Unless the context otherwise requires, references in this report to "our partnership," "we," "our," or "us," or like terms refer toLandmark 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 financial statements and related notes included elsewhere in this report. Among other things, those historical consolidated financial statements include more detailed information regarding the basis of presentation for the following information. The following discussion and analysis contains forwardlooking statements that involve risks and uncertainties. Our actual results could differ materially from those expressed or implied in forwardlooking 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 endedDecember 31, 2020 . Some of the information in this Quarterly Report on Form 10-Q may contain forwardlooking statements. Forwardlooking 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 forwardlooking statements. They can be affected by and involve assumptions used or known or unknown risks or uncertainties. Currently, one of the most significant factors, however, is the potential adverse effect of the current pandemic of the novel coronavirus, or COVID-19, on the financial condition, results of operations, cash flows and performance of the Partnership and its tenants, the real estate market and the global economy and financial markets. The extent to which COVID-19 impacts the Partnership and its tenants will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the scope, severity and duration of the pandemic, the actions taken to contain the pandemic or mitigate its impact, and the direct and indirect economic effects of the pandemic and containment measures, among others. Moreover, you should interpret many of the risks identified in this report, as well as the risks set forth below, as being heightened as a result of the ongoing and numerous adverse impacts of COVID-19. Consequently, no forwardlooking statements can be guaranteed. When considering these forwardlooking 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 endedDecember 31, 2020 . Actual results may vary materially. You are cautioned not to place undue reliance on any forwardlooking 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 endedDecember 31, 2020 could cause our actual results to differ materially from the results contemplated by such forwardlooking 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 number of completed infrastructure developments; • the return on infrastructure developments; • the prices we pay for our acquisitions of real property;
• our management's and our general partner's conflicts of interest with our
own;
• our ability to expand may be limited if Landmark's business does not grow as
expected;
• cost reimbursements, which are determined in our general partner's sole
discretion, and fees due to our general partner and its affiliates for
services provided will be substantial and will reduce the amount of cash we
have available for distribution;
• 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; • 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; 33
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• 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 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;
• restrictions in our revolving credit facility on our ability to issue
additional debt or equity or pay distributions; • mergers or consolidations among wireless carriers; • performance of our joint ventures; • fluctuations in foreign currency exchange rates; • epidemic or pandemic (such as the outbreak and worldwide spread of
COVID-19), and the measures that international, federal, state and local
governments, agencies, law enforcement and/or health authorities implement
to address it, which may (as with COVID-19) precipitate or exacerbate one or
more of the above-mentioned and/or other risks, and significantly disrupt or
prevent us from operating our business in the ordinary course for an extended period; and • other events outside of our control.
All forwardlooking statements are expressly qualified in their entirety by the foregoing cautionary statements.
Overview
We are a partnership formed by our Sponsor to acquire, develop, own and manage a portfolio of real property interests and infrastructure assets that are leased to companies in the wireless communication, digital infrastructure, outdoor advertising and renewable power generation industries. In addition, the Partnership owns certain interests in receivables associated with similar assets. We generate revenue and cash flow from existing tenant leases of our real property interests and infrastructure assets to wireless carriers, cellular tower owners, outdoor advertisers, renewable power producers and colocation providers and other enterprises. The Partnership is a master limited partnership organized in theState of Delaware and has been publicly traded since its initial public offering onNovember 19, 2014 . OnJuly 31, 2017 , the Partnership completed changes to its organizational structure by transferring substantially all of its assets to a consolidated subsidiary,Landmark Infrastructure Inc. , aDelaware corporation, which elected to be taxed as a real estate investment trust ("REIT") commencing with its taxable year endingDecember 31, 2017 . We intend to continue to own and operate substantially all of our assets through the REIT Subsidiary. These changes are designed to simplify tax reporting for unitholders and intended to broaden the Partnership's investor base by substantially eliminating unrelated business taxable income allocated by the Partnership to tax-exempt investors, including individuals investing through tax-deferred accounts such as an individual retirement account, and we do not intend to generate state source income. OnJune 2, 2021 ,Digital Colony Management, LLC , a leading global digital infrastructure investment firm ("DigitalBridge") completed the acquisition of Landmark. In connection with the consummation of the Landmark acquisition,Matthew P. Carbone ,Edmond G. Leung andJames F. Brown stepped down from their respective roles as members of the board of the General Partner (the "Board"). In connection with the vacancies created by the resignations described above, onJune 2, 2021 , the sole member of the General Partner of the Partnership, which is controlled byDigitalBridge , appointedSteven Sonnenstein andSadiq Malik as members of the Board. Additionally,Steven Sonnenstein was appointed as Chairman of the Board. OnJune 2, 2021 ,DigitalBridge provided to the Board a non-binding proposal to acquire, through a series of transactions, substantially all of the assets of the Partnership. OnAugust 21, 2021 , the Partnership entered into a definitive transaction agreement with Landmark to acquire substantially all of the assets of the Partnership through a series of transactions (the "Transaction Agreement"). Under the terms of the Transaction Agreement each issued and outstanding 34 -------------------------------------------------------------------------------- Common Unit, other than those Common Units owned by Landmark or its affiliates, will be converted into the right to receive$16.50 per Common Unit in cash without any interest thereon. The Board of Directors of the PartnershipGeneral Partner (the "Board"), after considering various factors, including the unanimous determination and recommendation of its Conflicts Committee, determined that the Transaction Agreement and the transactions contemplated thereby, are in the best interests of the Partnership and the Partnership unaffiliated unitholders and approved the Transaction Agreement and the transactions contemplated thereby, and recommended that the unitholders vote in favor of the Transaction Agreement and the transactions contemplated thereby. Completion of the transactions is conditioned upon, among other things, approval of the Transaction Agreement and the transactions by holders of at least a majority of the issued and outstanding Common Units of the Partnership. Additionally, the cap on general and administrative expense reimbursement under our Omnibus Agreement will expire onNovember 19, 2021 . Under our Amended 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, our general partner determines the amount of these expenses and such determinations must be made in good faith under the terms of our Amended 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 3% of our revenue during the current 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 exceeds$120 million and (ii)November 19, 2021 . Our Sponsor has informed us that it intends to let the cap expire onNovember 19, 2021 and will seek reimbursement for costs and expenses it incurs for services provided to the Partnership in accordance with the Amended Partnership Agreement. For further information regarding the impact of COVID-19 on the Company, see Part II, Item 1A titled "Risk Factors." COVID-19 We are closely monitoring the impact of COVID-19 pandemic on all aspects of our business and in all of the jurisdictions in which we operate, including how it will impact our tenants and business partners. While we did not incur significant disruptions during the nine months endedSeptember 30, 2021 from the COVID-19 pandemic, we are unable to predict the future impact that the COVID-19 pandemic will have on our financial condition, results of operations and cash flows due to numerous uncertainties. These uncertainties include the scope, severity and duration of the pandemic, the actions taken to contain the pandemic or mitigate its impact and the direct and indirect economic effects of the pandemic and containment measures, among others. The global impact of the outbreak has been rapidly evolving and, as cases of COVID-19 have continued to be identified in additional countries, many countries, includingthe United States , have reacted by instituting quarantines, mandating business and school closures and restricting travel. As a result, the COVID-19 pandemic is negatively impacting the global economy. Further, the impacts of a potential worsening of global economic conditions and the continued disruptions to, and volatility in, the credit and financial markets, consumer spending as well as other unanticipated consequences remain unknown. In addition, we cannot predict the impact that COVID-19 will have on our tenants and other business partners; however, any material effect on these parties could adversely impact us. The Partnership has received a myriad of short-term rent relief requests from tenants within the outdoor advertising industry, most often in the form of rent deferral requests or amending to percentage rent. Not all tenant requests will ultimately result in modification agreements, nor is the Partnership forgoing its contractual rights under its lease agreements. The three and nine months endedSeptember 30, 2021 results may not be indicative of future results. During the three and nine months endedSeptember 30, 2021 , the Partnership generated$3.8 million and$11.5 million in rental revenue from outdoor advertising tenants,$0.2 million and$0.6 million of which was generated from percentage rent provisions, respectively. During the three and nine months endedSeptember 30, 2020 , the Partnership generated$3.7 million and$11.5 million in rental revenue from outdoor advertising tenants,$0.1 million and$0.6 million of which was generated from percentage rent provisions, respectively. The situation surrounding the COVID-19 pandemic remains fluid, and we are actively managing our response in collaboration with tenants and business partners and assessing potential impacts to our financial position and operating results, as well as potential adverse developments in our business. OnOctober 22, 2021 , the General Partner's board of directors approved a quarterly distribution of$0.20 per common unit for the quarter endedSeptember 30, 2021 . The current quarter distribution equates to approximately$5.1 million per quarter, or$20.4 million per year in the aggregate, based on the number of common units outstanding as ofNovember 2, 2021 . As a result of the unprecedented economic conditions, we will focus on repaying borrowings under our revolving credit facility, preserving liquidity and capital for any potential impact to our business and positioning the Partnership to take advantage of any prospective market opportunities. 35 --------------------------------------------------------------------------------
How We Generate Rental Revenue
We primarily generate rental revenue and cash flow from existing leases of our tenant sites to wireless carriers, cellular tower owners, outdoor advertisers, renewable power producers and colocation providers and other enterprises. 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. Substantially all of our tenant lease arrangements are triple net or effectively triple-net, meaning that our tenants or the underlying property owners are generally contractually responsible for propertylevel operating expenses, including maintenance capital expenditures, property taxes and insurance. For certain infrastructure assets, we incur ground rent obligations, maintenance expenditures, property taxes and insurance, some of which may be reimbursed by our tenants. In addition, as ofSeptember 30, 2021 , approximately 80% of our tenant leases (94% of rental revenue for the three months endedSeptember 30, 2021 ) have contractual fixedrate escalators or consumer price index ("CPI")based rent escalators, and some of our tenant leases contain revenuesharing 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 colocation. Future economic or regional downturns affecting our submarkets that impair our ability to renew or release 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. Significant consolidation among our tenants in the wireless communication industry (or our tenants' sublessees) may result in the decommissioning of certain existing communications sites, because certain portions of these tenants' (or their sublessees') networks may be redundant. The loss of any one of our large customers as a result of joint ventures, mergers, acquisitions or other cooperative agreements may result in a material decrease in our revenue. OnApril 1, 2020 , T-Mobile and Sprint completed their merger. The Partnership does not expect the merger to have a material impact on rental revenue. For the three and nine months endedSeptember 30, 2021 , T-Mobile represented approximately 10.4% and 10.5% of rental revenue, respectively.
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 and rental revenue (2) operating and maintenance expenses; (3) FFO and AFFO; and (4) Adjusted EBITDA.
Occupancy and Rental Revenue
The amount of revenue we generate primarily depends on our occupancy rate. As ofSeptember 30, 2021 , we had a 95% occupancy rate with 2,028 of our 2,136 available tenant sites leased. We believe the infrastructure assets at our tenant sites are essential to the ongoing operations and profitability of our tenants and will be a critical component for the rollout of future technologies such as 5G, IoT and autonomous vehicles. 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 consolidation in the wireless communication industry historically that has led to certain lease terminations. OnApril 1, 2020 , T-Mobile and Sprint completed their merger. The Partnership does not expect the merger to have a material impact on rental revenue. For the three and nine months endedSeptember 30, 2021 , T-Mobile represented approximately 10.4% and 10.5% of rental revenue, respectively. As a result of the T-Mobile and Sprint merger, we have received termination notices related to 25 T-Mobile and Sprint tenant sites. As ofSeptember 30, 2021 , seven tenant sites where we have received termination notices have been vacated with the remainder to be vacated prior toDecember 31, 2021 . Additional consolidation among our tenants in the wireless communication industry (or our tenants' sublessees) may result in lease terminations for certain existing communication sites. 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. 36
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Operating and Maintenance Expenses
Substantially all of our tenant sites are subject to triple net or 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 or to the extent a jurisdiction applies real property tax to our easements. Additionally, the Partnership may pursue further development opportunities in the future. As we deploy these infrastructure assets, we may incur additional operating expenses associated with ground lease payments and other operating expenses to maintain our infrastructure assets.
Funds from Operations ("FFO") and Adjusted Funds from Operations ("AFFO")
FFO is a non-GAAP financial measure of operating performance of an equity REIT in order to recognize that income-producing real estate historically has not depreciated on the basis determined under GAAP. We calculate FFO in accordance with the standards established by theNational Association of Real Estate Investment Trust ("NAREIT"). FFO represents net income (loss) excluding real estate related depreciation and amortization expense, real estate related impairment charges, gains (or losses) on real estate transactions, adjustments for unconsolidated joint venture, and distributions to preferred unitholders and noncontrolling interests. FFO is generally considered by industry analysts to be the most appropriate measure of performance of real estate companies. FFO does not necessarily represent cash provided by operating activities in accordance with GAAP and should not be considered an alternative to net earnings as an indication of the Partnership's performance or to cash flow as a measure of liquidity or ability to make distributions. Management considers FFO an appropriate measure of performance of an equity REIT because it primarily excludes the assumption that the value of the real estate assets diminishes predictably over time, and because industry analysts have accepted it as a performance measure. The Partnership's computation of FFO may differ from the methodology for calculating FFO used by other equity REITs, and therefore, may not be comparable to such other REITs. AFFO is a non-GAAP financial measure of operating performance used by many companies in the REIT industry. AFFO adjusts FFO for certain non-cash items that reduce or increase net income in accordance with GAAP. AFFO should not be considered an alternative to net earnings, as an indication of the Partnership's performance or to cash flow as a measure of liquidity or ability to make distributions. Management considers AFFO a useful supplemental measure of the Partnership's performance. The Partnership's computation of AFFO may differ from the methodology for calculating AFFO used by other equity REITs, and therefore, may not be comparable to such other REITs. We calculate AFFO by starting with FFO and adjusting for general and administrative expense reimbursement, transaction-related expenses, unrealized gain (loss) on derivatives, straight line rent adjustments, unit-based compensation, amortization of deferred loan costs and discount on secured notes, deferred income tax expense, amortization of above and below market rents, loss on early extinguishment of debt, repayments of receivables, adjustments for investment in unconsolidated joint venture, adjustments for drop-down assets and foreign currency transaction gain (loss). The GAAP measures most directly comparable to FFO and AFFO is net income.
EBITDA and Adjusted EBITDA
We define EBITDA as net income before interest, income taxes, depreciation and amortization, and we define Adjusted EBITDA as EBITDA before impairments, acquisitionrelated expenses, unrealized and realized gains and losses on derivatives, loss on extinguishment of debt, gains and losses on sale of real property interests, unit-based compensation, straight line rental adjustments, amortization of above and belowmarket rents plus cash receipts applied toward the repayments of investments in receivable, the deemed capital contribution to fund our general and administrative expense reimbursement and adjustments for investments in unconsolidated joint ventures. 37
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EBITDA and Adjusted EBITDA are nonGAAP supplemental financial measures that management and external users of our financial statements, such as industry analysts, investors, lenders and rating agencies, may use to assess:
• our operating performance as compared to other publicly traded limited
partnerships, without regard to historical cost basis or, in the case of Adjusted EBITDA, financing methods;
• the ability of our business to generate sufficient cash to support our
decision to make distributions to our unitholders;
• our ability to incur and service debt and fund capital expenditures; and
• the viability of acquisitions and the returns on investment of various
investment opportunities.
We believe that the presentation of EBITDA and Adjusted EBITDA 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 and Adjusted EBITDA are net income and net cash provided by operating activities. EBITDA and Adjusted EBITDA 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 and Adjusted EBITDA 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 and Adjusted EBITDA in isolation or as a substitute for analysis of our results as reported under GAAP. As a result, because EBITDA and Adjusted EBITDA may be defined differently by other companies in our industry, EBITDA and Adjusted EBITDA 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:
COVID-19
We are not aware of any material trends or uncertainties, other than national economic conditions affecting real estate and development generally and those risks listed in Part II. Item 1A of this Quarterly Report on Form 10-Q and in Part I, Item 1A of our Annual Report on Form 10-K for the year endedDecember 31, 2020 , that may reasonably be expected to have a material impact, favorable or unfavorable, on revenues or income from the acquisition, management and operation of our properties. However, due to the outbreak of COVID-19, the Partnership's tenants and their operations may be impacted, including their ability to pay rent. The impact of COVID-19 on our future results could be significant and will largely depend on future developments, which are highly uncertain and cannot be predicted, including new information that may emerge concerning the severity of COVID-19, the success of actions taken to contain or treat COVID-19 and reactions by consumers, companies, governmental entities and capital markets.
Acquisitions and Developments
We have in the past and intend to continue to pursue acquisitions of real property interests and developments of infrastructure. Our significant historical acquisition activity impacts the period to period comparability of our results of operations. During the nine months endedSeptember 30, 2021 and for the year endedDecember 31, 2020 , the Partnership acquired 10 and 15 tenant sites from third parties for a total consideration of$2.2 million and$144.2 million , respectively. In 2020, we acquired multiple data center properties with long-term triple net leases totaling$142.8 million . During the nine months endedSeptember 30, 2021 , the Partnership deployed 157 DART kiosks for a total of$17.2 million . During the year endedDecember 31, 2020 , the Partnership deployed two stealth towers, 112 DART kiosks and placed in service other assets for a total of$16.2 million . Sales The Partnership's sales of real property interests impacts the period to period comparability of our results of operations. During the three months endedSeptember 30, 2021 , the Partnership received total consideration of$0.2 million related to a tenant site lost to eminent domain proceedings and recognized a gain on the sale of real property interests of$0.1 million . On 38
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During the year endedDecember 31, 2020 , the Partnership completed the sale of its interest in the consolidated joint venture that holds its European outdoor advertising portfolio and recognized a total gain on sale of real property interest of$15.5 million . The operating results of the European outdoor advertising portfolio are presented as discontinued operations on the consolidated statements of operations. The Partnership used proceeds from the sale of the European outdoor advertising portfolio and available cash to repay borrowings totaling$115 million on its revolving credit facility, including the £40.5 million of British pound sterling ("GBP") denominated borrowings, and terminate USD interest rate swaps with a notional value of$145 million and a GBP denominated interest rate swap agreement with a notional value of £38 million for approximately$7.6 million .
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, except for foreign currency changes on interest rate swaps denominated in a foreign currency. In connection with the sale of the European outdoor advertising portfolio, the Partnership used proceeds from the sale to terminate existing USD interest rate swaps with a notional value of$145 million and a GBP denominated interest rate swap agreement with a notional value of £38 million for approximately$7.6 million . OnSeptember 29, 2020 , the Partnership entered into an interest rate swap agreement with a notional amount of$60 million with a fixed rate at 0.18% per annum and a maturity date ofNovember 15, 2023 . OnDecember 30, 2020 , the Partnership entered into an interest rate swap agreement with a notional amount of$40 million with a fixed rate at 0.21% per annum and a maturity date ofNovember 15, 2023 .
General and Administrative Expenses
Under the Partnership's Fourth Amended and Restated Agreement of Limited Partnership ofLandmark Infrastructure Partners LP datedApril 2, 2018 (the "Amended 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 amended Omnibus Agreement with Landmark ("Omnibus Agreement"), which was amended onJanuary 30, 2019 , our general partner determines the amount of these expenses and such determinations must be made in good faith under the terms of the Amended 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 3% of our revenue during the current 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 exceeds$120 million and (ii)November 19, 2021 . The full amount of our 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 in our financial statements as a capital contribution from Landmark rather than as a reduction of our general and administrative expenses, except for expenses that would otherwise be allocated to us, which are not included in the amount of general and administrative expenses. Our Sponsor has informed us that it intends to let the cap expire onNovember 19, 2021 and will seek reimbursement for costs and expenses it incurs for services provided to the Partnership in accordance with the Amended Partnership Agreement.
Factors That May Influence Future Results of Operations
General and Administrative Expenses
The cap on general and administrative expense reimbursement under our Omnibus Agreement will expire onNovember 19, 2021 . Under ourAmended 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, our general partner determines the amount of these expenses and such determinations must be made in good faith under the terms of our Amended Partnership Agreement. The expenses of other employees will be allocated to us based on the amount of time actually spent by those employees on our business. These reimbursable expenses also include an allocable portion of the compensation and benefits of employees and executive officers of other affiliates of our general partner who provide services to us. We will also reimburse Landmark for any additional outofpocket costs and expenses incurred by Landmark and its affiliates in providing general and administrative services to us. 39
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COVID-19
We are not aware of any material trends or uncertainties, other than national economic conditions affecting real estate and development generally and those risks listed in Part II. Item 1A. "Risk Factors," of this Quarterly Report on Form 10-Q, that may reasonably be expected to have a material impact, favorable or unfavorable, on revenues or income from the acquisition, management and operation of our properties. However, due to the outbreak of COVID-19, the Partnership's tenants and their operations may be impacted, including their ability to pay rent. The impact of COVID-19 on our future results could be significant and will largely depend on future developments, which are highly uncertain and cannot be predicted, including new information that may emerge concerning the severity of COVID-19, the success of actions taken to contain or treat COVID-19 and reactions by consumers, companies, governmental entities and capital markets. Acquisitions and Developments We intend to pursue acquisitions of real property interests from third parties and developments of infrastructure, utilizing the expertise of our management and other Landmark employees to identify and assess potential acquisitions, for which we may pay Landmark mutually agreed reasonable fees. When acquiring real property interests, we will 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. For our digital infrastructure industry, we focus on acquiring mission-critical, high-quality, network-neutral, single and multi-tenant data centers, primarily supporting colocation/cloud, wholesale colocation and enterprise tenants, in strategic markets. We expect the data center assets to have high-quality anchor tenants in place for whom the data center is critically important for its continued operations as well as leases that are structured on a long-term, net basis and contain contractual rent escalators. Additionally, we will 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 initial portfolio is focused on wireless communication, outdoor advertising and renewable power generation assets inthe United States , we intend to grow our initial portfolio of real property interests into other fragmented infrastructure asset classes and expect to continue to pursue acquisitions internationally. The impact of COVID-19 may restrict access to construction materials and delay development projects. During 2017, the Partnership started developing an ecosystem of technologies that provides smart enabled infrastructure including stealth towers and digital outdoor advertising kiosks acrossNorth America . Stealth towers are self-contained, neutral-host towers designed for wireless carrier and other wireless operator collocation. The stealth towers are designed for macro, mini macro and small cell deployments and will support Internet of Things ("IoT"), carrier densification needs, private LTE networks and other wireless solutions. During the fourth quarter of fiscal year 2018, the Partnership entered into an agreement withDallas Area Rapid Transit ("DART") to develop a smart media and communications platform which will include the deployment of content-rich kiosks and the Partnership's smart enabled infrastructure ecosystem solution on strategic high-traffic DART locations. During the nine months endedSeptember 30, 2021 , the Partnership deployed 157 DART kiosks for a total of$17.2 million . During the year endedDecember 31, 2020 , the Partnership deployed two stealth towers, 112 DART kiosks and placed in service other assets for a total of$16.2 million . As we deploy these infrastructure assets, we may incur additional operating expenses associated with ground lease payments and other operating expenses to maintain our infrastructure assets. Additionally, the Partnership may pursue further development opportunities in the future. The impact of COVID-19 has at times limited access to construction materials and delayed development projects and may continue to impact the pace of developments.
During the nine months ended
Mergers
Significant consolidation among our tenants in the wireless communication industry (or our tenants' sublessees) may result in the decommissioning of certain existing communications sites, because certain portions of these tenants' (or their sublessees') networks may be redundant. The loss of any one of our large customers as a result of joint ventures, mergers, acquisitions or other cooperative agreements may result in a material decrease in our revenue. OnApril 1, 2020 , T-Mobile and Sprint completed their merger. For the three and nine months endedSeptember 30, 2021 , T-Mobile represented approximately 10.4% and 10.5% of rental revenue, respectively. 40
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Revolving Credit Facility and Secured Notes
OnOctober 13, 2021 , certain subsidiaries of the Partnership entered into an indenture pursuant to which such subsidiaries issued and sold$172.5 million aggregate principal amount of securities of Secured Data Center Revenue Term Notes, Series 2021-1, consisting of Class A-2 notes in a private placement (the "2021-1 Secured Notes"). The 2021-1 Secured Notes mature onSeptember 15, 2028 and require interest-only payments. The net proceeds and available cash were used to pay down the revolving credit facility by$168.2 million and terminate an existing interest rate swap agreement with a notional value of$50 million for$2.0 million .
Changing Interest Rates and Foreign Currency Exchange 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. Additionally, fluctuations in foreign currencies in which the Partnership operates 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.
LIBOR Phase Out
InJuly 2017 ,Financial Conduct Authority (the "FCA"), which regulates LIBOR, announced it intends to stop compelling banks to submit rates for the calculation of LIBOR after 2021. As a result, theFederal Reserve Board and theFederal Reserve Bank of New York organized the Alternative Reference Rates Committee (the "ARRC") which identified the Secured Overnight Financing Rate (the "SOFR") as its preferred alternative to USD-LIBOR in derivatives and other financial contracts. The Partnership is not able to predict when LIBOR will cease to be available or when there will be sufficient liquidity in the SOFR markets. Any changes adopted by theFCA or other governing bodies in the method used for determining LIBOR may result in a sudden or prolonged increase or decrease in reported LIBOR. If that were to occur, our interest payments could change. In addition, uncertainty about the extent and manner of future changes may result in interest rates and/or payments that are higher or lower than if LIBOR were to remain available in its current form. The Partnership has agreements that are indexed to LIBOR and is monitoring and evaluating the related risks, which include interest on loans and valuation of derivative instruments. These risks arise in connection with transitioning contracts to a new alternative rate, including any resulting value transfer that may occur. The value of loans or derivative instruments tied to LIBOR could also be impacted if LIBOR is limited or discontinued. For some instruments, the method of transitioning to an alternative rate may be challenging, as they may require negotiation with the respective counterparty.
If a contract is not transitioned to an alternative rate and LIBOR is discontinued, the impact on our contracts is likely to vary by contract. If LIBOR is discontinued or if the methods of calculating LIBOR change from their current form, interest rates on our current or future indebtedness may be adversely affected.
While we expect LIBOR to be available in substantially its current form until the end of 2021, it is possible that LIBOR will become unavailable prior to that point. This could result, for example, if sufficient banks decline to make submissions to the LIBOR administrator. In that case, the risks associated with the transition to an alternative reference rate will be accelerated and magnified. Our revolving credit facility contains fallback language generally consistent with the ARRC's amendment approach, which provides a streamlined amendment approach for negotiating a benchmark replacement and introduces clarity with respect to the fallback trigger events and an adjustment to be applied to the successor rate. We will continue to monitor the potential impact of LIBOR changes on our business. 41
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Critical Accounting Policies
The preparation of financial statements in conformity with generally accepted accounting principles inthe 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 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 endedDecember 31, 2020 , in "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations." Our critical accounting policies have not changed during 2021.
Historical Results of Operations of our Partnership
Segments
We conduct business through four reportable business segments: Wireless Communication, Digital Infrastructure,Outdoor Advertising andRenewable Power Generation . Our reportable segments are strategic business units that offer different products and services. They are commonly managed, as all four businesses require similar marketing and business strategies. We evaluate our segments based on revenue because substantially all of our tenant lease arrangements are triple net or 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 asset sales in 2020, and acquisitions made during the year endedDecember 31, 2020 . As ofSeptember 30, 2021 and 2020, we had 2,136 and 1,952 available tenant sites with 2,028 and 1,841 leased tenant sites, respectively. 42
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Comparison of Three Months Ended
The following table summarizes the consolidated statements of operations of the Partnership for the three months endedSeptember 30, 2021 and 2020 (in thousands): Three Months Ended September 30, 2021 2020 Change Revenue Rental revenue$ 17,405 $ 14,228 $ 3,177 Expenses Property operating 1,188 360 828 General and administrative 1,483 768 715 Transaction-related 3,295 - 3,295 Depreciation and amortization 5,079 3,808 1,271 Impairments 8 16 (8 ) Total expenses 11,053 4,952 6,101 Other income and expenses Interest and other income 102 46 56 Interest expense (4,962 ) (4,068 ) (894 ) Unrealized gain on derivatives 194 154 40 Equity income from unconsolidated joint venture 329 248 81 Gain on sale of real property interests 79 - 79 Total other income and expenses (4,258 ) (3,620 ) (638 ) Income from continuing operations before income tax expense (benefit) 2,094 5,656 (3,562 ) Income tax expense (benefit) (80 ) (173 ) 93 Income from continuing operations 2,174 5,829 (3,655 ) Loss from discontinued operations, net of tax - (171 ) 171 Net income$ 2,174 $ 5,658 $ (3,484 ) Rental Revenue Rental revenue increased$3.2 million during the three months endedSeptember 30, 2021 primarily due to the full year of rental revenue in 2021 for assets acquired at the end of the quarter endedSeptember 30, 2020 and rent escalations. Revenue generated from our wireless communication, digital infrastructure, outdoor advertising and renewable power generation segments was$6.6 million ,$4.9 million ,$3.8 million and$2.1 million , or 38%, 28%, 22% and 12% of total rental revenue, respectively, during the three months endedSeptember 30, 2021 , compared to$6.5 million ,$2.1 million ,$3.7 million and$2.0 million or 45% , 15% , 26% and 14% of total rental revenue, respectively, during the three months endedSeptember 30, 2020 . The occupancy rates in our wireless communication, digital infrastructure, outdoor advertising and renewable power generation segments were 93%, 100%, 97% and 100%, respectively, atSeptember 30, 2021 compared to 92%, 100%, 97% and 100%, respectively, atSeptember 30, 2020 . Additionally, our effective monthly rental rates per tenant site for wireless communication, digital infrastructure, outdoor advertising and renewable power generation segments were$2,080 ,$116,439 ,$1,954 and$9,767 respectively, during the three months endedSeptember 30, 2021 compared to$2,022 ,$73,030 ,$1,789 and$9,474 , respectively, during the three months endedSeptember 30, 2020 . Property Operating Property operating expenses increased$0.8 million during the three months endedSeptember 30, 2021 compared to the three months endedSeptember 30, 2020 , primarily due to an increase in property taxes and other operating expenses for tenant sites acquired subsequent toSeptember 30, 2021 and operating expenses on development assets placed into service. Substantially all of our tenant sites are subject to triple net or 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. As we deploy our smart enabled infrastructure solution and other projects, we may incur additional operating expenses associated with ground lease payments and other operating expenses. 43
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General and Administrative
General and administrative expenses increased$0.7 million during the three months endedSeptember 30, 2021 compared to the three months endedSeptember 30, 2020 , primarily due to an increase in legal, accounting and insurance related expenses. Under our Amended 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, our general partner determines the amount of these expenses and such determinations must be made in good faith under the terms of the Amended Partnership Agreement. OnJanuary 30, 2019 , we amended the Omnibus Agreement and 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 3% of our revenue during the current calendar quarter. Under the amended Omnibus Agreement, 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 exceeds$120 million and (ii)November 19, 2021 . 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. For the three months endedSeptember 30, 2021 and 2020, Landmark reimbursed us$1.0 million and$0.3 million , respectively, for expenses related to certain general and administrative services expenses that exceeded the cap. During the three months endedSeptember 30, 2021 and 2020,$0.1 million , respectively, of management fees related to our unconsolidated joint venture that is not subject to the cap and is treated as a capital contribution from Sponsor. Our Sponsor has informed us that it intends to let the cap expire onNovember 19, 2021 and will seek reimbursement for costs and expenses it incurs for services provided to the Partnership in accordance with the Amended Partnership Agreement.
TransactionRelated
In connection with the Transaction Agreement, we incurred expenses of approximately$3.3 million during the three months endedSeptember 30, 2021 , consisting of independent advisory, accounting and legal fees, and other related charges. Transaction-related expenses also include 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 business acquisitions or unsuccessful asset acquisitions.
Depreciation and Amortization
Depreciation and amortization expense increased$1.3 million during the three months endedSeptember 30, 2021 compared to the three months endedSeptember 30, 2020 as a result of acquisitions and the deployment of stealth towers, DART kiosks and other assets placed in service subsequent toSeptember 30, 2020 .
Interest and Other Income
We expect the amount of interest income on receivables to decline as the principal balance of the receivables continues to decrease. Interest income on receivables is generated from our wireless communication, outdoor advertising, and renewable power generation segments.
Interest Expense
Interest expense increased$0.9 million during the three months endedSeptember 30, 2021 compared to the three months endedSeptember 30, 2020 , primarily due to a higher average debt balance of approximately$504.1 million during the three months endedSeptember 30, 2021 compared to an average debt balance of approximately$410.5 million during the three months endedSeptember 30, 2020 . 44
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Unrealized Gain (Loss) on Derivative Financial Instruments
We mitigate exposure to fluctuations in interest rates on existing variable rate debt by entering into swap contracts that fixed the floating LIBOR rate. These interest rate swap agreements extend through and beyond the term of the Partnership's existing credit facility. The swap contracts are adjusted to fair value at each period end. The unrealized gain recorded for the three months endedSeptember 30, 2021 and for the three months endedSeptember 30, 2020 reflect the change in fair value of these contracts during those periods. In connection with the issuance of the 2021-1 Secured Notes, the Partnership used proceeds from the sale to terminate an existing interest rate swap agreement with a notional value of$50 million for$2.0 million .
Equity Income from Unconsolidated Joint Venture
Equity income from unconsolidated joint venture increased$0.1 million during the three months endedSeptember 30, 2021 compared to the three months endedSeptember 30, 2020 . Under the equity method, the investment is initially recorded at fair value and subsequently adjusted for additional distributions and the Partnership's proportionate share of equity in the JV's income or loss. The Partnership recognizes its proportionate share of the ongoing income or loss of the unconsolidated JV as equity income or loss from unconsolidated JV on the consolidated statements of operations.
Gain on Sale of Real Property Interests
During the three months endedSeptember 30, 2021 , the Partnership received total consideration of$0.2 million related to a tenant site lost to eminent domain proceedings and recognized a gain on sale of real property interests of$0.1 million . Income Tax Benefit During the three months endedSeptember 30, 2021 , the Partnership recorded a net tax benefit of$0.1 million as a result of an increase in net deferred taxes. During the three months endedSeptember 30, 2020 , the Partnership recorded a net tax benefit of$0.2 million as a result of an increase to deferred tax assets related to a higherU.S. state effective tax rate.
Income from Discontinued Operations, Net of Tax
OnJune 17, 2020 , the Partnership sold its European outdoor advertising portfolio for a purchase price of £95 million and recognized a total gain on sale of$15.5 million . The sale of the European outdoor advertising portfolio met the criteria as discontinued operations inJune 2020 . As a result, the operating results of the European outdoor advertising portfolio are presented as income from discontinued operations for the prior period on the consolidated statements of operations. 45
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Comparison of Nine Months Ended
The following table summarizes the consolidated statements of operations of the Partnership for the nine months endedSeptember 30, 2021 and 2020 (in thousands): Nine Months Ended September 30, 2021 2020 Change Revenue Rental revenue$ 52,259 $ 41,893 $ 10,366 Expenses Property operating 2,966 1,223 1,743 General and administrative 3,915 3,479 436 Transaction-related 3,421 91 3,330 Depreciation and amortization 14,871 11,711 3,160 Impairments 35 200 (165 ) Total expenses 25,208 16,704 8,504 Other income and expenses Interest and other income 331 317 14 Interest expense (14,830 ) (12,759 ) (2,071 ) Loss on early extinguishment of debt - (2,231 ) 2,231 Unrealized gain (loss) on derivatives 1,511 (6,530 ) 8,041 Equity income (loss) from unconsolidated joint venture (761 ) 1,085 (1,846 ) Gain on sale of real property interests 189 - 189 Total other income and expenses (13,560 ) (20,118 ) 6,558 Income from continuing operations before income tax benefit 13,491 5,071 8,420 Income tax expense (benefit) (80 ) (508 ) 428 Income from continuing operations 13,571 5,579 7,992 Income (loss) from discontinued operations, net of tax - 17,340 (17,340 ) Net income (loss)$ 13,571 $ 22,919 $ (9,348 ) Rental Revenue Rental revenue increased$10.4 million during the nine months endedSeptember 30, 2021 primarily due to the full year of rental revenue in 2021 for assets acquired at the end of the quarter endedSeptember 30, 2020 and rent escalations. Revenue generated from our wireless communication, digital infrastructure, outdoor advertising and renewable power generation segments was$19.8 million ,$14.7 million ,$11.5 million and$6.3 million , or 38%, 28%, 22% and 12% of total rental revenue, respectively, during the nine months endedSeptember 30, 2021 , compared to$19.1 million ,$5.2 million ,$11.5 million and$6.1 million or 46%, 12%, 27% and 15% of total rental revenue, respectively, during the nine months endedSeptember 30, 2020 . The occupancy rates in our wireless communication, digital infrastructure, outdoor advertising and renewable power generation segments were 93%, 100%, 97% and 100%, respectively, atSeptember 30, 2021 compared to 92%, 100%, 97% and 100%, respectively, atSeptember 30, 2020 . Additionally, our effective monthly rental rates per tenant site for wireless communication, digital infrastructure, outdoor advertising and renewable power generation segments were$2,064 ,$115,979 ,$1,954 and$10,047 respectively, during the nine months endedSeptember 30, 2021 compared to$2,000 ,$60,449 ,$1,942 and$9,627 , respectively, during the nine months endedSeptember 30, 2020 . Property Operating Property operating expenses increased$1.7 million during the nine months endedSeptember 30, 2021 compared to the nine months endedSeptember 30, 2020 , primarily due to an increase in property taxes and other operating expenses for tenant sites acquired subsequent toSeptember 30, 2021 and operating expenses on development assets placed into service. Substantially all of our tenant sites are subject to triple net or 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. As we deploy our smart enabled infrastructure solution and other projects, we may incur additional operating expenses associated with ground lease payments and other operating expenses. 46
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General and Administrative
General and administrative expenses increased$0.4 million during the nine months endedSeptember 30, 2021 compared to the nine months endedSeptember 30, 2020 , primarily due to an increase in legal and insurance related expenses. Under our Amended 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, our general partner determines the amount of these expenses and such determinations must be made in good faith under the terms of the Amended Partnership Agreement. OnJanuary 30, 2019 , we amended the Omnibus Agreement and 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 3% of our revenue during the current calendar quarter. Under the amended Omnibus Agreement, 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 exceeds$120 million and (ii)November 19, 2021 . 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. For the nine months endedSeptember 30, 2021 and 2020, Landmark reimbursed us$2.3 million and$2.2 million , respectively, for expenses related to certain general and administrative services expenses that exceeded the cap. During the nine months endedSeptember 30, 2021 and 2020,$0.2 million , respectively, of management fees related to our unconsolidated joint venture that is not subject to the cap and is treated as a capital contribution from Sponsor. Our Sponsor has informed us that it intends to let the cap expire onNovember 19, 2021 and will seek reimbursement for costs and expenses it incurs for services provided to the Partnership in accordance with the Amended Partnership Agreement.
TransactionRelated
In connection with the Transaction Agreement, we incurred expenses of approximately$3.3 million during the nine months endedSeptember 30, 2021 , consisting of independent advisory, accounting and legal fees, and other related charges. Transaction-related expenses also include 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 business acquisitions or unsuccessful asset acquisitions.
Depreciation and Amortization
Depreciation and amortization expense increased$3.2 million during the nine months endedSeptember 30, 2021 compared to the nine months endedSeptember 30, 2020 as a result of acquisitions and the deployment of stealth towers, DART kiosks and other assets placed in service subsequent toSeptember 30, 2020 .
Impairments
Impairments decreased$0.2 million during the nine months endedSeptember 30, 2021 compared to the nine months endedSeptember 30, 2020 , as a result of one lease termination in our outdoor advertising segment for less than$0.1 million during the nine months endedSeptember 30, 2021 compared to four lease terminations and one non-lease renewal in our wireless and outdoor advertising segments for$0.2 million for the nine months endedSeptember 30, 2020 .
Interest and Other Income
We expect the amount of interest income on receivables to decline as the principal balance of the receivables continues to decrease. Interest income on receivables is generated from our wireless communication, outdoor advertising, and renewable power generation segments.
Interest Expense
Interest expense increased
47
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Loss on Early Extinguishment of Debt
In connection with the issuance of the 2019 Secured Notes, the Partnership repaid in full the 2016 Secured Notes by$108 million . The unamortized balance of the deferred loan costs totaling$1.2 million and a$1.0 million make-whole payments were recorded as a loss on extinguishment of debt during the nine months endedSeptember 30, 2020 .
Unrealized Gain (Loss) on Derivative Financial Instruments
We mitigated exposure to fluctuations in interest rates on existing variable rate debt by entering into swap contracts that fixed the floating LIBOR rates. These interest rate swap agreements extend through and beyond the term of the Partnership's existing credit facility. The swap contracts are adjusted to fair value at each period end. The unrealized gain recorded for the nine months endedSeptember 30, 2021 and for the nine months endedSeptember 30, 2020 reflect the change in fair value of these contracts during those periods. In connection with the sale of the European outdoor advertising portfolio, the Partnership used proceeds from the sale to terminate existing swaps including the GBP interest rate swap agreement for a total of approximately$7.6 million . In connection with the issuance of the 2021-1 Secured Notes, the Partnership used proceeds from the sale to terminate an existing interest rate swap agreement with a notional value of$50 million for$2.0 million .
Equity Income (Loss) from Unconsolidated Joint Venture
Equity income from unconsolidated joint venture decreased$1.8 million during the nine months endedSeptember 30, 2021 compared to the nine months endedSeptember 30, 2020 . Under the equity method, the investment is initially recorded at fair value and subsequently adjusted for additional distributions and the Partnership's proportionate share of equity in the JV's income or loss. The Partnership recognizes its proportionate share of the ongoing income or loss of the unconsolidated JV as equity income or loss from unconsolidated JV on the consolidated statements of operations. The Partnership's equity income (loss) from the unconsolidated JV for the nine months endedSeptember 30, 2021 , includes its proportionate share of impairment charges for$0.9 million and expenses related to eminent domain proceedings for certain assets of$0.7 million .
Gain on Sale of Real Property Interests
During the nine months endedSeptember 30, 2020 , the Partnership received total consideration of$0.2 million related to a tenant site lost to eminent domain proceedings and recognized a gain on the sale of real property interests of$0.1 million . During the nine months endedSeptember 30, 2021 , the Partnership completed sales of its real property interests for total consideration of$0.1 million and recognized a gain of$0.1 million .
Income Tax Benefit
During the nine months ended
Income from Discontinued Operations, Net of Tax
OnJune 17, 2020 , the Partnership sold its European outdoor advertising portfolio for a purchase price of £95 million and recognized a total gain on sale of$15.5 million . The sale of the European outdoor advertising portfolio met the criteria as discontinued operations inJune 2020 . As a result, the operating results of the European outdoor advertising portfolio are presented as income from discontinued operations for the prior period on the consolidated statements of operations. 48
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NonGAAP Financial Measures
The following table sets forth a reconciliation of our historical EBITDA and Adjusted EBITDA for the periods presented to net cash provided by operating activities and net income (loss) (in thousands):
Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Net cash provided by operating activities$ 11,365 $ 11,886 $ 34,701 $ 31,982 Unit-based compensation - - (120 ) (120 ) Unrealized gain (loss) on derivatives 194 154 1,511 (8,329 ) Loss on early extinguishment of debt - - - (2,231 ) Depreciation and amortization expense (5,079 ) (3,808 ) (14,871 ) (12,247 ) Amortization of above- and below-market rents, net 238 245 708 726 Amortization of deferred loan costs (565 ) (549 ) (1,625 ) (1,569 ) Amortization of discount on secured notes (94 ) (91 ) (282 ) (276 ) Impairments (8 ) (16 ) (35 ) (200 ) Gain (loss) on sale of real property interests 79 (215 ) 189 15,508 Adjustment for uncollectible accounts - (45 ) - (195 ) Equity income (loss) from unconsolidated joint venture 329 248 (761 ) 1,085 Distributions of earnings from unconsolidated joint venture (1,184 ) (726 ) (1,663 ) (1,651 ) Foreign currency transaction gain - 86 - 2,721 Working capital changes (3,101 ) (1,511 ) (4,181 ) (2,285 ) Net income $ 2,174 $ 5,658 $ 13,571 $ 22,919 Interest expense 4,962 4,068 14,830 13,400 Depreciation and amortization expense 5,079 3,808 14,871 12,247 Income tax benefit (80 ) (131 ) (80 ) (28 ) EBITDA$ 12,135 $ 13,403 $ 43,192 $ 48,538 Impairments 8 16 35 200 Transaction-related 3,295 - 3,421 432 Unrealized (gain) loss on derivatives (194 ) (154 ) (1,511 ) 8,329 Loss on early extinguishment of debt - - - 2,231 (Gain) loss on sale of real property interests (79 ) 215 (189 ) (15,508 ) Unit-based compensation - - 120 120 Straight line rent adjustments (192 ) 7 (614 ) 384 Amortization of above- and below-market rents, net (238 ) (245 ) (708 ) (726 ) Repayments of investments in receivables 181 152 432 395 Adjustments for investment in unconsolidated joint venture 1,397 1,430 5,801 3,920 Foreign currency transaction gain - (86 ) - (2,721 ) Deemed capital contribution due to cap on general and administrative expense reimbursement 1,050 425 2,497 2,455 Adjusted EBITDA$ 17,363 $ 15,163 $ 52,476 $ 48,049 49
-------------------------------------------------------------------------------- The following table sets forth a reconciliation of FFO and AFFO for the periods presented (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Net income $ 2,174 $ 5,658$ 13,571 $ 22,919 Adjustments: Depreciation and amortization 5,079 3,808 14,871 12,247 expense Impairments 8 16 35 200 (Gain) loss on sale of real property interests, net of income (79 ) 215 (189 ) (15,508 ) taxes Adjustments for investment in 705 742 3,730 1,825 unconsolidated joint venture Distributions to preferred (3,060 ) (3,055 ) (9,180 ) (9,152 ) unitholders Distributions to noncontrolling (8 ) (8 ) (24 ) (24 ) interests FFO attributable to common $ 4,819 $ 7,376$ 22,814 $ 12,507 unitholders Adjustments: General and administrative expense 1,050 425 2,497 2,455 reimbursement Transaction-related expenses 3,295 - 3,421 432 Unrealized (gain) loss on (194 ) (154 ) (1,511 ) 8,329 derivatives Straight line rent adjustments (192 ) 7 (614 ) 384 Unit-based compensation - - 120 120 Amortization of deferred loan costs and discount on secured 659 640 1,907 1,845
notes
Amortization of above- and (238 ) (245 ) (708 ) (726 ) below-market rents, net Deferred income tax benefit (31 ) (152 ) (122 ) (460 ) Loss on early extinguishment of - - - 2,231 debt Repayments of receivables 181 152 432 395 Adjustments for investment in 47 26 127 103 unconsolidated joint venture Foreign currency transaction gain - (86 ) - (2,721 )
AFFO attributable to common $ 9,396 $ 7,989
$ 28,363 $ 24,894 unitholders
FFO per common unit - diluted $ 0.19 $ 0.29
$ 0.90 $ 0.49
AFFO per common unit - diluted $ 0.37 $ 0.31
$ 1.11 $ 0.98 Weighted average common units 25,489 25,478 25,489 25,472 outstanding - diluted
Liquidity and Capital Resources
Our shortterm liquidity requirements will consist primarily of funds to pay for operating expenses, acquisitions and developments and other expenditures directly associated with our assets, including:
• interest expense on our revolving credit facility; • interest expense and principal payments on our secured notes;
• general and administrative expenses, including potentially reimbursing
general and administrative expenses of our Sponsor; • acquisitions of real property interests; • capital expenditures for infrastructure developments; and • distributions to our common and preferred unitholders. 50
-------------------------------------------------------------------------------- We intend to satisfy our shortterm liquidity requirements primarily through cash flow from operating activities and through borrowings available under our revolving credit facility. As discussed earlier, our Sponsor has informed us that it intends to let the cap on reimbursement of general and administrative expenses expire onNovember 19, 2021 . As a result, we anticipate that our borrowing capacity will decrease under the revolving credit facility. We may also satisfy our short-term liquidity requirements through the issuance of additional equity, asset dispositions, formation of joint ventures, 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. Our ability to access capital on favorable terms as well as to use cash from operations to continue to meet our liquidity needs, all of which are highly uncertain and cannot be predicted, could be affected by various risks and uncertainties, including, but not limited to, the effects of the COVID-19 pandemic and other risks detailed in Part II, Item 1A titled "Risk Factors". Access to capital markets impacts our cost of capital and ability to refinance indebtedness, as well as our ability to fund future acquisitions and development through the issuance of additional securities or secured debt. Credit ratings impact our ability to access capital and directly impact our cost of capital as well. The Partnership has a universal shelf registration statement on file with theSEC , effectiveJanuary 30, 2020 , under which we have the ability to issue and sell common and preferred units representing limited partner interests in us and debt securities up to an aggregate amount of$750.0 million . OnOctober 22, 2021 , the General Partner's board of directors approved a quarterly distribution of$0.20 per common unit for the quarter endedSeptember 30, 2021 . The current quarter distribution equates to approximately$5.1 million per quarter, or$20.4 million per year in the aggregate, based on the number of common units outstanding as ofNovember 2, 2021 . As a result of the unprecedented economic conditions, we will focus on repaying borrowings under our revolving credit facility, preserving liquidity and capital for any potential impact to our business and positioning the Partnership to take advantage of any prospective market opportunities. 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 Amended Partnership Agreement. We intend to pay a quarterly Series A and Series B Preferred Unit distribution of 8.0% and 7.9%, respectively, which equates to approximately$2.2 million per quarter, or approximately$8.8 million per year in the aggregate based on the number of Series A and Series B Preferred Units outstanding as ofOctober 1, 2021 andNovember 1, 2021 , respectively. We intend to pay a quarterly Series C Preferred Units distribution of a rate equal to the greater of (i) 7.00% per annum, and (ii) the sum of (a) three-month LIBOR as calculated on each applicable date of determination and (b) 4.698% per annum, based on the$25.00 liquidation preference per Series C Preferred Unit. As ofSeptember 30, 2021 , there were 1,982,700 Series C Preferred Units outstanding. The Preferred Unit distributions are cumulative from the date of original issuance and will be payable quarterly in arrears. The amount of future distributions to unitholders will depend on our results of operations, financial condition, capital requirements and will be determined by the General Partner's Board of Directors on a quarterly basis. The Partnership expects to rely on external financing sources, including equity and debt issuances, to fund expansion capital expenditures and future acquisitions. However, the Partnership may use operating cash flows to fund expansion capital expenditures or acquisitions, which could result in subsequent borrowings under the revolving credit facility to pay distributions or fund other short-term working capital requirements. 51
-------------------------------------------------------------------------------- The table below summarizes the quarterly distribution related to our financial results: Total Cash Distribution Distribution Quarter Ended Per Unit (in thousands) Distribution Date Common Units September 30, 2020 $ 0.2000 $ 5,096 November 13, 2020 December 31, 2020 0.2000 5,098 February 12, 2021 March 31, 2021 0.2000 5,098 May 14, 2021 June 30, 2021 0.2000 5,098 August 13, 2021 September 30, 2021 0.2000 5,098 November 12, 2021 Series A Preferred Units September 30, 2020$ 0.5000 $ 893 October 15, 2020 December 31, 2020 0.5000 894 January 15, 2021 March 31, 2021 0.5000 894 April 15, 2021 June 30, 2021 0.5000 894 July 15, 2021 September 30, 2021 0.5000 894 October 15, 2021 Series B Preferred Units September 30, 2020$ 0.4938 $ 1,298 November 16, 2020 December 31, 2020 0.4938 1,298 February 16, 2021 March 31, 2021 0.4938 1,298 May 17, 2021 June 30, 2021 0.4938 1,298 August 16, 2021 September 30, 2021 0.4938 1,298 November 15, 2021 Series C Preferred Units September 30, 2020$ 0.4375 $ 867 November 16, 2020 December 31, 2020 0.4375 867 February 16, 2021 March 31, 2021 0.4375 867 May 17, 2021 June 30, 2021 0.4375 867 August 16, 2021 September 30, 2021 0.4375 867 November 15, 2021
As of
Our longterm liquidity needs consist primarily of funds necessary to pay for acquisitions, developments and scheduled debt maturities. We intend to satisfy our longterm liquidity needs through cash flow from operations, joint ventures, and through the issuance of additional equity and debt.
Cash Flows
The following table summarizes the historical cash flow of the Partnership for
the nine months ended
Nine Months EndedSeptember 30, 2021 2020
Net cash provided by operating activities $ 34,701 $
31,982
Net cash used in investing activities (15,845 ) (23,960 ) Net cash used in financing activities (18,113 ) (8,405 ) 52
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Comparison of Nine Months Ended
Net cash provided by operating activities. Net cash provided by operating
activities increased
Net cash used in investing activities. Net cash used in investing activities was$15.8 million for the nine months endedSeptember 30, 2021 compared to net cash used in investing activities of$24.0 million for the nine months endedSeptember 30, 2020 . The change in net cash used in investing activities was primarily due to a$127.9 million increase of cash used for acquisitions and development activities offset by$119.8 million of cash provided by the proceeds from the sale of real property interests during the nine months endedSeptember 30, 2020 compared to the nine months endedSeptember 30, 2021 . Net cash used in financing activities. Net cash used in financing activities was$18.1 million for the nine months endedSeptember 30, 2021 compared to net cash used in financing activities of$8.4 million for the nine months endedSeptember 30, 2020 . The change in net cash used in financing activities was primarily attributable to the net decrease of$17.4 million in proceeds from the net borrowings from the revolving credit facility and secured notes and the net decrease of$5.2 million in proceeds from equity offerings, partially offset by a decrease in cash used for distributions of$4.3 million ,$1.7 million for deferred loan costs, and$7.6 million for payments on the settlement of derivatives.
Revolving Credit Facility
Our revolving credit facility will mature onNovember 15, 2023 and is available for working capital, capital expenditures, permitted acquisitions and general corporate purposes, including distributions. OnNovember 15, 2018 , the Partnership completed its Third Amended and Restated Credit Facility and obtained commitments from a syndicate of banks with initial borrowing commitments of$450.0 million for five-years. Additionally, borrowings up to$75.0 million may be denominated in GBP, Euro, Australian dollar and Canadian dollar. Substantially all of our assets, excluding equity in and assets of certain joint ventures and unrestricted subsidiaries is pledged 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 saleleaseback 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 8.0 to 1.0; and • an interest coverage ratio of not less than 2.0 to 1.0. 53
-------------------------------------------------------------------------------- In addition, our revolving credit facility contains 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 a rate equal to
LIBOR, plus a spread ranging from 1.75% to 2.25% (determined based on leverage
levels). As of
Additionally, under the revolving credit facility we will be subject to an annual commitment fee (determined based on leverage levels) associated with the available undrawn capacity subject to certain restrictions. As ofSeptember 30, 2021 , the applicable annual commitment rate used was 0.20%. As ofSeptember 30, 2021 , we had$223.2 million of total outstanding indebtedness under our revolving credit facility with$226.8 million available under the revolving credit facility (including standby letter of credit arrangements of$5.8 million ), subject to compliance with certain covenants. As ofSeptember 30, 2021 , the Partnership was in compliance with all financial covenants required under the revolving credit facility. As ofNovember 1, 2021 , the Partnership had$60.0 million of outstanding borrowings on our revolving credit facility, and we had$390.0 million of undrawn borrowing capacity (including standby letter of credit arrangements of$5.8 million ), subject to compliance with certain covenants, under our revolving credit facility.
Secured Notes
OnOctober 13, 2021 , certain subsidiaries of the Partnership entered into an indenture pursuant to which such subsidiaries issued and sold$172.5 million aggregate principal amount of the "2021-1 Secured Notes". The 2021-1 Secured Notes mature onSeptember 15, 2028 and require interest-only payments. The net proceeds and available cash were used to pay down the revolving credit facility by$168.2 million and terminate an existing interest rate swap agreement with a notional value of$50 million for$2.0 million . OnJanuary 15, 2020 , certain subsidiaries of the Partnership entered into a master note purchase and participation agreement ("MNPPA") pursuant to which such subsidiaries issued and sold an initial$170 million aggregate principal amount of 3.90% series A senior secured notes in a private placement (the "2019 Secured Notes"). The 2019 Secured Notes mature onJanuary 14, 2027 and include an interest-only initial term of three years. The net proceeds were used to repay in full the 2016 Secured Notes by$108 million and the revolving credit facility by$59 million . In connection with the issuance of the 2019 Secured Notes, the Partnership obtained a standby letter of credit arrangement totaling$3.4 million . OnApril 24, 2018 , the Partnership entered into a note purchase and private shelf agreement pursuant to which the Partnership agreed to sell an initial$43.7 million aggregate principal amount of 4.38% Senior Secured Notes, in a private placement. The 4.38% Senior Secured Notes are obligations of certain special purpose subsidiaries of the Partnership, including the issuer of the 4.38% Senior Secured Notes,LMRK PropCo SO LLC (the "4.38% Senior Secured Notes Issuer"), and are not obligations of the Partnership or any of its other subsidiaries (including the obligors with respect to the 4.38% Senior Secured Notes). The assets and credit of such obligors are not available to satisfy the debts and obligations of the Partnership or any of its other affiliates (other than the obligors with respect to the 4.38% Senior Secured Notes). In connection with the issuance of the 4.38% Senior Secured Notes, the Partnership obtained a standby letter of credit arrangement totaling$2.4 million . OnNovember 30, 2017 , the Partnership completed the 2017 Securitization involving certain outdoor advertising sites and related property interests owned by certain special purpose subsidiaries of the Partnership, through the issuance of the 2017 Secured Notes, in an aggregate principal amount of$80.0 million . The 2017 Secured Notes are obligations of certain special purpose subsidiaries of the Partnership, including the issuer of the 2017 Secured Notes,LMRK Issuer Co. 2 LLC, and are not obligations of the Partnership or any of its other subsidiaries (including the obligors with respect to the 2016 and 2019 Secured Notes). The assets and credit of such obligors are not available to satisfy the debts and obligations of the Partnership or any of its other affiliates (other than the obligors with respect to the 2017 Secured Notes). 54 -------------------------------------------------------------------------------- The secured notes described above are collectively referred to as the "Secured Notes" and were issued in separate classes as indicated in the table below. The Class B notes of the Series 2017-1 are subordinated in right of payment to the Class A notes of such series. Initial Principal Anticipated Balance Repayment Class (in thousands) Note Rate Date 4.38% senior secured notes $ 43,702 4.38 % June 30, 2036 Series 2019-1 Class A $ 170,000 3.90 % January 14, 2027 Series 2017-1 Class A $ 62,000 4.10 % November 15, 2022 Series 2017-1 Class B $ 18,000 3.81 % November 15, 2022 The Secured Notes are each secured by (1) mortgages and deeds of trust on substantially all of the tenant sites and their operating cash flows, (2) a security interest in substantially all of the personal property of the obligors (as defined in the applicable indenture), and (3) the rights of the obligors under a management agreement. Under the terms of the applicable indenture, the obligors will be permitted to issue additional notes under certain circumstances, including so long as the debt service coverage ratio ("DSCR") of the issuer is at least 1.5 to 1.0 for the 2019 Secured Notes, 2.0 to 1.0 for the 2017 Secured Notes and at least 1.1 to 1.0 for the 4.38% Senior Secured Notes. Under the terms of the applicable indenture, amounts due under the Secured Notes, as applicable, will be paid solely from the cash flows generated from the operation of the Secured Tenant Site Assets, as applicable, which must be deposited into reserve accounts, and thereafter distributed solely pursuant to the terms of the applicable indenture. On a monthly basis, after payment of all required amounts under the applicable indenture, subject to the conditions described in Note 9, Debt, the excess cash flows generated from the operation of such assets are released to the Partnership. As ofSeptember 30, 2021 ,$3.4 million was held in such reserve accounts which are classified as restricted cash on the accompanying consolidated balance sheets. Certain information with respect to the Secured Notes is set forth in Note 9, Debt. The DSCR is generally calculated as the ratio of annualized net cash flow (as defined in the applicable indenture) to the amount of interest, servicing fees and trustee fees required to be paid over the succeeding 12 months on the principal amount of the Secured Notes, as applicable, that will be outstanding on the payment date following such date of determination. Each indenture includes covenants customary for notes issued in rated securitizations. Among other things, the related obligors are prohibited from incurring other indebtedness for borrowed money or further encumbering their assets (as defined in the applicable agreement) and the organizational documents of the related obligors were amended to contain certain provisions consistent with rating agency securitization criteria for special purposes entities, including that the applicable issuer and guarantor maintain independent directors. As ofSeptember 30, 2021 , the applicable obligors were in compliance with all financial covenants under the Secured Notes.
Shelf Registrations
OnDecember 4, 2019 , the Partnership filed a universal shelf registration statement on Form S-3 with theSEC . The shelf registration statement was declared effective by theSEC onJanuary 30, 2020 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$750.0 million .
ATM Programs
OnFebruary 28, 2020 , the Partnership replaced the 2019 Common Unit ATM Program and established a new Common Unit at-the-market offering program (the "2020 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. OnFebruary 28, 2020 , the Partnership replaced the 2019 Series A ATM Program and established a new Series A Preferred Unit at-the-market offering program (the "2020 Series A ATM Program") pursuant to which we may sell, from time to time, Series A Preferred 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. OnFebruary 28, 2020 , the Partnership replaced the 2017 Series B ATM Program and established a new Series B Preferred Unit at-the-market offering program (the "2020 Series B ATM Program" and together with 2020 Common Unit ATM Program and the 2020 Series A ATM Program, the "2020 ATM Programs") pursuant to which we may sell, from time to time, Series B Preferred 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. We 55 -------------------------------------------------------------------------------- intend to use the net proceeds from any sales pursuant to the 2020 ATM Programs for general partnership purposes, which may include, among other things, the repayment of indebtedness and to potentially fund future acquisitions. There were no Common Units or Preferred Units issued under the 2020 ATM Programs during the nine months endedSeptember 30, 2021 . During the nine months endedSeptember 30, 2020 , the Partnership issued a total of 109,724 Common Units, 23,287 Series A Preferred Units and 84,139 Series B Preferred Units under the 2019 ATM Programs generating total proceeds of approximately$4.5 million before issuance costs. During the nine months endedSeptember 30, 2020 , the Partnership issued 41,447 Series A Preferred Units under the 2020 Series A ATM Program, generating proceeds of approximately$1.0 million before issuance costs.
Off Balance Sheet Arrangements
In connection with the issuance of the 4.38% Senior Secured Notes, the Partnership has a standby letter of credit arrangement totaling$2.4 million . In connection with the issuance of the 2019 Secured Notes, the Partnership has a standby letter of credit arrangement totaling$3.4 million . As ofSeptember 30, 2021 , there were no amounts drawn on the standby letters of credit.
As of
Inflation The majority of our tenant lease arrangements are triple net or effectively triple net and provide for fixedrate 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 triple net and 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 Financial Statements for the impact of new accounting standards.
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