Digital Colony Partners II (Digital Colony), the second flagship private equity fund from Colony Capital, today announced that it has agreed to acquire Landmark Dividend LLC, the sponsor of Landmark Infrastructure Partners (NASDAQ: LMRK). Initially, Digital Colony will acquire 13.2% of Landmark Infrastructure Partners’ common units and 100% of the firm’s general partner interest.
Subsequently, Digital Colony will offer the remaining unitholders of Landmark Infrastructure Partners $13.00 per common unit in cash, to gain full control of the company. Overall, Colony Capital’s Digital Colony is valuing Landmark Infrastructure Partners’ common equity at $331m. Incorporating the company’s net debt, preferred units, and noncontrolling interests of ~$640m, Landmark Infrastructure Partners’ enterprise value equates to $972m.
Finally, the transaction is expected to close in Q2 2021.
Landmark Infrastructure Partners – Valuation
Enterprise Value / EBITDA
During Q1 2021, Landmark Infrastructure Partners generated adjusted EBITDA of $17.5m, which on an annualized basis, equates to $70.0m. Therefore, Digital Colony is valuing Landmark Infrastructure Partners at 13.9x adjusted EBITDA.
Based on the company’s distribution of $0.80 per common unit, on an annualized basis, Landmark Infrastructure Partners is being valued at a 6.2% dividend yield.
Transaction Advisors – Digital Colony and Landmark Infrastructure Partners
Digital Colony’s financial advisor was TAP Advisors. Additionally, Digital Colony’s legal advisor was Simpson Thacher & Bartlett.
Landmark’s financial advisor was RBC Capital Markets. Additionally, Landmark’s legal advisor was Latham & Watkins.
Landmark Infrastructure Partners – Overview
Landmark Infrastructure Partners acquires, develops, owns, and manages a portfolio of real property interests and infrastructure assets. Specifically, the company’s real property interests underlie its tenants’ infrastructure assets, which include ground-based cellular towers, rooftop wireless sites, powered shell data centers, billboards, wind turbines, and solar panels.
Overall, as of Q1 2021, Landmark Infrastructure Partners had a 95% occupancy rate, with 1,962 of its 2,062 available tenant sites leased.
By rental revenue, Landmark Infrastructure Partners generates: 38% from wireless carriers & tower companies, 28% from data centers, 22% from outdoor advertising, and 12% from renewable power generation. Specifically, the company’s real property interests are leased to the following companies:
- Wireless Carriers: Verizon, AT&T, and T-Mobile
- Tower Companies: American Tower, Crown Castle, and SBA Communications
- Data Centers: PayPal, Sungard Availability Services, Amdocs, Wipro, Flexential, Cyxtera, and C.H. Robinson
- Outdoor Advertising: Clear Channel Outdoor, Outfront Media, and Lamar Advertising
- Renewable Power Generation: Southern California Edison
Landmark Infrastructure Partners acquires real property interests that are typically subject to triple net lease arrangements. Additionally, these leases contain contractual rental escalators, which have an average annual escalation rate of 2.4%. Overall, the remaining lease term of the company’s wireless, outdoor advertising, and renewable tenant leases range from 15 to 30 years, including renewal terms.
Additionally, the company’s data center portfolio is located in several markets throughout the United States and leased on terms of 5+ years.
Landmark Infrastructure Partners’ real property interests usually consist of a diversified portfolio of long-term and perpetual easements, tenant lease assignments, fee simple properties, and digital infrastructure assets.