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LMRK - Landmark Infrastructure Partners LP


MCN
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Landmark Infrastructure Partners LP (LMRK) is a Master limited Partnership that invests in real estate leases brought to it by its General Partner/ sponsor (also called Landmark).

 

 

Just wondering if anyone on the board has come across this type of company and its business model before and has any insight into understanding where the value is.

 

And just to be clear, I’m not suggesting this company as a long investment, I’ll be passing on it as my first impression is I don’t understand how shareholders benefit over the long term, although I haven’t gone into this much. Maybe its even a short candidate!

 

But after coming across it I’m curious to understand its business model and how an investor should value it, given the depleting nature of its assets.

 

From what I understand, the sponsor/GP purchases lease payments and easements from landowners that have leased their land to a commercial tenant. It aggregates these leases into a larger pool and then sells on to LMRK.

LMRK holds these portfolios of leases for the long term, receiving the lease payments. So far, most of these have been for wireless tower leases but they are also moving into advertising bill board leases.

 

LMRK shareholders receive dividends.

 

What confuses me is that, unlike a typical real estate company, Landmark does not actually own the land outright (fee simple?) but simply pays an up- front lump sum amount in exchange for the right to receive the lease payments for the next 20, 30, 50 years etc. So the asset depletes in value over the course of the lease and there seems to be no real tangible asset at the end of it.

 

 

Is this business model creating value by simply buying the lease at a higher IRR than cost of capital?

 

What is the best way to value something like this, discount cash flow, as valuing a mine or leasing asset where the asset depletes to zero?

 

Is this a ponzi scheme?

 

If anyone is familiar with this type of company I’d be grateful of clarification.. many thanks!

 

 

 

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I don't think this business model makes sense to me. How can have Landmark have a lower cost of capital than a real estate company or REIT, that takes in a commercial mortgage. Also, the business model to carve out the lease payment sounds like something that caters to yield hungry investors and we know how that ends typically.

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