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Landmark Infrastructure Partners LP Reports Fourth Quarter Results

EL SEGUNDO, Calif., Feb. 20, 2019 (GLOBE NEWSWIRE) -- Landmark Infrastructure Partners LP (the “Partnership,” “we,” “us” or “our”) (LMRK) today announced its fourth quarter financial results.

Highlights

  • Net loss attributable to common unitholders of $0.21 per diluted unit, FFO of $0.01 per diluted unit and AFFO of $0.35 per diluted unit, an increase in AFFO per diluted unit of 9% from the fourth quarter of 2017;
  • Amended and restated its five-year revolving credit facility with initial borrowing commitments of $450 million;
  • Entered into an agreement with the City of Lancaster, CA, to develop and deploy Landmark’s FlexGridTM solution;
  • Amended our Omnibus Agreement, extending the general & administrative expense reimbursement arrangement through November 2021; and
  • Announced a quarterly distribution of $0.3675 per common unit.

2018 Highlights

  • Reported 2018 rental revenue of $64.8 million, a 23% increase year-over-year;
  • Reported 2018 net income attributable to common unitholders of $3.97 per diluted unit, FFO of $0.96 per diluted unit, and AFFO of $1.34 per diluted unit;
  • Formed a joint venture with Brookfield Asset Management (the “JV”) to invest in core infrastructure assets;
  • Entered into an agreement with Dallas Area Rapid Transit (“DART”) to develop a smart media communications platform which includes the deployment of kiosks and Landmark’s FlexGridTM solution; and
  • Completed acquisitions with total consideration of approximately $136 million in 2018.

Fourth Quarter 2018 Results
Rental revenue for the quarter ended December 31, 2018 increased 2% to $14.7 million compared to the fourth quarter of 2017 and declined 16% compared to the third quarter of 2018.  The sequential decline in rental revenue in the fourth quarter is due to the contribution of assets to the JV in September 2018, as the JV is accounted for as an equity method investment and the revenue generated in the venture is not consolidated into the Partnership’s results.  Net loss for the fourth quarter of 2018 was $2.2 million, compared to net income of $9.3 million in the fourth quarter of 2017.  Net loss attributable to common unitholders per diluted unit in the fourth quarter of 2018 was $0.21, compared to net income attributable to common unitholders per diluted unit of $0.31 in the fourth quarter of 2017.  FFO for the fourth quarter of 2018 was $0.01 per diluted unit, compared to FFO per diluted unit of $0.48 in the fourth quarter of 2017.  Net loss and FFO in the fourth quarter of 2018 included a $4.2 million unrealized loss on our interest rate swaps, while net income and FFO in the fourth quarter of 2017 included a $1.8 million unrealized gain on our interest rate swaps and an income tax benefit of $3.2 million.  AFFO for the fourth quarter of 2018 increased to $0.35 per diluted unit, an increase of 9% from the fourth quarter of 2017.

For the full year ended December 31, 2018, the Partnership reported rental revenue of $64.8 million compared to $52.6 million during the full year ended December 31, 2017.  The growth in revenue was primarily attributable to acquisitions made during the course of 2017 and 2018, partially offset by the impact of the contribution of assets to the JV in September of 2018.  For the full year ended December 31, 2018 we generated net income of $115.8 million compared to $19.3 million during the year ended December 31, 2017.  Net income attributable to common unitholders for the full year ended December 31, 2018 was $3.97 per diluted unit compared to $0.53 per diluted unit for the year ended December 31, 2017.   For the full year ended December 31, 2018 we generated FFO of $0.96 per diluted unit and AFFO of $1.34 per diluted unit, compared to FFO of $1.18 per diluted unit and AFFO of $1.26 per diluted unit during the full year ended December 31, 2017.  Net income for 2018 included a gain on sale of assets of $99.9 million.

“We are very pleased with our fourth quarter results.  We made further progress with our development initiatives, refinanced our revolving line of credit and ended the year well positioned for 2019.  We continue to believe that our development activities will drive the Partnership’s near-term and long-term growth,” said Tim Brazy, Chief Executive Officer of the Partnership’s general partner.

Quarterly Distributions
On January 25, 2019, the Board of Directors of the Partnership’s general partner declared a cash distribution of $0.3675 per common unit, or $1.47 per common unit on an annualized basis, for the quarter ended December 31, 2018.  The distribution was paid on February 14, 2019 to common unitholders of record as of February 4, 2019.

On January 22, 2019, the Board of Directors of the Partnership’s general partner declared a quarterly cash distribution of $0.4571 per Series C preferred unit, which was paid on February 15, 2019 to Series C preferred unitholders of record as of February 1, 2019. 

On January 22, 2019, the Board of Directors of the Partnership’s general partner declared a quarterly cash distribution of $0.49375 per Series B preferred unit, which was paid on February 15, 2019 to Series B preferred unitholders of record as of February 1, 2019.

On December 20, 2018, the Board of Directors of the Partnership’s general partner declared a quarterly cash distribution of $0.5000 per Series A preferred unit, which was paid on January 15, 2019 to Series A preferred unitholders of record as of January 2, 2019.

Recent Acquisitions
In the full year 2018, the Partnership acquired a total of 231 assets for total consideration of approximately $136 million. The acquisitions were immediately accretive to the Partnership’s distributable cash flow, funded primarily with borrowings under the Partnership’s existing Facility and the issuance of common units.

At-The-Market (“ATM”) Equity Programs
Through its At-The-Market (“ATM”) issuance programs, the Partnership issued 27,830 common units and 24,747 Series A preferred units for gross proceeds of approximately $0.5 million and $0.6 million, respectively, for the full year 2018.

Conference Call Information
The Partnership will hold a conference call on Wednesday, February 20, 2019, at 12:00 p.m. Eastern Time (9:00 a.m. Pacific Time) to discuss its fourth quarter 2018 financial and operating results.  The call can be accessed via a live webcast at https://edge.media-server.com/m6/p/4p2soroi, or by dialing 877-930-8063 in the U.S. and Canada.  Investors outside of the U.S. and Canada should dial 253-336-7764.  The passcode for both numbers is 3186638.

A webcast replay will be available approximately two hours after the completion of the conference call through February 20, 2020 at https://edge.media-server.com/m6/p/4p2soroi.  The replay is also available through March 1, 2019 by dialing 855-859-2056 or 404-537-3406 and entering the access code 3186638.

About Landmark Infrastructure Partners LP
The Partnership owns and manages a portfolio of real property interests and infrastructure assets that the Partnership leases to companies in the wireless communication, outdoor advertising and renewable power generation industries. 

Non-GAAP Financial Measures
FFO, is a non-GAAP financial measure of operating performance of an equity REIT in order to recognize that income-producing real estate historically has not depreciated on the basis determined under GAAP.  We calculate FFO in accordance with the standards established by the National Association of Real Estate Investment Trust (“NAREIT”).  FFO represents net income (loss) excluding real estate related depreciation and amortization expense, real estate related impairment charges, gains (or losses) on real estate transactions, adjustments for unconsolidated joint venture, and distributions to preferred unitholders and noncontrolling interests.

FFO is generally considered by industry analysts to be the most appropriate measure of performance of real estate companies.  FFO does not necessarily represent cash provided by operating activities in accordance with GAAP and should not be considered an alternative to net earnings as an indication of the Partnership's performance or to cash flow as a measure of liquidity or ability to make distributions.  Management considers FFO an appropriate measure of performance of an equity REIT because it primarily excludes the assumption that the value of the real estate assets diminishes predictably over time, and because industry analysts have accepted it as a performance measure.  The Partnership's computation of FFO may differ from the methodology for calculating FFO used by other equity REITs, and therefore, may not be comparable to such other REITs.

Adjusted Funds from Operations ("AFFO") is a non-GAAP financial measure of operating performance used by many companies in the REIT industry.  AFFO adjusts FFO for certain non-cash items that reduce or increase net income in accordance with GAAP.  AFFO should not be considered an alternative to net earnings, as an indication of the Partnership's performance or to cash flow as a measure of liquidity or ability to make distributions. Management considers AFFO a useful supplemental measure of the Partnership's performance.  The Partnership's computation of AFFO may differ from the methodology for calculating AFFO used by other equity REITs, and therefore, may not be comparable to such other REITs.  We calculate AFFO by starting with FFO and adjusting for general and administrative expense reimbursement, acquisition-related expenses, unrealized gain (loss) on derivatives, straight line rent adjustments, unit-based compensation, amortization of deferred loan costs and discount on secured notes, deferred income tax expense, amortization of above and below market rents, loss on early extinguishment of debt, repayments of receivables, adjustments for investment in unconsolidated joint venture, adjustments for drop-down assets and foreign currency transaction loss.  The GAAP measures most directly comparable to FFO and AFFO is net income.

We define EBITDA as net income before interest expense, income taxes, depreciation and amortization, adjustments for investment in unconsolidated joint venture, and we define Adjusted EBITDA as EBITDA before unrealized and realized gain or loss on derivatives, loss on early extinguishment of debt, gain or loss on sale of real property interests, straight line rent adjustments, amortization of above and below market rents, impairments, acquisition-related expenses, unit-based compensation, repayments of investments in receivables, foreign currency transaction loss, and the capital contribution to fund our general and administrative expense reimbursement.  We define distributable cash flow as Adjusted EBITDA less cash interest expense, cash interest expense from unconsolidated joint venture, current cash income tax expense, distributions to preferred unitholders, distributions to noncontrolling interest holders, and maintenance capital expenditures.  Distributable cash flow will not reflect changes in working capital balances.  We believe that to understand our performance further, EBITDA, Adjusted EBITDA and distributable cash flow should be compared with our reported net income (loss) and net cash provided by operating activities in accordance with GAAP, as presented in our consolidated financial statements.

EBITDA, Adjusted EBITDA and distributable cash flow are non-GAAP supplemental financial measures that management and external users of our financial statements, such as industry analysts, investors, lenders and rating agencies, may use to assess:

  • our operating performance as compared to other publicly traded limited partnerships, without regard to historical cost basis or, in the case of Adjusted EBITDA, financing methods;
  • the ability of our business to generate sufficient cash to support our decision to make distributions to our unitholders;
  • our ability to incur and service debt and fund capital expenditures; and
  • the viability of acquisitions and the returns on investment of various investment opportunities.

We believe that the presentation of EBITDA, Adjusted EBITDA and distributable cash flow provides information useful to investors in assessing our financial condition and results of operations.  The GAAP measures most directly comparable to EBITDA, Adjusted EBITDA and distributable cash flow are net income (loss) and net cash provided by operating activities.  EBITDA, Adjusted EBITDA and distributable cash flow should not be considered as an alternative to GAAP net income (loss), net cash provided by operating activities or any other measure of financial performance or liquidity presented in accordance with GAAP.  Each of EBITDA, Adjusted EBITDA and distributable cash flow has important limitations as analytical tools because they exclude some, but not all, items that affect net income (loss) and net cash provided by operating activities, and these measures may vary from those of other companies.  You should not consider EBITDA, Adjusted EBITDA and distributable cash flow in isolation or as a substitute for analysis of our results as reported under GAAP.  As a result, because EBITDA, Adjusted EBITDA and distributable cash flow may be defined differently by other companies in our industry, EBITDA, Adjusted EBITDA and distributable cash flow as presented below may not be comparable to similarly titled measures of other companies, thereby diminishing their utility.  For a reconciliation of EBITDA, Adjusted EBITDA and distributable cash flow to the most comparable financial measures calculated and presented in accordance with GAAP, please see the “Reconciliation of EBITDA, Adjusted EBITDA and Distributable Cash Flow” table below.

Forward-Looking Statements
This release contains forward-looking statements within the meaning of federal securities laws.  These statements discuss future expectations, contain projections of results of operations or of financial condition or state other forward-looking information.  You can identify forward-looking statements by words such as “anticipate,” “believe,” “estimate,” “expect,” “forecast,” “project,” “could,” “may,” “should,” “would,” “will” or other similar expressions that convey the uncertainty of future events or outcomes.  These forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties and other factors, some of which are beyond the Partnership’s control and are difficult to predict.  These statements are often based upon various assumptions, many of which are based, in turn, upon further assumptions, including examination of historical operating trends made by the management of the Partnership.  Although the Partnership believes that these assumptions were reasonable when made, because assumptions are inherently subject to significant uncertainties and contingencies, which are difficult or impossible to predict and are beyond its control, the Partnership cannot give assurance that it will achieve or accomplish these expectations, beliefs or intentions.  Examples of forward-looking statements in this press release include expected acquisition opportunities from our sponsor.  When considering these forward-looking statements, you should keep in mind the risk factors and other cautionary statements contained in the Partnership’s filings with the U.S. Securities and Exchange Commission (the “Commission”), including the Partnership’s annual report on Form 10-K for the year ended December 31, 2018 and Current Report on Form 8-K filed with the Commission on February 20, 2019.  These risks could cause the Partnership’s actual results to differ materially from those contained in any forward-looking statement.

CONTACT: Marcelo Choi
  Vice President, Investor Relations
  (213) 788-4528
  ir@landmarkmlp.com
   


Landmark Infrastructure Partners LP
Consolidated Statements of Operations
In thousands, except per unit data
(Unaudited)

    Three Months Ended December 31,     Year Ended December 31,  
    2018     2017     2018     2017  
Revenue                                
Rental revenue   $ 14,714     $ 14,482     $ 64,765     $ 52,625  
Expenses                                
Property operating     272       147       1,147       394  
General and administrative     1,208       1,019       4,731       5,286  
Acquisition-related      2,818       280       3,287       1,287  
Amortization     3,604       3,711       16,152       13,537  
Impairments     579             1,559       848  
Total expenses     8,481       5,157       26,876       21,352  
Other income and expenses                                
Interest and other income     362       419       1,642       1,587  
Interest expense     (4,687 )     (5,468 )     (24,273 )     (18,399 )
Loss on early extinguishment of debt     (157 )           (157 )      
Unrealized gain (loss) on derivatives     (4,198 )     1,786       1,010       1,675  
Equity income from unconsolidated joint venture                 59        
Gain (loss) on sale of real property interests     (155 )     (5 )     99,884       (5 )
Foreign currency transaction loss     (6 )           (6 )      
Total other income and expenses     (8,841 )     (3,268 )     78,159       (15,142 )
Income (loss) before income tax (benefit) expense     (2,608 )     6,057       116,048       16,131  
Income tax (benefit) expense     (436 )     (3,217 )     227       (3,145 )
Net income (loss)     (2,172 )     9,274       115,821       19,276  
Less: Net income attributable to noncontrolling interests     7       8       27       19  
Net income (loss) attributable to limited partners     (2,179 )     9,266       115,794       19,257  
Less: Distributions to preferred unitholders     (2,888 )     (2,001 )     (10,630 )     (6,673 )
Less: General Partner's incentive distribution rights     (197 )     (193 )     (784 )     (488 )
Net income (loss) attributable to common and subordinated unitholders   $ (5,264 )   $ 7,072     $ 104,380     $ 12,096  
Net income (loss) per common and subordinated unit                                
Common units – basic   $ (0.21 )   $ 0.31     $ 4.25     $ 0.54  
Common units – diluted   $ (0.21 )   $ 0.31     $ 3.97     $ 0.53  
Subordinated units – basic and diluted   $     $ 0.28     $ (0.78 )   $ 0.50  
Weighted average common and subordinated units outstanding                                
Common units – basic     25,283       19,940       24,626       19,701  
Common units – diluted     25,283       23,075       26,967       22,836  
Subordinated units – basic and diluted           3,135       387       3,135  
Other Data                                
Total leased tenant sites (end of period)     1,831       2,157       1,831       2,157  
Total available tenant sites (end of period)     1,920       2,239       1,920       2,239  
                                 


Landmark Infrastructure Partners LP
Consolidated Balance Sheets
In thousands, except per unit data
(Unaudited)

    December 31, 2018     December 31, 2017  
Assets                
Land   $ 128,302     $ 114,385  
Real property interests     517,423       596,422  
Construction in progress     29,556       7,574  
Total land and real property interests     675,281       718,381  
Accumulated amortization of real property interests     (39,069 )     (37,817 )
Land and net real property interests     636,212       680,564  
Investments in receivables, net     18,348       20,782  
Investment in unconsolidated joint venture     65,670        
Cash and cash equivalents     4,108       9,188  
Restricted cash     3,672       18,672  
Rent receivables, net     4,292       4,141  
Due from Landmark and affiliates     1,390       629  
Deferred loan costs, net     5,552       3,589  
Deferred rent receivable     5,251       4,252  
Derivative asset     4,590       3,159  
Other intangible assets, net     20,839       17,984  
Assets held for sale (AHFS)     7,846        
Other assets     8,843       5,039  
Total assets   $ 786,613     $ 767,999  
Liabilities and equity                
Revolving credit facility   $ 155,000     $ 304,000  
Secured notes, net     223,685       187,249  
Accounts payable and accrued liabilities     7,435       4,978  
Other intangible liabilities, net     9,291       12,833  
Liabilities associated with AHFS     397        
Prepaid rent     5,418       4,581  
Derivative liabilities     402        
Total liabilities     401,628       513,641  
Commitments and contingencies                
Mezzanine equity                
Series C cumulative redeemable convertible preferred units, 2,000,000 and zero units
  issued and outstanding at December 31, 2018 and 2017, respectively
    47,308        
Equity                
Series A cumulative redeemable preferred units, 1,593,149 and 1,568,402 units
  issued and outstanding at December 31, 2018 and 2017, respectively
    37,207       36,604  
Series B cumulative redeemable preferred units, 2,463,015 units
  issued and outstanding at December 31, 2018 and 2017, respectively
    58,936       58,936  
Common units, 25,327,801 and 20,146,458 units issued and outstanding at
  December 31, 2018 and 2017, respectively
    411,158       288,527  
Subordinated units, zero and 3,135,109 units issued and outstanding
  at December 31, 2018 and 2017, respectively
          19,641  
General Partner     (167,019 )     (150,519 )
Accumulated other comprehensive income (loss)     (2,806 )     968  
Total limited partners' equity     337,476       254,157  
Noncontrolling interests     201       201  
Total equity     337,677       254,358  
Total liabilities, mezzanine equity and equity   $ 786,613     $ 767,999  
 


Landmark Infrastructure Partners LP
Real Property Interest Table

        Available Tenant Sites (1)       Leased Tenant Sites                    
Real Property Interest   Number of
Infrastructure
Locations (1)
  Number   Average
Remaining
Property
Interest
(Years)
      Number   Average
Remaining
Lease
Term
(Years) (2)
  Tenant
Site

Occupancy
Rate (3)
  Average
Monthly
Effective Rent
Per Tenant
Site (4)(5)
  Quarterly
Rental
Revenue (6)
(In thousands)
  Percentage
of
Quarterly

Rental
Revenue (6)
Tenant Lease Assignment with Underlying Easement                                            
Wireless Communication   726   918   72.7   (7)   864   27.8             $ 5,156   35%
Outdoor Advertising   531   631   80.5   (7)   615   17.6               4,150   28%
Renewable Power Generation   24   56   28.6   (7)   56   29.3               432   3%
Subtotal   1,281   1,605   78.6   (7)   1,535   23.8             $ 9,738   66%
Tenant Lease Assignment only (8)                                            
Wireless Communication   122   176   48.2       158   17.8             $ 994   7%
Outdoor Advertising   32   35   63.1       34   14.2               225   2%
Renewable Power Generation   6   6   48.6       6   27.6               57   —%
Subtotal   160   217   50.8       198   17.5             $ 1,276   9%
Tenant Lease on Fee Simple                                            
Wireless Communication   19   29   99.0   (7)   29   18.7             $ 1,213   8%
Outdoor Advertising   50   54   99.0   (7)   54   7.8               906   6%
Renewable Power Generation   13   15   99.0   (7)   15   30.9               1,581   11%
Subtotal   82   98   99.0   (7)   98   14.4             $ 3,700   25%
Total   1,523   1,920   72.9   (9)   1,831   22.6             $ 14,714   100%
Aggregate Portfolio                                            
Wireless Communication   867   1,123   68.8       1,051   26.0   94%   $ 1,927   $ 7,363   50%
Outdoor Advertising   613   720   80.8       703   16.7   98%     2,535     5,281   36%
Renewable Power Generation   43   77   37.3       77   29.6   100%     8,960     2,070   14%
Total   1,523   1,920   72.9   (9)   1,831   22.6   95%   $ 2,458   $ 14,714   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, 2018 were 3.8, 8.5, 17.6 and 5.9 years, respectively.
(3)   Represents the number of leased tenant sites divided by the 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, 2018.  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 64 years.



Landmark Infrastructure Partners LP
Reconciliation of Funds from Operations (FFO) and Adjusted Funds from Operations (AFFO)
In thousands, except per unit data
(Unaudited)

    Three Months Ended December 31,     Year Ended December 31,  
    2018     2017     2018     2017  
Net income (loss)   $ (2,172 )   $ 9,274     $ 115,821     $ 19,276  
Adjustments:                                
Amortization expense     3,604       3,711       16,152       13,537  
Impairments     579             1,559       848  
(Gain) loss on sale of real property interests     155       5       (99,884 )     5  
Adjustments for investment in unconsolidated joint venture     923             923        
Distributions to preferred unitholders     (2,888 )     (2,001 )     (10,630 )     (6,673 )
Distributions to noncontrolling interests     (7 )     (8 )     (27 )     (19 )
FFO   $ 194     $ 10,981     $ 23,914     $ 26,974  
Adjustments:                                
General and administrative expense reimbursement     764       491       2,833       3,516  
Acquisition-related expenses     2,818       280       3,287       1,287  
Unrealized gain on derivatives     4,198       (1,786 )     (1,010 )     (1,675 )
Straight line rent adjustments     58       (54 )     235       (358 )
Unit-based compensation                 70       105  
Amortization of deferred loan costs and discount on secured notes     805       719       3,809       2,237  
Deferred income tax expense (benefit)     (215 )     (3,215 )     205       (3,215 )
Amortization of above- and below-market rents, net     (218 )     (262 )     (1,226 )     (1,226 )
Loss on early extinguishment of debt     157             157        
Repayments of receivables     193       275       1,108       1,180  
Adjustments for investment in unconsolidated joint venture     30             36        
Foreign currency transaction loss     6             6        
AFFO   $ 8,790     $ 7,429     $ 33,424     $ 28,825  
                                 
FFO per common unit - diluted   $ 0.01     $ 0.48     $ 0.96     $ 1.18  
AFFO per common unit - diluted   $ 0.35     $ 0.32     $ 1.34     $ 1.26  
Weighted average common units outstanding - diluted     25,283       23,075       25,013       22,836  
                                 


Landmark Infrastructure Partners LP
Reconciliation of EBITDA, Adjusted EBITDA and Distributable Cash Flow
In thousands
(Unaudited)

...
    Three Months Ended December 31,     Year Ended December 31,  
    2018     2017     2018     2017  
Reconciliation of EBITDA and Adjusted EBITDA to Net Income                                
Net income (loss)   $ (2,172 )   $ 9,274     $ 115,821     $ 19,276  
Interest expense     4,687       5,468       24,273       18,399  
Amortization expense     3,604       3,711       16,152