Q3 2021 Landmark Infrastructure Partners LP Earnings Call

November 5, 2021

[music].

Good day and welcome to the third quarter 2021 landmark infrastructure partners L. P earnings Conference call.

Today's call will be limited to prepared remarks.

I'd like to turn the call over to myself Choi Investor Relations.

You may begin.

Yeah.

Thank you and good morning, we'd like to welcome you to landmark infrastructure partners third quarter earnings call today, we'll share an operating and financial overview of the business.

Presenting on the call today are temporary the Chief Executive Officer, and Georgia oil Chief Financial Officer.

I would like to remind all participants that our comments today will include forward looking statements.

Subject to certain risks and uncertainties.

Number of factors and uncertainties could cause actual results in future periods to differ materially from current expectations.

For a complete discussion of these risks we encourage you to read the partnership's earnings release and documents on 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.

And 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.

As you saw from our press release. This morning, we had another solid quarter of operating and financial results.

The partnership portfolio continues to produce stable and consistent cash flows.

Rental revenues and <unk> were both higher year over year, primarily due to the redeployment of capital from the sale of our interest in the European outdoor advertising joint venture last year.

We saw some improvement within our outdoor advertising segment, which has been the segment most affected by the pandemic as rental revenues increased slightly in the third quarter compared to the second quarter and we expect the outdoor advertising industry fully rebound over the long run.

We're optimistic that the worst is behind us for the outdoor advertising segment with the industry well positioned for recovery.

In the near term our focus remains on our development projects and select acquisitions.

As expected acquisition volume has been light year to date with a total of 10 acquisitions through September 30th.

For total consideration of approximately $2 $2 million.

The assets acquired are expected to contribute about $200000 in annual rents.

With regard to our development projects, while the pandemic has slowed the overall pace of our deployments we.

We made further progress this quarter with landmark vertex, our stealth wireless infrastructure offering and dart our existing program with the Dallas area Rapid transit system.

We placed additional kiosks into service in the third quarter.

Which brought the total number of installed kiosks in service to 269 as of September 30th.

Dart rental revenues are not yet meaningful and have not ramped up as quickly as anticipated.

While mass transit ridership has been recovering across the country, including darts ridership numbers. It continues to lag overall outdoor traffic activity, which.

She has rebounded to pre pandemic levels in many parts of the country.

The mass transit ridership numbers are actually still well below pre pandemic levels.

At Dart total ridership in the third quarter of 2021 increased by approximately 20% year over year.

But at these levels total ridership is still down approximately 43% compared to the third quarter of 2019.

The lower than anticipated transit ridership.

Our ability to drive meaningful advertising rental revenues on the digital kiosks that had been placed within darts footprint.

While we believe these trends are temporary and that ridership will continued to normalize as the pandemic subsides.

<unk> has led to lower than expected rental revenues for our dart kiosks.

Before I turn it over to George I would like to briefly touch on the proposed acquisition of LMR K by our sponsor landmark dividend.

The definitive proxy has been filed with the SEC and sent out to unit holders.

A record date of October 25 has been set and the partnership unit holder meeting is scheduled for December nine 2021.

<unk> unit holders as of the record date are currently able to vote online.

Phone or by mail with voting information displayed on their proxy card.

The LMR K take private transaction is subject to a majority approval by <unk> unitholders and so we encourage all of our unit holders to vote.

The board after considering various factors, including the unanimous recommendation of the conflicts Committee.

Has approved the transaction and determined that its in the best interest of the partnership.

And is therefore recommending that unit holders vote in favor of the transaction proposal.

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 the assets in our portfolio continued to generate stable and rising cash flows as we had another solid quarter of operating results.

Rental revenue for the third quarter with $17 4 million.

<unk> was 22% higher year over year.

The year over year growth in rental revenue.

It was primarily driven by the redeployment of capital from the disposition of the European outdoor advertising joint venture and.

In the second half of 2020.

As well as organic growth generated across the portfolio.

Year to date as of September 30th.

Seven sprint sites of decommissioned including two in the third quarter and another 18 sites are expected to decommission in the fourth quarter.

We expect the annualized rent impact from decommissioned sprint T mobile sites in 2021.

To be approximately $7 million.

Which includes the annualized rents from the 18 sites that are expected to terminate in the fourth quarter.

The pace of sprint T mobile termination notices have slowed recently and.

And as we have discussed in past calls and the longer term, we expect some offsetting revenues as wireless carriers continue to deploy <unk> equipment.

And expiring leases are renewed at higher rates.

Moving on to <unk> and <unk>.

<unk> per diluted unit was <unk> 19 cents this quarter.

<unk> 2009.

In the third quarter of last year.

As we have discussed on prior calls <unk> can fluctuate quarter to quarter.

Depending on the change in the fair value of our interest rate hedges as well as various other items.

Including foreign currency transaction gains and losses.

The decline in <unk> in the third quarter compared to the second quarter was primarily driven by the transaction related costs associated with the LMR K take private transaction.

Which are included in the transaction related expense line item.

<unk>, which excludes these gains and losses on our <unk>.

Interest rate hedges and other items.

With 37 per diluted unit this quarter compared to 31.

In the third quarter of last year.

Representing 19% growth year over year.

As we discussed last quarter.

Our sponsor has informed us that it intends to let the 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 cap is expected to negatively impact <unk> for the partnership.

Beginning in the fourth quarter of 2021.

During the year ended December 31 2020.

In the nine months ended September 32021.

The expense reimbursement from the sponsor totaled $3 3 million and $2 5 million respectively.

In addition, we expect the sponsor to seek reimbursement for G&A related costs incurred to manage the partnership.

With additional expenses expected to be around $3 million per year.

Now turning to our balance sheet, we ended the quarter with approximately $223 million of outstanding borrowings under our revolving credit facility.

We continue to see attractive financing rates for our asset classes.

And we have no scheduled maturities until November 2022.

In terms of liquidity, we ended the quarter with approximately $11 million in cash and.

$227 million of Undrawn borrowing capacity under our revolving credit facility.

Subject to compliance with certain covenants.

In October we completed our Datacenters securitization transaction.

Issuing approximately $173 million in secured notes.

With a fixed coupon rate of 372% and determine of seven years.

Net proceeds from the securitization.

Primarily used to repay borrowings from our revolving credit facility.

We also terminated one of our interest rate swaps with a notional value.

$50 million.

With the completion of our datacenter finance in October our debt maturities have been pushed out.

And all of our debt is now fixed.

We're hedged through interest rate swaps.

Regarding our distribution the board declared.

Distribution of <unk> 20 per unit.

Based on this level of distribution our distribution coverage ratio for the third quarter was 184 times.

In summary, our financial results were strong again this quarter due to the performance of our portfolio.

Headwinds from the exploration of the G&A cap additional G&A expenses.

An additional sprint churn are expected to negatively negatively impact <unk> in the fourth quarter.

But we remain confident in the longer term as our portfolio continues to generate stable and growing cash flows.

And with that.

I'll turn it over to Tim for closing remarks.

Thank you George and thank you all.

I'd just like to take this moment to acknowledge everyone for their commitment to landmark.

We're proud to have been the first public ground lease real estate company focused in our particular industries.

And while the markets didn't always cooperate the portfolio of assets that we've accumulated over the years.

<unk> stable and continued to perform.

We truly appreciate all the support from our investors board of directors and working with partners and wish you all the best thank.

Thank you.

This does conclude the conference you may now disconnect.

Have a great day.

[music].

Yes.

[music].

Okay.

Yes.

Okay.

[music].

Good day and welcome to the third quarter 2021 landmark infrastructure partners L. P earnings Conference call.

Today's call will be limited to prepared remarks.

I would now like to turn the call over to Marcelo Choi Investor Relations you may begin.

Thank you and good morning, we'd like to welcome you to landmark infrastructure partners third quarter earnings call.

They will share an operating and financial overview of the business presenting on the call today are temporary the chief Executive Officer, and Georgetown Chief Financial Officer.

I would 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 on file with the SEC.

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.

As you saw from our press release. This morning, we had another solid quarter of operating and financial results as the partnerships portfolio continues to produce stable and consistent cash flows.

Rental revenues and <unk> were both higher year over year, primarily due to the redeployment of capital from the sale of our interest in the European outdoor advertising joint venture last year.

We are optimistic that the worst is behind us for the outdoor advertising segment.

The industry well positioned for recovery.

In the near term our focus remains on our development projects and select acquisitions.

As expected acquisition volume has been light year to date with a total of 10 acquisitions through September 30th.

For total consideration of approximately $2 $2 million.

The assets acquired are expected to contribute about $200000.

As an annual rents.

With regard to our development projects, while the pandemic has slowed the overall pace of our deployments. We made further progress this quarter with landmark vertex our stealth wireless infrastructure offering and dart are.

Existing program with the Dallas area Rapid transit system.

We placed additional kiosks into service in the third quarter.

Which brought the total number of installed kiosks in service to 269 as of September 30.

Dart rental revenues are not yet meaningful and have not ramped up as quickly as anticipated.

While mass transit ridership has been recovering across the country, including darts ridership numbers. It continues to lag overall outdoor traffic activity.

She has rebounded to pre pandemic levels in many parts of the country.

The mass transit ridership numbers are actually still well below pre pandemic levels.

At Dart total ridership in the third quarter of 2021 increased by approximately 20% year over year.

But at these levels total ridership is still down approximately 43% compared to the third quarter of 2019.

The lower than anticipated transit ridership at Ada or ability.

<unk> to drive meaningful advertising rental revenues on the digital kiosks that had been placed within darts footprint.

While we believe these trends are temporary and that ridership will continue to normalize as the pandemic subsides. This has led to lower than expected rental revenues for our dart kiosks.

Before I turn it over to George I'd like to briefly touch on the proposed acquisition of LMR K by its sponsor landmark dividend.