partnership also owns certain interests in receivables associated with similar assets. Concurrently with the IPO, the Partnership completed its formation transactions, pursuant to which it acquired, through a series of transactions, substantially all of the assets and liabilities of the Contributing Landmark Funds (as defined below).   

Our operations are managed by the board of directors and executive officers of Landmark Infrastructure Partners GP LLC, our general partner. Landmark and its affiliates own (a) our general partner; (b) 3,135,109 subordinated units in us and; (c) all of our incentive distribution rights.

2. Basis of Presentation and Summary of Significant Accounting Policies

Basis of Presentation and Principles of Consolidated and Combined Financial Statements

For periods presented prior to the IPO, these consolidated and combined financial statements were derived from the historical financial statements and the combined results of operations of Landmark Dividend Growth Fund-A LLC (“Fund A”) and Landmark Dividend Growth Fund-D LLC (“Fund D” and together with Fund A, the “Contributing Landmark Funds”) the predecessor for accounting purposes (“Predecessor”). The IPO and formation transactions were treated as a reorganization of entities under common control pursuant to Accounting Standards Codification (“ASC”) 805, Business Combinations (ASC 805).

On March 4, 2015, Landmark Infrastructure Operating Company LLC (“OpCo”), a wholly owned subsidiary of the Partnership, completed its acquisition of 81 tenant sites and related real property interests (“Acquired Assets”), consisting of 41 wireless communication, 39 outdoor advertising and 1 renewable power sites, from Landmark Infrastructure Holding Company LLC (“HoldCo”), a wholly owned subsidiary of Landmark, in exchange for cash consideration of $25,205,000 (the “Drop-down”). The Drop-down was a transaction between entities under common control, which requires the assets and liabilities transferred at the historical cost of the parent of the entities, with prior periods retroactively adjusted to furnish comparative information. Accordingly, the accompanying financial statements and related notes have been retroactively adjusted to include the historical results and financial position of the Acquired Assets prior to the March 4, 2015 as part of the Predecessor.  All intercompany transactions and account balances have been eliminated. See Note 3—Acquisition, for additional information.

For periods subsequent to the IPO, our results of operations, cash flows, assets and liabilities consist of the consolidated Landmark Infrastructure Partners LP activities and balances with retroactive adjustments of the combined results of operations, cash flows, assets and liabilities of the Acquired Assets.  

The consolidated and combined balance sheets of our Predecessor include assets and liabilities that are specifically identifiable or otherwise attributable to the real property interests prior to the period they were owned by our Predecessor.  If a real property interest was owned by Landmark before it was owned by our Predecessor, all revenue and

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expenses associated with such real property interest, for the period such real property interest was owned by Landmark, are included in the consolidated and combined statements of operations. See further discussion in Note 12, Related‑Party Transactions.  

All financial information presented for the periods after the IPO represent the consolidated results of operations, financial position and cash flows of the Partnership with retroactive adjustments of the combined results of operations, financial position and cash flows of the Acquired Assets. Accordingly:

·

Our consolidated and combined statement of operations and our consolidated and combined statement of cash flows for the three months ended March 31, 2015, consists of the consolidated results of the Acquired Assets and the consolidated results of the Partnership from January 1, 2015 through March 3, 2015, and the consolidated results of the Partnership for the remainder of the period. Our consolidated and combined statement of income for the three months ended March 31, 2014, consists entirely of the combined results of our Predecessor with retroactive adjustments for the Acquired Assets.

·

Our consolidated and combined balance sheet at March 31, 2015, consists of the consolidated balances of the Partnership, while at December 31, 2014, it consists of the consolidated balances of the Partnership and the combined balances of certain Acquired Assets.

·

Our consolidated statement of changes in equity for the three months ended March 31, 2015, consists of both the combined activity of the Acquired Assets and the consolidated activity of the Partnership prior to March 4, 2015, and the consolidated activity of the Partnership  for the remainder of the period. Our consolidated statement of changes in equity for the three months ended March 31, 2014, consists entirely of the combined activity of our Predecessor and the Acquired Assets.

The unaudited interim consolidated and combined financial statements have been prepared in conformity with GAAP as established by the Financial Accounting Standards Board (“FASB”) in the 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, 2015 and 2014 included in these Notes to the Consolidated and Combined 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, 2015 are not necessarily indicative of the results that may be expected for the year ending December 31, 2015. All references to tenant sites are unaudited.

Use of Estimates

The preparation of the consolidated and combined 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 and combined financial statements and reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

Recently Issued Accounting Standards

Changes to GAAP are established by the FASB in the form of ASUs to the FASB’s Accounting Standard Codification. The Partnership considers the applicability and impact of all ASUs. Newly issued ASUs not listed below are expected to not have any material impact on its combined financial position and results of operations because either the ASU is not applicable or the impact is expected to be immaterial.

In January 2015, the FASB issued final guidance on its initiative of simplifying income statement presentation by eliminating the concept of extraordinary items (“ASU No. 2015-02”). Under the guidance, an entity will no longer be able to segregate an extraordinary item from the results of operations, separately present an extraordinary item on the

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income statement, or disclose income taxes or earnings-per-share data applicable to an extraordinary item.  The ASU is effective for all entities for reporting periods (including interim periods) beginning after December 15, 2015, and early adoption is permitted. The Partnership does not expect the adoption of ASU No. 2015-01 to have a material impact on its financial statements.

In February 2015, the FASB issued amendments to accounting for consolidation of certain legal entities (ASU No. 2015-02”). ASU No. 2015-02 changes the analysis that a reporting entity must perform to determine whether it should consolidate certain types of legal entities. Specifically, ASU 2015-02 modifies the evaluation of whether limited partnerships and similar legal entities are VIEs or voting interest entities, eliminates the presumption that a general partner should consolidate a limited partnership, and affects the evaluation of fee arrangements in the primary beneficiary determination.  ASU 2015-02 is effective for public business entities for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2015. Early adoption is permitted, including adoption in an interim period. The Partnership does not expect the adoption of ASU No. 2015-02 to have a material impact on its financial statements.

In April 2015, the FASB issued ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs ("ASU 2015-03"). ASU 2015-03 requires debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying value of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by ASU 2015-03. The amendments in this ASU are effective retrospectively for fiscal years, and interim periods within those years, beginning after December 15, 2015. Early adoption is permitted. We are currently in the process of evaluating the impact of adoption of the ASU on our consolidated balance sheets. 

3. Acquisitions

On March 4, 2015, OpCo, a wholly-owned subsidiary of the Partnership, completed its acquisition of 81 tenant sites and related real property interests, consisting of 41 wireless communication, 39 outdoor advertising and 1 renewable power sites, from HoldCo, a wholly-owned subsidiary of Landmark, in exchange for cash consideration of $25,205,000. The purchase price was funded with $24,000,000 of borrowings under the Partnership’s existing credit facility and available cash.

The assets and liabilities acquired are recorded at the historical cost of Landmark, as the acquisition of the Acquired Assets is a  transaction between entities under common control with the statements of operations of the Partnership adjusted retroactively as if the Drop-down transaction occurred on the earliest date during which the entities were under common control. Our historical financial statements have been retroactively adjusted to reflect the results of operations, financial position, and cash flows of the Acquired Assets as if we owned the Acquired Assets for all periods presented. The following tables present our results of operations and financial position reflecting the effect of the Drop-down on pre-acquisition periods.  

Statement of operations for the three months ended March 31, 2015:

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended March 31, 2015

 

 

Landmark Infrastructure

 

Pre-Acquisition results

 

Consolidated

 

 

Partners LP

 

of Acquired Assets

 

Results

Revenue

    

 

    

    

 

    

    

 

    

Rental revenue

 

$

3,616,429 

 

$

212,936 

 

$

3,829,365 

Interest income on receivables

 

 

207,310 

 

 

 —

 

 

207,310 

Total revenue

 

 

3,823,739 

 

 

212,936 

 

 

4,036,675 

Expenses

 

 

 

 

 

 

 

 

 

General and administrative

 

 

983,985 

 

 

 —

 

 

983,985 

Acquisition-related

 

 

299,598 

 

 

464,892 

 

 

764,490 

Amortization

 

 

956,343 

 

 

58,808 

 

 

1,015,151 

Impairments

 

 

2,762,436 

 

 

 —

 

 

2,762,436 

Total expenses

 

 

5,002,362 

 

 

523,700 

 

 

5,526,062 

Other income and expenses

 

 

(1,713,040)

 

 

 —

 

 

(1,713,040)

Net loss

 

$

(2,891,663)

 

$

(310,764)

 

$

(3,202,427)

 

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Statement of operations for the three months ended March 31, 2014:

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended March 31, 2014

 

 

 

 

Pre-Acquisition results

 

Consolidated

 

 

Predecessor

 

of Acquired Assets

 

Results

Revenue

    

 

    

    

 

    

    

 

    

Rental revenue

 

$

3,296,090 

 

$

17,246 

 

$

3,313,336 

Interest income on receivables

 

 

175,551 

 

 

 —

 

 

175,551 

Total revenue

 

 

3,471,641 

 

 

17,246 

 

 

3,488,887 

Expenses

 

 

 

 

 

 

 

 

 

Management fees to affiliate

 

 

101,505 

 

 

 —

 

 

101,505 

General and administrative

 

 

17,547 

 

 

 —

 

 

17,547 

Amortization

 

 

858,126 

 

 

7,083 

 

 

865,209 

Total expenses

 

 

977,178 

 

 

7,083 

 

 

984,261 

Other income and expenses

 

 

(1,184,914)

 

 

 —

 

 

(1,184,914)

Net income

 

$

1,309,549 

 

$

10,163 

 

$

1,319,712 

 

Balance Sheet as of December 31, 2014:

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2014

 

 

Landmark Infrastructure

 

Pre-Acquisition

 

Consolidated

 

    

Partners LP

 

Acquired Assets

 

Results

Assets

 

 

 

 

 

 

 

 

 

Land

 

$

1,895,117 

 

$

2,934,456 

 

$

4,829,573 

Real property interests

 

 

173,009,873 

 

 

10,368,607 

 

 

183,378,480 

Total land and real property interests

 

 

174,904,990 

 

 

13,303,063 

 

 

188,208,053 

Accumulated amortization of real property interest

 

 

(5,831,342)

 

 

(41,857)

 

 

(5,873,199)

Land and net real property interests

 

 

169,073,648 

 

 

13,261,206 

 

 

182,334,854 

Investments in receivables, net

 

 

8,665,274 

 

 

 —

 

 

8,665,274 

Cash and cash equivalents

 

 

311,108 

 

 

 —

 

 

311,108 

Rent receivables, net

 

 

80,711 

 

 

 —

 

 

80,711 

Due from Landmark and affiliates

 

 

659,722 

 

 

 —

 

 

659,722 

Deferred loan cost, net

 

 

2,838,879 

 

 

 —

 

 

2,838,879 

Deferred rent receivable

 

 

279,324 

 

 

6,466 

 

 

285,790 

Other intangible assets, net

 

 

3,783,653 

 

 

893,846 

 

 

4,677,499 

Other assets

 

 

399,222 

 

 

 —

 

 

399,222 

Total assets

 

$

186,091,541 

 

$

14,161,518 

 

$

200,253,059 

Liabilities and equity

 

 

 

 

 

 

 

 

 

Revolving credit facility

 

$

74,000,000 

 

$

 —

 

$

74,000,000 

Accounts payable and accrued liabilities

 

 

141,508 

 

 

 —

 

 

141,508 

Other intangible liabilities, net

 

 

5,685,590 

 

 

1,643,151 

 

 

7,328,741 

Prepaid rent

 

 

1,532,372 

 

 

 —

 

 

1,532,372 

Derivative liabilities

 

 

289,808 

 

 

 —

 

 

289,808 

Total liabilities

 

 

81,649,278 

 

 

1,643,151 

 

 

83,292,429 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

Equity

 

 

104,442,263 

 

 

12,518,367 

 

 

116,960,630 

Total liabilities and equity

 

$

186,091,541 

 

$

14,161,518 

 

$

200,253,059 

 

 

 

4. Real Property Interests

The following table summarizes the Partnership’s real property interests:

 

 

 

 

 

 

 

 

 

March 31, 2015

 

December 31, 2014

Land

    

$

4,829,573 

    

$

4,829,573 

Real property interests – perpetual

 

 

47,321,341 

 

 

45,834,289 

Real property interests – non-perpetual

 

 

141,636,400 

 

 

137,544,191 

Total land and real property interests

 

 

193,787,314 

 

 

188,208,053 

Accumulated amortization

 

 

(6,515,945)

 

 

(5,873,199)

Land and net real property interests

 

$

187,271,369 

 

$

182,334,854 

 

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On March 4, 2015, the Partnership completed the Drop-down as described in Note 3 above. The Partnership paid a total consideration of $25,205,000. The Drop-down was a transaction between entities under common control, which requires the assets and liabilities to be transferred at the historical cost of the parent of the entities, with prior periods retroactively adjusted to furnish comparative information. The following table summarizes the preliminary allocations of estimated fair values of the assets acquired and liabilities assumed at the date of acquisition of Landmark.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

 

 

    

Investments in real

    

In-place lease

    

Above-market

    

Below-market

    

 

 

Date

 

Land

 

property interests

 

intangibles

 

lease intangibles

 

lease intangibles

 

Total

 

March 2015

 

$

2,934,456 

 

$

18,913,599 

 

$

517,625 

 

$

789,739 

 

$

(2,416,167)

 

$

20,739,252 

 

 

The weighted average remaining amortization period for non‑perpetual real property interests is 49 years at March 31, 2015.

Future estimated aggregate amortization of real property interests for each of the five succeeding fiscal years and thereafter as of March 31, 2015, are as follows:

 

 

 

 

2015 (nine months)

    

$

2,435,558 

2016

 

 

3,232,649 

2017

 

 

3,232,649 

2018

 

 

3,232,649 

2019

 

 

3,232,649 

Thereafter

 

 

119,754,301 

Total

 

$

135,120,455 

 

 

 

5. Other Intangible Assets and Liabilities

The following table summarizes our identifiable intangible assets, including above/below‑market lease intangibles:

 

 

 

 

 

 

 

 

 

March 31, 2015

 

December 31, 2014

Acquired in-place lease

    

 

    

    

 

    

Gross amount

 

$

4,982,228 

 

$

4,821,008 

Accumulated amortization

 

 

(1,163,103)

 

 

(967,221)

Net amount

 

$

3,819,125 

 

$

3,853,787 

Acquired above-market leases

 

 

 

 

 

 

Gross amount

 

$

1,506,203 

 

$

1,332,286 

Accumulated amortization

 

 

(581,020)

 

 

(508,574)

Net amount

 

$

925,183 

 

$

823,712 

Total other intangible assets, net

 

$

4,744,308 

 

$

4,677,499 

Acquired below-market leases

 

 

 

 

 

 

Gross amount

 

$

(9,571,804)

 

$

(8,816,156)

Accumulated amortization

 

 

1,762,281 

 

 

1,487,415 

Total other intangible liabilities, net

 

$

(7,809,523)

 

$

(7,328,741)

We recorded net amortization of above- and below‑market lease intangibles of $202,421 and $121,389 as an increase to rental revenue for the three months ended March 31, 2015 and 2014, respectively. We recorded amortization of in‑place lease intangibles of $202,071 and $122,463 as amortization expense for the three months ended March 31, 2015 and 2014, respectively.

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Future aggregate amortization of intangibles for each of the five succeeding fiscal years and thereafter as of March 31, 2015 follows:

 

 

 

 

 

 

 

 

 

 

 

 

    

Acquired

    

Acquired

    

Acquired

 

 

 

in-place

 

above-market

 

below-market

 

 

 

leases

 

leases

 

leases

 

2015 (nine months)

 

$

451,988 

 

$

204,827 

 

$

(747,562)

 

2016

 

 

498,641 

 

 

210,976 

 

 

(944,723)

 

2017

 

 

472,312 

 

 

131,810 

 

 

(915,617)

 

2018

 

 

442,931 

 

 

71,904 

 

 

(889,040)

 

2019

 

 

429,056 

 

 

46,063 

 

 

(871,725)

 

Thereafter

 

 

1,524,197 

 

 

259,603 

 

 

(3,440,856)

 

Total

 

$

3,819,125 

 

$

925,183 

 

$

(7,809,523)

 

 

 

6. Investments in Receivables

As a result of the transfer of investments in receivables from the Contributing Landmark Funds to the Partnership, which met the conditions to be accounted for as a sale in accordance with ASC 860, Transfers and Servicing, the investments in receivables were recorded at their estimated fair value as of November 19, 2014, the date we closed our IPO, using an 8.75% discount rate. The receivables are unsecured with payments collected over periods ranging from 2 to 29 years. Interest income recognized on the receivables totaled $207,310 and $175,551 for the three months ended March 31, 2015 and 2014, respectively.

The following table reflects the activity in investments in receivables:

 

 

 

 

 

 

 

 

 

March 31, 2015

 

December 31, 2014

Investments in receivables – beginning

    

$

8,665,274 

    

$

9,085,281 

Fair value adjustment

 

 

 —

 

 

284,294 

Impairments

 

 

 —

 

 

(4,465)

Repayments

 

 

(167,708)

 

 

(751,735)

Interest accretion

 

 

15,381 

 

 

51,899 

Investments in receivables – ending

 

$

8,512,947 

 

$

8,665,274 

 

Annual amounts due as of March 31, 2015, are as follows:

 

 

 

 

 

2015 (nine months)

    

$

1,036,903 

 

2016

 

 

1,430,049 

 

2017

 

 

1,561,423 

 

2018

 

 

1,377,750 

 

2019

 

 

893,149 

 

Thereafter

 

 

6,637,989 

 

Total

 

$

12,937,263 

 

Interest

 

$

4,424,316 

 

Principal

 

 

8,512,947 

 

Total

 

$

12,937,263 

 

 

 

7. Debt

At the closing of the IPO on November 19, 2014, we amended and restated the Fund A and Fund D secured debt facilities as a new $190.0 million senior secured revolving credit facility, which we refer to as our “revolving credit facility,” with SunTrust Bank, as administrative agent, and a syndicate of lenders. Our revolving credit facility will mature on November 19, 2019 and will be available for working capital, capital expenditures, permitted acquisitions and general partnership purposes, including distributions. Substantially all of our assets, excluding equity in and assets of certain joint ventures and unrestricted subsidiaries, after‑acquired real property (other than real property that is acquired

12


 

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from affiliate funds and is subject to a mortgage), and other customary exclusions, are pledged as collateral under our revolving credit facility. Our revolving credit facility contains various customary covenants and restrictive provisions. 

In addition, our revolving credit facility contains customary events of default, including, but not limited to (i) event of default resulting from our failure or the failure of our restricted subsidiaries to comply with covenants and financial ratios, (ii) the occurrence of a change of control (as defined in the credit agreement), (iii) the institution of insolvency or similar proceedings against us or our restricted subsidiaries, (iv) the occurrence of a default under any other material indebtedness (as defined in the credit agreement) we or our restricted subsidiaries may have and (v) any one or more collateral documents ceasing to create a valid and perfected lien on collateral (as defined in the credit agreement). Upon the occurrence and during the continuation of an event of default, subject to the terms and conditions of the credit agreement, the lenders may declare any outstanding principal of our revolving credit facility debt, together with accrued and unpaid interest, to be immediately due and payable and may exercise the other remedies set forth or referred to in the credit agreement and the other loan documents.

Loans under the revolving credit facility bear interest at our option at a variable rate per annum equal to either:

·

a base rate, which will be the highest of (i) the administrative agent’s prime rate in effect on such day, (ii) the federal funds rate in effect on such day plus 0.50%, and (iii) an adjusted one month LIBOR plus 1.0%, in each case, plus an applicable margin of 1.50%; or

·

an adjusted one-month LIBOR plus an applicable margin of 2.50%.

At March 31, 2015, $97.0 million was outstanding and there was $93.0 million of undrawn borrowing capacity, subject to compliance with certain covenants, under our revolving credit facility.

For the three months ended March 31, 2015 and 2014, the Partnership incurred $1,011,656 and $1,132,654, respectively, of interest expense and had interest payable of $106,209 and $43,905 at March 31, 2015 and December 31, 2014, respectively. The Partnership recorded $143,378  and $216,739 of deferred loan costs amortization, which is included in interest expense, for the three months ended March 31, 2015 and 2014, respectively.

The revolving credit facility requires monthly interest payments and the outstanding debt balance due upon maturity on November 19, 2019.  Our revolving credit facility requires compliance with certain financial covenants. As of March 31, 2015, the Partnership was in compliance with all financial covenants.

8. Interest Rate Swap Agreements

Effective December 24, 2014, we entered into an interest rate swap agreement with a notional amount of $70,000,000 to fix the floating interest rate on borrowings under our revolving credit facility over a four-year period at an effective rate of 4.02%. On February 5, 2015, the Partnership swapped an additional $25,000,000 of the floating rate on its revolving facility at an effective rate of 3.79% over a four-year period beginning April 13, 2015.

The following table summarizes the terms and fair value of the Partnerships’ interest rate swap agreements:

 

 

 

 

 

 

 

 

 

 

 

 

 

Notional

 

Fixed

 

Effective

 

Maturity

 

Fair Value Asset (Liability) at

Value

 

Rate

 

Date

 

Date

 

March 31, 2015

 

December 31, 2014

$
70,000,000 

 

4.02 

%

12/24/2014

 

12/24/2018

 

$

(987,699)

 

$

(289,808)
25,000,000 

 

3.79 

 

4/13/2015

 

4/13/2019

 

 

(75,995)

 

 

 —

 

 

 

 

 

 

 

 

$

(1,063,694)

 

$

(289,808)

During the three months ended March 31, 2015 and 2014, the Partnership recorded a loss of $773,886 and $52,260, respectively, resulting from the change in fair value of the interest rate swap agreements, which is reflected as an unrealized loss on derivative financial instruments on the consolidated and combined statements of operations.

The fair value of the interest rate swap agreements are derived based on Level 2 inputs.

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To illustrate the effect of movements in the interest rate market, the Partnership performed a market sensitivity analysis on its outstanding interest rate swap agreements. The Partnership applied various basis point spreads to the underlying interest rate curve of the derivative in order to determine the instruments’ change in fair value at March 31, 2015. The following table summarizes the results of the analysis performed:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Effects of Change in Interest Rates

Date Entered

 

Maturity Date

 

+50 Basis Points

 

-50 Basis Points

 

+100 Basis Points

 

-100 Basis Points

December 2014

 

12/24/2018

 

$

220,554 

 

$

(2,275,760)

 

$

1,448,788 

 

$

(3,490,407)

February 2015

 

4/13/2019

 

 

399,036 

 

 

(566,713)

 

 

873,116 

 

 

(1,031,195)

 

 

 

 

9. Net Loss Per Limited Partner Unit

Net loss per limited partner unit is calculated only for the period subsequent to the IPO as no units were outstanding prior to the IPO.  Landmark’s subordinated units and the General Partner’s incentive distribution rights meet the definition of a participating security and therefore we are required to compute income per unit using the two-class method under which any excess of distributions declared over net income shall be allocated to the partners based on their respective sharing of income specified in the partnership agreement. Payments made to our unitholders are determined in relation to actual distributions declared and are not based on the net loss allocations used in the calculation of net loss per unit.

On January 26, 2015, the board of directors of our General Partner declared our prorated initial quarterly cash distribution of $0.1344 per unit, or $1.1 million in aggregate. This was the first distribution declared by the Partnership and corresponded to the minimum quarterly distribution of $0.2875 per unit, or $1.15 per unit annually. The amount was prorated for the 43-day period that the Partnership was public following the closing of its IPO on November 19, 2014. The distribution was paid on February 13, 2015, to unitholders of record as of February 6, 2015. 

On April 23, 2015, the board of directors of our General Partner declared a quarterly cash distribution of $0.2975 per unit, or $1.19 per unit on an annualized basis, for the quarter ended March 31, 2015.  This distribution represents a 3.5% increase over the Partnership’s minimum quarterly distribution of $0.2875 per unit, and is payable on May 14, 2015 to unitholders of record as of May 5, 2015.

Net loss per unit applicable to limited partners (including subordinated unitholders) is computed by dividing limited partners’ interest in net loss, after deducting any General Partner incentive distributions, by the weighted-average number of outstanding common and subordinated units. Diluted net income per unit includes the effects of potentially dilutive units on our common and subordinated units. Net loss related to the Acquired Assets prior to March 4, 2015 is allocated to the General Partner.

As of March 31, 2015, there were no incentive distribution right amounts available for distribution to the General Partner. Therefore, net income available to the limited partner units has not been reduced.

14


 

Table of Contents 

The calculation of net loss per unit for the three months ended March 31, 2015 is as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Limited Partner

    

Limited Partner

    

 

 

    

 

 

 

 

Common

 

Subordinated

 

General

 

 

 

 

 

Units – Public

 

Units – Landmark

 

Partner

 

Total

Net loss attributable to partners:

 

 

 

 

 

 

 

 

 

 

 

 

Distribution declared 

 

$

1,399,343 

 

$

932,695 

 

$

 —

 

$

2,332,038 

Undistributed net loss

 

 

(3,134,490)

 

 

(2,089,211)

 

 

(310,764)

 

 

(5,534,465)

Net loss attributable to partners

 

$

(1,735,147)

 

$

(1,156,516)

 

$

(310,764)

 

$

(3,202,427)

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average units outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted

 

 

4,703,675 

 

 

3,135,109 

 

 

 —

 

 

7,838,784 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss per limited partner unit:

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted

 

$

(0.37)

 

$

(0.37)

 

 

 

 

 

 

 

 

 

10. Fair Value of Financial Instruments

The fair value for certain financial instruments is derived using a combination of market quotes, pricing models and other valuation techniques that involve significant management judgment. The price transparency of financial instruments is a key determinant of the degree of judgment involved in determining the fair value of the Partnership’s financial instruments. Financial instruments for which actively quoted prices or pricing parameters are available and for which markets contain orderly transaction will generally have a higher degree of price transparency than financial instruments for which markets are inactive or consist of non‑orderly trades. The Partnership evaluates several factors when determining if a market is inactive or when market transactions are not orderly. The following is a summary of the methods and assumptions used by management in estimating the fair value of each class of assets and liabilities for which it is practicable to estimate the fair value:

Cash and cash equivalents, rent receivables, net and accounts payable and accrued liabilities:  The carrying values of these balances approximate their fair values because of the short‑term nature of these instruments.

Revolving credit facility:  The fair value of the Partnership’s revolving credit facility is estimated using a discounted cash flow analysis based on management’s estimates of current market interest rates for instruments with similar characteristics, including remaining loan term, loan‑to‑value ratio, type of collateral and other credit enhancements. Additionally, since a quoted price in an active market is generally not available for the instrument or an identical instrument, the Partnership measures fair value using a valuation technique that is consistent with the principles of fair value measurement which typically considers what management believes is a market participant rate for a similar instrument. The Partnership classifies these inputs as Level 3 inputs.

 Investments in receivables:  The Partnership’s investments in receivables are presented in the accompanying combined balance sheets at their amortized cost net of recorded reserves and not at fair value. The fair values of the receivables were estimated using an internal valuation model that considered the expected cash flow of the receivables and estimated yield requirements by market participants with similar characteristics, including remaining loan term, and credit enhancements. The Partnership classifies these inputs as Level 3 inputs.

Interest rate swap agreements:  The Partnership’s interest rate swap agreements are presented at fair value on the accompanying combined balance sheets. The valuation of these instruments is determined using a proprietary model that utilizes observable and unobservable inputs. A majority of the inputs are observable with the only unobservable inputs relating to the lack of performance risk on the part of the Partnership or the counter party to the instrument. As such, the Partnership classifies these inputs as Level 2 inputs. The proprietary model uses the contractual terms of the derivatives, including the period to maturity, as well as observable market‑based inputs, including the interest rate curves

15


 

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and volatility. The fair values of interest rate swaps are estimated using the market standard methodology of netting the discounted fixed cash payments and the discounted expected variable cash receipts. The variable cash receipts are based on an expectation of interest rates (forward curves) derived from observable market interest rate curves. In addition, credit valuation adjustments, which consider the impact of any credit risk to the contracts, are incorporated in the fair values to account for potential nonperformance risk.

The table below summarizes the carrying amounts and fair values of financial instruments which are not carried at fair value on the face of the financial statements:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

March 31, 2015

 

December 31, 2014

 

 

 

Carrying amount

 

Fair Value

 

Carrying amount

 

Fair Value

 

Investment in Receivables, net

    

$

8,512,947 

    

$

8,581,811 

    

$

8,665,274 

    

$

8,665,274 

 

Secured Debt Facilities

 

 

97,000,000 

 

 

97,000,000 

 

 

74,000,000 

 

 

74,000,000 

 

Disclosure of the fair values of financial instruments is based on pertinent information available to the Partnership as of the period end and requires a significant amount of judgment. Despite increased capital market and credit market activity, transaction volume for certain financial instruments remains relatively low. This has made the estimation of fair values difficult and, therefore, both the actual results and the Partnership’s estimate of value at a future date could be materially different.

For the three months ended March 31, 2015 and for the year ended December 31, 2014, the Partnership measured the following assets and liabilities at fair value on a recurring basis:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

March 31, 2015

 

December 31, 2014

 

    

Carrying amount

    

Fair Value

    

Carrying amount

    

Fair Value

Derivative Liabilities(1)

 

$

1,063,694 

 

$

1,063,694 

 

$

289,808 

 

$

289,808 

(1)

Fair value is calculated using level 2 inputs. Level 2 inputs are quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model‑derived valuations in which significant inputs and significant value drivers are observable in active markets.

During the three months ended March 31, 2015, eleven of the Partnership’s real property interests were impaired as a result of termination notices received and one property interest foreclosure. As a result of T‑Mobile’s acquisition of MetroPCS (completed in 2013), we have received termination notices related to 23 MetroPCS tenant sites. As of March 31, 2015, four tenant sites have been vacated with the majority of the remaining sites vacating over the next six months.  As a result of these termination notices we determined that eight real property interests were impaired during the quarter and recognized impairment charges totaling $2.1 million related to MetroPCS tenant sites. The remaining $0.7 million of impairment related to a foreclosure notice received effective March 26, 2015. During the three months ended March 31, 2015 we recognized impairment charges totaling $2,762,436. The carrying value of each real property interest were determined to have a fair value of zero with the remaining lease intangibles amortization adjusted to the remaining lease life.    

11. Related‑Party Transactions

General and Administrative Reimbursement

Under our omnibus agreement, we must reimburse Landmark for expenses related to certain general and administrative services Landmark will provide to us in support of our business, subject to a quarterly cap equal to the greater of $162,500 and 3% of our revenue during the preceding calendar quarter. This cap on expenses will last until the earlier to occur of: (i) the date on which our revenue for the immediately preceding four consecutive fiscal quarters exceeded $80.0 million and (ii) November 19, 2019.  The full amount of general and administrative expenses incurred will be reflected on our income statements, and to the extent such general and administrative expenses exceed the cap amount, the amount of such excess will be reflected on our financial statements as a capital contribution from Landmark rather than as a reduction of our general and administrative expenses, except for expenses that would otherwise be allocated to us, which are not included in the amount of general and administrative expenses. These expenses include

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salary, bonus, incentive compensation and other amounts paid to persons who perform services for us or on our behalf and expenses allocated to our General Partner by its affiliates. For the three months ended March 31, 2015, Landmark reimbursed us $692,872 for expenses related to certain general and administrative expenses that exceeded the cap.

Patent License Agreement

We entered into a Patent License Agreement (“License Agreement”) with American Infrastructure Funds, LLC (“AIF”), an affiliate of the controlling member of Landmark. Under the License Agreement, AIF granted us a nonexclusive, perpetual license to practice certain patented methods related to the apparatus and method for combining easements under a master limited partnership. We have agreed to pay AIF a license fee of $50,000 for the second year of the License Agreement, and thereafter, an amount equal to the greater of (i) one‑tenth of one percent (0.1%) of our gross revenue received during such contract year; and (ii) $100,000.

Right of First Offer

In connection with the IPO, certain other investment funds managed by Landmark 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. As of March 31, 2015, no such offers were made.

Management Fee

In accordance with the limited liability company agreements for each of the Contributing Landmark Funds, Landmark or its affiliates were paid a management fee of $45 per asset per month for providing various services to the funds. Management fees totaled $101,505  for the three months ended March 31, 2014. Upon execution of the omnibus agreement and completion of the closing of the IPO, Landmark’s right to receive this management fee has been terminated and we will instead reimburse Landmark for certain general and administrative expenses incurred by Landmark pursuant to the omnibus agreement, subject to a cap, as described above.

Acquisition of Real Property Interests

In connection with third party acquisitions, Landmark will be obligated to provide acquisition services to us, including asset identification, underwriting and due diligence, negotiation, documentation and closing, at the reasonable request of our General Partner, but we are under no obligation to utilize such services. We will pay Landmark reasonable fees, as mutually agreed to by Landmark and us, for providing these services. These fees will not be subject to the cap on general and administrative expenses described above. As of March 31, 2015, no such fees have been incurred.

Due from Affiliates

At March 31, 2015 and December 31, 2014, the General Partner and its affiliates owed $652,955  and $659,722 to the Partnership for general and administrative reimbursement and for rents received on their behalf.

12. Segment Information

The Partnership had three reportable segments, wireless communication, outdoor advertising and renewable power generation, as of March 31, 2015 and December 31, 2014 and two reportable segments, wireless communication and outdoor advertising, as of March 31, 2014.

The Partnership’s wireless communication segment consists of leasing real property interests to companies in the wireless communication industry in the United States. The Partnership’s outdoor advertising segment consists of leasing real property interests to companies in the outdoor advertising industry in the United States. The Partnership’s renewable power generation segment consists of leasing real property interests to companies in the renewable power industry in the United States. Items that are not included in any of the reportable segments are included in the corporate category.

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The reportable segments are strategic business units that offer different products and services. They are commonly managed as all three segment businesses require similar marketing and business strategies. Because our tenant lease arrangements are mostly effectively triple-net, we evaluate our segments based on revenue. We believe this measure provides investors relevant and useful information because it is presented on an unlevered basis.

The statements of income for the reportable segments are as follows:

For the three months ended March 31, 2015: