Landmark Infrastructure Partners LP - FORM 10-Q

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EX-32.1 - EX-32.1 - Landmark Infrastructure Partners LP	lmrk-20160630ex321ab0001.htm
EX-31.2 - EX-31.2 - Landmark Infrastructure Partners LP	lmrk-20160630ex312dea4b9.htm
EX-31.1 - EX-31.1 - Landmark Infrastructure Partners LP	lmrk-20160630ex3115ac9c5.htm
EX-12.1 - EX-12.1 - Landmark Infrastructure Partners LP	lmrk-20160630ex121006765.htm

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2016


◻	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-36735

Landmark Infrastructure Partners LP

(Exact name of registrant as specified in its charter)


Delaware		61-1742322
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
2141 Rosecrans Avenue, Suite 2100, P.O. Box 3429 El Segundo, CA 90245		90245
(Address of principal executive offices)		(Zip Code)

(310) 598-3173

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ◻

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ◻

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer ◻		Accelerated filer ◻		Non-accelerated filer ☒		Smaller reporting company ◻

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ◻ No ☒

The registrant had 12,155,154 common units and 3,135,109 subordinated units outstanding at July 29, 2016.

Table of Contents

LANDMARK INFRASTRUCTURE PARTNERS LP

Table of Contents


		Page
	PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements:

	Consolidated and Combined Balance Sheets	3

	Consolidated and Combined Statements of Operations	4

	Consolidated and Combined Statements of Partners’ Capital	5

	Consolidated and Combined Statements of Cash Flows	6

	Notes to the Consolidated and Combined Financial Statements	7

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	32

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	49

Item 4.	Controls and Procedures	50

	PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	50

Item 1A.	Risk Factors	50

Item 6.	Exhibits	51

Signatures		52

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Landmark Infrastructure Partners LP

Consolidated and combined Balance Sheets


	June 30, 2016		December 31, 2015*
Assets
Land	$	12,041,723	$	12,041,723
Real property interests		358,803,767		358,074,190
Total land and real property interests		370,845,490		370,115,913
Accumulated amortization of real property interests		(17,757,074)		(14,114,307)
Land and net real property interests		353,088,416		356,001,606
Investments in receivables, net		11,970,843		12,135,786
Cash and cash equivalents		5,730,294		1,984,468
Restricted cash		955,000		—
Rent receivables, net		1,032,605		952,427
Due from Landmark and affiliates		1,198,779		2,205,853
Deferred loan costs, net		2,715,749		3,089,894
Deferred rent receivable		749,960		675,769
Other intangible assets, net		9,938,233		10,752,238
Other assets		233,341		1,206,949
Total assets	$	387,613,220	$	389,004,990
Liabilities and equity
Revolving credit facility	$	106,000,000	$	233,000,000
Secured Notes, net		112,641,184		—
Accounts payable and accrued liabilities		2,940,586		1,683,062
Other intangible liabilities, net		11,166,736		12,001,093
Prepaid rent		2,929,239		2,980,621
Derivative liabilities		5,587,087		736,231
Total liabilities		241,264,832		250,401,007
Commitments and contingencies (Note 14)
Equity
Series A cumulative redeemable preferred units, 800,000 and zero units issued and outstanding at June 30, 2016 and December 31, 2015, respectively		17,832,324		—
Common units, 12,066,101 and 11,820,144 units issued and outstanding at June 30, 2016 and December 31, 2015, respectively		174,260,628		179,045,366
Subordinated units, 3,135,109 units issued and outstanding		23,700,724		25,941,274
Landmark Infrastructure Partners Predecessor		—		5,248,510
General Partner		(69,445,288)		(71,631,167)
Total equity		146,348,388		138,603,983
Total liabilities and equity	$	387,613,220	$	389,004,990

*Prior-period financial information has been retroactively adjusted for Drop-down Acquisitions made under common control. See Note 3 for additional information.

See accompanying notes to consolidated and combined financial statements.

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Landmark Infrastructure Partners LP

Consolidated and Combined Statements of Operations


	Three months ended June 30,				Six months ended June 30,
	2016		2015*		2016		2015*
Revenue
Rental revenue	$	7,597,490	$	6,447,809	$	15,198,224	$	12,471,935
Interest income on receivables		249,187		196,966		531,587		404,276
Total revenue		7,846,677		6,644,775		15,729,811		12,876,211
Expenses
Management fees to affiliate		—		75,672		—		151,752
Property operating		67,028		10,098		72,055		11,782
General and administrative		1,041,870		661,004		2,144,591		1,644,989
Acquisition-related		262,885		731,665		334,965		1,954,982
Amortization		2,239,712		1,717,840		4,244,868		3,256,222
Impairments		—		514,300		—		3,276,736
Total expenses		3,611,495		3,710,579		6,796,479		10,296,463
Other income and expenses
Interest expense		(2,367,026)		(2,045,883)		(4,714,516)		(3,932,603)
Unrealized gain (loss) on derivatives		(1,802,739)		412,760		(4,850,856)		(459,737)
Gain on sale of real property interests		—		9,524		373,779		82,026
Total other income and expenses		(4,169,765)		(1,623,599)		(9,191,593)		(4,310,314)
Net income (loss)		65,417		1,310,597		(258,261)		(1,730,566)
Less: Net income attributable to Predecessor		37,644		201,981		141,593		52,481
Net income (loss) attributable to limited partners		27,773		1,108,616		(399,854)		(1,783,047)
Less: Distributions declared to preferred unitholders		(382,222)		—		(382,222)		—
Less: General partner's incentive distribution rights		(5,059)		—		(5,059)		—
Net income (loss) attributable to common and subordinated unitholders	$	(359,508)	$	1,108,616	$	(787,135)	$	(1,783,047)
Net income (loss) per common and subordinated unit
Common units – basic	$	(0.02)	$	0.16	$	(0.05)	$	(0.16)
Common units – diluted	$	(0.02)	$	0.16	$	(0.05)	$	(0.16)
Subordinated units – basic and diluted	$	(0.03)	$	0.05	$	(0.06)	$	(0.30)
Weighted average common and subordinated units outstanding
Common units – basic		11,914,525		6,090,688		11,872,092		5,401,007
Common units – diluted		15,049,634		6,090,688		15,007,201		5,401,007
Subordinated units – basic and diluted		3,135,109		3,135,109		3,135,109		3,135,109
Cash distributions declared per common and subordinated unit	$	0.3325	$	0.3075	$	0.6625	$	0.6050

*Prior-period financial information has been retroactively adjusted for Drop-down Acquisitions made under common control. See Note 3 for additional information.

See accompanying notes to consolidated and combined financial statements.

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Landmark Infrastructure Partners LP

Consolidated and Combined Statements of Partners’ Capital


	Landmark Infrastructure Partners LP*											Landmark
												Infrastructure
	Common	Subordinated	Preferred	Common		Subordinated		Preferred		General		Partners LP		Total
	Units	Units	Units	Unitholders		Unitholder		Unitholder		Partner		Predecessor*		Equity*
Balance as of December 31, 2014	4,702,665	3,135,109	—	$	74,683,957	$	29,745,957	$	—	$	12,349	$	44,749,002	$	149,191,265
Net income from Drop-down Assets attributable to Predecessor	—	—	—		—		—		—		52,481		—		52,481
Net investment of Drop-down Assets	—	—	—		—		—		—		(9,519,686)		10,237,511		717,825
Distributions	—	—	—		(2,031,518)		(1,354,053)		—		—		—		(3,385,571)
Capital contribution to fund general and administrative expense reimbursement	—	—	—		—		—		—		1,173,925		—		1,173,925
Issuance of Common Units, net	3,000,000	—	—		46,942,876		—		—		—		—		46,942,876
Unit-based compensation	5,050	—	—		87,500		—		—		—		—		87,500
Net loss attributable to partners	—	—	—		(837,979)		(945,068)		—		—		—		(1,783,047)
Balance as of June 30, 2015	7,707,715	3,135,109	—	$	118,844,836	$	27,446,836	$	—	$	(8,280,931)	$	54,986,513	$	192,997,254

Balance as of December 31, 2015	11,820,144	3,135,109	—	$	179,045,366	$	25,941,274	$	—	$	(71,631,167)	$	5,248,510	$	138,603,983
Net income from Drop-down Assets attributable to Predecessor	—	—	—		—		—		—		141,593		—		141,593
Net investment of Drop-down Assets	—	—	—		—		—		—		420,257		(5,248,510)		(4,828,253)
Issuance of Series A Preferred Units, net	—	—	800,000		—		—		17,832,324		—		—		17,832,324
Issuance of Common Units, net	236,117	—	—		3,474,104		—		—		—		—		3,474,104
Distributions	—	—	—		(7,763,761)		(2,053,496)		(382,222)		—		—		(10,199,479)
Capital contribution to fund general and administrative expense reimbursement	—	—	—		—		—		—		1,618,970		—		1,618,970
Unit-based compensation	9,840	—	—		105,000		—		—		—		—		105,000
Net income (loss) attributable to partners	—	—	—		(600,081)		(187,054)		382,222		5,059		—		(399,854)
Balance as of June 30, 2016	12,066,101	3,135,109	800,000	$	174,260,628	$	23,700,724	$	17,832,324	$	(69,445,288)	$	—	$	146,348,388

*Prior-period financial information has been retroactively adjusted for Drop-down Acquisitions made under common control. See Note 3 for additional information.

See accompanying notes to consolidated and combined financial statements

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Landmark Infrastructure Partners LP

Consolidated and Combined Statements of Cash Flows


	Six months ended June 30,
	2016		2015*
Operating activities
Net loss	$	(258,261)	$	(1,730,566)
Adjustments to reconcile net loss to net cash provided by operating activities:
Unit-based compensation		105,000		87,500
Unrealized loss on derivatives		4,850,856		459,737
Amortization expense		4,244,868		3,256,222
Amortization of above- and below- market lease		(587,688)		(580,342)
Amortization of deferred loan costs		427,159		722,908
Amortization of discount on Secured Notes		144		—
Receivables interest accretion		(22,962)		(19,166)
Impairments		—		3,276,736
Gain on sale of real property interests		(373,779)		(82,026)
Changes in operating assets and liabilities:
Rent receivables, net		(80,178)		(235,270)
Accounts payable and accrued liabilities		(500,207)		1,087,357
Deferred rent receivables		(74,191)		(139,218)
Prepaid rent		(51,382)		108,178
Due from Landmark and affiliates		1,715,593		(172,633)
Other assets		973,608		183,616
Net cash provided by operating activities		10,368,580		6,223,033
Investing activities
Acquisition of land		(1,228,939)		(3,324,549)
Acquisition of real property interests		(466,890)		(33,994,051)
Proceeds from sales of real property interests		1,789,448		223,487
Acquisition of receivables		(4,211,278)		—
Repayments of receivables		400,264		327,059
Net cash used in investing activities		(3,717,395)		(36,768,054)
Financing activities
Proceeds from the issuance of Common Units, net		2,001,608		46,942,876
Proceeds from the issuance of Series A Preferred Units, net		18,367,906		—
Proceeds from revolving credit facility		12,300,000		47,400,000
Proceeds from secured debt facilities		—		59,291,925
Proceeds from the issuance of Secured Notes		116,582,709		—
Principal payments on revolving credit facility		(139,300,000)		(49,200,000)
Principal payments on secured debt facilities		—		(60,488,953)
Deferred loan costs		(3,286,426)		(581,339)
Changes in restricted cash		(955,000)		—
Capital contribution to fund general and administrative expense reimbursement		799,954		692,872
Distributions to limited partners		(9,817,257)		(3,385,571)
Consideration received from (paid to) General Partner associated with Drop-down Acquisitions		401,147		(10,036,005)
Net cash provided by (used in) financing activities		(2,905,359)		30,635,805
Net increase in cash and cash equivalents		3,745,826		90,784
Cash and cash equivalents at beginning of the period		1,984,468		311,108
Cash and cash equivalents at end of the period	$	5,730,294	$	401,892

*Prior-period financial information has been retroactively adjusted for Drop-down Acquisitions made under common control. See Note 3 for additional information.

See accompanying notes to consolidated and combined financial statements.

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Landmark Infrastructure Partners LP

Notes to the Consolidated and Combined Financial Statements

1. Business

Landmark Infrastructure Partners LP (the “Partnership”) was formed on July 28, 2014 by Landmark Dividend LLC (“Landmark” or “Sponsor”) as a master limited partnership organized in the State of Delaware and has been publicly traded since its initial public offering on November 19, 2014 (the “IPO”). References in this report to “Landmark Infrastructure Partners LP,” the “partnership,” “we,” “our,” “us,” or like terms for time periods prior to our IPO, refer to our predecessor for accounting purposes (our “Predecessor”) and for time periods subsequent to the IPO, refer to Landmark Infrastructure Partners LP.

The Partnership was formed to own a portfolio of primarily real property interests that are leased to companies in the wireless communication, outdoor advertising and renewable power generation industries.

Our operations are managed by the board of directors and executive officers of Landmark Infrastructure Partners GP LLC, our general partner (the “General Partner”). As of June 30, 2016, Landmark owns (a) our general partner; (b) 228,589 common units representing limited partnership interest in the Partnership (“Common Units”) and 3,135,109 subordinated units in us; and (c) all of our incentive distribution rights (“IDRs”).

2. Basis of Presentation and Summary of Significant Accounting Policies

Basis of Presentation and Principles of Consolidated and Combined Financial Statements

During the six months ended June 30, 2016 and for the year ended December 31, 2015, the Partnership completed one and eight drop-down acquisitions, respectively, from our Sponsor and affiliates (collectively the “Drop-down Acquisitions” or “Drop-down Assets”). The Drop-down Acquisitions were deemed to be transactions between entities under common control, which requires that the assets and liabilities transferred be reflected at the historical cost of the parent of the entities, with prior periods retroactively adjusted to furnish comparative information. Accordingly, the accompanying financial statements and related notes have been retroactively adjusted to include the historical results and financial position of the Drop-down Assets prior to the acquisition dates as part of the Predecessor. The differences between the cash consideration of each acquisition and the historical cost basis were allocated to the General Partner. All intercompany transactions and account balances have been eliminated.

Our results of operations, cash flows, assets and liabilities consist of the consolidated Landmark Infrastructure Partners LP activities and balances with retroactive adjustments of the combined results of operations, cash flows, assets and liabilities of the Drop-down Assets.

All financial information presented represents the consolidated results of operations, financial position and cash flows of the Partnership with retroactive adjustments of the combined results of operations, financial position and cash flows of the Drop-down Assets as if the Drop-down Acquisitions occurred on the earliest date during which the Drop-down Assets were under common control. See further discussion in Note 3, Acquisitions for additional information.

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The unaudited interim consolidated and combined financial statements have been prepared in conformity with GAAP as established by the Financial Accounting Standards Board (the “FASB”) in the ASC including modifications issued under the Accounting Standards Updates (“ASUs”) and with the instructions to Form 10-Q and Article 10 of Regulation S-X of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The accompanying unaudited financial statements include, in our opinion, all adjustments, consisting of normal recurring adjustments, necessary to present fairly the unaudited financial information set forth therein. Financial information for the three and six months ended June 30, 2016 and 2015 included in these Notes to the Consolidated and Combined Financial Statements is derived from our unaudited financial statements. Certain notes and other information have been condensed or omitted from the interim financial statements included in this report. Operating results for the three months and six months ended June 30, 2016 are not necessarily indicative of the results that may be expected for the year ending December 31, 2016. All references to tenant sites are unaudited.

Use of Estimates

The preparation of the consolidated and combined financial statements, in conformity with GAAP, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated and combined financial statements and reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

Recently Issued Accounting Standards

Changes to GAAP are established by the FASB in the form of ASUs to the FASB’s Accounting Standard Codification. The Partnership considers the applicability and impact of all ASUs. Newly issued ASUs not listed below are not expected to have any material impact on its combined financial position and results of operations because either the ASU is not applicable or the impact is expected to be immaterial.

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (“ASU No. 2016-13”). The ASU sets forth a current expected credit loss model which requires an entity to measure all expected credit losses for financial instruments held at the reporting date based on historical experience, current conditions and reasonable supportable forecasts. This replaces the existing incurred loss model and is applicable to the measurement of credit losses on financial assets measured at amortized cost. This ASU is effective for annual and interim reporting periods beginning after December 15, 2019, and the guidance is to be applied using the modified-retrospective approach. The Partnership is currently assessing the impact of the adoption of this ASU on its consolidated financial statements.

In March 2016, the FASB issued ASU No. 2016-09, Improvements to Employee Share-Based Payment Accounting (“ASU No. 2016-09”). The guidance simplifies various aspects related to how share-based payments are accounted for and presented in the consolidated financial statements. The amendments include income tax consequences, the accounting for forfeitures, classification of awards as either equity or liabilities and classification on the statement of cash flows. The standard is effective for interim and annual reporting periods beginning after December 15, 2016, although early adoption is permitted. The Partnership does not expect the adoption of ASU No. 2016-09 to have an impact on its financial statements.

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (“ASU No. 2016-02”), which establishes a new lease accounting model for lessees. The updated guidance requires an entity to recognize assets and liabilities arising from a lease for both financing and operating leases, along with additional qualitative and quantitative disclosures. The amended guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018, with early adoption permitted. The Partnership is currently evaluating the impact of the adoption of this standard on our consolidated financial statements.

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In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU No. 2014-09”). ASU No. 2014-09 requires an entity to recognize the revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. ASU No. 2014-09 supersedes the revenue requirements in Revenue Recognition (Topic 605) and most industry-specific guidance throughout the Industry Topics of the Codification. ASU No. 2014-09 does not apply to lease contracts within the scope of Leases (Topic 840). In August 2015, the FASB issued Accounting Standards Update No. 2015-14, “Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date,” which delayed the effective date of ASU 2014-09 by one year. ASU 2014-09, as amended, is effective for public companies for annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period. Earlier application is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. The Partnership does not expect the adoption of ASU No. 2014-09, as amended, to have an impact on its financial statements.

3. Acquisitions

On March 4, 2015, the Partnership completed its acquisition of 81 tenant sites and related real property interests, consisting of 41 wireless communication, 39 outdoor advertising and one renewable power generation sites, from Landmark Infrastructure Holding Company LLC (“HoldCo”), a wholly-owned subsidiary of Landmark, in exchange for cash consideration of $25.2 million (the “First Quarter Acquisition”). The purchase price was funded with $24.0 million of borrowings under the Partnership’s existing credit facility and available cash.

On April 8, 2015, the Partnership completed an acquisition of 73 tenant sites and related real property interests, consisting of 45 wireless communication and 28 outdoor advertising sites, from HoldCo in exchange for cash consideration of $22.1 million (the “Second Quarter Acquisition”). The purchase price was funded with $21.5 million of borrowings under the Partnership’s existing credit facility and available cash.

On July 21, 2015, the Partnership completed an acquisition of 100 tenant sites and related real property interests, consisting of 81 wireless communication, 16 outdoor advertising and 3 renewable power generation sites, from HoldCo, in exchange for cash consideration of $35.7 million. The purchase price was funded with $35.5 million of borrowings under the Partnership’s existing credit facility and available cash.

On August 18, 2015, the Partnership completed an acquisition of an entity owning 193 tenant sites and related real property interests, consisting of 135 wireless communication, 57 outdoor advertising and 1 renewable power generation sites, from Landmark Dividend Growth Fund-E LLC (“Fund E”), an affiliate of Landmark, in exchange for (i) 1,998,852 Common Units, valued at approximately $31.0 million, which was subsequently distributed to Fund E’s respective members, including 171,737 Common Units to Landmark, as part of the fund’s liquidation, and (ii) cash consideration of approximately $34.9 million, of which $29.2 million was used to repay Fund E’s secured indebtedness and was funded with borrowings under the Partnership’s revolving credit facility.

On September 21, 2015, the Partnership completed an acquisition of 65 tenant sites and related real property interests, consisting of 50 wireless communication, 13 outdoor advertising and 2 renewable power generation sites, from HoldCo, in exchange for cash consideration of $20.3 million. The purchase price was funded with $20.0 million of borrowings under the Partnership’s existing credit facility and available cash.

On November 19, 2015, the Partnership completed an acquisition of an entity owning 72 tenant sites and related real property interests, consisting of 67 wireless communication and 5 outdoor advertising sites, from Landmark Dividend Growth Fund-C LLC (“Fund C”), an affiliate of Landmark, in exchange for (i) 847,260 Common Units, valued at approximately $13.0 million, which was subsequently distributed to Fund C’s respective members, including 123,405 Common Units to Landmark, valued at approximately $1.9 million, as part of the fund’s liquidation, and (ii) cash consideration of approximately $17.3 million, of which $15.1 million was used to repay Fund C’s secured indebtedness and was funded with borrowings under the Partnership’s revolving credit facility.

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On November 19, 2015, the Partnership completed an acquisition of 136 tenant sites and related real property interests, consisting of 99 wireless communication and 37 outdoor advertising sites, from Landmark Dividend Growth Fund-F LLC (“Fund F”), an affiliate of Landmark, in exchange for (i) 1,266,317 Common Units, valued at approximately $19.5 million, which was subsequently distributed to Fund F’s respective members, including 217,133 Common Units to Landmark, valued at approximately $3.3 million, as part of the fund’s liquidation and (ii) cash consideration of approximately $25.0 million, of which $24.5 million was used to repay Fund F’s secured indebtedness and was funded with borrowings under the Partnership’s revolving credit facility.

On December 18, 2015, the Partnership completed an acquisition of 41 tenant sites and related real property interests, consisting of 23 wireless communication, 16 outdoor advertising and 2 renewable power generation sites, from HoldCo, in exchange for cash consideration of $24.2 million. The purchase price was funded with $24.0 million of borrowings under the Partnership’s existing credit facility and available cash.

On April 20, 2016, the Partnership completed an acquisition of 2 tenant sites and related real property interests and 1 investment in receivable, consisting of 1 wireless communication and 2 renewable power generation sites, from HoldCo, in exchange for cash consideration of $6.3 million. The purchase price was funded with $6.3 million of borrowings under the Partnership’s existing credit facility.

The acquisitions from Landmark and affiliates described above in this Note 3 are collectively referred to as the “Drop-down Acquisitions,” and the acquired assets in the Drop-down Acquisitions are collectively referred to as the “Drop-down Assets.” The August 18, 2015 and both November 19, 2015 acquisitions are collectively referred to as the “Acquired Funds.”

On June 30, 2016, the Partnership acquired directly from third parties 2 wireless communication tenant sites located in Australia in exchange for $0.1 million. Additionally, during the three and six months ended June 30, 2016, the Partnership completed direct third party acquisitions of 3 wireless communication tenant sites in exchange for 104,968 Common Units, valued at approximately $1.6 million, pursuant to our previously filed and effective registration statement on Form S-4, in which we may offer and issue, from time to time, an aggregate of up to 5,000,000 Common Units in connection with the acquisition by us or our subsidiaries of other businesses, assets or securities (the “Unit Exchange Program”). The acquisitions made under the Unit Exchange Program are collectively referred to as the “Unit Exchange Acquisitions.”

The assets and liabilities acquired from Landmark and affiliates are recorded at the historical cost of Landmark, as the Drop-down Acquisitions are deemed to be transactions between entities under common control with the statements of operations of the Partnership adjusted retroactively as if the Drop-down Acquisitions occurred on the earliest date during which the Drop-down Assets were under common control. Our 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 we owned the Drop-down Assets as of the date acquired by Landmark for all periods presented. The following tables present our results of operations and financial position reflecting the effect of the Drop-down Acquisitions on pre-acquisition periods.

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Consolidated statement of operations for the three and six months ended June 30, 2016:


	Three months ended June 30, 2016						Six months ended June 30, 2016
			Pre-Acquisition						Pre-Acquisition
	Landmark		results of the				Landmark		results of the
	Infrastructure		Drop-down		Consolidated		Infrastructure		Drop-down		Consolidated
	Partners LP		Acquisitions		Results		Partners LP		Acquisitions		Results
Revenue
Rental revenue	$	7,587,502	$	9,988	$	7,597,490	$	15,160,471	$	37,753	$	15,198,224
Interest income on receivables		220,815		28,372		249,187		424,160		107,427		531,587
Total revenue		7,808,317		38,360		7,846,677		15,584,631		145,180		15,729,811
Expenses
Property operating		67,028		—		67,028		72,055		—		72,055
General and administrative		1,041,870		—		1,041,870		2,144,591		—		2,144,591
Acquisition-related		262,885		—		262,885		334,965		—		334,965
Amortization		2,238,996		716		2,239,712		4,241,281		3,587		4,244,868
Total expenses		3,610,779		716		3,611,495		6,792,892		3,587		6,796,479
Other income and expenses		(4,169,765)		—		(4,169,765)		(9,191,593)		—		(9,191,593)
Net income (loss)	$	27,773	$	37,644	$	65,417	$	(399,854)	$	141,593	$	(258,261)

Consolidated statement of operations for the three months ended June 30, 2015:


			Pre-Acquisition		Landmark		Pre-Acquisition		Landmark
			results of the		Infrastructure		results of the		Infrastructure
	Landmark		First and		Partners LP		Post Second		Partners LP
	Infrastructure		Second Quarter		(As Previously Reported		Quarter		(As Currently
	Partners LP		Acquisitions		August 6, 2015)		Acquisitions		Reported)
Revenue
Rental revenue	$	4,205,286	$	24,485	$	4,229,771	$	2,218,038	$	6,447,809
Interest income on receivables		194,544		—		194,544		2,422		196,966
Total revenue		4,399,830		24,485		4,424,315		2,220,460		6,644,775
Expenses
Management fees to affiliate		—		—		—		75,672		75,672
Property operating		8,894		—		8,894		1,204		10,098
General and administrative		651,071		—		651,071		9,933		661,004
Acquisition-related		173,755		—		173,755		557,910		731,665
Amortization		1,185,645		9,130		1,194,775		523,065		1,717,840
Impairments		514,300		—		514,300		—		514,300
Total expenses		2,533,665		9,130		2,542,795		1,167,784		3,710,579
Other income and expenses		(757,549)		—		(757,549)		(866,050)		(1,623,599)
Net income	$	1,108,616	$	15,355	$	1,123,971	$	186,626	$	1,310,597

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Consolidated statement of operations for the six months ended June 30, 2015:


			Pre-Acquisition		Landmark		Pre-Acquisition		Landmark
			results of the		Infrastructure		results of the		Infrastructure
	Landmark		First and		Partners LP		Post Second		Partners LP
	Infrastructure		Second Quarter		(As Previously Reported		Quarter		(As Currently
	Partners LP		Acquisitions		August 6, 2015)		Acquisitions		Reported)
Revenue
Rental revenue	$	7,821,715	$	370,148	$	8,191,863	$	4,280,072	$	12,471,935
Interest income on receivables		401,854		—		401,854		2,422		404,276
Total revenue		8,223,569		370,148		8,593,717		4,282,494		12,876,211
Expenses
Management fees to affiliate		—		—		—		151,752		151,752
Property operating		8,894		—		8,894		2,888		11,782
General and administrative		1,635,056		—		1,635,056		9,933		1,644,989
Acquisition-related		473,353		893,719		1,367,072		587,910		1,954,982
Amortization		2,141,988		119,762		2,261,750		994,472		3,256,222
Impairments		3,276,736		—		3,276,736		—		3,276,736
Total expenses		7,536,027		1,013,481		8,549,508		1,746,955		10,296,463
Other income and expenses		(2,470,589)		—		(2,470,589)		(1,839,725)		(4,310,314)
Net income (loss)	$	(1,783,047)	$	(643,333)	$	(2,426,380)	$	695,814	$	(1,730,566)

Balance Sheet as of December 31, 2015:


	Landmark
	Infrastructure		Pre-Acquisition		Landmark
	Partners LP		results of the		Infrastructure
	(As Previously Reported		Drop-down		Partners LP
	February 16, 2016)		Acquisitions		(As Currently Reported)
Assets
Land	$	10,812,784	$	1,228,939	$	12,041,723
Real property interests		358,074,190		—		358,074,190
Total land and real property interests		368,886,974		1,228,939		370,115,913
Accumulated amortization of real property interest		(14,114,307)		—		(14,114,307)
Land and net real property interests		354,772,667		1,228,939		356,001,606
Investments in receivables, net		8,136,867		3,998,919		12,135,786
Cash and cash equivalents		1,984,468		—		1,984,468
Rent receivables, net		952,427		—		952,427
Due from Landmark and affiliates		2,205,853		—		2,205,853
Deferred loan cost, net		3,089,894		—		3,089,894
Deferred rent receivable		676,134		(365)		675,769
Other intangible assets, net		10,731,221		21,017		10,752,238
Other assets		1,206,949		—		1,206,949
Total assets	$	383,756,480	$	5,248,510	$	389,004,990
Liabilities and equity
Revolving credit facility	$	233,000,000	$	—	$	233,000,000
Accounts payable and accrued liabilities		1,683,062		—		1,683,062
Other intangible liabilities, net		12,001,093		—		12,001,093
Prepaid rent		2,980,621		—		2,980,621
Derivative liabilities		736,231		—		736,231
Total liabilities		250,401,007		—		250,401,007
Commitments and contingencies
Equity		133,355,473		5,248,510		138,603,983
Total liabilities and equity	$	383,756,480	$	5,248,510	$	389,004,990

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Consolidated summarized cash flows for the six months ended June 30, 2016:


			Pre-Acquisition
	Landmark		results of the
	Infrastructure		Drop-down		Consolidated
	Partners LP		Acquisitions		Results
Net cash provided by operating activities	$	10,243,521	$	125,059	$	10,368,580
Net cash used in investing activities		(3,717,395)		—		(3,717,395)
Net cash used in financing activities		(2,780,300)		(125,059)		(2,905,359)

Consolidated summarized cash flows for the six months ended June 30, 2015:


			Pre-Acquisition		Landmark		Pre-Acquisition		Landmark
			results of the		Infrastructure		results of the		Infrastructure
	Landmark		First and		Partners LP		Post Second		Partners LP
	Infrastructure		Second Quarter		(As Previously Reported		Quarter		(As Currently
	Partners LP		Acquisitions		August 6, 2015)		Acquisitions		Reported)
Net cash provided by (used in) operating activities	$	4,924,657	$	(550,379)	$	4,374,278	$	1,848,755	$	6,223,033
Net cash used in investing activities		(36,768,054)		—		(36,768,054)		—		(36,768,054)
Net cash provided by (used in) financing activities		31,934,181		550,379		32,484,560		(1,848,755)		30,635,805

The Pre-Acquisition results of the First and Second Quarter Acquisitions include the retroactive adjustments to reflect the results of operations and cash flows of the March 4, 2015 and April 8, 2015 acquisitions prior to the acquisition date for the periods under common control. The Landmark Infrastructure Partners LP (As Previously Reported August 6, 2015) column refers to periods previously filed within the Partnership’s Form 10-Q as filed on August 6, 2015. The Pre-Acquisition results of the Post Second Quarter Acquisitions include the retroactive adjustments to reflect the results of operations and cash flows of the Drop-Down Acquisitions subsequent to the April 8, 2015 acquisition prior to the acquisition dates for the periods under common control. The Landmark Infrastructure Partners LP (As Previously Reported February 16, 2016) column refers to period previously filed within the Partnership’s Form 10-K as filed on February 16, 2016.

4. Real Property Interests

The following table summarizes the Partnership’s real property interests:


	June 30, 2016		December 31, 2015
Land	$	12,041,723	$	12,041,723
Real property interests – perpetual		88,290,114		88,496,491
Real property interests – finite life		270,513,653		269,577,699
Total land and real property interests		370,845,490		370,115,913
Accumulated amortization of real property interests		(17,757,074)		(14,114,307)
Land and net real property interests	$	353,088,416	$	356,001,606

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On March 22, 2016, the Partnership completed a sale of one wireless communication site to a third party in exchange for cash consideration of $0.8 million. We recognized a gain on sale of real property interest of $0.4 million upon completion of the sale.

On March 30, 2016, the Partnership completed a sale of 12 wireless communication sites to Landmark, in exchange for cash consideration of $2.0 million. The assets were originally acquired by Landmark and sold to the Partnership during the July 21, 2015 and September 21, 2015 acquisitions. Landmark repurchased the pool of assets at the same purchase price sold to the Partnership. As the transaction is between entities under common control, the difference between the cash consideration and the net book value of the assets is allocated to the General Partner and no gain or loss is recognized.

During the three and six months ended June 30, 2016, the Partnership completed the acquisitions as described in Note 3, Acquisitions, and paid total consideration of $8.0 million. During 2015, the Partnership completed the acquisitions as described in Note 3, Acquisitions and paid total consideration of $268.2 million. The Drop-down Acquisitions are deemed to be transactions between entities under common control, which requires the assets and liabilities to be transferred at the historical cost of the parent of the entities, with prior periods retroactively adjusted to furnish comparative information. During the six months ended June 30, 2016 the differences totaling $0.5 million between the total consideration of $8.0 million and the historical cost basis of $7.5 million were allocated to the General Partner. During 2015 the differences totaling $69.4 million between the total consideration of $268.2 million and the historical cost basis of $198.8 million were allocated to the General Partner.

The Partnership applies the business combination method to all acquired investments of real property interests for transactions that meet the definition of a business combination. The fair value of the assets acquired and liabilities assumed is typically determined by using Level III valuation methods. The most sensitive assumption is the discount rate used to discount the estimated cash flows from the real estate rights. For purposes of the computation of fair value assigned to the various tangible and intangible assets, the Partnership assigned discount rates ranging between 6% and 20%.

The following table summarizes the preliminary allocation for the Partnership’s 2016 acquisitions and final allocation for the Partnership’s 2015 acquisitions of estimated fair values of the assets acquired and liabilities assumed at the date of acquisition by Landmark.


			Investments in real		In-place lease		Above-market		Below-market
Period	Land		property interests		intangibles		lease intangibles		lease intangibles		Total
2016	$	1,228,939	$	2,126,767	$	74,644	$	—	$	(73,859)	$	3,356,491
2015(1)		6,148,413		76,267,203		2,462,533		2,518,355		(4,030,559)		83,365,945

(1)

Prior-period financial information retroactively adjusted for Drop-down Acquisitions made under common control. See Note 3 for additional information.

Future estimated aggregate amortization of real property interests for each of the five succeeding fiscal years and thereafter as of June 30, 2016, are as follows:


2016 (six months)	$	3,681,007
2017		7,362,013
2018		7,096,700
2019		6,852,916
2020		6,662,743
Thereafter		221,101,200
Total	$	252,756,579

The weighted average remaining amortization period for non‑perpetual real property interests is 49 years at June 30, 2016.

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During the three and six months ended June 30, 2015, two and thirteen, respectively, the Partnership’s real property interests were impaired as a result of termination notices received and one property foreclosure. As a result of T‑Mobile’s acquisition of MetroPCS (completed in 2013), we have received termination notices related to 23 MetroPCS tenant sites, two of which have subsequently been rescinded. As of June 30, 2016, the majority of the MetroPCS tenant sites where we have received termination notices have been vacated. There was no impairment during the three and six months ended June 30, 2016. During the three and six months ended June 30, 2015, we recognized impairment charges totaling $0.5 million and $3.3 million, respectively. The carrying value of each real property interest was determined to have a fair value of zero with the remaining lease intangibles amortized over the remaining lease life.

5. Other Intangible Assets and Liabilities

The following table summarizes our identifiable intangible assets, including above/below‑market lease intangibles:


	June 30, 2016		December 31, 2015
Acquired in-place lease
Gross amount	$	10,059,959	$	10,050,400
Accumulated amortization		(3,090,320)		(2,552,640)
Net amount	$	6,969,639	$	7,497,760
Acquired above-market leases
Gross amount	$	4,363,790	$	4,363,790
Accumulated amortization		(1,395,196)		(1,109,312)
Net amount	$	2,968,594	$	3,254,478
Total other intangible assets, net	$	9,938,233	$	10,752,238
Acquired below-market leases
Gross amount	$	(15,836,155)	$	(15,799,840)
Accumulated amortization		4,669,419		3,798,747
Total other intangible liabilities, net	$	(11,166,736)	$	(12,001,093)

We recorded net amortization of above‑ and below‑market lease intangibles of $0.3 million and $0.6 million as an increase to rental revenue for the three and six months ended June 30, 2016, respectively, and $0.3 million and $0.6 million as an increase to rental revenue for the three and six months ended June 30, 2015, respectively. We recorded amortization of in‑place lease intangibles of $0.3 million and $0.5 million as amortization expense for the three and six months ended June 30, 2016, respectively, and $0.3 million and $0.6 million as amortization expense for the three and six months ended June 30, 2015, respectively.

Future aggregate amortization of intangibles for each of the five succeeding fiscal years and thereafter as of June 30, 2016 follows:


	Acquired		Acquired		Acquired
	in-place		above-market		below-market
	leases		leases		leases
2016 (six months)	$	509,380	$	270,285	$	(804,405)
2017		976,327		467,351		(1,572,088)
2018		939,321		352,821		(1,536,141)
2019		891,824		307,960		(1,491,079)
2020		843,927		246,896		(1,460,282)
Thereafter		2,808,860		1,323,281		(4,302,741)
Total	$	6,969,639	$	2,968,594	$	(11,166,736)

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6. Investments in Receivables

As a result of the transfer of investments in receivables from the Predecessor to the Partnership, which met the conditions to be accounted for as a sale in accordance with ASC 860, Transfers and Servicing, the investments in receivables were recorded at their estimated fair value as of November 19, 2014, the date we closed our IPO, using an 8.75% discount rate. The receivables are unsecured with payments collected over periods ranging from 2 to 99 years. In connection with the April 20, 2016 and July 21, 2015 acquisitions, the Partnership acquired additional investments in receivables that are recorded at the fair value at the acquisition date, using a discount rate of 8.65%.

Interest income recognized on the receivables totaled $0.2 million and $0.5 million for the three and six months ended June 30, 2016, respectively, and $0.2 million and $0.4 million for the three and six months ended June 30, 2015, respectively.

The following table reflects the activity in investments in receivables:


	June 30, 2016		December 31, 2015
Investments in receivables – beginning	$	12,135,786	$	8,665,274
Acquisitions		—		4,130,200
Fair value adjustment		212,359		11,862
Repayments		(400,264)		(695,948)
Interest accretion		22,962		24,398
Investments in receivables – ending	$	11,970,843	$	12,135,786

Annual amounts due as of June 30, 2016, are as follows:


2016 (six months)	$	952,976
2017		1,976,916
2018		1,798,004
2019		1,317,446
2020		1,300,584
Thereafter		15,709,303
Total	$	23,055,229
Interest	$	11,084,386
Principal		11,970,843
Total	$	23,055,229

7. Debt

The following table summarizes the Partnership’s debt:


			Maturity	Outstanding Balance
	Principal		Date	June 30, 2016		December 31, 2015
Revolving credit facility	$	250,000,000	November 19, 2019	$	106,000,000	$	233,000,000

Series 2016-1 Class A		91,500,000	June 1, 2021		91,500,000		—
Series 2016-1 Class B		25,100,000	June 1, 2021		25,100,000		—
Secured Notes		116,600,000			116,600,000		—
Discount on Secured Notes					(17,148)		—
Deferred loan costs					(3,941,668)		—
Secured Notes, net				$	112,641,184	$	—

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Substantially all of our assets, excluding equity in and assets of unrestricted subsidiaries, after‑acquired real property, and other customary exclusions, are pledged (or secured by mortgages), as collateral under our revolving credit facility. Our revolving credit facility contains various customary covenants and restrictive provisions.

In addition, our revolving credit facility contains customary events of default, including, but not limited to (i) event of default resulting from our failure or the failure of our restricted subsidiaries to comply with covenants and financial ratios, (ii) the occurrence of a change of control (as defined in the credit agreement), (iii) the institution of insolvency or similar proceedings against us or our restricted subsidiaries, (iv) the occurrence of a default under any other material indebtedness (as defined in the credit agreement) we or our restricted subsidiaries may have and (v) any one or more collateral documents ceasing to create a valid and perfected lien on collateral (as defined in the credit agreement). Upon the occurrence and during the continuation of an event of default, subject to the terms and conditions of the credit agreement, the lenders may declare any outstanding principal of our revolving credit facility debt, together with accrued and unpaid interest, to be immediately due and payable and may exercise the other remedies set forth or referred to in the credit agreement and the other loan documents.

Loans under the revolving credit facility bear interest at our option at a variable rate per annum equal to either:

a base rate, which will be the highest of (i) the administrative agent’s prime rate in effect on such day, (ii) the federal funds rate in effect on such day plus 0.50%, and (iii) an adjusted one month LIBOR plus 1.0%, in each case, plus an applicable margin of 1.50%; or

an adjusted one-month LIBOR plus an applicable margin of 2.50%.

The revolving credit facility requires monthly interest payments and the outstanding debt balance is due upon maturity. As of June 30, 2016, there was $144.0 million of undrawn borrowing capacity, subject to compliance with certain financial covenants. As of June 30, 2016, the Partnership was in compliance with all financial covenants required under the revolving credit facility.

On June 16, 2016, the Partnership completed a securitization transaction (the “Securitization”) involving 629 tenant sites and related real property interests (the “Secured Tenant Site Assets”) owned by certain unrestricted special purpose subsidiaries of the Partnership (the “Obligors”), through the issuance of the Series 2016-1 Secured Tenant Site Contract Revenue Notes, Class A and Class B (collectively, the “Secured Notes”), in an aggregate principal amount of $116.6 million. The net proceeds from the Securitization were used to pay down the revolving credit facility by $112.3 million. The Class B Notes are subordinated in right of payment to the Class A Notes. The Secured Notes were issued at a discount of $17,292, which will be accreted and recognized to interest expense over the term of the Secured Notes. The Class A and Class B Secured Notes bear interest at a fixed note rate per annum of 3.52% and 7.02%, respectively.

The Secured Notes are secured by (1) mortgages and deeds of trust on substantially all of the Secured Tenant Site Assets and their operating cash flows, (2) a security interest in substantially all of the personal property of the Obligors, and (3) the rights of the Obligors under a management agreement. Amounts due under the Secured Notes will be paid solely from the cash flows generated from the operation of the Secured Tenant Site Assets. The Partnership is required to make monthly payments of principal and interest on Class A Notes based on a 30-year amortization period and monthly payments of interest only on Class B Notes, commencing in July 2016. On each payment date, commencing with the payment date occurring in July 2016, available funds will be used to repay the Class A Notes in an amount sufficient to pay the Class A monthly amortization amount. No other payments of principal will be required to be made prior to the anticipated repayment date in June 2021. If the DSCR, or debt service coverage ratio, generally calculated as the ratio of annualized net cash flow (as defined in the Indenture) to the amount of interest, servicing fees and trustee fees that we will be required to pay over the succeeding twelve payment dates, is 1.30 to 1.0 or less for one calendar month (the “Cash Trap DSCR”), then all cash flow in excess of amounts required to make debt service payments, to fund required reserves, to pay management fees and budgeted operating expenses and to make certain other payments required under the Indenture, referred to as Excess Cash Flow, will be deposited into a reserve account instead of being released to us. The funds in the reserve account will not be released unless and until the debt service coverage ratio exceeds the Cash Trap DSCR for two consecutive calendar months. Additionally, an “amortization period” commences if, as of the end of any calendar month, the debt service coverage ratio falls below 1.15 to 1.0 (the “Minimum DSCR”)

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and will continue to exist until the debt service coverage ratio exceeds the Minimum DSCR for two consecutive calendar months. During an amortization period, excess cash flow is applied to repay the Secured Notes.

The Secured Notes have an anticipated repayment date of June 15, 2021 and a final repayment date of July 15, 2046. The Secured Notes may be prepaid in whole or in part at any time, provided such payment is accompanied by the applicable prepayment consideration. Except in certain limited circumstances described in the Indenture, prepayments (other than scheduled amortization payments) made more than twelve months prior to the anticipated repayment date of the Secured Notes are required to be accompanied by the applicable prepayment consideration. If the Secured Notes have not been paid in full upon the anticipated repayment date, additional interest will begin to accrue on the outstanding principal balance of the Secured Notes and such notes will begin to amortize on a monthly basis based on excess cash flows from the Secured Tenant Site Assets.

The Partnership is subject to covenants customary for notes issued in rated securitizations. Among other things, the Obligors are prohibited from incurring other indebtedness for borrowed money or further encumbering their assets. The organizational documents of the Guarantor and the Obligors were amended to contain provisions consistent with rating agency securitization criteria for special purpose entities, including the requirement that they maintain independent directors. As of June 30, 2016, the Partnership was in compliance with all financial covenants under the Secured Notes.

The Secured Notes’ annual principal payment amounts due as of June 30, 2016, are as follows:


2016 (six months)	$	582,600
2017		1,746,600
2018		2,913,000
2019		4,083,000
2020		5,249,400
Thereafter		102,025,400
Total	$	116,600,000

The Partnership incurred interest expense of $2.4 million and $4.7 million for the three and six months ended June 30, 2016, respectively, and $2.0 million and $3.9 million for the three and six months ended June 30, 2015, respectively. At June 30, 2016 and December 31, 2015 we had interest payable of $0.3 million and $0.3 million, respectively. The Partnership recorded $0.2 million and $0.4 million of deferred loan costs amortization, which is included in interest expense, for the three and six months ended June 30, 2016, respectively, and $0.4 million and $0.7 million for the three and six months ended June 30, 2015, respectively.

Prior-period information has been retroactively adjusted to include interest expense related to the Acquired Funds’ secured debt facilities of $0.9 million and $1.8 million for the three and six months ended June 30, 2015. Additionally, deferred loan costs amortization, which is included in interest expense, has been retroactively adjusted to include $0.2 million and $0.4 million for the three and six months ended June 30, 2015.

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8. Interest Rate Swap Agreements

On March 23, 2016, the Partnership entered into an interest rate swap agreement with a notional amount of $50.0 million to fix the floating rate for existing borrowings at an effective rate of 4.17% over a three-year period beginning on December 24, 2018. Additionally, on March 31, 2016, the Partnership entered into two interest rate swap agreements with notional amounts of $20.0 million and $25.0 million to fix the floating interest rate for existing borrowings at an effective rate of 4.06% and 4.13% over a three-year period beginning on December 24, 2018 and April 13, 2019, respectively. These interest rate swap agreements extend through and beyond the term of the Partnership’s existing credit facility.

The following table summarizes the terms and fair value of the Partnerships’ interest rate swap agreements:


Date	Notional	Fixed		Effective	Maturity	Fair Value Liability at
Entered	Value	Rate		Date	Date	June 30, 2016		December 31, 2015
December 24, 2014	$ 70,000,000	4.02	%	12/24/2014	12/24/2018	$	(1,589,585)	$	(645,464)
February 5, 2015	25,000,000	3.79		4/13/2015	4/13/2019		(464,482)		(26,369)
August 24, 2015	50,000,000	4.24		10/1/2015	10/1/2022		(2,315,764)		(64,398)
March 23, 2016	50,000,000	4.17		12/24/2018	12/24/2021		(708,101)		—
March 31, 2016	20,000,000	4.06		12/24/2018	12/24/2021		(225,867)		—
March 31, 2016	25,000,000	4.13		4/13/2019	4/13/2022		(283,288)		—
						$	(5,587,087)	$	(736,231)

During the three and six months ended June 30, 2016, the Partnership recorded a loss of $1.8 million and $4.9 million, respectively, and for the three and six months ended June 30, 2015, the Partnership recorded a gain of $0.4 million and a loss of $0.5 million, respectively, resulting from the change in fair value of the interest rate swap agreements, which is reflected as an unrealized gain (loss) on derivative financial instruments on the consolidated and combined statements of operations.

Prior-period information has been retroactively adjusted to include an unrealized gain on derivative financial instruments related to the Acquired Funds’ interest rate swap agreements of $15,598 for the three months ended June 30, 2015 and an unrealized loss on derivative financial instruments of $83,013 for the six months ended June 30, 2015. The Acquired Funds’ interest rate swap agreements were terminated in connection with the repayment of the Acquired Funds’ secured indebtedness as a result of the Partnership’s August 18, 2015 and both November 19, 2015 acquisitions.

The fair value of the interest rate swap agreements are derived based on Level 2 inputs. To illustrate the effect of movements in the interest rate market, the Partnership performed a market sensitivity analysis on its outstanding interest rate swap agreements. The Partnership applied various basis point spreads to the underlying interest rate curve of the derivative in order to determine the instruments’ change in fair value at June 30, 2016. The following table summarizes the fair values of the interest rate swaps as a result of the analysis performed:


		Effects of Change in Interest Rates
Date Entered	Maturity Date	+50 Basis Points		-50 Basis Points		+100 Basis Points		-100 Basis Points
December 24, 2014	12/24/2018	$	(798,543)	$	(2,480,317)	$	28,972	$	(2,687,634)
February 5, 2015	4/13/2019		(138,905)		(823,369)		197,020		(924,635)
August 24, 2015	10/1/2022		(955,672)		(4,039,788)		513,667		(5,325,652)
March 23, 2016	12/24/2021		(59,091)		(1,562,708)		646,567		(2,494,040)
March 31, 2016	12/24/2021		37,568		(561,369)		318,617		(932,826)
March 31, 2016	4/13/2022		41,301		(706,320)		390,563		(1,184,799)

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9. Equity

The table below summarizes changes in the number of units outstanding for the six months ended June 30, 2016 and 2015 (in units):


			Series A
	Common	Subordinated	Preferred
Balance at December 31, 2014	4,702,665	3,135,109	—
Issuance of Common Units - May 20, 2015	3,000,000	—	—
Unit-based compensation	5,050	—	—
Balance at June 30, 2015	7,707,715	3,135,109	—

Balance at December 31, 2015	11,820,144	3,135,109	—
Issuance of Series A Preferred Units - April 4, 2016	—	—	800,000
ATM Programs	131,149	—	—
Unit Exchange Program	104,968	—	—
Unit-based compensation	9,840	—	—
Balance at June 30, 2016	12,066,101	3,135,109	800,000

On May 20, 2015, the Partnership closed a public offering of an additional 3,000,000 Common Units at a price to the public of $16.75 per Common Unit, or $15.9125 per Common Unit net of the underwriter’s discount. We received net proceeds of $46.9 million after deducting the underwriter’s discount and offering expenses paid by us of $3.3 million. We used all proceeds to repay a portion of the borrowings under our revolving credit facility.

In connection with the August 18, 2015 and November 19, 2015 acquisitions, the Partnership issued 4,112,429 Common Units to the Acquired Funds as partial consideration for the transactions as described in Note 3, Acquisitions, which were then distributed to their respective members, including 512,275 Common Units to Landmark and affiliates, as part of the Acquired Fund’s respective liquidations. The Common Units were issued in private transactions exempt from registration under Section 4(a)(2) of the Securities Act.

On December 3, 2015, the Partnership filed a universal shelf registration statement on Form S-3 with the SEC. The shelf registration statement was declared effective by the SEC on December 30, 2015 and permits us to issue and sell Common and Preferred units, from time to time, representing limited partner interests in us and debt securities up to an aggregate amount of $250.0 million.

On February 16, 2016, the Partnership filed a shelf registration statement on Form S-4 with the SEC. The shelf registration statement was declared effective on March 10, 2016 and permits us to offer and issue, from time to time, an aggregate of up to 5,000,000 Common Units in connection with the acquisition by us or our subsidiaries of other businesses, assets or securities. During the three and six months ended June 30, 2016, under the Unit Exchange Program we completed acquisitions of three wireless communication tenant sites in exchange for 104,968 Common Units, valued at approximately $1.6 million, as described in Note 3, Acquisitions.

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On April 4, 2016, the Partnership completed a public offering of $20.0 million 8.0% Series A Cumulative Redeemable Perpetual Preferred Units (“Series A Preferred Units”), representing limited partner interests in the Partnership, at a price of $25.00 per unit. We received net proceeds of approximately $18.4 million after deducting underwriters’ discounts and offering expenses paid by us of $1.6 million. We used all proceeds to repay a portion of the borrowings under our revolving credit facility.

Distributions on the Series A Preferred Units are cumulative from the date of original issuance and will be payable quarterly in arrears on the 15th day of January, April, July and October of each year, when, as and if declared by the board of directors of our General Partner. The initial distribution on the Series A Preferred Units was paid on July 15, 2016 in an amount equal to $0.5611 per unit. Distributions on the Series A Preferred Units will accumulate at a rate of 8.0% per annum per $25.00 stated liquidation preference per Series A Preferred Unit. In connection with the closing of the preferred equity offering, on April 4, 2016, the Partnership executed the Second Amended and Restated Agreement of Limited Partnership of Landmark Infrastructure Partners LP (the “Partnership Agreement”) for the purpose of updating the form of Partnership Agreement and defining the preferences, rights, powers and duties of holders of preferred units.

On June 24, 2016, the Partnership established a Preferred Unit at-the-market offering program (the “Preferred Unit ATM Program” and together with the Common Unit ATM Program the “ATM Programs”) pursuant to which we may sell, from time to time, Preferred Units having an aggregate offering price of up to $40.0 million pursuant to our previously filed and effective registration statement on Form S-3. The net proceeds from sales under the Preferred Unit ATM Program will be used for general Partnership purposes, which may include, among other things, the repayment of indebtedness and to potentially fund future acquisitions.

Our Partnership Agreement provides that, during the subordination period, the Common Units have the right to receive distributions of available cash from operating surplus each quarter in an amount equal to $0.2875 per Common Unit, which amount is defined in our Partnership Agreement as the minimum quarterly distribution, plus any arrearages in the payment of the minimum quarterly distribution on the Common Units from prior quarters, before any distributions of available cash from operating surplus may be made on the subordinated units. These units are deemed “subordinated” because for a period of time, referred to as the subordination period, the subordinated units are not entitled to receive any distributions until the Common Units have received the minimum quarterly distribution plus any arrearages in the payment of the minimum quarterly distribution on the Common Units from prior quarters. Furthermore, no arrearages will accrue or be payable on the subordinated units. The practical effect of the subordinated units is to increase the likelihood that, during the subordination period, there will be available cash to be distributed on the Common Units.

The table below summarizes the quarterly distributions for Common and Subordinated Units related to our quarterly financial results:


Quarter Ended	Declaration Date	Distribution Date	Distribution Per Unit		Total Distribution
March 31, 2015	April 23, 2015	May 14, 2015	$	0.2975	$	2,332,038
June 30, 2015	July 21, 2015	August 14, 2015		0.3075		3,334,168
September 30, 2015	October 22, 2015	November 13, 2015		0.3175		4,077,232
December 31, 2015	January 28, 2016	February 12, 2016		0.3250		4,863,655
March 31, 2016	April 20, 2016	May 13, 2016		0.3300		4,953,601
June 30, 2016 (1)	July 27, 2016	August 15, 2016		0.3325		5,089,072

(1)

On July 27, 2016, the board of directors of our General Partner declared a quarterly cash distribution of $0.3325 per common and subordinated unit, or $1.33 per unit on an annualized basis, including IDRs, but excluding distributions on Series A Preferred Units, for the quarter ended June 30, 2016. This distribution is payable on August 15, 2016 to common and subordinated unitholders of record as of August 8, 2016.

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The table below summarizes the quarterly Series A Preferred Units distributions related to our quarterly financial results:


Quarter Ended	Declaration Date	Distribution Date	Distribution Per Unit		Total Distribution
June 30, 2016	June 16, 2016	July 15, 2016	$	0.5611	$	448,880

10. Net Income (Loss) Per Limited Partner Unit

Landmark’s subordinated units and the General Partner’s incentive distribution rights meet the definition of a participating security and therefore we are required to compute income per unit using the two-class method under which any excess of distributions declared over net income shall be allocated to the partners based on their respective sharing of income specified in the Partnership Agreement. Payments made to our unitholders are determined in relation to actual distributions declared and are not based on the net income (loss) allocations used in the calculation of net income (loss) per unit.

Net income (loss) per unit applicable to limited partners (including subordinated unitholders) is computed by dividing limited partners’ interest in net income (loss), after deducting any Series A Preferred Unit distributions and General Partner incentive distributions, by the weighted-average number of outstanding common and subordinated units. Diluted net income (loss) per unit includes the effects of potentially dilutive units on our common and subordinated units. Net income (loss) related to the Drop-down Assets prior to the Partnership’s acquisition dates of each transaction is allocated to the General Partner.

The calculation of the undistributed net loss attributable to common and subordinated unitholders for the three and six months ended June 30, 2016 and 2015 is as follows:


	Three months ended June 30,				Six months ended June 30,
	2016		2015		2016		2015
Net income (loss) attributable to limited partners	$	27,773	$	1,108,616	$	(399,854)	$	(1,783,047)
Less:
Distributions declared on Series A Preferred Units		(382,222)		—		(382,222)		—
General partner's incentive distribution rights		(5,059)		—		(5,059)		—
Net income (loss) attributable to common and subordinated unitholders		(359,508)		1,108,616		(787,135)		(1,783,047)
Distributions declared on common units		(4,041,589)		(2,370,122)		(7,960,604)		(3,769,466)
Distributions declared on subordinated units		(1,042,424)		(964,046)		(2,077,010)		(1,896,741)
Undistributed net loss	$	(5,443,521)	$	(2,225,552)	$	(10,824,749)	$	(7,449,254)

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The calculation of net income (loss) per common and subordinated unit for the three months ended June 30, 2016 and 2015 is as follows:


	Three months ended June 30,
	2016				2015
	Common Units		Subordinated Units		Common Units		Subordinated Units
Distributions declared	$	4,041,589	$	1,042,424	$	2,370,122	$	964,046
Undistributed net loss		(4,307,068)		(1,136,453)		(1,417,648)		(807,904)
Net income (loss) attributable to common and subordinated units - basic		(265,479)		(94,029)		952,474		156,142
Net loss attributable to subordinated units		(94,029)		—		—		—
Net income (loss) attributable to common and subordinated units - diluted	$	(359,508)	$	(94,029)	$	952,474	$	156,142

Weighted-average units outstanding:
Basic		11,914,525		3,135,109		6,090,688		3,135,109
Effect of diluted subordinated units		3,135,109		—		—		—
Diluted		15,049,634		3,135,109		6,090,688		3,135,109

Net income (loss) per common and subordinated unit:
Basic	$	(0.02)	$	(0.03)	$	0.16	$	0.05
Diluted (1)	$	(0.02)	$	(0.03)	$	0.16	$	0.05

(1)

The Partnership Agreement provides that when the subordination period ends, each outstanding subordinated unit will convert into one Common Unit and will thereafter participate pro rata with the other Common Units in distributions of available cash. The dilutive effect of Landmark’s subordinated units is reflected using the “if-converted method” which assumes conversion of the subordinated units into Common Units and excludes the subordinated distributions from the calculation, as the “if-converted method” is more dilutive. Diluted net loss per unit for the three months ended June 30, 2016, includes the full effect of the conversion of Landmark’s subordinated units into 3,135,109 of Common Units at the beginning of the period.

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The calculation of net loss per unit for the six months ended June 30, 2016 and 2015 is as follows:


	Six months ended June 30,
	2016				2015
	Common Units		Subordinated Units		Common Units		Subordinated Units
Distributions declared	$	7,960,604	$	2,077,010	$	3,769,466	$	1,896,741
Undistributed net loss		(8,560,685)		(2,264,064)		(4,607,445)		(2,841,809)
Net income (loss) attributable to common and subordinated units - basic		(600,081)		(187,054)		(837,979)		(945,068)
Net loss attributable to subordinated units		(187,054)		—		—		—
Net income (loss) attributable to common and subordinated units - diluted	$	(787,135)	$	(187,054)	$	(837,979)	$	(945,068)

Weighted-average units outstanding:
Basic		11,872,092		3,135,109		5,401,007		3,135,109
Effect of diluted subordinated units		3,135,109		—		—		—
Diluted		15,007,201		3,135,109		5,401,007		3,135,109

Net loss per common and subordinated unit:
Basic	$	(0.05)	$	(0.06)	$	(0.16)	$	(0.30)
Diluted (1)	$	(0.05)	$	(0.06)	$	(0.16)	$	(0.30)

(1)

The Partnership Agreement provides that when the subordination period ends, each outstanding subordinated unit will convert into one Common Unit and will thereafter participate pro rata with the other Common Units in distributions of available cash. The dilutive effect of Landmark’s subordinated units is reflected using the “if-converted method” which assumes conversion of the subordinated units into Common Units and excludes the subordinated distributions from the calculation, as the “if-converted method” is more dilutive. Diluted net loss per unit for the six months ended June 30, 2016, includes the full effect of the conversion of Landmark’s subordinated units into 3,135,109 of Common Units at the beginning of the period.

11. Fair Value of Financial Instruments

The fair value for certain financial instruments is derived using a combination of market quotes, pricing models and other valuation techniques that involve significant management judgment. The price transparency of financial instruments is a key determinant of the degree of judgment involved in determining the fair value of the Partnership’s financial instruments. Financial instruments for which actively quoted prices or pricing parameters are available and for which markets contain orderly transaction will generally have a higher degree of price transparency than financial instruments for which markets are inactive or consist of non‑orderly trades. The Partnership evaluates several factors when determining if a market is inactive or when market transactions are not orderly. The following is a summary of the methods and assumptions used by management in estimating the fair value of each class of assets and liabilities for which it is practicable to estimate the fair value:

Cash and cash equivalents, rent receivables, net and accounts payable and accrued liabilities: The carrying values of these balances approximate their fair values because of the short‑term nature of these instruments.

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Revolving credit facility: The fair value of the Partnership’s revolving credit facility is estimated using a discounted cash flow analysis based on management’s estimates of current market interest rates for instruments with similar characteristics, including remaining loan term, loan‑to‑value ratio, type of collateral and other credit enhancements. Additionally, since a quoted price in an active market is generally not available for the instrument or an identical instrument, the Partnership measures fair value using a valuation technique that is consistent with the principles of fair value measurement which typically considers what management believes is a market participant rate for a similar instrument. The Partnership classifies these inputs as Level 3 inputs. The fair value of the Partnership’s revolving credit facility is considered to approximate the carrying value because the interest payments are based on LIBOR rates that reset every month. The Partnership does not believe its credit risk has changed materially from the date the applicable LIBOR plus 2.50% was set for the revolving credit facility.

Secured Notes: The Partnership determines fair value of its secured notes utilizing various Level 2 sources including quoted prices and indicative quotes (non-binding quotes) from brokers that require judgment to interpret market information. Quotes from brokers require judgment and are based on the brokers’ interpretation of market information, including implied credit spreads for similar borrowings on recent trades or bid/ask prices or quotes from active markets if available. The fair value of the Partnership’s Secured Notes approximates the carrying value as the Secured Notes were issued in June 2016.

Investments in receivables: The Partnership’s investments in receivables are presented in the accompanying consolidated and combined balance sheets at their amortized cost net of recorded reserves and not at fair value. The fair values of the receivables were estimated using an internal valuation model that considered the expected cash flow of the receivables and estimated yield requirements by market participants with similar characteristics, including remaining loan term, and credit enhancements. The Partnership classifies these inputs as Level 3 inputs.

Interest rate swap agreements: The Partnership’s interest rate swap agreements are presented at fair value on the accompanying consolidated and combined balance sheets. The valuation of these instruments is determined using a proprietary model that utilizes observable and unobservable inputs. A majority of the inputs are observable with the only unobservable inputs relating to the lack of performance risk on the part of the Partnership or the counter party to the instrument. As such, the Partnership classifies these inputs as Level 2 inputs. The proprietary model uses the contractual terms of the derivatives, including the period to maturity, as well as observable market‑based inputs, including the interest rate curves and volatility. The fair values of interest rate swaps are estimated using the market standard methodology of netting the discounted fixed cash payments and the discounted expected variable cash receipts. The variable cash receipts are based on an expectation of interest rates (forward curves) derived from observable market interest rate curves. In addition, credit valuation adjustments, which consider the impact of any credit risk to the contracts, are incorporated in the fair values to account for potential nonperformance risk.

The table below summarizes the carrying amounts and fair values of financial instruments which are not carried at fair value on the face of the financial statements:


	June 30, 2016				December 31, 2015
	Carrying amount		Fair Value		Carrying amount		Fair Value
Investment in receivables, net	$	11,970,843	$	12,025,667	$	12,135,786	$	12,400,960
Revolving credit facility		106,000,000		106,000,000		233,000,000		233,000,000
Secured Notes, net		112,641,184		112,641,184		—		—

Disclosure of the fair values of financial instruments is based on pertinent information available to the Partnership as of the period end and requires a significant amount of judgment. Despite increased capital market and credit market activity, transaction volume for certain financial instruments remains relatively low. This has made the estimation of fair values difficult and, therefore, both the actual results and the Partnership’s estimate of value at a future date could be materially different.

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As of June 30, 2016 and December 31, 2015, the Partnership measured the following assets and liabilities at fair value on a recurring basis:


	June 30, 2016		December 31, 2015
Derivative Liabilities(1)	$	5,587,087	$	736,231

(1)

Fair value is calculated using level 2 inputs. Level 2 inputs are quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model‑derived valuations in which significant inputs and significant value drivers are observable in active markets.

12. Related‑Party Transactions

General and Administrative Reimbursement

Under our omnibus agreement, we are required to reimburse Landmark for expenses related to certain general and administrative services Landmark provides 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 on our income statements, and to the extent such general and administrative expenses exceed the cap amount, the amount of such excess will be reflected on 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 the amount of general and administrative expenses. These expenses include salary, bonus, incentive compensation and other amounts paid to persons who perform services for us or on our behalf and expenses allocated to our General Partner by its affiliates. For the three and six months ended June 30, 2016, Landmark reimbursed us $0.8 million and $1.6 million, respectively, for expenses related to certain general and administrative expenses that exceeded the cap, and $0.5 million and $1.2 million for the three and six months ended June 30, 2015, respectively.

Patent License Agreement

We entered into a Patent License Agreement (“License Agreement”) with American Infrastructure Funds, LLC (“AIF”), an affiliate of the controlling member of Landmark. Under the License Agreement, AIF granted us a nonexclusive, perpetual license to practice certain patented methods related to the apparatus and method for combining easements under a master limited partnership. We have agreed to pay AIF a license fee of $50,000 for the second year of the License Agreement, and thereafter, an amount equal to the greater of (i) one‑tenth of one percent (0.1%) of our gross revenue received during such contract year; and (ii) $100,000. During the three and six months ended June 30, 2016, we incurred $12,500 and $25,000, respectively, of license fees related to the AIF patent license agreement.

Right of First Offer

In connection with the IPO, certain other investment funds managed by Landmark have granted us a right of first offer (“ROFO”) on real property interests that they currently own or acquire in the future before selling or transferring those assets to any third party. On August 18, 2015 and November 19, 2015, the Partnership completed ROFO acquisitions of 193, 72 and 136 tenant sites from Fund E, Fund C and Fund F, respectively, for total consideration of $65.9 million, $30.3 million, and $44.5 million, respectively. See further discussion in Note 3, Acquisitions for additional information.

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Management Fee

In accordance with the limited liability company agreements for each of the Acquired Funds, Landmark or its affiliates were paid a management fee ranging from $45 to $75 per asset per month for providing various services to the funds. Upon execution of the omnibus agreement and completion of the closing of the IPO, Landmark’s right to receive this management fee has been terminated and we will instead reimburse Landmark for certain general and administrative expenses incurred by Landmark pursuant to the omnibus agreement, subject to a cap, as described above. For the three and six months ended June 30, 2015, financial information has been retroactively adjusted to include management fees of $75,672 and $151,752, respectively, incurred by the Acquired Funds during the period prior to the acquisition by the Partnership.

Secured Tenant Site Assets’ Management Fee

In connection with the issuance of the Secured Notes, the Partnership entered into a management agreement, dated as of June 16, 2016 (the “Secured Notes Management Agreement”), with the General Partner. Pursuant to the Secured Notes Management Agreement, our General Partner will perform those functions reasonably necessary to maintain, manage and administer the Secured Tenant Site Assets for a monthly management fee equal to 1.5% of the Secured Tenant Site Assets’ operating revenue, as defined by the Secured Notes Management Agreement. The Secured Tenant Site Assets’ Management fee to Landmark will be treated as a capital distribution to Landmark. Landmark will reimburse us for the fees paid with the reimbursement treated as a capital contribution. As of June 30, 2016, no such fees have been incurred.

Acquisition of Real Property Interests

In connection with third party acquisitions, Landmark will be obligated to provide acquisition services to us, including asset identification, underwriting and due diligence, negotiation, documentation and closing, at the reasonable request of our General Partner, but we are under no obligation to utilize such services. We will pay Landmark reasonable fees, as mutually agreed to by Landmark and us, for providing these services. These fees will not be subject to the cap on general and administrative expenses described above. As of June 30, 2016, no such fees have been incurred.

Due from Affiliates

At June 30, 2016 and December 31, 2015, the General Partner and its affiliates owed $1.2 million and $2.2 million, respectively, to the Partnership primarily for the current quarter general and administrative reimbursement and for rents received on our behalf.

13. Segment Information

The Partnership had three reportable segments, wireless communication, outdoor advertising and renewable power generation for all periods presented.

The Partnership’s wireless communication segment consists of leasing real property interests to companies in the wireless communication industry in the United States. The Partnership’s outdoor advertising segment consists of leasing real property interests to companies in the outdoor advertising industry in the United States. The Partnership’s renewable power generation segment consists of leasing real property interests to companies in the renewable power industry in the United States. Items that are not included in any of the reportable segments are included in the corporate category.

The reportable segments are strategic business units that offer different products and services. They are commonly managed as all three businesses require similar marketing and business strategies. Because our tenant lease arrangements are mostly effectively triple-net, we evaluate our segments based on revenue. We believe this measure provides investors relevant and useful information because it is presented on an unlevered basis.

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The statements of operations for the reportable segments are as follows:

For the three months ended June 30, 2016:


					Renewable
	Wireless		Outdoor		Power
	Communication		Advertising		Generation		Corporate		Total
Revenue
Rental revenue	$	6,069,496	$	1,361,417	$	166,577	$	—	$	7,597,490
Interest income on receivables		153,097		—		96,090		—		249,187
Total revenue		6,222,593		1,361,417		262,667		—		7,846,677
Expenses
Property operating		53,159		7,681		6,188		—		67,028
General and administrative		—		—		—		1,041,870		1,041,870
Acquisition-related		2,250		—		—		260,635		262,885
Amortization		2,034,016		187,230		18,466		—		2,239,712
Total expenses		2,089,425		194,911		24,654		1,302,505		3,611,495
Total other income and expenses		—		—		—		(4,169,765)		(4,169,765)
Net income (loss)	$	4,133,168	$	1,166,506	$	238,013	$	(5,472,270)	$	65,417

For the three months ended June 30, 2015:


					Renewable
	Wireless		Outdoor		Power
	Communication		Advertising		Generation		Corporate		Total
Revenue
Rental revenue	$	5,323,369	$	1,101,670	$	22,770	$	—	$	6,447,809
Interest income on receivables		196,966		—		—		—		196,966
Total revenue		5,520,335		1,101,670		22,770		—		6,644,775
Expenses
Management fees to affiliate		57,352		18,320		—		—		75,672
Property operating		6,632		3,466		—		—		10,098
General and administrative		—		—		—		661,004		661,004
Acquisition-related		532,648		25,261		—		173,756		731,665
Amortization		1,566,619		142,789		8,432		—		1,717,840
Impairments		222,224		292,076		—		—		514,300
Total expenses		2,385,475		481,912		8,432		834,760		3,710,579
Total other income and expenses		9,524		—		—		(1,633,123)		(1,623,599)
Net income (loss)	$	3,144,384	$	619,758	$	14,338	$	(2,467,883)	$	1,310,597

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For the six months ended June 30, 2016:


					Renewable
	Wireless		Outdoor		Power
	Communication		Advertising		Generation		Corporate		Total
Revenue
Rental revenue	$	12,147,180	$	2,711,901	$	339,143	$	—	$	15,198,224
Interest income on receivables		356,442		—		175,145		—		531,587
Total revenue		12,503,622		2,711,901		514,288		—		15,729,811
Expenses
Property operating		58,186		7,681		6,188		—		72,055
General and administrative		—		—		—		2,144,591		2,144,591
Acquisition-related		2,250		—		—		332,715		334,965
Amortization		3,831,595		376,342		36,931		—		4,244,868
Total expenses		3,892,031		384,023		43,119		2,477,306		6,796,479
Total other income and expenses		373,779		—		—		(9,565,372)		(9,191,593)
Net income (loss)	$	8,985,370	$	2,327,878	$	471,169	$	(12,042,678)	$	(258,261)

For the six months ended June 30, 2015:


					Renewable
	Wireless		Outdoor		Power
	Communication		Advertising		Generation		Corporate		Total
Revenue
Rental revenue	$	10,296,362	$	2,142,863	$	32,710	$	—	$	12,471,935
Interest income on receivables		404,276		—		—		—		404,276
Total revenue		10,700,638		2,142,863		32,710		—		12,876,211
Expenses
Management fees to affiliate		114,997		36,755		—		—		151,752
Property operating		8,316		3,466		—		—		11,782
General and administrative		—		—		—		1,644,989		1,644,989
Acquisition-related		1,435,242		46,387		—		473,353		1,954,982
Amortization		2,972,244		272,238		11,740		—		3,256,222
Impairments		2,984,659		292,077		—		—		3,276,736
Total expenses		7,515,458		650,923		11,740		2,118,342		10,296,463
Total other income and expenses		9,524		72,502		—		(4,392,340)		(4,310,314)
Net income (loss)	$	3,194,704	$	1,564,442	$	20,970	$	(6,510,682)	$	(1,730,566)

The Partnership’s total assets by segment were:


	June 30, 2016		December 31, 2015
Segments
Wireless communication	$	305,718,332	$	308,997,560
Outdoor advertising		59,216,532		59,499,264
Renewable power generation		12,002,644		11,980,027
Corporate assets		10,675,712		8,528,139
Total assets	$	387,613,220	$	389,004,990

14. Commitments and Contingencies

The Partnership’s commitments and contingencies include customary claims and obligations incurred in the normal course of business. In the opinion of management, these matters will not have a material effect on the Partnership’s combined financial position.

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There has been significant consolidation in the wireless communication industry over the last several years that has led to certain lease terminations. In 2013, T‑Mobile acquired MetroPCS and Sprint acquired the remaining interest in Clearwire, and in 2014 AT&T acquired Leap Wireless. The past consolidation in the wireless industry has led to rationalization of wireless networks and reduced demand for tenant sites. We believe the impact of past consolidation is already reflected in our occupancy rates. The termination of additional leases in our portfolio would result in lower rental revenue and may lead to impairment of our real property interests or other adverse effects to our business.

As of June 30, 2016, the Partnership had approximately $42.5 million of real property interest subject to subordination to lenders of the underlying property. To the extent a lender forecloses on a property the Partnership would take impairment charges for the book value of the asset and no longer be entitled to the revenue associated with the asset.

15. Tenant Concentration

For the three and six months ended June 30, 2016 and 2015, the Partnership had the following tenant revenue concentrations:


	Three Months Ended June 30,				Six Months Ended June 30,
Tenant	2016		2015		2016		2015
T-Mobile	15.7	%	17.5	%	15.8	%	17.5	%
Verizon	11.7	%	11.3	%	11.5	%	11.3	%
Sprint	11.9	%	13.0	%	11.9	%	13.3	%
AT&T Mobility	13.1	%	13.5	%	12.8	%	13.0	%
Crown Castle	11.4	%	11.7	%	11.3	%	11.7	%

Most tenants are subsidiaries of these companies but have been aggregated for purposes of showing revenue concentration. Financial information for these companies can be found at www.sec.gov.

The loss of any one of our large customers as a result of consolidation, merger, bankruptcy, insolvency, network sharing, roaming, joint development, resale agreements by our customers or otherwise may result in (1) a material decrease in our revenue, (2) uncollectible account receivables, (3) an impairment of our deferred site rental receivables, wireless infrastructure assets, site rental contracts or customer relationships intangible assets, or (4) other adverse effects to our business.

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16. Supplemental Cash Flow Information

Noncash activities for the six months ended June 30, 2016 and 2015 were as follows:


	Six Months Ended June 30,
	2016		2015
Capital contribution to fund general and administrative expense reimbursement	$	819,016	$	481,053
Purchase price for acquisition of real property interests included in due to Landmark and affiliates		110,497		—
Unit Exchange Program acquisitions		1,604,166		—
Fair value adjustment of investments in receivables		212,359		—
Distributions payable to Series A Preferred Units		382,222		—
Offering costs in accounts payable and accrued liabilities		667,252		—
Deferred loan costs included in accounts payable and accrued liabilities		708,257		—

Cash flows related to interest paid was as follows:

17. Subsequent Events

On July 27, 2016, the board of directors of our General Partner declared a quarterly cash distribution of $0.3325 per unit, or $1.33 per unit on an annualized basis, for the quarter ended June 30, 2016. This distribution is payable on August 15, 2016 to unitholders of record as of August 8, 2016.

On August 1, 2016, the Partnership completed an acquisition of 59 tenant sites and related real property interests, consisting of 37 wireless communication, 4 outdoor advertising and 18 renewable power generation sites, from HoldCo, in exchange for cash consideration of $24.4 million. The purchase price was funded with $18.0 million of borrowings under the Partnership’s existing credit facility and available cash.

Subsequent to June 30, 2016, the Partnership issued 89,053 Common Units and 63,657 Preferred Units under our existing ATM Programs, generating proceeds of approximately $1.5 million and $1.6 million, respectively, before issuance costs.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Unless the context otherwise requires, references in this report to “Landmark Infrastructure Partners LP,” “our partnership,” “we,” “our,” “us,” or like terms for time periods prior to our initial public offering (the “IPO”) refer to Landmark Infrastructure Partners LP Predecessor, our predecessor for accounting purposes (our “Predecessor”). Our Partnership succeeded our Predecessor, which includes substantially all the assets and liabilities that were contributed to us in connection with our IPO by Landmark Dividend Growth Fund-A LLC (“Fund A”) and Landmark Dividend Growth Fund-D LLC (“Fund D” and together with Fund A, the “Contributing Landmark Funds”), two investment funds formerly managed by Landmark Dividend LLC (“Landmark” or “Sponsor”). Our Predecessor includes the results of such assets during any period they were previously owned by Landmark or any of its affiliates. The operations of the assets we acquired from Landmark and affiliates prior to acquisition dates of the Partnership, are also included in our operations and the operations of our Predecessor. For time periods subsequent to the IPO, references in this report to “Landmark Infrastructure Partners LP,” “our partnership,” “we,” “our,” “us,” or like terms refer to Landmark Infrastructure Partners LP.

The following is a discussion and analysis of our financial performance, financial condition and significant trends that may affect our future performance. You should read the following in conjunction with the historical consolidated and combined financial statements and related notes included elsewhere in this report. Among other things, those historical consolidated and combined financial statements include more detailed information regarding the basis of presentation for the following information. The following discussion and analysis contains forward‑looking statements that involve risks and uncertainties. Our actual results could differ materially from those expressed or implied in forward‑looking statements for many reasons, including the risks described in “Risk Factors” disclosed in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2015.

Some of the information in this Quarterly Report on Form 10-Q may contain forward‑looking statements. Forward‑looking statements give our current expectations, contain projections of results of operations or of financial condition, or forecasts of future events. Words such as “may,” “will,” “assume,” “forecast,” “position,” “predict,” “strategy,” “expect,” “intend,” “plan,” “estimate,” “anticipate,” “believe,” “project,” “budget,” “potential,” or “continue,” and similar expressions are used to identify forward‑looking statements. They can be affected by and involve assumptions used or known or unknown risks or uncertainties. Consequently, no forward‑looking statements can be guaranteed. When considering these forward‑looking statements, you should keep in mind the risk factors and other cautionary statements as set forth in “Part I, Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2015. Actual results may vary materially. You are cautioned not to place undue reliance on any forward‑looking statements. You should also understand that it is not possible to predict or identify all such factors and should not consider the following list to be a complete statement of all potential risks and uncertainties. The risk factors and other factors noted throughout our Annual Report on Form 10-K for the year ended December 31, 2015 and other factors noted in this Quarterly Report on Form 10-Q could cause our actual results to differ materially from the results contemplated by such forward‑looking statements, including the following:

the number of real property interests that we are able to acquire, and whether we are able to complete such acquisitions on favorable terms, which could be adversely affected by, among other things, general economic conditions, operating difficulties, and competition;

the prices we pay for our acquisitions of real property;

our management’s and our general partner’s conflicts of interest;

the rent increases we are able to negotiate with our tenants, and the possibility of further consolidation among a relatively small number of significant tenants in the wireless communication and outdoor advertising industries;

our relative lack of experience with real property interest acquisition in the renewable power segment and abroad;

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changes in the price and availability of real property interests;

changes in prevailing economic conditions;

unanticipated cancellations of tenant leases;

a decrease in our tenants’ demand for real property interest due to, among other things, technological advances or industry consolidation;

inclement or hazardous weather conditions, including flooding, and the physical impacts of climate change, unanticipated ground, grade or water conditions, and other environmental hazards;

inability to acquire or maintain necessary permits;

changes in laws and regulations (or the interpretation thereof), including zoning regulations;

difficulty collecting receivables and the potential for tenant bankruptcy;

additional difficulties and expenses associated with being a publicly traded partnership;

our ability to borrow funds and access capital markets, and the effects of the fluctuating interest rate on our existing and future borrowings; and

restrictions in our revolving credit facility on our ability to issue additional debt or equity or pay distributions.

All forward‑looking statements are expressly qualified in their entirety by the foregoing cautionary statements.

Overview

We are a growth‑oriented master limited partnership formed by Landmark to own and manage a portfolio of real property interests that we lease to companies in the wireless communication, outdoor advertising and renewable power generation industries. We generate revenue and cash flow from existing tenant leases of our real property interests to wireless carriers, cellular tower owners, outdoor advertisers and renewable power producers.

How We Generate Rental Revenue

We generate rental revenue and cash flow from existing leases of our tenant sites to wireless carriers, cellular tower owners, outdoor advertisers and renewable power producers. The amount of rental revenue generated by the assets in our portfolio depends principally on occupancy levels and the tenant lease rates and terms at our tenant sites.

We believe the terms of our tenant leases provide us with stable and predictable cash flow that will support consistent, growing distributions to our unitholders. Substantially all of our tenant lease arrangements are effectively triple net, meaning that our tenants or the underlying property owners are generally contractually responsible for property‑level operating expenses, including maintenance capital expenditures, property taxes and insurance. In addition, over 94% of our tenant leases have contractual fixed‑rate escalators or consumer price index (“CPI”)‑based rent escalators, and some of our tenant leases contain revenue‑sharing provisions in addition to the base monthly or annual rental payments. Occupancy rates under our tenant leases have historically been very high. We also believe we are well positioned to negotiate higher rents in advance of lease expirations as tenants request lease amendments to accommodate equipment upgrades or add tenants to increase co‑location.

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Future economic or regional downturns affecting our submarkets that impair our ability to renew or re‑lease our real property interests and other adverse developments that affect the ability of our tenants to fulfill their lease obligations, such as tenant bankruptcies, could adversely affect our ability to maintain or increase rental rates at our sites. Adverse developments or trends in one or more of these factors could adversely affect our rental revenue and tenant recoveries in future periods.

How We Evaluate Our Operations

Our management uses a variety of financial and operating metrics to analyze our performance. These metrics are significant factors in assessing our operating results and profitability and include: (1) occupancy (2) operating and maintenance expenses; (3) Adjusted EBITDA; and (4) distributable cash flow.

Occupancy

The amount of revenue we generate primarily depends on our occupancy rate. As of June 30, 2016, we had a 97% occupancy rate with 1,405 of our 1,450 available tenant sites leased. We believe the infrastructure assets at our tenant sites are essential to the ongoing operations and profitability of our tenants. Combined with the challenges and costs of relocating the infrastructure, we believe that we will continue to enjoy high tenant retention and occupancy rates.

There has been significant consolidation in the wireless communication industry over the last several years that has led to certain lease terminations. In 2013, T‑Mobile acquired MetroPCS and Sprint acquired the remaining interest in Clearwire, and in 2014 AT&T acquired Leap Wireless. As a result of T-Mobile’s acquisition of MetroPCS (completed in 2013), in 2015 we received termination notices related to 23 MetroPCS tenant sites, two of which were subsequently rescinded. The majority of the MetroPCS sites where we have received termination notices have been vacated. We believe the impact of past consolidation is already reflected in our occupancy rates. Any additional termination of leases in our portfolio would result in lower rental revenue, may lead to impairment of our real property interests, or other adverse effects to our business.

Operating and Maintenance Expenses

Substantially all of our tenant sites are subject to effectively triple net lease arrangements, which require the tenant or the underlying property owner to pay all utilities, property taxes, insurance and repair and maintenance costs. Our overall financial results could be impacted to the extent the owners of the fee interest in the real property or our tenants do not satisfy their obligations.

EBITDA, Adjusted EBITDA and Distributable Cash Flow

We define EBITDA as net income before interest, income taxes, depreciation and amortization, and we define Adjusted EBITDA as EBITDA before impairments, acquisition‑related costs, unrealized or realized gain or loss on derivatives, loss on early extinguishment of debt, gain on sale of real property interest, unit‑based compensation, straight line rental adjustments, amortization of above‑ and below‑market rents, and after the deemed 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, maintenance capital expenditures and Series A Preferred Unit distributions. Distributable cash flow will not reflect changes in working capital balances.

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;

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•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 in this Quarterly Report on Form 10-Q 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 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, 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 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.

Factors Affecting the Comparability of Our Financial Results

Our future results of operations may not be comparable to our historical results of operations for the reasons described below:

Acquisitions

We have in the past pursued and intend to continue to pursue acquisitions of real property interests. Our significant historical acquisition activity impacts the period to period comparability of our results of operations. During 2015, Landmark acquired real property interests underlying 278 tenant sites that were subsequently included in drop-down acquisitions by the Partnership. The acquisitions were deemed to be transactions between entities under common control, which requires the assets and liabilities transferred at the historical cost of the parent of the entities, with prior periods retroactively adjusted to furnish comparative information. Operating results from the acquisition of real property interests are reflected from the date of acquisition by Landmark.

On April 20, 2016, the Partnership completed one drop-down acquisition of two tenant sites and related property interest and one investment in other receivable from Landmark and affiliates in exchange for total consideration of $6.3 million. Additionally, during the three months ended June 30, 2016 the Partnership acquired five tenant sites and related real property interest from third parties for total consideration of $1.7 million. During the year ended December 31, 2015, the Partnership completed eight drop-down acquisitions of an aggregate of 761 tenant sites and related real property interests from Landmark and affiliates in exchange for total consideration of $268.2 million. Of the 761 tenant sites acquired by the Partnership in 2015, 401 of these tenant sites were part of the right of first offer assets acquired from Landmark Dividend Growth Fund-C LLC (“Fund C”), Landmark Dividend Growth Fund-E LLC (“Fund E”) and Landmark Dividend Growth Fund-F LLC (“Fund F” and together with Fund C and Fund E, the “Acquired Funds”) for total consideration of $140.7 million.

All of the acquisitions from Landmark and affiliates described above are collectively referred to as the “Drop-down Acquisitions,” and the acquired assets in the Drop-down Acquisitions are collectively referred to as the “Drop-Down Assets.” The Drop-down Acquisitions are deemed to be transactions between entities under common control, which, under applicable accounting guidelines, requires the assets and liabilities to be transferred at the historical cost of the parent of the entities, with prior periods retroactively adjusted to furnish comparative information. See Note 3, Acquisitions to the Consolidated and Combined Financial Statements for additional information.

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On August 1, 2016, the Partnership completed an acquisition of 59 tenant sites and related real property interests, consisting of 37 wireless communication, 4 outdoor advertising and 18 renewable power generation sites, from Landmark, in exchange for cash consideration of $24.4 million. The purchase price was funded with $18.0 million of borrowings under the Partnership’s existing credit facility and available cash. These tenant sites and related real property interests are not reflected in our historical results of operations.

Secured Notes

On June 16, 2016, the Partnership completed a securitization transaction (the “Securitization”) involving 629 tenant sites and related real property interests (the “Secured Tenant Site Assets”) owned by certain special purpose subsidiaries of the Partnership, through the issuance of the Series 2016-1 Secured Tenant Site Contract Revenue Notes, Class A principal amount of $91.5 million and Class B principal amount of $25.1 million (collectively, the “Secured Notes”), in an aggregate principal amount of $116.6 million. The Class A and Class B Secured Notes bear interest at a fixed note rate per annum of 3.52% and 7.02%, respectively. See Note 7, Debt to the Consolidated and Combined Financial Statements for additional information.

Derivative Financial Instruments

Historically, we have hedged a portion of the variable interest rates under our secured debt facilities through interest rate swap agreements. We have not applied hedge accounting to these derivative financial instruments which has resulted in the change in the fair value of the interest rate swap agreements to be reflected in income as either a realized or unrealized gain (loss) on derivatives.

General and Administrative Expenses

Under the Partnership’s Second Amended and Rested Agreement of Limited Partnership dated April 4, 2016 (the “Partnership Agreement”), we are required to reimburse our general partner and its affiliates for all costs and expenses that they incur on our behalf for managing and controlling our business and operations. Except to the extent specified under our Omnibus Agreement with Landmark (“Omnibus Agreement”), our general partner determines the amount of these expenses and such determinations must be made in good faith under the terms of the Partnership Agreement. Under the Omnibus Agreement, 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) the fifth anniversary of the closing of the IPO (November 19, 2019). The full amount of general and administrative expenses incurred will be reflected on our income statements, and to the extent such general and administrative expenses exceed the cap amount, the amount of such excess will be reflected on 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 the amount of general and administrative expenses.

Our historical financial results include a management fee charged by Landmark to cover certain administrative costs as the managing member of the Acquired Funds. Landmark is no longer entitled to receive a management fee for these services and will be reimbursed for its costs of providing these services subject to the cap under the terms of the Omnibus Agreement.

Basis in Real Property Interests

We have concluded that the contribution of interests by the Contributing Landmark Funds was deemed a transaction among entities under common control, since these entities have common management and ownership and are under common control. As a result, the contribution and acquisition of real property interests and other assets from the Contributing Landmark Funds to our Predecessor was recorded at Landmark’s historical cost.

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The Drop-Down Assets are recorded at the historical cost of Landmark, as the Drop-down Acquisitions are transactions between entities under common control, our statements of operations of the Partnership are adjusted retroactively as if the transaction occurred on the earliest date during which the entities were under common control. Our 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 we owned the Drop-down Assets as of the date acquired by Landmark for all periods presented.

Factors That May Influence Future Results of Operations

Acquisitions of Additional Real Property Interests

We intend to pursue acquisitions of real property interests from Landmark and its affiliates, including those real property interests subject to our right of first offer. We also intend to pursue acquisitions of real property interests from third parties, utilizing the expertise of our management and other Landmark employees to identify and assess potential acquisitions, for which we would pay Landmark mutually agreed reasonable fees. When acquiring real property interests, we target infrastructure locations that are essential to the ongoing operations and profitability of our tenants, which we expect will result in continued high tenant occupancy and enhance our cash flow stability. We expect the vast majority of our acquisitions will include leases with tenants that are large, publicly traded companies (or their affiliates) that have a national footprint (“Tier 1”) or tenants whose sub‑tenants are Tier 1 companies. Additionally, we focus on infrastructure locations with characteristics that are difficult to replicate in their respective markets, and those with tenant assets that cannot be easily moved to nearby alternative sites or replaced by new construction. Although our portfolio is focused on wireless communication, outdoor advertising and renewable power generation assets in the United States, we intend to grow our portfolio of real property interests into other fragmented infrastructure asset classes and may pursue acquisitions internationally.

Changing Interest Rates

Interest rates have been at or near historic lows in recent years. If interest rates rise, this may impact the availability and terms of debt financing, our interest expense associated with existing and future debt or our ability to make accretive acquisitions.

Critical Accounting Policies

The preparation of financial statements in conformity with generally accepted accounting principles in the United States (“GAAP”) requires management to use judgment in the application of accounting policies, including making estimates and assumptions. We base estimates on the best information available to us at the time, our experience and on various other assumptions believed to be reasonable under the circumstances. These estimates affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting periods. If our judgment or interpretation of the facts and circumstances relating to various transactions or other matters had been different, it is possible that different accounting would have been applied, resulting in a different presentation of our consolidated and combined financial statements. From time to time, we re-evaluate our estimates and assumptions. In the event estimates or assumptions prove to be different from actual results, adjustments are made in subsequent periods to reflect more current estimates and assumptions about matters that are inherently uncertain. A summary of our critical accounting policies is included in our Annual Report on Form 10-K for the year ended December 31, 2015, in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Our critical accounting policies have not changed during 2016.

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Historical Results of Operations of our Partnership

Segments

We conduct business through three reportable business segments: Wireless Communication, Outdoor Advertising and Renewable Power Generation. Our reportable segments are strategic business units that offer different products and services. They are commonly managed, as all three businesses require similar marketing and business strategies. We evaluate our segments based on revenue because substantially all of our tenant lease arrangements are effectively triple-net. We believe this measure provides investors relevant and useful information because it is presented on an unlevered basis.

Results of Operations

Our results of operations for all periods presented were affected by acquisitions made during the year ended December 31, 2015. As of June 30, 2016 and 2015, we had 1,450 and 1,357 available tenant sites with 1,405 and 1,339 leased tenant sites, respectively. The following table summarizes the consolidated and combined statement of operations of our Partnership for the three months ended June 30, 2016:


	Three Months Ended June 30,
	2016		2015		Change
Revenue
Rental revenue	$	7,597,490	$	6,447,809	$	1,149,681
Interest income on receivables		249,187		196,966		52,221
Total revenue		7,846,677		6,644,775		1,201,902
Expenses
Management fees to affiliate		—		75,672		(75,672)
Property operating		67,028		10,098		56,930
General and administrative		1,041,870		661,004		380,866
Acquisition-related		262,885		731,665		(468,780)
Amortization		2,239,712		1,717,840		521,872
Impairments		—		514,300		(514,300)
Total expenses		3,611,495		3,710,579		(99,084)
Other income and expenses
Interest expense		(2,367,026)		(2,045,883)		(321,143)
Unrealized gain (loss) on derivatives		(1,802,739)		412,760		(2,215,499)
Gain on sale of real property interests		—		9,524		(9,524)
Total other income and expenses		(4,169,765)		(1,623,599)		(2,546,166)
Net income (loss)	$	65,417	$	1,310,597	$	(1,245,180)

Comparison of Three Months Ended June 30, 2016 to Three Months Ended June 30, 2015

Rental Revenue

Rental revenue increased $1,149,681, $1,085,817 of which was due to the greater number of assets in the portfolio during the three months ended June 30, 2016 compared to the three months ended June 30, 2015. Revenue generated from our wireless communication, outdoor advertising, and renewable power generation segments was $6,069,496, $1,361,417, and $166,577, or 80%, 18%, and 2% of total rental revenue, respectively, during the three months ended June 30, 2016, compared to $5,323,369, $1,101,670, and $22,770, or 83%, 17%, and less than 1% of total rental revenue, respectively, during the three months ended June 30, 2015. The occupancy rates in our wireless communication, outdoor advertising, and renewable power generation segments were 96%, 98%, and 100%, respectively, at June 30, 2016 compared to 97%, 100%, and 100%, respectively, at June 30, 2015. Additionally, our effective monthly rental rates per tenant site for wireless communication, outdoor advertising and renewable power generation segments were $1,785, $1,417, and $4,654, respectively, during the three months ended June 30, 2016 compared to $1,737, $1,268, and $1,537, respectively, during the three months ended June 30, 2015.

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Interest Income on Receivables

Interest income on receivables increased $52,221 during the three months ended June 30, 2016 compared to the three months ended June 30, 2015 as a result of the acquisition of an additional investment in receivables in connection with the April 20, 2016 acquisition. As part of the April 20, 2016 and July 21, 2015 acquisitions, the Partnership acquired additional investments in receivables that were valued at $4.2 million and $0.1 million, respectively, at the acquisition date. We expect the amount of interest income on receivables to decline as the principal balance of the receivables amortize. We expect to reinvest the principal payments received into additional real property interests. Interest income on receivables is generated from our wireless communication and renewable power generation segments.

Management Fees to Affiliate

Management fees to affiliates decreased $75,672 during the three months ended June 30, 2016 compared to the three months ended June 30, 2015 primarily due to $75,672 of management fees to affiliates that are associated with the Acquired Funds. Landmark’s right to receive management fees ranging from $45 to $75 per asset per month for managing each of the Acquired Funds’ assets was terminated in connection with the Partnership’s acquisition of the Acquired Funds. Pursuant to the terms of our Omnibus Agreement, Landmark is required to reimburse the Partnership for certain general and administrative services that exceed the greater of $162,500 or 3% of our revenue during the preceding calendar quarter.

General and Administrative

General and administrative expenses increased $380,866 during the three months ended June 30, 2016 compared to the three months ended June 30, 2015, primarily due to state tax filing fees. Pursuant to the terms of our Omnibus Agreement, we will reimburse Landmark for certain general and administrative expenses incurred by Landmark, subject to the cap described above. For the three months ended June 30, 2016 and 2015, Landmark reimbursed us $819,016 and $481,053, respectively, for expenses related to certain general and administrative services expenses that exceeded the cap. The full amount of general and administrative expenses incurred is reflected on our income statements and the amount in excess of the cap that is reimbursed is reflected on 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 the amount of general and administrative expenses.

Acquisition‑Related

Acquisition‑related expenses decreased $468,780 during the three months ended June 30, 2016 compared to the three months ended June 30, 2015 as a result of the reduction in tenant site acquisitions. The Partnership acquired 7 tenant sites and related real property interests during the three months ended June 30, 2016 compared to 73 tenant sites and related real property interests during the three months ended June 30, 2015. Additionally, acquisitions made under common control from Landmark and affiliates require the prior periods retroactively adjusted to furnish comparative information. Acquisition‑related expenses are third party fees and expenses related to acquiring an asset and include survey, title, legal, and other items as well as legal and financial advisor expenses associated with the acquisition. As such, the three months ended June 30, 2015 acquisition-related expenses includes retroactive adjustments of $557,910 associated with the Drop-down Assets.

Amortization

Amortization expense increased $521,872 during the three months ended June 30, 2016 compared to the three months ended June 30, 2015 as a result of having 1,450 tenant sites as of June 30, 2016 compared to 1,357 tenant sites as of June 30, 2015. We expect amortization of investments in real property rights with finite useful lives and in‑place lease values to continue to increase based on increased acquisitions and assets acquired in 2015 contributing to a full period of amortization.

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Impairments

Impairments decreased $514,300 during the three months ended June 30, 2016 compared to the three months ended June 30, 2015, primarily due to lease terminations in our wireless communication and outdoor advertising segments during the three months ended June 30, 2015 and no such impairments during the three months ended June 30, 2016. As a result of T‑Mobile’s acquisition of MetroPCS (completed in 2013), we have received termination notices related to 23 MetroPCS tenant sites, two of which have subsequently been rescinded. As of June 30, 2016, the majority of the MetroPCS sites where we have received termination notices have been vacated. Other recent consolidation events include Sprint’s acquisition of the remaining interest in Clearwire (completed in 2013), and AT&T’s acquisition of Leap Wireless (completed in 2014). We believe the impact of past consolidation is already reflected in our occupancy rates.

Interest Expense

Interest expense increased $321,143 during the three months ended June 30, 2016 compared to the three months ended June 30, 2015, primarily due to the increase in average outstanding debt balances during the three months ended June 30, 2016 compared to the average outstanding balances for the three months ended June 30, 2015. On June 16, 2016, the Partnership issued its Class A and Class B Secured Notes in amounts of $91.5 million and $25.1 million, respectively, which bear interest at a fixed note rate per annum of 3.52% and 7.02%, respectively. Net proceeds from the Securitization were used to pay down the revolving credit facility by $112.3 million. As of June 30, 2016, the Partnership had $145.0 million of debt on the revolving credit facility hedged through interest rate swap agreements at a weighted-average interest rate of 4.06%. We had $106.0 million outstanding under the revolving credit facility as of June 30, 2016. We expect to incur additional borrowings over the course of 2016 such that the borrowings will exceed the amount of swaps outstanding.

As the Drop-down Acquisitions were transactions between entities under common control, prior-period information has been retroactively adjusted to include interest expense of $0.9 million related to the Acquired Funds’ secured debt facility for the three months ended June 30, 2015. Additionally, deferred loan costs amortization, which is included in interest expense, has been retroactively adjusted to include $0.2 million for the three months ended June 30, 2015.

Unrealized Gain (Loss) on Derivative Financial Instruments

We mitigated exposure to fluctuations in interest rates on existing debt by entering into swap contracts, as described above, that fixed the floating LIBOR rate. On March 23, 2016, the Partnership entered into an interest rate swap agreement with a notional amount of $50.0 million to fix the floating rate for existing borrowings at an effective rate of 4.17% over a three-year period beginning on December 24, 2018. Additionally, on March 31, 2016, the Partnership entered into two interest rate swap agreements with notional amounts of $20.0 million and $25.0 million to fix the floating interest rate for existing borrowings at an effective rate of 4.06% and 4.13% over a three-year period beginning on December 24, 2018 and April 13, 2019, respectively. These interest rate swap agreements extend through and beyond the term of the Partnership’s existing credit facility. The swap contracts were adjusted to fair value at each period end. The unrealized gain (loss) recorded for the three months ended June 30, 2016 and 2015 reflects the change in fair value of these contracts during those periods.

Gain on Sale of Real Property Interests

No gain was recognized during the three months ended June 30, 2016. During the three months ended June 30, 2015, we recognized a gain on the sale of real property interest of $9,524 related to one tenant site lost to eminent domain proceeding.

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The following table summarizes the consolidated and combined statement of operations of our Partnership for the six months ended June 30, 2016 and 2015:


	Six Months Ended June 30,
	2016		2015		Change
Revenue
Rental revenue	$	15,198,224	$	12,471,935	$	2,726,289
Interest income on receivables		531,587		404,276		127,311
Total revenue		15,729,811		12,876,211		2,853,600
Expenses
Management fees to affiliate		—		151,752		(151,752)
Property operating		72,055		11,782		60,273
General and administrative		2,144,591		1,644,989		499,602
Acquisition-related		334,965		1,954,982		(1,620,017)
Amortization		4,244,868		3,256,222		988,646
Impairments		—		3,276,736		(3,276,736)
Total expenses		6,796,479		10,296,463		(3,499,984)
Other income and expenses
Interest expense		(4,714,516)		(3,932,603)		(781,913)
Unrealized loss on derivatives		(4,850,856)		(459,737)		(4,391,119)
Gain on sale of real property interests		373,779		82,026		291,753
Total other income and expenses		(9,191,593)		(4,310,314)		(4,881,279)
Net income (loss)	$	(258,261)	$	(1,730,566)	$	1,472,305

Comparison of Six Months Ended June 30, 2016 to Six Months Ended June 30, 2015

Rental Revenue

Rental revenue increased $2,726,289, $2,172,786 of which was due to the greater number of assets in the portfolio during the six months ended June 30, 2016 compared to the six months ended June 30, 2015. Revenue generated from our wireless communication, outdoor advertising, and renewable power generation segments was $12,147,180, $2,711,901, and $339,143, or 80%, 18%, and 2% of total rental revenue, respectively, during the six months ended June 30, 2016, compared to $10,296,362, $2,142,863, and $32,710, or 83%, 17%, and less than 1% of total rental revenue, respectively, during the six months ended June 30, 2015. The occupancy rates in our wireless communication, outdoor advertising, and renewable power generation segments were 96%, 98%, and 100%, respectively, at June 30, 2016 compared to 97%, 100%, and 100%, respectively, at June 30, 2015. Additionally, our effective monthly rental rates per tenant site for wireless communication, outdoor advertising and renewable power generation segments were $1,778, $1,411, and $4,738, respectively, during the six months ended June 30, 2016 compared to $1,677, $1,232, and $1,104, respectively, during the six months ended June 30, 2015.

Interest Income on Receivables

Interest income on receivables increased $127,311 during the six months ended June 30, 2016 compared to the six months ended June 30, 2015 as a result of the acquisition of an additional investment in receivables in connection with the April 20, 2016 acquisition. As part of the April 20, 2016 and July 21, 2015 acquisitions, the Partnership acquired additional investments in receivables that were valued at $4.2 million and $0.1 million, respectively, at the acquisition date. We expect the amount of interest income on receivables to decline as the principal balance of the receivables amortize. We expect to reinvest the principal payments received into additional real property interests. Interest income on receivables is generated from our wireless communication and outdoor advertising segments.

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Management Fees to Affiliate

Management fees to affiliates decreased $151,752 during the six months ended June 30, 2016 compared to the six months ended June 30, 2015 primarily due to $151,752 of management fees to affiliates that are associated with the Acquired Funds. Landmark’s right to receive management fees ranging from $45 to $75 per asset per month for managing each of the Acquired Funds’ assets was terminated in connection with the Partnership’s acquisition of the Acquired Funds. Pursuant to the terms of our Omnibus Agreement, Landmark is required to reimburse the Partnership for certain general and administrative services that exceed the greater of $162,500 or 3% of our revenue during the preceding calendar quarter.

General and Administrative

General and administrative expenses increased $499,602 during the six months ended June 30, 2016 compared to the six months ended June 30, 2015, due to an increase in additional accounting, tax and legal related expenses. Pursuant to the terms of our Omnibus Agreement, we will reimburse Landmark for certain general and administrative expenses incurred by Landmark, subject to the cap described above. For the six months ended June 30, 2016 and 2015, Landmark reimbursed us $1,618,970 and $1,173,925, respectively, for expenses related to certain general and administrative services expenses that exceeded the cap. The full amount of general and administrative expenses incurred is reflected on our income statements and the amount in excess of the cap that is reimbursed is reflected on 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 the amount of general and administrative expenses.

Acquisition‑Related

Acquisition‑related expenses decreased $1,620,017 during the six months ended June 30, 2016 compared to the six months ended June 30, 2015 as a result of the reduction in tenant site acquisitions. The Partnership acquired 7 tenant sites and related real property interests during the six months ended June 30, 2016 compared to 154 tenant sites and related real property interests during the six months ended June 30, 2015. Additionally, acquisitions made under common control from Landmark and affiliates require the prior periods retroactively adjusted to furnish comparative information. Acquisition‑related expenses are third party fees and expenses related to acquiring an asset and include survey, title, legal, and other items as well as legal and financial advisor expenses associated with the acquisition. As such, the six months ended June 30, 2015 acquisition-related expenses includes retroactive adjustments of $1.5 million associated with the Drop-down Assets.

Amortization

Amortization expense increased $988,646 during the six months ended June 30, 2016 compared to the six months ended June 30, 2015 as a result of having 1,450 tenant sites as of June 30, 2016 compared to 1,357 tenant sites as of June 30, 2015. We expect amortization of investments in real property rights with finite useful lives and in‑place lease values to continue to increase based on increased acquisitions and assets acquired in 2015 contributing to a full period of amortization.

Impairments

Impairments decreased $3,276,736 during the six months ended June 30, 2016 compared to the six months ended June 30, 2015, primarily due to lease terminations in our wireless communication and outdoor advertising segments during the six months ended June 30, 2015 and no such impairments during the six months ended June 30, 2016. As a result of T‑Mobile’s acquisition of MetroPCS (completed in 2013), we have received termination notices related to 23 MetroPCS tenant sites, two of which have subsequently been rescinded. As of June 30, 2016, the majority of the MetroPCS sites where we have received termination notices have been vacated. Other recent consolidation events include Sprint’s acquisition of the remaining interest in Clearwire (completed in 2013), and AT&T’s acquisition of Leap Wireless (completed in 2014). We believe the impact of past consolidation is already reflected in our occupancy rates.

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Interest Expense

Interest expense increased $781,913 during the six months ended June 30, 2016 compared to the six months ended June 30, 2015, due to the increase in average outstanding debt balances during the six months ended June 30, 2016 compared to the average outstanding balances for the six months ended June 30, 2015. On June 16, 2016, the Partnership issued its Class A and Class B Secured Notes in amounts of $91.5 million and $25.1 million, respectively, which bear interest at a fixed note rate per annum of 3.52% and 7.02%, respectively. Net proceeds from the Securitization were used to pay down the revolving credit facility by $112.3 million. As of June 30, 2016, the Partnership had $145.0 million of debt on the revolving credit facility hedged through interest rate swap agreements at a weighted-average interest rate of 4.06%. We had $106.0 million outstanding under the revolving credit facility as of June 30, 2016. We expect to incur additional borrowings over the course of 2016 such that the borrowings will exceed the amount of swaps outstanding.

As the Drop-down Acquisitions were transactions between entities under common control, prior-period information has been retroactively adjusted to include interest expense of $1.8 million related to the Acquired Funds’ secured debt facility for the six months ended June 30, 2015. Additionally, deferred loan costs amortization, which is included in interest expense, has been retroactively adjusted to include $0.4 million for the six months ended June 30, 2015.

Unrealized Loss on Derivative Financial Instruments

We mitigated exposure to fluctuations in interest rates on existing debt by entering into swap contracts, as described above, that fixed the floating LIBOR rate. On March 23, 2016, the Partnership entered into an interest rate swap agreement with a notional amount of $50.0 million to fix the floating rate for existing borrowings at an effective rate of 4.17% over a three-year period beginning on December 24, 2018. Additionally, on March 31, 2016, the Partnership entered into two interest rate swap agreements with notional amounts of $20.0 million and $25.0 million to fix the floating interest rate for existing borrowings at an effective rate of 4.06% and 4.13% over a three-year period beginning on December 24, 2018 and April 13, 2019, respectively. These interest rate swap agreements extend through and beyond the term of the Partnership’s existing credit facility. The swap contracts were adjusted to fair value at each period end. The unrealized loss recorded for the six months ended June 30, 2016 and 2015 reflects the change in fair value of these contracts during those periods.

Gain on Sale of Real Property Interests

During the six months ended June 30, 2016, we recognized a gain on the sale of real property interest of $0.4 million related to the sale of one wireless communication site. During the six months ended June 30, 2015, we recognized a gain on the sale of real property interest of $0.1 million related to one tenant site lost to eminent domain proceeding.

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Non‑GAAP Financial Measures

The following table sets forth a reconciliation of our historical EBITDA, Adjusted EBITDA and distributable cash flow for the periods presented to net cash provided by operating activities and net income:


	Three Months Ended June 30,				Six Months Ended June 30,
	2016		2015*		2016		2015*
Net cash provided by operating activities	$	5,951,288	$	2,849,316	$	10,368,580	$	6,223,033
Unit-based compensation		—		(8,750)		(105,000)		(87,500)
Unrealized gain (loss) on derivatives		(1,802,739)		412,760		(4,850,856)		(459,737)
Amortization expense		(2,239,712)		(1,717,840)		(4,244,868)		(3,256,222)
Amortization of above- and below-market rents, net		266,682		293,597		587,688		580,342
Amortization of deferred loan costs		(230,331)		(368,318)		(427,303)		(722,908)
Receivables interest accretion		4,190		3,785		22,962		19,166
Impairments		—		(514,300)		—		(3,276,736)
Gain on sale of real property interests		—		9,524		373,779		82,026
Working capital changes		(1,883,961)		350,823		(1,983,243)		(832,030)
Net income (loss)	$	65,417	$	1,310,597	$	(258,261)	$	(1,730,566)
Interest expense		2,367,026		2,045,883		4,714,516		3,932,603
Amortization expense		2,239,712		1,717,840		4,244,868		3,256,222
EBITDA	$	4,672,155	$	5,074,320	$	8,701,123	$	5,458,259
Impairments		—		514,300		—		3,276,736
Acquisition-related		262,885		731,665		334,965		1,954,982
Unrealized (gain) loss on derivatives		1,802,739		(412,760)		4,850,856		459,737
Gain on sale of real property interests		—		(9,524)		(373,779)		(82,026)
Unit-based compensation		—		8,750		105,000		87,500
Straight line rent adjustments		(28,327)		(77,819)		(74,191)		(139,218)
Amortization of above- and below-market rents, net		(266,682)		(293,597)		(587,688)		(580,342)
Deemed capital contribution due to cap on general and administrative expense reimbursement		819,016		481,053		1,618,970		1,173,925
Adjusted EBITDA	$	7,261,786	$	6,016,388	$	14,575,256	$	11,609,553
Less: Predecessor Adjusted EBITDA		(37,300)		(2,024,820)		(125,059)		(4,217,540)
Adjusted EBITDA applicable to limited partners	$	7,224,486	$	3,991,568	$	14,450,197	$	7,392,013
Less: Cash interest expense		(2,136,695)		(1,009,475)		(4,287,213)		(1,877,753)
Less: Distributions declared to preferred unitholders		(382,222)		—		(382,222)		—
Distributable cash flow	$	4,705,569	$	2,982,093	$	9,780,762	$	5,514,260

* Prior-period financial information has been retroactively adjusted for Drop-down Acquisitions made under common control. See Note 3 to the Consolidated and Combined Financial Statements.

Liquidity and Capital Resources

Our short‑term liquidity requirements will consist primarily of funds to pay for operating expenses and other expenditures directly associated with our assets, including:

interest expense on our revolving credit facility;

general and administrative expenses;

acquisitions of real property interests; and

distributions to our unitholders.

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We intend to satisfy our short‑term liquidity requirements through cash flow from operating activities and proceeds from borrowings available under our revolving credit facility. We may also satisfy our short-term liquidity requirements through the issuance of additional equity, amending our existing revolving credit facility to increase the available commitments or refinancing some of the outstanding borrowings under our existing credit facility through securitizations or other long term debt arrangements. We have a universal shelf registration statement on file with the U.S. Securities and Exchange Commission (the SEC) under which we have the ability to issue and sell an indeterminate amount of common and preferred units representing limited partner interests in us and debt securities.

We intend to pay at least a quarterly distribution of $0.3325 per unit per quarter, which equates to approximately $5.1 million per quarter, or $20.3 million per year in the aggregate, based on the number of common and subordinated units outstanding as of June 30, 2016. We do not have a legal obligation to pay this distribution or any other distribution except to the extent we have available cash as defined in our Partnership Agreement.

The table below summarizes the quarterly distribution related to our financial results:


	Distribution		Total Cash		Distribution
Quarter Ended	Per Unit		Distribution		Date
March 31, 2015	$	0.2975	$	2,332,038	May 14, 2015
June 30, 2015		0.3075		3,334,168	August 14, 2015
September 30, 2015		0.3175		4,077,232	November 13, 2015
December 31, 2015		0.3250		4,863,655	February 12, 2016
March 31, 2016		0.3300		4,953,601	May 13, 2016
June 30, 2016 (1)		0.3325		5,089,072	August 15, 2016

(2)

As of June 30, 2016, we had $106.0 million of outstanding indebtedness, and we had approximately $144.0 million of undrawn borrowing capacity, subject to compliance with certain covenants, under our revolving credit facility.

We intend to use the revolving credit facility, among other things, for real property interest acquisitions, working capital requirements and other general corporate purposes.

Our long‑term liquidity needs consist primarily of funds necessary to pay for acquisitions and scheduled debt maturities. We intend to satisfy our long‑term liquidity needs through cash flow from operations and through the issuance of additional equity and debt.

Cash Flow of the Funds

The following table summarizes the historical cash flow of the Partnership for the six months ended June 30, 2016 and 2015:


	Six Months Ended June 30,
	2016		2015
Net cash provided by operating activities	$	10,368,580	$	6,223,033
Net cash used in investing activities		(3,717,395)		(36,768,054)
Net cash provided by (used in) financing activities		(2,905,359)		30,635,805

Comparison of Six Months Ended June 30, 2016 to Six Months Ended June 30, 2015

Net cash provided by operating activities. Net cash provided by operating activities increased $4.1 million to $10.4 million for the six months ended June 30, 2016 compared to $6.2 million for the six months ended June 30, 2015. The increase is primarily attributable to the increase in rental revenue related to the assets acquired and timing of payments of accounts payable and accrued liabilities.

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Net cash used in investing activities. Net cash used in investing activities was $3.7 million for the six months ended June 30, 2016 compared to net cash used in investing activities of $36.8 million for the six months ended June 30, 2015. The change in cash used in investing activities was due to the cash used to acquire 7 tenant sites offset by the proceeds from the sale of 13 tenant sites during the six months ended June 30, 2016 compared to the cash used to acquire 154 tenant sites during the six months ended June 30, 2015.

Net cash provided by (used in) financing activities. Net cash used in financing activities was $2.9 million for the six months ended June 30, 2016 compared to net cash provided by financing activities of $30.6 million for the six months ended June 30, 2015. The decrease in cash provided by financing activities is primarily attributable to a reduction in net proceeds of $26.6 million from issuances of units and the net increase principal payments of $7.4 million during the six months ended June 30, 2016 compared to the six months ended June 30, 2015. Additionally, the difference between the cost and the sales price of assets sold by Landmark to us is treated as a distribution to Landmark.

Revolving Credit Facility

Substantially all of our assets, excluding equity in and assets of certain joint ventures and unrestricted subsidiaries, after‑acquired real property, and other customary exclusions, are pledged (or secured by mortgages), as collateral under our revolving credit facility.

Our revolving credit facility contains various covenants and restrictive provisions that limit our ability (as well as the ability of our restricted subsidiaries) to, among other things:

•incur or guarantee additional debt;

•make distributions on or redeem or repurchase equity;

•make certain investments and acquisitions;

•incur or permit to exist certain liens;

•enter into certain types of transactions with affiliates;

•merge or consolidate with another company;

•transfer, sell or otherwise dispose of assets or enter into certain sale‑leaseback transactions; and

•enter into certain restrictive agreements or amend or terminate certain material agreements.

Our revolving credit facility also requires compliance with certain financial covenants as follows:

•a leverage ratio of not more than 8.5 to 1.0; and

•an interest coverage ratio of not less than 2.0 to 1.0.

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In addition, our revolving credit facility contains events of default including, but not limited to (i) events of default resulting from our failure or the failure of our restricted subsidiaries to comply with covenants and financial ratios, (ii) the occurrence of a change of control (as defined in the credit agreement), (iii) the institution of insolvency or similar proceedings against us or our restricted subsidiaries, (iv) the occurrence of a default under any other material indebtedness (as defined in the credit agreement) we or our restricted subsidiaries may have and (v) any one or more collateral documents ceasing to create a valid and perfected lien on collateral (as defined in the credit agreement). Upon the occurrence and during the continuation of an event of default, subject to the terms and conditions of the credit agreement, the lenders may declare any outstanding principal of our revolving credit facility debt, together with accrued and unpaid interest, to be immediately due and payable and may exercise the other remedies set forth or referred to in the credit agreement and the other loan documents.

Loans under our revolving credit facility bear interest at our option at a variable rate per annum equal to either:

•a base rate, which is the highest of (i) the administrative agent’s prime rate in effect on such day, (ii) the federal funds rate in effect on such day plus 0.50%, and (iii) an adjusted one month LIBOR plus 1.0%, in each case, plus an applicable margin of 1.50%; or

•an adjusted one month LIBOR plus an applicable margin of 2.50%.

As of June 30, 2016, we had approximately $106.0 million of outstanding indebtedness and approximately $144.0 million of undrawn borrowing capacity, subject to compliance with certain covenants, under our revolving credit facility. The Partnership was also in compliance with all covenants under its revolving credit facility at June 30, 2016.

Secured Notes

On June 16, 2016, the Partnership completed a Securitization transaction involving Secured Tenant Site Assets owned by certain special purpose subsidiaries of the Partnership (the “Obligors”), through the issuance of the Series 2016-1 Secured Tenant Site Contract Revenue Notes in an aggregate principal amount of $116.6 million. The Secured Notes were issued in two separate classes as indicated in the table below. The Class B Notes are subordinated in right of payment to the Class A Notes.


Class	Initial Principal Balance		Note Rate		Anticipated Repayment Date
Class A	$	91,500,000	3.52	%	June 15, 2021

Class B	$	25,100,000	7.02	%	June 15, 2021

In connection with the issuance and sale of the Secured Notes, the Obligors, Deutsche Bank Trust Company Americas, as Indenture Trustee and as Securities Intermediary, and the General Partner entered into a cash management agreement, dated as of June 16, 2016 (the “Cash Management Agreement”). Pursuant to the Cash Management Agreement, the Indenture Trustee will administer the reserve funds in the manner set forth in the Indenture. Under the Cash Management Agreement, the Partnership is required to maintain reserve accounts for cash flows generated from the operation of the Secured Tenant Site Assets. As of June 30, 2016, the Partnership held $1.0 million in the reserve accounts which are classified as Restricted Cash on the accompanying consolidated and combined balance sheets.

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Amounts due under the Secured Notes will be paid solely from the cash flows generated from the operation of the Secured Tenant Site Assets. We are required to make monthly payments of principal and interest on Class A Notes based on a 30-year amortization period and monthly payments of interest only on Class B Notes, commencing in July 2016. On each payment date, commencing with the payment date occurring in July 2016, available funds will be used to repay the Class A Notes in an amount sufficient to pay the Class A monthly amortization amount. No other payments of principal will be required to be made prior to the anticipated repayment date in June 2021. However, if the DSCR, or debt service coverage ratio, generally calculated as the ratio of annualized net cash flow (as defined in the Indenture) to the amount of interest, servicing fees and trustee fees that we will be required to pay over the succeeding twelve Payment Dates, is 1.30 to 1.0 or less for one calendar month (the “Cash Trap DSCR”), then all cash flow in excess of amounts required to make debt service payments, to fund required reserves, to pay management fees and budgeted operating expenses and to make certain other payments required under the Indenture, referred to as Excess Cash Flow, will be deposited into a reserve account instead of being released to us. The funds in the reserve account will not be released unless and until the debt service coverage ratio exceeds the Cash Trap DSCR for two consecutive calendar months. Additionally, an “amortization period” commences if, as of the end of any calendar month, the debt service coverage ratio falls below 1.15 to 1.0 (the “Minimum DSCR”) and will continue to exist until the debt service coverage ratio exceeds the Minimum DSCR for two consecutive calendar months. During an amortization period, excess cash flow is applied to repay the Secured Notes.

The Secured Notes may be prepaid in whole or in part at any time, provided such payment is accompanied by the applicable prepayment consideration. Except in certain limited circumstances described in the Indenture, prepayments (other than scheduled amortization payments) made more than twelve (12) months prior to the anticipated repayment date of the Secured Notes are required to be accompanied by the applicable prepayment consideration.

The Indenture includes covenants customary for notes issued in rated securitizations. Among other things, the Obligors are prohibited from incurring other indebtedness for borrowed money or further encumbering their assets. The organizational documents of the Guarantor and the Obligors were amended to contain provisions consistent with rating agency securitization criteria for special purpose entities, including the requirement that they maintain independent directors.

Shelf Registrations

On December 3, 2015, the Partnership filed a universal shelf registration statement on Form S-3 with the SEC. The shelf registration statement was declared effective by the SEC on December 30, 2015 and permits us to issue and sell, from time to time, common and preferred units representing limited partner interests in us, and debt securities up to an aggregate amount of $250.0 million.

Preferred Equity Offering

On April 4, 2016, the Partnership completed a public offering of $20.0 million 8.00% Series A Cumulative Redeemable Perpetual Preferred Units (“Series A Preferred Units”), representing limited partner interests in the Partnership, at a price of $25.00 per unit. We received net proceeds of approximately $18.4 million after deducting the underwriters’ discounts and offering expenses paid by us of $1.6 million. We used all proceeds to repay a portion of the borrowings under our revolving credit facility.

The initial distribution on the Series A Preferred Units was paid on July 15, 2016 in an amount equal to $0.5611 per unit, which equates to $0.4 million in total distributions to preferred unitholders of record as of July 1, 2016. Distributions on the Series A Preferred Units will accumulate at a rate of 8.0% per annum per $25.00 stated liquidation preference per Series A Preferred Unit.

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In connection with the closing of the preferred equity offering, on April 4, 2016, the Partnership executed the Second Amended and Restated Agreement of Limited Partnership of Landmark Infrastructure Partners LP for the purpose of creating the Series A Preferred Units and defining the preferences, rights, powers and duties of holders of Series A Preferred Units.

ATM Programs

On February 16, 2016, the Partnership established a Common Unit at-the-market offering program (the “Common Unit ATM Program”) pursuant to which we may sell, from time to time, Common Units having an aggregate offering price of up to $50.0 million, pursuant to our previously filed and effective registration statement on Form S-3. On June 24, 2016, the Partnership established a Preferred Unit at-the-market offering program (the “Preferred Unit ATM Program” and together with the Common Unit ATM Program the “ATM Programs”) pursuant to which we may sell, from time to time, Preferred Units having an aggregate offering price of up to $40.0 million pursuant to our previously filed and effective registration statement on Form S-3. We intend to use the net proceeds from any sales pursuant to the ATM Programs for general partnership purposes, which may include, among other things, the repayment of indebtedness and to potentially fund future acquisitions. During the three months ended June 30, 2016, the Partnership issued 131,149 Common Units under our Common Unit ATM Program, generating gross proceeds of $2.1 million. Subsequent to June 30, 2016, the Partnership issued 89,053 Common Units and 63,657 Preferred Units under our existing ATM Programs, generating proceeds of approximately $1.5 million and $1.6 million before issuance costs.

Off Balance Sheet Arrangements

As of June 30, 2016, we do not have any off balance sheet arrangements.

Inflation

Substantially all of our tenant lease arrangements are effectively triple net and provide for fixed‑rate escalators or rent escalators tied to increases in the consumer price index. We believe that inflationary increases may be at least partially offset by the contractual rent increases and our tenants’ (or the underlying property owners’) obligations to pay taxes and expenses under our effectively triple net lease arrangements. We do not believe that inflation has had a material impact on our historical financial position or results of operations.

Newly Issued Accounting Standards

See Note 2, Basis of Presentation and Summary of Significant Accounting Policies, to the Consolidated and Combined Financial Statements for the impact of new accounting standards. There are no accounting pronouncements that have been issued, but not yet adopted by us, that we believe will materially impact our consolidated financial statements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Our future income, cash flow and fair values relevant to financial instruments are impacted by prevailing market interest rates. Market risk refers to the risk of loss from adverse changes in market prices and interest rates. In the future, we may continue to use derivative financial instruments to manage, or hedge, interest rate risks related to our borrowings. Our primary market risk exposure will be interest rate risk with respect to our expected indebtedness.

As of June 30, 2016, our revolving credit facility had an outstanding balance of $106.0 million. Additional borrowings under our revolving credit facility will have variable LIBOR‑based rates and will fluctuate based on the underlying LIBOR rate. As of June 30, 2016, we have hedged $145.0 million of the LIBOR rate on our revolving credit facility through interest rate swap agreements. Although our current borrowings are less than our interest rate swap agreements, we expect to incur additional borrowings over the course of 2016 such that the borrowings will exceed the amount of swaps outstanding. If LIBOR and various basis point spreads were to increase by 50 basis points, the fair

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value of our interest rate swap agreements would increase by approximately $4.6 million. If LIBOR and various basis point spreads were to decrease by 50 basis points, the fair value of our interest rate swap agreements would decrease by approximately $3.7 million.

Interest risk amounts represent our management’s estimates and were determined by considering the effect of hypothetical interest rates on our financial instruments. These analyses do not consider the effect of any change in overall economic activity that could occur in that environment. Further, in the event of a change of that magnitude, we may take actions to further mitigate our exposure to the change. However, due to the uncertainty of the specific actions that would be taken and their possible effects, these analyses assume no changes in our financial structure.

As of June 30, 2016 our fixed rate Secured Notes had an outstanding balance of $116.6 million. Interest rate fluctuations will generally not affect our future earnings or cash flows on our fixed rate secured notes until maturity or earlier repayment and refinancing.

Rising interest rates could limit our ability to refinance our debt when it matures or cause us to pay higher interest rates upon refinancing and increase interest expense on refinanced indebtedness. We intend to hedge interest rate risks related to a portion of our borrowings over time by means of interest rate swap agreements or other arrangements. See further discussion in Note 8, Interest Rate Swap Agreements, to the Consolidated and Combined Financial Statements for additional information.

Item 4.Controls and Procedures

Disclosure Controls and Procedures

Our management has evaluated, with the participation of our principal executive officer and principal financial officer, the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) as of the end of the period covered by this report, and has concluded that our disclosure controls and procedures were effective as of June 30, 2016.

Changes in Internal Control over Financial Reporting

There has been no change in our internal control over financial reporting that occurred during our last fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

Although we may, from time to time, be involved in litigation and claims arising out of our operations in the normal course of business, we are not a party to any litigation or governmental or other proceeding that we believe will have a material adverse impact on our financial condition or results of operations. In addition, under our Omnibus Agreement, Landmark will indemnify us for liabilities relating to litigation matters attributable to the ownership of the contributed assets prior to the closing of the IPO. In addition, pursuant to the terms of the various agreements under which we have acquired assets from Landmark since the IPO, Landmark will indemnify us for certain losses resulting from any breach of their representations, warranties or covenants contained in the various agreements, subject to certain limitations and survival periods.

Item 1A. Risk Factors

There are no material changes to the risk factors previously disclosed in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2015.

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Item 6. Exhibits


Exhibit number		Description
1.1		At-the-Market Issuance Sales Agreement, dated as of February 16, 2016, by and among Landmark Infrastructure Partners LP, Landmark Infrastructure Partners GP LLC, Landmark Infrastructure Operating Company LLC and FBR Capital Markets & Co., MLV & Co. LLC and Janney Montgomery Scott LLC (incorporated by reference to Exhibit 1.1 of our Current Report on Form 8-K filed on February 16, 2016).
1.2		At-the-Market Issuance Sales Agreement, dated as of June 24, 2016, by and among Landmark Infrastructure Partners LP, Landmark Infrastructure Partners GP LLC and Landmark Infrastructure Operating Company LLC and FBR Capital Markets & Co. and MLV & Co. LLC (incorporated by reference to Exhibit 1.1 of our Current Report on Form 8-K filed on June 24, 2016).
3.1		Second Amended and Restated Agreement of Limited Partnership of Landmark Infrastructure Partners LP (incorporated by reference to Exhibit 3.1 of our Current Report on Form 8-K filed on April 4, 2016).
4.1		Indenture, dated as of June 16, 2016, by and among Deutsche Bank Trust Company Americas, as Indenture Trustee, and LMRK Issuer Co. LLC, LD Acquisition Company 8 LLC, LD Acquisition Company 9 LLC and LD Acquisition Company 10 LLC, collectively as Obligors (incorporated by reference to Exhibit 4.1 of our Current Report on Form 8-K filed on June 22, 2016).
4.2		Indenture Supplement, dated as of June 16, 2016, by and among Deutsche Bank Trust Company Americas, as Indenture Trustee, and LMRK Issuer Co. LLC, LD Acquisition Company 8 LLC, LD Acquisition Company 9 LLC and LD Acquisition Company 10 LLC, collectively as Obligors (incorporated by reference to Exhibit 4.2 of our Current Report on Form 8-K filed on June 22, 2016).
10.1		Management Agreement, dated as of June 16, 2016, by and among Landmark Infrastructure Partners GP LLC, as Manager, and LMRK Issuer Co. LLC, LD Acquisition Company 8 LLC, LD Acquisition Company 9 LLC and LD Acquisition Company 10 LLC (incorporated by reference to Exhibit 10.1 of our Current Report on Form 8-K filed on June 22, 2016).
10.2		Guarantee and Security Agreement, dated as of June 16, 2016, by and between LMRK Guarantor Co. LLC and the Deutsche Bank Trust Company Americas (incorporated by reference to Exhibit 10.2 of our Current Report on Form 8-K filed on June 22, 2016).
10.3		Cash Management Agreement, dated as of June 16, 2016, by and among Deutsche Bank Trust Company Americas, as Indenture Trustee and as Securities Intermediary, and LMRK Issuer Co. LLC, LD Acquisition Company 8 LLC, LD Acquisition Company 9 LLC, LD Acquisition Company 10 LLC and Landmark Infrastructure Partners GP LLC (incorporated by reference to Exhibit 10.3 of our Current Report on Form 8-K filed on June 22, 2016).
10.4		Servicing Agreement, dated as of June 16, 2016, by and between Midland Loan Services, a division of PNC Bank, National Association, as Servicer, and Deutsche Bank Trust Company Americas (incorporated by reference to Exhibit 10.4 of our Current Report on Form 8-K filed on June 22, 2016).
12.1*		Statement Regarding Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Distributions.
31.1*		Rule 13a-14(a) Certification (under Section 302 of the Sarbanes-Oxley Act of 2002) of principal executive officer.
31.2*		Rule 13a-14(a) Certification (under Section 302 of the Sarbanes-Oxley Act of 2002) of principal financial officer.
32.1*		Section 1350 Certifications (as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002).
101.INS*		XBRL Instance Document.
101.SCH*		XBRL Schema Document
101.CAL*		XBRL Calculation Linkbase Document.
101.LAB*		XBRL Labels Linkbase Document.
101.PRE*		XBRL Presentation Linkbase Document.
101.DEF*		XBRL Definition Linkbase Document.

*Filed herewith.

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of El Segundo, State of California, on August 2, 2016.



	Landmark Infrastructure Partners LP

	By:	Landmark Infrastructure Partners GP LLC, its General Partner

	By:
		/s/ George P. Doyle
	Name:	George P. Doyle
	Title:	Chief Financial Officer and Treasurer

Six Months Ended June 30,

Cash paid for interest