EL SEGUNDO, Calif., Aug. 01, 2018 (GLOBE NEWSWIRE) -- Landmark Infrastructure Partners LP (the “Partnership,” “we,” “us” or “our”) (Nasdaq:LMRK) today announced its second quarter financial results.

Highlights

  • Completed acquisitions with total consideration of approximately $128 million through July 31, 2018;
  • Reported Q2 2018 rental revenue of $16.8 million, a 31% increase year-over-year;
  • Reported Q2 2018 net income of $6.1 million, EBITDA of $16.9 million, and Adjusted EBITDA of $16.5 million, a 30% increase in Adjusted EBITDA year-over-year;
  • Reported Q2 2018 distributable cash flow of $8.1 million, a 9% increase year-over-year;
  • Announced a quarterly distribution of $0.3675 per common unit; and
  • On June 6, the Partnership completed a $125 million wireless communication fixed rate debt placement through a securitization with a weighted-average coupon rate of 4.31%.

Second Quarter 2018 Results
Rental revenue for the quarter ended June 30, 2018 increased 31% to $16.8 million compared to the second quarter of 2017.  Net income for the second quarter of 2018 was $6.1 million, compared to net income of $2.7 million in the second quarter of 2017.  Net income attributable to common unitholders per diluted unit in the second quarter of 2018 was $0.12, compared to net income attributable to common unitholders per diluted unit of $0.05 in the second quarter of 2017.  EBITDA (earnings before interest, income taxes, depreciation and amortization) for the quarter ended June 30, 2018 increased 66% to $16.9 million compared to the second quarter of 2017.  Adjusted EBITDA for the quarter ended June 30, 2018 increased 30% to $16.5 million compared to the second quarter of 2017, and distributable cash flow increased 9% to $8.1 million compared to the second quarter of 2017.

For the six months ended June 30, 2018, the Partnership reported rental revenue of $32.5 million, net income of $12.8 million, and net income attributable to common unitholders of $0.31 per diluted unit.  The Partnership reported EBITDA of $34.0 million, Adjusted EBITDA of $32.0 million, and distributable cash flow of $16.1 million in the six-month period ended June 30, 2018.

“We’re very pleased to announce another quarter of strong operating results.  Our principal ground lease business continues to produce very stable and consistent returns, and we’re making great progress on the new initiatives that we’ve launched.  These initiatives will allow us to drive more meaningful growth to the Partnership as we leverage our relationships and our large and growing portfolio of critical infrastructure assets. We’re confident we have the relationships and financial flexibility to execute our business and grow the Partnership, and we remain focused on providing long-term value for our unitholders,” said Tim Brazy, Chief Executive Officer of the Partnership’s general partner.

Quarterly Distributions
On July 19, 2018, 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 June 30, 2018.  The distribution is payable on August 14, 2018 to common unitholders of record as of August 1, 2018.

On July 19, 2018, the Board of Directors of the Partnership’s general partner declared a quarterly cash distribution of $0.4400 per Series C preferred unit, which is payable on August 15, 2018 to Series C preferred unitholders of record as of August 1, 2018. 

On July 19, 2018, the Board of Directors of the Partnership’s general partner declared a quarterly cash distribution of $0.49375 per Series B preferred unit, which is payable on August 15, 2018 to Series B preferred unitholders of record as of August 1, 2018.

On June 21, 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 July 16, 2018 to Series A preferred unitholders of record as of July 2, 2018.

Recent Acquisitions
Year-to-date through July 31, 2018, the Partnership acquired a total of 186 assets for total consideration of approximately $128 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
Year-to-date as of June 30, 2018, through its At-The-Market (“ATM”) issuance programs, the Partnership has 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.

2018 Guidance
The Partnership’s outlook for acquisition volume is $250 million to $300 million in assets.  This includes the right to purchase $200 million to $250 million in assets that the Partnership’s sponsor has expressed its intent to offer us, and approximately $50 million in new infrastructure deployments.  These acquisitions and deployments, combined with organic portfolio growth, are expected to drive distribution growth of 10% over the fourth quarter 2017 distribution of $0.3675 per common unit by the fourth quarter 2018 (distribution to be paid in February 2019).

Conference Call Information
The Partnership will hold a conference call on Wednesday, August 1, 2018, at 12:00 p.m. Eastern Time (9:00 a.m. Pacific Time) to discuss its second quarter 2018 financial and operating results.  The call can be accessed via a live webcast at https://edge.media-server.com/m6/p/ho43yvep, 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 4349739.

A webcast replay will be available approximately two hours after the completion of the conference call through August 1, 2019 at https://edge.media-server.com/m6/p/ho43yvep.  The replay is also available through August 10, 2018 by dialing 855-859-2056 or 404-537-3406 and entering the access code 4349739.

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
We 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 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, and the capital contribution to fund our general and administrative expense reimbursement.  We define distributable cash flow as Adjusted EBITDA less cash interest expense, 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 generally accepted accounting principles in the United States (“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 our expected distribution growth for 2018 and 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, 2017 and Current Report on Form 8-K filed with the Commission on February 15, 2018.  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 June 30,  Six Months Ended June 30, 
  2018  2017  2018  2017 
Revenue                
Rental revenue $16,796  $12,803  $32,491  $24,644 
Expenses                
Property operating  229   74   515   161 
General and administrative  1,089   1,437   2,788   2,845 
Acquisition-related  196   285   381   752 
Amortization  4,233   3,239   8,255   6,368 
Impairments  103   692   103   848 
Total expenses  5,850   5,727   12,042   10,974 
Other income and expenses                
Interest and other income  408   379   846   738 
Interest expense  (6,408)  (4,234)  (12,680)  (8,154)
Unrealized gain (loss) on derivatives  1,286   (544)  4,434   (50)
Total other income and expenses  (4,714)  (4,399)  (7,400)  (7,466)
Income before income tax expense  6,232   2,677   13,049   6,204 
Income tax expense  127      203    
Net income  6,105   2,677   12,846   6,204 
Less: Net income attributable to noncontrolling interests  8   4   12   7 
Net income attributable to limited partners  6,097   2,673   12,834   6,197 
Less: Distributions to preferred unitholders  (2,930)  (1,510)  (4,874)  (2,854)
Less: General Partner's incentive distribution rights  (195)  (98)  (390)  (187)
Net income attributable to common and subordinated unitholders $2,972  $1,065  $7,570  $3,156 
Net income (loss) per common and subordinated unit                
Common units – basic $0.12  $0.05  $0.33  $0.14 
Common units – diluted $0.12  $0.05  $0.31  $0.14 
Subordinated units – basic and diluted $  $0.05  $(0.39) $0.14 
Weighted average common and subordinated units outstanding                
Common units – basic  25,058   19,650   24,032   19,554 
Common units – diluted  25,058   22,785   24,811   22,689 
Subordinated units – basic and diluted     3,135   779   3,135 
Other Data                
Total leased tenant sites (end of period)  2,327   2,016   2,327   2,016 
Total available tenant sites (end of period)  2,415   2,093   2,415   2,093 
                 


 
Landmark Infrastructure Partners LP
Consolidated Balance Sheets
In thousands, except per unit data
(Unaudited)
 
  June 30, 2018  December 31, 2017 
Assets        
Land $124,816  $114,385 
Real property interests  668,252   596,422 
Construction in progress  23,804   7,574 
Total land and real property interests  816,872   718,381 
Accumulated amortization of real property interests  (44,870)  (37,817)
Land and net real property interests  772,002   680,564 
Investments in receivables, net  20,101   20,782 
Cash and cash equivalents  9,767   9,188 
Restricted cash  6,578   18,672 
Rent receivables, net  3,446   4,141 
Due from Landmark and affiliates  583   629 
Deferred loan costs, net  2,671   3,589 
Deferred rent receivable  4,059   4,252 
Derivative asset  7,593   3,159 
Other intangible assets, net  23,627   17,984 
Assets held for sale (AHFS)  7,846    
Other assets  4,563   5,039 
Total assets $862,836  $767,999 
Liabilities and equity        
Revolving credit facility $177,000  $304,000 
Secured notes, net  349,223   187,249 
Accounts payable and accrued liabilities  12,039   4,978 
Other intangible liabilities, net  13,146   12,833 
Liabilities associated with AHFS  397    
Prepaid rent  6,499   4,581 
Total liabilities  558,304   513,641 
Commitments and contingencies        
Mezzanine equity        
Series C cumulative redeemable convertible preferred units, 2,000,000 and zero units
  issued and outstanding at June 30, 2018 and December 31, 2017, respectively
  47,534    
Equity        
Series A cumulative redeemable preferred units, 1,593,149 and 1,568,402 units
  issued and outstanding at June 30, 2018 and December 31, 2017, respectively
  37,207   36,604 
Series B cumulative redeemable preferred units, 2,463,015 units
  issued and outstanding at June 30, 2018 and December 31, 2017, respectively
  58,936   58,936 
Common units, 25,130,604 and 20,146,458 units issued and outstanding at
  June 30, 2018 and December 31, 2017, respectively
  330,207   288,527 
Subordinated units, zero and 3,135,109 units issued and outstanding
  at June 30, 2018 and December 31, 2017, respectively
     19,641 
General Partner  (169,239)  (150,519)
Accumulated other comprehensive income  (314)  968 
Total limited partners' equity  256,797   254,157 
Noncontrolling interests  201   201 
Total equity  256,998   254,358 
Total liabilities, mezzanine equity and equity $862,836  $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  1,093   1,390   77.6 (7) 1,336   28.1          $7,876   48%
Outdoor Advertising  517   617   83.8 (7) 602   18.1           3,411   21%
Renewable Power Generation  24   56   29.1 (7) 56   29.8           471   3%
Subtotal  1,634   2,063   78.7 (7) 1,994   25.1          $11,758   72%
Tenant Lease Assignment only (8)                                    
Wireless Communication  163   232   48.9   214   17.8          $1,580   9%
Outdoor Advertising  30   31   61.9   30   15.3           209   1%
Renewable Power Generation  6   6   49.1   6   28.0           56   %
Subtotal  199   269   50.4   250   17.7          $1,845   10%
Tenant Lease on Fee Simple                                    
Wireless Communication  17   27   99.0 (7) 27   18.7          $908   5%
Outdoor Advertising  37   41   99.0 (7) 41   10.4           716   4%
Renewable Power Generation  13   15   99.0 (7) 15   31.4           1,569   9%
Subtotal  67   83   99.0 (7) 83   16.8          $3,193   18%
Total  1,900   2,415   76.2 (9) 2,327   24.0          $16,796   100%
Aggregate Portfolio                                    
Wireless Communication  1,273   1,649   73.9   1,577   26.5   96% $2,145  $10,364   62%
Outdoor Advertising  584   689   83.7   673   17.5   98%  2,349   4,336   26%
Renewable Power Generation  43   77   37.8   77   30.1   100%  9,510   2,096   12%
Total  1,900   2,415   76.2 (9) 2,327   24.0   96% $2,443  $16,796   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 June 30, 2018 were 3.8, 8.8, 18.1 and 5.5 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 June 30, 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 65 years.

 
Landmark Infrastructure Partners LP
Reconciliation of EBITDA, Adjusted EBITDA and Distributable Cash Flow
In thousands
(Unaudited)
 
  Three Months Ended June 30,  Six Months Ended June 30, 
  2018  2017  2018  2017 
Reconciliation of EBITDA and Adjusted EBITDA to Net Income                
Net income $6,105  $2,677  $12,846  $6,204 
Interest expense  6,408   4,234   12,680   8,154 
Amortization expense  4,233   3,239   8,255   6,368 
Income tax expense  127      203    
EBITDA $16,873  $10,150  $33,984  $20,726 
Impairments  103   692   103   848 
Acquisition-related  196   285   381   752 
Unrealized (gain) loss on derivatives  (1,286)  544   (4,434)  50 
Unit-based compensation        70   105 
Straight line rent adjustments  63   27   144   (220)
Amortization of above- and below-market rents, net  (347)  (369)  (675)  (652)
Repayments of investments in receivables  309   280   608   525 
Deemed capital contribution to fund general and administrative expense reimbursement(1)  578   1,074   1,780   2,029 
Adjusted EBITDA $16,489  $12,683  $31,961  $24,163 
Reconciliation of EBITDA, Adjusted EBITDA and Distributable Cash Flow to Net Cash Provided by Operating Activities                
Net cash provided by operating activities $9,886  $7,211  $21,566  $13,990 
Unit-based compensation        (70)  (105)
Unrealized gain (loss) on derivatives  1,286   (544)  4,434   (50)
Amortization expense  (4,233)  (3,239)  (8,255)  (6,368)
Amortization of above- and below-market rents, net  347   369   675   652 
Amortization of deferred loan costs and discount on secured notes  (990)  (473)  (1,881)  (911)
Receivables interest accretion     (2)     7 
Impairments  (103)  (692)  (103)  (848)
Allowance for doubtful accounts  (39)  (11)  (29)  (26)
Working capital changes  (49)  58   (3,491)  (137)
Net income $6,105  $2,677  $12,846  $6,204 
Interest expense  6,408   4,234   12,680   8,154 
Amortization expense  4,233   3,239   8,255   6,368 
Income tax expense  127      203    
EBITDA $16,873  $10,150  $33,984  $20,726 
Less:                
Unrealized gain on derivatives  (1,286)     (4,434)   
Straight line rent adjustment           (220)
Amortization of above- and below-market rents, net  (347)  (369)  (675)  (652)
Add:                
Impairments  103   692   103   848 
Acquisition-related  196   285   381   752 
Unrealized loss on derivatives     544      50 
Unit-based compensation        70   105 
Straight line rent adjustment  63   27   144    
Repayments of investments in receivables  309   280   608   525 
Deemed capital contribution to fund general and administrative expense reimbursement (1)  578   1,074   1,780   2,029 
Adjusted EBITDA $16,489  $12,683  $31,961  $24,163 
Less:                
Expansion capital expenditures  (36,760)  (46,710)  (131,820)  (59,153)
Cash interest expense  (5,418)  (3,761)  (10,799)  (7,243)
Cash income tax  (76)     (152)   
Distributions to preferred unitholders  (2,930)  (1,510)  (4,874)  (2,854)
Distributions to noncontrolling interest holders  (8)  (4)  (12)  (7)
Add:                
Borrowings and capital contributions to fund expansion capital expenditures  36,760   46,710   131,820   59,153 
Distributable cash flow $8,057  $7,408  $16,124  $14,059 

________________________________
(1) 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
In thousands, except per unit data (Unaudited)
 
  Three Months Ended June 30, 
  2018  2017 
Revenue:        
Rental revenue $16,796  $12,803 
Expenses:        
Property operating  229   74 
General and administrative  1,089   1,437 
Acquisition-related  196   285 
Amortization  4,233   3,239 
Impairments  103   692 
Total expenses  5,850   5,727 
Other income and expenses        
Interest and other income  408   379 
Interest expense  (6,408)  (4,234)
Unrealized gain (loss) on derivatives  1,286   (544)
Total other income and expenses  (4,714)  (4,399)
Income before income tax expense  6,232   2,677 
Income tax expense  127    
Net income $6,105  $2,677 
Add:        
Interest expense  6,408   4,234 
Amortization expense  4,233   3,239 
Income tax expense  127    
EBITDA $16,873  $10,150 
Less:        
Unrealized gain on derivatives  (1,286)   
Amortization of above- and below-market rents  (347)  (369)
Add:        
Impairments  103   692 
Acquisition-related expenses  196   285 
Unrealized loss on derivatives     544 
Straight line rent adjustments  63   27 
Repayments of investments in receivables  309   280 
Deemed capital contribution to fund general and administrative expense reimbursement (1)  578   1,074 
Adjusted EBITDA $16,489  $12,683 
Less:        
Expansion capital expenditures  (36,760)  (46,710)
Cash interest expense  (5,418)  (3,761)
Cash income tax  (76)   
Distributions to preferred unitholders  (2,930)  (1,510)
Distributions to noncontrolling interest holders  (8)  (4)
Add:        
Borrowings and capital contributions to fund expansion capital expenditures  36,760   46,710 
Distributable cash flow $8,057  $7,408 
Annualized quarterly distribution per unit $1.47  $1.42 
Distributions to common unitholders  9,209   6,976 
Distributions to Landmark Dividend – subordinated units     1,113 
Distributions to the General Partner – incentive distribution rights  195   98 
Total distributions $9,404  $8,187 
Shortfall of distributable cash flow over the quarterly distribution $(1,347) $(779)
Coverage ratio (2)  0.86x  0.90x

_______________________________
(1) 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.
(2) 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
In thousands, except per unit data (Unaudited)
 
  Six Months Ended June 30, 
  2018  2017 
Revenue:        
Rental revenue $32,491  $24,644 
Expenses:        
Property operating  515   161 
General and administrative  2,788   2,845 
Acquisition-related  381   752 
Amortization  8,255   6,368 
Impairments  103   848 
Total expenses  12,042   10,974 
Other income and expenses        
Interest and other income  846   738 
Interest expense  (12,680)  (8,154)
Unrealized gain (loss) on derivatives  4,434   (50)
Total other income and expenses  (7,400)  (7,466)
Income before income tax expense  13,049   6,204 
Income tax expense  203    
Net income $12,846  $6,204 
Add:        
Interest expense  12,680   8,154 
Amortization expense  8,255   6,368 
Income tax expense  203    
EBITDA $33,984  $20,726 
Less:        
Unrealized gain on derivatives  (4,434)   
Straight line rent adjustments     (220)
Amortization of above- and below-market rents  (675)  (652)
Add:        
Impairments  103   848 
Acquisition-related expenses  381   752 
Unrealized loss on derivatives     50 
Straight line rent adjustments  144    
Unit-based compensation  70   105 
Repayments of investments in receivables  608   525 
Deemed capital contribution to fund general and administrative expense reimbursement (1)  1,780   2,029 
Adjusted EBITDA $31,961  $24,163 
Less:        
Expansion capital expenditures  (131,820)  (59,153)
Cash interest expense  (10,799)  (7,243)
Cash income tax  (152)   
Distributions to preferred unitholders  (4,874)  (2,854)
Distributions to noncontrolling interest holders  (12)  (7)
Add:        
Borrowings and capital contributions to fund expansion capital expenditures  131,820   59,153 
Distributable cash flow $16,124  $14,059 
Annualized quarterly distribution per unit $1.47  $1.42 
Distributions to common unitholders  17,664   13,834 
Distributions to Landmark Dividend – subordinated units  573   2,218 
Distributions to the General Partner – incentive distribution rights  386   185 
Total distributions $18,623  $16,237 
Shortfall of distributable cash flow over the quarterly distribution $(2,499) $(2,178)
Coverage ratio (2)  0.87x  0.87x

____________________________
(1) 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.
(2) Coverage ratio is calculated as the distributable cash flow for the year divided by the distributions to the common and subordinated unitholders on the weighted average units outstanding.