Q2 2021 Landmark Infrastructure Partners LP Earnings Call
Hello, Thank you for standing by and welcome to the second quarter 2021 Landmark infrastructure Partners LP earnings Conference call. At this time all participants are in a listen only mode. This call is limited to prepared remarks. Please be advised that today's conference is being recorded for you require any further assistance.
Please press Star Zero I would now like turn the conference over to your Speaker today, Marcelo Choi VP Investor Relations. Please go ahead.
Thank you and good morning, we'd like to welcome you to landmark infrastructure partners second quarter earnings call.
Dave will share an operating and financial overview of the business presenting on the call today are temporary the chief Executive Officer, and George Doyle Chief Financial Officer.
Like to remind all participants that our comments today will include forward looking statements, which are subject to certain risks and uncertainties a number of factors and uncertainties could cause actual results in future periods to differ materially from our current expectations for a complete discussion of these risks we encourage you to read the partnership's earnings release and documents.
File with the SEC.
Additionally, we may refer to non-GAAP measures, such as <unk> <unk> EBITDA and.
Adjusted EBITDA during the call.
Please refer to the earnings release, and our public filings for definitions and reconciliations of these non-GAAP measures to their most comparable GAAP measures.
And with that I'll turn the call over to Tim.
Thank you Marcelo and thank you all for joining us today I.
I hope that everyone is doing well and continuing to manage through what are still uncertain times.
As you saw from our release. This morning, we posted another quarter of solid operating and financial results as <unk> portfolio continues to generate stable and consistent cash flows.
Rental revenues were significantly higher year over year.
Driven by the redeployment of capital from the sale of our interest in our European outdoor advertising joint venture last year.
Those proceeds were primarily used to acquire data center assets in the second half of 2020.
<unk> per unit in the second quarter was higher year over year and slightly higher compared to the first quarter.
As expected our wireless communication digital infrastructure and renewable power generation assets have generally not been impacted by the pandemic.
Our outdoor advertising segment, which has been the segment most affected by the pandemic.
A slight decline in rental revenues in the second quarter compared to the first quarter, which was the first sequential decline since the third quarter of 2020 after 2 straight quarters of improvement.
We continue to expect the outdoor advertising industry to rebound over the longer term.
And we remain optimistic that the worst is behind us for the outdoor advertising segment.
We believe that the industry is still well positioned to take advantage of the recovery.
Near term our focus still remains on our development projects and select acquisitions.
As expected acquisition volume has been extremely light year to date with a total of for acquisitions through June 30th for total consideration of approximately $1.6 million.
These assets are expected to contribute about $145000 in annual rents.
With regard to our development projects.
The pandemic has slowed the overall pace of our deployments we.
We made further progress this quarter with landmark vertex Arthur.
Still for wireless infrastructure, offering and dart, our existing program with the Dallas area Rapid transit system.
With regard to our dark project, we placed additional kiosks into service in the second quarter, which brought the total number of installed kiosks into service at 235 as of June 30th.
Dark rental revenues have not been meaningful yet and may not ramp up as quickly as anticipated.
Although we've seen outdoor traffic activity rebound to pre pandemic levels in many parts of the country.
Mass transit ridership numbers continue to lag and we've seen a slower recovery path.
If the infection rates stays at a higher level or continues to increase due to the variance ridership recovery may take longer than expected.
The lower transit ridership has hindered our ability to drive advertising rental revenues on the digital kiosks placed within <unk> footprint.
While we fully believe these trends are temporary and that ridership will normalize once the pandemic subsides. This has contributed to lower than expected rental revenues for our dart kiosks in the interim.
Before I turn it over to George.
Briefly touch on the acquisition of the sponsored by Digital Bridge group and its proposal to acquire the outstanding common units of Ela Mark Kaye.
Hello, <unk> conflicts committee.
Which is made up entirely of the general partners 3 independent board members.
Has been reviewing the acquisition proposal together with its own independent legal counsel and financial adviser.
We don't know how long the process will take.
Or if a transaction will be consummated, but of course, we will provide an update as things progress.
And with that I'll turn the call over to George who will provide us with a more detailed financial review of the quarter George.
Thank you Tim.
As Tim mentioned, our portfolio continues to perform as we had another quarter of solid operating results.
Rental revenue for the quarter was $17.6 million.
Which was 27% higher year over year, and 2% higher versus the first quarter.
The year over year growth in rental revenue was primarily driven by the redeployment of capital from.
From the disposition of the European outdoor advertising joint venture net.
Second half of 2020 as.
As well as organic growth generated across the portfolio.
During the second quarter, 3 sprint sites for decommission with annual rents of approximately <unk> 2 million.
Looking ahead for the back half of 2021.
<unk> sprint sites are scheduled to decommission.
Including 3 sites in the third quarter.
We have recently seen a pickup in sprint terminations.
But as we have discussed in the past.
And the longer term, we expect some offsetting revenue as wireless carriers continue to deploy <unk> equipment and.
And expiring leases are renewed at higher rates.
Moving on to the SFO and SSL.
<unk> per unit was <unk> 35 this quarter.
Compared to <unk> 19 in the second quarter of last year.
As we have discussed on prior calls.
<unk> can fluctuate quarter to quarter.
Depending on the change in net fair value of our interest rate hedges as.
As well as various other items.
Foreign currency transaction gains and losses.
And for sale.
Which excludes these gains and losses on our interest rate hedges and other items.
38 cents per diluted unit this quarter.
Compared to <unk> 33.
In the second quarter of last year.
Representing 15% growth year over year.
The slight increase in <unk> per unit this quarter from last quarter's level was primarily due to higher revenue from renewable power generation leases.
That contained revenue sharing provisions.
<unk> growth from the overall portfolio.
As you may have seen in our press release this morning.
Our sponsor has informed us that it intends to lift the cap on G&A reimbursement expire in November 2021.
And it will seek reimbursement for expenses that it incurs for services provided to the partnership.
The exploration of the G&A cash and reimbursement of expenses incurred for services provided to us.
As expected to negatively impact <unk> for the partnership again in the fourth quarter of 2021.
During the year ended December 31.2020.
The 6 months ended June 32021 the.
The expense reimbursement from the sponsor totaled $3.3 million and $1.4 million.
Respectively.
Now turning to our balance sheet.
We ended the second quarter with approximately $223 million of outstanding borrowings under our revolving credit facility.
We continue to see very attractive financing rates for our asset classes.
Have no scheduled maturities until November 2022.
In terms of liquidity, we ended the quarter with approximately 12 million in cash and.
$227 million of Undrawn borrowing capacity under our revolving credit facility.
Subject to compliance with certain covenants.
Including our interest rate hedges, approximately 85% of our outstanding debt.
Either fixed rate debt for borrowings that have been fixed through interest rate swaps.
Regarding our distribution.
The board declared a distribution of <unk> 20 per unit.
Based on this level of distribution or <unk>.
Distribution coverage ratio for the second quarter was 1.88 times.
The previously discussed exploration of the G&A cap and reimbursement of expenses.
As expected to negatively impact <unk> and our distribution coverage ratio.
Along with the partnership's borrowing capacity under its existing revolving line of credit.
In summary, our portfolio continues to perform well as seen in this quarter's financial results.
We see some headwinds in the second half of 2021 with.
With the exploration of the G&A cap and additional sprint churn.
But remained positive in the longer term.
That our assets will continue to generate stable cash flows.
And with that I'll turn it over to Tim for closing remarks.
Thank you George and thank you all for joining US again. This morning, as we said our portfolio is performing well and while some near term challenges remain we are confident our assets will continue to perform well in the long term.
Thanks, again and have a good day.
Thank you for this concludes today's conference call. Thank you for participating you may now disconnect.
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