Landmark Infrastructure Partners LP Reports Third Quarter 2016 Results; Updates 2016 Guidance And Provides Preliminary 2017 Guidance

EL SEGUNDO, Calif., Nov. 03, 2016 (GLOBE NEWSWIRE) -- Landmark Infrastructure Partners LP (the "Partnership," "we," "us" or "our") (Nasdaq:LMRK) today announced its third quarter 2016 financial results.

Highlights
  • Announced a quarterly distribution of $0.3375 per common unit, representing year-over-year distribution growth of 6.3%;
  • Reported Q3 2016 revenue of $8.8 million, a 59% increase year-over-year;
  • Reported Q3 2016 net income of $1.5 million, EBITDA of $7.1 million, and Adjusted EBITDA of $8.3 million, a 65% increase in Adjusted EBITDA year-over-year;
  • Reported Q3 2016 distributable cash flow of $4.6 million, a 22% increase year-over-year;
  • On October 31, the Partnership completed the previously announced utility-scale solar land acquisition from Canadian Solar subsidiary, Recurrent Energy, for total consideration of approximately $73 million;
  • On August 30, the Partnership acquired a portfolio of 390 assets from Landmark Dividend Growth Fund - G LLC, an affiliate of its sponsor, Landmark Dividend LLC ("Landmark"), for total consideration of $140.5 million;
  • On August 30, the Partnership also acquired a portfolio of 63 assets from Landmark, for total consideration of $21.1 million;
  • Maintained an occupancy rate of 97%;
  • On October 19, the Partnership completed an offering of 3,450,000 common units, raising net proceeds of approximately $53.3 million;
  • On August 8, the Partnership completed the issuance of 7.9% Series B preferred units, raising net proceeds of approximately $44.3 million;
  • Increased commitments under the Partnerships revolving line of credit to $282 million.

Third Quarter and Nine Months 2016 ResultsRevenue for the quarter ended September 30, 2016 increased 59% to $8.8 million compared to the third quarter of 2015.  Net income for the third quarter was $1.5 million, or $0.06 per basic common unit.  EBITDA (earnings before interest, income taxes, depreciation and amortization) for the quarter ended September 30, 2016 increased 196% to $7.1 million compared to the third quarter of 2015.  The net income and EBITDA amounts include the impact from $1.2 million of impairments and $1.0 million of unrealized gain on interest rate swaps.  Adjusted EBITDA for the quarter ended September 30, 2016 increased 65% to $8.3 million compared to the third quarter of 2015, and distributable cash flow increased 22% to $4.6 million compared to the third quarter of 2015.

For the nine months ended September 30, 2016, the Partnership reported revenue of $24.4 million, net income of $1.1 million, or $0.02 per basic common unit.  The Partnership reported EBITDA of $15.6 million, Adjusted EBITDA of $22.7 million, and distributable cash flow of $14.4 million in the nine-month period ended September 30, 2016.  The net income and EBITDA amounts include the impact from $3.8 million of unrealized loss on interest rate swaps, $1.2 million of impairments and $0.4 million of gain on sale of real property interests.

"We are very pleased with this quarter's financial and operating performance," said Tim Brazy, Chief Executive Officer of the Partnership's general partner.  "Activity at our sponsor continues to be strong and direct acquisition opportunities, such as the recently completed Recurrent transaction, also help drive further growth for the Partnership.  In addition, the capital raised from our recent Series B preferred and common unit offerings provides us with further financial flexibility in the near-term to seek additional accretive acquisitions."

Quarterly DistributionOn October 26, 2016, the Board of Directors of the Partnership's general partner declared a cash distribution of $0.3375 per common unit, or $1.35 per common unit on an annualized basis, for the quarter ended September 30, 2016.  This quarter's cash distribution, which represents a 17.4% increase over the minimum quarterly distribution of $0.2875 per common unit and a 1.5% increase compared to the second quarter 2016 distribution of $0.3325 per common unit, marks the seventh consecutive quarter that the Partnership has increased its quarterly cash distribution since its IPO in November 2014.  The distribution is payable on November 15, 2016 to common unitholders of record as of November 7, 2016.

On October 20, 2016, the Board of Directors of the Partnership's general partner also declared an initial quarterly cash distribution of $0.5321527 per Series B preferred unit, which is payable on November 15, 2016 to Series B preferred unitholders of record as of November 1, 2016.

On September 22, 2016, the Board of Directors of the Partnership's general partner declared a quarterly cash distribution of $0.500 per Series A preferred unit, which was paid on October 17, 2016 to Series A preferred unitholders of record as of October 3, 2016.

Capital and LiquidityAs of September 30, 2016, the Partnership had $179.0 million of outstanding borrowings under its revolving credit facility (the "Facility") and $71.0 million of undrawn borrowing capacity under the Facility, subject to compliance with certain covenants.  On October 19, 2016, the Partnership exercised its option to increase the available commitments under the Facility by an additional $32 million, resulting in aggregate commitments of $282 million under the Facility.

Recurrent Energy TransactionOn October 31, 2016, the Partnership completed the previously announced acquisition of approximately 4,000 acres of land in California underneath utility-scale solar photovoltaic projects developed by Recurrent Energy, a subsidiary of Canadian Solar Inc. (NASDAQ:CSIQ), one of the world's largest solar power companies, for a total purchase price of approximately $73 million.

Recent Drop-Down AcquisitionsDuring the third quarter of 2016, the Partnership completed three drop-down acquisitions from Landmark or an affiliate of Landmark, acquiring a total of 512 assets for total consideration of approximately $186 million. Each of these acquisitions was immediately accretive to the Partnership's distributable cash flow, and were funded primarily with borrowings under the Partnership's existing Facility and the issuance of common units.
  • On August 1, 2016, the Partnership completed a drop-down acquisition of 59 assets for total consideration of $24.4 million in cash.
  • On August 30, 2016, the Partnership completed the ROFO Fund G drop-down acquisition of 390 assets for total consideration of approximately $140.5 million.  The consideration for the Fund G ROFO drop-down acquisition consisted of approximately 3.6 million common units representing limited partnership interests in the Partnership, valued at $64.8 million, plus $75.7 million in cash; and
  • On August 30, 2016, the Partnership completed a drop-down acquisition of 63 assets for total consideration of $21.1 million in cash.

At-The-Market ("ATM") Equity ProgramsThrough its At-The-Market ("ATM") issuance programs, the Partnership issued 274,007 common units and 63,657 Series A preferred units for net proceeds of approximately $4.7 million and $1.6 million, respectively, in the third quarter of 2016.  In total, for the first nine months of 2016, the Partnership has issued 405,156 common units and 63,657 Series A preferred units for net proceeds of approximately $6.9 million and $1.6 million, respectively.

Common Unit OfferingOn October 19, 2016, the Partnership closed a public offering of 3,450,000 common units, representing limited partner interests in the Partnership, including 450,000 common units issued pursuant to the underwriters' option to purchase additional common units, at a price to the public of $16.30 per common unit.  We used the net proceeds from the offering of approximately $53.3 million, after deducting underwriting discounts and estimated offering expenses, to fund a portion of the purchase price for the Recurrent Energy transaction.

Series B Preferred Unit OfferingOn August 8, 2016, the Partnership closed a public offering of its 7.90% Series B Cumulative Redeemable Perpetual Preferred Units (Liquidation Preference $25.00 per Unit) representing limited partner interests in the Partnership ("Series B Preferred Units") at a public offering price of $25.00 per Series B Preferred Unit.  The Partnership sold 1,840,000 Series B preferred units, which included the full exercise of the underwriters' option to purchase an additional 240,000 Series B preferred units.  We used the net proceeds from the offering of approximately $44.3 million, after deducting underwriting discounts and estimated offering expenses, to repay indebtedness.

Updated Guidance

Preliminary 2017 GuidanceFor 2017, the Partnership's sponsor, Landmark, has expressed its intent to offer us the right to purchase $200 million of assets.  These acquisitions, combined with organic portfolio growth, are expected to drive distribution growth of 10% over the fourth quarter 2016 distribution by the fourth quarter 2017 (distribution to be paid in February 2018).

2016 GuidanceThe Partnership's sponsor previously expressed its intent to offer us the right to purchase assets in the range of $200 million to $300 million in 2016.  Landmark has now expressed its intent to offer us between $300 million and $310 million in drop-down and third-party acquisitions in 2016.  Through October 31, 2016, we have completed drop-down acquisitions totaling $192 million from our sponsor and direct third-party acquisitions totaling $79 million.  To fund the acquisitions, we recently completed a common unit offering on October 19 th and do not expect to fully deploy the additional capital until the first half of 2017.  As a result of the under-deployment of the recently raised capital continuing into the first half of 2017, we are updating our distribution growth guidance for 2016 to 7% to 10% over the fourth quarter of 2015 distribution of $0.325 per common unit (distribution to be paid in February 2017). 

Conference Call InformationThe Partnership will hold a conference call on Thursday, November 3, 2016, at 12:00 p.m. Eastern Time (9:00 a.m. Pacific Time) to discuss its third quarter 2016 financial and operating results.  The call can be accessed via a live webcast at http://edge.media-server.com/m/p/8mkzfhu8, 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 4082725.

A webcast replay will be available approximately two hours after the completion of the conference call through November 3, 2017 at http://investor.landmarkmlp.com/phoenix.zhtml?c=253802&p=irol-calendar.  The replay is also available through November 12, 2016 by dialing 855-859-2056 or 404-537-3406 and entering the access code 4082725.

About Landmark Infrastructure Partners LPThe Partnership is a growth-oriented master limited partnership formed to acquire, own and manage a portfolio of real property interests that the Partnership leases to companies in the wireless communication, outdoor advertising and renewable power generation industries.  Headquartered in El Segundo, California, the Partnership owns and manages a diversified portfolio of real property interests, which includes long-term and perpetual easements, tenant lease assignments and, to a lesser extent, fee simple properties, primarily located in the United States.

Non-GAAP Financial MeasuresWe define EBITDA as net income before interest, income taxes, depreciation and amortization, and we define Adjusted EBITDA as EBITDA before unrealized and realized gain or loss on derivatives, loss on early extinguishment of debt, gain on sale of real property interests, straight line rent adjustments, amortization of above and below market rents, impairments, acquisition-related expenses, unit-based compensation, and the capital contribution to fund our general and administrative expense reimbursement.  We define distributable cash flow as Adjusted EBITDA less cash interest paid, current cash income tax paid, preferred distributions paid 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 generally accepted accounting principles in the United States ("GAAP"), as presented in our combined 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 StatementsThis 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 our expected distribution growth for 2016, the deployment of proceeds from the recent equity offering, expected acquisition opportunities from our sponsor and distribution growth guidance for 2017.  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, 2015 and Current Report on Form 8-K filed with the Commission on November 3, 2016.  These risks could cause the Partnership's actual results to differ materially from those contained in any forward-looking statement.

LANDMARK INFRASTRUCTURE PARTNERS LP
CONSOLIDATED AND COMBINED STATEMENTS OF OPERATIONS
( Unaudited)
 
    Three Months Ended September 30,    Nine Months Ended September 30, 
    2016   2015 (1)   2016   2015 (1)
Revenue                        
Rental revenue   $    10,031,438     $    8,806,838     $    29,493,148     $    24,304,884  
Interest income on receivables        349,824          200,902          908,970          605,180  
Total revenue        10,381,262          9,007,740          30,402,118          24,910,064  
Expenses                        
Management fees to affiliate        49,530          119,915          195,663          388,085  
Property operating        22,914          21,182          96,519          32,963  
General and administrative        632,251          462,364          2,776,839          2,107,354  
Acquisition-related        986,655          1,071,716          1,414,261          3,111,909  
Amortization        2,865,751          2,099,709          8,169,542          6,167,876  
Impairments        1,235,035          302,008          1,235,035          3,578,744  
Total expenses        5,792,136          4,076,894          13,887,859          15,386,931  
Other income and expenses                        
Interest expense        (3,663,180 )        (2,788,639 )        (10,282,184 )        (7,867,131 )
Loss on early extinguishment of debt        (1,703,468 )        (902,625 )        (1,703,468 )        (902,625 )
Realized loss on derivatives        (99,071 )        (13,823 )        (99,071 )        (13,823 )
Unrealized gain (loss) on derivatives        1,231,471          (1,580,130 )        (3,735,354 )        (2,094,627 )
Gain on sale of real property interests      —        —          373,779          82,026  
Total other income and expenses        (4,234,248 )        (5,285,217 )        (15,446,298 )        (10,796,180 )
Net income (loss)   $    354,878     $    (354,371 )   $    1,067,961     $    (1,273,047 )
Less: Pre-acquisition net income (loss) from Drop-down Assets (1)        (1,118,764 )        (83,925 )        (5,829 )        780,444  
Net income (loss) attributable to limited partners        1,473,642          (270,446 )        1,073,790          (2,053,491 )
Less: Distributions to preferred unitholders        (951,426 )      —          (1,333,648 )      —  
Less: General Partner's incentive distribution rights        (27,326 )      —          (32,385 )      —  
Net income (loss) attributable to common and subordinated unitholders   $    494,890     $    (270,446 )   $    (292,243 )   $    (2,053,491 )
Net income (loss) per limited partner unit                        
Common units - basic   $    0.06     $    (0.01 )   $    0.02     $    (0.13 )
Common units - diluted   $    0.06     $    (0.01 )   $    (0.02 )   $    (0.13 )
Subordinated units - basic and diluted   $    (0.10 )   $    (0.06 )   $    (0.16 )   $    (0.38 )
Weighted average limited partner units outstanding                        
Common units - basic        13,426,557          8,663,688          12,394,029          6,500,519  
Common units - diluted        13,426,557          8,663,688          15,529,138          6,500,519  
Subordinated units - basic and diluted        3,135,109          3,135,109          3,135,109          3,135,109  
Other Data:                        
Total leased tenant sites (end of period)        1,900          1,746          1,900          1,746  
Total available tenant sites (end of period)        1,958          1,769          1,958          1,769  
                                         

(1) During the nine months ended September 30, 2016 and the year ended December 31, 2015, the Partnership completed four and eight drop-down acquisitions, respectively, (the "Drop-down Assets") from our sponsor Landmark Dividend LLC and affiliates (collectively "Landmark"). Since the entities are under common control, the assets and liabilities acquired are recorded at Landmark's historical cost, with financial statements for prior periods retroactively adjusted to furnish comparative information. Financial information prior to the closing of each transaction has been retroactively adjusted for the Drop-down Assets. These financial statements should be read in conjunction with the financial statements and the accompanying notes and other information included in the Partnership's Quarterly Report on Form 10-Q for the quarter ended September 30, 2016 filed with the Securities and Exchange Commission on November 3, 2016 and the Partnership's Annual Report on Form 10-K for the year ended December 31, 2015 filed with the Securities and Exchange Commission on February 16, 2016.
LANDMARK INFRASTRUCTURE PARTNERS LP
CONSOLIDATED AND COMBINED BALANCE SHEETS
( Unaudited)
 
  September 30, 2016   December 31, 2015 (1)
Assets          
Land $    17,421,418     $    12,886,526  
Real property interests      476,118,276          452,678,000  
Total land and real property interests      493,539,694          465,564,526  
Accumulated amortization of real property interests      (23,391,414 )        (16,366,005 )
Land and net real property interests      470,148,280          449,198,521  
Investments in receivables, net      16,781,764          12,135,786  
Cash and cash equivalents      3,346,769          1,984,468  
Restricted cash      1,179,148        —  
Rent receivables, net      1,221,496          1,340,431  
Due from Landmark and affiliates      971,079          2,205,853  
Deferred loan costs, net      2,661,950          3,089,894  
Deferred rent receivable      1,123,005          864,979  
Other intangible assets, net      12,401,230          13,115,279  
Other assets      888,037          1,206,949  
Total assets $    510,722,758     $    485,142,160  
Liabilities and equity          
Revolving credit facility $    179,000,000     $    233,000,000  
Secured debt facility, net    —          74,135,801  
Secured notes, net      112,539,409        —  
Accounts payable and accrued liabilities      3,523,019          1,787,521  
Other intangible liabilities, net      13,368,603          14,379,895  
Prepaid rent      4,402,915          4,130,516  
Derivative liabilities      4,557,934          822,580  
Total liabilities      317,391,880          328,256,313  
Commitments and contingencies          
Equity          
Series A cumulative redeemable preferred units, 863,657 and zero units issued and outstanding at September 30, 2016 and December 31, 2015, respectively      19,442,312        —  
Series B cumulative redeemable preferred units, 1,840,000 and zero units issued and outstanding at September 30, 2016 and December 31, 2015, respectively      44,256,029        —  
Common units, 15,938,248 and 11,820,144 units issued and outstanding at September 30, 2016 and December 31, 2015, respectively      240,537,629          179,045,366  
Subordinated units, 3,135,109 units issued and outstanding      22,329,916          25,941,274  
General Partner      (133,272,083 )        (48,108,889 )
Accumulated other comprehensive income      37,075          8,096  
Total equity      193,330,878          156,885,847  
Total liabilities and equity $    510,722,758     $    485,142,160  
                   

(1) Financial information prior to the closing of the drop-down transactions has been retroactively adjusted for certain assets acquired from Landmark during the three and nine months ended September 30, 2016 and during the year ended December 31, 2015.  These financial statements should be read in conjunction with the financial statements and the accompanying notes and other information included in the Partnership's Annual Report on Form 10-K for the year ended December 31, 2015 filed with the Securities and Exchange Commission on February 16, 2016.
LANDMARK INFRASTRUCTURE PARTNERS LP
REAL PROPERTY INTEREST TABLE
 
    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)   Site (4)(5)   Revenue (6)   Revenue (6)  
Tenant Lease Assignment with Underlying Easement                                          
Wireless Communication    916    1,192   79.1   (7 )  1,156    23.6             $  6,324,213    63
Outdoor Advertising    394    474   87.7   (7 )  466    13.3                1,830,632    18
Renewable Power Generation    19    50   30.8   (7 )  50    29.8                314,206    3
Subtotal    1,329    1,716   80.9   (7 )  1,672    20.8             $  8,469,051    84
Tenant Lease Assignment only (8)                                          
Wireless Communication    134    186   52.0    173    17.4             $  1,108,467    11
Outdoor Advertising    16    16   75.5    16    11.8                140,863    2
Subtotal    150    202   53.8    189    16.9             $  1,249,330    13
Tenant Lease on Fee Simple                                          
Wireless Communication    8    15   99.0   (7 )  15    12.5             $  90,284    1
Outdoor Advertising    16    20   99.0   (7 )  19    10.1                86,602    1
Renewable Power Generation    5    5   99.0   (7 )  5    29.8                136,171    1
Subtotal    29    40   99.0   (7 )  39    13.9             $  313,057    3
Total    1,508    1,958   78.4   (9 )  1,900    20.3             $  10,031,438    100
Aggregate Portfolio                                          
Wireless Communication    1,058    1,393   75.7    1,344    22.7    96 $  1,803   $  7,522,964    75
Outdoor Advertising    426    510   87.7    501    13.2    98    1,370      2,058,097    21
Renewable Power Generation    24    55   36.2    55    29.8    100    2,735      450,377    4
Total    1,508    1,958   78.4   (9 )  1,900    20.3    97 $  1,716   $  10,031,438    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 September 30, 2016 were 5.3, 7.5, 19.8 and 6.0 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 September 30, 2016.  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 69 years.
LANDMARK INFRASTRUCTURE PARTNERS LP
RECONCILIATION OF EBITDA, ADJUSTED EBITDA AND DISTRIBUTABLE CASH FLOW
( Unaudited)
 
    Three Months Ended September 30,    Nine months ended September 30, 
    2016   2015 (1)   2016   2015 (1)
Reconciliation of EBITDA and Adjusted EBITDA to Net Income (loss)                        
Net income (loss)   $    354,878     $    (354,371 )   $    1,067,961     $    (1,273,047 )
Interest expense        3,663,180          2,788,639          10,282,184          7,867,131  
Amortization expense        2,865,751          2,099,709          8,169,542          6,167,876  
EBITDA   $    6,883,809     $    4,533,977     $    19,519,687     $    12,761,960  
Impairments        1,235,035          302,008          1,235,035          3,578,744  
Acquisition-related        986,655          1,071,716          1,414,261          3,111,909  
Unrealized (gain) loss on derivatives        (1,231,471 )        1,580,130          3,735,354          2,094,627  
Realized loss on derivatives        99,071          13,823          99,071          13,823  
Loss on early extinguishment of debt        1,703,468          902,625          1,703,468          902,625  
Gain on sale of real property interests      —        —          (373,779 )        (82,026 )
Unit-based compensation      —          8,750          105,000          96,250  
Straight line rent adjustments        (85,291 )        (96,279 )        (258,026 )        (292,102 )
Amortization of above- and below-market rents, net        (287,229 )        (447,627 )        (1,022,966 )        (1,139,059 )
Deemed capital contribution to fund general and administrative expense reimbursement (2)        415,107          291,115          2,034,077          1,465,040  
Adjusted EBITDA   $    9,719,154     $    8,160,238     $    28,191,182     $    22,511,791  
Reconciliation of EBITDA, Adjusted EBITDA and Distributable Cash Flow to Net Cash Provided by Operating Activities                        
Net cash provided by operating activities   $    4,973,233     $    3,009,265     $    17,509,674     $    11,461,648  
Unit-based compensation      —          (8,750 )        (105,000 )        (96,250 )
Unrealized gain (loss) on derivatives        1,231,471          (1,580,130 )        (3,735,354 )        (2,094,627 )
Loss on early extinguishment of debt        (1,703,468 )        (902,625 )        (1,703,468 )        (902,625 )
Amortization expense        (2,865,751 )        (2,099,709 )        (8,169,542 )        (6,167,876 )
Amortization of above- and below-market rents, net        287,229          447,627          1,022,966          1,139,059  
Amortization of deferred loan costs and discount on secured notes        (473,559 )        (513,530 )        (1,256,511 )        (1,482,408 )
Receivables interest accretion        7,387          2,284          30,349          21,450  
Impairments        (1,235,035 )        (302,008 )        (1,235,035 )        (3,578,744 )
Gain on sale of real property interests      —        —          373,779          82,026  
Allowance for doubtful accounts        (113,796 )      —          (113,796 )      —  
Working capital changes        247,167          1,593,205          (1,550,101 )        345,300  
Net income (loss)   $    354,878     $    (354,371 )   $    1,067,961     $    (1,273,047 )
Interest expense        3,663,180          2,788,639          10,282,184          7,867,131  
Amortization expense        2,865,751          2,099,709          8,169,542          6,167,876  
EBITDA   $    6,883,809     $    4,533,977     $    19,519,687     $    12,761,960  
Less:                        
Unrealized gain on derivatives        (1,231,471 )      —        —        —  
Gain on sale of real property interests      —        —          (373,779 )        (82,026 )
Straight line rent adjustment        (85,291 )        (96,279 )        (258,026 )        (292,102 )
Amortization of above- and below-market rents, net        (287,229 )        (447,627 )        (1,022,966 )        (1,139,059 )
Add:                        
Impairments        1,235,035          302,008          1,235,035          3,578,744  
Acquisition-related        986,655          1,071,716          1,414,261          3,111,909  
Unrealized loss on derivatives      —          1,580,130          3,735,354          2,094,627  
Realized loss on derivatives        99,071          13,823          99,071          13,823  
Loss on early extinguishment of debt        1,703,468          902,625          1,703,468          902,625  
Unit-based compensation      —          8,750          105,000          96,250  
Deemed capital contribution to fund general and administrative expense reimbursement (2)        415,107          291,115          2,034,077          1,465,040  
Adjusted EBITDA   $    9,719,154     $    8,160,238     $    28,191,182     $    22,511,791  
Less:                        
Expansion capital expenditures        (190,303,446 )        (122,400,000 )        (198,330,654 )        (169,655,000 )
Cash interest expense        (3,189,621 )        (2,275,109 )        (9,025,673 )        (6,384,723 )
Distributions to preferred unitholders        (951,426 )      —          (1,333,648 )      —  
Add:                        
Borrowings and capital contributions to fund expansion capital expenditures        190,303,446          122,400,000          198,330,654          169,655,000  
Distributable cash flow   $    5,578,107     $    5,885,129     $    17,831,861     $    16,127,068  
                                         

(1) Financial information prior to the closing of the drop-down transactions has been retroactively adjusted for certain assets acquired from Landmark during the three and nine months ended September 30, 2016 and 2015. See reconciliation of operations, EBITDA, Adjusted EBITDA, and distributable cash flow for the periods presented.(2) Under the omnibus agreement that we entered into with Landmark at the closing of our initial public offering, we agreed to reimburse Landmark for expenses related to certain general and administrative services that 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 in our income statements, and to the extent such general and administrative expenses exceed the cap amount, the amount of such excess will be reflected in 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 our general and administrative expenses.
LANDMARK INFRASTRUCTURE PARTNERS LP
RECONCILIATION OF OPERATIONS, EBITDA, ADJUSTED EBITDA AND DISTRIBUTABLE CASH FLOW FOR THE PREDECESSOR AND PARTNERSHIP
( Unaudited)
 
    For the Three Months Ended September 30, 
    2016   2015 (1)
    Landmark   Drop-down       Landmark   Drop-down    
    Infrastructure   Assets   Consolidated   Infrastructure   Assets   Consolidated
    Partners LP   Predecessor   Results   Partners LP   Predecessor   Results
Revenue:                                    
Rental revenue   $    8,504,764     $    1,526,674     $    10,031,438     $    5,326,821     $    3,480,017     $    8,806,838  
Interest income on receivables        296,232          53,592          349,824          200,117          785          200,902  
Total revenue        8,800,996          1,580,266          10,381,262          5,526,938          3,480,802          9,007,740  
Expenses:                                    
Management fees to affiliate      —          49,530          49,530        —          119,915          119,915  
Property operating        22,914        —          22,914          7,568          13,614          21,182  
General and administrative        632,251        —          632,251          462,364        —          462,364  
Acquisition-related        875,136          111,519          986,655          817,099          254,617          1,071,716  
Amortization        2,474,531          391,220          2,865,751          1,251,433          848,276          2,099,709  
Impairments        1,235,035        —          1,235,035          302,008        —          302,008  
Total expenses        5,239,867          552,269          5,792,136          2,840,472          1,236,422          4,076,894  
Other income and expenses                                    
Interest expense        (3,116,640 )        (546,540 )        (3,663,180 )        (1,404,727 )        (1,383,912 )        (2,788,639 )
Loss on early extinguishment of debt      —          (1,703,468 )        (1,703,468 )      —          (902,625 )        (902,625 )
Realized loss on derivatives      —          (99,071 )        (99,071 )      —          (13,823 )        (13,823 )
Unrealized gain (loss) on derivatives        1,029,153          202,318          1,231,471          (1,552,185 )        (27,945 )        (1,580,130 )
Total other income and expenses        (2,087,487 )        (2,146,761 )        (4,234,248 )        (2,956,912 )        (2,328,305 )        (5,285,217 )
Net income   $    1,473,642     $    (1,118,764 )   $    354,878     $    (270,446 )   $    (83,925 )   $    (354,371 )
Add:                                    
Interest expense        3,116,640          546,540          3,663,180          1,404,727          1,383,912          2,788,639  
Amortization expense        2,474,531          391,220          2,865,751          1,251,433          848,276          2,099,709  
EBITDA   $    7,064,813     $    (181,004 )   $    6,883,809     $    2,385,714     $    2,148,263     $    4,533,977  
Less:                                    
Unrealized gain on derivatives        (1,029,153 )        (202,318 )        (1,231,471 )      —        —        —  
Straight line rent adjustments        (50,899 )        (34,392 )        (85,291 )        (33,116 )        (63,163 )        (96,279 )
Amortization of above- and below-market rents        (242,045 )        (45,184 )        (287,229 )        (311,516 )        (136,111 )        (447,627 )
Add:                                    
Impairments        1,235,035        —          1,235,035          302,008        —          302,008  
Acquisition-related expenses        875,136          111,519          986,655          817,099          254,617          1,071,716  
Loss on early extinguishment of debt      —          1,703,468          1,703,468        —          902,625          902,625  
Unrealized loss on derivatives      —        —        —          1,552,185          27,945          1,580,130  
Realized loss on derivatives      —          99,071          99,071        —          13,823          13,823  
Unit-based compensation      —        —        —          8,750        —          8,750  
Deemed capital contribution to fund general and administrative expense reimbursement (2)        415,107        —          415,107          291,115        —          291,115  
Adjusted EBITDA   $    8,267,994     $    1,451,160     $    9,719,154     $    5,012,239     $    3,147,999     $    8,160,238  
Less:                                    
Expansion capital expenditures        (190,303,446 )      —          (190,303,446 )        (122,400,000 )      —          (122,400,000 )
Cash interest expense        (2,703,851 )        (485,770 )        (3,189,621 )        (1,223,898 )        (1,051,211 )        (2,275,109 )
Distributions to preferred unitholders        (951,426 )      —          (951,426 )      —        —        —  
Add:                                    
Borrowings and capital contributions to fund expansion capital expenditures        190,303,446        —          190,303,446          122,400,000        —          122,400,000  
Distributable cash flow   $    4,612,717     $    965,390     $    5,578,107     $    3,788,341     $    2,096,788     $    5,885,129  
                                     
Annualized quarterly distribution per unit   $    1.35                 $    1.27              
Distributions to common unitholders        4,531,463                      2,750,721              
Distributions to Landmark Dividend - subordinated units        1,058,099                      995,397              
Distributions to the General Partner - incentive distribution rights        20,093                    —              
Total distributions   $    5,609,655                 $    3,746,118              
Excess (shortfall) of distributable cash flow over the quarterly distribution   $    (996,938 )               $    42,223              
Coverage ratio (3)     0.82x                 1.01x            
                                     

(1) During the nine months ended September 30, 2016 and the year ended December 31, 2015, the Partnership completed four and eight drop-down acquisitions, respectively, from Landmark and affiliates (the "Drop-down Assets"). The assets and liabilities acquired are recorded at the historical cost of Landmark, as the transactions are between entities under common control, the statements of operations of the Partnership are adjusted retroactively as if the transactions occurred on the earliest date during which the entities were under common control. The historical financial statements have been retroactively adjusted to reflect the results of operations, financial position, and cash flows of the Drop-down Assets as if the Partnership owned the Drop-down Assets in all periods while under common control. The reconciliation presents our results of operations and financial position giving effect to the Drop-down Assets. The combined results of the Drop-down Assets prior to each transaction date are included in "Drop-down Assets Predecessor." The consolidated results of the Drop-down Assets after each transaction date are included in "Landmark Infrastructure Partners LP."(2) Under the omnibus agreement that we entered into with Landmark at the closing of the IPO, we agreed to reimburse Landmark for expenses related to certain general and administrative services that 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 in our income statements, and to the extent such general and administrative expenses exceed the cap amount, the amount of such excess will be reflected in 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 our general and administrative expenses.(3) Coverage ratio is calculated as the distributable cash flow for the quarter divided by the distributions to the common and subordinated unitholders on the weighted average units outstanding. 
LANDMARK INFRASTRUCTURE PARTNERS LP
RECONCILIATION OF OPERATIONS, EBITDA, ADJUSTED EBITDA AND DISTRIBUTABLE CASH FLOW FOR THE PREDECESSOR AND PARTNERSHIP
( Unaudited)
 
    For the Nine Months Ended September 30,
    2016   2015 (1)
    Landmark   Drop-down       Landmark   Drop-down    
    Infrastructure   Assets   Consolidated   Infrastructure   Assets   Consolidated
    Partners LP   Predecessor   Results   Partners LP   Predecessor   Results
Revenue:                                    
Rental revenue   $    23,665,233     $    5,827,915     $    29,493,148     $    13,148,536     $    11,156,348     $    24,304,884  
Interest income        720,392          188,578          908,970          601,972          3,208          605,180  
Total revenue        24,385,625          6,016,493          30,402,118          13,750,508          11,159,556          24,910,064  
Expenses:                                    
Management fees to affiliate      —          195,663          195,663        —          388,085          388,085  
Property operating        94,969          1,550          96,519          16,462          16,501          32,963  
General and administrative        2,776,839        —        2,776,839          2,097,421          9,933          2,107,354  
Acquisition-related        1,210,101          204,160          1,414,261          1,290,451          1,821,458          3,111,909  
Amortization        6,715,810          1,453,732          8,169,542          3,393,421          2,774,455          6,167,876  
Impairments        1,235,035        —          1,235,035          3,578,744        —          3,578,744  
Total expenses        12,032,754          1,855,105          13,887,859          10,376,499          5,010,432          15,386,931  
Other income and expenses                                    
Interest expense        (7,831,157 )        (2,451,027 )        (10,282,184 )        (3,580,618 )        (4,286,513 )        (7,867,131 )
Loss on early extinguishment of debt      —          (1,703,468 )        (1,703,468 )      —          (902,625 )        (902,625 )
Realized loss on derivatives      —          (99,071 )        (99,071 )      —          (13,823 )        (13,823 )
Unrealized gain (loss) on derivatives        (3,821,703 )        86,349          (3,735,354 )        (1,928,908 )        (165,719 )        (2,094,627 )
Gain on sale of real property interests        373,779        —        373,779          82,026        —          82,026  
Total other income and expenses        (11,279,081 )        (4,167,217 )        (15,446,298 )        (5,427,500 )        (5,368,680 )        (10,796,180 )
Net income (loss)   $    1,073,790     $    (5,829 )   $    1,067,961     $    (2,053,491 )   $    780,444     $    (1,273,047 )
Add:                                    
Interest expense        7,831,157          2,451,027          10,282,184          3,580,618          4,286,513          7,867,131  
Amortization expense        6,715,810          1,453,732          8,169,542          3,393,421          2,774,455          6,167,876  
EBITDA   $    15,620,757     $    3,898,930     $    19,519,687     $    4,920,548     $    7,841,412     $    12,761,960  
Less:                                    
Gain on sale of real property interests        (373,779 )      —          (373,779 )        (82,026 )      —          (82,026 )
Straight line rent adjustments        (104,969 )        (153,057 )        (258,026 )        (91,660 )        (200,442 )        (292,102 )
Amortization of above- and below-market rents        (829,733 )        (193,233 )        (1,022,966 )        (702,003 )        (437,056 )        (1,139,059 )
Add:                                    
Impairments        1,235,035        —          1,235,035          3,578,744        —          3,578,744  
Acquisition-related expenses        1,210,101          204,160          1,414,261          1,290,451          1,821,458          3,111,909  
Loss on early extinguishment of debt      —          1,703,468          1,703,468        —          902,625          902,625  
Unrealized loss on derivatives        3,821,703          (86,349 )        3,735,354          1,928,908          165,719          2,094,627  
Realized loss on derivatives      —          99,071          99,071        —          13,823          13,823  
Unit-based compensation        105,000        —        105,000          96,250        —          96,250  
Deemed capital contribution to fund general and administrative expense reimbursement (2)        2,034,077        —        2,034,077          1,465,040        —          1,465,040  
Adjusted EBITDA   $    22,718,192     $    5,472,990     $    28,191,182     $    12,404,252     $    10,107,539     $    22,511,791  
Less:                                    
Expansion capital expenditures        (198,330,654 )      —          (198,330,654 )        (169,655,000 )      —          (169,655,000 )
Cash interest expense        (6,991,065 )        (2,034,608 )        (9,025,673 )        (3,101,651 )        (3,283,072 )        (6,384,723 )
Distributions to preferred unitholders        (1,333,648 )      —          (1,333,648 )      —        —        —  
Add:                                        
Borrowings and capital contributions to fund expansion capital expenditures        198,330,654        —          198,330,654          169,655,000        —          169,655,000  
Distributable cash flow   $    14,393,479     $    3,438,382     $    17,831,861     $    9,302,601     $    6,824,467     $    16,127,068  
                                     
Annualized quarterly distribution per unit   $    1.33                 $    1.23              
Distributions to common unitholders        12,394,029                      5,996,729              
Distributions to Landmark Dividend - subordinated units        3,135,109                      2,892,138              
Distributions to the General Partner - incentive distribution rights        22,266                    —              
Total distributions   $    15,551,404                 $    8,888,867              
Excess (shortfall) of distributable cash flow over the quarterly distribution   $    (1,157,925 )               $    413,734              
Coverage ratio (3)     0.93x                 1.05x            
                                     

(1) The historical financial statements have been retroactively adjusted to reflect the results of operations, financial position, and cash flows of the Drop-down Assets as if the Partnership owned the Drop-down Assets in all periods while under common control. The reconciliation presents our results of operations and financial position giving effect to the Drop-down Assets. The combined results of the Drop-down Assets prior to each transaction date are included in "Drop-down Assets Predecessor." The consolidated results of the Drop-down Assets after each transaction date are included in "Landmark Infrastructure Partners LP."(2) Under the omnibus agreement that we entered into with Landmark at the closing of the IPO, we agreed to reimburse Landmark for expenses related to certain general and administrative services that 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 in our income statements, and to the extent such general and administrative expenses exceed the cap amount, the amount of such excess will be reflected in 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 our general and administrative expenses.(3) Coverage ratio is calculated as the distributable cash flow for the quarter divided by the distributions to the common and subordinated unitholders on the weighted average units outstanding.
CONTACT: Marcelo ChoiVice President, Investor Relations(310) 598-3173ir@landmarkmlp.com

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