UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
☑
(Mark One)
þQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2017
OR
For the quarterly period ended June 30, 2023
OR
☐
¨TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____ to ____
Commission file number 001-37386
logoa03.jpg
FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC
(Exact name of registrant as specified in its charter)

For the transition period from ____ to ____
Commission file number 001-37386
FTAI Aviation Logo.jpg
FTAI AVIATION LTD.
(Exact name of registrant as specified in its charter)
DelawareCayman Islands32-043423898-1420784
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
1345 Avenue of the Americas,
45th Floor
New York NYNY10105
(Address of principal executive offices)(Zip Code)

(Registrant’s telephone number, including area code) (212) 798-6100
(Former name, former address and former fiscal year, if changed since last report) N/A
Securities registered pursuant to Section 12(b) of the Act:
Title of each class:Trading Symbol:Name of exchange on which registered:
Ordinary shares, $0.01 par value per shareFTAIThe Nasdaq Global Select Market
8.25% Fixed-to-Floating Rate Series A Cumulative Perpetual Redeemable Preferred SharesFTAIPThe Nasdaq Global Select Market
8.00% Fixed-to-Floating Rate Series B Cumulative Perpetual Redeemable Preferred SharesFTAIOThe Nasdaq Global Select Market
8.25% Fixed-Rate Reset Series C Cumulative Perpetual Redeemable Preferred SharesFTAINThe Nasdaq Global Select Market
(Registrant’s telephone number, including area code) (212) 798-61009.50% Fixed-Rate Reset Series D Cumulative Perpetual Redeemable Preferred Shares
FTAIMThe Nasdaq Global Select Market
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YesþNo¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). YesþNo¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerþAccelerated filer¨
Non-accelerated filer¨Smaller reporting company☐
Large accelerated filer ¨
Accelerated filer þ
Non-accelerated filer  ¨
Smaller reporting company ¨
Emerging growth company þ
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. þ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes¨☐Noþ
There were 75,771,738 common99,737,046 ordinary shares outstanding representing limited liability company interests outstanding at November 3, 2017.

July 24, 2023.



FORWARD-LOOKING STATEMENTS AND RISK FACTORS SUMMARY
This report contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not statements of historical fact but instead are based on our present beliefs and assumptions and on information currently available to the Company.us. You can identify these forward-looking statements by the use of forward-looking words such as “outlook,” “believes,” “expects,” “potential,” “continues,” “may,” “will,” “should,” “could,” “seeks,” “approximately,” “predicts,” “intends,” “plans,” “estimates,” “anticipates,” “target,” “projects,” “contemplates” or the negative version of those words or other comparable words. Any forward-looking statements contained in this report are based upon our historical performance and on our current plans, estimates and expectations in light of information currently available to us. The inclusion of this forward-looking information should not be regarded as a representation by us, that the future plans, estimates or expectations contemplated by us will be achieved.
Such forward-looking statements are subject to various risks and uncertainties and assumptions relating to our operations, financial results, financial condition, business, prospects, growth strategy and liquidity. Accordingly, there are or will be important factors that could cause our actual results to differ materially from those indicated in these statements. The following is a summary of the principal risk factors that make investing in our securities risky and may materially adversely affect our business, financial condition, results of operations and cash flows. This summary should be read in conjunction with the more complete discussion of the risk factors we face, which are set forth in Part II, Item 1A. “Risk Factors” of this report. We believe that these factors include, but are not limited to:
•changes in economic conditions generally and specifically in our industry sectors, and other risks relating to the global economy;economy, including, but not limited to, the Russia-Ukraine conflict, and any related responses or actions by businesses and governments;
•reductions in cash flows received from our assets, as well as contractual limitations on the use of our aviation assets to secure debt for borrowed money;
•our ability to take advantage of acquisition opportunities at favorable prices;
•a lack of liquidity surrounding our assets, which could impede our ability to vary our portfolio in an appropriate manner;
•the relative spreads between the yield on the assets we acquire and the cost of financing;
•adverse changes in the financing markets we access affecting our ability to finance our acquisitions;
•customer defaults on their obligations;
•our ability to renew existing contracts and win additionalenter into new contracts with existing or potential customers;
•the availability and cost of capital for future acquisitions;
•concentration of a particular type of asset or in a particular sector;
•competition within the aviation energy, intermodal transport and rail sectors;industry;
•the competitive market for acquisition opportunities;
•risks related to operating through joint ventures, partnerships, consortium arrangements or partnerships or through consortium arrangements;other collaborations with third parties;
•our ability to successfully integrate acquired businesses;
•obsolescence of our assets or our ability to sell, re-lease or re-charter our assets;
•exposure to uninsurable losses and force majeure events;
infrastructure operations may require substantial capital expenditures;
•the legislative/regulatory environment and exposure to increased economic regulation;
•exposure to the oil and gas industry’s volatile oil and gas prices;
•difficulties in obtaining effective legal redress in jurisdictions in which we operate with less developed legal systems;
•our ability to maintain our exemption from registration under the Investment Company Act of 1940 and the fact that maintaining such exemption imposes limits on our operations;
•our ability to successfully utilize leverage in connection with our investments;
•foreign currency risk and risk management activities;
•effectiveness of our internal control over financial reporting;
•exposure to environmental risks, including natural disasters, increasing environmental legislation and the broader impacts of climate change;
•changes in interest rates and/or credit spreads, as well as the success of any hedging strategy we may undertake in relation to such changes;
•actions taken by national, state, or provincial governments, including nationalization, or the imposition of new taxes, could materially impact the financial performance or value of our assets;
•our dependence on our Manager and its professionals and actual, potential or perceived conflicts of interest in our relationship with our Manager;
•effects of the pending mergeracquisition of SoftBank’s equity in Fortress by certain members of management of Fortress Investment Group LLC with affiliates of SoftBank Group Corp.;and Mubadala;

2





•volatility in the market price of our common shares;
•the inability to pay dividends to our shareholders in the future; and
•other risks described in the “Risk Factors” section of this report.
These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this report. The forward-looking statements made in this report relate only to events as of the date on which the statements are made. We do not undertake any obligation to publicly update or review any forward-looking statement except as required by law, whether as a result of new information, future developments or otherwise.
If one or more of these or other risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, our actual results may vary materially from what we may have expressed or implied by these forward-looking statements. We caution that you should not place undue reliance on any of our forward-looking statements. Furthermore, new risks and uncertainties arise from time to time, and it is impossible for us to predict those events or how they may affect us.

3





FTAI AVIATION LTD.
FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC
INDEX TO FORM 10-Q
PART I - FINANCIAL INFORMATION
Item 1.
5
5
6
Consolidated Statements of Comprehensive Income (Loss) for the three and ninesix months ended SeptemberJune 30, 20172023 and 20162022
7
Consolidated StatementStatements of Changes in Equity for the ninethree and six months ended SeptemberJune 30, 20172023 and 2022
8
Consolidated Statements of Cash Flows for the ninesix months ended SeptemberJune 30, 20172023 and 20162022
910
Notes to Consolidated Financial Statements
1112
Note 1: Organization
1112
Note 2: Summary of Significant Accounting Policies
1112
Note 3: Discontinued Operations
15
Note 4: Leasing Equipment, net
16
Note 4: Finance Leases, net5: Investments
17
Note 5: Property, Plant and Equipment, net
17
Note 6: Investments
18
Note 7: Intangible Assets and Liabilities, net
1918
Note 8:7: Debt, net
2019
Note 9:8: Fair Value Measurements
2319
Note 9: Equity-Based Compensation
20
Note 10: RevenuesIncome Taxes
2621
Note 11: Equity-Based Compensation
28
Note 12: Income Taxes
29
Note 13: Management Agreement and Affiliate Transactions
2921
Note 14:12: Segment Information
3123
Note 15:13: Earnings per Share and Equity
4131
Note 16:14: Commitments and Contingencies
4232
Note 17:15: Subsequent Events
4232
Item 2.
4334
Item 3.
7249
Item 4.
7449
PART II - OTHER INFORMATION
Item 1.
7450
Item 1A.
7450
Item 2.
9766
Item 3.
9767
Item 4.
9767
Item 5.
9767
Item 6.
9768




4






PART I—FINANCIAL INFORMATION
Item 1. Financial Statements


FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLCFTAI AVIATION LTD.
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except share and per share data)
(Unaudited)
NotesJune 30, 2023December 31, 2022
Assets
Cash and cash equivalents2$21,134 $33,565 
Restricted cash2— 19,500 
Accounts receivable, net117,546 99,443 
Leasing equipment, net41,891,263 1,913,553 
Property, plant, and equipment, net12,123 10,014 
Investments539,822 22,037 
Intangible assets, net644,683 41,955 
Inventory, net2232,043 163,676 
Other assets2167,018 125,834 
Total assets$2,525,632 $2,429,577 
Liabilities
Accounts payable and accrued liabilities$79,765 $86,452 
Debt, net72,173,108 2,175,727 
Maintenance deposits298,354 78,686 
Security deposits237,192 32,842 
Other liabilities45,895 36,468 
Total liabilities$2,434,314 $2,410,175 
Commitments and contingencies14
Equity
Ordinary shares ($0.01 par value per share; 2,000,000,000 shares authorized; 99,737,046 and 99,716,621 shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively)
$997 $997 
Preferred shares ($0.01 par value per share; 200,000,000 shares authorized; 15,920,000 and 13,320,000 shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively)159 133 
Additional paid in capital331,080 343,350 
Accumulated deficit(241,452)(325,602)
Shareholders' equity90,784 18,878 
Non-controlling interest in equity of consolidated subsidiaries534 524 
Total equity91,318 19,402 
Total liabilities and equity$2,525,632 $2,429,577 
   (Unaudited)  

Notes
September 30, December 31,
(Dollar amounts in thousands, except share and per share data)

2017
2016
Assets




Cash and cash equivalents2
$176,357

$68,055
Restricted cash2
36,458

65,441
Accounts receivable, net

27,926

21,358
Leasing equipment, net3
929,364

765,455
Finance leases, net4
9,370

9,717
Property, plant, and equipment, net5
464,399

352,181
Investments (includes $30,470 and $17,630 available-for-sale securities at fair value as of September 30, 2017 and December 31, 2016, respectively)6
67,792

39,978
Intangible assets, net7
33,882

38,954
Goodwill

116,584

116,584
Other assets2
47,789

69,589
Total assets

$1,909,921

$1,547,312






Liabilities




Accounts payable and accrued liabilities

$51,684

$38,239
Debt, net8
655,580

259,512
Maintenance deposits 
81,775

45,394
Security deposits 
24,752

19,947
Other liabilities

18,207

18,540
Total liabilities

$831,998

$381,632






Commitments and contingencies16









Equity




Common shares ($0.01 par value per share; 2,000,000,000 shares authorized; 75,771,738 and 75,750,943 shares issued and outstanding as of September 30, 2017 and December 31, 2016, respectively)

758

758
Additional paid in capital

1,010,026

1,084,757
Accumulated deficit
 (41,709) (38,833)
Accumulated other comprehensive income

11,638

7,130
Shareholders' equity

980,713

1,053,812
Non-controlling interest in equity of consolidated subsidiaries

97,210

111,868
Total equity

1,077,923

1,165,680
Total liabilities and equity

$1,909,921

$1,547,312













See accompanying notes to consolidated financial statements.

5


FTAI AVIATION LTD.


FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC
CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
(Dollars in thousands, except share and per share data)
(Dollar amounts in thousands, except share and per share data)

Three Months Ended September 30,
Nine Months Ended September 30,
Notes
2017 2016
2017 2016
Revenues








Equipment leasing revenues

$49,616

$30,054

$121,387

$71,980
Infrastructure revenues

10,746

11,672

34,842

34,394
Total revenues10
60,362

41,726

156,229

106,374










Expenses








Operating expenses

23,688

17,028

66,025

48,937
General and administrative

3,439

3,205

10,615

9,154
Acquisition and transaction expenses

1,732

1,688

5,064

4,622
Management fees and incentive allocation to affiliate13
3,771

4,146

11,529

12,725
Depreciation and amortization3, 5, 7
24,784

15,376

62,382

43,294
Interest expense

8,914

5,416

21,292

15,839
Total expenses

66,328

46,859

176,907

134,571










Other income (expense)








Equity in earnings (losses) of unconsolidated entities6
132

(1,161)
(1,461)
(1,335)
Gain on sale of equipment and finance leases, net

2,709

40

6,726

3,307
Loss on extinguishment of debt8
—

—

(2,456)
(1,579)
Asset impairment  —
 —
 —
 (7,450)
Interest income

215

206

582

87
Other income

2,148

485

2,180

583
Total other income (expense)

5,204

(430)
5,571

(6,387)










Loss before income taxes

(762)
(5,563)
(15,107)
(34,584)
Provision for income taxes12
909

83

1,585

195
Net loss

(1,671)
(5,646)
(16,692)
(34,779)
Less: Net loss attributable to non-controlling interests in consolidated subsidiaries

(4,669)
(4,370)
(13,816)
(16,528)
Net income (loss) attributable to shareholders

$2,998

$(1,276)
$(2,876)
$(18,251)














Earnings/(loss) per share15
 
 
 
 
Basic

$0.04
 $(0.02) $(0.04) $(0.24)
Diluted  $0.04
 $(0.02) $(0.04) $(0.24)
          
Weighted Average Shares Outstanding:         
Basic

75,770,529

75,746,200

75,765,144

75,734,587
Diluted  75,770,665
 75,746,200
 75,765,144
 75,734,587








Three Months Ended June 30,Six Months Ended June 30,
Notes2023202220232022
Revenues
Lease income$59,541 $39,640 $115,519 $78,965 
Maintenance revenue42,065 39,932 77,206 76,664 
Asset sales revenue101,486 — 210,177 — 
Aerospace products revenue68,075 26,497 153,188 40,810 
Other revenue3,178 5,995 10,973 7,316 
Total revenues274,345 112,064 567,063 203,755 
Expenses
Cost of sales104,532 15,141 250,202 24,191 
Operating expenses224,797 19,000 47,331 80,800 
General and administrative3,188 3,906 7,255 8,467 
Acquisition and transaction expenses2,672 3,219 5,934 5,492 
Management fees and incentive allocation to affiliate115,563 — 8,560 — 
Depreciation and amortization4, 638,514 39,303 79,440 80,608 
Asset impairment— 886 1,220 123,676 
Interest expense38,499 47,889 77,791 92,030 
Total expenses217,765 129,344 477,733 415,264 
Other (expense) income
Equity in (losses) earnings of unconsolidated entities5(380)35 (1,715)233 
Gain on sale of assets, net— 63,645 — 79,933 
Other income408 1,118 416 1,246 
Total other income (expense)28 64,798 (1,299)81,412 
Income (loss) from continuing operations before income taxes56,608 47,518 88,031 (130,097)
Provision for income taxes101,855 1,829 3,881 3,168 
Net income (loss) from continuing operations54,753 45,689 84,150 (133,265)
Net loss from discontinued operations, net of income taxes3— (35,929)— (86,634)
Net income (loss)54,753 9,760 84,150 (219,899)
Less: Net loss attributable to non-controlling interests in consolidated subsidiaries:
Continuing operations— — — — 
Discontinued operations— (8,480)— (15,946)
Less: Dividends on preferred shares8,335 6,791 15,126 13,582 
Net income (loss) attributable to shareholders$46,418 $11,449 $69,024 $(217,535)
Earnings (loss) per share:13
Basic
Continuing operations$0.47 $0.40 $0.69 $(1.48)
Discontinued operations$— $(0.28)$— $(0.71)
Diluted
Continuing operations$0.46 $0.39 $0.69 $(1.48)
Discontinued operations$— $(0.28)$— $(0.71)
Weighted average shares outstanding:
Basic99,732,179 99,370,301 99,730,223 99,367,597 
Diluted100,462,277 99,805,455 100,314,508 99,367,597 
See accompanying notes to consolidated financial statements.

6


FTAI AVIATION LTD.


FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (unaudited)
(Dollars in thousands)
 Three Months Ended September 30, Nine Months Ended September 30,
(Dollar amounts in thousands)2017 2016 2017 2016
Net loss$(1,671) $(5,646) $(16,692) $(34,779)
Other comprehensive income (loss):       
Change in fair value of cash flow hedge—
 —
 —
 (97)
Change in fair value of available-for-sale securities5,784
 —
 4,508
 —
Comprehensive income (loss)4,113
 (5,646) (12,184) (34,876)
Comprehensive loss attributable to non-controlling interest(4,669) (4,370) (13,816) (16,528)
Comprehensive income (loss) attributable to shareholders$8,782
 $(1,276) $1,632
 $(18,348)
Three Months Ended June 30,Six Months Ended June 30,
2023202220232022
Net income (loss)$54,753 $9,760 $84,150 $(219,899)
Other comprehensive loss:
Other comprehensive loss related to equity method investees, net in discontinued operations— (47,714)— (142,493)
Comprehensive income (loss)54,753 (37,954)84,150 (362,392)
Comprehensive loss attributable to non-controlling interest:
Continuing operations— — — — 
Discontinued operations— (8,480)— (15,946)
Comprehensive income (loss) attributable to shareholders$54,753 $(29,474)$84,150 $(346,446)
































































































See accompanying notes to consolidated financial statements.

7


FTAI AVIATION LTD.


FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC
CONSOLIDATED STATEMENTSTATEMENTS OF CHANGES IN EQUITY (unaudited)
(Dollars in thousands)

(Dollar amounts in thousands)Common Stock Additional Paid In Capital Accumulated Deficit  Accumulated Other Comprehensive Income  Non-Controlling Interest in Equity of Consolidated Subsidiaries Total Equity
Equity - December 31, 2016$758
 $1,084,757
 $(38,833) $7,130
 $111,868
 $1,165,680
Comprehensive loss:           
Net loss for the period    (2,876)   (13,816) (16,692)
Other comprehensive loss    —
 4,508
 —
 4,508
Total comprehensive loss
 
 (2,876) 4,508
 (13,816) (12,184)
Capital contributions  

     1,261
 1,261
Transfer of non-controlling interest        (2,798) (2,798)
Dividends declared  (75,041)     —
 (75,041)
Issuance of common shares

 310
     —
 310
Equity-based compensation  —
     695
 695
Equity - September 30, 2017$758
 $1,010,026
 $(41,709) $11,638
 $97,210
 $1,077,923
Three and Six Months Ended June 30, 2023
Ordinary Shares(1)
Preferred Shares(1)
Additional Paid In CapitalAccumulated Deficit Non-Controlling Interest in Equity of Consolidated SubsidiariesTotal Equity
Equity - December 31, 2022$997 $133 $343,350 $(325,602)$524 $19,402 
Net income29,397 — 29,397 
Other comprehensive income— — 
Total comprehensive income29,397 — 29,397 
Issuance of ordinary shares230 230 
Dividends declared - ordinary shares(29,919)(29,919)
Issuance of preferred shares26 61,703 61,729 
Dividends declared - preferred shares(6,791)(6,791)
Equity-based compensation108 108 
Equity - March 31, 2023$997 $159 $368,681 $(296,205)$524 $74,156 
Net income54,753 — 54,753 
Other comprehensive income— 
Total comprehensive income54,753 — 54,753 
Contributions from non-controlling interest10 10 
Issuance of ordinary shares159 159 
Dividends declared - ordinary shares(29,935)(29,935)
Dividends declared - preferred shares(8,335)(8,335)
Equity-based compensation510 510 
Equity - June 30, 2023$997 $159 $331,080 $(241,452)$534 $91,318 


































































See accompanying notes to consolidated financial statements.


8


FTAI AVIATION LTD.


FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC
CONSOLIDATED STATEMENTS OF CASH FLOWSCHANGES IN EQUITY (unaudited)
(Dollars in thousands)

 Nine Months Ended September 30,
(Dollar amounts in thousands)2017 2016
 Cash flows from operating activities:   
 Net loss$(16,692) $(34,779)
 Adjustments to reconcile net loss to net cash provided by operating activities:   
Equity losses of unconsolidated entities1,461
 1,335
Gain on sale of equipment and finance leases, net(6,726) (3,307)
Security deposits and maintenance claims included in earnings(60) (300)
Loss on extinguishment of debt2,456
 1,579
Equity-based compensation695
 (3,818)
Depreciation and amortization62,382
 43,294
Gain on settlement of liabilities(1,093) —
Asset impairment—
 7,450
Change in current and deferred income taxes551
 (399)
Change in fair value of non-hedge derivative(1,036) 3
Amortization of lease intangibles and incentives5,193
 4,783
Amortization of deferred financing costs3,120
 1,927
Operating distributions from unconsolidated entities—
 30
Bad debt expense63
 134
Other566
 100
Change in:   
 Accounts receivable(7,984) (6,263)
 Other assets10,595
 (4,070)
 Accounts payable and accrued liabilities862
 2,396
 Management fees payable to affiliate(554) 1
 Other liabilities(1,356) 5,566
 Net cash provided by operating activities52,443
 15,662
    
 Cash flows from investing activities:   
Change in restricted cash28,983
 (799)
Investment in notes receivable—
 (3,066)
Investment in unconsolidated entities and available for sale securities(24,903) (1,754)
Principal collections on finance leases347
 2,406
Acquisition of leasing equipment(267,451) (114,012)
Acquisition of property plant and equipment(86,455) (47,454)
Acquisition of lease intangibles(1,583) (812)
Purchase deposit for aircraft and aircraft engines(11,785) (10,225)
Proceeds from sale of finance leases—
 71,000
Proceeds from sale of leasing equipment87,093
 15,905
Proceeds from sale of property, plant and equipment51
 125
Proceeds from deposit on sale of leasing equipment—
 250
Return of capital distributions from unconsolidated entities—
 432
 Net cash used in investing activities$(275,703) $(88,004)
Three and Six Months Ended June 30, 2022
Common Shares(1)
Preferred Shares(1)
Additional Paid In CapitalAccumulated Deficit Accumulated Other Comprehensive Loss Non-Controlling Interest in Equity of Consolidated SubsidiariesTotal Equity
Equity - December 31, 2021$992 $133 $1,411,940 $(132,392)$(156,381)$(192)$1,124,100 
Net loss(222,193)(7,466)(229,659)
Other comprehensive loss(94,779)(94,779)
Total comprehensive loss(222,193)(94,779)(7,466)(324,438)
Issuance of ordinary shares164 164 
Dividends declared - ordinary shares(32,749)(32,749)
Dividends declared - preferred shares(6,791)(6,791)
Equity-based compensation709 709 
Equity - March 31, 2022$992 $133 $1,372,564 $(354,585)$(251,160)$(6,949)$760,995 
Net income (loss)18,240 (8,480)9,760 
Other comprehensive loss(47,714)(47,714)
Total comprehensive income (loss)18,240 (47,714)(8,480)(37,954)
Acquisition of consolidated subsidiary3,054 3,054 
Contributions from non-controlling interest1,187 1,187 
Issuance of ordinary shares235 235 
Dividends declared - ordinary shares(33,040)(33,040)
Dividends declared - preferred shares(6,791)(6,791)
Equity-based compensation1,585 1,585 
Equity - June 30, 2022$992 $133 $1,332,968 $(336,345)$(298,874)$(9,603)$689,271 

(1) Common and Preferred Shares of Fortress Transportation and Infrastructure Investors LLC were exchanged for Ordinary and Preferred Shares of FTAI Aviation Ltd. when the Merger, as detailed in Note 1, was completed on November 10, 2022.
































See accompanying notes to consolidated financial statements.

9



FTAI AVIATION LTD.

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC
CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
(Dollars in thousands)
 Nine Months Ended September 30,
(Dollar amounts in thousands)2017 2016
 Cash flows from financing activities:   
Proceeds from debt$417,191
 $110,658
Repayment of debt(22,623) (157,603)
Payment of other liabilities to non-controlling interest holder—
 (1,000)
Payment of deferred financing costs(3,232) (3,935)
Receipt of security deposits5,826
 3,340
Return of security deposits(3,232) (316)
Receipt of maintenance deposits18,784
 10,806
Release of maintenance deposits(6,111) (5,653)
Capital contributions from non-controlling interests—
 7,433
Settlement of equity-based compensation—
 (200)
Cash dividends(75,041) (75,017)
 Net cash provided by (used in) financing activities$331,562
 $(111,487)
    
 Net increase (decrease) in cash and cash equivalents108,302
 (183,829)
 Cash and cash equivalents, beginning of period68,055
 381,703
 Cash and cash equivalents, end of period$176,357
 $197,874
    
 Supplemental disclosure of non-cash investing and financing activities:   
Restricted cash proceeds from borrowings of debt$—
 $44,342
Proceeds from borrowings of debt108,089
 —
Repayment and settlement of debt(102,352) —
Acquisition of leasing equipment(28,335) (3,451)
Acquisition of property, plant and equipment(36,770) (11,519)
Settled and assumed security deposits2,272
 (272)
Billed, assumed and settled maintenance deposits23,226
 3,923
Deferred financing costs(7,867) (2,884)
Non-cash contribution from non-controlling interest1,261
 —
Transfer of non-controlling interest(2,798) —
Six Months Ended June 30,
20232022
Cash flows from operating activities:
Net income (loss)$84,150 $(219,899)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Equity in losses of unconsolidated entities1,715 37,836 
Gain on sale of assets, net(75,960)(79,933)
Security deposits and maintenance claims included in earnings(12,215)(30,208)
Equity-based compensation618 2,294 
Depreciation and amortization79,440 114,923 
Asset impairment1,220 123,676 
Change in deferred income taxes3,127 6,200 
Change in fair value of non-hedge derivative— (748)
Change in fair value of guarantees(1,902)— 
Amortization of lease intangibles and incentives18,264 23,818 
Amortization of deferred financing costs4,190 13,328 
Provision for credit losses1,032 47,218 
Other(658)(407)
Change in:
 Accounts receivable(21,918)(47,061)
 Inventory11 (12,373)
 Other assets(2,583)(25,319)
 Accounts payable and accrued liabilities(15,350)5,045 
 Management fees payable to affiliate1,892 (1,829)
 Other liabilities2,168 (5,130)
Net cash provided by (used in) operating activities67,241 (48,569)
Cash flows from investing activities:
Investment in unconsolidated entities(19,500)(2,232)
Principal collections on notes receivable1,624 — 
Principal collections on finance leases1,939 575 
Acquisition of business, net of cash acquired— (3,819)
Acquisition of leasing equipment(325,462)(320,766)
Acquisition of property, plant and equipment(2,298)(118,729)
Acquisition of lease intangibles(10,795)(5,282)
Investment in promissory notes(11,500)— 
Purchase deposits for acquisitions(11,200)(7,100)
Proceeds from sale of leasing equipment273,229 138,020 
Proceeds from sale of property, plant and equipment— 4,304 
Proceeds for deposit on sale of aircraft and engine1,817 8,245 
Receipt of deposits for sale of aircraft and engine300 — 
Net cash used in investing activities$(101,846)$(306,784)

































See accompanying notes to consolidated financial statements.

10


FTAI AVIATION LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
(Dollars in thousands)
Six Months Ended June 30,
20232022
Cash flows from financing activities:
Proceeds from debt$325,000 $503,980 
Repayment of debt(330,000)(224,724)
Payment of deferred financing costs(1,437)(14,405)
Receipt of security deposits5,577 1,890 
Return of security deposits(1,295)— 
Receipt of maintenance deposits18,070 24,418 
Release of maintenance deposits— (878)
Capital contributions from non-controlling interests10 1,187 
Proceeds from issuance of preferred shares, net of underwriter's discount and issuance costs61,729 — 
Cash dividends - common shares(59,854)(65,789)
Cash dividends - preferred shares(15,126)(13,582)
Net cash provided by financing activities2,674 212,097 
Net decrease in cash and cash equivalents and restricted cash(31,931)(143,256)
Cash and cash equivalents and restricted cash, beginning of period53,065 440,061 
Cash and cash equivalents and restricted cash, end of period$21,134 $296,805 
Supplemental disclosure of non-cash investing and financing activities:
Acquisition of leasing equipment$50,100 $105,635 
Acquisition of property, plant and equipment(148)(1,346)
Security deposits, maintenance deposits, other assets and other liabilities settled in the sale of leasing equipment20,062 — 
Settled and assumed security deposits167 (12,055)
Billed, assumed and settled maintenance deposits7,374 (55,108)
Non-cash change in equity method investment— (142,493)
Conversion of interests in unconsolidated entities— (21,302)
Issuance of ordinary shares389 399 


























See accompanying notes to consolidated financial statements.
FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC
11

FTAI AVIATION LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
(Dollar amountsDollars in tables in thousands, unless otherwise noted)



1. ORGANIZATION
1.
ORGANIZATION
FTAI Aviation Ltd. (“we”, “us”, “our” or the “Company” and formerly “Fortress Transportation and Infrastructure Investors LLC”) is a Cayman Islands exempted company which through its subsidiaries owns, leases, and sells aviation equipment and also develops and manufactures, through a joint venture, and repairs and sells, through exclusivity arrangements, aftermarket components for aircraft engines. Additionally, we own and lease offshore energy equipment. We have two reportable segments, (i) Aviation Leasing and (ii) Aerospace Products (see Note 12).
On August 1, 2022, the Company completed the spin-off of its infrastructure business into an independent publicly traded company. Accordingly, the operating results of, and costs to separate, the infrastructure business are reported in Net loss from discontinued operations, net of income taxes in the Consolidated Statements of Operations for all periods presented. All amounts and disclosures included in the Notes to Consolidated Financial Statements reflect only the Company's continuing operations unless otherwise noted. For additional information, see Note 3, "Discontinued Operations."
On November 10, 2022, the Company completed a reverse merger transaction pursuant to the Agreement and Plan of Merger (the “Merger”) between Fortress Transportation and Infrastructure Investors LLC (the “Company”(“FTAI LLC”) isand the Company and the parties thereto, with FTAI LLC becoming a Delaware limited liability company which, through its subsidiary Fortress Worldwide Transportationof the Company. This reverse merger represents a transaction between entities under common control. Upon merger completion, FTAI LLC’s shareholders received one share of the Company’s ordinary shares, Series A Preferred Shares, Series B Preferred Shares and Infrastructure General Partnership (the “Partnership”), is engagedSeries C Preferred Shares in exchange for each share of FTAI LLC’s common shares, Series A Preferred Shares, Series B Preferred Shares and Series C Preferred Shares, respectively, with the ownershipnew Shares of FTAI Aviation Ltd. having substantially similar rights and leasing of aviation equipment, offshore energy equipment and shipping containers, and also owns and operates a short line railroad in North America, Central Maine and Québec Railway (“CMQR”), a multi-modal crude oil and refined products terminal in Beaumont, Texas (“Jefferson Terminal”), a deep-water port located alongprivileges as the Delaware River with an underground storage cavern and multiple industrial development opportunities (“Repauno”), and a multi-modal terminal located alongrespective FTAI LLC shares being converted. All exchanges were completed without any further action from the Ohio River with multiple industrial development opportunities (“Hannibal”). The Company has six reportable segments, (i) Aviation Leasing, (ii) Offshore Energy, (iii) Shipping Containers, (iv) Jefferson Terminal, (v) Railroad, and (vi) Ports and Terminals, which operate in two primary businesses, Equipment Leasing and Infrastructure (Note 14).shareholders.
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Accounting—The accompanying consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) and include the accounts of us and our subsidiaries. These financial statements and related notes should be read in conjunction with the CompanyConsolidated Financial Statements and its subsidiaries.related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.
Principles of Consolidation—The Company consolidatesWe consolidate all entities in which it haswe have a controlling financial interest and in which it has control over significant operating decisions, as well as variable interest entities (“VIEs”) in which the Company is the primary beneficiary.decisions. All significant intercompany transactions and balancesadjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been eliminated.included. The ownership interest of other investors in consolidated subsidiaries is recorded as non-controlling interest.
The Company usesWe use the equity method of accounting for investments in entities in which the Company exerciseswe exercise significant influence but which do not meet the requirements for consolidation. Under the equity method, the Company records itswe record our proportionate share of the underlying net income (loss) of these entities.entities as well as the proportionate interest in adjustments to other comprehensive loss.
Use of Estimates—The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Risks and Uncertainties—In the normal course of business, the Company encounterswe encounter several significant types of economic risk including credit, market, and capital market risks. Credit risk is the risk of the inability or unwillingness of a lessee customer, or derivative counterpartycustomer to make contractually required payments or to fulfill its other contractual obligations. Market risk reflects the risk of a downturn or volatility in the underlying industry segments in which the Company operateswe operate, which could adversely impact the pricing of the services offered by the Companyus or a lessee’s or customer’s ability to make payments, increase the risk of unscheduled lease terminations and depress lease rates and the value of the Company’sour leasing equipment or operating assets. Capital market risk is the risk that the Company iswe are unable to obtain capital at reasonable rates to fund the growth of itsour business or to refinance existing debt facilities. The Company,We, through itsour subsidiaries, also conductsconduct operations outside of the United States; such international operations are subject to the same risks as those associated with itsour United States operations as well as additional risks, including unexpected changes in regulatory requirements, heightened risk of political and economic instability, potentially adverse tax consequences and the burden of complying with foreign laws. The Company doesWe do not have significant exposure to foreign currency risk as all of itsour leasing arrangements terminal services revenue and the majority of freight rail revenue are denominated in U.S. dollars.
Variable Interest Entities—The assessment of whether an entity is a variable interest entity (“VIE”) and the determination of whether to consolidate a VIE requires judgment. VIEs are defined as entities in which equity investors do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. A VIE is required to be consolidated by its primary beneficiary, and only by its primary beneficiary, which is defined as the party who has the power to direct the activities of a VIE that most significantly impact its economic performance and who has the obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant to the VIE.

11

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
(Dollar amounts in thousands, unless otherwise noted)

WWTAI IES MT6015 Ltd
The Company has an interest in WWTAI IES MT6015 Ltd. (“MT6015”), an entity formed in 2014 which had entered into a contract with a shipbuilder for the construction of an offshore multi service / inspection, maintenance and repair vessel (the “Vessel”) for a price of approximately $75,000. A subsidiary of the Company and a third party each hold a 50% interest in MT6015 and have equal representation on its board of directors. In connection with the initial capitalization of MT6015, another subsidiary of the Company provided the third party partner with a $3,725 loan which was utilized by the third party partner to fund its equity contribution to MT6015. In addition, the agreement provides the Company with disproportionate voting rights, in certain situations, as defined in the agreement. Accordingly, the Company determined that MT6015 is a VIE and that it was the primary beneficiary; accordingly, MT6015 has been presented on a consolidated basis in the accompanying financial statements.
During the second quarter of 2016, the Company determined not to proceed with the purchase of the Vessel. The shipbuilder delivered a notice of termination of the shipbuilding contract to MT6015 in July 2016. Correspondingly, in the second quarter of 2016, the Company recorded an impairment in its MT6015 investment of $7,450. The shipbuilder has no further recourse to the Company.
During the third quarter of 2017, the Company entered into a settlement arrangement whereby the holder of the non-controlling interest settled its $3,725loan due to the Company by transferring its interest in a subsidiary of the Company, and the note payable due to the holder of the non-controlling interest was extinguished. The settlement resulted in a net gain of $1,093 recorded in other income. Refer to Note 8 for further details.
JGP Energy Partners LLC
During the quarter ended September 30, 2016, the Company initiated activities in its 50% owned joint venture, JGP Energy Partners LLC (“JGP”). The other 50% member to the joint venture is a third party ethanol producer. The purpose of the venture is to build storage capacity with capabilities to receive and/or distribute ethanol via water, rail or truck. Each member agreed to contribute up to $27,000 (for a total of $54,000) for the development and construction of the ethanol terminal facilities. JGP is governed by a designated operating committee selected by the members in proportion to their equity interests. JGP is solely reliant on its members to finance its activities and therefore is a VIE. The Company concluded that it is not the primary beneficiary of JGP as the members share equally in the risks and rewards and decision making authority of the entity; therefore, the Company does not consolidate JGP and accounts for this investment in accordance with the equity method. Refer to Note 6 for details.
Delaware River Partners LLC
On July 1, 2016, the Company, through Delaware River Partners LLC (“DRP”), a consolidated subsidiary, purchased the assets of Repauno, which consisted primarily of land, a storage cavern, and riparian rights for the acquired land, site improvements and rights. Upon acquisition there were no operational processes that could be applied to these assets that would result in outputs without significant green field development. The Company currently holds a 90% economic interest and a 100% voting interest in DRP. DRP is solely reliant on the Company to finance its activities and therefore is a VIE. The Company concluded it was the primary beneficiary; and accordingly, DRP has been presented on a consolidated basis in the accompanying financial statements. The Company has the right to purchase an additional 8% economic interest from the non-controlling party after the second anniversary but prior to the fifth year anniversary of the acquisition of Repauno. At the time of the purchase, the Company concluded that 8% of the 10% interest held by the non-controlling party does not share in the risks or rewards of true equity; and, therefore $5,321 was recorded in other liabilities on the Company’s Consolidated Balance Sheet. The remaining 2% economic non-controlling interest was valued at $641 at the acquisition date.
Ohio River Partners LLC
On June 16, 2017, the Company, through Ohio River Partners LLC (“ORP”), a consolidated subsidiary, purchased the assets of Hannibal which consisted primarily of land, buildings, railroad track, docks, water rights, site improvements and other rights. The Company purchased 100% of the interests in these assets. ORP is solely reliant on the Company to finance its activities and therefore is a VIE. The Company concluded it was the primary beneficiary; accordingly, ORP has been presented on a consolidated basis in the accompanying financial statements.
Cash and Cash Equivalents—The Company considersWe consider all highly liquid short-term investments with a maturity of 90 days or less when purchased to be cash equivalents.
Restricted Cash—Restricted cash consists of $36,458 and $65,441funds required for the Company’s investment in Quick Turn, as described in Note 5, of $19.5 million as of September 30, 2017 and December 31, 2016, respectively, consists2022. The Company had no restricted cash as of prepaid interestJune 30, 2023.
Inventory—We hold aircraft engine modules, spare parts and principal pursuantused material inventory for trading and to support operations. Inventory is carried at the requirementslower of certain of the Company’s debt agreements (Note 8), and funds set aside for qualifying construction projects at Jefferson Terminal.cost or net realizable value on our Consolidated Balance Sheets.

12


FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLCFTAI AVIATION LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
(Dollar amountsDollars in tables in thousands, unless otherwise noted)

Revenues—We disaggregate our revenue from contracts with customers by products and services. Revenues are within the scope of ASC 842, Leases, and ASC 606, Revenue from contracts with customers, unless otherwise noted. We have elected to exclude sales and other similar taxes from revenues.
Available-For-Sale Securities—
During the third quarter of 2022, we updated our corporate strategy based on the opportunities available in the market such that the sale of aircraft and engines is now an output of our recurring, ordinary activities. As a result of this update, the transaction price allocated to the sale of assets is included in Asset sales revenue in the Consolidated Statement of Operations beginning in the third quarter of 2022 and are accounted for in accordance with ASC 606. The Company considers listed equity securities as available-for-sale securities recorded at fair value with unrealized gains (losses)corresponding net book values of the assets sold are recorded in other comprehensive income (loss)Cost of sales in the Consolidated Statement of Operations beginning in the third quarter of 2022. Sales transactions of aircraft and realized gains (losses) recordedengines prior to the third quarter of 2022 were accounted for in earnings. The Company’s basisaccordance with ASC 610-20, Gains and losses from the derecognition of nonfinancial assets and were included in Gain on which the costsale of the security sold or the amount reclassified out of other comprehensive income into earnings is determined using specific identification. Available-for-sale securities are included as a component of investmentsassets, net on the accompanyingConsolidated Statement of Operations, as we were previously only occasionally selling these assets. Generally, assets sold were under leasing arrangements with customers prior to sales and were included in Leasing equipment, net, on the Consolidated Balance Sheets. At each balance sheet date, the Company evaluates its available for sale securities holdings
Operating Leases—We lease equipment pursuant to operating leases. Operating leases with unrealized losses to determine if an other-than-temporary impairment has occurred. Refer to Note 6fixed rentals and 9 for details.
Deferred Financing Costs—Costs incurred in connection with obtaining long term financingstep rentals are capitalized and amortized to interest expenserecognized on a straight-line basis over the term of the underlying loans. Unamortized deferred financing costslease, assuming no renewals. Revenue is not recognized when collection is not reasonably assured. When collectability is not reasonably assured, the customer is placed on non-accrual status and revenue is recognized when cash payments are received.
Generally, under our aircraft lease and engine agreements, the lessee is required to make periodic maintenance payments calculated based on the lessee’s utilization of $11,291the leased asset or at the end of the lease. Typically, under our aircraft lease agreements, the lessee is responsible for maintenance, repairs and $6,489other operating expenses throughout the term of the lease. These periodic maintenance payments accumulate over the term of the lease to fund major maintenance events, and we are contractually obligated to return maintenance payments to the lessee up to the cost of maintenance events paid by the lessee. In the event the total cost of maintenance events over the term of a lease is less than the cumulative maintenance payments, we are not required to return any unused or excess maintenance payments to the lessee.
Maintenance payments received for which we expect to repay to the lessee are presented as of September 30, 2017 and December 31, 2016, respectively,Maintenance deposits in our Consolidated Balance Sheets. All excess maintenance payments received that we do not expect to repay to the lessee are recorded as Maintenance revenue on our Consolidated Statements of Operations. Estimates in recognizing revenue include mean time between removal, projected costs for engine maintenance and forecasted utilization of aircraft which are affected by historical usage patterns and overall industry, market and economic conditions. Significant changes to these estimates could have a componentmaterial effect on the amount of debtrevenue recognized in the accompanying Consolidated Balance Sheets. In connection withperiod.
For purchase and lease back transactions, we account for the revolving credit facility,transaction as a single arrangement. We allocate the Company incurred $1,157consideration paid based on the relative fair value of deferred financing costs asthe aircraft and lease. The fair value of September 30, 2017the lease may include a lease premium or discount, which areis recorded as a favorable or unfavorable lease intangible.
Finance Leases—From time to time we enter into finance lease arrangements that include a lessee obligation to purchase the leased equipment at the end of the lease term, a bargain purchase option, or provides for minimum lease payments with a present value that equals or exceeds substantially all of the fair value of the leased equipment at the date of lease inception. Net investment in finance leases represents the minimum lease payments due from lessee, net of unearned income. The lease payments are segregated into principal and interest components similar to a loan. Unearned income is recognized on an effective interest method over the lease term and is recorded as lease income. The principal component of other assets in the accompanying Consolidated Balance Sheet. Refer to Note 8 for details.
Amortization expense was $1,056 and $3,120 for the three and nine months ended September 30, 2017, respectively, and $678 and $1,927 for the three and nine months ended September 30, 2016, respectively. Amortization expenses are includedlease payment is reflected as a componentreduction to the net investment in finance leases. Revenue is not recognized when collection is not reasonably assured. When collectability is not reasonably assured, the customer is placed on non-accrual status and revenue is recognized when cash payments are received.
Asset sales revenue—Asset sales revenue primarily consists of interest expensethe transaction price related to the sale of aircraft and aircraft engines from our Aviation Leasing segment. From time to time, the Company may also assign the related lease agreements to the customer as part of the sale of these assets. We routinely sell leasing equipment to customers and such transactions are considered recurring and ordinary in nature to our business. As such, these sales are accounted for within the accompanyingscope of ASC 606. Revenue is recognized when a performance obligation is satisfied by transferring control over an asset to a customer. Revenue is recorded with corresponding costs of sales, presented on a gross basis in the Consolidated Statements of Operations.
Aerospace products revenue—Aerospace products revenue primarily consists of the transaction price related to the sale of repaired CFM56-7B and CFM56-5B engines, engine modules, spare parts and used material inventory, and are accounted for within the scope of ASC 606. Revenue is recognized when a performance obligation is satisfied by transferring control over the related asset to a customer. Revenue is recorded with corresponding costs of sales, presented on a gross basis in the Consolidated Statements of Operations. Aerospace products revenue also consists of engine management service contracts, where the Company has a stand-ready obligation to provide replacement CFM56-7B and CFM56-5B engines to customers as they become unserviceable during the contract term. The Company recognizes revenue over time using a straight-line attribution method and the costs related to fulfilling the performance obligation are expensed as incurred.
13

FTAI AVIATION LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
(Dollars in tables in thousands, unless otherwise noted)
Leasing Arrangements—At contract inception, we evaluate whether an arrangement is or contains a lease for which we are the lessee (that is, arrangements which provide us with the right to control a physical asset for a period of time). Operating lease right-of-use (“ROU”) assets and lease liabilities are included in Other assets and Other liabilities in our Consolidated Balance Sheets, respectively. Finance lease ROU assets are recognized in Other assets and lease liabilities are recognized in Other liabilities in our Consolidated Balance Sheets.
All lease liabilities are measured at the present value of the unpaid lease payments, discounted using our incremental borrowing rate based on the information available at commencement date of the lease. ROU assets, for both operating and finance leases, are initially measured based on the lease liability, adjusted for prepaid rent and lease incentives. Operating lease ROU assets are subsequently measured at the carrying amount of the lease liability adjusted for prepaid or accrued lease payments and lease incentives. The finance lease ROU assets are subsequently amortized using the straight-line method.
Operating lease expenses are recognized on a straight-line basis over the lease term. With respect to finance leases, amortization of the ROU asset is presented separately from interest expense related to the finance lease liability and is recorded in Operating expenses in the Consolidated Statements of Operations. Variable lease payments, which are primarily based on usage, are recognized when the associated activity occurs.
We have elected to combine lease and non-lease components for all lease contracts where we are the lessee. Additionally, for arrangements with lease terms of 12 months or less, we do not recognize ROU assets, and lease liabilities and lease payments are recognized on a straight-line basis over the lease term with variable lease payments recognized in the period in which the obligation is incurred.
Concentration of Credit Risk—The Company isWe are subject to concentrations of credit risk with respect to amounts due from customers on its finance lease and operating leases. The Company attemptscustomers. We attempt to limit itsour credit risk by performing ongoing credit evaluations. During the three We earned 10% and nine months ended September 30, 2017, the Company had no revenue concentration over 10%11% of total revenue from any one customer. During the three and nine months ended September 30, 2016, the Company earned approximately 9.5% and 10.9%, respectively, of itsour revenue from one customer in the Jefferson Terminal segment.Aviation Leasing segment during the three and six months ended June 30, 2023, respectively. No single customer accounted for greater than 10% of total revenue during the three and six months ended June 30, 2022.
As of SeptemberJune 30, 2017, accounts receivable from two2023, there were three customers in the Offshore EnergyAviation Leasing segment that represented 17%15%, 14%, and 22%, respectively,11% of total accounts receivable, net. As of December 31, 2016, accounts receivable from2022, there were two customers in the Offshore SegmentAviation Leasing segment that represented 22%20% and 18%, respectively,12% of total accounts receivable, net.
The Company maintains cash and restrictedWe maintain cash balances, which generally exceed federally insured limits, and subject the Companyus to credit risk, in high credit quality financial institutions. The Company monitorsWe monitor the financial condition of these institutions and hashave not experienced any losses associated with these accounts.
ProvisionAllowance for Doubtful Accounts—The Company determinesWe determine the provisionallowance for doubtful accounts based on itsour assessment of the collectability of itsour receivables on a customer-by-customer basis. The allowance for doubtful accounts was $66.6 million and $65.6 million as of June 30, 2023 and December 31, 2022, respectively. There was provision for credit losses of $0.6 million and a bad debt reversal of $0.7 million for the three months ended June 30, 2023 and 2022, respectively. There was a provision for credit losses of $1.0 million and a provision for credit losses of $47.2 million for the six months ended June 30, 2023 and 2022, respectively, and is included in Operating expenses in the Consolidated Statements of Operations.
Economic sanctions and export controls against Russia and Russia’s aviation industry were imposed due to its invasion of Ukraine during the first quarter of 2022. As a result of the sanctions imposed on Russian airlines, we terminated all lease agreements with Russian airlines and our allowance for doubtful accounts at both SeptemberJune 30, 20172023 includes all accounts receivable exposure to Russian and December 31, 2016 was $418. Bad debt expense was $0 and $63for the three and nine months ended September 30, 2017, respectively. Bad debt expense was $79 and $134 for the three and nine months ended September 30, 2016, respectively.Ukrainian customers.
Comprehensive Income (Loss)Loss—Comprehensive income (loss)loss is defined as the change in equity of a business enterprise during a period from transactions and other events and circumstances, excluding those resulting from investments by and distributions to owners. The Company’sOur comprehensive income (loss)loss represents net income (loss), as presented in the Consolidated Statements of Operations, adjusted for comprehensive loss related to cash flow hedges of our equity method investees of discontinued operations. The cash flow impact of commodity derivatives held by our consolidated subsidiaries is recognized in Change in fair value changes related to the available-for-sale securities andof non-hedge derivatives accounted for as cash flow hedges.in our Consolidated Statements of Cash Flows.
Other Assets—Other assets is primarily comprised of lease incentives of $49.4 million and $37.9 million, purchase deposits of $11.2 million and $6.7 million, notes receivable of $2,714$71.6 million and $22,469, leasing equipment purchase deposits$49.2 million, operating lease right-of-use assets, net of $2.6 million and $3.0 million, finance leases, net of $11,785$4.1 million and $13,701, lease incentives$6.4 million, maintenance right assets of $18,516$9.4 million and $3,556, capitalized costs for potential asset acquisitions of $781$6.8 million and $2,116, prepaid expenses of $5,331$3.1 million and $3,440, a short-term derivative contract asset of $1,036 and $0, and receivables of $4,690 and $21,501$1.9 million, as of SeptemberJune 30, 20172023 and December 31, 2016,2022, respectively.
Dividends—Dividends are recorded if and when declared by the Board of Directors. For both the three and nine months ended SeptemberJune 30, 20172023 and 2016,2022, the Board of Directors declared a cash dividenddividends of $0.30 and $0.33 per ordinary share, respectively. For the six months ended June 30, 2023 and $0.992022, the Board of Directors declared cash dividends of $0.60 and $0.66 per ordinary share, respectively.
Additionally, in the quarter ended June 30, 2023, the Board of Directors declared cash dividends on the Series A Preferred Shares, Series B Preferred Shares, Series C Preferred Shares and Series D Preferred Shares of $0.52, $0.50, $0.52 and $0.59 per share, respectively.
Recent Accounting Pronouncements—In July 2015, the Financial Accounting Standards Board (“FASB”) issued an Accounting Standards Update (“ASU”) 2015-11, Simplifying the Measurement of Inventory (Topic 330) (“ASU 2015-11”), which simplifies the measurement of inventory by requiring certain inventory to be measured at the “lower of cost and net realizable value” and the previous parameters for “market value” will be eliminated. ASU 2015-11 defines net realizable value as the “estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation.”  The standard is effective for fiscal years beginning after December 15, 2016, with earlier adoption permitted. The adoption of this standard did not have a material impact on our financial statements.
In March 2016, the FASB issued ASU 2016-06, Contingent put and call options in debt instruments (“ASU 2016-06”). ASU 2016-06 simplifies the embedded derivative analysis for debt instruments containing contingent call or put options. ASU 2016-06 is effective for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years, with early adoption

13
14


FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLCFTAI AVIATION LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
(Dollar amountsDollars in tables in thousands, unless otherwise noted)

permitted. Recent Accounting Pronouncements—The Company adopted ASU 2016-06 as of January 1, 2017has evaluated all recent accounting pronouncements and the adoption of this guidance did notnone are expected to have a material impact on the Company’s consolidated financial statements.
In March 2016,
3. DISCONTINUED OPERATIONS
FTAI Infrastructure Inc. (“FTAI Infrastructure”) Spin-Off
On April 28, 2022, the FASB issued ASU 2016-09, ImprovementsBoard of Directors of the Company unanimously approved the previously announced spin-off of the Company’s infrastructure business held by FTAI Infrastructure (a wholly owned subsidiary of the Company). The spin-off was effected as a distribution of all of the shares owned by the Company of common stock of FTAI Infrastructure to Employee Share-Based Payment Accounting (“ASU 2016-09”). ASU 2016-09 requires the holders of the Company’s ordinary shares as of July 21, 2022. The distribution was completed on August 1, 2022. Under ASC 205-20, Presentation of Financial Statements – Discontinued Operations, the spin-off met the criteria to be reported as a discontinued operation. Therefore, FTAI Infrastructure is presented as a discontinued operation within the Company’s financial statements for the three and six months ended June 30, 2022.
FTAI Infrastructure is a corporation for U.S. federal income tax effects of awards to be recognized in the income statement when the awards vest or are settled, increases the amount an employer can withhold to cover income taxes on awardspurposes and still qualify for the exception to liability classification, and allow recognizing forfeitures of awards as they occur. ASU 2016-09 is effective beginning in the first quarter of 2017, with early adoption permitted. The Company adopted ASU 2016-09 as of January 1, 2017 and the adoption of this guidance did not have a material impact onholds, among other things, the Company’s consolidated financial statements.
In October 2016, the FASB issued ASU 2016-17, Consolidation (Topic 810): Interests Held through Related Parties That Are under Common Control (“ASU 2016-17”). ASU 2016-17 amends the consolidation guidance on how a reporting entity that is the single decision maker of a VIE should treat indirectpreviously held interests in the entity held through(i) Jefferson Terminal business, (ii) Repauno business, (iii) Long Ridge investment, and (iv) Transtar business. FTAI Infrastructure retained all related parties that are under common controlproject-level debt of those businesses. In connection with the reporting entity when determining whether it isspin-off, FTAI Infrastructure paid a dividend of $730.3 million to the primary beneficiaryCompany. The Company used these proceeds to repay all outstanding borrowings under its 2021 bridge loans, $200.0 million of that VIE. Underits 6.50% senior unsecured notes due 2025, and approximately $175.0 million of the amendments, a single decision maker is not required to consider indirect interests held through related parties that areoutstanding borrowings under common controlits revolving credit facility. FTAI LLC retained the aviation business and certain other assets, and FTAI LLC’s remaining outstanding corporate indebtedness.
In connection with the single decision makerspin-off, the Company and the Manager assigned the Company’s then-existing management agreement to beFTAI Infrastructure, and FTAI Infrastructure and the equivalent of direct interests in their entirety. Instead, a single decision maker is required to include those interests on a proportionate basis consistent with indirect interests held through other related parties. ASU 2016-17 is effective for fiscal years beginning after December 15, 2016,Manager executed an amended and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period.restated agreement. The Company adopted ASU 2016-17and certain of its subsidiaries executed a new management agreement with the Manager. The new management agreement has an initial term of six years. The Manager is entitled to a management fee and reimbursement of certain expenses on substantially similar terms as the previous arrangements with the Manager, which were assigned to FTAI Infrastructure. Prior to the Merger described below, our Manager remained entitled to incentive allocations (comprised of January 1, 2017income incentive allocation and the adoption of this guidance did not have a material impactcapital gains incentive allocation) on the Company’s consolidated financial statements.
In January 2017,same terms as they existed prior to spin-off. Following the FASB issued ASU 2017-01, Business Combinations (Topic 805)Merger, the Company entered into a Services and Profit Sharing Agreement (the “Services and Profit Sharing Agreement”), with a subsidiary of the Company and Fortress Worldwide Transportation and Infrastructure Master GP LLC (“ASU 2017-01”Master GP”). ASU 2017-01 clarifying the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of businesses or assets. ASU 2017-01 is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted. The Company adopted ASU 2017-01 as of January 1, 2017 and the adoption of this guidance did not have a material impact on the Company’s consolidated financial statements.
Unadopted Accounting Pronouncements—In May 2014, the FASB issued ASU 2014-09, Revenues from Contracts with Customers (Topic 606) (“ASU 2014-09”). ASU 2014-09 requires that a company recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration, pursuant to which Master GP is entitled to incentive payments on substantially similar terms as the company expects to be entitled in exchange for those goods or services. In doing so, companies will need to use more judgment and make more estimates than under current guidance. These may include identifying performance obligations inprevious arrangements.
Financial Information of Discontinued Operations
The following table presents the contract, estimating the amountsignificant components of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. In August 2015, the FASB deferred the effective date of this standard by one year, which will be for fiscal years, and interim periods within those years, beginning after December 15, 2017. Additionally, during 2016, the FASB issued ASU 2016-08, Revenuenet loss from Contracts with Customers, Principal versus Agent Considerations, ASU 2016-10, Revenue from Contracts with Customers, Identifying Performance Obligations and Licensing and ASU 2016-12, Revenue from Contracts with Customers, Narrow-Scope Improvements and Practical Expedients, ASU 2016-20, Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers, which clarify the guidance on reporting revenue as a principal versus agent, identifying and disclosing performance obligations, accounting for intellectual property licenses, and assessing collectibility, present sales tax, treating noncash consideration. The Company’s evaluation of the impact of the new guidance on its consolidated financial statements is ongoing. The Company’s implementation efforts include the identification of revenue within the scope of the guidance, the evaluation of those revenue contracts, education and discussions with the Company’s control functions. The Company continues to evaluate the timing of recognition for various revenues, however, since a substantial portion of the Company’s revenue is recognized from its leasing contracts, subject to ASU 2016-02 Leases, these have been excluded from the evaluation.discontinued operations:
In February 2016, the FASB issued ASU 2016-02, Leases (“ASU 2016-02”). ASU 2016-02 amends the existing accounting standards for lease accounting, including requiring lessees to recognize most leases on their balance sheets and making targeted changes to lessor accounting. ASU 2016-02 will be effective beginning in the first quarter of 2019, with early adoption permitted. ASU 2016-02 requires a modified retrospective transition approach for all leases existing at, or entered into after, the date of initial application, with an option to use certain transition relief. The Company’s evaluation of the impact of the new guidance on its consolidated financial statements is ongoing. The Company is currently identifying the lease arrangements within the scope of the new guidance, and evaluating the impact of the lease arrangements. In September 2017, the FASB issued ASU 2017-13, Revenue Recognition (Topic 605), Revenue from contracts from customers (Topic 606), Leases (Topic 840) and Leases (Topic 842), (“ASU 2017-13”) which adds SEC paragraphs to the new revenue and lease sections of the codification on the announcement of the SEC observer made at the July 2017 EITF meeting.
In January 2016, the FASB issued ASU 2016-01, Financial Instruments-Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities (“ASU 2016-01”). ASU 2016-01 requires (i) equity investments, except those accounted for under the equity method of accounting or those that result in consolidation of the investee, to be measured at fair value with changes in fair value recognized in net income, (ii) public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes, and (iii) separate presentation of financial assets and

Three Months EndedSix Months Ended
June 30, 2022June 30, 2022
Revenues
Total revenues$65,868 $112,016 
Expenses
Operating expenses49,858 87,925 
General and administrative expenses1,098 2,228 
Acquisition and transaction expenses6,407 10,158 
Management fees and incentive allocation to affiliate3,065 7,226 
Depreciation and amortization17,319 34,315 
Interest expense6,486 12,945 
Total expenses84,233 154,797 
Equity in losses of unconsolidated entities(13,858)(38,069)
Other income(2,124)(2,055)
Total other expense(15,982)(40,124)
Loss before income taxes(34,347)(82,905)
Provision for income taxes1,582 3,729 
Net loss from discontinued operations, net of income taxes(35,929)(86,634)
Less: Net loss attributable to non-controlling interests in consolidated subsidiaries(8,480)(15,946)
Net loss attributable to shareholders$(27,449)$(70,688)
14
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FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLCFTAI AVIATION LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
(Dollar amountsDollars in tables in thousands, unless otherwise noted)

financial liabilities by measurement category and form of financial asset. ASU 2016-01 also eliminates the requirement for public business entities to disclose the methods and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost. The pronouncement is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017, with early adoption permitted. The Company is currently evaluating the impact of adopting this new guidance on its consolidated financial statements.
In May 2016, the FASB issued ASU 2016-11, Revenue Recognition (Topic 605) and Derivatives and Hedging (Topic 815): Rescission of SEC Guidance Because of Accounting Standards Updates 2014-09 and 2014-16 Pursuant to Staff Announcements at the March 3, 2016 EITF Meeting. The Company is currently evaluating the impact of adopting this new guidance on its consolidated financial statements.
In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). For assets held at amortized cost basis, ASU 2016-13 eliminates the probable initial recognition threshold in current GAAP and, instead, requires an entity to reflect its current estimate of all expected credit losses. The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of the financial assets to present the net amount expected to be collected. For available for sale debt securities, credit losses should be measured in a manner similar to current GAAP, however this ASU requires that credit losses be presented as an allowance rather than as a write-down. This ASU affects entities holding financial assets and net investment in leases that are not accounted for at fair value through net income. The amendments affect loans, debt securities, trade receivables, net investments in leases, off balance sheet credit exposures, reinsurance receivables, and any other financial assets not excluded from the scope that have the contractual right to receive cash. ASU 2016-13 will be effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The Company is currently evaluating the impact of adopting this new guidance on its consolidated financial statements.
In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments (“ASU 2016-15”). ASU 2016-15addresses the following eight specific cash flow issues: (i) debt prepayment or debt extinguishment costs; (ii) settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing; (iii) contingent consideration payments made after a business combination; (iv) proceeds from the settlement of insurance claims; (v) proceeds from the settlement of corporate-owned life insurance policies (COLIs); (vi) distributions received from equity method investees; (vii) beneficial interests in securitization transactions; (viii) and separately identifiable cash flows related to discontinued operations have not been segregated, and application ofare included in the predominance principle. ASU 2016-15 will be effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. The Company is currently evaluating the impact of adopting this new guidance on its consolidated financial statements.
In October 2016, the FASB issued ASU 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory (“ASU 2016-16”). ASU 2016-16 prohibits the recognition of current and deferred income taxes for an intra-entity asset transfer until the asset has been sold to an outside party. In addition, interpretations of this guidance have developed in practice for transfers of certain intangible and tangible assets. This prohibition on recognition is an exception to the principle of comprehensive recognition of current and deferred income taxes in GAAP. To more faithfully represent the economics of intra-entity asset transfers, the amendments ASU 2016-16 require that entities recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. The amendments in ASU 2016-16 do not change GAAP for the pre-tax effects of an intra-entity asset transfer under Topic 810, Consolidation, or for an intra-entity transfer of inventory. ASU 2016-16 will be effective for annual reporting periods beginning after December 15, 2017, and interim periods within those annual reporting periods. Early adoption is permitted, including adoption in an interim period. The Company is currently evaluating the impact of adopting this new guidance on its consolidated financial statements.
In November 2016, the FASB issued ASU 2016-18, StatementConsolidated Statements of Cash Flows (Topic 230): Restricted Cash (“ASU 2016-18”). ASU 2016-18 addressesfor the diversity in the classificationsix months ended June 30, 2022. The following table summarizes depreciation and presentation of changes in restricted cash on the statement of cash flows under Topic 230, Statement of Cash Flows. The amendments in ASU 2016-18 require that a statement of cash flows explain the change during the period in the total of cash, cash equivalents,amortization, capital expenditures, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cashother significant operating and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The amendments in this ASU apply to all entities that have restricted cash or restricted cash equivalents and are required to present a statement of cash flows under Topic 230. ASU 2016-18 will be effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. The Company is currently evaluating the impact of adopting this new guidance on its consolidated financial statements.investing noncash items from discontinued operations:

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FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
(Dollar amounts in thousands, unless otherwise noted)

In January 2017, the FASB issued ASU 2017-03, Accounting Changes and Error Corrections (Topic 250) and Investments—Equity Method and Joint Ventures (Topic 323) (“ASU 2017-03”). ASU 2017-03 adds and amends SEC paragraphs pursuant to the SEC Staff Announcements at the September 22, 2016 and November 17, 2016 Emerging Issues Task Force (EITF) meetings. The September announcement is about the disclosure of the impact that recently issued accounting standards will have on the financial statements of a registrant when such standards are adopted in a future period. The November announcement made amendments to conform the SEC Observer Comment on Accounting for Tax Benefits Resulting from Investments in Qualified Affordable Housing Projects to the guidance issued in ASU 2014-01, Investments—Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Qualified Affordable Housing Projects. The Company is currently evaluating the impact of adopting this new guidance on its consolidated financial statements.
In January 2017, the FASB issued ASU 2017-04, Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment (“ASU 2017-04”). ASU 2017-04 addresses concerns over the cost and complexity of the two-step goodwill impairment test by removing the second step of the test. An entity will apply a one-step quantitative test and record the amount of goodwill impairment as the excess of a reporting unit's carrying amount over its fair value, not to exceed the total amount of goodwill allocated to the reporting unit. The new guidance does not amend the optional qualitative assessment of goodwill impairment. ASU 2017-01 will be effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. The Company is currently evaluating the impact of adopting this new guidance on its consolidated financial statements.
In February 2017, the FASB issued ASU 2017-05, Other Income—Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets (“ASU 2017-05”). ASU 2017-05 amendments the scope of the nonfinancial asset guidance in Subtopic 610-20. The amendments also clarify that the derecognition of all businesses and nonprofit activities (except those related to conveyances of oil and gas mineral rights or contracts with customers) should be accounted for in accordance with the derecognition and deconsolidation guidance in Subtopic 810-10. In addition, the amendments eliminate the exception in the financial asset guidance for transfers of investments (including equity method investments) in real estate entities and supersede the guidance in the Exchanges of a Nonfinancial Asset for a Noncontrolling Ownership Interest Subsection within Topic 845. The amendments in ASU 2017-05 also provide guidance on the accounting for what often are referred to as partial sales of nonfinancial assets within the scope of Subtopic 610-20 and contributions of nonfinancial assets to a joint venture or other noncontrolled investee. ASU 2017-05 will be effective for annual reporting periods beginning after December 15, 2017, and interim periods within those fiscal years. The Company is currently evaluating the impact of adopting this new guidance on its consolidated financial statements.
In May 2017, the FASB issued Accounting Standards Update No. 2017-09, Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting("ASU 2017-09"), which provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. ASU 2017-09 is effective for fiscal years beginning after December 15, 2017 and interim periods within those fiscal years, and early adoption is permitted, including in an interim period. ASU 2017-09 is to be applied on a prospective basis to an award modified on or after the adoption date. We do not expect the adoption of ASU 2017-09 to have a material impact on our consolidated financial statements.
3.
LEASING EQUIPMENT, NET
Six Months Ended
June 30, 2022
Operating activities:
Equity in losses of unconsolidated entities$(38,069)
Depreciation and amortization34,315 
Equity-based compensation2,294 
Investing activities:
Acquisition of property, plant and equipment$(113,917)
Investment in unconsolidated entities(2,745)
Proceeds from sale of property, plant and equipment4,304 
Non-cash change in equity method investment(142,493)
Non-cash conversion of interest in unconsolidated entities(21,302)
The Company accounted for Long Ridge Terminal LLC, included in discontinued operations for the three and six months ended June 30, 2022 included above, using the equity method of accounting. Summarized financial data for Long Ridge Terminal LLC are shown in the following table.
Three Months EndedSix Months Ended
Income StatementJune 30, 2022June 30, 2022
Total revenue$19,801 $15,043 
Expenses
Operating expenses19,909 32,356 
Depreciation and amortization12,454 24,998 
Interest expense13,181 26,042 
Total expenses45,544 83,396 
Other expense(149)(213)
Net loss$(25,892)$(68,566)
4. LEASING EQUIPMENT, NET
Leasing equipment, net is summarized as follows:
September 30, 2017 December 31, 2016June 30, 2023December 31, 2022
Leasing equipment$1,055,548
 $849,565
Leasing equipment$2,396,594 $2,413,230 
Less: accumulated depreciation(126,184) (84,110)
Less: Accumulated depreciationLess: Accumulated depreciation(505,331)(499,677)
Leasing equipment, net$929,364
 $765,455
Leasing equipment, net$1,891,263 $1,913,553 
DuringEconomic sanctions and export controls against Russia and Russia’s aviation industry were imposed due to its invasion of Ukraine during the ninethree months ended SeptemberMarch 31, 2022. As a result of the sanctions imposed on Russian airlines, we terminated all lease agreements with Russian airlines. We determined that it is unlikely that we will regain possession of the aircrafts and engines that had not yet been recovered from Ukraine and Russia. As a result, we recognized an impairment charge totaling $120.0 million, net of maintenance deposits, to write-off the entire carrying value of leasing equipment assets that we did not expect to recover from Ukraine and Russia. As of June 30, 2017, the Company acquired seventeen2023, four aircraft fifty commercial jet engines,were still located in Ukraine and sold fiveeight aircraft and thirteen commercial jet engines.seventeen engines were still located in Russia. Additionally, we identified certain assets in our leasing equipment portfolio with indicators of impairment. As a result, we adjusted the carrying value of these assets to fair value and recognized transactional impairment charges of $1.2 million, net of redelivery compensation during the six months ended June 30, 2023.
Depreciation expense for leasing equipment is summarized as follows:
 Three Months Ended September 30, 2017 Nine Months Ended September 30,
 2017 2016 2017 2016
Depreciation expense for leasing equipment$19,792
 $11,322
 $48,934
 $31,065

16


FTAI AVIATION LTD.
FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
(Dollar amountsDollars in tables in thousands, unless otherwise noted)

Three Months Ended June 30,Six Months Ended June 30,
2023202220232022
Depreciation expense for leasing equipment$38,336 $39,168 $79,102 $80,371 
4. FINANCE LEASES, NET
Finance leases, net are summarized as follows:
5. INVESTMENTS
 September 30, 2017 December 31, 2016
Finance leases$16,521
 $18,022
Unearned revenue(7,151) (8,305)
Finance leases, net$9,370
 $9,717
As of September 30, 2017, future minimum lease payments to be received under finance leases for the remainder of the lease terms are as follows:
 Total
2017$507
20182,008
20192,008
20202,013
20212,008
Thereafter7,977
Total$16,521
5.
PROPERTY, PLANT AND EQUIPMENT, NET
Property, plant and equipment, net is summarized as follows:
 September 30, 2017 December 31, 2016
Land, site improvements and rights$74,270
 $57,617
Construction in progress114,844
 49,605
Buildings and improvements9,763
 2,750
Terminal machinery and equipment262,212
 236,652
Track and track related assets27,977
 22,948
Railroad equipment1,037
 1,091
Railcars and locomotives3,114
 2,909
Computer hardware and software3,034
 388
Furniture and fixtures544
 405
Vehicles1,171
 985
 497,966
 375,350
Less: accumulated depreciation(36,413) (26,002)
Spare parts2,846
 2,833
Property, plant and equipment, net$464,399
 $352,181
During the nine months ended September 30, 2017, additional property, plant and equipment of $122,737 was acquired. Acquisitions primarily consist of construction in progress, terminal machinery and equipment, and computer hardware and software due to the ongoing development of Jefferson Terminal and Repauno.
On June 16, 2017, the Company, through one of its consolidated subsidiaries, purchased the assets of Hannibal for $30,000. The assets acquired consisted primarily of land, buildings, railroad track, docks, water rights, site improvements and other rights. As part of the transaction, additional amounts of $2,335 were capitalized for costs directly related to the purchase, including costs for legal advice, exploratory diligence, and regulatory permitting. Hannibal is part of the Ports and Terminals segment.
During the nine months ended September 30, 2017 and 2016, disposals of property, plant and equipment totaled $108 and $125, respectively, mainly related to railroad equipment, vehicles, and furniture and fixtures.

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FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
(Dollar amounts in thousands, unless otherwise noted)

Depreciation expense for property, plant and equipment is summarized as follows:
 Three Months Ended September 30, Nine Months Ended September 30,
 2017 2016 2017 2016
Depreciation expense for property, plant and equipment$4,092
 $3,154
 $10,749
 $9,530

6.
INVESTMENTS
The following table presents the ownership interests and carrying values of the Company’sour investments:
Carrying Value
InvestmentOwnership PercentageJune 30, 2023December 31, 2022
Advanced Engine Repair JVEquity method25%$20,480 $20,207 
Falcon MSN 177 LLCEquity method50%1,696 1,830 
Quick Turn Engine Center LLCEquity method50%17,646 — 
$39,822 $22,037 
     Carrying Value
 Investment Ownership Percentage September 30, 2017 December 31, 2016
Listed securityAvailable-for-sale 2% $30,470
 $17,630
Advanced Engine Repair JVEquity method 25% 13,954
 15,000
JGP Energy Partners LLCEquity method 50% 19,741
 3,266
Intermodal Finance I, Ltd.Equity method 51% 3,627
 4,082
Investments    $67,792
 $39,978
Available-for-sale securities
  Equity Security
December 31, 2016 $17,630
Purchases 8,332
Unrealized gain 4,508
September 30, 2017 $30,470
   
Cost $18,833
The CompanyWe did not recognize any other-than-temporary impairments for the three and ninesix months ended SeptemberJune 30, 2017.2023 and 2022.
The following table presents our proportionate share of equity in (losses) income:
Three Months Ended June 30,Six Months Ended June 30,
2023202220232022
Advanced Engine Repair JV$681 $(212)$273 $(566)
Falcon MSN 177 LLC(35)247 (134)799 
Quick Turn Engine Center LLC(1,026)— (1,854)— 
Total$(380)$35 $(1,715)$233 
Equity Method Investments
Advanced Engine Repair JV
In December 2016, the Companywe invested $15,000$15 million for a 25% interest in an advanced engine repair joint venture. The Company will initially focusThis joint venture is focused on developing new costscost savings programs for engine repairs. The primary financial activities for the joint venture relate to member contributionsWe exercise significant influence over this investment and therefore its summary financial information has not been presented. The Company’s proportionate share of equity in losses was $203and $1,046 for the three and nine months ended September 30, 2017, respectively.
JGP
In 2016, the Company initiated activities in a 50% non-controlling interest in JGP, a joint venture. JGP is governed by a designated operating committee selected by the members in proportion to their equity interests. JGP is solely reliant on its members to finance its activities and therefore is a variable interest entity. The Company concluded it is not the primary beneficiary of JGP as the members share equally in the risks and rewards and decision making authority of the entity; therefore, the Company does not consolidate JGP and instead accountsaccount for this investment in accordance withas an equity method investment.
In August 2019, we expanded the equity method. The primary financial activities for JGP relate to member investmentsscope of our joint venture and therefore JGP summary financial information has not been presented. The Company’s proportionate share of equity in losses was $24invested an additional $13.5 million and $99 for the three and nine months ended September 30, 2017, respectively.maintained a 25% interest.
Intermodal Finance I, Ltd.Falcon MSN 177 LLC
In 2012, the Company acquiredNovember 2021, we invested $1.6 million for a 51% non-controlling50% interest in Intermodal Finance I, Ltd. (“Intermodal”)Falcon MSN 177 LLC, an entity that consists of one Dassault Falcon 2000 aircraft. Falcon MSN 177 LLC leases the aircraft to charter operators on aircraft, crew, maintenance and insurance contracts. We account for our investment in Falcon as an equity method investment as we have significant influence through our interest.
Quick Turn Engine Center LLC
On January 4, 2023, we invested $19.5 million for a 50% interest in Quick Turn Engine Center LLC or “Quick Turn” (previously iAero Thrust LLC), a joint venture. Intermodal is governed by a board of directors,hospital maintenance and its shareholderstesting facility dedicated to the CFM56 engine. We account for our investment in Quick Turn as an equity method investment as we have voting rightssignificant influence through their equity interests. As such,our interest.



18
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FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLCFTAI AVIATION LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
(Dollar amountsDollars in tables in thousands, unless otherwise noted)

6. INTANGIBLE ASSETS AND LIABILITIES, NET
Intermodal is not within the scope of ASC 810-20 and should be evaluated for consolidation under the voting interest model. Due to the existence of substantive participating rights of the 49% equity investor, including the joint approval of material operating and capital decisions, such as material contracts and capital expenditures consistent with ASC 810-10-25-11, the Company does not have unilateral rights over this investment; therefore, the Company does not consolidate Intermodal but accounts for this investment in accordance with the equity method. The Company does not have a variable interest in this investment as none of the criteria of ASC 810-10-15-14 were met.
As of September 30, 2017, Intermodal owns a portfolio of multiple finance leases, representing five customers and comprising approximately 24,000 shipping containers, as well as a portfolio of approximately 12,000 shipping containers subject to multiple operating leases. The Company’s proportionate share of equity in income was $359and equity in losses was $316 for the three and nine months ended September 30, 2017, respectively, and $1,161 and $1,335 for the three and nine months ended September 30, 2016, respectively.
7.
INTANGIBLE ASSETS AND LIABILITIES, NET
The Company’s intangibleIntangible assets and liabilities, net are summarized as follows:
June 30, 2023December 31, 2022
Intangible assets
Acquired favorable lease intangibles$61,934 $64,202 
Less: Accumulated amortization(17,251)(22,247)
Acquired favorable lease intangibles, net$44,683 $41,955 
Intangible liabilities
Acquired unfavorable lease intangibles$2,232 $13,152 
Less: Accumulated amortization(1,380)(2,607)
Acquired unfavorable lease intangibles, net$852 $10,545 
 September 30, 2017
 Aviation Leasing Jefferson Terminal Railroad Total
Intangible assets       
Acquired favorable lease intangibles$28,180
 $—
 $—
 $28,180
Less: Accumulated amortization(18,946) —
 —
 (18,946)
Acquired favorable lease intangibles, net9,234
 —
 —
 9,234
Customer relationships—
 35,513
 225
 35,738
Less: Accumulated amortization—
 (10,936) (154) (11,090)
Acquired customer relationships, net—
 24,577
 71
 24,648
Total intangible assets, net$9,234
 $24,577
 $71
 $33,882
        
Intangible liabilities       
Acquired unfavorable lease intangibles$2,440
 $—
 $—
 $2,440
Less: Accumulated amortization(1,090) —
 —
 (1,090)
Acquired unfavorable lease intangibles, net$1,350
 $—
 $—
 $1,350
 December 31, 2016
 Aviation Leasing Jefferson Terminal Railroad Total
Intangible assets       
Acquired favorable lease intangibles$26,605
 $—
 $—
 $26,605
Less: Accumulated amortization(14,998) —
 —
 (14,998)
Acquired favorable lease intangibles, net11,607
 —
 —
 11,607
Customer relationships—
 35,513
 225
 35,738
Less: Accumulated amortization—
 (8,271) (120) (8,391)
Acquired customer relationships, net—
 27,242
 105
 27,347
Total intangible assets, net$11,607
 $27,242
 $105
 $38,954
        
Intangible liabilities       
Acquired unfavorable lease intangibles$1,506
 $—
 $—
 $1,506
Less: Accumulated amortization(627) —
 —
 (627)
Acquired unfavorable lease intangibles, net$879
 $—
 $—
 $879

19

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
(Dollar amounts in thousands, unless otherwise noted)

Intangible assets and liabilities are all held within the Aviation Leasing segment. Intangible liabilities relate to unfavorable lease intangibles and are included as a component of otherOther liabilities in the accompanying Consolidated Balance Sheets.
Amortization of intangible assets and liabilities is recorded in the Consolidated Statements of Operations as follows:
 Classification in Consolidated Statements of Operations Three Months Ended September 30, Nine Months Ended September 30,
   2017 2016 2017 2016
Lease intangiblesEquipment leasing revenues $1,147
 $1,403
 $3,494
 $4,557
Customer relationshipsDepreciation and amortization 900
 900
 2,699
 2,699
Total  $2,047
 $2,303
 $6,193
 $7,256
Classification in Consolidated Statements of OperationsThree Months Ended June 30,Six Months Ended June 30,
2023202220232022
Lease intangiblesLease income$3,616 $3,310 $7,599 $6,968 
As of SeptemberJune 30, 2017,2023, estimated net annual amortization of intangibles is as follows:
Remainder of 20236,371 
202413,166 
20259,050 
20266,506 
20273,392 
20283,218 
Thereafter2,128 
Total$43,831 
18

 Total
2017$1,899
20187,301
20195,625
20204,331
20213,847
Thereafter9,529
Total$32,532
FTAI AVIATION LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
8.
DEBT, NET
The Company’s(Dollars in tables in thousands, unless otherwise noted)
7. DEBT, NET
Our debt, net is summarized as follows:
June 30, 2023December 31, 2022
Outstanding BorrowingsStated Interest RateMaturity DateOutstanding Borrowings
Loans payable
Revolving Credit Facility (1)
$145,000 
(i) Base Rate + 1.75%; or
(ii) Adjusted Term SOFR Rate + 2.75%
9/20/25$150,000 
Total loans payable145,000 150,000 
Bonds payable
Senior Notes due 2025 (2)
652,547 6.50%10/1/25653,036 
Senior Notes due 2027400,000 9.75%8/1/27400,000 
Senior Notes due 2028 (3)
1,001,921 5.50%5/1/281,002,091 
Total bonds payable2,054,468 2,055,127 
Debt2,199,468 2,205,127 
Less: Debt issuance costs(26,360)(29,400)
Total debt, net$2,173,108 $2,175,727 
Total debt due within one year$— $— 
________________________________________________________
 September 30, 2017 December 31, 2016
Loans payable   
FTAI Pride Credit Agreement$53,993
 $60,937
CMQR Credit Agreement18,400
 12,625
Revolving Credit Facility60,000
 —
Total loans payable132,393
 73,562
Bonds payable   
Series 2012 Bonds (including unamortized premium of $1,654 and $1,697 at September 30, 2017 and December 31, 2016, respectively)44,419
 45,887
Series 2016 Bonds144,200
 144,200
Senior Notes (including unamortized discount of $6,826 and unamortized premium of $2,686 at September 30, 2017)345,859
 —
Total bonds payable534,478
 190,087
Note payable to non-controlling interest   
Note payable to non-controlling interest—
 2,352
Total note payable to non-controlling interest—
 2,352

   
Debt666,871
 266,001
Less: Debt issuance costs(11,291) (6,489)
Total debt, net$655,580
 $259,512
    
Total debt due within one year$6,233
 $8,078

20

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
(Dollar amounts in thousands, unless otherwise noted)

FTAI Pride Credit Agreement—On September 15, 2014, FTAI Pride, LLC, (“FTAI Pride”) a subsidiary of the Company entered into a credit agreement (the “FTAI Pride Credit Agreement”) with a financial institution for a term loan in an aggregate amount of $75,000. The loan proceeds were used in connection with the acquisition of an offshore construction vessel. The FTAI Pride Credit Agreement requires quarterly payments of interest and scheduled principal payments of $1,562 beginning in the quarter ending December 31, 2015, through its maturity and can be prepaid without penalty at any time. The FTAI Pride Credit Agreement is secured on a first priority basis by the offshore construction vessel. Borrowings under the FTAI Pride Credit Agreement bear interest at the LIBOR rate plus a spread of 4.50%.
The FTAI Pride Credit Agreement contains affirmative and negative covenants which limit certain actions of the borrower and a financial covenant requiring the borrower to maintain a Fixed Charges Coverage Ratio, as defined, of not less than 1.15:1.00 in any twelve month period ending December 31, 2014, or later.
CMQR Credit Agreement—On June 30, 2017, CMQR amended its credit agreement (the “CMQR Credit Agreement”) with a financial institution for a revolving line of credit to increase the aggregate amount from $20,000 to $25,000 and to extend the maturity date to September 18, 2019. Borrowings under the CMQR Credit Agreement bear interest at either (i) Adjusted LIBOR plus a spread of 2.50% or 4.50%, (ii) the U.S. or Canadian Base Rate plus a spread of 1.50% or 3.50%, or (iii) the Canadian Fixed Rate plus a spread of 2.50% or 4.50%, as defined by the CMQR Credit Agreement. The weighted-average effective interest rate as of September 30, 2017 was 3.61%.
The CMQR Credit Agreement is also indirectly supported by Fortress Transportation and Infrastructure Investors LLC (the “Sponsor”). In the event of a default under the credit agreement, CMQR’s lenders can cause CMQR to call up to a total of $29,000 in capital from the Sponsor, and in the event of CMQR’s bankruptcy, the lenders can put the debt back to the Sponsor. The CMQR Credit Agreement contains affirmative and negative covenants which limit certain actions of CMQR.
Jefferson Terminal Credit Agreement—On August 27, 2014, a subsidiary of the Company entered into a credit agreement (the “Jefferson Terminal Credit Agreement”) with a financial institution for an aggregate amount of $100,000. The Jefferson Terminal Credit Agreement required quarterly payments of $250 beginning with the quarter ending December 31, 2014, with such quarterly payments increasing to $1,250 beginning with the quarter ending December 31, 2016, and could be prepaid or repaid at any time prior to its maturity on February 27, 2018. On March 8, 2016, all amounts outstanding under the Jefferson Terminal Credit Agreement were paid in full and such agreement was terminated. Accordingly, during the first quarter of 2016, the Company recorded a loss on extinguishment of debt of $1,579.
Series 2012 Bonds—On August 1, 2012, Jefferson County Development Corporation issued $46,875 of tax-exempt industrial bonds (“Series 2012 Bonds”), to specifically fund construction and operation of an intermodal transfer facility for crude oil and refined petroleum products. The proceeds of this issuance were loaned to Jefferson Terminal, to be held in trust, as restricted cash, to ensure adherence to the restrictions of use of the funds. Use of the proceeds requires approval from a trustee prior to release of funds. Such restricted cash may only be released to us after payment of applicable reserves, including a six-month interest reserve, and expenses, as determined by the trustee. The Series 2012 Bonds have a stated maturity of July 1, 2032, bear interest at 8.25%, and require scheduled principal payments. The principal of the Series 2012 Bonds is payable annually at varying amounts.
In connection with the Company’s acquisition of Jefferson Terminal, the Series 2012 Bonds were recorded at a fair value of $48,554, which represented a premium of $1,823 as compared to their face value at the date of acquisition; such premium is being amortized using the effective interest method over the remaining contractual term of the Series 2012 Bonds.
The Series 2012 Bond agreement contains a financial covenant requiring a subsidiary of the Company to maintain a long-term debt service coverage ratio, as defined in the agreement, of 1.25 to 1, in each fiscal year, beginning with December 31, 2014.
Series 2016 Bonds—On March 7, 2016, the Port of Beaumont Navigation District of Jefferson County, Texas (the “District”) issued $144,200 of Dock and Wharf Facility Revenue Bonds, Series 2016 (Jefferson Energy Companies Project) (the “Series 2016 Bonds”).  Proceeds from the issuance of the Series 2016 Bonds were used, in part, to reimburse Jefferson Railport Terminal II, LLC (“Jefferson Railport II”) for certain costs related to the development, construction and acquisition of certain facilities for the transport, loading, unloading, and storage of petroleum products (the “Facilities”) on behalf of the District, and settle the Jefferson Terminal Credit Agreement. Construction of the Facilities has occurred, and will occur, on property leased by the District to Jefferson Railport II pursuant to a First Amended and Restated Ground Lease between Jefferson Railport II, as lessee, and the District, as lessor. All such Facilities will be leased by the District to Jefferson Railport II pursuant to a Lease and Development Agreement between the District and Jefferson Railport II.
The transaction described above did not qualify for sale-leaseback accounting due to the continuing involvement of the Company resulting from the mandatory tender feature and, as a result, the leases were classified as a financing transaction in the Company’s consolidated financial statements. Under the financing method, the assets constructed or to be constructed will remain on the consolidated balance sheet and the net proceeds received by the Company are recorded as financial debt. Payments under these leases are recorded as interest expense and reduction of principal in accordance with the terms of the bond agreement with annual interest payments and a principal repayment at February 13, 2020 barring a remarketing of the bond on new terms. 

21

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
(Dollar amounts in thousands, unless otherwise noted)

Under a Capital Call Agreement, the Company has agreed to make funds available to Jefferson Holdings in order to satisfy its obligation under the Standby Bond Purchase Agreement. The Capital Call Agreement contains certain covenants applicable to the Company, including a negative lien covenant regarding Aviation Assets, as defined therein, as well as maintenance of a minimum total asset value of Aviation Assets and minimum total equity of the Company. In connection with the above, and related to the Series 2016 Bonds, a subsidiary of the Company and an affiliate of its Manager entered into a Fee and Support Agreement with FTAI Energy Partners LLC and certain of its subsidiaries. The Fee and Support Agreement provides that both such subsidiary of the Company and affiliate of the Manager will effectively guarantee a pro rata portion of the obligations under the Standby Bond Purchase Agreement in return for a guarantee fee of $6,873 (shared on the same pro rata basis). This fee will be amortized as interest expense to the earlier of the redemption date or February 13, 2020.
The Series 2016 Bonds bear interest at an initial rate of 7.25% and require scheduled interest payments. The Series 2016 Bonds have a stated maturity of February 1, 2036 but are subject to mandatory tender for purchase at par on February 13, 2020 if they have not been repurchased from proceeds of a remarketing of the Series 2016 Bonds or redeemed prior to such date. In the event all of the Series 2016 Bonds are not repurchased from proceeds of a remarketing or redeemed at February 13, 2020, Jefferson Railport and Jefferson Railport Terminal II Holdings LLC (“Jefferson Holdings”), a Delaware limited liability company and parent of Jefferson Railport II, have agreed to purchase the Series 2016 Bonds from the Holders thereof at par pursuant to a Standby Bond Purchase Agreement.  In addition, pursuant to the Standby Purchase Agreement, Jefferson Holdings will guarantee the payment of all Rent (as defined in the Facilities Lease), and all principal of and premium and interest on the Series 2016 Bonds payable prior to repurchase or redemption at February 13, 2020.
Term Loan—On January 23, 2017, the Company entered into an unsecured credit agreement under which the Company, through its wholly owned subsidiaries, including the Partnership and WWTAI Finance Ltd., an exempted company incorporated with limited liability under the laws of Bermuda, borrowed $100,000 in term loans denominated in U.S. dollars (the “Term Loans”). The proceeds of the Term Loan are to be used for general corporate purposes, including future acquisitions by the Company and its subsidiaries of certain aviation and infrastructure assets. The Term Loans bear interest at the Base Rate (determined in accordance with the agreement) plus 2.75% per annum, or at the Adjusted Eurodollar Rate (determined in accordance with the agreement) plus 3.75% per annum, if the Company chooses to make Eurodollar Rate borrowings. The Term Loans mature on January 22, 2018, subject to the Company’s right to elect a one year extension, and require amortization payments in the amount of $250 on the last day of each fiscal quarter beginning on March 31, 2017. On March 15, 2017, all amounts outstanding under the Term Loan were repaid in full and the agreement was terminated. Accordingly, during the nine months ended September 30, 2017, the Company recorded a loss on extinguishment of debt of $2,456.
Senior Notes—On March 15, 2017, the Company issued $250,000 aggregate principal amount of 6.75% senior unsecured notes due 2022 (the “Senior Notes”). The Senior Notes were issued pursuant to an indenture, dated as of March 15, 2017, between the Company and U.S. Bank National Association, as trustee. On August 23, 2017, the Company issued an additional $100,000 of Senior Notes. The additional notes were issued at an offering price of 102.75% of the principal amount plus accrued interest from March 15, 2017 to the date of issuance.
The Senior Notes bear interest at a rate of 6.75% per annum, payable semi-annually in arrears on March 15 and September 15 of each year, commencing on September 15, 2017, to persons who are registered holders of the Senior Notes on the immediately preceding March 1 and September 1, respectively.
The Senior Notes mature on March 15, 2022. Prior to March 15, 2020, the Company may redeem some or all of the Senior Notes at a redemption price equal to 100.00% of the principal amount of the Senior Notes redeemed, plus accrued and unpaid interest, if any, to, but not including, the applicable redemption date, plus a “make-whole” premium.  On or after March 15, 2020, the Company may redeem some or all of the Senior Notes at any time at declining redemption prices equal to (i) 105.063% beginning on March 15, 2020, and (ii) 100.000% beginning on March 15, 2021 and thereafter, plus, in each case, accrued and unpaid interest, if any, to, but not including, the applicable redemption date.  In addition, at any time on or prior to March 15, 2020, the Company may at any time redeem up to 40% of the aggregate principal amount of the Senior Notes using net proceeds from certain equity offerings at a redemption price equal to 106.75% of the principal amount of the Senior Notes redeemed, plus accrued and unpaid interest, if any, to, but not including, the applicable redemption date.
The Company used a portion of the proceeds to fully repay all outstanding indebtedness under the Company’s Term Loan in the amount of $100,000, payment of fees related to the issuance of Senior Notes, and to fund the purchase of additional investments. The Company intends to use the remainder of the proceeds for general corporate purposes, including the funding of future investments.
Revolving Credit Facility-On June 16, 2017, the Company entered into a revolving credit facility (the “Revolving Credit Facility”) with certain lenders and issuing banks and JPMorgan Chase Bank, N.A., as administrative agent. The Revolving Credit Facility provides for revolving loans in the aggregate principal amount of up to $75,000, of which $25,000 may be utilized for the issuance of letters of credit. The proceeds drawn on this facility will be used for working capital and general corporate purposes, including, without limitation, permitted acquisitions and other investments. The Revolving Credit Facility is secured by the capital stock of certain direct subsidiaries of the Company as defined in the related credit agreement.

22

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
(Dollar amounts in thousands, unless otherwise noted)

Borrowings outstanding under the Revolving Credit Facility bear interest at the Adjusted Eurodollar Rate (determined in accordance with the credit agreement) plus 3.00% per annum, if the Company chooses to make Eurodollar Rate borrowings, or at the Base Rate (determined in accordance with the credit agreement) plus 2.00% per annum.  The Company will also be required to pay(1) Requires a quarterly commitment fee at a rate per annum equal toof 0.50% on the average daily unused portion, of the Revolving Credit Facility, as well as customary letter of credit fees and agency fees.
The Revolving Credit Facility will mature,(2) Includes an unamortized discount of $1,096 and commitments in respect$1,318 at June 30, 2023 and December 31, 2022, respectively, and an unamortized premium of the Revolving Credit Facility will terminate, on$3,643 and $4,354 at June 16, 2020. Any amount borrowed under the Revolving Credit Facility may be voluntarily prepaid without penalty or30, 2023 and December 31, 2022, respectively.
(3) Includes an unamortized premium other than customary breakage costs related to prepayments of Eurodollar Rate borrowings.$1,921 and $2,091 at June 30, 2023 and December 31, 2022, respectively.
The Revolving Credit Facility includes financial covenants requiring the maintenance of (1) a minimum ratio of the appraised value of certain aviation assets to the aggregate commitments under the revolving credit facility of 3.00 to 1.00 and (2) a maximum ratio of debt to total equity (before reduction for minority interests) for the Company and its subsidiaries of 1.65 to 1.00 per the terms of the credit agreement.
At September 30, 2017, the Company had $60,000 of borrowings outstanding under the revolving credit facility.
Note Payable to Non-Controlling Interest—In May 2013, in connection with the capitalization of a consolidated subsidiary, the Company and the owner of the non-controlling interest loaned approximately $18,275 and $3,225, respectively, to the entity in proportion to their respective ownership percentages of 85% and 15%. The loans bear interest at an annual rate of 5% and mature in May 2021. The loan amount funded by the Company and related interest have been eliminated in consolidation.
During the third quarter of 2017, the Company entered into a settlement arrangement whereby the holder of the non-controlling interest settled its $3,725 loan due to the Company in conjunction with the MT6015 venture by transferring its 15% interest in a consolidated subsidiary of the Company, and the note payable due to the holder of the non-controlling interest was extinguished. The settlement resulted in a net gain of $1,093 recorded in other income. Refer to Note 2 for further detail.
The Company wasWe were in compliance with all debt covenants as of SeptemberJune 30, 2017.2023.
9.
8. FAIR VALUE MEASUREMENTS
Fair value measurements and disclosures require the use of valuation techniques to measure fair value that maximize the use of observable inputs and minimize use of unobservable inputs. These inputs are prioritized as follows:
•Level 1: Observable inputs such as quoted prices in active markets for identical assets or liabilities.
•Level 2: Inputs other than quoted prices included within Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities or market corroborated inputs.
•Level 3: Unobservable inputs for which there is little or no market data and which require the Companyus to develop itsour own assumptions about how market participants price the asset or liability.
The valuation techniques that may be used to measure fair value are as follows:
•Market approach—Uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities.
•Income approach—Uses valuation techniques to convert future amounts to a single present amount based on current market expectations about those future amounts.
•Cost approach—Based on the amount that currently would be required to replace the service capacity of an asset (replacement cost).

23

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
(Dollar amounts in thousands, unless otherwise noted)

The following tables set forth the Company’s financial assets measured at fair value on a recurring basis as of September 30, 2017 and December 31, 2016, by level within the fair value hierarchy. Assets measured at fair value are classified in their entirety based on the lowest level of input that is significant to their fair value measurement.
 Fair Value as of Fair Value Measurements Using Fair Value Hierarchy as of  
 September 30, 2017 September 30, 2017  
 Total Level 1 Level 2 Level 3 Valuation Technique
Assets         
Cash and cash equivalents$176,357
 $176,357
 $—
 $—
 Market
Restricted cash36,458
 36,458
 —
 —
 Market
Available-for-sale securities30,470
 30,470
 —
 —
 Market
Total$243,285
 $243,285
 $—
 $—
 
          
 Fair Value as of Fair Value Measurements Using Fair Value Hierarchy as of  
 December 31, 2016 December 31, 2016  
 Total Level 1 Level 2 Level 3 Valuation Technique
Assets         
Cash and cash equivalents$68,055
 $68,055
 $—
 $—
 Market
Restricted cash65,441
 65,441
 —
 —
 Market
Available-for-sale securities17,630
 17,630
 —
 —
 Market
Total$151,126
 $151,126
 $—
 $—
 
At September 30, 2017 and December 31, 2016, the Company had no liabilities that were measured at fair value on a recurring basis.
The Company’sOur cash and cash equivalents and restricted cash consist largely of demand deposit accounts with maturities of 90 days or less when purchased that are considered to be highly liquid. These instruments are valued using inputs observable in active markets for identical instruments and are therefore classified as Level 1 within the fair value hierarchy. Publicly traded securities with sufficient trading volume are fair valued by management using quoted prices for identical instruments in active markets and are therefore classified as Level 1 within the fair value hierarchy.
Except as discussed below, the Company’sour financial instruments other than cash and cash equivalents and restricted cash and available-for-sale securities consist principally of accounts receivable, notes receivable, accounts payable and accrued liabilities, loans payable, bonds payable, security deposits, maintenance deposits and management fees payable, whose fair value approximatesvalues approximate their carrying valuevalues based on an evaluation of pricing data, vendor quotes, and historical trading activity or due to their short maturity profiles.
At September 30, 2017andDecember 31, 2016, the Company’s notes receivable included a $0 and $17,935, respectively, loan bearing interest at 10% related to a terminal site under development, collateralized by property at that site, which was settled
19

FTAI AVIATION LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
(Dollars in the acquisition of Hannibal (Note 5). At December 31, 2016 the Company’s notes receivable included, as a component of other assets on the accompanying Consolidated Balance Sheets, a $3,725 loan bearing interest at 12.0% made to the Company’s joint venture partnertables in MT 6015 (Note 2) which was collateralized by other property owned by the joint venture partner. During the third quarter of 2017 the Company entered into a settlement agreement for this loan more fully discussed in Note 2. The fair value of these notes receivable approximate carrying value and are classified as Level 2, which is within the fair value hierarchy.thousands, unless otherwise noted)
At September 30, 2017, the Company recorded a derivative asset related to short-term forward crude contracts. The fair value of the short-term derivative asset of $1,036, recorded in other assets, is classified as Level 3 within the fair value hierarchy.
The fair value of Series 2012our bonds payable reported in debt,as Debt, net onin the Consolidated Balance Sheets was approximately $44,667are presented in the table below and $46,488, at September 30, 2017 and December 31, 2016, respectively, based upon market prices for similar municipal securities. classified as Level 2 within the fair value hierarchy:
June 30, 2023December 31, 2022
Senior Notes due 2025642,688 613,152 
Senior Notes due 2027414,572 402,032 
Senior Notes due 2028915,590 853,490 
The fair value of Series 2016 bonds, reported in debt, net on the Consolidated Balance Sheets, was approximately $149,463 and $149,575 at September 30, 2017 and December 31, 2016, respectively, based upon market prices for similar municipal securities. The fair value of Senior Notes, reported in debt, net on the Consolidated Balance Sheets, was approximately $345,859 as of September 30, 2017 as the carrying value approximates the market prices. The fair values of all other items reported as debt,Debt, net in the Consolidated Balance SheetSheets approximate their carrying values due to their bearing market rates

24

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
(Dollar amounts in thousands, unless otherwise noted)

of interest and are classified as Level 2 within the fair value hierarchy.
The Company measureshas contingent obligations under ASC 460, Guarantees, in connection with certain sales of aircraft on lease, which are measured at fair value. The guarantees are valued at $6.7 million and $3.8 million as of June 30, 2023 and December 31, 2022, respectively, and are reflected as a component of Other liabilities on the Consolidated Balance Sheets. The fair values of the guarantees are determined based on the estimated condition of the engines at the end of each lease term, the estimated cost of replacement and applicable discount rates, and are classified as Level 3. During the six months ended June 30, 2023, the Company recorded a $4.9 million increase in guarantees related to the sale of seven aircraft and a $1.9 million decrease related to the change in fair value, which is recorded as Asset sales revenue in the Consolidated Statements of Operations.
We measure the fair value of certain assets and liabilities on a non-recurring basis when U.S. GAAP requires the application of fair value, including events or changes in circumstances that indicate that the carrying amounts of assets may not be recoverable. Assets subject to these measurements include goodwill, intangible assets, property, plant and equipment and leasing equipment. The Company recordsWe record such assets at fair value when it is determined the carrying value may not be recoverable. Fair value measurements for assets subject to impairment tests are based on an income approach which uses Level 3 inputs, which include the Company’sour assumptions as to future cash flows from operation of the underlying businesses and the leasingleasing and eventual sale of assets.

25

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
(Dollar amounts in thousands, unless otherwise noted)

10. REVENUES
Components of revenue are as follows:
 Three Months Ended September 30, 2017
 Equipment Leasing Infrastructure  
RevenuesAviation Leasing Offshore Energy Shipping Containers Jefferson Terminal Railroad Ports and Terminals Total
Equipment leasing revenues             
Lease income$25,941
 $3,800
 $—
 $—
 $—
 $—
 $29,741
Maintenance revenue17,533
 —
 —
 —
 —
 —
 17,533
Finance lease income—
 385
 —
 —
 —
 —
 385
Other revenue—
 1,932
 25
 —
 —
 —
 1,957
Total equipment leasing revenues43,474
 6,117
 25
 —
 —
 —
 49,616
Infrastructure revenues             
Lease income—
 —
 —
 —
 —
 455
 455
Rail revenues—
 —
 —
 —
 8,258
 —
 8,258
Terminal services revenues—
 —
 —
 1,730
 —
 —
 1,730
Other revenue—
 —
 —
 —
 —
 303
 303
Total infrastructure revenues—
 —
 —
 1,730
 8,258
 758
 10,746
Total revenues$43,474
 $6,117
 $25
 $1,730
 $8,258
 $758
 $60,362
 Three Months Ended September 30, 2016
 Equipment Leasing Infrastructure  
RevenuesAviation Leasing Offshore Energy Shipping Containers Jefferson Terminal Railroad Ports and Terminals Total
Equipment leasing revenues             
Lease income$19,039
 $2,561
 $—
 $—
 $—
 $—
 $21,600
Maintenance revenue7,646
 —
 —
 —
 —
 —
 7,646
Finance lease income—
 403
 —
 —
 —
 —
 403
Other revenue375
 5
 25
 —
 —
 —
 405
Total equipment leasing revenues27,060
 2,969
 25
 —
 —
 —
 30,054
Infrastructure revenues             
Lease income—
 —
 —
 —
 —
 16
 16
Rail revenues—
 —
 —
 —
 7,401
 —
 7,401
Terminal services revenues—
 —
 —
 4,255
 —
 —
 4,255
Total infrastructure revenues—
 —
 —
 4,255
 7,401
 16
 11,672
Total revenues$27,060
 $2,969
 $25
 $4,255
 $7,401
 $16
 $41,726





26

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
(Dollar amounts in thousands, unless otherwise noted)

 Nine Months Ended September 30, 2017
 Equipment Leasing
Infrastructure 
RevenuesAviation Leasing Offshore Energy Shipping Containers Jefferson Terminal Railroad Ports and Terminals Total
Equipment leasing revenues             
Lease income$63,577
 $7,295
 $—
 $—
 $—
 $—
 $70,872
Maintenance revenue46,778
 —
 —
 —
 —
 —
 46,778
Finance lease income—
 1,156
 —
 —
 —
 —
 1,156
Other revenue2
 2,504
 75
 —
 —
 —
 2,581
Total equipment leasing revenues110,357
 10,955
 75
 —
 —
 —
 121,387
Infrastructure revenues             
Lease income—
 —
 —
 —
 —
 594
 594
Rail revenues—
 —
 —
 —
 24,323
 —
 24,323
Terminal services revenues—
 —
 —
 9,622
 —
 —
 9,622
Other revenue—
 —
 —
 —
 —
 303
 303
Total infrastructure revenues—
 —
 —
 9,622
 24,323
 897
 34,842
Total revenues$110,357
 $10,955
 $75
 $9,622
 $24,323
 $897
 $156,229
 Nine Months Ended September 30, 2016
 Equipment Leasing Infrastructure  
RevenuesAviation Leasing Offshore Energy Shipping Containers Jefferson Terminal Railroad Ports and Terminals Total
Equipment leasing revenues             
Lease income$46,636
 $3,216
 $—
 $—
 $—
 $—
 $49,852
Maintenance revenue19,037
 —
 —
 —
 —
 —
 19,037
Finance lease income—
 1,212
 1,112
 —
 —
 —
 2,324
Other revenue687
 5
 75
 —
 —
 —
 767
Total equipment leasing revenues66,360
 4,433
 1,187
 —
 —
 —
 71,980
Infrastructure revenues             
 Lease income—
 —
 —
 —
 —
 16
 16
 Rail revenues—
 —
 —
 —
 23,107
 —
 23,107
 Terminal services revenues—
 —
 —
 11,271
 —
 —
 11,271
Total infrastructure revenues—
 —
 —
 11,271
 23,107
 16
 34,394
Total revenues$66,360
 $4,433
 $1,187
 $11,271
 $23,107
 $16
 $106,374
Presented below are the contracted minimum future annual revenues to be received under existing operating leases across several market sectors as of September 30, 2017:
 Total
2017$29,473
201891,448
201961,823
202039,441
202128,408
Thereafter21,934
Total$272,527

27

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
(Dollar amounts in thousands, unless otherwise noted)

11.9. EQUITY-BASED COMPENSATION
In 2015, the Companywe established a Nonqualified Stock Option and Incentive Award Plan (“Incentive Plan”) which provides for the ability to awardgrant equity compensation awards in the form of stock options, stock appreciation rights, restricted stock, and performance awards to eligible employees, consultants, directors, and other individuals who provide services to the Company,us, each as determined by the Compensation Committee of the Board of Directors.
As of SeptemberJune 30, 2017,2023, the Incentive Plan provides for the issuance of up to 3029.8 million shares. The Company accountsWe account for equity-based compensation expense in accordance with Accounting Standards CodificationASC 718 Compensation-Stock Compensation (“ASC 718”) and is reported within operating expenses and general and administrative in the Consolidated Statements of Operations.
The Consolidated Statements of Operations includes the following expense (income) related to itsour stock-based compensation arrangements:
Three Months Ended June 30,Six Months Ended June 30,Remaining Expense To Be Recognized, If All Vesting Conditions Are MetWeighted Average Remaining Contractual Term (in years)
2023202220232022
Restricted Shares$510 $— $618 $— $8,153 3.5 years
 Three Months Ended September 30, Nine Months Ended September 30, Remaining Expense To Be Recognized, If All Vesting Conditions Are MetWeighted Average Remaining Contractual Term, (in years)
 2017 2016 2017 2016 
Stock Options$—
 $—
 $—
 $—
 $—
7.64
Restricted Shares90
 —
 228
 (4,168) 1,091
3.28
Common Units75
 28
 467
 350
 516
2.06
Total$165
 $28
 $695
 $(3,818) $1,607
 
Options
In connection with our March 2023 offering of preferred shares (see Note 13), we granted options to the Manager related to 248,947 ordinary shares at an exercise price of $26.11, which had a grant date fair value of $2.1 million. The assumptions used in valuing the options were: a 3.471% risk-free rate, a 6.263% dividend yield, a 37.879% volatility and a ten-year term.
During the six months ended June 30, 2023, the Manager did not transfer any options to employees.
Restricted Shares
InDuring the ninesix months ended SeptemberJune 30, 2017,2023, we issued restricted shares of the Company granted equity-based compensation awards in ato select employees of FTAI Aviation LLC (a wholly owned subsidiary consisting of 31,430 restricted sharesthe Company) that had a grant date fair value of $495 using a discounted cash flow model, which$8.8 million and vest over 4.3 years. These awards are subject to continued employment, and the compensation expense is determinedrecognized ratably over the vesting periods, with 50% of the units vesting on June 30, 2026 and the remaining units vesting on June 30, 2027. The fair value of these awards were calculated based on the fair valueclosing price of the operating segmentFTAI Aviation Ltd.’s ordinary shares on the grant date estimated using a discounted cash flow analysis that requires the application of discount factors and terminal multiples to projected cash flows. Discount factors and terminal multiples were based on market-based inputs and transactions, as available at the measurement date. The awards vest in four tranches over four years, provided the employee remains employed by the Company.
As of August 2017, 1.25 million restricted shares granted in August 2014 are no longer eligible for vesting due to (i) the expiration of the award agreement and (ii) certain performance conditions which were not reached. These shares had a grant date fair value of $23,879. This expiration had no impact on the Company’s financial statements for the three and nine months ended September 30, 2017.
Common Units
In the nine months ended September 30, 2017, the Company granted equity-based compensation in a subsidiary consisting of 520,000 common units that had a grant date fair value of $894 using a discounted cash flow model, which is determined based on the fair value of the operating segment on the grant date, estimated using a discounted cash flow analysis that requires the application of discount factors and terminal multiples to projected cash flows. Discount factors and terminal multiples were based on market-based inputs and transactions, as available at the measurement date. The awards vest over a range of six to 48 months, provided the employee remains employed by the Company.

March 13, 2023.
28
20


FTAI AVIATION LTD.
FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
(Dollar amountsDollars in tables in thousands, unless otherwise noted)

12.10. INCOME TAXES
The current and deferred components of the income tax provision included in the Consolidated Statements of Operations are as follows: 
Three Months Ended September 30, Nine Months Ended September 30,Three Months Ended June 30,Six Months Ended June 30,
2017 2016 2017 20162023202220232022
Current:       Current:
Cayman IslandsCayman Islands$— $— $— — 
United States:United States:— — — — 
Federal$841
 $43
 $1,157
 $205
Federal(92)(42)(45)335 
State and local58
 9
 106
 49
State and local(32)154 (19)511 
Foreign8
 (218) 49
 (192)
Total current provision907
 (166) 1,312
 62
       
Non-U.S.Non-U.S.544 (225)818 68 
Total current provision (benefit)Total current provision (benefit)420 (113)754 914 
Deferred:       Deferred:
Cayman IslandsCayman Islands— — — — 
United States:United States:— — — — 
Federal(14) 1
 34
 2
Federal590 1,602 823 1,602 
State and local(18) —
 (18) 1
State and local54 306 498 306 
Foreign34
 248
 257
 130
Non-U.S.Non-U.S.791 34 1,806 346 
Total deferred provision2
 249
 273
 133
Total deferred provision1,435 1,942 3,127 2,254 
       
Total provision for income taxes$909
 $83
 $1,585
 $195
Provision for income taxes:Provision for income taxes:
Continuing operationsContinuing operations1,855 1,829 3,881 3,168 
Discontinued operationsDiscontinued operations— 1,582 — 3,729 
TotalTotal$1,855 $3,411 $3,881 $6,897 
The Company is taxed asan exempted entity domiciled in the Cayman Islands where income taxes are not imposed. The Company is considered a flow-through entityPassive Foreign Investment Company for U.S. income tax purposes and its taxablecertain income or loss generated is the responsibility of itstaxes are imposed on our owners. Taxable income or loss generated by the Company’sour corporate subsidiaries is subject to U.S. federal, state and foreign corporate income tax in locations where they conduct business.
The Company’sOur effective tax rate differs from the U.S. federal tax rate of 35%21% primarily due to a significant portion of itsour income not being subject to U.S. corporate tax rates, or being deemed to be foreign sourced and thus either not taxable or taxable at effectively lower tax rates.
As of and for the nine month periodsix months ended SeptemberJune 30, 2017, the Company2023, we had not established a liability for uncertain tax positions as no such positions existed. In general, the Company’sour tax returns and the tax returns of itsour corporate subsidiaries are subject to U.S. federal, state, local and foreign income tax examinations by tax authorities. Generally, the Company iswe are not subject to examination by taxing authorities for tax years prior to 2013. The Company does2019. We do not believe that it is reasonably possible that the total amount of unrecognized tax benefits will significantly change within 12 months of the reporting date of September 30, 2017.date.
13.11. MANAGEMENT AGREEMENT AND AFFILIATE TRANSACTIONS
In connection with the spin-off of FTAI Infrastructure on August 1, 2022, we assigned our then-existing management and advisory agreement, dated as of May 20, 2015, with our Manager to FTAI Infrastructure. On July 31, 2022, we entered into a new management and advisory agreement (the “Management Agreement”), by and among FTAI LLC, FTAI Aviation Ltd., and each of the subsidiaries that are party thereto and the Manager, with substantially similar terms and conditions as the existing management and advisory agreement.
The Manager is paid annual fees in exchange for advising the Companyus on various aspects of itsour business, formulating itsour investment strategies, arranging for the acquisition and disposition of assets, arranging for financing, monitoring performance, and managing itsour day-to-day operations, inclusive of all costs incidental thereto. In addition, the Manager may be reimbursed for various expenses incurred by the Manager on the Company’sour behalf, including the costs of legal, accounting and other administrative activities. In May 2015, in connection with the Company’s IPO, the Company entered into the Management Agreement which replaced its then-existing management agreement as a private fund. Additionally, the Company haswe have entered into certain incentive allocation arrangements with Master GP, which owns 0.05%approximately 0.01% of the Partnership and is the general partner of the Partnership.
Post-IPO Management Agreement and Other Incentive AllocationFTAI Aviation Holdco Ltd.
The Manager is entitled to a management fee incentive allocations (comprised of income incentive allocation and capital gains incentive allocation, defined below) and reimbursement of certain expenses. The management fee is determined by taking the average value of total equity (excluding non-controlling interests) determined on a consolidated basis in accordance with U.S. GAAP at the end of the two most recently completed months multiplied by an annual rate of 1.50%, and is payable monthly in arrears in cash. The total management fees for the three and nine months ended September 30, 2017 were $3,776 and $11,524, respectively. The total management fees for the three and nine months ended September 30, 2016 were $4,146 and $12,725, respectively.

29
21


FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLCFTAI AVIATION LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
(Dollar amountsDollars in tables in thousands, unless otherwise noted)

Master GP is entitled to incentive allocations (comprised of income incentive allocation and capital gains incentive allocation, defined below). The income incentive allocation is calculated and distributable quarterly in arrears based on the pre-incentive allocation net income for the immediately preceding calendar quarter (the “Income Incentive Allocation”). For this purpose, pre-incentive allocation net income means, with respect to a calendar quarter, net income attributable to shareholders during such quarter calculated in accordance with U.S. GAAP excluding the Company’sour pro rata share of (1) realized or unrealized gains and losses, and (2) certain non-cash or one-time items, and (3) any other adjustments as may be approved by the Company’sour independent directors. Pre-incentive allocation net income does not include any Income Incentive Allocation or Capital Gains Incentive Allocation (described below) paid to the Master GP during the relevant quarter.
A subsidiaryOne of the Companyour subsidiaries allocates and distributes to the Master GP an Income Incentive Allocation with respect to its pre-incentive allocation net income in each calendar quarter as follows: (1) no Income Incentive Allocation in any calendar quarter in which pre-incentive allocation net income, expressed as a rate of return on the average value of the Company’sour net equity capital (excluding non-controlling interests) at the end of the two most recently completed calendar quarters, does not exceed 2% for such quarter (8% annualized); (2) 100% of pre-incentive allocation net income with respect to that portion of such pre-incentive allocation net income, if any, that is equal to or exceeds 2% but does not exceed 2.2223% for such quarter; and (3) 10% of the amount of pre-incentive allocation net income, if any, that exceeds 2.2223% for such quarter. These calculations will be prorated for any period of less than three months. No Income Incentive Allocation was due to the Master GP for the three and nine months ended September 30, 2017 and 2016.
Capital Gains Incentive Allocation is calculated and distributable in arrears as of the end of each calendar year and is equal to 10% of the Company’sour pro rata share of cumulative realized gains from the date of the IPO through the end of the applicable calendar year, net of the Company’sour pro rata share of cumulative realized or unrealized losses, the cumulative non-cash portion of equity-based compensation expenses and all realized gains upon which prior performance-based Capital Gains Incentive Allocation payments were made to the Master GP. No Capital Gains Incentive Allocation was due to the Master GP for the three and nine months ended September 30, 2017 and 2016.
The Company willfollowing table summarizes the management fees, income incentive allocation and capital gains incentive allocation from continuing operations:
Three Months Ended June 30,Six Months Ended June 30,
2023202220232022
Management fees$239 $— $294 $— 
Income incentive allocation5,324 — 8,266 — 
Capital gains incentive allocation— — — — 
Total$5,563 $— $8,560 $— 
We pay all of itsour operating expenses, except those specifically required to be borne by the Manager under the Management Agreement. The expenses required to be paid by the Companyus include, but are not limited to, issuance and transaction costs incident to the acquisition, disposition and financing of the company’sour assets, legal and auditing fees and expenses, the compensation and expenses of the Company’sour independent directors, the costs associated with the establishment and maintenance of any credit facilities and other indebtedness of the Companyours (including commitment fees, legal fees, closing costs, etc.), expenses associated with other securities offerings of the Company,ours, costs and expenses incurred in contracting with third parties (including affiliates of the Manager), the costs of printing and mailing proxies and reports to the Company’sour shareholders, costs incurred by the Manager or its affiliates for travel on the Company’sour behalf, costs associated with any computer software or hardware that is used for the Company,by us, costs to obtain liability insurance to indemnify the Company’sour directors and officers and the compensation and expenses of the Company’sour transfer agent.
The CompanyWe will pay or reimburse the Manager and its affiliates for performing certain legal, accounting, due diligence tasks and other services that outside professionals or outside consultants otherwise would perform, provided that such costs and reimbursements are no greater than those which would be paid to outside professionals or consultants. The Manager is responsible for all of its other costs incident to the performance of its duties under the Management Agreement, including compensation of the Manager’s employees, rent for facilities and other “overhead” expenses; the Companywe will not reimburse the Manager for these expenses. During
The following table summarizes our reimbursements to the three and nine months ended September 30, 2017, expense reimbursement of $2,046 and $5,868 was recordedManager from continuing operations:
Three Months Ended June 30,Six Months Ended June 30,
2023202220232022
Classification in the Consolidated Statements of Operations:
General and administrative$1,599 $1,719 $3,504 $3,467 
Acquisition and transaction expenses109 381 209 729 
Total$1,708 $2,100 $3,713 $4,196 
22

FTAI AVIATION LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
(Dollars in general and administrative expenses, respectively, and $1,507 and $4,220 was recordedtables in acquisition and transaction expenses, respectively, in the Consolidated Statements of Operations. During the three and nine months ended September 30, 2016, expense reimbursement of $1,960 and $5,361 was recorded in general and administrative expenses, respectively, and $990 and $3,017 was recorded in acquisition and transaction expenses, respectively.thousands, unless otherwise noted)
If the Company terminateswe terminate the Management Agreement, itwe will generally be required to pay the Manager a termination fee. The termination fee is equal to the amount of the management fee during the 12 months immediately preceding the date of the termination. In addition, an Incentive Allocation Fair Value Amount will be distributable to the Master GP if the Master GP is removed due to the termination of the Management Agreement in certain specified circumstances. The Incentive Allocation Fair Value Amount is an amount equal to the Income Incentive Allocation and the Capital Gains Incentive Allocation that would be paid to the Master GP if the Company’sour assets were sold for cash at their then current fair market value (as determined by an appraisal, taking into account, among other things, the expected future value of the underlying investments).
Upon the successful completion of a post-IPOan offering of the Company’s commonour ordinary shares or other equity securities (including securities issued as consideration in an acquisition), the Company willwe grant the Manager options to purchase commonordinary shares in an amount equal to 10% of the number of commonordinary shares being sold in the offering (or if the issuance relates to equity securities other than the Company’s commonour ordinary shares, options to purchase a number of commonordinary shares equal to 10% of the gross capital raised in the equity issuance divided by the fair market value of a commonan ordinary share as of the date of issuance), with an exercise price equal to the offering price per share paid by the public or other ultimate purchaser or attributed to such securities in connection with an acquisition (or the fair market value of a commonan ordinary share as of the date of the equity issuance if it relates to equity securities other than our commonordinary shares). Any ultimate purchaser of commonordinary shares for which such options are granted may be an affiliate of Fortress.

30

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
(Dollar amounts in thousands, unless otherwise noted)

As of September 30, 2017 and December 31, 2016, no amounts were recorded as a receivable from the Manager. As of September 30, 2017 and December 31, 2016,
The following table summarizes amounts due to the Manager, or its affiliates of $1,138 and $1,697, respectively, excluding accrued management fees,which are included within accounts payable and accrued liabilities onin the Consolidated Balance Sheets. Sheets:
June 30, 2023December 31, 2022
Accrued management fees$238 $53 
Other payables6,394 4,688 
As of SeptemberJune 30, 20172023 and December 31, 2016, amounts due to2022, there were no receivables from the Manager or its affiliates of $1,224 and $1,347, respectively, related to accrued management fees, are included within accounts payable and accrued liabilities on the Consolidated Balance Sheets.Manager.
Other Affiliate Transactions
12. SEGMENT INFORMATION
As of September 30, 2017 and December 31, 2016 an affiliatea result of the Company’s Manager owns an approximately 20% interest in Jefferson Terminal which has been accounted for as a componentspin-off of non-controlling interest in consolidated subsidiaries in the accompanying consolidated financial statements. The carrying amount of this non-controlling interest at September 30, 2017 and December 31, 2016 was $69,259 and $74,904, respectively. For the three and nine months ended September 30, 2017, the amount of this non-controlling interest share of net loss was $2,163 and $5,646, respectively. For the three and nine months ended September 30, 2016, the amount of this non-controlling interest share of net loss was $1,762 and $5,715, respectively.
In connection with the Capital Call Agreement related to the Series 2016 Bonds discussed in Note 8,FTAI Infrastructure effective on August 1, 2022, the Company and an affiliate ofreevaluated its Manager entered into a Fee and Support Agreement.operating segments. The Fee and Support Agreement provides thatkey factors used to identify the affiliate of the Manager is compensated for its guarantee of a portion of the obligations under the Standby Bond Purchase Agreement. This affiliate of the Manager received fees of $1,740, which are amortized as interest expense to the earlier of the redemption date or February 13, 2020.
14. SEGMENT INFORMATION
The Company’s reportable segments represent strategic business units comprisedare the organization and alignment of investments in different typesour internal operations and the nature of transportationour products and infrastructure assets. The Company has six reportable segments which operate in the Equipment Leasing and Infrastructure businesses across several market sectors. The Company’sservices. Our two reportable segments are (i) Aviation Leasing and (ii) Offshore Energy, (iii) Shipping Containers, (iv) Jefferson Terminal, (v) Railroad, and (vi) Ports and Terminals.Aerospace Products. The Aviation Leasing consists ofsegment owns and manages aviation assets, including aircraft and aircraft engines, heldwhich it leases and sells to customers. The Aerospace Products segment develops and manufactures through a joint venture, and repairs and sells, through exclusivity arrangements, aftermarket components for leaseaircraft engines. The interim period discloses the reportable segments on this basis, and are typically held long-term. Offshore Energyprior periods have been restated to reflect the change in accordance with the requirements of ASC 280, Segment Reporting.
Corporate and Other primarily consists of debt, unallocated corporate general and administrative expenses, shared services costs, and management fees. Additionally, Corporate and Other also includes offshore energy related assets, which consist of vessels and equipment that support offshore oil and gas drillingactivities and production which are typically subject to long-term operating leases. Shipping Containers consists of an investment in an unconsolidated entity engaged in the acquisition and leasing of shipping containers (on both an operating lease and finance lease basis). Jefferson Terminal consists of a multi-modal crude oil and refined products terminal and other related assets. Railroad consists of our CMQR railroad operations. Ports and Terminals consists of Repauno, which is a 1,630 acre deep-water port located along the Delaware river with an underground storage cavern and multiple industrial development opportunities, and Hannibal, which is a 1,660 acre multi-modal port located along the Ohio River with rail, dock, and multiple industrial development opportunities.
Corporate consists primarily of unallocated Company level general and administrative expenses, and management fees. The accounting policies of the segments are the same as those described in the summary of significant accounting policies; however, financial information presented by segment includes the impact of intercompany eliminations. Our Chief Executive Officer is our Chief Operating Decision Maker (“CODM”). Segment information is presented in the same manner that our CODM reviews the operating results in assessing performance and allocating resources. The CompanyCODM evaluates investment performance for each reportable segment primarily based on Adjusted EBITDA. Historically, the CODM’s assessment of segment performance included asset information. During the third quarter of 2022, the CODM determined that segment asset information is not a key factor in measuring performance or allocating resources. Therefore, segment asset information is not included in the tables below as it is not provided to or reviewed by our CODM.
During the third quarter of 2022, the Company changed its measure of segment profit to include the add back of dividends on preferred shares in Adjusted EBITDA. Prior period Adjusted EBITDA amounts and the reconciliation to net income (loss) attributable to shareholders and Adjusted Net Income.from continuing operations have been recast to reflect this change in the measure of segment profit.
Adjusted Net IncomeEBITDA is defined as net income (loss) attributable to shareholders from continuing operations, adjusted (a) to exclude the impact of provision for (benefit from) income taxes, equity-based compensation expense, acquisition and transaction expenses, losses on the modification or extinguishment of debt and capital lease obligations, changes in fair value of non-hedge derivative instruments, asset impairment charges, incentive allocations, depreciation and equity in earnings of unconsolidated entities;amortization expense, dividends on preferred shares and interest expense, (b) to include the impact of cash income tax payments, the Company’sour pro-rata share of the Adjusted Net IncomeEBITDA from unconsolidated entities, (collectively “Adjusted Net Income”), and (c) to exclude the impact of equity in earnings (losses) of unconsolidated entities and the non-controlling share of Adjusted Net Income.EBITDA.
The Company believesWe believe that net income (loss) attributable to shareholders from continuing operations, as defined by U.S. GAAP, is the most appropriate earnings measurement with which to reconcile Adjusted Net Income.EBITDA. Adjusted Net IncomeEBITDA should not be considered as an
23

FTAI AVIATION LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
(Dollars in tables in thousands, unless otherwise noted)
alternative to net income (loss) attributable to shareholders as determined in accordance with U.S. GAAP.

31

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
(Dollar amounts in thousands, unless otherwise noted)

The following tables set forth certain information for each reportable segment of the Company:segment:
I. For the Three Months Ended SeptemberJune 30, 20172023
Three Months Ended June 30, 2023
Aviation LeasingAerospace ProductsCorporate and OtherTotal
Revenues
Lease income$48,167 $— $11,374 $59,541 
Maintenance revenue42,065 — — 42,065 
Asset sales revenue101,486 — — 101,486 
Aerospace products revenue— 68,075 — 68,075 
Other revenue313 — 2,865 3,178 
Total revenues192,031 68,075 14,239 274,345 
Expenses
Cost of sales69,558 34,974 — 104,532 
Operating expenses7,578 3,236 13,983 24,797 
General and administrative— — 3,188 3,188 
Acquisition and transaction expenses1,169 272 1,231 2,672 
Management fees and incentive allocation to affiliate— — 5,563 5,563 
Depreciation and amortization35,713 97 2,704 38,514 
Interest expense— — 38,499 38,499 
Total expenses114,018 38,579 65,168 217,765 
Other income (expense)
Equity in losses of unconsolidated entities(35)(345)— (380)
Other income408 — — 408 
Total other income (expense)373 (345)— 28 
Income (loss) from continuing operations before income taxes78,386 29,151 (50,929)56,608 
Provision for income taxes1,087 584 184 1,855 
Net income (loss) from continuing operations77,299 28,567 (51,113)54,753 
Less: Net loss from continuing operations attributable to non-controlling interests in consolidated subsidiaries— — — — 
Less: Dividends on preferred shares— — 8,335 8,335 
Net income (loss) attributable to shareholders from continuing operations$77,299 $28,567 $(59,448)$46,418 
24
 Three months ended September 30, 2017
 Equipment Leasing Infrastructure    
 Aviation Leasing Offshore Energy Shipping Containers Jefferson Terminal Railroad Ports and Terminals Corporate Total
Revenues               
Equipment leasing revenues$43,474
 $6,117
 $25
 $—
 $—
 $—
 $—
 $49,616
Infrastructure revenues—
 —
 —
 1,730
 8,258
 758
 —
 10,746
Total revenues43,474
 6,117
 25
 1,730
 8,258
 758
 —
 60,362
                
Expenses               
Operating expenses1,706
 5,103
 8
 7,039
 6,980
 2,852
 —
 23,688
General and administrative—
 —
 —
 —
 —
 —
 3,439
 3,439
Acquisition and transaction expenses6
 —
 —
 —
 —
 —
 1,726
 1,732
Management fees and incentive allocation to affiliate—
 —
 —
 —
 —
 —
 3,771
 3,771
Depreciation and amortization17,909
 1,607
 —
 3,978
 507
 783
 —
 24,784
Interest expense—
 946
 —
 1,408
 264
 273
 6,023
 8,914
Total expenses19,621
 7,656
 8
 12,425
 7,751
 3,908
 14,959
 66,328
                
Other income (expense)               
Equity in (losses)/earnings of unconsolidated entities(203) —
 359
 (24) —
 —
 —
 132
Gain (loss) on sale of equipment, net2,871
 —
 —
 —
 (162) —
 —
 2,709
Loss on extinguishment of debt—
 —
 —
 —
 —
 —
 —
 —
Interest income51
 4
 —
 160
 —
 —
 —
 215
Other income—
 1,093
 —
 1,055
 —
 —
 —
 2,148
Total other income (expense)2,719
 1,097
 359
 1,191
 (162) —
 —
 5,204
Income (loss) before income taxes26,572
 (442) 376
 (9,504) 345
 (3,150) (14,959) (762)
Provision for (benefit from) income taxes927
 (5) (10) (3) —
 —
 —
 909
Net income (loss)25,645
 (437) 386
 (9,501) 345
 (3,150) (14,959) (1,671)
Less: Net income (loss) attributable to non-controlling interests in consolidated subsidiaries303
 (62) —
 (4,806) (104) —
 —
 (4,669)
Net income (loss) attributable to shareholders$25,342
 $(375) $386
 $(4,695) $449
 $(3,150) $(14,959) $2,998







32

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLCFTAI AVIATION LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
(Dollar amountsDollars in tables in thousands, unless otherwise noted)

Thefollowing table sets forth a reconciliation of Adjusted Net Income (Loss)EBITDA to net income attributable to shareholders:shareholders from continuing operations:
Three Months Ended June 30, 2023
Three months ended September 30, 2017Aviation LeasingAerospace ProductsCorporate and OtherTotal
Equipment Leasing Infrastructure    
Aviation Leasing Offshore Energy Shipping Containers Jefferson Terminal Railroad Ports and Terminals Corporate Total
Adjusted Net Income (Loss)$26,274
 $(380) $330
 $(6,081) $517
 $(3,150) $(13,673) $3,837
Add: Non-controlling share of adjustments to Adjusted Net Income              447
Add: Equity in earnings of unconsolidated entities              132
Add: Cash payments for income taxes              438
Adjusted EBITDAAdjusted EBITDA$125,856 $30,057 $(2,836)$153,077 
Add: Non-controlling share of Adjusted EBITDAAdd: Non-controlling share of Adjusted EBITDA— 
Add: Equity in losses of unconsolidated entitiesAdd: Equity in losses of unconsolidated entities(380)
Less: Pro-rata share of Adjusted EBITDA from unconsolidated entitiesLess: Pro-rata share of Adjusted EBITDA from unconsolidated entities(150)
Less: Interest expense and dividends on preferred sharesLess: Interest expense and dividends on preferred shares(46,834)
Less: Depreciation and amortization expenseLess: Depreciation and amortization expense(48,934)
Less: Incentive allocations              —
Less: Incentive allocations(5,324)
Less: Pro-rata share of Adjusted Net Income from investments in unconsolidated entities              (86)
Less: Asset impairment charges              —
Less: Asset impairment charges— 
Less: Changes in fair value of non-hedge derivative instruments              1,036
Less: Changes in fair value of non-hedge derivative instruments— 
Less: Losses on the modification or extinguishment of debt and capital lease obligations              —
Less: Losses on the modification or extinguishment of debt and capital lease obligations— 
Less: Acquisition and transaction expenses              (1,732)Less: Acquisition and transaction expenses(2,672)
Less: Equity-based compensation expense              (165)Less: Equity-based compensation expense(510)
Less: Provision for income taxes              (909)Less: Provision for income taxes(1,855)
Net income attributable to shareholders              $2,998
Net income attributable to shareholders from continuing operationsNet income attributable to shareholders from continuing operations$46,418 
Summary information with respect to the Company’sour geographic sources of revenue, based on location of customer, is as follows:
 Three months ended September 30, 2017
 Equipment Leasing Infrastructure  
 Aviation Leasing Offshore Energy Shipping Containers Jefferson Terminal Railroad Ports and Terminals Total
Revenues             
Africa$1,964
 $—
 $—
 $—
 $—
 $—
 $1,964
Asia6,094
 1,543
 25
 —
 —
 —
 7,662
Europe28,907
 4,189
 —
 —
 —
 —
 33,096
North America6,509
 385
 —
 1,730
 8,258
 758
 17,640
South America—
 —
 —
 —
 —
 —
 —
Total$43,474
 $6,117
 $25
 $1,730
 $8,258
 $758
 $60,362





Three Months Ended June 30, 2023
Aviation LeasingAerospace ProductsCorporate and OtherTotal
Revenues
Africa$— $— $— $— 
Asia15,252 1,785 14,239 31,276 
Europe83,454 19,920 — 103,374 
North America86,385 43,200 — 129,585 
South America6,940 3,170 — 10,110 
Total$192,031 $68,075 $14,239 $274,345 
33
25


FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLCFTAI AVIATION LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
(Dollar amountsDollars in tables in thousands, unless otherwise noted)

I.II. For the NineSix Months Ended SeptemberJune 30, 20172023
Six Months Ended June 30, 2023
Aviation LeasingAerospace ProductsCorporate and OtherTotal
Revenues
Lease income$96,997 $— $18,522 $115,519 
Maintenance revenue77,206 — — 77,206 
Asset sales revenue210,177 — — 210,177 
Aerospace products revenue— 153,188 — 153,188 
Other revenue6,691 — 4,282 10,973 
Total revenues391,071 153,188 22,804 567,063 
Expenses
Cost of sales161,792 88,410 — 250,202 
Operating expenses14,666 6,891 25,774 47,331 
General and administrative— — 7,255 7,255 
Acquisition and transaction expenses2,631 1,027 2,276 5,934 
Management fees and incentive allocation to affiliate— — 8,560 8,560 
Depreciation and amortization73,853 183 5,404 79,440 
Asset impairment1,220 — — 1,220 
Interest expense— — 77,791 77,791 
Total expenses254,162 96,511 127,060 477,733 
Other income (expense)
Equity in losses of unconsolidated entities(134)(1,581)— (1,715)
Other income416 — — 416 
Total other income (expense)282 (1,581)— (1,299)
Income (loss) before income taxes137,191 55,096 (104,256)88,031 
Provision for income taxes2,082 1,500 299 3,881 
Net income (loss)135,109 53,596 (104,555)84,150 
Less: Net loss attributable to non-controlling interests in consolidated subsidiaries— — — — 
Less: Dividends on preferred shares— — 15,126 15,126 
Net income (loss) attributable to shareholders from continuing operations$135,109 $53,596 $(119,681)$69,024 
26
 Nine months ended September 30, 2017
 Equipment Leasing Infrastructure 
 
 Aviation Leasing Offshore Energy Shipping Containers Jefferson Terminal Railroad Ports and Terminals Corporate Total
Revenues               
Equipment leasing revenues$110,357
 $10,955
 $75
 $—
 $—
 $—
 $—
 $121,387
Infrastructure revenues—
 —
 —
 9,622
 24,323
 897
 —
 34,842
Total revenues110,357
 10,955
 75
 9,622
 24,323
 897
 —
 156,229
                
Expenses               
Operating expenses4,496
 12,661
 8
 21,919
 22,431
 4,510
 —
 66,025
General and administrative—
 —
 —
 —
 —
 —
 10,615
 10,615
Acquisition and transaction expenses276
 —
 —
 —
 —
 —
 4,788
 5,064
Management fees and incentive allocation to affiliate—
 —
 —
 —
 —
 —
 11,529
 11,529
Depreciation and amortization43,284
 4,820
 —
 11,885
 1,525
 868
 —
 62,382
Interest expense—
 2,800
 —
 4,283
 710
 817
 12,682
 21,292
Total expenses48,056
 20,281
 8
 38,087
 24,666
 6,195
 39,614
 176,907
                
Other income (expense)               
Equity in losses of unconsolidated entities(1,046) —
 (316) (99) —
 —
 —
 (1,461)
Gain (loss) on sale of equipment, net6,932
 —
 —
 —
 (206) —
 —
 6,726
Loss on extinguishment of debt—
 —
 —
 —
 —
 —
 (2,456) (2,456)
Interest income210
 11
 —
 361
 —
 —
 —
 582
Other income—
 1,093
 —
 1,087
 —
 —
 —
 2,180
Total other income (expense)6,096
 1,104
 (316) 1,349
 (206) —
 (2,456) 5,571
Income (loss) before income taxes68,397
 (8,222) (249) (27,116) (549) (5,298) (42,070) (15,107)
Provision for (benefit from) income taxes1,598
 —
 (44) 31
 —
 —
 —
 1,585
Net income (loss)66,799
 (8,222) (205) (27,147) (549) (5,298) (42,070) (16,692)
Less: Net (loss) income attributable to non-controlling interests in consolidated subsidiaries445
 (526) —
 (13,209) (43) (483) —
 (13,816)
Net income (loss) attributable to shareholders$66,354
 $(7,696) $(205) $(13,938) $(506) $(4,815) $(42,070) $(2,876)










34

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLCFTAI AVIATION LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
(Dollar amountsDollars in tables in thousands, unless otherwise noted)


Thefollowing table sets forth a reconciliation of Adjusted Net Income (Loss)EBITDA to net loss attributable to shareholders:shareholders from continuing operations:
Six Months Ended June 30, 2023
Aviation LeasingAerospace ProductsCorporate and OtherTotal
Adjusted EBITDA$233,412 $57,434 $(10,113)$280,733 
Add: Non-controlling share of Adjusted EBITDA— 
Add: Equity in losses of unconsolidated entities(1,715)
Less: Pro-rata share of Adjusted EBITDA from unconsolidated entities546 
Less: Interest expense and dividends on preferred shares(92,917)
Less: Depreciation and amortization expense(97,704)
Less: Incentive allocations(8,266)
Less: Asset impairment charges(1,220)
Less: Changes in fair value of non-hedge derivative instruments— 
Less: Losses on the modification or extinguishment of debt and capital lease obligations— 
Less: Acquisition and transaction expenses(5,934)
Less: Equity-based compensation expense(618)
Less: Provision for income taxes(3,881)
Net loss attributable to shareholders from continuing operations$69,024 

Summary information with respect to our geographic sources of revenue, based on location of customer, is as follows:
Six Months Ended June 30, 2023
Aviation LeasingAerospace ProductsCorporate and OtherTotal
Revenues
Africa$— $875 $— $875 
Asia33,018 1,785 22,804 57,607 
Europe135,819 45,886 — 181,705 
North America202,050 100,196 — 302,246 
South America20,184 4,446 — 24,630 
Total$391,071 $153,188 $22,804 $567,063 
Presented below are the contracted minimum future annual revenues to be received under existing operating leases across as of June 30, 2023:
Operating Leases
Remainder of 2023$92,012 
2024115,106 
202584,079 
202656,323 
202739,838 
Thereafter55,343 
Total$442,701 
27

FTAI AVIATION LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
(Dollars in tables in thousands, unless otherwise noted)
 Nine months ended September 30, 2017
 Equipment Leasing Infrastructure 
 
 Aviation Leasing Offshore Energy Shipping Containers Jefferson Terminal Railroad Ports and Terminals Corporate Total
Adjusted Net Income (Loss)$68,227
 $(7,696) $(387) $(15,269) $(67) $(4,815) $(35,779) $4,214
Add: Non-controlling share of adjustments to Adjusted Net Income              503
Add: Equity in losses of unconsolidated entities              (1,461)
Add: Cash payments for income taxes              1,033
Less: Incentive allocations              —
Less: Pro-rata share of Adjusted Net Income from investments in unconsolidated entities              1,599
Less: Asset impairment charges              —
Less: Changes in fair value of non-hedge derivative instruments              1,036
Less: Losses on the modification or extinguishment of debt and capital lease obligations              (2,456)
Less: Acquisition and transaction expenses              (5,064)
Less: Equity-based compensation expense              (695)
Less: Provision for income taxes              (1,585)
Net loss attributable to shareholders              $(2,876)
III. For the Three Months Ended June 30, 2022
Three Months Ended June 30, 2022
Aviation LeasingAerospace ProductsCorporate and OtherTotal
Revenues
Lease income$37,298 $— $2,342 $39,640 
Maintenance revenue39,932 — — 39,932 
Aerospace products revenue— 26,497 — 26,497 
Other revenue5,204 — 791 5,995 
Total revenues82,434 26,497 3,133 112,064 
Expenses
Cost of sales— 15,141 — 15,141 
Operating expenses7,130 2,980 8,890 19,000 
General and administrative— — 3,906 3,906 
Acquisition and transaction expenses168 — 3,051 3,219 
Depreciation and amortization37,191 67 2,045 39,303 
Asset impairment886 — — 886 
Interest expense— — 47,889 47,889 
Total expenses45,375 18,188 65,781 129,344 
Other income
Equity in earnings (losses) of unconsolidated entities246 (211)— 35 
Gain on sale of assets, net54,784 8,861 — 63,645 
Other income38 — 1,080 1,118 
Total other income55,068 8,650 1,080 64,798 
Income (loss) from continuing operations before income taxes92,127 16,959 (61,568)47,518 
Provision for (Benefit from) income taxes715 1,887 (773)1,829 
Net income (loss) from continuing operations91,412 15,072 (60,795)45,689 
Less: Net income (loss) from continuing operations attributable to non-controlling interests in consolidated subsidiaries— — — — 
Less: Dividends on preferred shares— — 6,791 6,791 
Net income (loss) attributable to shareholders from continuing operations$91,412 $15,072 $(67,586)$38,898 















28

FTAI AVIATION LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
(Dollars in tables in thousands, unless otherwise noted)
Thefollowing table sets forth a reconciliation of Adjusted EBITDA to net loss attributable to shareholders from continuing operations:
Three Months Ended June 30, 2022
Aviation LeasingAerospace ProductsCorporate and OtherTotal
Adjusted EBITDA$142,238 $17,082 $(8,583)$150,737 
Add: Non-controlling share of Adjusted EBITDA— 
Add: Equity in income of unconsolidated entities35 
Less: Pro-rata share of Adjusted EBITDA from unconsolidated entities(152)
Less: Interest expense and dividends on preferred shares(54,680)
Less: Depreciation and amortization expense(51,108)
Less: Incentive allocations— 
Less: Asset impairment charges(886)
Less: Changes in fair value of non-hedge derivative instruments— 
Less: Losses on the modification or extinguishment of debt and capital lease obligations— 
Less: Acquisition and transaction expenses(3,219)
Less: Equity-based compensation expense— 
Less: Provision for income taxes(1,829)
Net loss attributable to shareholders from continuing operations$38,898 
Summary information with respect to the Company’sour geographic sources of revenue, based on location of customer, is as follows:
 Nine months ended September 30, 2017
 Equipment Leasing Infrastructure 
 Aviation Leasing Offshore Energy Shipping Containers Jefferson Terminal Railroad Ports and Terminals Total
Revenues             
Africa$6,744
 $—
 $—
 $—
 $—
 $—
 $6,744
Asia29,207
 4,657
 75
 —
 —
 —
 33,939
Europe63,229
 5,142
 —
 —
 —
 —
 68,371
North America10,472
 1,156
 —
 9,622
 24,323
 897
 46,470
South America705
 —
 —
 —
 —
 —
 705
Total$110,357
 $10,955
 $75
 $9,622
 $24,323
 $897
 $156,229



Three Months Ended June 30, 2022
Aviation LeasingAerospace ProductsCorporate and OtherTotal
Revenues
Asia$20,953 $— $3,133 $24,086 
Europe25,409 6,651 — 32,060 
North America21,056 19,846 — 40,902 
South America15,016 — — 15,016 
Total$82,434 $26,497 $3,133 $112,064 
35
29


FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLCFTAI AVIATION LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
(Dollar amountsDollars in tables in thousands, unless otherwise noted)

III.IV. For the ThreeSix Months Ended SeptemberJune 30, 20162022
Six Months Ended June 30, 2022
Aviation LeasingAerospace ProductsCorporate and OtherTotal
Revenues
Lease income$71,256 $— $7,709 $78,965 
Maintenance revenue76,664 — — 76,664 
Aerospace products revenue— 40,810 — 40,810 
Other revenue5,226 — 2,090 7,316 
Total revenues153,146 40,810 9,799 203,755 
Expenses
Cost of sales— 24,191 — 24,191 
Operating expenses61,602 4,603 14,595 80,800 
General and administrative— — 8,467 8,467 
Acquisition and transaction expenses377 — 5,115 5,492 
Management fees and incentive allocation to affiliate— — — — 
Depreciation and amortization76,419 101 4,088 80,608 
Asset impairment123,676 — — 123,676 
Interest expense— — 92,030 92,030 
Total expenses262,074 28,895 124,295 415,264 
Other income (expense)
Equity in income (losses) of unconsolidated entities798 (565)— 233 
Gain on sale of assets, net61,371 18,562 — 79,933 
Other income203 — 1,043 1,246 
Total other income62,372 17,997 1,043 81,412 
(Loss) income before income taxes(46,556)29,912 (113,453)(130,097)
Provision for (benefit from) income taxes1,701 1,958 (491)3,168 
Net (loss) income(48,257)27,954 (112,962)(133,265)
Less: Net loss attributable to non-controlling interests in consolidated subsidiaries— — — — 
Less: Dividends on preferred shares— — 13,582 13,582 
Net (loss) income attributable to shareholders from continuing operations$(48,257)$27,954 $(126,544)$(146,847)
30
 Three Months Ended September 30, 2016
 Equipment Leasing Infrastructure    
 Aviation Leasing Offshore Energy Shipping Containers Jefferson Terminal Railroad Ports and Terminals Corporate Total
Revenues               
Equipment leasing revenues$27,060
 $2,969
 $25
 $—
 $—
 $—
 $—
 $30,054
Infrastructure revenues—
 —
 —
 4,255
 7,401
 16
 —
 11,672
Total revenues27,060
 2,969
 25
 4,255
 7,401
 16
 —
 41,726
                
Expenses               
Operating expenses892
 2,408
 1
 6,796
 6,514
 417
 —
 17,028
General and administrative—
 —
 —
 —
 —
 —
 3,205
 3,205
Acquisition and transaction expenses—
 —
 —
 109
 —
 —
 1,579
 1,688
Management fees and incentive allocation to affiliate—
 —
 —
 —
 —
 —
 4,146
 4,146
Depreciation and amortization9,376
 1,669
 —
 3,920
 411
 —
 —
 15,376
Interest expense—
 934
 —
 4,016
 182
 284
 —
 5,416
Total expenses10,268
 5,011
 1
 14,841
 7,107
 701
 8,930
 46,859
                
Other income (expense)               
Equity in losses of unconsolidated entities—
 —
 (1,161) —
 —
 —
 —
 (1,161)
Gain (loss) on sale of equipment and finance leases, net—
 —
 —
 —
 40
 —
 —
 40
Loss on extinguishment of debt—
 —
 —
 —
 —
 —
 —
 —
Asset impairment—
 —
 —
 —
 —
 —
 —
 —
Interest income (expense)6
 4
 —
 196
 —
 —
 —
 206
Other (expense) income—
 —
 —
 485
 —
 —
 —
 485
Total other income (expense)6
 4
 (1,161) 681
 40
 —
 —
 (430)
Income (loss) before income taxes16,798
 (2,038) (1,137) (9,905) 334
 (685) (8,930) (5,563)
Provision (benefit from) for income taxes100
 —
 (41) 20
 —
 4
 —
 83
Net income (loss)16,698
 (2,038) (1,096) (9,925) 334
 (689) (8,930) (5,646)
Less: Net income (loss) attributable to non-controlling interests in consolidated subsidiaries60
 (131) —
 (4,241) 14
 (69) (3) (4,370)
Net income (loss) attributable to shareholders$16,638
 $(1,907) $(1,096) $(5,684) $320
 $(620) $(8,927) $(1,276)







36

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLCFTAI AVIATION LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
(Dollar amountsDollars in tables in thousands, unless otherwise noted)

Thefollowing table sets forth a reconciliation of Adjusted Net Income (Loss)EBITDA to net loss attributable to shareholders:shareholders from continuing operations:
Six Months Ended June 30, 2022
Aviation LeasingAerospace ProductsCorporate and OtherTotal
Adjusted EBITDA$177,794 $30,125 $(12,220)$195,699 
Add: Non-controlling share of Adjusted EBITDA— 
Add: Equity in losses of unconsolidated entities233 
Less: Pro-rata share of Adjusted EBITDA from unconsolidated entities(406)
Less: Interest expense and dividends on preferred shares(105,612)
Less: Depreciation and amortization expense(104,425)
Less: Incentive allocations— 
Less: Asset impairment charges(123,676)
Less: Changes in fair value of non-hedge derivative instruments— 
Less: Losses on the modification or extinguishment of debt and capital lease obligations— 
Less: Acquisition and transaction expenses(5,492)
Less: Equity-based compensation expense— 
Less: Provision for income taxes(3,168)
Net loss attributable to shareholders from continuing operations$(146,847)
 Three Months Ended September 30, 2016
 Equipment Leasing Infrastructure    
 Aviation Leasing Offshore Energy Shipping Containers Jefferson Terminal Railroad Ports and Terminals Corporate Total
Adjusted Net Income (Loss)$16,564
 $(1,907) $(1,183) $(5,719) $342
 $(616) $(7,348) $133
Add: Non-controlling share of adjustments to Adjusted Net Income              170
Add: Equity in losses of unconsolidated entities              (1,161)
Add: Cash payments for income taxes              174
Less: Incentive allocations              —
Less: Pro-rata share of Adjusted Net Income from investments in unconsolidated entities              1,207
Less: Asset impairment charges              —
Less: Changes in fair value of non-hedge derivative instruments              —
Less: Losses on the modification or extinguishment of debt and capital lease obligations              —
Less: Acquisition and transaction expenses              (1,688)
Less: Equity-based compensation expense              (28)
Less: Provision for income taxes              (83)
Net loss attributable to shareholders              $(1,276)

Summary information with respect to the Company’sour geographic sources of revenue, based on location of customer, is as follows:
 Three Months Ended September 30, 2016
 Equipment Leasing Infrastructure  
 Aviation Leasing Offshore Energy Shipping Containers Jefferson Terminal Railroad Ports and Terminals Total
Revenues             
Africa$3,554
 $—
 $—
 $—
 $—
 $—
 $3,554
Asia11,589
 2,565
 25
 —
 —
 —
 14,179
Europe9,431
 —
 —
 —
 —
 —
 9,431
North America2,091
 404
 —
 4,255
 7,401
 16
 14,167
South America395
 —
 —
 —
 —
 —
 395
Total$27,060
 $2,969
 $25
 $4,255
 $7,401
 $16
 $41,726




37

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
(Dollar amounts in thousands, unless otherwise noted)

IV. For the Nine Months Ended September 30, 2016
 Nine Months Ended September 30, 2016
 Equipment Leasing Infrastructure 
 
 Aviation Leasing Offshore Energy Shipping Containers Jefferson Terminal Railroad Ports and Terminals Corporate Total
Revenues               
Equipment leasing revenues$66,360
 $4,433
 $1,187
 $—
 $—
 $—
 $—
 $71,980
Infrastructure revenues—
 —
 —
 11,271
 23,107
 16
 —
 34,394
Total revenues66,360
 4,433
 1,187
 11,271
 23,107
 16
 —
 106,374
                
Expenses               
Operating expenses2,875
 8,410
 43
 16,182
 21,004
 417
 6
 48,937
General and administrative—
 —
 —
 —
 —
 —
 9,154
 9,154
Acquisition and transaction expenses—
 —
 —
 400
 —
 —
 4,222
 4,622
Management fees and incentive allocation to affiliate—
 —
 —
 —
 —
 —
 12,725
 12,725
Depreciation and amortization25,307
 4,927
 —
 11,589
 1,471
 —
 —
 43,294
Interest expense—
 2,805
 410
 11,804
 536
 284
 —
 15,839
Total expenses28,182
 16,142
 453
 39,975
 23,011
 701
 26,107
 134,571
                
Other income (expense)               
Equity in losses of unconsolidated entities—
 —
 (1,335) —
 —
 —
 —
 (1,335)
Gain (loss) on sale of equipment and finance leases, net2,717
 —
 304
 —
 286
 —
 —
 3,307
Loss on extinguishment of debt—
 —
 —
 (1,579) —
 —
 —
 (1,579)
Asset impairment—
 (7,450) —
 —
 —
 —
 —
 (7,450)
Interest income (expense)9
 9
 —
 69
 —
 —
 —
 87
Other (expense) income—
 —
 (2) 585
 —
 —
 —
 583
Total other income (expense)2,726
 (7,441) (1,033) (925) 286
 —
 —
 (6,387)
Income (loss) before income taxes40,904
 (19,150) (299) (29,629) 382
 (685) (26,107) (34,584)
Provision (benefit from) for income taxes188
 —
 (54) 55
 —
 5
 1
 195
Net income (loss)40,716
 (19,150) (245) (29,684) 382
 (690) (26,108) (34,779)
Less: Net income (loss) attributable to non-controlling interests in consolidated subsidiaries350
 (4,289) —
 (12,522) 11
 (69) (9) (16,528)
Net income (loss) attributable to shareholders$40,366
 $(14,861) $(245) $(17,162) $371
 $(621) $(26,099) $(18,251)

38

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
(Dollar amounts in thousands, unless otherwise noted)

Thefollowing table sets forth a reconciliation of Adjusted Net Loss to net loss attributable to shareholders:
 Nine Months Ended September 30, 2016
 Equipment Leasing Infrastructure    
 Aviation Leasing Offshore Energy Shipping Containers Jefferson Terminal Railroad Ports and Terminals Corporate Total
Adjusted Net Income (Loss)$40,016
 $(11,136) $(405) $(18,495) $702
 $(621) $(21,875) $(11,814)
Add: Non-controlling share of adjustments to Adjusted Net Income              2,891
Add: Equity in losses of unconsolidated entities              (1,335)
Add: Cash payments for income taxes              594
Less: Incentive allocations              —
Less: Pro-rata share of Adjusted Net Income from investments in unconsolidated entities              1,444
Less: Asset impairment charges              (7,450)
Less: Changes in fair value of non-hedge derivative instruments              (3)
Less: Losses on the modification or extinguishment of debt and capital lease obligations              (1,579)
Less: Acquisition and transaction expenses              (4,622)
Less: Equity-based compensation income              3,818
Less: Provision for income taxes              (195)
Net loss attributable to shareholders              $(18,251)
Summary information with respect to the Company’s geographic sources of revenue, based on location of customer, is as follows:
 Nine Months Ended September 30, 2016
 Equipment Leasing Infrastructure 
 Aviation Leasing Offshore Energy Shipping Containers Jefferson Terminal Railroad Ports and Terminals Total
Revenues
 
 
 
 
    
Africa$9,201
 $—
 $—
 $—
 $—
 $—
 $9,201
Asia30,665
 2,973
 858
 —
 —
 —
 34,496
Europe20,929
 248
 —
 —
 —
 —
 21,177
North America4,192
 1,212
 329
 11,271
 23,107
 16
 40,127
South America1,373
 —
 —
 —
 —
 —
 1,373
Total$66,360
 $4,433
 $1,187
 $11,271
 $23,107
 $16
 $106,374




39

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
(Dollar amounts in thousands, unless otherwise noted)

Six Months Ended June 30, 2022
Aviation LeasingAerospace ProductsCorporate and OtherTotal
Revenues
Africa$— $850 $— $850 
Asia36,615 1,401 9,799 47,815 
Europe52,810 11,226 — 64,036 
North America39,341 27,333 — 66,674 
South America24,380 — — 24,380 
Total$153,146 $40,810 $9,799 $203,755 
V. Balance Sheet and locationLocation of long-lived assetsLong-Lived Assets
The following tables sets forth summarized balance sheet information and the geographic location of property, plant and equipment and leasing equipment, net as of September 30, 2017 and December 31, 2016:net:
June 30, 2023December 31, 2022
Property, plant and equipment and leasing equipment, net
Africa$— $7,952 
Asia384,330 383,378 
Europe904,646 821,840 
North America398,355 424,617 
South America216,055 285,780 
Total$1,903,386 $1,923,567 

September 30, 2017

Equipment Leasing
Infrastructure    


Aviation Leasing
Offshore Energy
Shipping Containers
Jefferson Terminal
Railroad
Ports and Terminals Corporate
Total
Total assets$792,335
 $231,152
 $4,090
 $557,833
 $49,318
 $110,679
 $164,514
 $1,909,921
                
Debt, net—
 53,531
 —
 184,526
 18,034
 —
 399,489
 655,580
                
Total liabilities116,080
 58,589
 —
 203,148
 33,936
 16,588
 403,657
 831,998
                
Non-controlling interests in equity of consolidated subsidiaries3,040
 —
 —
 91,106
 2,540
 —
 524
 97,210
                
Total equity676,255
 172,563
 4,090
 354,685
 15,382
 94,091
 (239,143) 1,077,923
                
Total liabilities and equity$792,335
 $231,152
 $4,090
 $557,833
 $49,318
 $110,679
 $164,514
 $1,909,921
 September 30, 2017
 Equipment Leasing Infrastructure    
 Aviation Leasing Offshore Energy Shipping Containers Jefferson Terminal Railroad Ports and Terminals Corporate Total
Property, plant and equipment and leasing equipment, net               
Africa$38,926
 $—
 $—
 $—
 $—
 $—
 $—
 $38,926
Asia280,554
 36,710
 —
 —
 —
 —
 —
 317,264
Europe269,448
 127,968
 —
 —
 —
 —
 —
 397,416
North America127,600
 —
 —
 365,016
 35,593
 104,633
 —
 632,842
South America7,315
 —
 —
 —
 —
 —
 —
 7,315
Total$723,843
 $164,678
 $—
 $365,016
 $35,593
 $104,633
 $—
 $1,393,763

40

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
(Dollar amounts in thousands, unless otherwise noted)

 December 31, 2016
 Equipment Leasing Infrastructure      
 Aviation Leasing Offshore Energy Shipping Containers Jefferson Terminal Railroad Ports and Terminals Corporate Total
Total assets$625,680
 $220,544
 $4,333
 $534,638
 $40,428
 $63,331
 $58,358
 $1,547,312
                
Debt, net—
 62,655
 —
 184,702
 12,155
 —
 —
 259,512
                
Total liabilities74,989
 66,002
 —
 205,536
 24,971
 6,287
 3,847
 381,632
                
Non-controlling interests in equity of consolidated subsidiaries1,334
 3,325
 —
 104,087
 2,114
 483
 525
 111,868
                
Total equity550,691
 154,542
 4,333
 329,102
 15,457
 57,044
 54,511
 1,165,680
                
Total liabilities and equity$625,680
 $220,544
 $4,333
 $534,638
 $40,428
 $63,331
 $58,358
 $1,547,312
 December 31, 2016
 Equipment Leasing Infrastructure    
 Aviation Leasing Offshore Energy Shipping Containers Jefferson Terminal Railroad Ports and Terminals Corporate Total
Property, plant and equipment and leasing equipment, net               
Africa$51,136
 $—
 $—
 $—
 $—
 $—
 $—
 $51,136
Asia212,635
 169,499
 —
 —
 —
 —
 —
 382,134
Europe225,934
 —
 —
 —
 —
 —
 —
 225,934
North America56,456
 —
 —
 319,503
 29,866
 44,486
 —
 450,311
South America8,121
 —
 —
 —
 —
 —
 —
 8,121
Total$554,282
 $169,499
 $—
 $319,503
 $29,866
 $44,486
 $—
 $1,117,636
15.13. EARNINGS PER SHARE AND EQUITY
Basic earnings (loss) per ordinary share (“EPS”) is calculated by dividing net income (loss) attributable to the Companyshareholders by the weighted average number of ordinary shares of common stock outstanding.outstanding, plus any participating securities. Diluted EPS is calculated by dividing net income (loss) attributable to the Companyshareholders by the weighted average number of ordinary shares of common stock outstanding, plus any participating securities and potentially dilutive securities. Potentially dilutive securities are calculated using the treasury stock method.
The calculation of basic and diluted EPS is presented below.below:
31
 Three Months Ended September 30, Nine Months Ended September 30,
(in thousands, except share and per share data)2017 2016 2017 2016
Net income (loss) attributable to shareholders$2,998
 $(1,276) $(2,876) $(18,251)
Weighted Average Shares Outstanding - Basic75,770,529
 75,746,200
 75,765,144
 75,734,587
Weighted Average Shares Outstanding - Diluted75,770,665
 75,746,200
 75,765,144
 75,734,587
        
Basic EPS$0.04
 $(0.02) $(0.04) $(0.24)
Diluted EPS$0.04
 $(0.02) $(0.04) $(0.24)


41

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLCFTAI AVIATION LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
(Dollar amountsDollars in tables in thousands, unless otherwise noted)

Three Months Ended June 30,Six Months Ended June 30,
(in thousands, except share and per share data)2023202220232022
Net income (loss) from continuing operations$54,753 $45,689 $84,150 $(133,265)
Net loss from discontinued operations, net of income taxes— (35,929)— (86,634)
Net income (loss)$54,753 $9,760 84,150 (219,899)
Less: Net loss attributable to non-controlling interests in consolidated subsidiaries:
Continuing operations— — — — 
Discontinued operations— (8,480)— (15,946)
Less: Dividends on preferred shares8,335 6,791 15,126 13,582 
Net income (loss) attributable to shareholders$46,418 $11,449 $69,024 $(217,535)
Weighted Average Common Shares Outstanding - Basic (1)
99,732,179 99,370,301 99,730,223 99,367,597 
Weighted Average Common Shares Outstanding - Diluted (1)
100,462,277 99,805,455 100,314,508 99,367,597 
Earnings (loss) per share:
Basic
Continuing operations$0.47 $0.40 $0.69 $(1.48)
Discontinued operations$— $(0.28)$— $(0.71)
Diluted
Continuing operations$0.46 $0.39 $0.69 $(1.48)
Discontinued operations$— $(0.28)$— $(0.71)

For the nine(1) Three and six months ended SeptemberJune 30, 2017, 1,048 shares have been excluded from the calculation2022 include participating securities which can be converted into a fixed amount of Diluted EPS because the impact would be anti-dilutive. our shares.
For the three and nine months ended SeptemberJune 30, 2016, 7,3332023 and 9,4742022, 0 and 407,124 shares, respectively, and for the six months ended June 30, 2023 and 2022, 1,245 and 595,047 shares, respectively, have been excluded from the calculation of Diluted EPS because the impact would be anti-dilutive.
During the six months ended June 30, 2023 and 2022, we issued 18,457 and 19,811 common shares to certain directors as compensation.
16.
14. COMMITMENTS AND CONTINGENCIES
In the normal course of business, the Company and its subsidiaries may be involved in various claims, legal proceedings, or may enter into contracts that contain a variety of representations and warranties and which provide general indemnifications. Within our offshore energy business, a lessee did not fulfill its obligation under its charter arrangement, therefore we are pursuing rights afforded to us under the Company’s Offshore Energy segment, lessees have asserted that they are entitled to certain reimbursable expenses or adjustments per the terms of the related charter agreement. Although the Company believes it has strong defenses against these claims,and the range of potential damageslosses against the obligation is $0$0.0 million to $6,580 at September 30, 2017. No amount has been recorded for this matter in the Company’s consolidated financial statements as of September 30, 2017, and the Company will continue to vigorously defend against these claims. The Company’s$3.3 million. Our maximum exposure under other arrangements is unknown as no additional claims have been made. The Company believesWe believe the risk of loss in connection with such arrangements is remote.
The Company has also entered into an arrangementcontingent obligations under ASC 460, Guarantees, in connection with its non-controlling interest holdercertain sales of Repauno, wherebyaircraft on lease. Under the non-controlling interest holder may receive additional payments contingent uponagreements, we provide certain guarantees at the achievement of certain conditions, not to exceed $15,000. The Company will account for such amounts when and if such conditions are achieved.
The Company has entered into an arrangement with the seller of Hannibal, whereby the seller may receive additional payments contingent upon the achievement of certain conditions, not to exceed $5,000. The Company will account for such amounts when and if such conditions are achieved.
Severalend of the Company’s subsidiarieslease term for the condition of the aircraft engines that were sold to the buyer.The guarantees are lesseesvalued at $6.7 million and $3.8 million as of June 30, 2023 and December 31, 2022, respectively, and are reflected as a component of Other liabilities on the Consolidated Balance Sheets.
Given variability in the condition of the engines at the end of the lease terms, which range from 4 to 10 years, the maximum potential amount of undiscounted future payments that could be required under various operating and capital leases. Total rent expense for operating leasesthe guarantees at June 30, 2023 was as follows:$34.7 million, which is not reasonably expected.
 Three Months Ended September 30, Nine Months Ended September 30,
 2017 2016 2017 2016
Rent expense$1,235
 $1,197
 $3,755
 $3,724
As of September 30, 2017, minimum future rental payments under operating and capital leases are as follows:
2017$2,047
20186,925
20196,514
20205,484
20214,166
Thereafter73,330
Total$98,466
17.15. SUBSEQUENT EVENTS
Dividends
On October 3, 2017, the Company repaid the outstanding balance on the Revolving Credit Facility, including associated interest, for $60,489. The Company currently has no outstanding balance on the Revolving Credit Facility.
On November 2, 2017, the Company’sJuly 25, 2023, our Board of Directors declared a cash dividend on its commonour ordinary shares and eligible participating securities of $0.33$0.30 per share for the quarter ended SeptemberJune 30, 2017,2023, payable on November 27, 2017August 29, 2023 to the holders of record on November 17, 2017.

August 14, 2023.
42
32


FTAI AVIATION LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
(Dollars in tables in thousands, unless otherwise noted)
Additionally, on July 25, 2023, our Board of Directors also declared cash dividends on the Series A Preferred Shares, Series B Preferred Shares, Series C Preferred Shares and Series D Preferred Shares of $0.52, $0.50, $0.52 and $0.59 per share, respectively, payable on September 15, 2023 to the holders of record on September 1, 2023.


33





Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to help you understand Fortress Transportation and Infrastructure Investors LLCFTAI Aviation Ltd. (the “Company”“Company,” “we,” “our” or “us”). The Company’sOur MD&A should be read in conjunction with itsour unaudited consolidated financial statements and the accompanying notes, and with Part II, Item 1A, “Risk Factors” included elsewhere in this Quarterly Report on Form 10-Q.
Overview
We own, lease and acquire high quality infrastructuresell aviation equipment. We also develop and related equipment that is essentialmanufacture through a joint venture, and repair and sell, through exclusivity arrangements, aftermarket components for the transportation of goodsaircraft engines. Additionally, we own and people globally.lease offshore energy equipment. We target assets that, on a combined basis, generate strong cash flows with potential for earnings growth and asset appreciation. We believe that there areis a large number of acquisition opportunities in our markets and that our Manager’s expertise and business and financing relationships, together with our access to capital, will allow us to take advantage of these opportunities. We are externally managed by FIG LLC (the “Manager”), an affiliate of Fortress Investment Group LLC (“Fortress”), which has a dedicated team of experienced professionals focused on the acquisition of transportation and infrastructure assets since 2002. As of SeptemberJune 30, 2017,2023, we had total consolidated assets of $1.9$2.5 billion and total equity of $1.1 billion.$91.3 million.
Impact of Russia’s Invasion of Ukraine
Economic sanctions and export controls against Russia and Russia’s aviation industry were imposed due to its invasion of Ukraine during the three months ended March 31, 2022. As a result of the sanctions imposed on Russian airlines, we terminated all lease agreements with Russian airlines. We determined that it is unlikely that we will regain possession of the aircraft and engines that had not yet been recovered from Ukraine and Russia. As a result, during the six months ended June 30, 2022, we recognized an impairment charge totaling $120.0 million, net of maintenance deposits, to write-off the entire carrying value of leasing equipment assets that we did not expect to recover from Ukraine and Russia. As of June 30, 2023, four aircraft were still located in Ukraine and eight aircraft and seventeen engines were still located in Russia.
Our lessees are required to provide insurance coverage with respect to leased aircraft and engines, and we are named as insureds under those policies in the event of a total loss of an aircraft or engine. We also purchase insurance which provides us with coverage when our aircraft or engines are not subject to a lease or where a lessee’s policy fails to indemnify us. The insured value of the aircraft and engines that remain in Ukraine and Russia is approximately $243.0 million. We intend to pursue all our claims under these policies. However, the timing and amount of any recoveries under these policies are uncertain.
The extent of the impact of Russia’s invasion of Ukraine and the related sanctions on our operational and financial performance, including the ability for us to recover our leasing equipment in the region, will depend on future developments, including the duration of the conflict, sanctions and restrictions imposed by Russian and international governments, all of which remain uncertain.
Spin-Off of FTAI Infrastructure Inc. (“FTAI Infrastructure”)
On August 1, 2022, we effected a spin-off of our infrastructure business held by FTAI Infrastructure (a wholly-owned subsidiary of the Company) as a distribution of all of the shares owned by the Company of common stock of FTAI Infrastructure to the holders of the Company’s ordinary shares as of July 21, 2022.
FTAI Infrastructure is a corporation for U.S. federal income tax purposes and holds, among other things, the Company’s previously held interests in the (i) Jefferson Terminal business, (ii) Repauno business, (iii) Long Ridge investment, and (iv) Transtar business. FTAI Infrastructure retained all related project-level debt of those entities. In connection with the spin-off, FTAI Infrastructure paid a dividend of $730.3 million to the Company. The Company used these proceeds to repay all outstanding borrowings under its 2021 bridge loans, $200.0 million of its 6.50% senior unsecured notes due 2025, and approximately $175.0 million of the outstanding borrowings under its revolving credit facility. Fortress Transportation and Infrastructure Investors LLC (“FTAI LLC”) retained the aviation business and certain other assets, and FTAI LLC’s remaining outstanding corporate indebtedness.
In connection with the spin-off, the Company and the Manager assigned the Company’s then-existing management agreement to FTAI Infrastructure, and FTAI Infrastructure and the Manager executed an amended and restated agreement. The Company and certain of its subsidiaries executed a new management agreement with the Manager. The new management agreement has an initial term of six years. The Manager is entitled to a management fee and reimbursement of certain expenses on substantially similar terms as the previous arrangements with the Manager, which were assigned to FTAI Infrastructure. Prior to the Merger described below, our Manager remained entitled to incentive allocations (comprised of income incentive allocation and capital gains incentive allocation) on the same terms as they existed prior to spin-off. Following the Merger, the Company entered into a Services and Profit Sharing Agreement (the “Services and Profit Sharing Agreement”), with a subsidiary of the Company and Fortress Worldwide Transportation and Infrastructure Master GP LLC (“Master GP”), pursuant to which Master GP is entitled to incentive payments on substantially similar terms as the previous arrangements.
On November 10, 2022, the Company completed the transactions set forth in the Agreement and Plan of Merger (the “Merger”) between FTAI LLC and FTAI Aviation Ltd. and certain other parties, with FTAI LLC becoming a subsidiary of the company. As a result of the merger, FTAI Aviation Ltd. became a Cayman Islands exempted company. Upon merger completion, FTAI LLC
34


public common shareholders’ shares of the Company were exchanged automatically for shares of FTAI Aviation Ltd. without any further action from the shareholders.
Operating Segments
Our operations consistAs a result of two primary strategic business units –the spin-off of FTAI Infrastructure and Equipment Leasing. Our Infrastructure Business acquires long-lived assets that provide mission-critical services or functionseffective August 1, 2022, the Company reevaluated its operating segments. The key factors used to transportation networks and typically have high barriers to entry. The Company targets or develops operating businesses with strong margins, stable cash flows and upside from earnings growth and asset appreciation driven by increased use and inflation. Our Equipment Leasing Business acquires assets that are designed to carry cargo or people or provide functionality to transportation infrastructure. Transportation equipment assets are typically long-lived, moveable and leased by us on either operating leases or finance leases to companies that provide transportation services. Our leases generally provide for long-term contractual cash flow with high cash-on-cash yields and include structural protections to mitigate credit risk.
Ouridentify the reportable segments are comprisedthe organization and alignment of interests in different types of infrastructure and equipment leasing assets. We currently conduct our business through our corporate operating segmentinternal operations and the following sixnature of our products and services. Our two reportable segments:segments are (i) Aviation Leasing Offshore Energy, Shipping Containers, all of which are within Equipment Leasing Business, and Jefferson Terminal, Railroad and Ports and Terminals, which together comprise our Infrastructure Business.(ii) Aerospace Products. The Aviation Leasing segment consists ofowns and manages aviation assets, including aircraft and aircraft engines, heldwhich it leases and sells to customers. The Aerospace Products segment develops and manufactures through a joint venture, and repairs and sells, through exclusivity arrangements, aircraft engines and aftermarket components for leaseaircraft engines. The interim period discloses the reportable segments on this basis, and are typically held long-term. The Offshore Energy segmentprior periods have been restated to reflect the change in accordance with the requirements of ASC 280, Segment Reporting.
Corporate and Other primarily consists of debt, unallocated corporate general and administrative expenses, shared services costs, and management fees. Additionally, Corporate and Other also includes offshore energy related assets, which consist of vessels and equipment that support offshore oil and gas activities and production which are typically subject to long-term operating leases. The Shipping Containers segment consists of an investment in an unconsolidated entity engaged in the acquisition and leasing of shipping containers on both an operating lease and finance lease basis. The Jefferson Terminal segment consists of a multi-modal crude and refined products terminal and other related assets which were acquired in 2014. The Railroad segment consists of our Central Maine and Quebec Railway (“CMQR”) short line railroad operations also acquired in 2014. Ports and Terminals consists of Repauno, acquired in 2016, which is a 1,630 acre deep-water port located along the Delaware river with an underground storage cavern and multiple industrial development opportunities, and Hannibal, acquired in June 2017, which is a 1,660 acre multi-modal port located along the Ohio River with rail, dock, and multiple industrial development opportunities.
The Corporate operating segment primarily consists of unallocated corporate general and administrative expenses, and management fees.
The Company’s reportable segments are comprised of investments in different types of transportation infrastructure and equipment. Each segment requires different investment strategies. The accounting policies of the segments are the same as those described in the summary of significant accounting policies; however, financial information presented by segment includes the impact of intercompany eliminations.
Our Manager
On February 14, 2017,May 22, 2023, Fortress and Mubadala Investment Company, through its wholly owned asset management subsidiary Mubadala Capital (“Mubadala”), announced that it hadthey have entered into the Merger Agreement with SB Foundation Holdings LP, a Cayman Islands exempted limited partnership (“SoftBank Parent”) and an affiliate of SoftBank, and Foundation Acquisition LLC, a Delaware limited liability company and wholly owned subsidiary of Parent (“SoftBank Merger Sub”),definitive agreements pursuant to which, among other things, certain members of Fortress management and affiliates of Mubadala will acquire 100% of the equity of Fortress that is currently indirectly held by SoftBank Merger SubGroup Corp. (“SoftBank”). After the closing of the transaction, Fortress will merge with and into Fortress, with Fortress survivingcontinue to operate as a wholly owned subsidiary of SoftBank Parent. While Fortress’s senioran independent investment professionals are expected to remain in place, including those individuals who perform services for us, there can be no assurance that the SoftBank merger will not have an impact on us or our relationship with the Manager.

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Fortress informed the Company that it believes thatmanager under the Investment Advisers Act of 1940, as amended, the change of ownership resulting from the completion of the SoftBank merger will result in a deemed assignment of the Management Agreement,Fortress brand, with autonomy over investment processes and that as a result, the Manager is required to obtain the Company’s consent to the assignment. On May 22, 2017, the disinterested members of our board of directors unanimously approved the consent to the assignment. The disinterested members of our board of directors were advised by outside independent counsel.decision making, personnel and operations.
Results of Operations
Adjusted Net Income (Loss)EBITDA (Non-GAAP)
The Chief Operating Decision Makerchief operating decision maker (“CODM”) utilizes Adjusted Net IncomeEBITDA as the key performance measure. Adjusted EBITDA is not a financial measure in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”). This performance measure provides the CODM with the information necessary to assess operational performance as well asand make resource and allocation decisions. We believe Adjusted EBITDA is a useful metric for investors and analysts for similar purposes of assessing our operational performance.
During the third quarter of 2022, the Company updated its measure of segment profit to include the add back of dividends on preferred shares in Adjusted Net IncomeEBITDA. Adjusted EBITDA is defined as net lossincome (loss) attributable to shareholders from continuing operations, adjusted (a) to exclude the impact of provision for income taxes, equity-based compensation expense, acquisition and transaction expenses, losses on the modification or extinguishment of debt and capital lease obligations, changes in fair value of non-hedge derivative instruments, asset impairment charges, incentive allocations, and equity in earnings of unconsolidated entities, (b) to include the impact of cash income tax payments, and our pro-rata share of the Adjusted Net Income from unconsolidated entities, and (c) to exclude the impact of the non-controlling share of Adjusted Net Income. We evaluate investment performance for each reportable segment primarily based on Adjusted Net Income. We believe that net income attributable to shareholders, as defined by GAAP, is the most comparable earnings measurement with which to reconcile Adjusted Net Income.  
Adjusted EBITDA (Non-GAAP)
We view Adjusted EBITDA as a secondary measurement to Adjusted Net Income, which we believe serves as a useful supplement to investors, analysts and management to measure economic performance of deployed revenue generating assets between periods on a consistent basis, and which we believe measures our financial performance and helps identify operational factors that management can impact in the short-term, namely our cost structure and expenses. Adjusted EBITDA may not be comparable to similarly titled measures of other companies because other entities may not calculate Adjusted EBITDA in the same manner.
Adjusted EBITDA is defined as net loss attributable to shareholders, adjusted (a) to exclude the impact of provision for(benefit from) income taxes, equity-based compensation expense, acquisition and transaction expenses, losses on the modification or extinguishment of debt and capital lease obligations, changes in fair value of non-hedge derivative instruments, asset impairment charges, incentive allocations, depreciation and amortization expense, dividends on preferred shares and interest expense, (b) to include the impact of our pro-rata share of Adjusted EBITDA from unconsolidated entities and (c) to exclude the impact of equity in earnings (losses) of unconsolidated entities and the non-controlling share of Adjusted EBITDA.




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35




Comparison of the three and ninesix months ended SeptemberJune 30, 20172023 and September 30, 20162022
The following table presents our consolidated results of operations and reconciliation of net income (loss) attributable to shareholders to Adjusted Net Income (Loss) for the three and nine months ended September 30, 2017 and September 30, 2016:operations:
Three Months Ended June 30,ChangeSix Months Ended
June 30,		Change
(in thousands)2023202220232022
Revenues
Lease income$59,541 $39,640 $19,901 $115,519 $78,965 $36,554 
Maintenance revenue42,065 39,932 2,133 77,206 76,664 542 
Asset sales revenue101,486 — 101,486 210,177 — 210,177 
Aerospace products revenue68,075 26,497 41,578 153,188 40,810 112,378 
Other revenue3,178 5,995 (2,817)10,973 7,316 3,657 
Total revenues274,345 112,064 162,281 567,063 203,755 363,308 
Expenses
Cost of sales104,532 15,141 89,391 250,202 24,191 226,011 
Operating expenses24,797 19,000 5,797 47,331 80,800 (33,469)
General and administrative3,188 3,906 (718)7,255 8,467 (1,212)
Acquisition and transaction expenses2,672 3,219 (547)5,934 5,492 442 
Management fees and incentive allocation to affiliate5,563 — 5,563 8,560 — 8,560 
Depreciation and amortization38,514 39,303 (789)79,440 80,608 (1,168)
Asset impairment— 886 (886)1,220 123,676 (122,456)
Interest expense38,499 47,889 (9,390)77,791 92,030 (14,239)
Total expenses217,765 129,344 88,421 477,733 415,264 62,469 
Other (expense) income
Equity in (losses) earnings of unconsolidated entities(380)35 (415)(1,715)233 (1,948)
Gain on sale of assets, net— 63,645 (63,645)— 79,933 (79,933)
Other income408 1,118 (710)416 1,246 (830)
Total other income (expense)28 64,798 (64,770)(1,299)81,412 (82,711)
Income (loss) before income taxes56,608 47,518 9,090 88,031 (130,097)218,128 
Provision for income taxes1,855 1,829 26 3,881 3,168 713 
Net income (loss) from continued operations54,753 45,689 9,064 84,150 (133,265)217,415 
Net loss from discontinued operations, net of income taxes— (35,929)35,929 — (86,634)86,634 
Net income (loss)54,753 9,760 44,993 84,150 (219,899)304,049 
Less: Net loss attributable to non-controlling interest in consolidated subsidiaries:
Continued operations— — — — — — 
Discontinued operations— (8,480)8,480 — (15,946)15,946 
Less: Dividends on preferred shares8,335 6,791 1,544 15,126 13,582 1,544 
Net income (loss) attributable to shareholders from continuing operations$46,418 $11,449 $34,969 $69,024 $(217,535)$286,559 

36
 Three Months Ended September 30, Change Nine Months Ended
September 30,		 Change
(Dollar amounts in thousands)
2017 2016  2017 2016 
Revenues 
Equipment leasing revenues           
Lease income$29,741
 $21,600
 $8,141
 $70,872
 $49,852
 $21,020
Maintenance revenue17,533
 7,646
 9,887
 46,778
 19,037
 27,741
Finance lease income385
 403
 (18) 1,156
 2,324
 (1,168)
Other revenue1,957
 405
 1,552
 2,581
 767
 1,814
Total equipment leasing revenues49,616
 30,054
 19,562
 121,387
 71,980
 49,407
Infrastructure revenues           
 Lease income455
 16
 439
 594
 16
 578
 Rail revenues8,258
 7,401
 857
 24,323
 23,107
 1,216
 Terminal services revenues1,730
 4,255
 (2,525) 9,622
 11,271
 (1,649)
 Other revenue303
 —
 303
 303
 —
 303
Total infrastructure revenues10,746
 11,672
 (926) 34,842
 34,394
 448
Total revenues60,362
 41,726
 18,636
 156,229
 106,374
 49,855
            
Expenses           
Operating expenses23,688
 17,028
 6,660
 66,025
 48,937
 17,088
General and administrative3,439
 3,205
 234
 10,615
 9,154
 1,461
Acquisition and transaction expenses1,732
 1,688
 44
 5,064
 4,622
 442
Management fees and incentive allocation to affiliate3,771
 4,146
 (375) 11,529
 12,725
 (1,196)
Depreciation and amortization24,784
 15,376
 9,408
 62,382
 43,294
 19,088
Interest expense8,914
 5,416
 3,498
 21,292
 15,839
 5,453
Total expenses66,328
 46,859
 19,469
 176,907
 134,571
 42,336

           
Other (expense) income           
Equity in (losses) earnings of unconsolidated entities132
 (1,161) 1,293
 (1,461) (1,335) (126)
Gain on sale of equipment and finance leases, net2,709
 40
 2,669
 6,726
 3,307
 3,419
Gain/(loss) on extinguishment of debt—
 —
 —
 (2,456) (1,579) (877)
Asset impairment—
 —
 —
 —
 (7,450) 7,450
Interest income215
 206
 9
 582
 87
 495
Other income2,148
 485
 1,663
 2,180
 583
 1,597
Total other income (expense)5,204
 (430) 5,634
 5,571
 (6,387) 11,958
Loss before income taxes(762) (5,563) 4,801
 (15,107) (34,584) 19,477
Provision for income taxes909
 83
 826
 1,585
 195
 1,390
Net loss(1,671) (5,646) 3,975
 (16,692) (34,779) 18,087
Less: Net loss attributable to non-controlling interest in consolidated subsidiaries(4,669) (4,370) (299) (13,816) (16,528) 2,712
Net income (loss) attributable to shareholders$2,998
 $(1,276) $4,274
 $(2,876) $(18,251) $15,375
Add: Provision for income taxes909
 83
 826
 1,585
 195
 1,390
Add: Equity-based compensation expense (income)165
 28
 137
 695
 (3,818) 4,513
Add: Acquisition and transaction expenses1,732
 1,688
 44
 5,064
 4,622
 442
Add: Losses on the modification or extinguishment of debt and capital lease obligations—
 —
 —
 2,456
 1,579
 877


45



 Three Months Ended September 30, Change Nine Months Ended
September 30,		 Change
(Dollar amounts in thousands)
2017 2016  2017 2016 
Add: Changes in fair value of non-hedge derivative instruments(1,036) —
 (1,036) (1,036) 3
 (1,039)
Add: Asset impairment charges—
 —
 —
 —
 7,450
 (7,450)
Add: Pro-rata share of Adjusted Net (Loss) Income from unconsolidated entities(1)
86
 (1,207) 1,293
 (1,599) (1,444) (155)
Add: Incentive allocations—
 —
 —
 —
 —
 —
Less: Cash payments for income taxes(438) (174) (264) (1,033) (594) (439)
Less: Equity in losses (earnings) of unconsolidated entities(132) 1,161
 (1,293) 1,461
 1,335
 126
Less: Non-controlling share of Adjusted Net (Loss) Income (2)
(447) (170) (277) (503) (2,891) 2,388
Adjusted Net Income (Loss)$3,837
 $133
 $3,704
 $4,214
 $(11,814) $16,028
______________________________________________________________________________________
(1) Pro-rata share of Adjusted Net Income from unconsolidated entities includes the Company’s proportionate share of the unconsolidated entities’ net income adjusted for the excluded and included items detailed in the table above.
(2) Non-controlling share of Adjusted Net (Loss) Income is comprised of the following for the threemonths endedSeptember 30, 2017 and 2016: (i) equity-based compensation of $43 and $6, (ii) provision for income tax of $(1) and $8, (iii) changes in fair value of non-hedge derivative instruments of $404 and $0, and (iv) acquisition and transaction expenses of $0 and $156, less (v) cash tax payments of $(1) and $0, respectively. Non-controlling share of Adjusted Net (Loss) Income is comprised of the following for the nine months endedSeptember 30, 2017 and 2016: (i) equity-based compensation of $118 and $(1,608), (ii) provision for income tax of $12 and $22, (iii) loss on extinguishment of debt of $0 and $616, (iv) acquisition and transaction expenses of $0 and $156, (v) changes in fair value of non-hedge derivative instruments of $404 and $0, and (vi) asset impairment of $0 and $3,725, less (vii) cash tax payments of $31 and $20, respectively.
The following table sets forth a reconciliation of net lossincome (loss) attributable to shareholders from continuing operations to Adjusted EBITDA for the three and nine months ended September 30, 2017 and September 30, 2016:EBITDA:
 Three Months Ended September 30, Change Nine Months Ended
September 30,		 Change
 2017 2016  2017 2016 
 (in thousands)
Net income (loss) attributable to shareholders$2,998
 $(1,276) $4,274
 $(2,876) $(18,251) $15,375
Add: Provision for income taxes909
 83
 826
 1,585
 195
 1,390
Add: Equity-based compensation expense (income)165
 28
 137
 695
 (3,818) 4,513
Add: Acquisition and transaction expenses1,732
 1,688
 44
 5,064
 4,622
 442
Add: Losses on the modification or extinguishment of debt and capital lease obligations—
 —
 —
 2,456
 1,579
 877
Add: Changes in fair value of non-hedge derivative instruments(1,036) —
 (1,036) (1,036) 3
 (1,039)
Add: Asset impairment charges—
 —
 —
 —
 7,450
 (7,450)
Add: Incentive allocations—
 —
 —
 —
 —
 —
Add: Depreciation and amortization expense (3)
26,686
 16,885
 9,801
 67,575
 48,076
 19,499
Add: Interest expense8,914
 5,416
 3,498
 21,292
 15,839
 5,453
Add: Pro-rata share of Adjusted EBITDA from unconsolidated entities (4)
282
 (287) 569
 (209) 1,873
 (2,082)
Less: Equity in losses of unconsolidated entities(132) 1,161
 (1,293) 1,461
 1,335
 126
Less: Non-controlling share of Adjusted EBITDA (5)
(2,753) (3,379) 626
 (7,272) (12,314) 5,042
Adjusted EBITDA (non-GAAP)$37,765
 $20,319
 $17,446
 $88,735
 $46,589
 $42,146

Three Months Ended June 30,ChangeSix Months Ended
June 30,		Change
(in thousands)2023202220232022
Net income (loss) attributable to shareholders from continuing operations$46,418 $38,898 $7,520 $69,024 $(146,847)$215,871 
Add: Provision for income taxes1,855 1,829 26 3,881 3,168 713 
Add: Equity-based compensation expense510 — 510 618 — 618 
Add: Acquisition and transaction expenses2,672 3,219 (547)5,934 5,492 442 
Add: Losses on the modification or extinguishment of debt and capital lease obligations— — — — — — 
Add: Changes in fair value of non-hedge derivative instruments— — — — — — 
Add: Asset impairment charges— 886 (886)1,220 123,676 (122,456)
Add: Incentive allocations5,324 — 5,324 8,266 — 8,266 
Add: Depreciation and amortization expense (1)
48,934 51,108 (2,174)97,704 104,425 (6,721)
Add: Interest expense and dividends on preferred shares46,834 54,680 (7,846)92,917 105,612 (12,695)
Add: Pro-rata share of Adjusted EBITDA from unconsolidated entities (2)
150 152 (2)(546)406 (952)
Less: Equity in losses (earnings) of unconsolidated entities380 (35)415 1,715 (233)1,948 
Less: Non-controlling share of Adjusted EBITDA— — — — — — 
Adjusted EBITDA (non-GAAP)$153,077 $150,737 $2,340 $280,733 $195,699 $85,034 
___________________________________________________
(3) Depreciation and amortization expense includes $24,784 and $15,376 of depreciation and amortization expense, $1,147 and $1,403 of lease intangible amortization, and $755 and $106 of amortization for lease incentives in the three months ended September 30, 2017 and 2016, respectively. Depreciation and amortization expense includes $62,382 and $43,294 of depreciation and amortization expense, $3,494 and $4,557 of lease intangible amortization, and $1,699 and $225 of amortization for lease incentives in the nine months ended September 30, 2017 and 2016, respectively.
(4) Pro-rata share of Adjusted EBITDA from unconsolidated entities includes(1) Includes the following items for the three months ended SeptemberJune 30, 20172023 and 2016:2022: (i) net income (loss) of $86 and $(1,208), (ii) interest expense of $176 and $270, and (iii) depreciation and amortization expense

46


of $20$38,514 and $651,$39,303, (ii) lease intangible amortization of $3,616 and $3,310 and (iii) amortization for lease incentives of $6,804 and $8,495, respectively. Pro-rata share of Adjusted EBITDA from unconsolidated entities includesIncludes the following items for the ninesix months ended SeptemberJune 30, 20172023 and 2016:2022: (i) net loss of $1,599 and $1,475, (ii) interest expense of $650 and $931, and (iii) depreciation and amortization expense of $740$79,440 and $2,417,$80,608, (ii) lease intangible amortization of $7,599 and $6,968 and (iii) amortization for lease incentives of $10,665 and $16,849, respectively.
(5) Non-controlling share of Adjusted EBITDA is comprised of(2) Includes the following items for the three months ended SeptemberJune 30, 20172023 and 2016:2022: (i) equity based compensationnet (loss) income of $43$(380) and $6,$35, (ii) provision for income taxes of $(1) and $8, (iii) interest expense of $485 and $1,538, (iv) depreciation and amortization expense of $1,822$435 and $1,671, (v)$117 and (iii) acquisition and transaction expensesexpense of $0 and $156, and (vi) changes in fair value of non-hedge derivative instruments of $404$95 and $0, respectively. Non-controlling share of Adjusted EBITDA is comprised ofIncludes the following items for the ninesix months ended SeptemberJune 30, 20172023 and 2016:2022: (i) equity based compensationnet (loss) income of $118$(1,715) and $(1,608),$233, (ii) provision for income taxes of $12 and $22, (iii) interest expense of $1,489 and $4,494, (iv) depreciation and amortization expense of $5,249$835 and $4,909, (v) loss on extinguishment of debt of $0$173 and $616, (vi) changes in fair value of non-hedge derivative instruments of $404 and $0, (vii)(iii) acquisition and transaction expensesexpense of $334 and $0, and $156, and (viii) asset impairment of $0 and $3,725, respectively.
Revenues
ForPresentation of assets sales
During the third quarter of 2022, we updated our corporate strategy based on the opportunities available in the market such that the sale of aircraft and engines is now an output of our recurring, ordinary activities. As a result of this update, the transaction price allocated to the sale of assets is included in Revenues in the Consolidated Statement of Operations beginning in the third quarter of 2022 and are accounted for in accordance with ASC 606. The corresponding net book values of the assets sold are recorded in Cost of sales in the Consolidated Statement of Operations beginning in the third quarter of 2022. Sales transactions of aircraft and engines prior to the third quarter of 2022 were accounted for in accordance with ASC 610-20, Gains and losses from the derecognition of nonfinancial assets and were included in Gain (loss) on sale of assets, net on the Consolidated Statement of Operations, as we were previously only occasionally selling these assets. Generally, assets sold were included in Leasing equipment, net, on the Consolidated Balance Sheets.
Comparison of the three months ended SeptemberJune 30, 2017, total2023 and 2022
Total revenues increased $18,636 as compared to the three months ended September 30, 2016$162.3 million primarily due to higher revenues across a majority of our segments, including Aviation Leasing, Offshore Energy, Railroad and Ports and Terminals. These increases were partially offset by lower revenues in our Jefferson Terminal segment.
In Equipment Leasing, revenue increased $19,562 during the three months ended September 30, 2017 as compared to the three months ended September 30, 2016 primarily due a greater number of assets on lease in the Aviation Leasing segment. Additionally, we continued to increase the number of aircraft and engines subject to leases with maintenance arrangements resulting in higher maintenance revenue of $9,887 and higher lease income of $8,141 compared to the three months ended September 30, 2016.
In Infrastructure, for the three months ended September 30, 2017, revenue was $926 lower than the three months ended September 30, 2016 primarily reflecting lower revenue from Jefferson Terminal of $2,525 resulting from a decrease in volume. This decrease was partially offset by increased revenue in our Ports and Terminal segment of $439 due to a lease contract at Hannibal, which was acquired in July of 2016, coupled with increased Railroad revenue of $857 reflecting an increase in traffic.Asset sales revenue, Aerospace products revenue and Lease income.
For the nine months ended September 30, 2017, total revenuesAsset sales revenue increased $49,855 compared to the nine months ended September 30, 2016$101.5 million primarily due to higher revenuesan increase in the sale of commercial aircraft and engines in our Aviation Leasing Offshore Energy, Railroadsegment during 2023. See above discussion regarding presentation of asset sales.
Aerospace products revenue increased $41.6 million primarily driven by an increase in sales relating to the CFM56-7B and PortsCFM56-5B engines, engine modules, spare parts and Terminals segments. Increases across the aforementioned segments were partially offset by decreasesused material inventory as operations continued to ramp-up in the Jefferson Terminal and Shipping Containers segments.2023.
In Equipment Leasing, leaseLease income increased $21,020during the nine months endedSeptember 30, 2017 compared to the nine months ended September 30, 2016$19.9 million primarily due to an increase in the number of assetsaircraft placed on lease in the Aviation Leasing segment. Additionally, we continued to increase the number of aircraft and engines subject to leases with maintenance arrangements resulting in an increase to our maintenance revenue of $27,741. These increases were partially offset by a $1,168 decrease in finance lease income primarily driven by the sale of 42,000 shipping containers during the first quarter of 2016.
In Infrastructure, rail revenues increased $1,216 during the nine months endedSeptember 30, 2017 as compared to the nine months ended September 30, 2016 due to an increase in traffic and expanded service offerings in the first quarterOffshore Energy business driven by increased number of 2017 bydays on-hire for one of our Railroad segment. Lease income increased by $578 invessels.

37


Comparison of the ninesix months ended SeptemberJune 30, 2017 from a lease contract at Hannibal, which was acquired in June 2017. The increases were partially offset by lower Jefferson Terminal revenue of $1,649 primarily due to lower volumes in the first nine months of 2017 compared to the same period of 2016.2023 and 2022
Expenses
For the three months ended September 30, 2017 total expensesTotal revenues increased $19,469 compared to the three months ended September 30, 2016 primarily due to higher: (i) depreciation expense, (ii) operating expenses and (iii) interest expense.
Operating expenses increased $6,660 during the three months ended September 30, 2017 as compared to the three months ended September 30, 2016 primarily due to higher (i) professional fees of $2,175, (ii) facility operations costs of $1,455 reflecting increased costs in our Ports & Terminal and Railroad segments, (iii) compensation of $947, including stock-based compensation and benefits at our Jefferson Terminal and Railroad segments, coupled with non-stock-based compensation expenses at our Ports and Terminals segment and (iv) operating expenditures related to Offshore Energy equipment.
Depreciation and amortization expenses increased $9,408 during the three months ended September 30, 2017 as compared to the three months ended September 30, 2016 primarily due to additional assets acquired and placed on lease in the Aviation Leasing segment.
Interest expense increased $3,498 during the three months ended September 30, 2017 as compared to the three months ended September 30, 2016 primarily due to the issuance of the Senior Notes in the first quarter of 2017 coupled with the drawdown of the Revolving Credit Facility in the third quarter of 2017. Refer to Note 8 of the Consolidated Financial Statements for further detail.
For the nine months ended September 30, 2017 total expenses increased $42,336 compared to the nine months ended September 30, 2016 mainly due to higher (i) operating expenses, (ii) depreciation and amortization and (iii) interest expense.

47


Operating expenses increased $17,088 during the nine months ended September 30, 2017 as compared to the nine months ended September 30, 2016$363.3 million primarily due to an increase in (i) compensation, including stock compensationAsset sales revenue, Aerospace products revenue, Lease income and benefits, of $7,188Other revenue.
Asset sales revenue increased $210.2 million primarily due to a reversal of stock compensationan increase in the first quartersale of 2016 coupled with higher compensation costscommercial aircraft and engines in our PortsAviation Leasing segment during 2023. See above discussion regarding presentation of asset sales.
Aerospace products revenue increased $112.4 million primarily driven by an increase in sales relating to the CFM56-7B and TerminalsCFM56-5B engines, engine modules, spare parts and Jefferson segments, (ii) facilityused material inventory as operations of $3,968 primarilycontinued to ramp-up in the Railroad segment due to higher volumes in the first quarter of 2017, and (iii) professional fees of $4,4722023.
Lease income increased $36.6 million primarily due to legal costs related to our vesselsan increase in the number of aircraft placed on lease and an increase in the Offshore Energy segment andbusiness driven by increased number of days on-hire for one of our aircraft and engines on leasevessels.
Other revenue increased $3.7 million primarily due to an increase in end-of-lease redelivery compensation in the Aviation Leasing segment. Offsettingsegment and an increase in the increase were lower environmental and legal feesOffshore Energy business driven by increased number of $1,917, primarily indays on-hire for one of our Jefferson Terminal segment, coupled with lower general and administrative expensesvessels.
Expenses
Comparison of $1,050.
General and administrative expenses at the Corporate segment increased $1,461 during the ninethree months ended SeptemberJune 30, 2017 as compared to the nine months ended September 30, 2016 attributable to higher professional fees including legal, tax consulting2023 and audit fees as we continue to grow our business, coupled with higher reimbursements to our Manager.2022
Acquisitions and transactionTotal expenses including advisory, legal, accounting, valuation and other professional or consulting fees, increased $442 during the nine months ended September 30, 2017 as compared to the nine months ended September 30, 2016 as we continue to pursue new business opportunities.
Depreciation and amortization increased $19,088 during the nine months ended September 30, 2017 as compared to the nine months ended September 30, 2016$88.4 million, primarily due to additional assets acquiredhigher (i) Cost of sales, (ii) Operating expenses and placed on lease(iii) Management fees and incentive allocation to affiliate, partially offset by lower (iv) Interest expense.
Cost of sales increased $89.4 million primarily as a result of an increase in asset sales and Aerospace Products sales and the gross presentation of Asset sales revenue and Aerospace products revenue as described above.
Operating expenses increased $5.8 million, primarily due to an increase of $5.1 million in the Aviation Leasing segment.Offshore Energy business which reflects increases in crew expenses, project costs and other operating expenses for one of our vessels driven by increased cost of operations based on the operating location of the vessel as well as increased number of days on-hire.
Management fees decreased $1,196 during the nine months ended September 30, 2017 as comparedand incentive allocation to affiliate increased $5.6 million primarily due to an increase in incentive fee due to the nine months ended September 30, 2016 due toManager.
Interest expense decreased $9.4 million which reflects a decrease in the average valueoutstanding debt of our total equity as comparedapproximately $581.0 million due to decreases in (i) the first nine months2021 Bridge Loans of 2016.$339.8 million, (ii) the Senior Notes due 2025 of $199.4 million, which were partially redeemed in August 2022, and (iii) the Revolving Credit Facility of $41.8 million.
Interest expense increased $5,453 duringComparison of the ninesix months ended SeptemberJune 30, 2017 as compared to the nine months ended September 30, 20162023 and 2022
Total expenses increased $62.5 million, primarily due to higher (i) Cost of sales and (ii) Management fees and incentive allocation to affiliate, partially offset by lower (iii) Asset impairment, (iv) Operating expenses and (v) Interest expense.
Cost of sales increased $226.0 million primarily as a result of an increase in asset sales and Aerospace Products sales and the issuancegross presentation of Asset sales revenue and Aerospace products revenue as described above.
Management fees and incentive allocation to affiliate increased $8.6 million primarily due to an increase in incentive fee due to the Manager.
Asset impairment decreased $122.5 million primarily due to the write down in 2022 of aircraft and engines located in Ukraine and Russia that may not be recoverable. See Note 4 to the consolidated financial statements for additional information.
Operating expenses decreased $33.5 million which primarily reflects:
•a decrease of $46.9 million in the Aviation Leasing segment primarily as a result of decreases in provision for credit losses and other expenses as a result of the sanctions imposed on Russian airlines in 2022.
•an increase of $11.2 million in the Offshore Energy business which reflects increases in offshore crew expenses, project costs and other operating expenses for one of our vessels driven by increased cost of operations based on the operating location of the vessel as well as increased number of days on-hire.
•an increase of $2.3 million in the Aerospace Products segment primarily due to an increase in commission expenses due to the increase in sales from the used material program.
Interest expense decreased $14.2 million, which reflects a decrease in the average outstanding debt of approximately $503.5 million due to decreases in (i) the 2021 Bridge Loans of $299.9 million and (ii) the Senior Notes due 2025 of $199.3 million, which were partially redeemed in August 2022, and (iii) the first quarterRevolving Credit Facility of 2017 and the draw down on the revolver in the third quarter of 2017. Partially offsetting this increase was lower interest expense in the Jefferson Terminal segment reflecting the capitalization of interest related to new projects in 2017. Refer to the Note 8 of the Consolidated Financial Statements for further detail.$4.3 million.
38


Other (Expense) Incomeincome (expense)
ForTotal other income decreased $64.8 million during the three months ended SeptemberJune 30, 2017 compared2023 which primarily reflects (i) a decrease of $63.6 million in Gain on sale of assets, net in the Aviation Leasing and Aerospace Products segments due to the change in presentation of asset sales as described above and (ii) a decrease of $0.4 million in Aviation Leasing’s and Aerospace Products’ proportionate share of unconsolidated entities’ net loss. See above discussion regarding presentation of asset sales and impact on Gain on sales of assets, net.
Total other income decreased $82.7 million during six months ended June 30, 2023 which primarily reflects (i) a decrease of $79.9 million in Gain on sale of assets, net in the Aviation Leasing and Aerospace Products segments due to the change in presentation of asset sales as described above and (ii) an increase of $1.9 million in Aviation Leasing’s and Aerospace Products’ proportionate share of unconsolidated entities’ net loss. See above discussion regarding presentation of asset sales and impact on Gain on sales of assets, net.
Net income from continuing operations
Net income from continuing operations increased $9.1 million for the three months ended SeptemberJune 30, 2016, total other income2023 and increased $5,634 primarily reflecting higher gains on sales of equipment of $2,669 reflecting opportunistic sales of Aviation assets coupled with equity in earnings of unconsolidated entities compared to losses in$217.4 million for the same period of 2016.
For the ninesix months ended SeptemberJune 30, 2017, total other income increased $11,9582023 as compared to the nine months ended September 30, 2016. In 2016, an asset impairment charge of $7,450 was recorded for the MT 6015 vessel. In addition, during 2017, the Aviation Leasing segment had an increase of $3,419 in gain on sale of equipment due to opportunistic sales of assets.
Net Loss
Net loss attributable to shareholders for the three and nine months ended September 30, 2017 decreased $4,274 and $15,375, respectively, compared to the same periods in 2016,prior years primarily due to the changes discussednoted above.
Adjusted Net Income/(Loss)loss from discontinued operations
Adjusted net income increased $3,704Net loss from discontinued operations decreased $35.9 million and $16,028 $86.6 million for the three and ninesix months ended SeptemberJune 30, 2017,2023, respectively, compared to the same periods in 2016, primarily due to the changes in revenue, expensesprior year as these businesses have spun off and other income/(loss) noted above, and the increase in equity based compensation of $137 and $4,513 for the three and nine months ended September 30, 2017, respectively. Also contributing to the increase for the nine months ended September 30, 2017 was an increasethere is no corresponding activity in the equity in losses of unconsolidated entities of $126 and an increase in losses from the extinguishment of debt of $877 coupled with changes in the non-controlling share of Adjusted Net Income of $277 and $2,388 for the three and nine months ended September 30, 2017, respectively. Additionally, the change in the fair value of the non-hedge derivative instrument impacted Adjusted Net Income/(Loss) of $1,036 in both the three and nine months ended September 30, 2017.current period.
Adjusted EBITDA (Non-GAAP)
Adjusted EBITDA was $37,765 forincreased $2.3 million and $85.0 million during the three and six months ended SeptemberJune 30, 2017, an increase of $17,446 compared to the same period of 2016. In addition2023, respectively, primarily due to the changes in revenue, expenses and income/(loss) noted above, which resulted in an increase in net income, the change was primarily due to increased depreciation and amortization expense from additional assets acquired and placed into service and increased interest expense. These changes were partially offset by the change in the fair value of the non-hedge derivative instrument.above.

48


Adjusted EBITDA was $88,735 for the nine months ended September 30, 2017, an increase of $42,146 compared to the same period of 2016. In addition to the changes in revenue, expenses and income/(loss) noted above, which resulted in a net decrease in loss attributable to shareholders, the change was primarily due to (i) increased depreciation and amortization expense from additional assets acquired and placed into service, (ii) decreased non-controlling share of Adjusted EBITDA, (iii) increased equity-based compensation and (iv) increased equity in losses of unconsolidated entities. Partially offsetting these changes was the change in the fair value of the non-hedge derivative instrument and the 2016 asset impairment charge. There was no impairment charge in the nine months ended September 30, 2017.
Aviation Leasing Segment

As of SeptemberJune 30, 2017,2023, in our Aviation Leasing segment, we own and manage 141344 aviation assets, consisting of 3897 commercial aircraftand 103 commercial jet engines.247 engines, including four aircraft that were still located in Ukraine and eight aircraft and seventeen engines that were still located in Russia.
As of SeptemberJune 30, 2017, 372023, 77 of our commercial aircraft and 71148 of our jet engines were leased to operators or other third parties. Aviation assets currently off lease are either undergoing repair and/or maintenance, being prepared to go on lease or held in short term storage awaiting a future lease. Our aviation equipment was approximately 88%77% utilized as of Septemberduring the three months ended June 30, 2017,2023, based on the equity valuepercent of our on-hire leasing equipment as a percentage ofdays on-lease in the totalquarter weighted by the monthly average equity value of our aviation leasing equipment.equipment, excluding airframes. Our aircraft currently have a weighted average remaining lease term of 3443 months, and our jet engines currently on-lease have an average remaining lease term of 1110 months. The table below provides additional information on the assets in our Aviation Leasing segment:
Aviation AssetsWidebodyNarrowbodyTotal
Aircraft
Assets at January 1, 20238 98 106 
Purchases— 20 20 
Sales(2)(8)(10)
Transfers(1)(18)(19)
Assets at June 30, 20235 92 97 
Engines
Assets at January 1, 202340 184 224 
Purchases2 43 45 
Sales(6)(14)(20)
Transfers2 (4)(2)
Assets at June 30, 202338 209 247 
Aviation AssetsWidebody Narrowbody Total
Aircraft     
Assets at January 1, 20177
 19
 26
Purchases3
 14
 17
Sales(1) (4) (5)
Assets at September 30, 20179
 29
 38
      
Jet Engines     
Assets at January 1, 201738
 28
 66
Purchases22
 28
 50
Sales(9) (4) (13)
Assets at September 30, 201751
 52
 103



49
39




The following table presents our results of operations and reconciliation of net income attributable to shareholders to Adjusted Net Income for theour Aviation Leasing segment for the three and nine months ended September 30, 2017 and September 30, 2016:segment:
Three Months Ended June 30,ChangeSix Months Ended
June 30,		Change
(in thousands)2023202220232022
Revenues
Lease income$48,167 $37,298 $10,869 $96,997 $71,256 $25,741 
Maintenance revenue42,065 39,932 2,133 77,206 76,664 542 
Asset sales revenue101,486 — 101,486 210,177 — 210,177 
Other revenue313 5,204 (4,891)6,691 5,226 1,465 
Total revenues192,031 82,434 109,597 391,071 153,146 237,925 
Expenses
Cost of sales69,558 — 69,558 161,792 — 161,792 
Operating expenses7,578 7,130 448 14,666 61,602 (46,936)
Acquisition and transaction expenses1,169 168 1,001 2,631 377 2,254 
Depreciation and amortization35,713 37,191 (1,478)73,853 76,419 (2,566)
Asset impairment— 886 (886)1,220 123,676 (122,456)
Total expenses114,018 45,375 68,643 254,162 262,074 (7,912)
Other income
Equity in (losses) earnings of unconsolidated entities(35)246 (281)(134)798 (932)
Gain on sale of assets, net— 54,784 (54,784)— 61,371 (61,371)
Other income408 38 370 416 203 213 
Total other income373 55,068 (54,695)282 62,372 (62,090)
Income (loss) before income taxes78,386 92,127 (13,741)137,191 (46,556)183,747 
Provision for income taxes1,087 715 372 2,082 1,701 381 
Net income (loss)77,299 91,412 (14,113)135,109 (48,257)183,366 
Less: Net loss attributable to non-controlling interest in consolidated subsidiaries— — — — — — 
Net income (loss) attributable to shareholders from continuing operations$77,299 $91,412 $(14,113)$135,109 $(48,257)$183,366 

40
 Three Months Ended September 30, Change Nine Months Ended
September 30,		 Change
(Dollar amounts in thousands)
2017 2016  2017 2016 
Revenues 
Equipment leasing revenues           
Lease income$25,941
 $19,039
 $6,902
 $63,577
 $46,636
 $16,941
Maintenance revenue17,533
 7,646
 9,887
 46,778
 19,037
 27,741
Other revenue—
 375
 (375) 2
 687
 (685)
Total revenues43,474
 27,060
 16,414
 110,357
 66,360
 43,997
            
Expenses           
Operating expenses1,706
 892
 814
 4,496
 2,875
 1,621
Acquisition and transaction expenses6
 —
 6
 276
 —
 276
Depreciation and amortization17,909
 9,376
 8,533
 43,284
 25,307
 17,977
Total expenses19,621
 10,268
 9,353
 48,056
 28,182
 19,874
            
Other income (expense)           
Equity losses of unconsolidated entities(203) —
 (203) (1,046) —
 (1,046)
Gain on sale of equipment, net2,871
 —
 2,871
 6,932
 2,717
 4,215
Interest income51
 6
 45
 210
 9
 201
Total other income2,719
 6
 2,713
 6,096
 2,726
 3,370
Income before income taxes26,572
 16,798
 9,774
 68,397
 40,904
 27,493
Provision for income taxes927
 100
 827
 1,598
 188
 1,410
Net income25,645
 16,698
 8,947
 66,799
 40,716
 26,083
Less: Net income attributable to non-controlling interest in consolidated subsidiaries303
 60
 243
 445
 350
 95
Net income attributable to shareholders$25,342
 $16,638
 $8,704
 $66,354
 $40,366
 $25,988
Add: Provision for income taxes927
 100
 827
 1,598
 188
 1,410
Add: Equity-based compensation expense—
 —
 —
 —
 —
 —
Add: Acquisition and transaction expenses6
 —
 6
 276
 —
 276
Add: Losses on the modification or extinguishment of debt and capital lease obligations—
 —
 —
 —
 —
 —
Add: Changes in fair value of non-hedge derivative instruments—
 —
 —
 —
 —
 —
Add: Asset impairment charges—
 —
 —
 —
 —
 —
Add: Pro-rata share of Adjusted Net Income from unconsolidated entities(1)
(203) —
 (203) (1,046) —
 (1,046)
Add: Incentive allocations—
 —
 —
 —
 —
 —
Less: Cash payments for income taxes(1) (174) 173
 (1) (538) 537
Less: Equity in losses of unconsolidated entities203
 —
 203
 1,046
 —
 1,046
Less: Non-controlling share of Adjusted Net Income—
 —
 —
 —
 —
 —
Adjusted Net Income$26,274
 $16,564
 $9,710
 $68,227
 $40,016
 $28,211

(1) Pro-rata share of Adjusted Net Income from unconsolidated entities includes Aviation’s proportionate share of the unconsolidated entities’ net income adjusted for the excluded and included items detailed in the table above, for which there were no adjustments.

50



The following table sets forth a reconciliation of net income attributable to shareholders to Adjusted EBITDA for the Aviation Leasing segment for the three and nine months ended September 30, 2017 and September 30, 2016:
 Three Months Ended September 30, Change Nine Months Ended
September 30,		 Change
 2017 2016  2017 2016 
(Dollar amounts in thousands)

Net income attributable to shareholders$25,342
 $16,638
 $8,704
 $66,354
 $40,366
 $25,988
Add: Provision for income taxes927
 100
 827
 1,598
 188
 1,410
Add: Equity-based compensation expense—
 —
 —
 —
 —
 —
Add: Acquisition and transaction expenses6
 —
 6
 276
 —
 276
Add: Losses on the modification or extinguishment of debt and capital lease obligations—
 —
 —
 —
 —
 —
Add: Changes in fair value of non-hedge derivative instruments—
 —
 —
 —
 —
 —
Add: Asset impairment charges—
 —
 —
 —
 —
 —
Add: Incentive allocations—
 —
 —
 —
 —
 —
Add: Depreciation and amortization expense (2)
19,811
 10,885
 8,926
 48,477
 30,089
 18,388
Add: Interest expense—
 —
 —
 —
 —
 —
Add: Pro-rata share of Adjusted EBITDA from unconsolidated entities(3)
(203) —
 (203) (1,046) —
 (1,046)
Less: Equity in losses of unconsolidated entities203
 —
 203
 1,046
 —
 1,046
Less: Non-controlling share of Adjusted EBITDA(4)
(192) (41) (151) (354) (123) (231)
Adjusted EBITDA (non-GAAP)$45,894
 $27,582
 $18,312
 $116,351
 $70,520
 $45,831
______________________________________________________________________________________
(2) Depreciation and amortization expense includes $17,909 and $9,376 of depreciation expense, $1,147 and $1,403 of lease intangible amortization, and $755 and $106 of amortization for lease incentives in the three months ended September 30, 2017 and 2016, respectively. Depreciation and amortization expense includes $43,284 and $25,307 of depreciation expense, $3,494 and $4,557 of lease intangible amortization, and $1,699 and $225 of amortization for lease incentives in the nine months ended September 30, 2017 and 2016, respectively.
(3) Aviation Leasing's pro-rata share of Adjusted EBITDA from unconsolidated entities includes net loss of $203 and $0 for the three months ended September 30, 2017 and 2016, respectively. Aviation Leasing’s pro-rata share of Adjusted EBITDA from unconsolidated entities includes net loss of $1,046 and $0 in the nine months ended September 30, 2017 and 2016, respectively.
(4) Non-controlling share of Adjusted EBITDA is comprised of depreciation and amortization expense of $192 and $41 for the three months ended September 30, 2017 and 2016, respectively. Non-controlling share of Adjusted EBITDA is comprised of depreciation and amortization expense of $354 and $123 for the nine months ended September 30, 2017 and 2016, respectively.
Revenues
Total revenues in the Aviation Leasing segment increased $16,414 in the three months ended September 30, 2017 as compared to the three months ended September 30, 2016, due to higher lease income and maintenance revenue driven by newly acquired assets. Lease income increased $6,902 primarily due to higher aircraft lease income of $2,639 driven by the addition of 17 aircraft on lease partially offset by the redelivery of two aircraft. Engine lease income increased $4,263 primarily driven by an increase in the number of engines which generated revenue from 34 in the three months ended September 30, 2016 to 76 in the three months ended September 30, 2017. Maintenance revenue increased $9,887 reflecting additional aircraft and engines on lease. Engine maintenance and aircraft maintenance revenue increased $7,646 and $2,241, respectively, in the three months ended September 30, 2017 as compared to the three months ended September 30, 2016.
Total revenues in the Aviation Leasing segment increased $43,997 in the nine months ended September 30, 2017 as compared to the nine months ended September 30, 2016, due to higher lease income and maintenance revenue reflecting newly acquired assets. Lease income increased $16,941 primarily due to higher aircraft lease income of $6,064 reflecting an additional 17 aircraft on lease partially offset by the redelivery and sale of three aircraft. Engine lease income increased $10,877 primarily driven by an increase in the number of engines which generated revenue from 40 in the nine months ended September 30, 2016 to 79 in the nine months ended September 30, 2017. Maintenance revenue increased $27,741 due to a higher number of aircraft and engines on lease and the receipt of end-of-lease compensation for two aircraft. Engine maintenance and aircraft maintenance revenue increased $17,355 and $10,386, respectively, in the nine months ended September 30, 2017 as compared to the nine months ended September 30, 2016.

51


Expenses
Total expenses in the Aviation Leasing segment increased $9,353 in the three months ended September 30, 2017 as compared to the three months ended September 30, 2016 primarily due to an increase in depreciation and amortization and an increase in operating expenses. Depreciation and amortization increased by $8,533 reflecting the depreciation of additional aircraft and engines owned or put on lease in the three months ended September 30, 2017. Operating expenses increased $814 primarily reflecting increases in (i) professional fees of $456 due to an increased number of assets on lease, (ii) aviation shipping expense of $246 due to the positioning of our assets for lease and (iii) other operating expense of $112 due to the overall growth of the aviation portfolio.
Total expenses in the Aviation Leasing segment increased $19,874 in the nine months ended September 30, 2017 as compared to the nine months ended September 30, 2016 primarily due to an increase in depreciation and amortization and an increase in operating expenses. Depreciation and amortization increased by $17,977 reflecting the depreciation of additional aircraft and engines owned or put on lease in the nine months ended September 30, 2017. Operating expenses increased $1,621 in the nine months ended September 30, 2017 as compared to the nine months ended September 30, 2016, primarily reflecting increases in (i) professional fees of $912 due to an increased number of assets on lease, (ii) aviation shipping expense of $593 due to the positioning of our assets for lease and (iii) other operating expense of $116 due to the overall growth of the aviation portfolio. Acquisitions and transaction expenses increased $276 in the nine months ended September 30, 2017 compared to the same period of 2016 as we continue to pursue new business opportunities.
Other Income
Total other income in the Aviation Leasing segment increased $2,713 and $3,370 in the three and nine months ended September 30, 2017 as compared to the three and ninemonths ended September 30, 2016, respectively, reflecting increases in the gain on sale of leasing equipment, partially offset by increases in the equity in losses of unconsolidated entities.
Adjusted Net Income
Adjusted Net Income in the Aviation Leasing segment was $26,274 and $68,227 for the three and ninemonths ended September 30, 2017, respectively, increasing $9,710 and $28,211 as compared to the three and ninemonths ended September 30, 2016, respectively, primarily reflecting the changes to net income attributable to shareholders noted above, adjusted for the provision for income taxes, acquisition and transaction expenses, and cash payments for income taxes.
Adjusted EBITDA (Non-GAAP)
Adjusted EBITDA in the Aviation Leasing segment was $45,894 and $116,351 for the three and ninemonths ended September 30, 2017, respectively, decreasing $18,312and$45,831 as compared to the three and ninemonths ended September 30, 2016, respectively. In addition to the changes in net income attributable to shareholders noted above, this movement was primarily due to (i) higher depreciation and amortization expense for the additional aircraft and engines owned and on lease in the three and ninemonths ended September 30, 2017, (ii) higher provision for income tax, and (iii) an increase in the acquisition and transaction expenses.
Offshore Energy Segment
In our Offshore Energy segment, we own one remotely operated vehicle (“ROV”) support vessel, one construction support vessel and one anchor handling tug supply (“AHTS”) vessel. The chart below describes the assets in our Offshore Energy segment as of September 30, 2017:
Offshore Energy Assets
Asset TypeYear BuiltDescriptionEconomic Interest (%)
AHTS Vessel2010Anchor handling tug supply vessel with accommodation for 30 personnel and a total bollard pull of 68.5 tons100%
Construction Support Vessel2014DP-3 construction support and well intervention vessel with 250-ton main crane, 2,000 square meter open deck space, moon pool and accommodation for 100 personnel100%
ROV Support Vessel2011DP-2 dive and ROV support vessel with 50-ton crane, moon pool and accommodation for 120 personnel100%*

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* The increase in the economic interest in the third quarter of 2017 for the ROV support vessel reflects the transfer of the non-controlling interest to the Company as part of the settlement arrangement as more fully discussed in Note 2 and Note 8 of the Consolidated Financial Statements.
The following table presents our results of operations and reconciliation of net loss attributable to shareholders to Adjusted Net Loss for the Offshore Energy segment for the three and nine months ended September 30, 2017 and September 30, 2016:
 Three Months Ended September 30, Change Nine Months Ended
September 30,		 Change
(Dollar amounts in thousands)
2017 2016  2017 2016 
Revenues 
Equipment leasing revenues           
Lease income$3,800
 $2,561
 $1,239
 $7,295
 $3,216
 $4,079
Finance lease income385
 403
 (18) 1,156
 1,212
 (56)
Other revenue1,932
 5
 1,927
 2,504
 5
 2,499
Total revenues6,117
 2,969
 3,148
 10,955
 4,433
 6,522
            
Expenses           
Operating expenses5,103
 2,408
 2,695
 12,661
 8,410
 4,251
Depreciation and amortization1,607
 1,669
 (62) 4,820
 4,927
 (107)
Interest expense946
 934
 12
 2,800
 2,805
 (5)
Total expenses7,656
 5,011
 2,645
 20,281
 16,142
 4,139
            
Other income (expense)           
Asset impairment—
 —
 —
 —
 (7,450) 7,450
Interest income4
 4
 —
 11
 9
 2
Other income1,093
 —
 1,093
 1,093
 —
 1,093
Total other income (expense)1,097
 4
 1,093
 1,104
 (7,441) 8,545
Loss before income taxes(442) (2,038) 1,596
 (8,222) (19,150) 10,928
Benefit from income taxes(5) —
 (5) —
 —
 —
Net loss(437) (2,038) 1,601
 (8,222) (19,150) 10,928
Less: Net loss attributable to non-controlling interest in consolidated subsidiaries(62) (131) 69
 (526) (4,289) 3,763
Net loss attributable to shareholders$(375) $(1,907) $1,532
 $(7,696) $(14,861) $7,165
Add: Benefit from income taxes(5) —
 (5) —
 —
 —
Add: Equity-based compensation expense—
 —
 —
 —
 —
 —
Add: Acquisition and transaction expenses—
 —
 —
 —
 —
 —
Add: Losses on the modification or extinguishment of debt and capital lease obligations—
 —
 —
 —
 —
 —
Add: Changes in fair value of non-hedge derivative instruments—
 —
 —
 —
 —
 —
Add: Asset impairment charges—
 —
 —
 —
 7,450
 (7,450)
Add: Pro-rata share of Adjusted Net Income from unconsolidated entities—
 —
 —
 —
 —
 —
Add: Incentive allocations—
 —
 —
 —
 —
 —
Less: Cash payments for income taxes—
 —
 —
 —
 —
 —
Less: Equity in earnings of unconsolidated entities—
 —
 —
 —
 —
 —
Less: Non-controlling share of Adjusted Net Income (1)
—
 —
 —
 —
 (3,725) 3,725
Adjusted Net Loss$(380) $(1,907) $1,527
 $(7,696) $(11,136) $3,440
(1)Non-controlling share of Adjusted Net Loss is comprised of asset impairment of $0 and $3,725 for the nine months ended September 30, 2017 and 2016, respectively.

53


The following table sets forth a reconciliation of net loss attributable to shareholders to Adjusted EBITDA for the Offshore Energy segment for the three and nine months ended September 30, 2017 and September 30, 2016:
 Three Months Ended September 30, Change Nine Months Ended
September 30,		 Change
 2017 2016  2017 2016 
(Dollar amounts in thousands)

Net loss attributable to shareholders$(375) $(1,907) $1,532
 $(7,696) $(14,861) $7,165
Add: Benefit from income taxes(5) —
 (5) —
 —
 —
Add: Equity-based compensation expense—
 —
 —
 —
 —
 —
Add: Acquisition and transaction expenses—
 —
 —
 —
 —
 —
Add: Losses on the modification or extinguishment of debt and capital lease obligations—
 —
 —
 —
 —
 —
Add: Changes in fair value of non-hedge derivative instruments—
 —
 —
 —
 —
 —
Add: Asset impairment charges—
 —
 —
 —
 7,450
 (7,450)
Add: Incentive allocations—
 —
 —
 —
 —
 —
Add: Depreciation and amortization expense1,607
 1,669
 (62) 4,820
 4,927
 (107)
Add: Interest expense946
 934
 12
 2,800
 2,805
 (5)
Add: Pro-rata share of Adjusted EBITDA from unconsolidated entities—
 —
 —
 —
 —
 —
Less: Equity in earnings of unconsolidated entities—
 —
 —
 —
 —
 —
Less: Non-controlling share of Adjusted EBITDA (2)
(61) (91) 30
 (247) (3,992) 3,745
Adjusted EBITDA (non-GAAP)$2,112
 $605
 $1,507
 $(323) $(3,671) $3,348

(2) Non-controlling share of Adjusted EBITDA is comprised of the following items for the three months ended September 30, 2017 and 2016: (i) depreciation expense of $42 and $62, and (ii) interest expense of $19 and $29, respectively. Non-controlling share of Adjusted EBITDA is comprised of the following items for the nine months ended September 30, 2017 and 2016: (i) depreciation expense of $165 and $183, (ii) interest expense of $82 and $84, and (iii) asset impairment of $0 and $3,725, respectively.
Revenues
Total revenues in the Offshore Energy segment increased $3,148 and $6,522 in the three and nine months ended September 30, 2017 compared to the three and nine months ended September 30, 2016, respectively, primarily due to higher lease income and other revenue. Other revenue increased $1,927 and $2,499 in the three and nine months ended September 30, 2017 compared to the three and nine months ended September 30, 2016, respectively, relate to the crew and insurance reimbursement income for the offshore construction vessel. In the three and nine months ended September 30, 2017 both the offshore construction vessel and the ROV support vessel were on hire compared to the prior year periods when both the offshore construction vessel and ROV support vessel were subject to short term charter arrangements.
Expenses
Total expenses in the Offshore Energy segment increased $2,645 in the three months ended September 30, 2017 compared to the prior period primarily due to increases in operating expenses.
Operating expenses increased $2,695 in the three months ended September 30, 2017 compared to the prior year. The increase reflected higher (i) project costs of $673, (ii) mobilization costs of $524 (iii) crew costs of $516 (iv) legal fees of $403 and (vi) other operating expenses of $579.
During the three months ended September 30, 2017, there was $1,195 and $412 of depreciation expense related to the construction support vessel and ROV support vessel, respectively, flat compared to the prior period.
During the three months ended September 30, 2017, there was $916 and $30 of interest expense primarily related to financing for the construction support vessel and ROV support vessel, respectively, flat compared to the prior period.
For the nine months ended September 30, 2017, total expenses increased $4,139 compared to the prior period primarily due to increases in operating expenses.

54


Operating expenses increased $4,251 in the nine months ended September 30, 2017 compared to the prior period reflecting higher (i) legal fees of $1,839, (ii) crew costs of $1,370 (iii) project costs of $927 and (iv) other operating expenses of $115.
During the nine months ended September 30, 2017, there was $3,586 and $1,234 of depreciation expense related to the construction support vessel and ROV support vessel, respectively, flat compared to the prior period.
During the nine months ended September 30, 2017, there was $2,708 and $92 of interest expense primarily related to financing for the construction support vessel and ROV support vessel, respectively, flat compared to the prior period.
Other Income
Other Income in the Offshore Energy segment increased $1,093 and $8,545 in the three and nine months ended September 30, 2017 as compared to the three and nine months ended September 30, 2016, respectively, primarily due to transfer of interests from the non-controlling interest holder to the Company as settlement for a note receivable, resulting in a gain of $1,093 in the third quarter of 2017. Also, contributing to the change in the nine months ended was the net impact of the asset impairment recorded in the second quarter of 2016.
Adjusted Net Loss
Adjusted Net Loss decreased $1,527 and $3,440 in the three and nine months ended September 30, 2017 compared to the three and nine months ended September 30, 2016, respectively. The decrease in both periods is primarily due to the changes to net loss attributable to shareholders described above, with the addition of the net impact of the impairment recorded in the second quarter of 2016 contributing to the decrease in the nine months ended September 30, 2017.
Adjusted EBITDA (Non-GAAP)
Adjusted EBITDA increased $1,507 and $3,348 in the three and nine months ended September 30, 2017, compared to the three and nine months ended September 30, 2016, respectively. The increase in both periods is primarily due to lower net loss attributable to shareholders of $1,532 and $7,165 in the three and nine months ended September 30, 2017, respectively, compared to the three months ended September 30, 2017. The increase in both periods was partially offset by a decrease in depreciation and amortization expense of $62 and $107 in the three and nine months ended September 30, 2017, respectively. The increase in the nine months ended September 30, 2017 was also partially offset by the asset impairment charge recorded during 2016, there was no asset impairment in 2017.
Shipping Containers Segment
In our Shipping Containers segment, we own, through a joint venture, interest in approximately 36,000 maritime shipping containers and related equipment through one portfolio. The chart below describes the assets in our Shipping Containers segment as of September 30, 2017:
Shipping Containers Assets
Number of ContainersTypeAverage AgeLease TypeCustomer MixEconomic Interest (%)
36,00020’ Dry
20’ Reefer
40’ Dry
40’ HC Dry
40’ HC Reefer
~9 YearsDirect Finance Lease/Operating Lease5 Customers51%

55


The following table presents our results of operations and reconciliation of Net (loss) income attributable to shareholders to Adjusted Net (Loss) Income for the Shipping Containers segment for the three and nine months ended September 30, 2017 and September 30, 2016:
 Three Months Ended September 30, Change Nine Months Ended
September 30,		 Change
(Dollar amounts in thousands)
2017 2016  2017 2016 
Revenues 
Equipment leasing revenues           
Finance lease income$—
 $—
 $—
 $—
 $1,112
 $(1,112)
Other revenue25
 25
 —
 75
 75
 —
Total revenues25
 25
 —
 75
 1,187
 (1,112)
            
Expenses           
Operating expenses8
 1
 7
 8
 43
 (35)
Interest expense—
 —
 —
 —
 410
 (410)
Total expenses8
 1
 7
 8
 453
 (445)
            
Other (expense) income           
Equity in earnings / (losses) of unconsolidated entities359
 (1,161) 1,520
 (316) (1,335) 1,019
Gain on sale of finance leases, net—
 —
 —
 —
 304
 (304)
Other expense—
 —
 —
 —
 (2) 2
Total other income (expense)359
 (1,161) 1,520
 (316) (1,033) 717
Income (loss) before income taxes376
 (1,137) 1,513
 (249) (299) 50
Benefit from income taxes(10) (41) 31
 (44) (54) 10
Net (loss) income attributable to shareholders$386
 $(1,096) $1,482
 $(205) $(245) $40
Add: Benefit from income taxes(10) (41) 31
 (44) (54) 10
Add: Equity-based compensation expense—
 —
 —
 —
 —
 —
Add: Acquisition and transaction expenses—
 —
 —
 —
 —
 —
Add: Losses on the modification or extinguishment of debt and capital lease obligations—
 —
 —
 —
 —
 —
Add: Changes in fair value of non-hedge derivative instruments—
 —
 —
 —
 3
 (3)
Add: Asset impairment charges—
 —
 —
 —
 —
 —
Add: Pro-rata share of Adjusted Net Income (Loss) from unconsolidated entities (1)
313
 (1,207) 1,520
 (454) (1,444) 990
Add: Incentive allocations—
 —
 —
 —
 —
 —
Less: Cash payments for income taxes—
 —
 —
 —
 —
 —
Less: Equity in earnings / (losses) of unconsolidated entities(359) 1,161
 (1,520) 316
 1,335
 (1,019)
Less: Non-controlling share of Adjusted Net Income—
 —
 —
 —
 —
 —
Adjusted Net Income (Loss)$330
 $(1,183) $1,513
 $(387) $(405) $18

(1) Pro-rata share of Adjusted Net Income from unconsolidated entities includes Shipping’s proportionate share of the unconsolidated entities’ net income adjusted for the excluded and included items detailed in the table above.

56


The following table sets forth a reconciliation of net income (loss) attributable to shareholders to Adjusted EBITDA for the Shipping Containers segment for the three and nine months ended September 30, 2017 and September 30, 2016:
 Three Months Ended September 30, Change Nine Months Ended
September 30,		 Change
(Dollar amounts in thousands)2017 2016  2017 2016 
Net (loss) income attributable to shareholders$386
 $(1,096) $1,482
 $(205) $(245) $40
Add: Benefit from income taxes(10) (41) 31
 (44) (54) 10
Add: Equity-based compensation expense—
 —
 —
 —
 —
 —
Add: Acquisition and transaction expenses—
 —
 —
 —
 —
 —
Add: Losses on the modification or extinguishment of debt and capital lease obligations—
 —
 —
 —
 —
 —
Add: Changes in fair value of non-hedge derivative instruments—
 —
 —
 —
 3
 (3)
Add: Asset impairment charges—
 —
 —
 —
 —
 —
Add: Incentive allocations—
 —
 —
 —
 —
 —
Add: Depreciation and amortization expense—
 —
 —
 —
 —
 —
Add: Interest expense—
 —
 —
 —
 410
 (410)
Add: Pro-rata share of Adjusted EBITDA from unconsolidated entities (2)
509
 (287) 796
 936
 1,873
 (937)
Less: Equity in earnings / (losses) of unconsolidated entities(359) 1,161
 (1,520) 316
 1,335
 (1,019)
Less: Non-controlling share of Adjusted EBITDA—
 —
 —
 —
 —
 —
Adjusted EBITDA (non-GAAP)$526
 $(263) $789
 $1,003
 $3,322
 $(2,319)

(2) The Company’s pro-rata share of Adjusted EBITDA from unconsolidated entities includes the following items for the three months ended September 30, 2017 and 2016: (i) net income (loss) of $313 and $(1,208), (ii) interest expense of $176 and $270, and (iii) depreciation and amortization expense of $20 and $651, respectively. The Company’s pro-rata share of Adjusted EBITDA from unconsolidated entities includes the following items for the nine months ended September 30, 2017 and 2016: net loss of $454 and $1,475, offset by interest expense of $650 and $931, and depreciation and amortization expense of $740 and $2,417, respectively.
Revenues
Total revenues in the Shipping Containers segment were flat and decreased $1,112 in the three and nine months ended September 30, 2017 as compared to the three and nine months ended September 30, 2016, respectively. The decrease for the nine months ended September 30, 2017 compared to September 30, 2016 is primarily driven by the sale of 42,000 shipping containers that were subject to direct finance leases during the first quarter of 2016.
Expenses
Total expenses in the Shipping Containers segment increased $7 and decreased $445, in the three and nine months ended September 30, 2017 as compared to the three and nine months ended September 30, 2016, respectively. The decrease in the nine months ended September 30, 2017, primarily reflects lower interest expense of $410 due to lower principal balances on the term loans along with the termination of the term loan in conjunction with the sale of the shipping containers during the first quarter of 2016. Additionally, the sale of the 42,000 shipping containers resulted in a decrease in operating expense of $35 in the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016.
Other (Expense) Income
Total other income in the Shipping Containers segment increased $1,520 and $717 in the three and nine months ended September 30, 2017 as compared to the three and nine months ended September 30, 2016, respectively. This was primarily driven by income earned from our shipping container joint venture. Also contributing to the decrease in the nine months ended September 30, 2017 period was the gain on sale of direct finance leases of $304 from the sale of 42,000 shipping containers during the first quarter of 2016.
Adjusted Net (Loss) Income
Adjusted Net Income increased $1,513 in the three months ended September 30, 2017 as compared to the three months ended September 30, 2016, primarily due to the changes noted above.
Adjusted Net Loss decreased $18 in the nine months ended September 30, 2017 as compared to the nine months ended September 30, 2016, reflecting the changes noted above coupled with a decrease in the pro-rata share of Adjusted Net Loss from unconsolidated entities. These changes were mostly offset by the change in equity of losses of unconsolidated entities.

57


Adjusted EBITDA (Non-GAAP)
Adjusted EBITDA was $526 and $1,003 in the three and nine months ended September 30, 2017, respectively, an increase of $789 and decrease of $2,319 as compared to the three and nine months ended September 30, 2016, respectively. The increase in the three months ended September 30, 2017 primarily reflects a higher net income partially offset by the change in equity in unconsolidated entities. The decrease in the nine months ended September 30, 2017 primarily reflects the change in equity in unconsolidated entities coupled with a lower pro-rata share of Adjusted EBITDA from unconsolidated entities. Also contributing to the decrease was finance lease income in the nine months ended September 30, 2016 driven by the sale of 42,000 shipping containers during the first quarter of 2016.

58


Jefferson Terminal Segment
The following table presents our results of operations and reconciliation of net loss attributable to shareholders to Adjusted Net Loss for the Jefferson Terminal segment for the three and nine months ended September 30, 2017 and September 30, 2016:
 Three Months Ended September 30, Change Nine Months Ended
September 30,		 Change
(Dollar amounts in thousands)
2017 2016  2017 2016 
Revenues 
Infrastructure revenues           
 Terminal services revenues$1,730
 $4,255
 $(2,525) $9,622
 $11,271
 $(1,649)
Total revenues1,730
 4,255
 (2,525) 9,622
 11,271
 (1,649)
            
Expenses           
Operating expenses7,039
 6,796
 243
 21,919
 16,182
 5,737
Acquisition and transaction expenses—
 109
 (109) —
 400
 (400)
Depreciation and amortization3,978
 3,920
 58
 11,885
 11,589
 296
Interest expense1,408
 4,016
 (2,608) 4,283
 11,804
 (7,521)
Total expenses12,425
 14,841
 (2,416) 38,087
 39,975
 (1,888)
            
Other income (expense)           
Equity in losses of unconsolidated entities(24) —
 (24) (99) —
 (99)
Loss on extinguishment of debt—
 —
 —
 —
 (1,579) 1,579
Interest income (expense)160
 196
 (36) 361
 69
 292
Other income1,055
 485
 570
 1,087
 585
 502
Total other income (expense)1,191
 681
 510
 1,349
 (925) 2,274
Loss before income taxes(9,504) (9,905) 401
 (27,116) (29,629) 2,513
(Benefit from) provision for income taxes(3) 20
 (23) 31
 55
 (24)
Net loss(9,501) (9,925) 424
 (27,147) (29,684) 2,537
Less: Net loss attributable to non-controlling interest in consolidated subsidiaries(4,806) (4,241) (565) (13,209) (12,522) (687)
Net loss attributable to shareholders$(4,695) $(5,684) $989
 $(13,938) $(17,162) $3,224
Add: (Benefit from) provision for income taxes(3) 20
 (23) 31
 55
 (24)
Add: Equity-based compensation expense90
 —
 90
 228
 (4,168) 4,396
Add: Acquisition and transaction expenses—
 109
 (109) —
 400
 (400)
Add: Losses on the modification or extinguishment of debt and capital lease obligations—
 —
 —
 —
 1,579
 (1,579)
Add: Changes in fair value of non-hedge derivative instruments(1,036) —
 (1,036) (1,036) —
 (1,036)
Add: Asset impairment charges—
 —
 —
 —
 —
 —
Add: Pro-rata share of Adjusted Net Loss from unconsolidated entities (1)
(24) —
 (24) (99) —
 (99)
Add: Incentive allocations—
 —
 —
 —
 —
 —
Less: Cash payments for income taxes3
 —
 3
 (79) (52) (27)
Less: Equity in losses of unconsolidated entities24
 —
 24
 99
 —
 99
Less: Non-controlling share of Adjusted Net Loss(2)
(440) (164) (276) (475) 853
 (1,328)
Adjusted Net Loss$(6,081) $(5,719) $(362) $(15,269) $(18,495) $3,226

(1) Pro-rata share of Adjusted Net Loss from unconsolidated entities includes Jefferson’s proportionate share of the unconsolidated entities’ net income adjusted for the excluded and included items detailed in the table above, for which there were no adjustments.
(2) Jefferson Terminal’s non-controlling share of Adjusted Net Loss is comprised of the following for the three months ended September 30, 2017 and 2016: (i) equity-based compensation of $36 and $0, (ii) provision for income taxes of $(1) and $8, (iii) acquisition and transaction expenses of $0 and $156 and (iv) changes in fair value of non-hedge derivative instruments of $404 and $0, less (v) cash tax payments of $(1) and $0, respectively. Jefferson Terminal’s non-controlling share of Adjusted Net Loss is comprised of the following for the nine months

59


ended September 30, 2017 and 2016: (i) equity-based compensation of $90 and $(1,627), (ii) provision for income taxes of $12 and $22, (iii) acquisition and transaction expenses of $0 and $156, (iv) changes in fair value of non-hedge derivative instruments of $404 and $0, and (v) loss on extinguishment of debt of $0 and $616, less (iv) cash paid for income taxes of $31 and $20, respectively.
The following table sets forth a reconciliation of net loss attributable to shareholders to Adjusted EBITDA for the Jefferson Terminal segment for the three and nine months ended September 30, 2017 and September 30, 2016: 
 Three Months Ended September 30, Change Nine Months Ended
September 30,		 Change
(Dollar amounts in thousands)2017 2016  2017 2016 
Net loss attributable to shareholders$(4,695) $(5,684) $989
 $(13,938) $(17,162) $3,224
Add: Provision for income taxes(3) 20
 (23) 31
 55
 (24)
Add: Equity-based compensation expense90
 —
 90
 228
 (4,168) 4,396
Add: Acquisition and transaction expenses—
 109
 (109) —
 400
 (400)
Add: Losses on the modification or extinguishment of debt and capital lease obligations—
 —
 —
 —
 1,579
 (1,579)
Add: Changes in fair value of non-hedge derivative instruments(1,036) —
 (1,036) (1,036) —
 (1,036)
Add: Asset impairment charges—
 —
 —
 —
 —
 —
Add: Incentive allocations—
 —
 —
 —
 —
 —
Add: Depreciation and amortization expense3,978
 3,920
 58
 11,885
 11,589
 296
Add: Interest expense1,408
 4,016
 (2,608) 4,283
 11,804
 (7,521)
Add: Pro-rata share of Adjusted EBITDA from unconsolidated entities (3)
(24) —
 (24) (99) —
 (99)
Less: Equity in losses of unconsolidated entities24
 —
 24
 99
 —
 99
Less: Non-controlling share of Adjusted EBITDA (4)
(2,439) (3,160) 721
 (6,509) (8,043) 1,534
Adjusted EBITDA (non-GAAP)$(2,697) $(779) $(1,918) $(5,056) $(3,946) $(1,110)

(3)Jefferson Terminal's pro-rata share of Adjusted EBITDA from unconsolidated entities includes net loss of $24 and $0 for the three months ended September 30, 2017 and 2016, respectively. Jefferson Terminal’s pro-rata share of Adjusted EBITDA from unconsolidated entities includes net loss of $99 and $0 for the nine months ended September 30, 2017 and 2016, respectively.
(4) Non-controlling share of Adjusted EBITDA is comprised of the following items for the three months ended September 30, 2017 and 2016: (i) equity-based compensation of $36 and $0, (ii) provision for income taxes of $(1) and $8, (iii) interest expense of $447 and $1,466, (iv) acquisition and transaction expenses of $0 and $156, (v) changes in fair value of non-hedge derivative instruments of $404 and $0, and (vi) depreciation and amortization expense of $1,553 and $1,530, respectively. Non-controlling share of Adjusted EBITDA is comprised of the following items for the nine months ended September 30, 2017 and 2016: (i) equity-based compensation of $90 and $(1,627), (ii) provision for income taxes of $12 and $22, (iii) interest expense of $1,364 and $4,353, (iv) loss on extinguishment of debt of $0 and $616, (v) acquisition and transaction expenses of $0 and $156, (vi) changes in fair value of non-hedge derivative instruments of $404 and $0, and (vii) depreciation and amortization expense of $4,639 and $4,523, respectively.
Revenues
Total revenues in the Jefferson Terminal segment decreased $2,525 and $1,649 in the three and nine months ended September 30, 2017 as compared to the three and nine months ended September 30, 2016, respectively, reflecting lower volumes, offset by the realization of deferred revenues.
Expenses
Total expenses in the Jefferson Terminal segment decreased $2,416 in the three months ended September 30, 2017 as compared to the three months ended September 30, 2016. The decrease is due to lower interest expense of $2,608 reflecting the capitalization of interest related to new construction projects in 2017. Partially offsetting the decrease was higher operating expenses of $243, which consisted of higher (i) compensation and benefit expense of $295, (ii) repairs and maintenance expense of $263, (iii) facility operations expense of $13, and (iv) other operating expenses of $82. These increases were partially offset by lower environmental expense of $410 reflecting remediation expense of an oil spill.
Total expenses decreased $1,888 in the nine months ended September 30, 2017 as compared to the nine months ended September 30, 2016, primarily due to lower interest expense of $7,521 reflecting the capitalization of interest related to new construction projects in 2017. Partially offsetting the decrease was higher operating expenses of $5,737. The increase reflects higher (i) compensation and benefits expense of $5,262, (ii) facility operations expense of $995, (iii) repairs and maintenance of $587, (iv) professional fees of $451, and (v) other operating expenses of $288. These increases were partially offset by $1,845 in

60


lower environmental expenses which was the result of remediation expense relating to an oil spill that occurred during the nine months ended September 30, 2016.
Adjusted Net Loss
Adjusted Net Loss was $6,081 in the three months ended September 30, 2017, increasing $362 as compared to the three months ended September 30, 2016. The increase reflects the changes in net loss attributable to shareholders noted above, mostly offset by the change in the fair value of the non-hedge derivative instrument of $1,036.
Adjusted Net Loss was $15,269 in the nine months ended September 30, 2017, decreasing $3,226 as compared to the nine months ended September 30, 2016. The decrease reflects the changes in net loss attributable to shareholders noted above coupled with the increase in equity-based compensation of $4,396. This was partially offset by a decrease in losses on modification or extinguishment of debt of $1,579 coupled with a change in the fair value of the non-hedge derivative instrument of $1,036.
Adjusted EBITDA (Non-GAAP)
Adjusted EBITDA was $(2,697) in the three months ended September 30, 2017, a decrease of $1,918 as compared to the three months ended September 30, 2016. The decrease primarily reflects lower interest expense of $2,608 and the change in fair value of the non-hedge derivative instrument of $1,036. Partially offsetting these decreases was an increase in the non-controlling share of Adjusted EBITDA of $721 coupled with the changes in net loss attributable to shareholders noted above.
Adjusted EBITDA was $(5,056) in the nine months ended September 30, 2017, a decrease of $1,110 as compared to the nine months ended September 30, 2016. The decrease reflects (i) lower interest expense of $7,521, (ii) losses on modification or extinguishment of debt of $1,579 and (iii) the change in the fair value of the non-hedge derivative instrument of $1,036. Partially offsetting these changes was an increase in equity-based compensation of $4,396 coupled with lower net loss attributable to shareholders of $3,224.

61


Railroad Segment
The following table presents our results of operations and reconciliation of net income attributable to shareholders to Adjusted Net Income for the Railroad segment for the three and nine months ended September 30, 2017 and September 30, 2016:
 Three Months Ended September 30, Change Nine Months Ended
September 30,		 Change
(Dollar amounts in thousands)
2017 2016  2017 2016 
Revenues 
Infrastructure revenues           
 Rail revenues$8,258
 $7,401
 $857
 $24,323
 $23,107
 $1,216
Total revenues8,258
 7,401
 857
 24,323
 23,107
 1,216
            
Expenses           
Operating expenses6,980
 6,514
 466
 22,431
 21,004
 1,427
Depreciation and amortization507
 411
 96
 1,525
 1,471
 54
Interest expense264
 182
 82
 710
 536
 174
Total expenses7,751
 7,107
 644
 24,666
 23,011
 1,655
            
Other (expense) income           
(Loss) Gain on sale of equipment, net(162) 40
 (202) (206) 286
 (492)
Total other (expense) income(162) 40
 (202) (206) 286
 (492)
Income (loss) before income taxes345
 334
 11
 (549) 382
 (931)
Provision for income taxes—
 —
 —
 —
 —
 —
Net income (loss)345
 334
 11
 (549) 382
 (931)
Less: Net income attributable to non-controlling interest in consolidated subsidiaries(104) 14
 (118) (43) 11
 (54)
Net income (loss) attributable to shareholders$449
 $320
 $129
 $(506) $371
 $(877)
Add: Provision for income taxes—
 —
 —
 —
 —
 —
Add: Equity-based compensation expense75
 28
 47
 467
 350
 117
Add: Acquisition and transaction expenses—
 —
 —
 —
 —
 —
Add: Losses on the modification or extinguishment of debt and capital lease obligations—
 —
 —
 —
 —
 —
Add: Changes in fair value of non-hedge derivative instruments—
 —
 —
 —
 —
 —
Add: Asset impairment charges—
 —
 —
 —
 —
 —
Add: Pro-rata share of Adjusted Net Income from unconsolidated entities—
 —
 —
 —
 —
 —
Add: Incentive allocations—
 —
 —
 —
 —
 —
Less: Cash payments for income taxes—
 —
 —
 —
 —
 —
Less: Equity in earnings of unconsolidated entities—
 —
 —
 —
 —
 —
Less: Non-controlling share of Adjusted Net Income (1)
(7) (6) (1) (28) (19) (9)
Adjusted Net Income (Loss)$517
 $342
 $175
 $(67) $702
 $(769)

(1) Non-controlling share of Adjusted Net Income is comprised of equity-based compensation of $7 and $6 for the three months ended September 30, 2017 and 2016, respectively. Non-controlling share of Adjusted Net Income is comprised of equity-based compensation of $28 and $19 for the nine months ended September 30, 2017 and 2016, respectively.

62


The following table sets forth a reconciliation of net income (loss) attributable to shareholders from continuing operations to Adjusted EBITDA for the Railroad segment for the three and nine months ended September 30, 2017 and September 30, 2016:EBITDA:
Three Months Ended June 30,ChangeSix Months Ended
June 30,		Change
Three Months Ended September 30, Change Nine Months Ended
September 30,		 Change
(Dollar amounts in thousands)
2017 2016 2017 2016 
Net income (loss) attributable to shareholders$449
 $320
 $129
 $(506) $371
 $(877)
(in thousands)(in thousands)20232022Change20232022Change
Net income (loss) attributable to shareholders from continuing operationsNet income (loss) attributable to shareholders from continuing operations$77,299 $91,412 $135,109 $(48,257)
Add: Provision for income taxes—
 —
 —
 —
 —
 —
Add: Provision for income taxes1,087 715 372 2,082 1,701 381 
Add: Equity-based compensation expense75
 28
 47
 467
 350
 117
Add: Equity-based compensation expense105 — 105 127 — 127 
Add: Acquisition and transaction expenses—
 —
 —
 —
 —
 —
Add: Acquisition and transaction expenses1,169 168 1,001 2,631 377 2,254 
Add: Losses on the modification or extinguishment of debt and capital lease obligations—
 —
 —
 —
 —
 —
Add: Losses on the modification or extinguishment of debt and capital lease obligations— — — — — — 
Add: Changes in fair value of non-hedge derivative instruments—
 —
 —
 —
 —
 —
Add: Changes in fair value of non-hedge derivative instruments— — — — — — 
Add: Asset impairment charges—
 —
 —
 —
 —
 —
Add: Asset impairment charges— 886 (886)1,220 123,676 (122,456)
Add: Incentive allocations—
 —
 —
 —
 —
 —
Add: Incentive allocations— — — — — — 
Add: Depreciation and amortization expense507
 411
 96
 1,525
 1,471
 54
Add: Interest expense264
 182
 82
 710
 536
 174
Add: Pro-rata share of Adjusted EBITDA from unconsolidated entities—
 —
 —
 —
 —
 —
Less: Equity in earnings of unconsolidated entities—
 —
 —
 —
 —
 —
Less: Non-controlling share of Adjusted EBITDA (2)
(61) (59) (2) (162) (128) (34)
Add: Depreciation and amortization expense (1)
Add: Depreciation and amortization expense (1)
46,133 48,996 (2,863)92,117 100,236 (8,119)
Add: Interest expense and dividends on preferred sharesAdd: Interest expense and dividends on preferred shares— — — — — — 
Add: Pro-rata share of Adjusted EBITDA from unconsolidated entities (2)
Add: Pro-rata share of Adjusted EBITDA from unconsolidated entities (2)
28 307 (279)(8)859 (867)
Less: Equity in losses (earnings) of unconsolidated entitiesLess: Equity in losses (earnings) of unconsolidated entities35 (246)281 134 (798)932 
Less: Non-controlling share of Adjusted EBITDALess: Non-controlling share of Adjusted EBITDA— — — — — — 
Adjusted EBITDA (non-GAAP)$1,234
 $882
 $352
 $2,034
 $2,600
 $(566)Adjusted EBITDA (non-GAAP)$125,856 $142,238 $(16,382)$233,412 $177,794 $55,618 

(2) Non-controlling share of Adjusted EBITDA is comprised of(1) Includes the following items for the three months ended SeptemberJune 30, 20172023 and 2016:2022: (i) equity-based compensation of $7 and $6, (ii) interestdepreciation expense of $19$35,713 and $15,$37,191, (ii) lease intangible amortization of $3,616 and $3,310 and (iii) depreciationamortization for lease incentives of $6,804 and amortization expense of $35 and $38,$8,495, respectively. Non-controlling share of Adjusted EBITDA is comprised ofIncludes the following items for the ninesix months ended SeptemberJune 30, 20172023 and 2016:2022: (i) equity-based compensation of $28 and $19, (ii) interestdepreciation expense of $43$73,853 and $29,$76,419, (ii) lease intangible amortization of $7,599 and $6,968 and (iii) depreciationamortization for lease incentives of $10,665 and amortization expense of $91 and $80,$16,849, respectively.
Revenues
Total revenues in(2) Includes the Railroad segment increased $857 infollowing items for the three months ended SeptemberJune 30, 2017 compared to the same period of 2016 due to higher transportation revenue per car2023 and the seasonal volume shift to energy products. The increase reflects $625 of higher freight transportation revenue and $284 in higher switching and other rail service revenue. Partially offsetting the increase was lower car hire2022: (i) net (loss) income of $52.
Total revenues in$(35) and $246 and (ii) depreciation and amortization of $63 and $61, respectively. Includes the Railroad segment increased by $1,216 infollowing items for the ninesix months ended SeptemberJune 30, 2017 compared to the same period of 2016 due to higher traffic2023 and expanded service offerings to customers. The increase reflects $897 of higher freight transportation revenue and $495 in higher switching and other rail service revenue. Partially offsetting the increase was lower car hire2022: (i) net (loss) income of $176.$(134) and $798 and (ii) depreciation and amortization of $126 and $61, respectively.
ExpensesRevenues
Total expenses in the Railroad segment increased $644 inComparison of the three months ended SeptemberJune 30, 2017 as compared2023 and 2022
Total revenue increased $109.6 million driven by an increase in Asset sales revenue, Lease income and Maintenance revenue, partially offset by a decrease in Other revenue.
•Asset sales revenue increased $101.5 million primarily due to an increase in the sale of commercial aircraft and engines. See above discussion regarding presentation of asset sales.
•Lease income increased $10.9 million primarily due to an increase in the number of aircraft and engines placed on lease.
•Maintenance revenue increased $2.1 million primarily due an increase in the number of aircraft and engines placed on lease, and higher aircraft and engine utilization, partially offset by lower end-of-lease return compensation.
•Other revenue decreased $4.9 million primarily due to lower end-of-lease redelivery compensation.
Comparison of the six months ended June 30, 2023 and 2022
Total revenue increased $237.9 million driven by an increase in Asset sales revenue, Lease income and Other revenue.
•Asset sales revenue increased $210.2 million primarily due to an increase in the sale of commercial aircraft and engines. See above discussion regarding presentation of asset sales.
•Lease income increased $25.7 million primarily due to primarily due to an increase in the number of aircraft and engines placed on lease.
•Other revenue increased $1.5 million primarily due to an increase in end-of-lease redelivery compensation.
41


Expenses
Comparison of the three months ended SeptemberJune 30, 20162023 and 2022
Total expenses increased $68.6 million primarily driven by an increase in Cost of sales, partially offset by a decrease in Depreciation and amortization expense.
•Cost of sales increased $69.6 million primarily as a result of an increase in asset sales and the gross presentation of Asset sales revenues and related costs of sales as described above.
•Depreciation and amortization expense decreased $1.5 million driven by an increase in the number of aircraft redelivered and parted out into our engine leasing pool, partially offset by an increase in the number of assets owned and on lease.
Comparison of the six months ended June 30, 2023 and 2022
Total expenses decreased $7.9 million primarily driven by a decrease in Asset impairment and Operating expenses, partially offset by an increase in Cost of sales.
•Asset impairment decreased $122.5 million primarily due to higher operating expenses. Thethe write down in 2022 of aircraft and engines located in Ukraine and Russia that may not be recoverable. See Note 4 to the consolidated financial statements for additional information.
•Operating expenses decreased $46.9 million primarily as a result of decreases in provision for credit losses and other expenses as a result of the sanctions imposed on Russian airlines in 2022.
•Cost of sales increased $161.8 million as a result of an increase in operating expensesasset sales and the gross presentation of $466 reflects higher (i) general operating expenseAsset sales revenues and related costs of $516 due to certain tax benefits taken insales as described above.
Other income (expense)
Total other income decreased $54.7 million during the three months ended SeptemberJune 30, 2016 not available in the three months ended September 30, 2017, (ii) compensation and benefits of $291 and (iii) fuel expense of $87. Partially offsetting these increases was lower (i) professional fees of $89, (ii) bad debt of $79 and (iii) other expenses of $260.
Total expenses in the Railroad segment increased $1,655 in the nine months ended September 30, 2017 as compared to the nine months ended September 30, 20162023 primarily due to higher operating expenses. The increasea decrease of $54.8 million in operating expensesGain on sale of $1,427 reflects (i) general operating expense of $1,562assets, net in 2022 due to certain tax benefits takenthe change in presentation of asset sales as described above.
Total other income decreased $62.1 million during the ninesix months ended SeptemberJune 30, 2016 not available2023 primarily due to a decrease of $61.4 million in the nine months ended September 30, 2017, (ii) an increaseGain on sale of assets, net in compensation and benefits of $534 and (iii) fuel expense of $425. Partially offsetting these increases was lower (i) professional fees of $369, (ii) bad debt of $71 and (iii) other expenses of $654. Also contributing2022 due to the increase was $174change in presentation of increased interest expense related to borrowings under the CMQR Credit Agreement used to finance constructionasset sales as described above and improvements to the railroad.



63


Adjusted Net Income (Loss)
Adjusted Net Income increased $175a decrease of $0.9 million in the three months ended September 30, 2017 as compared to the three months ended September 30, 2016. In addition to the changes inAviation Leasing’s proportionate share of unconsolidated entities’ net loss attributable to shareholders noted above, Adjusted Net Loss was impacted by higher equity-based compensation expense of $47.
Adjusted Net Income decreased $769 in the nine months ended September 30, 2017 as compared to the nine months ended September 30, 2016. In addition to the changes in net income (loss) attributable to shareholders noted above, Adjusted Net Income was impacted by higher equity-based compensation expense of $117.income.
Adjusted EBITDA (Non-GAAP)
Adjusted EBITDA was $1,234decreased $16.4 million and $2,034 inincreased $55.6 million during the three and ninesix months ended SeptemberJune 30, 2017,2023, respectively, increasing $352primarily due to lower gain on sales period over period and decreasing $566 as comparedthe changes noted above.

Aerospace Products Segment
The Aerospace Products segment develops and manufactures through a joint venture, and repairs and sells, through exclusivity arrangements, aircraft engines and aftermarket components primarily for the CFM56-7B and CFM56-5B commercial aircraft engines. Our engine and module sales are facilitated through The Module Factory, a dedicated commercial maintenance program, designed to focus on modular repair and refurbishment of CFM56-7B and CFM56-5B engines, performed by a third party. Used serviceable material is sold through our exclusive partnership with AAR Corp, who is responsible for the teardown, repair, marketing and sales of spare parts from our CFM56 engine pool. We also hold a 25% interest in the Advanced Engine Repair JV which focuses on developing new cost savings programs for engine repairs and a 50% interest in Quick Turn Engine Center LLC or “Quick Turn” (previously iAero Thrust LLC), a hospital maintenance and testing facility dedicated to the three and nine months ended September 30, 2016, respectively. In addition to the changes in net income (loss) attributable to shareholders noted above, Adjusted EBITDA was also impacted primarily by higher equity-based compensation expense of $47 and $117, and an increase in interest expense of $82 and $174, in the three and nine months ended September 30, 2017, respectively, as compared to the three and nine months ended September 30, 2016.CFM56 engine.
42
Ports and Terminals

The following table presents our results of operations andoperations:
Three Months Ended June 30,ChangeSix Months Ended
June 30,		Change
(in thousands)2023202220232022
Aerospace products revenue$68,075 $26,497 $41,578 $153,188 $40,810 $112,378 
Expenses
Cost of sales34,974 15,141 19,833 88,410 24,191 64,219 
Operating expenses3,236 2,980 256 6,891 4,603 2,288 
Acquisition and transaction expenses272 — 272 1,027 — 1,027 
Depreciation and amortization97 67 30 183 101 82 
Total expenses38,579 18,188 20,391 96,511 28,895 67,616 
Other (expense) income
Equity in losses of unconsolidated entities(345)(211)(134)(1,581)(565)(1,016)
Gain on sale of assets, net— 8,861 (8,861)— 18,562 (18,562)
Total other (expense) income(345)8,650 (8,995)(1,581)17,997 (19,578)
Income before income taxes29,151 16,959 12,192 55,096 29,912 25,184 
Provision for income taxes584 1,887 (1,303)1,500 1,958 (458)
Net income28,567 15,072 13,495 53,596 27,954 25,642 
Less: Net loss attributable to non-controlling interest in consolidated subsidiaries— — — — — — 
Net income attributable to shareholders from continuing operations$28,567 $15,072 $13,495 $53,596 $27,954 $25,642 
43


The following table sets forth a reconciliation of net lossincome attributable to shareholders from continuing operations to Adjusted Net Loss for Ports and TerminalsEBITDA:
Three Months Ended June 30,ChangeSix Months Ended
June 30,		Change
(in thousands)2023202220232022
Net income attributable to shareholders from continuing operations$28,567 $15,072 $13,495 $53,596 $27,954 $25,642 
Add: Provision for income taxes584 1,887 (1,303)1,500 1,958 (458)
Add: Equity-based compensation expense70 — 70 85 — 85 
Add: Acquisition and transaction expenses272 — 272 1,027 — 1,027 
Add: Losses on the modification or extinguishment of debt and capital lease obligations— — — — — — 
Add: Changes in fair value of non-hedge derivative instruments— — — — — — 
Add: Asset impairment charges— — — — — — 
Add: Incentive allocations— — — — — — 
Add: Depreciation and amortization expense97 67 30 183 101 82 
Add: Interest expense and dividends on preferred shares— — — — — — 
Add: Pro-rata share of Adjusted EBITDA from unconsolidated entities (1)
122 (155)277 (538)(453)(85)
Less: Equity in losses of unconsolidated entities345 211 134 1,581 565 1,016 
Less: Non-controlling share of Adjusted EBITDA— — — — — — 
Adjusted EBITDA (non-GAAP)$30,057 $17,082 $12,975 $57,434 $30,125 $27,309 
________________________________________________________
(1) Includes the following items for the three and nine months ended SeptemberJune 30, 20172023 and September2022: (i) net loss of $345 and $211, (ii) depreciation and amortization expense of $372 and $56 and (iii) acquisition and transaction expense of $95 and $0, respectively. Includes the following items for the six months ended June 30, 2016:2023 and 2022: (i) net loss of $1,581 and $565, (ii) depreciation and amortization expense of $709 and $112 and (iii) acquisition and transaction expense of $334 and $0, respectively.
Revenues
Total Aerospace products revenue increased $41.6 million and $112.4 million during the three and six months ended June 30, 2023 primarily driven by an increase in sales relating to the CFM56-7B and CFM56-5B engines, engine modules, spare parts and used material inventory as operations continued to ramp-up in 2023.
Expenses
Total expenses increased $20.4 million during the three months ended June 30, 2023 primarily due to an increase in Cost of sales of $19.8 million as a result of an increase in Aerospace product sales and the gross presentation described above.
Total expenses increased $67.6 million primarily due to an increase in Cost of sales and Operating expenses during the six months ended June 30, 2023.
•Cost of sales increased $64.2 million primarily as a result of an increase in Aerospace products sales and the gross presentation described above.
•Operating expenses increased $2.3 million primarily due to an increase in commission expenses due to the increase in sales from the used material program.
Other income (expense)
Total other income decreased $9.0 million primarily due to a decrease of $8.9 million in Gain on sale of assets, net during the three months ended June 30, 2023. See above discussion regarding presentation of asset sales.
Total other income decreased $19.6 million primarily due to a decrease of $18.6 million in Gain on sale of assets, net and an increase of $1.0 million in our proportionate share of unconsolidated entities’ net loss during the six months ended June 30, 2023. See above discussion regarding presentation of asset sales.
Adjusted EBITDA (Non-GAAP)
Adjusted EBITDA increased $13.0 million and $27.3 million during the three and six months endedJune 30, 2023, respectively, primarily due to the changes noted above.
44

 Three Months Ended September 30, Change Nine Months Ended
September 30,		 Change
(Dollar amounts in thousands)
2017 2016  2017 2016 
Revenues
Infrastructure revenues

          
 Lease income$455
 $16
 $439
 $594
 $16
 $578
Other revenue303
 —
 303
 303
 —
 303
Total revenues758
 16
 742
 897
 16
 881



          
Expenses           
Operating expenses2,852

417
 2,435
 4,510
 417
 4,093
Depreciation and amortization783
 —
 783
 868
 —
 868
Interest expense273
 284
 (11) 817
 284
 533
Total expenses3,908
 701
 3,207
 6,195
 701
 5,494
Loss before income taxes(3,150) (685) (2,465) (5,298) (685) (4,613)
Provision for income taxes—
 4
 (4) —
 5
 (5)
Net loss(3,150) (689) (2,461) (5,298) (690) (4,608)
Less: Net loss attributable to non-controlling interest in consolidated subsidiaries—
 (69) 69
 (483) (69) (414)
Net loss attributable to shareholders$(3,150) $(620) $(2,530) $(4,815) $(621) $(4,194)
Add: Provision for income taxes—
 4
 (4) —
 5
 (5)
Add: Equity-based compensation expense—
 —
 —
 —
 —
 —
Add: Acquisition and transaction expenses—
 —
 —
 —
 —
 —
Add: Losses on the modification or extinguishment of debt and capital lease obligations—
 —
 —
 —
 —
 —
Add: Changes in fair value of non-hedge derivative instruments—
 —
 —
 —
 —
 —
Add: Asset impairment charges—
 —
 —
 —
 —
 —
Add: Pro-rata share of Adjusted Net Income from unconsolidated entities—
 —
 —
 —
 —
 —
Add: Incentive allocations—
 —
 —
 —
 —
 —
Less: Cash payments for income taxes—
 —
 —
 —
 (5) 5
Less: Equity in earnings of unconsolidated entities—
 —
 —
 —
 —
 —
Less: Non-controlling share of Adjusted Net Income—
 —
 —
 —
 —
 —
Adjusted Net Loss$(3,150) $(616) $(2,534) $(4,815) $(621) $(4,194)


Corporate and Other
The following table presents our results of operations:
Three Months Ended June 30,ChangeSix Months Ended
June 30,		Change
(in thousands)2023202220232022
Revenues
Lease income$11,374 $2,342 $9,032 $18,522 $7,709 $10,813 
Other revenue2,865 791 2,074 4,282 2,090 2,192 
Total revenues14,239 3,133 11,106 22,804 9,799 13,005 
Expenses
Operating expenses13,983 8,890 5,093 25,774 14,595 11,179 
General and administrative3,188 3,906 (718)7,255 8,467 (1,212)
Acquisition and transaction expenses1,231 3,051 (1,820)2,276 5,115 (2,839)
Management fees and incentive allocation to affiliate5,563 — 5,563 8,560 — 8,560 
Depreciation and amortization2,704 2,045 659 5,404 4,088 1,316 
Interest expense38,499 47,889 (9,390)77,791 92,030 (14,239)
Total expenses65,168 65,781 (613)127,060 124,295 2,765 
Other income
Other income— 1,080 (1,080)— 1,043 (1,043)
Total other income— 1,080 (1,080)— 1,043 (1,043)
Loss before income taxes(50,929)(61,568)10,639 (104,256)(113,453)9,197 
Provision for (benefit from) income taxes184 (773)957 299 (491)790 
Net loss(51,113)(60,795)9,682 (104,555)(112,962)8,407 
Less: Net loss attributable to non-controlling interest in consolidated subsidiaries— — — — — — 
Less: Dividends on preferred shares8,335 6,791 1,544 15,126 13,582 1,544 
Net loss attributable to shareholders from continuing operations$(59,448)$(67,586)$8,138 $(119,681)$(126,544)$6,863 
64
45




The following table sets forth a reconciliation of net loss attributable to shareholders from continuing operations to Adjusted EBITDA for PortsEBITDA:
Three Months Ended June 30,ChangeSix Months Ended
June 30,		Change
(in thousands)2023202220232022
Net loss attributable to shareholders from continuing operations$(59,448)$(67,586)$8,138 $(119,681)$(126,544)$6,863 
Add: Provision for (benefit from) income taxes184 (773)957 299 (491)790 
Add: Equity-based compensation expense335 — 335 406 — 406 
Add: Acquisition and transaction expenses1,231 3,051 (1,820)2,276 5,115 (2,839)
Add: Losses on the modification or extinguishment of debt and capital lease obligations— — — — — — 
Add: Changes in fair value of non-hedge derivative instruments— — — — — — 
Add: Asset impairment charges— — — — — — 
Add: Incentive allocations5,324 — 5,324 8,266 — 8,266 
Add: Depreciation and amortization expense2,704 2,045 659 5,404 4,088 1,316 
Add: Interest expense and dividends on preferred shares46,834 54,680 (7,846)92,917 105,612 (12,695)
Add: Pro-rata share of Adjusted EBITDA from unconsolidated entities— — — — — — 
Less: Equity in losses (earnings) of unconsolidated entities— — — — — — 
Less: Non-controlling share of Adjusted EBITDA— — — — — — 
Adjusted EBITDA (non-GAAP)$(2,836)$(8,583)$5,747 $(10,113)$(12,220)$2,107 
Revenues
Total revenues increased $11.1 million and Terminals for$13.0 million during the three and ninesix months ended SeptemberJune 30, 2017 and September 30, 2016:2023 primarily due to an increase in the Offshore Energy business driven by increased number of days on-hire for one of our vessels.
Expenses
 Three Months Ended September 30, Change Nine Months Ended
September 30,		 Change
(Dollar amounts in thousands)2017 2016  2017 2016 
Net loss attributable to shareholders$(3,150) $(620) $(2,530) $(4,815) $(621) $(4,194)
Add: Benefit from income taxes—
 4
 (4) —
 5
 (5)
Add: Equity-based compensation expense—
 —
 —
 —
 —
 —
Add: Acquisition and transaction expenses—
 —
 —
 —
 —
 —
Add: Losses on the modification or extinguishment of debt and capital lease obligations—
 —
 —
 —
 —
 —
Add: Changes in fair value of non-hedge derivative instruments—
 —
 —
 —
 —
 —
Add: Asset impairment charges—
 —
 —
 —
 —
 —
Add: Depreciation and amortization expense783
 —
 783
 868
 —
 868
Add: Interest expense273
 284
 (11) 817
 284
 533
Add: Pro-rata share of Adjusted EBITDA from unconsolidated entities—
 —
 —
 —
 —
 —
Less: Equity in earnings of unconsolidated entities—
 —
 —
 —
 —
 —
Less: Non-controlling share of Adjusted EBITDA (1)
—
 (28) 28
 —
 (28) 28
Adjusted EBITDA$(2,094) $(360) $(1,734) $(3,130) $(360) $(2,770)

(1) Non-controlling shareComparison of Adjusted EBITDA is comprised of the following items for the three months ended SeptemberJune 30, 20172023 and 2016: (i) interest expense of $0 and $28, respectively. Non-controlling share of Adjusted EBITDA is comprised of the following items for the nine months ended September 30, 2017 and 2016: (i) interest expense of $0 and $28, respectively.
Revenues
For the three and nine months ended September 30, 2017, there was $455 and $594, respectively, of lease income from existing lease agreements acquired with the acquisitions of Repauno and Hannibal. For the three and nine months ended September 30, 2017, there was $303 of other revenue, relating to the reimbursement of costs from leases at Hannibal.
Expenses2022
Total expenses increased by $3,207 for the three months ended September 30, 2017 as compared to the three months ended September 30, 2016. The increase in expenses for the three months ended September 30, 2017decreased $0.6 million primarily consisted of increases in operating expenses of $2,435 , which consisted of (i) professional fees of $1,173 , (ii) facility operations of $772, (iii) compensation and benefits of $306, (iv) insurance expense of $79, and (v) other operating expenses of $105. There was depreciation expense of $783, due to the acquisition of Hannibal in the second quarter, as well as the placement of assets into service at Repauno during the third quarter of 2017.
Total expenses increased by $5,494 for the nine months ended September 30, 2017 as compared to the nine months ended September 30, 2016. The increase in expenses primarily consisted of increases in operating expenses of $4,093, which consisted of (i) professional fees of $1,323, (ii) facility operations of $879, (iii) compensation and benefits of $1,248, (iv) insurance expense of $159, and (v) other operating expenses of $484. There was depreciation expense of $868, due to the acquisition of Hannibal in the second quarter, as well as the placement of assets into service at Repauno during the third quarter of 2017.lower Interest expense increased by $533 in the nine months ended September 30, 2017 as compared to the nine months ended September 30, 2016 due to the payment obligation to the non-controlling interest holder as part of the Repauno purchase.
Adjusted Net Loss
Adjusted Net Loss increased by $2,534 and $4,194 for the three and nine months ended September 30, 2017, respectively, due to the changes in net loss attributable to shareholders noted above.
Adjusted EBITDA (non-GAAP)
Adjusted EBITDA was $(2,094) and $(3,130) for the three and nine months ended September 30, 2017, respectively. In addition to the changes in net loss attributable to shareholders noted above, Adjusted EBITDA for the three and nine months ended September 30, 2017 includes the impact of depreciation expense of $783 and $868, as well as interest expense of $273 and $817 as a result of interest expense related to an obligation payable to the non-controlling interest as part of the Repauno purchase, respectively.


65


Corporate
The following table presents our results of operations and reconciliation of net loss attributable to shareholders to Adjusted Net Loss for Corporate for the three and nine months ended September 30, 2017 and September 30, 2016:
 Three Months Ended September 30, Change Nine Months Ended
September 30,		 Change
(Dollar amounts in thousands)
2017 2016  2017 2016 
Expenses           
Operating expenses$—

$—

$—

$—

$6

$(6)
General and administrative3,439
 3,205
 234
 10,615
 9,154
 1,461
Acquisition and transaction expenses1,726
 1,579
 147
 4,788
 4,222
 566
Management fees and incentive allocation to affiliate3,771
 4,146
 (375) 11,529
 12,725
 (1,196)
Interest expense6,023
 —
 6,023
 12,682
 —
 12,682
Total expenses14,959
 8,930
 6,029
 39,614
 26,107
 13,507
            
Other expense           
Loss on extinguishment of debt—
 —
 —
 (2,456) —
 (2,456)
Total other expense—
 —
 —
 (2,456) —
 (2,456)
Loss before income taxes(14,959) (8,930) (6,029) (42,070) (26,107) (15,963)
Provision for income taxes—
 —
 —
 —
 1
 (1)
Net loss(14,959) (8,930) (6,029) (42,070) (26,108) (15,962)
Less: Net loss attributable to non-controlling interest in consolidated subsidiaries—
 (3) 3
 —
 (9) 9
Net loss attributable to shareholders$(14,959) $(8,927) $(6,032) $(42,070) $(26,099) $(15,971)
Add: Provision for income taxes—
 —
 —
 —
 1
 (1)
Add: Equity-based compensation expense—
 —
 —
 —
��—
 —
Add: Acquisition and transaction expenses1,726
 1,579
 147
 4,788
 4,222
 566
Add: Losses on the modification or extinguishment of debt and capital lease obligations—
 —
 —
 2,456
 —
 2,456
Add: Changes in fair value of non-hedge derivative instruments—
 —
 —
 —
 —
 —
Add: Asset impairment charges—
 —
 —
 —
 —
 —
Add: Pro-rata share of Adjusted Net Income from unconsolidated entities—
 —
 —
 —
 —
 —
Add: Incentive allocations—
 —
 —
 —
 —
 —
Less: Cash payments for income taxes(440) —
 (440) (953) 1
 (954)
Less: Equity in earnings of unconsolidated entities—
 —
 —
 —
 —
 —
Less: Non-controlling share of Adjusted Net Income—
 —
 —
 —
 —
 —
Adjusted Net Loss$(13,673) $(7,348) $(6,325) $(35,779) $(21,875) $(13,904)

66


The following table sets forth a reconciliation of net loss attributable to shareholders to Adjusted EBITDA for Corporate for the three and nine months ended September 30, 2017 and September 30, 2016:
 Three Months Ended September 30, Change Nine Months Ended
September 30,		 Change
(Dollar amounts in thousands)2017 2016  2017 2016 
Net loss attributable to shareholders$(14,959) $(8,927) $(6,032) $(42,070) $(26,099) $(15,971)
Add: Provision for income taxes—
 —
 —
 —
 1
 (1)
Add: Equity-based compensation expense—
 —
 —
 —
 —
 —
Add: Acquisition and transaction expenses1,726
 1,579
 147
 4,788
 4,222
 566
Add: Losses on the modification or extinguishment of debt and capital lease obligations—
 —
 —
 2,456
 —
 2,456
Add: Changes in fair value of non-hedge derivative instruments—
 —
 —
 —
 —
 —
Add: Asset impairment charges—
 —
 —
 —
 —
 —
Add: Incentive allocations—
 —
 —
 —
 —
 —
Add: Depreciation and amortization expense—
 —
 —
 —
 —
 —
Add: Interest expense6,023
 —
 6,023
 12,682
 —
 12,682
Add: Pro-rata share of Adjusted EBITDA from unconsolidated entities—
 —
 —
 —
 —
 —
Less: Equity in earnings of unconsolidated entities—
 —
 —
 —
 —
 —
Less: Non-controlling share of Adjusted EBITDA—
 —
 —
 —
 —
 —
Adjusted EBITDA$(7,210) $(7,348) $138
 $(22,144) $(21,876) $(268)
Expenses
Total expenses increased $6,029 in the three months ended September 30, 2017 as compared to the three months ended September 30, 2016. The increase primarily consists of interest expense of $6,023 on the Senior Notes issued in 2017 and an increase in acquisitionAcquisition and transaction expenses, of $147 due to deal related expenses incurred. These increases were partially offset by a decrease in managementhigher Management fees and incentive allocation to affiliate of $375 as the average value of total equityand Operating expenses.
•Interest expense decreased during the period.
Total expenses increased $13,507 in the nine months ended September 30, 2017 as compared to the nine months ended September 30, 2016. The increase primarily consists of interest expense of $12,682 on the Senior Notes issued in 2017. General and administrative costs increased $1,461 and reflected (i) $508 in higher reimbursement expenses to our Manager, (ii) $703 of higher professional fees, (iii) $270 of higher general corporate costs, and (iv) $20 of lower other general and administrative expenses. Partially offsetting these increases was lower management fees of $1,196 due to$9.4 million, which reflects a decrease in the average valueoutstanding debt of total equityapproximately $581.0 million due to decreases in (i) the 2021 Bridge Loans of $339.8 million, (ii) the Senior Notes due 2025 of $199.4 million, which were partially redeemed in August 2022, and (iii) the Revolving Credit Facility of $41.8 million.
•Acquisition and transaction expense decreased $1.8 million primarily due to lower professional fees related to strategic transactions.
•Management fees and incentive allocation to affiliate increased $5.6 million primarily due to an increase in incentive fee due to the Manager.
•Operating expenses increased $5.1 million which reflects increases in offshore crew expenses, project costs and other operating expenses for one of our vessels driven by increased cost of operations based on the operating location of the vessel as well as increased number of days on-hire.
Comparison of the six months ended June 30, 2023 and 2022
Total expenses increased $2.8 million primarily due to higher Operating expenses and Management fees and incentive allocation to affiliate, partially offset by lower Interest expense and Acquisition and transaction expenses.
•Operating expenses increased $11.2 million which reflects increases in offshore crew expenses, project costs and other operating expenses for one of our vessels driven by increased cost of operations based on the operating location of the vessel as well as increased number of days on-hire.
•Management fees and incentive allocation to affiliate increased $8.6 million primarily due to an increase in incentive fee due to the Manager.
•Interest expense decreased $14.2 million, which reflects a decrease in the average outstanding debt of approximately $503.5 million due to decreases in (i) the 2021 Bridge Loans of $299.9 million and (ii) the Senior Notes due 2025 of $199.3 million, which were partially redeemed in August 2022, and (iii) the Revolving Credit Facility of $4.3 million.
46


•Acquisition and transaction expense decreased $2.8 million primarily due to lower professional fees related to strategic transactions.
Adjusted EBITDA (Non-GAAP)
Adjusted EBITDA increased $5.7 million and $2.1 million during the period.
Other Expenses
Total other expenses increased $2,456 in the ninethree and six months ended SeptemberJune 30, 2017 compared to the same period in 2016. The increase is2023, respectively, primarily due to a loss on extinguishment of debt.
Adjusted Net Loss
Adjusted Net Loss was $13,673 in the three months ended September 30, 2017, increasing by $6,325 as compared to the three months ended September 30, 2016. In addition to the changes in net loss attributable to shareholders noted above, Adjusted Net Loss was increased by acquisition and transaction expenses incurred for potential acquisition opportunities less cash payments for income taxes.above.
Adjusted Net Loss was $35,779 in the nine months ended September 30, 2017, increasing by $13,904, as compared to the nine months ended September 30, 2016. In addition to the changes in net loss attributable to shareholders noted above, Adjusted Net Loss was increased by the loss on extinguishment of debt, acquisition and transaction expenses incurred for potential acquisition opportunities less cash payments for income taxes.
Adjusted EBITDA (non-GAAP)
Adjusted EBITDA was $(7,210) for the three months ended September 30, 2017, increasing $138 compared to the same period in 2016. In addition to the changes in net loss attributable to shareholders noted above, Adjusted EBITDA was increased by acquisition and transaction expenses incurred for potential acquisition opportunities and interest expense of $6,023 related to the Senior Notes issued in March 2017.
Adjusted EBITDA was $(22,144) for the nine months ended September 30, 2017, decreasing $268 compared to the same period in 2016. In addition to the changes in net loss attributable to shareholders noted above, Adjusted EBITDA includes the impact of interest expense of $12,682 related to the Senior Notes issued in March 2017, $2,456 of a loss on extinguishment of debt and acquisition and transaction expenses incurred for potential acquisition opportunities.

67



Liquidity and Capital Resources
We believe we have sufficient liquidity to satisfy our cash needs, however, we continue to evaluate and take action, as necessary, to preserve adequate liquidity and ensure that our business can continue to operate during these uncertain times. This includes limiting discretionary spending across the organization and re-prioritizing our investments amid market volatility.
Our principal uses of liquidity have been and continue to be (i) acquisitions of transportation infrastructureaircraft and equipment,engines, (ii) distributionsdividends to our ordinary and preferred shareholders, (iii) expenses associated with our operating activities, and (iv) debt service obligations associated with our investments (all dollar amounts are expressed in thousands).investments.
In the nine months endedSeptember 30, 2017 and 2016, cash•Cash used for the purpose of making investments was $392,177$380.8 million and $177,323, respectively.
In$457.9 million during the ninesix months ended SeptemberJune 30, 20172023 and 2016, distributions2022, respectively.
•Dividends to shareholders and holders of eligible participating securities were $75,041$75.0 million and $75,017, respectively,$79.4 million during the six months ended June 30, 2023 and no distributions were made to non-controlling interests.2022, respectively.
•Uses of liquidity associated with our operating expenses are captured on a net basis in our cash flows from operating activities. Uses of liquidity associated with our debt obligations are captured in our cash flows from financing activities.
Our principal sources of liquidity to fund these uses have been and continue to be (i) revenues from our transportation infrastructure and equipmentaviation assets (including finance lease collections and maintenance reserve collections) net of operating expenses, (ii) proceeds from borrowings or the issuance of debt securities and (iii) distributions received from unconsolidated investees, (iv) proceeds from asset sales and (v) proceeds from the issuance of common shares.sales.
During the nine months ended September 30, 2017 and 2016, cash•Cash flows fromprovided by operating activities, plus the principal collections on finance leases and maintenance reserve collections were $87.3 million during the six months ended June 30, 2023. Cash flows used in operating activities, plus the principal collections on finance leases and maintenance reserve collections were $71,574 and $28,874, respectively.$23.6 million during the six months ended June 30, 2022
•During the ninesix months ended SeptemberJune 30, 2017,2023, additional borrowings and total principal repayments in connection with the Revolving Credit Facility were $325.0 million and $330.0 million, respectively. During the six months ended June 30, 2022, additional borrowings were obtained in connection with the Term Loan(i) 2021 Bridge Loans of $97,163, net of deferred financing costs, the$239.5 million, (ii) Revolving Credit Facility of $60,000, the CMQR Credit$255.0 million and (iii) EB-5 Loan Agreement of $20,030 and the Senior Notes of $239,998, net of deferred financing costs and repayment of the Term Loan.$9.5 million. We made total principal repaymentsrepayments of $22,623, primarily$224.5 million relating toto the FTAI PrideRevolving Credit Agreement and the CMQR Credit Agreement. During nine months ended September 30, 2016, additional borrowings were obtained in connection with the Series 2016 Bonds of $99,858 and the CMQR Credit Agreement of $10,800. We made total principal repayments of $157,603 primarily related to the termination of the Jefferson Terminal Credit Agreement, and the pay down of loans associated with the sale of our shipping container portfolios in Q1 2016.Facility.
During the nine months ended September 30, 2017 and 2016, we received $0 and $462 in cash distributions from our unconsolidated investees, respectively, of which $0, and $30 was included in cash flows from operating activities, respectively.
During the nine months ended September 30, 2017 and 2016, proceeds•Proceeds from the sale of assets were $87,144$273.2 million and $87,030, respectively.
During$142.3 million during the ninesix months ended SeptemberJune 30, 20172023 and 2016, there2022, respectively.
•Proceeds from the issuance of preferred shares, net of underwriter’s discount and issuance costs were no capital contributions from shareholders$61.7 million and capital contributions from non-controlling interests were $0$0.0 million during the six months ended June 30, 2023 and $7,433,2022, respectively.
Our net cash provided by operating activities has been less than the amount of distributions to our shareholders. Our board of directors takes this and other factors into account as part of any decision to pay a dividend, and the timing and amount of any future dividend is subject to change at the discretion of our board of directors.
The Company isWe are currently evaluating several potential Infrastructuretransactions and Equipment Leasing transactions,related financings, which could occur within the next 12 months. However, as of the date of this filing, noneNone of these pipelinepotential transactions, negotiations, or negotiationsfinancings are definitive or included within theour planned liquidity needs of the Company.needs. We cannot assure you if or when any such transaction will be consummated or the terms of any such transaction.
The Company has a dividend reinvestment plan in place which allows shareholders to automatically reinvest dividends in the Company’s common shares.  The plan became effective on February 24, 2017.

transaction or related financing.
68
47




Historical Cash Flow
Comparison of the ninesix months endedSeptember June 30, 20172023 and September 30, 20162022
The following table compares the historical cash flow from continuing and discontinued operations for the ninesix months ended SeptemberJune 30, 20172023 and September 30, 2016:2022:
Six Months Ended June 30,
(in thousands)20232022
Cash Flow Data:
Net cash provided by (used in) operating activities$67,241 $(48,569)
Net cash used in investing activities(101,846)(306,784)
Net cash provided by financing activities2,674 212,097 
 Nine Months Ended
(Dollar amounts in thousands)
September 30, 2017 September 30, 2016
Cash Flow Data:   
Net cash provided by operating activities$52,443
 $15,662
Net cash used in investing activities$(275,703) $(88,004)
Net cash provided by (used in) financing activities$331,562
 $(111,487)
Net cash provided by operating activities was $52,443 in the nine months ended September 30, 2017 as compared to $15,662 in the nine months ended September 30, 2016, representing a $36,781 increase. Net loss was $16,692 for the nine months ended September 30, 2017, compared $34,779 for the nine months endedSeptember 30, 2016,increased $115.8 million, which primarily reflects (i) an increase in netNet income of $18,087. The increase was also attributable to$304.0 million and (ii) Changes in working capital of $50.9 million, partially offset by certain adjustments to reconcile net income which include an increaseto Cash used in operating activities including, (iii) Asset impairment of (i) $4,513$122.5 million, (iv) Provision for credit losses of equity based compensation, (ii) $19,088 relating to depreciation$46.2 million, (v) Equity in losses of unconsolidated entities of $36.1 million and (vi) Depreciation and amortization and (iii) $3,419 of gains on the sale of leasing equipment, offset by a decrease of $7,450 of asset impairment charges. The increase also includes the impact of the change in other assets of $14,665 due to cash receipts in the nine months ended September 30, 2017 for a maintenance right asset that was settled upon the redelivery of an aircraft and other receivables, offset by a decrease in other liabilities of $6,922 due to a decrease in deferred revenue.$35.5 million.
Net cash used in investing activities was $275,703 in the nine months ended September 30, 2017 as compared to $88,004 in the nine months ended September 30, 2016, representing a $187,699 increase. Cash used in investing activities increaseddecreased $204.9 million, primarily due to the acquisition of leasing equipment and lease intangibles of $154,210 in the Aviation Leasing segment, cash used for investments of $23,149, and the acquisition of property, plant and equipment of $39,001 mainly due to the acquisition of Hannibal, offset by an increase in proceeds(i) higher Proceeds from the sale of leasing equipment of $71,188$135.2 million and change in restricted cash of $29,782 in nine months ended September 30, 2017 as compared to the nine months ended September 30, 2016. Additionally, cash used in investing activities increased due to(ii) a decrease in cash receivedAcquisitions of property, plant and equipment of $116.4 million partially offset by (iii) an increase in Investment in unconsolidated entities of $17.3 million, (iv) a decrease in Proceeds for thedeposit on sale of two finance leases, resultingaircraft and engine of $6.4 million, (v) an increase in proceedsAcquisition of $71,000lease intangibles of $5.5 million and (vi) an increase in the nine months ended September 30, 2016, as compared to the nine months ended September 30, 2017.Acquisitions of leasing equipment of $4.7 million.
Net cash provided by financing activities was $331,562 in the nine months ended September 30, 2017 as compared to cash used in financing activities of $111,487 in the nine months ended September 30, 2016, representing a $443,049 increase. Such increase was attributabledecreased $209.4 million, primarily due to (i) proceedsa decrease in Proceeds from borrowings underdebt of $179.0 million, and (ii) an increase in Repayments of debt of $105.3 million partially offset by (iii) an increase in Proceeds from the Term Loanissuance of $97,163, netpreferred shares of $61.7 million, and (iv) a decrease in Payments of deferred financing costs the Revolving Credit Facility of $60,000, the CMQR Credit Agreement$13.0 million.
We also have current availability for borrowing of $20,030up to $155.0 million.
Cash Flow of Discontinued Operations
The cash flows related to discontinued operations have not been segregated and the Senior Notes of $239,998, net of deferred financing costs and repayment of the Term Loan, (ii) a decreaseare included in the repaymentConsolidated Statements of debt related to the termination of the Jefferson Terminal Credit Agreement and loans associated with the sale of our shipping containers in the nine months ended September 30, 2016, and (iii) an increase in receipt of maintenance deposits of $7,978, offset by a decrease in cash contributions from non-controlling interests of $7,433.
Funds AvailableCash Flows for Distribution (Non-GAAP)all periods presented.
The Company uses Funds Available for Distribution (“FAD”) in evaluating itsabsence of cash flows from discontinued operations is not expected to adversely affect our liquidity or our ability to meet its stated dividend policy. FAD is not a financial measure in accordance with GAAP. The GAAP measure most directly comparable to FAD is net cash provided by operating activities. The Company believes FAD is a useful metric for investors and analysts for similar purposes.
The Company defines FAD as: net cash provided by operating activities plus principal collections on finance leases, proceeds from sale of assets, and return of capital distributions from unconsolidated entities, less required payments on debt obligations and capital distributions to non-controlling interest, and excluding changes in working capital. The following table sets forth a reconciliation of Net Cash Provided by Operating Activities to FAD:

69



Nine Months Ended
(Dollar amounts in thousands)September 30, 2017 September 30, 2016
Net Cash Provided by Operating Activities$52,443

$15,662
Add: Principal Collections on Finance Leases347

2,406
Add: Proceeds from sale of assets (1)
87,144

87,530
Add: Return of Capital Distributions from Unconsolidated Entities��

432
Less: Required Payments on Debt Obligations (2)
(8,368)
(52,105)
Less: Capital Distributions to Non-Controlling Interest—

—
Exclude: Changes in Working Capital(1,563)
2,370
Funds Available for Distribution (FAD)$130,003

$56,295

(1) Proceeds from sale of assets for the nine months ended September 30, 2016 includes $500 received in December 2015 for a deposit on the sale of a commercial jet engine, which was completed in the nine months ended September 30, 2016.
(2) Required payments on debt obligations for the nine months ended September 30, 2017 excludes $100,000 repayment of the Term Loan and $14,255 repayment of the CMQR loan, and for the nine months ended September 30, 2016 excludes $98,750 repayment upon the termination of the Jefferson Terminal Credit Agreement and $6,748 repayment under the CMQR Credit Agreement, which were voluntary refinancings as repayment of these amounts were not required at such time.
Limitations
FAD is subject to a number of limitations and assumptions and there can be no assurance that the Company will generate FAD sufficient to meet its intended dividends. FAD has material limitations as a liquidity measure of the Company because such measure excludes items that are required elements of the Company’s net cash provided by operating activities as described below. FAD should not be considered in isolation nor as a substitute for analysis of the Company’s results of operations under GAAP, and it is not the only metric that should be considered in evaluating the Company’s ability to meet its stated dividend policy. Specifically:
FAD does not include equity capital called from the Company’s existing limited partners, proceeds from any debt issuance or future equity offering, historical cash and cash equivalents and expected investments in the Company’s operations.
FAD does not give pro forma effect to prior acquisitions, certain of which cannot be quantified.
While FAD reflects the cash inflows from sale of certain assets, FAD does not reflect the cash outflows to acquire assets as the Company relies on alternative sources of liquidity to fund such purchases.
FAD does not reflect expenditures related to capital expenditures acquisitions and other investments as the Company has multiple sources of liquidity and intends to fund these expenditures with future incurrences of indebtedness, additional capital contributions and/or future issuances of equity.
FAD does not reflect any maintenance capital expenditures necessary to maintain the same level of cash generation from our capital investments.
FAD does not reflect changes in working capital balances as management believes that changes in working capital are primarily driven by short term timing differences, which are not meaningful to the Company’s distribution decisions.needs. The discontinued operations historically generate negative operating and investing cash flows.
Management has significant discretion to make distributions, and the Company is not bound by any contractual provision that requires it to use cash for distributions.
If such factors were included in FAD, there can be no assurance that the results would be consistent with the Company’s presentation of FAD.

Debt Obligations
Refer to Note 8 of the Consolidated Financial Statements for detail.

70


Contractual Obligations
TheOur material cash requirements include the following table summarizescontractual and other obligations:
Debt Obligations—As of June 30, 2023, we had outstanding principal and interest payment obligations of $2.2 billion and $0.6 billion, respectively, of which only interest payments of $152.2 million are due in the next twelve months. See Note 7 to the consolidated financial statements for additional information about our futuredebt obligations.
Lease Obligations—As of June 30, 2023, we had outstanding operating and finance lease obligations by periodof $2.5 million, of which $0.8 million is due as of September 30, 2017, underin the next twelve months.
Other Cash Requirements—In addition to our various contractual obligations, we pay quarterly cash dividends on our ordinary shares and commitments. We had no off-balance sheet arrangements aspreferred shares, which are subject to change at the discretion of September 30, 2017.
    
(in thousands)

2017 2018 2019 2020 2021 Thereafter Total
FTAI Pride Credit Agreement$—
 $6,250
 $47,743
 $—
 $—
 $—
 $53,993
CMQR Credit Agreement—
 —
 18,400
 —
 —
 —
 18,400
Revolving Credit Facility—
 —
 60,000
 —
 —
 —
 60,000
Jefferson Bonds Payable—
 1,545
 1,670
 146,010
 1,960
 35,780
 186,965
Senior Notes—
 —
 —
 —
 —
 350,000
 350,000
Note payable to non-controlling interest—
 —
 —
 —
 —
 —
 —
Total principal payments on loans and bonds payable—
 7,795
 127,813
 146,010
 1,960
 385,780
 669,358
              
Total estimated interest payments (1)
16,035
 23,741
 32,707
 30,518
 21,215
 22,063
 146,279
              
Obligation to third-party (Repauno)—
 5,500
 —
 —
 —
 —
 5,500
              
Operating lease obligations1,950
 6,616
 6,200
 5,186
 4,061
 73,318
 97,331
Capital lease obligations97
 309
 314
 298
 105
 12
 1,135
 2,047
 6,925
 6,514
 5,484
 4,166
 73,330
 98,466
Total contractual obligations$18,082
 $43,961
 $167,034
 $182,012
 $27,341
 $481,173
 $919,603
(1) Estimated interest payments based on rates as of September 30, 2017.
our Board of Directors. During the last twelve months, we declared cash dividends of $122.5 million and $28.7 million on our ordinary shares and preferred shares, respectively.
We expect to meet our future short-term liquidity requirements through cash on hand, unused borrowing capacity or future financings and net cash provided by our current operations. We expect that our operating subsidiaries will generate sufficient cash flow to cover operating expenses and the payment of principal and interest on our indebtedness as they become due. We may elect to meet certain long-term liquidity requirements or to continue to pursue strategic opportunities through utilizing cash on hand, cash generated from our current operations and the issuance of securities in the future. Management believes adequate capital and borrowings are available from various sources to fund our commitments to the extent required.
Application of Critical Accounting Estimates and Policies
Goodwill—The following is an updateThere were no material changes to the Company’s Application of Critical Accounting Policies disclosure relating to goodwill which was presentedour critical accounting estimates described in the Company’sour Annual Report on Form 10-K for the year ended December 31, 2016. This update should be read in conjunction with the disclosures made in that aforementioned Form 10-K, and relates2022.
Recent Accounting Pronouncements
See Note 2 to the Company’s Jefferson Terminal.
Goodwill includes the excess of the purchase price over the fair value of the net tangible and intangible assets associated with the acquisitions of CMQR and Jefferson Terminal. The carrying amount of goodwill is approximately $116,584 as of September 30, 2017 and December 31, 2016.
The Company reviews the carrying values of goodwill at least annually to assess impairment since these assets are not amortized. An annual impairment review is conducted as of October 1st of each year. Additionally, the Company reviews the carrying value of goodwill whenever events or changes in circumstances indicate that its carrying amount may not be recoverable. The determination of fair value involves significant management judgment.
For an annual goodwill impairment assessment, an optional qualitative analysis may be performed. If the option is not elected or if it is more likely than not that the fair value of a reporting unit is less than its carrying amount, then a two-step goodwill impairment test is performed to identify potential goodwill impairment and measure an impairment loss. A qualitative analysis was not electedour Consolidated Financial Statements for the years ended December 31, 2016 or December 31, 2015.
The first step of an impairment assessment compares the fair value of a respective reporting unit with its carrying amount, including goodwill. The estimate of fair value of the respective reporting unit is based on the best information available as of the date of assessment, which primarily incorporates certain factors including the Company’s assumptions about operating results, business

recent accounting pronouncements.
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plans, income projections, anticipated future cash flows and market data. If the estimated fair value of the reporting unit is less than the carrying amount, a second step must be completed in order to determine the amount of goodwill impairment that should be recorded, if any.
For the purpose of performing the annual analysis, the Company’s two reporting units subject to the test are the Jefferson Terminal and Railroad reporting units. The Company estimates the fair value of the reporting units using an income approach, specifically a discounted cash flow analysis. This analysis requires the Company to make significant assumptions and estimates about the extent and timing of future cash flows, discount rates and growth rates. The estimates and assumptions used consider historical performance if indicative of future performance, and are consistent with the assumptions used in determining future profit plans for the reporting units. The Company also utilizes valuation models and other financial ratios, which require the Company to make certain assumptions and estimates regarding the applicability of those models to its assets and businesses.
Although the Company believes the estimates of fair value are reasonable, the determination of certain valuation inputs is subject to management’s judgment. Changes in these inputs, including as a result of events beyond our control, could materially affect the results of the impairment review. If the forecasted cash flows of the Jefferson Terminal and Railroad reporting units or other key inputs are negatively revised in the future, the estimated fair value of the Jefferson Terminal and Railroad reporting units could be adversely impacted, potentially leading to an impairment in the future that could materially affect the Company’s operating results. Specifically, as it relates to the Jefferson Terminal segment, forecasted revenue is dependent on ramp-up of volumes under current contracts and the acquisition of additional storage contracts for both the heavy and light crude and refined products during 2018. The expansion of refineries in the Beaumont/Port Arthur area, as well as growing crude oil production in the U.S. and Canada, are expected to result in increased demand for storage on the U.S. Gulf Coast. Other assumptions that are significant in determination of the fair value of the reporting unit include the discount rate utilized in our discounted cash flow analysis of 15% and our terminal value growth rate of 3%.
For the years ended December 31, 2016, the Company’s estimated fair value exceeded carrying value by approximately 10%, and there was no impairment of goodwill. We expect the Jefferson Terminal segment to generate positive Adjusted EBITDA during the first half of 2018. Furthermore, changes in any of the significant assumptions used, including the Company’s timeline or ability to achieve its operating plan or adverse effects of market-driven factors, could materially affect the expected cash flows and may result in a material impairment charge.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Market risk represents the risk of changes in value of a financial instrument, caused by fluctuations in interest rates and foreign exchange rates. Changes in these factors could cause fluctuations in our results of operations and cash flows. We are exposed to the market risks described below.
Interest Rate Risk
Interest rate risk is the exposure to loss resulting from changes in the level of interest rates and the spread between different interest rates. Interest rate risk is highly sensitive to many factors, including the U.S. government’s monetary and tax policies, global economic factors and other factors beyond our control. We are exposed to changes in the level of interest rates and to changes in the relationship or spread between interest rates. Our primary interest rate exposure relates to our term loan arrangements.
LIBOR and other indices which are deemed “benchmarks” are the subject of recent national, international, and other regulatory guidance and proposals for reform. The ICE Benchmark Administration ceased publication of one-week and two-month USD LIBOR settings after December 31, 2021 and the remaining USD LIBOR settings after June 30, 2023, other than certain USD LIBOR settings that are expected to continue to be published under a synthetic methodology until September 2024. In anticipation of LIBOR’s phase out, we amended our revolving credit facility to incorporate SOFR as the successor rate to LIBOR. We continue to monitor related reform proposals and evaluate the related risks; however, it is not possible to predict the effects of any of these developments, and any future initiatives to regulate, reform or change the manner of administration of LIBOR, SOFR or other benchmark indices could result in adverse consequences to the rate of interest payable and receivable on, market value of and market liquidity for financial instruments tied to variable interest rate indices.
Our borrowing agreements generally require payments based on a variable interest rate index, such as LIBOR.SOFR. Therefore, to the extent our borrowing costs are not fixed, increases in interest rates may reduce our net income by increasing the cost of our debt without any corresponding increase in rents or cash flow from our finance leases. We may elect to manage our exposure to interest rate movements through the use of interest rate derivatives (interest rate swaps and caps). As a result, when market rates of interest change, there is generally not a material impact on our interest expense, future earnings or cash flows.
The following discussion about the potential effects of changes in interest rates is based on a sensitivity analysis, which models the effects of hypothetical interest rate shifts on our financial condition and results of operations. Although we believe a sensitivity analysis provides the most meaningful analysis permitted by the rules and regulations of the SEC, it is constrained by several factors, including the necessity to conduct the analysis based on a single point in time and by the inability to include the extraordinarily complex market reactions that normally would arise from the market shifts modeled. Although the following results of a sensitivity analysis for changes in interest rates may have some limited use as a benchmark, they should not be viewed as a forecast. This forward-looking disclosure also is selective in nature and addresses only the potential interest expense impacts on our financial instruments and, in particular, does not address the mark-to-market impact on our interest rate derivatives.derivatives, if any. It also does not include a variety of other potential factors that could affect our business as a result of changes in interest rates. In addition, the following discussion does not take into account our Series A and Series B preferred shares, on which distributions currently accrue interest at a fixed rate but will accrue interest at a floating rate based on a certain variable interest rate index plus a spread from and after September 15, 2024.
As of SeptemberJune 30, 2017,2023, assuming we do not hedge our exposure to interest rate fluctuations related to our outstanding floating rate debt, a hypothetical 100-basis point increase/decrease in our variable interest rate on our borrowings would result in an interest expense increase/(decrease)increase of approximately $705 and $(690), respectively,$1.5 million or a decrease of approximately $1.5 million in interest expense over the next 12 months before the impact of interest rate derivatives.months.

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Foreign Currency Exchange Risk
Our functional currency is U.S. dollars. All of our leasing arrangements are denominated in U.S. dollars. Currently, the majority of freight rail revenue is also denominated in U.S. dollars, but a portion is denominated in Canadian dollars. Although foreign exchange risk could arise from our operations in multiple jurisdictions, we do not have significant exposure to foreign currency risk as our leasing arrangements are denominated in U.S. dollars. All of our purchase agreements are negotiated in U.S. dollars, and we currently receive the majority of revenue in U.S. dollars. We pay substantially all of our expenses in U.S. dollars; however we pay some expenses in Canadian dollars. Because we currently receive the majority of our revenues in U.S. dollars and pay substantially all of our expenses in U.S. dollars, we do not expect a change in foreign exchange rates would have a significant impact on our results of operations or cash flows.

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Item 4. Controls and Procedures
Disclosure Controls and Procedures
As of the end of the period covered by this report, an evaluation was carried out under the supervision and with the participation of the Company’sour management, including itsour Chief Executive Officer and Chief Financial Officer, of the effectiveness of itsour disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”)). Based upon that evaluation, the Company’sour Chief Executive Officer and Chief Financial Officer have concluded that theseour disclosure controls and procedures were effective as of and for the period covered by this report.
Internal Control over Financial Reporting
In addition,There have been no changechanges in the Company’sour internal control over financial reporting (as such term is defined in RuleRules 13a-15(f) and 15d-15(f) under the Exchange Act) occurred during its most recentthe fiscal quarter to which this report relates that hashave materially affected, or isare reasonably likely to materially affect, itsour internal control over financial reporting.
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PART II—OTHER INFORMATION
Item 1. Legal Proceedings
We are and may become involved in legal proceedings, including but not limited to regulatory investigations and inquiries, in the ordinary course of our business. Although we are unable to predict with certainty the eventual outcome of any litigation, regulatory investigation or inquiry, in the opinion of management, we do not expect our current and any threatened legal proceedings to have a material adverse effect on our business, financial position or results of operations. Given the inherent unpredictability of these types of proceedings, however, it is possible that future adverse outcomes could have a material adverse effect on our financial results.
Item 1A. Risk Factors
You should carefully consider the following risks and other information in this Form 10-Q in evaluating us and our common shares. Any of the following risks, as well as additional risks and uncertainties not currently known to us or that we currently deem immaterial, could materially and adversely affect our results of operations or financial condition. The risk factors generally have been separated into the following categories: risks related to our business, risks related to our Manager, risks related to taxation and risks related to our commonthe Company’s shares. However, these categories do overlap and should not be considered exclusive.
Risks Related to Our Business
Uncertainty relating to macroeconomic conditions may reduce the demand for our assets, result in non-performance of contracts by our lessees or charterers, limit our ability to obtain additional capital to finance new investments, or have other unforeseen negative effects.
Uncertainty and negative trends in general economic conditions in the United States and abroad, including significant tightening of credit markets and commodity price volatility, historically have created difficult operating environments for owners and operators in the transportation industry.industries. Many factors, including factors that are beyond our control, may impact our operating results or financial condition and/or affect the lessees and charterers that form our customer base. For some years, the world has experienced weakened economic conditions and volatility following adverse changes in global capital markets. More recently, excessExcess supply in oil and gas markets hascan put significant downward pressure on prices for these commodities, and may affect demand for assets used in production, refining and transportation of oil and gas. In particular, the past, a significant decline in oil prices during 2016 has resulted inled to lower offshore exploration and production budgets worldwide, with industry experts predicting that offshore exploration and production spending will decrease by approximately 9% in 2017, as compared to 2016.worldwide. These conditions have resulted in significant contraction, de-leveragingdeleveraging and reduced liquidity in the credit markets. A number of governments have implemented, or are considering implementing, a broad variety of governmental actions or new regulations for the financial markets. In addition, limitations on the availability of capital, higher costs of capital for financing expenditures or the desire to preserve liquidity, may cause our current or prospective customers to make reductions in future capital budgets and spending.
Further, demand for our assets is related to passenger and cargo traffic growth, which in turn is dependent on general business and economic conditions. Global economic downturns could have an adverse impact on passenger and cargo traffic levels and consequently our lessees’ and charterers’ business, which may in turn result in a significant reduction in revenues, earnings and cash flows, difficulties accessing capital and a deterioration in the value of our assets. We may also becomehave in the past been exposed to increased credit risk from our customers and third parties who have obligations to us, which could resultresulted in increased non-performance of contracts by our lessees or charterers and adversely impactimpacted our business, prospects, financial condition, results of operations and cash flows. We cannot assure you that similar loss events may not occur in the future.

Instability in geographies where we have assets or where we derive revenue could have a material adverse effect on our business, customers, operations and financial results.
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The industriesEconomic, civil, military and political uncertainty exists and may increase in regions where we operate and derive our revenue. Various countries in which we operate are experiencing and may continue to experience military action and civil and political unrest. We have assets in the emerging market economies of Eastern Europe, including some assets in Russia and Ukraine. In late February 2022, Russian military forces launched significant military action against Ukraine. Sustained conflict and disruption in the region is likely. The impact to Russia and Ukraine, as well as actions taken by other countries, including new and stricter export controls and sanctions by Canada, the United Kingdom, the European Union, the U.S. and other countries and organizations against officials, individuals, regions, and industries in Russia and Ukraine, and each country’s potential response to such sanctions, tensions and military actions, could have a material adverse effect on our business and delay or prevent us from accessing certain of our assets. We are actively monitoring the security of our remaining assets in the region.
The aviation industry has experienced periods of oversupply during which lease rates and asset values have declined, particularly during the most recent economic downturn, and any future oversupply could materially adversely affect our results of operations and cash flows.
The oversupply of a specific asset is likely to depress the lease or charter rates for and the value of that type of asset and result in decreased utilization of our assets, and the industries in which we operate have experienced periods of oversupply during which rates and asset values have declined, particularly during the most recent economic downturn. Factors that could lead to such oversupply include, without limitation:
•general demand for the type of assets that we purchase;
•general macroeconomic conditions, including market prices for commodities that our assets may serve;
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•geopolitical events, including war, prolonged armed conflict and acts of terrorism;
•outbreaks of communicable diseases and natural disasters;
•governmental regulation;
•interest rates;
•the availability of credit;
•potential reduced cash flows and financial condition, including potential liquidity restraints;
•restructurings and bankruptcies of companies in the industries in which we operate, including our customers;
•manufacturer production levels and technological innovation;
•manufacturers merging or exiting the industry or ceasing to produce certain asset types;
•retirement and obsolescence of the assets that we own;
our railroad infrastructure may be damaged, including by flooding and railroad derailments;
•increases in supply levels of assets in the market due to the sale or merging of operating lessors; and
•reintroduction of previously unused or dormant assets into the industries in which we operate.
These and other related factors are generally outside of our control and could lead to persistence of, or increase in, the oversupply of the types of assets that we acquire or decreased utilization of our assets, either of which could materially adversely affect our results of operations and cash flow. In addition, aviation lessees may redeliver our assets to locations where there is oversupply, which may lead to additional repositioning costs for us if we move them to areas with higher demand. Positioning expenses vary depending on geographic location, distance, freight rates and other factors, and may not be fully covered by drop-off charges collected from the last lessees of the equipment or pick-up charges paid by the new lessees. Positioning expenses can be significant if a large portion of our assets are returned to locations with weak demand, which could materially adversely affect our business, prospects, financial condition, results of operations and cash flow.flows.
There canThe airline industry is heavily regulated, and if we fail to comply with applicable requirements, our results of operations could suffer.
The Federal Aviation Administration (“FAA”) and equivalent regulatory agencies have increasingly focused on the need to assure that airline industry products are designed with sufficient cybersecurity controls to protect against unauthorized access or other unwanted compromise. A failure to meet these evolving expectations could negatively impact sales into the industry and expose us to legal or contractual liability.
Governmental agencies throughout the world, including the FAA, prescribe standards and qualification requirements for aircraft components, including virtually all commercial airline and general aviation products. Specific regulations vary from country to country, although compliance with FAA requirements generally satisfies regulatory requirements in other countries. If any material authorization or approval qualifying us to supply our products is revoked or suspended, then sale of the product would be no assurance that any target returns will be achieved.
Our target returns for assets are targets only and are not forecasts of future profits. We develop target returns basedprohibited by law, which would have an adverse effect on our Manager’s assessmentbusiness, financial condition and results of appropriate expectations for returns on assetsoperations.
From time to time, the FAA or equivalent regulatory agencies in other countries propose new regulations or changes to existing regulations, which often are more stringent than existing regulations. If such proposals are adopted and the ability of our Manager to enhance the return generated by those assets through active management. There can be no assurance that these assessments and expectations will be achieved and failureenacted, we may incur significant additional costs to achieve any or all of them may materially adversely impact our ability to achieve any target return with respect to any or all of our assets.
In addition, our target returns are based on estimates and assumptions regarding a number of other factors, including, without limitation, holding periods, the absence of material adverse events affecting specific investments (whichcompliance, which could include, without limitation, natural disasters, terrorism, social unrest or civil disturbances), general and local economic and market conditions, changes in law, taxation, regulation or governmental policies and changes in the political approach to transportation investment, either generally or in specific countries in which we may invest or seek to invest. Many of these factors, as well as the other risks described elsewhere in this report, are beyond our control and all could adversely affect our ability to achieve a target return with respect to an asset. Further, target returns are targets for the return generated by specific assets and not by us. Numerous factors could prevent us from achieving similar returns, notwithstanding the performance of individual assets, including, without limitation, taxation and fees payable by us or our operating subsidiaries, including fees and incentive allocation payable to our Manager.

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There can be no assurance that the returns generated by any of our assets will meet our target returns, or any other level of return, or that we will achieve or successfully implement our asset acquisition objectives, and failure to achieve the target return in respect of any of our assets could, among other things, have a material adverse effect on our business, prospects, financial condition and results of operationsoperations.
Recent trends by China’s aviation authority to relax restrictions on airspace may be reversed, and cash flow. Further, even if the returns generated by individual assets meet target returns, there can be no assurance that the returns generated by other existinganticipated new regulations loosening airspace restrictions may not materialize, which could impact sales prospects in China for our commercial aerospace businesses.
The retirement or future assets would do so,prolonged grounding of commercial aircraft could reduce our revenues and the historical performancevalue of any related inventory.
We sell aircraft components and replacement parts. If aircraft or engines for which we offer aircraft components and replacement parts are retired or grounded for prolonged periods of time and there are fewer aircraft that require these components or parts, our revenues may decline as well as the assets in our existing portfolio should not be considered as indicativevalue of future results with respect to any assets.related inventory.
Contractual defaults may adversely affect our business, prospects, financial condition, results of operations and cash flows by decreasing revenues and increasing storage, positioning, collection, recovery and lost equipment expenses.
The success of our business depends in large part on the success of the operators in the sectors in which we participate. Cash flows from our assets are substantially impacted by our ability to collect compensation and other amounts to be paid in respect of such assets from the customers with whichwhom we enter into leases, charters or other contractual arrangements. Inherent in the nature of the leases, charters and other arrangements for the use of such assets is the risk that we may not receive, or may experience delay in realizing, such amounts to be paid. While we target the entry into contracts with credit-worthy counterparties, no assurance can be given that such counterparties will perform their obligations during the term of the leases, charters or other contractual arrangements. In addition, when counterparties default, we may fail to recover all of our assets, and the assets we do recover may be returned in damaged condition or to locations where we will not be able to efficiently lease, charter or sell them. In most cases, we maintain, or require our lessees to maintain, certain insurances to cover the risk of damages or loss of our assets. However, these insurance policies may not be sufficient to protect us against a loss.
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Depending on the specific sector, the risk of contractual defaults may be elevated due to excess capacity as a result of oversupply during the most recent economic downturn. We lease assets to our customers pursuant to fixed-price contracts, and our customers then seek to utilize those assets to transport goods and provide services. If the price at which our customers receive for their transportation services decreases as a result of an oversupply in the marketplace, then our customers may be forced to reduce their prices in order to attract business (which may have an adverse effect on their ability to meet their contractual lease obligations to us), or may seek to renegotiate or terminate their contractual lease arrangements with us to pursue a lower-priced opportunity with another lessor, which may have a direct, adverse effect on us. See “-The industries in which we operate have experienced periods of oversupply during which lease rates and asset values have declined, particularly during the financial crisis,most recent economic downturn, and any future oversupply could materially adversely affect our results of operations and cash flows.” Any default by a material customer would have a significant impact on our profitability at the time the customer defaulted, which could materially adversely affect our operating results and growth prospects. In addition, some of our counterparties may reside in jurisdictions with legal and regulatory regimes that make it difficult and costly to enforce such counterparties’ obligations.
We may not be able to renew or obtain new or favorable charters or leases, which could adversely affect our business, prospects, financial condition, results of operations and cash flows.
Our operating leases are subject to greater residual risk than direct finance leases because we will own the assets at the expiration of an operating lease term and we may be unable to renew existing charters or leases at favorable rates, or at all, or sell the leased or chartered assets, and the residual value of the asset may be lower than anticipated. In addition, our ability to renew existing charters or leases or obtain new charters or leases will also depend on prevailing market conditions, and upon expiration of the contracts governing the leasing or charter of the applicable assets, we may be exposed to increased volatility in terms of rates and contract provisions. For example, we do not currently have long-term charters for our construction support vessel and our ROV support vessel. Likewise, our customers may reduce their activity levels or seek to terminate or renegotiate their charters or leases with us. If we are not able to renew or obtain new charters or leases in direct continuation, or if new charters or leases are entered into at rates substantially below the existing rates or on terms otherwise less favorable compared to existing contractual terms, or if we are unable to sell assets for which we are unable to obtain new contracts or leases, our business, prospects, financial condition, results of operations and cash flows could be materially adversely affected.
If we acquire a high concentration of a particular type of asset, or concentrate our investments in a particular sector, and our business, prospects, financial condition, results of operations and cash flows could be adversely affected by changes in market demand or problems specific to that asset or sector.
If we acquire a high concentration of a particular asset, or concentrate our investments in a particular sector, and our business and financial results could be adversely affected by sector-specific or asset-specific factors. For example, if a particular sector experiences difficulties such as increased competition or oversupply, the operators we rely on as a lessor may be adversely affected and consequently our business and financial results may be similarly affected. If we acquire a high concentration of a particular asset and the market demand for a particular asset declines, it is redesigned or replaced by its manufacturer or it experiences design or technical problems, the value and rates relating to such asset may decline, and we may be unable to lease or charter such asset on favorable terms, if at all. Any decrease in the value and rates of our assets may have a material adverse effect on our business, prospects, financial condition, results of operations and cash flows.

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We operate in highly competitive markets.
The business of acquiring transportation and transportation-related infrastructureaviation assets is highly competitive. Market competition for opportunities includes traditional transportation and infrastructure companies, commercial and investment banks, as well as a growing number of non-traditional participants, such as hedge funds, private equity funds and other private investors, including Fortress-related entities. Some of these competitors may have access to greater amounts of capital and/or to capital that may be committed for longer periods of time or may have different return thresholds than us, and thus these competitors may have certain advantages not shared by us. In addition, competitors may have incurred, or may in the future incur, leverage to finance their debt investments at levels or on terms more favorable than those available to us. Strong competition for investment opportunities could result in fewer such opportunities for us, as certain of these competitors have established and are establishing investment vehicles that target the same types of assets that we intend to purchase.
In addition, some of our competitors may have longer operating histories, greater financial resources and lower costs of capital than us, and consequently, may be able to compete more effectively in one or more of our target markets. We likely will not always be able to compete successfully with our competitors and competitive pressures or other factors may also result in significant price competition, particularly during industry downturns, which could have a material adverse effect on our business, prospects, financial condition, results of operations and cash flows.
Litigation to enforce our contracts and recover our assets has inherent uncertainties that are increased by the location of our assets in jurisdictions that have less developed legal systems.
While some of our contractual arrangements are governed by New York law and provide for the non-exclusive jurisdiction of the courts located in the state of New York, our ability to enforce our counterparties’ obligations under such contractual arrangements is subject to applicable laws in the jurisdiction in which enforcement is sought. While some of our existing assets are used in specific jurisdictions, transportation and transportation-related infrastructure assets by their nature generally move throughout multiple jurisdictions in the ordinary course of business. As a result, it is not possible to predict, with any degree of certainty, the jurisdictions in which enforcement proceedings may be commenced. Litigation and enforcement proceedings have inherent uncertainties in any jurisdiction and are expensive. These uncertainties are enhanced in countries that have less developed legal systems where the interpretation of laws and regulations is not consistent, may be influenced by factors other than legal merits and may be cumbersome, time-consuming and even more expensive. For example, repossession from defaulting lessees may be difficult and more expensive in jurisdictions whose laws do not confer the same security interests and rights to creditors and lessors as those in the United States and where the legal system is not as well developed. As a result, the remedies available and the relative success and expedience of collection and enforcement proceedings with respect to the owned assets in various jurisdictions cannot be predicted. To the extent more of our business shifts to areas outside of the United States and Europe, such as China and Malaysia, it may become more difficult and expensive to enforce our rights and recover our assets.
Certain liens may arise on our assets.
Certain of our assets are currently subject to liens under separate financing arrangements entered into by certain subsidiaries in connection with acquisitions of assets. In the event of a default under such arrangements by the applicable subsidiary, the lenders thereunder would be permitted to take possession of or sell such assets. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations-Liquidity and Capital Resources.” In addition, our currently owned assets and assets that we purchase in the future may be subject to other liens based on the industry practices relating to such assets. Until they are discharged, these liens could impair our ability to repossess, re-lease or sell our assets, and to the extent our lessees or charterers do not comply with their obligations to discharge any liens on the applicable assets, we may find it necessary to pay the claims secured by such liens in order to repossess such assets. Such payments could materially adversely affect our operating results and growth prospects.
The values of theour assets that we purchase may fluctuate due to various factors.
The fair market values of our assets may decrease or increase depending on a number of factors, including the prevailing level of charter or lease rates from time to time, general economic and market conditions affecting our target markets, type and age of assets, supply and demand for assets, competition, new governmental or other regulations and technological advances, all of which could impact our profitability and our ability to lease, charter, develop, operate, or sell such assets. In addition, our assets depreciate as they age and may generate lower revenues and cash flows. We must be able to replace such older, depreciated assets with newer assets, or our ability to maintain or increase our revenues and cash flows will decline. In addition, if we dispose of an asset for a price that is less than the depreciated book value of the asset on our balance sheet or if we determine that an asset’s value has been impaired, we will recognize a related charge in our consolidated statement of operations and such charge could be material.

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We may not generate a sufficient amount of cash or generate sufficient free cash flow to fund our operations or repay our indebtedness.
Our ability to make payments on our indebtedness as required depends on our ability to generate cash flow in the future. This ability, to a certain extent, is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control. If we do not generate sufficient free cash flow to satisfy our debt obligations, including interest payments and the payment of principal at maturity, we may have to undertake alternative financing plans, such as refinancing or restructuring our debt, selling assets, reducing or delaying capital investments or seeking to raise additional capital. We cannot provide assurance that any refinancing would be possible, that any assets could be sold, or, if sold, of the timeliness and amount of proceeds realized from those sales, that additional financing could be obtained on acceptable terms, if at all, or that additional financing would be permitted under the terms of our various debt instruments then in effect. Furthermore, our ability to refinance would depend upon the condition of the finance and credit markets. Our inability to generate sufficient free cash flow to satisfy our debt obligations, or to refinance our obligations on commercially reasonable terms or on a timely basis, would materially affect our business, financial condition and results of operations.
Our use of joint ventures or partnerships, and our Manager’s outsourcing of certain functions, may present unforeseen obstacles or costs.
We have acquired and may in the future acquire interests in certain assets in cooperation with third-party partners or co-investors through jointly-owned acquisition vehicles, joint ventures or other structures. In these co-investment situations, our ability to control the management of such assets depends upon the nature and terms of the joint arrangements with such partners and our relative ownership stake in the asset, each of which will be determined by negotiation at the time of the investment and the determination of which is subject to the discretion of our Manager. Depending on our Manager’s perception of the relative risks and rewards of a particular asset, our Manager may elect to acquire interests in structures that afford relatively little or no operational and/or management control to us. Such arrangements present risks not present with wholly-owned assets, such as the possibility that a co-investor becomes bankrupt, develops business interests or goals that conflict with our interests and goals in respect of the assets, all of which could materially adversely affect our business, prospects, financial condition, results of operations and cash flows.
In addition, our Manager expects to utilize third partythird-party contractors to perform services and functions related to the operation and leasing of our assets. These functions may include billing, collections, recovery and asset monitoring. Because we and our Manager do not directly control these third parties, there can be no assurance that the services they provide will be delivered at a level commensurate with our expectations, or at all. The failure of any such third partythird-party contractors to perform in accordance with our expectations could materially adversely affect our business, prospects, financial condition, results of operations and cash flows.
We are subject to the risks and costs of obsolescence of our assets.
Technological and other improvements expose us to the risk that certain of our assets may become technologically or commercially obsolete. For example, in our Aviation Leasing segment, as manufacturers introduce technological innovations and new types of aircraft, some of our assets could become less desirable to potential lessees. Such technological innovations may increase the rate of obsolescence of existing aircraft faster than currently anticipated by us. In addition, the imposition of increased regulation regarding stringent noise or emissions restrictions may make some of our aircraft less desirable and less valuable in the marketplace. In our Offshore Energy segment,offshore energy business, development and construction of new, sophisticated, high-specification assets could cause our assets to become less desirable to potential charterers, and insurance rates may also increase with the age of a vessel, making older vessels less desirable to potential charterers. Any of these risks may adversely affect our ability to lease, charter or sell our assets on favorable terms, if at all, which could materially adversely affect our operating results and growth prospects.
The North American rail sectorinability to obtain certain components from suppliers could harm our business.
Our business is affected by the availability and price of the component parts that we use to maintain our products or to manufacture products. Our ability to manage inventory and meet delivery requirements may be constrained by our suppliers’ ability to adjust delivery of long-lead time products during times of volatile demand. The supply chains for our business could also be disrupted by external events such as natural disasters, extreme weather events, pandemics, labor disputes, governmental actions and legislative or regulatory changes. As a highly regulated industryresult, our suppliers may fail to perform according to specifications when required and we may be unable to identify alternate suppliers or to otherwise mitigate the consequences of their non-performance.
Transitions to new suppliers may result in significant costs and delays, including those related to the required recertification of parts obtained from new suppliers with our customers and/or regulatory agencies. Our inability to fill our supply needs could jeopardize our ability to fulfill obligations under customer contracts, which could result in reduced revenues and profits, contract penalties or terminations, and damage to customer relationships. Further, increased costs of compliance with, or liability for violation of, existing or future laws, regulationssuch components could reduce our profits if we were unable to pass along such price in-creases to our customers.
We could be negatively impacted by environmental, social, and governance (ESG) and sustainability-related matters.
Governments, investors, customers, employees and other requirements could significantly increase our costs of doing business, thereby adversely affecting our profitability.
The rail sector is subject to extensive laws, regulationsstakeholders are increasingly focusing on corporate ESG practices and disclosures, and expectations in this area are rapidly evolving. We have announced, and may in the future announce, sustainability-focused investments, partnerships and other requirementsinitiatives and goals. These initiatives, aspirations, targets or
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objectives reflect our current plans and aspirations and are not guarantees that we will be able to achieve them. Our efforts to accomplish and accurately report on these initiatives and goals present numerous operational, regulatory, reputational, financial, legal, and other risks, any of which could have a material negative impact, including on our reputation and stock price.
In addition, the standards for tracking and reporting on ESG matters are relatively new, have not been harmonized and continue to evolve. Our selection of disclosure frameworks that seek to align with various voluntary reporting standards may change from time to time and may result in a lack of comparative data from period to period. Moreover, our processes and controls may not always align with evolving voluntary standards for identifying, measuring, and reporting ESG metrics, our interpretation of reporting standards may differ from those of others, and such standards may change over time, any of which could result in significant revisions to our goals or reported progress in achieving such goals. In this regard, the criteria by which our ESG practices and disclosures are assessed may change due to the quickly evolving landscape, which could result in greater expectations of us and cause us to undertake costly initiatives to satisfy such new criteria. The increasing attention to corporate ESG initiatives could also result in increased investigations and litigation or threats thereof. If we are unable to satisfy such new criteria, investors may conclude that our ESG and sustainability practices are inadequate. If we fail or are perceived to have failed to achieve previously announced initiatives or goals or to accurately disclose our progress on such initiatives or goals, our reputation, business, financial condition and results of operations could be adversely impacted.
We may be affected by fluctuating prices for fuel and energy.
Volatility in energy prices could have a significant effect on a variety of items including, but not limited to, those relatingthe economy and demand for transportation services.
International, political, and economic factors, events and conditions, including current sanctions against Russia related to its invasion of Ukraine, affect the environment, safety, ratesvolatility of fuel prices and charges, service obligations, employment, labor, immigration, minimum wagessupplies. Weather can also affect fuel supplies and overtime pay, health care and benefits, working conditions, public accessibility and other requirements. These laws and regulations are enforced by U.S. and Canadian federal agencies including the U.S. and Canadian Environmental Protection Agencies, the U.S. and Canadian Departmentslimit domestic refining capacity. A severe shortage of, Transportation (USDOT or Transport Canada), the Occupational Safety and Health Act (OSHA or Canadian provincial equivalents), the U.S. Federal Railroad Administration, or FRA, and the U.S. Surface Transportation Board, or STB, as well as numerous other state, provincial, local and federal agencies. Ongoing compliance with, or a violation of, these laws, regulations and other requirementsdisruption to, domestic fuel supplies could have a material adverse effect on our business,results of operations, financial condition, and results of operations.
We believe that our rail operations are in substantial compliance with applicable laws and regulations. However, these laws and regulations, and the interpretation or enforcement thereof, are subject to frequent change and varying interpretation by regulatory authorities, and we are unable to predict the ongoing cost to us of complying with these laws and regulations or the future impact of these laws and regulations on our operations. In addition, from time to time we are subject to inspections and investigations by various regulators. Violation of environmental or other laws, regulations and permits can result in the imposition of significant administrative, civil and criminal penalties, injunctions and construction bans or delays.
Legislation passed by the U.S. Congress or Canadian Parliament or new regulations issued by federal agencies can significantly affect the revenues, costs and profitability of our business. For instance, in December 2009, a proposed bill called the “Surface Transportation Board Reauthorization Act of 2009” was introduced in the Senate but not advanced. In addition, more recently proposed bills such as the “Rail Shipper Fairness Act of 2015,” if adopted, could increase government involvement in railroad pricing, service and operations and significantly change the federal regulatory framework of the railroad industry. Several of the changes under consideration could have a significant negative impact on FTAI’s ability to determine prices for rail services, meet service standards and could force a reduction in capital spending. Statutes imposing price constraints or affecting rail-to-rail competition could adversely affect FTAI’s profitability.
Under various U.S. and Canadian federal, state, provincial and local environmental requirements, as the owner or operator of terminals or other facilities, we may be liable for the costs of removal or remediation of contamination at or from our existing locations, whether we knew of, or were responsible for, the presence of such contamination. The failure to timely report and properly remediate contamination may subject us to liability to third parties and may adversely affect our ability to sell or rent our property or to borrow

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money using our property as collateral. Additionally, we may be liable for the costs of remediating third-party sites where hazardous substances from our operations have been transported for treatment or disposal, regardless of whether we own or operate that site. In the future, we may incur substantial expenditures for investigation or remediation of contamination that has not yet been discovered at our current or former locations or locations that we may acquire.
A discharge of hydrocarbons or hazardous substances into the environment associated with operating our rail assets could subject us to substantial expense, including the cost to recover the materials spilled, restore the affected natural resources, pay fines and penalties, and natural resource damages and claims made by employees, neighboring landowners, government authorities and other third parties, including for personal injury and property damage. We may experience future catastrophic sudden or gradual releases into the environment from our facilities or discover historical releases that were previously unidentified or not assessed. Although our inspection and testing programs are designed to prevent, detect and address any such releases promptly, the liabilities incurred due to any future releases into the environment from our assets, have the potential to substantially affect our business. Such events could also subject us to media and public scrutiny that could have a negative effect on our operations and also on the value of our common shares.
Our business could be adversely affected if service on the railroads is interrupted or if more stringent regulations are adopted regarding railcar design or the transportation of crude oil by rail.
As a result of hydraulic fracturing and other improvements in extraction technologies, there has been a substantial increase in the volume of crude oil and liquid hydrocarbons produced and transported in North America, and a geographic shift in that production versus historical production. The increase in volume and shift in geography has resulted in a growing percentage of crude oil being transported by rail. High-profile accidents involving crude-oil-carrying trains in Quebec, North Dakota and Virginia, and more recently in West Virginia and Illinois, have raised concerns about the environmental and safety risks associated with crude oil transport by rail and the associated risks arising from railcar design.
In May 2015, the DOT issued new production standards and operational controls for rail tank cars used in “High-Hazard Flammable Trains” (i.e., trains carrying commodities such as ethanol, crude oil and other flammable liquids). Similar standards have been adopted in Canada. The new standard applies for all cars manufactured after October 1, 2015, and existing tank cars must be retrofitted within the next three to eight years. The applicable operational controls include reduced speed restrictions, and maximum lengths on trains carrying these materials. Retrofitting our tank cars will be required under these new standards.  While we may be able to pass some of these costs on to our customers, there may be costs that we cannot pass on to them. We continue to monitor the railcar regulatory landscape and remain in close contact with railcar suppliers and other industry stakeholders to stay informed of railcar regulation rulemaking developments.  It is unclear how these regulations will impact the crude-by-rail industry, and any such impact would depend on a number of factors that are outside of our control.  If, for example, overall volume of crude-by-rail decreases, or if we do not have access to a sufficient number of compliant cars to transport required volumes under our existing contracts, our operations may be negatively affected.  This may lead to a decrease in revenues and other consequences.
The adoption of additional federal, state, provincial or local laws or regulations, including any voluntary measures by the rail industry regarding railcar design or crude oil and liquid hydrocarbon rail transport activities, or efforts by local communities to restrict or limit rail traffic involving crude oil, could affect our business by increasing compliance costs and decreasing demand for our services, which could adversely affect our financial position and cash flows. Moreover, any disruptions in the operations of railroads, including those due to shortages of railcars, weather-related problems, flooding, drought, accidents, mechanical difficulties, strikes, lockouts or bottlenecks, could adversely impact our customers’ ability to move their product and, as a result, could affect our business.

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Our assets are exposed to unplanned interruptions caused by catastrophic events outside of our control which may disrupt our business and cause damage or losses that may not be adequately covered by insurance.
The operations of transportation and infrastructure projects are exposed to unplanned interruptions caused by significant catastrophic events, such as cyclones, earthquakes, landslides, floods, explosions, fires, major plant breakdowns, pipeline or electricity line ruptures or other disasters. Operational disruption, as well as supply disruption, could adversely impact the cash flows available from these assets. In addition, the cost of repairing or replacing damaged assets could be considerable. Repeated or prolonged interruption may result in temporary or permanent loss of customers, substantial litigation or penalties for regulatory or contractual non-compliance, and any loss from such events may not be recoverable under relevant insurance policies. Although we believe that we are adequately insured against these types of events, either indirectly through our lessees or charterers or through our own insurance policies, no assurance can be given that the occurrence of any such event will not materially adversely affect us. In addition, if a lessee or charterer is not obligated to maintain sufficient insurance, we may incur the costs of additional insurance coverage during the related lease or charter. We can give no assurance that such insurance will be available at commercially reasonable rates, if at all.liquidity.
Our assets generally require routine maintenance, and we may be exposed to unforeseen maintenance costs.
We may be exposed to unforeseen maintenance costs for our assets associated with a lessee’s or charterer’s failure to properly maintain the asset. We enter into leases and charters with respect to some of our assets pursuant to which the lessees are primarily responsible for many obligations, which generally include complying with all governmental requirements applicable to the lessee or charterer, including operational, maintenance, government agency oversight, registration requirements and other applicable directives. Failure of a lessee or charterer to perform required maintenance during the term of a lease or charter could result in a decrease in value of an asset, an inability to re-lease or charter an asset at favorable rates, if at all, or a potential inability to utilize an asset. Maintenance failures would also likely require us to incur maintenance and modification costs upon the termination of the applicable lease or charter; such costs to restore the asset to an acceptable condition prior to re-leasing, charter or sale could be substantial. Any failure by our lessees or charterers to meet their obligations to perform required scheduled maintenance or our inability to maintain our assets could materially adversely affect our business, prospects, financial condition, results of operations and cash flows.
Some of our customers operate in highly regulated industries and changes in laws or regulations, including laws with respect to international trade, may adversely affect our ability to lease, charter or sell our assets.
Some of our customers operate in highly regulated industries such as aviation and offshore energy. A number of our contractual arrangements-for example, our leasing aircraft engines or offshore energy equipment to third-party operators-require the operator (our customer) to obtain specific governmental or regulatory licenses, consents or approvals. These include consents for certain payments under such arrangements and for the export, import or re-export of the related assets. Failure by our customers or, in certain circumstances, by us, to obtain certain licenses and approvals could negatively affect our ability to conduct our business. In addition, the shipment of goods, services and technology across international borders subjects the operation of our assets to international trade laws and regulations. Moreover, many countries, including the United States, control the export and re-export of certain goods, services and technology and impose related export recordkeeping and reporting obligations. Governments also may impose economic sanctions against certain countries, persons and other entities that may restrict or prohibit transactions involving such countries, persons and entities. If any such regulations or sanctions affect the asset operators that are our customers, our business, prospects, financial condition, results of operations and cash flows may be materially adversely affected.
It is impossible to predict whether third parties will allege liability related to our purchase of the Montreal, Maine and Atlantic Railway (“MM&A”) assets out of bankruptcy, including possible claims related to the July 6, 2013 train derailment near Lac-Mégantic, Quebec.
On July 6, 2013, prior to our ownership, a train carrying crude oil on the MM&A line derailed near Lac-Mégantic, Quebec which resulted in fires that claimed the lives of 47 individuals (the “Incident”). Approximately two million gallons of crude oil were either burned or released into the environment, including into the nearby Chaudière River. Prior to our acquisition of the MM&A assets in May and June 2014, we received written assurance from the Quebec Ministry of Sustainable Development, Environment, Wildlife and Parks that it would take full responsibility for the environmental clean-up and that it would not hold CMQR liable for any environmental damages or costs relating to clean-up or restoration of the affected area as a result of the Incident. While we don’t anticipate any liability relating to the Incident, including liability for claims alleging personal injury, property damage or natural resource damages, there can be no assurance that such claims relating to the Incident will not arise in the future. No claims have been made or threatened against us as of September 30, 2017 and we do not anticipate any expenditures relating to environmental clean-up (including impacts to the Chaudière River) as a result of the Incident.

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Certain of our assets are subject to purchase options held by the charterer or lessee of the asset which, if exercised, could reduce the size of our asset base and our future revenues.
We have granted purchase options to the charterers and lessees of certain of our assets. The market values of these assets may change from time to time depending on a number of factors, such as general economic and market conditions affecting the industries in which we operate, competition, cost of construction, governmental or other regulations, technological changes and prevailing levels of charter or lease rates from time to time. The purchase price under a purchase option may be less than the asset’s market value at the time the option may be exercised. In addition, we may not be able to obtain a replacement asset for the price at which the asset is sold. In such cases, our business, prospects, financial condition, results of operations and cash flows may be materially adversely affected.
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The profitability of our Offshore Energy segmentoffshore energy assets may be impacted by the profitability of the offshore oil and gas industry generally, which is significantly affected by, among other things, volatile oil and gas prices.
Demand for assets in the Offshore Energy segmentoffshore energy business and our ability to secure charter contracts for our assets at favorable charter rates following expiry or termination of existing charters will depend, among other things, on the level of activity in the offshore oil and gas industry. The offshore oil and gas industry is cyclical and volatile, and demand for oil-service assets depends on, among other things, the level of development and activity in oil and gas exploration, as well as the identification and development of oil and gas reserves and production in offshore areas worldwide. The availability of high quality oil and gas prospects, exploration success, relative production costs, the stage of reservoir development, political concerns and regulatory requirements all affect the level of activity for charterers of oil-service vessels. Accordingly, oil and gas prices and market expectations of potential changes in these prices significantly affect the level of activity and demand for oil-service assets. Oil and gas prices can be extremely volatile (and have declined significantly in the last year) and are affected by numerous factors beyond the Company’sour control, such as: worldwide demand for oil and gas; costs of exploring, developing, producing and delivering oil and gas; expectations regarding future energy prices; the ability of the Organization of Petroleum Exporting Countries (“OPEC”) to set and maintain production levels and impact pricing; the level of production in non-OPEC countries; governmental regulations and policies regarding development of oil and gas reserves; local and international political, economic and weather conditions; domestic and foreign tax or trade policies; political and military conflicts in oil-producing and other countries; and the development and exploration of alternative fuels. Any reduction in the demand for our assets due to these or other factors could materially adversely affect our operating results and growth prospects.
We may not be able to renew or obtain new or favorable charters or leases, which could adversely affect our business, prospects, financial condition, results of operations and cash flows.
Our Shipping Containers segment is affectedoperating leases are subject to greater residual risk than direct finance leases because we will own the assets at the expiration of an operating lease term and we may be unable to renew existing charters or leases at favorable rates, or at all, or sell the leased or chartered assets, and the residual value of the asset may be lower than anticipated. In addition, our ability to renew existing charters or leases or obtain new charters or leases will also depend on prevailing market conditions, and upon expiration of the contracts governing the leasing or charter of the applicable assets, we may be exposed to increased volatility in terms of rates and contract provisions. For example, we do not currently have long-term charters for our construction support vessel and our ROV support vessel. Likewise, our customers may reduce their activity levels or seek to terminate or renegotiate their charters or leases with us. If we are not able to renew or obtain new charters or leases in direct continuation, or if new charters or leases are entered into at rates substantially below the existing rates or on terms otherwise less favorable compared to existing contractual terms, or if we are unable to sell assets for which we are unable to obtain new contracts or leases, our business, prospects, financial condition, results of operations and cash flows could be materially adversely affected.
Litigation to enforce our contracts and recover our assets has inherent uncertainties that are increased by the lacklocation of an international title registryour assets in jurisdictions that have less developed legal systems.
While some of our contractual arrangements are governed by New York law and provide for containers,the non-exclusive jurisdiction of the courts located in the state of New York, our ability to enforce our counterparties’ obligations under such contractual arrangements is subject to applicable laws in the jurisdiction in which increasesenforcement is sought. While some of our existing assets are used in specific jurisdictions, transportation and aviation assets by their nature generally move throughout multiple jurisdictions in the riskordinary course of ownership disputes.
Althoughbusiness. As a result, it is not possible to predict, with any degree of certainty, the Bureau International des Containers registersjurisdictions in which enforcement proceedings may be commenced. Litigation and allocatesenforcement proceedings have inherent uncertainties in any jurisdiction and are expensive. These uncertainties are enhanced in countries that have less developed legal systems where the interpretation of laws and regulations is not consistent, may be influenced by factors other than legal merits and may be cumbersome, time-consuming and even more expensive. For example, repossession from defaulting lessees may be difficult and more expensive in jurisdictions whose laws do not confer the same security interests and rights to creditors and lessors as those in the United States and where the legal system is not as well developed. As a unique four letter prefix to every container in accordance with International Standardization Organization (“ISO”) standard 6346 (Freight container coding, identificationresult, the remedies available and marking) there is no internationally recognized systemthe relative success and expedience of recordation or filing to evidence our title to containers nor is there an internationally recognized system for filing security interest in containers. While this has not historically had a material impact on our intermodal assets, the lack of a title recordation systemcollection and enforcement proceedings with respect to containers could resultthe owned assets in disputes with lessees, end-users, or third parties,various jurisdictions cannot be predicted. To the extent more of our business shifts to areas outside of the United States and Europe, such as creditors of end-users, whoAsia and the Middle East, it may improperly claim ownership of the containers, especially in countries with less developed legal systems.become more difficult and expensive to enforce our rights and recover our assets.
Our international operations involve additional risks, which could adversely affect our business, prospects, financial condition, results of operations and cash flows.
We and our customers operate in various regions throughout the world. As a result, we may, directly or indirectly, be exposed to political and other uncertainties, including risks of:
•terrorist acts, armed hostilities, war and civil disturbances;
•acts of piracy;
•potential cybersecurity attacks;
•significant governmental influence over many aspects of local economies;
•seizure, nationalization or expropriation of property or equipment;
•repudiation, nullification, modification or renegotiation of contracts;
•limitations on insurance coverage, such as war risk coverage, in certain areas;
•political unrest;
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•foreign and U.S. monetary policy and foreign currency fluctuations and devaluations;

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•the inability to repatriate income or capital;
•complications associated with repairing and replacing equipment in remote locations;
•import-export quotas, wage and price controls, imposition of trade barriers;
•U.S. and foreign sanctions or trade embargoes;
•restrictions on the transfer of funds into or out of countries in which we operate;
•compliance with U.S. Treasury sanctions regulations restricting doing business with certain nations or specially designated nationals;
•regulatory or financial requirements to comply with foreign bureaucratic actions;
•compliance with applicable anti-corruption laws and regulations;
•changing taxation policies, including confiscatory taxation;
•other forms of government regulation and economic conditions that are beyond our control; and
•governmental corruption.
Any of these or other risks could adversely impact our customers’ international operations which could materially adversely impact our operating results and growth opportunities.
We may make acquisitions in emerging markets throughout the world, and investments in emerging markets are subject to greater risks than developed markets and could adversely affect our business, prospects, financial condition, results of operations and cash flows.
To the extent that we acquire assets in emerging markets-which we may do throughout the world-additional risks may be encountered that could adversely affect our business. Emerging market countries have less developed economies and infrastructure and are often more vulnerable to economic and geopolitical challenges and may experience significant fluctuations in gross domestic product, interest rates and currency exchange rates, as well as civil disturbances, government instability, nationalization and expropriation of private assets and the imposition of taxes or other charges by government authorities. In addition, the currencies in which investments are denominated may be unstable, may be subject to significant depreciation and may not be freely convertible or may be subject to the imposition of other monetary or fiscal controls and restrictions.
Emerging markets are still in relatively early stages of their development and accordingly may not be highly or efficiently regulated. Moreover, emerging markets tend to be shallower and less liquid than more established markets which may adversely affect our ability to realize profits from our assets in emerging markets when we desire to do so or receive what we perceive to be their fair value in the event of a realization. In some cases, a market for realizing profits from an investment may not exist locally. In addition, issuers based in emerging markets are not generally subject to uniform accounting and financial reporting standards, practices and requirements comparable to those applicable to issuers based in more developed countries, thereby potentially increasing the risk of fraud and other deceptive practices. Settlement of transactions may be subject to greater delay and administrative uncertainties than in developed markets and less complete and reliable financial and other information may be available to investors in emerging markets than in developed markets. In addition, economic instability in emerging markets could adversely affect the value of our assets subject to leases or charters in such countries, or the ability of our lessees or charters, which operate in these markets, to meet their contractual obligations. As a result, lessees or charterers that operate in emerging market countries may be more likely to default under their contractual obligations than those that operate in developed countries. Liquidity and volatility limitations in these markets may also adversely affect our ability to dispose of our assets at the best price available or in a timely manner.
As we have and may continue to acquire assets located in emerging markets throughout the world, we may be exposed to any one or a combination of these risks, which could adversely affect our operating results.

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We are actively evaluating potential acquisitions of assets and operating companies in other transportation and infrastructureaviation sectors which could result in additional risks and uncertainties for our business and unexpected regulatory compliance costs.
While our existing portfolio primarily consists of assets in the aviation energy, intermodal transport and rail sectors,sector, we are actively evaluating potential acquisitions of assets and operating companies in other sectors of the transportation and transportation-related infrastructure and equipment marketsaviation market in which we do not currently operate and we plan to be flexible as other attractive opportunities arise over time. To the extent we make acquisitions in other sectors, we will face numerous risks and uncertainties, including risks associated with the required investment of capital and other resources and with combining or integrating operational and management systems and controls. Entry into certain lines of business may subject us to new laws and regulations and may lead to increased litigation and regulatory risk. Many types of transportation assets, including certain rail, airport and seaportaviation assets, are subject to registration requirements by U.S. governmental agencies, as well as foreign governments if such assets are to be used outside of the United States. Failing to register the assets, or losing such registration, could result in substantial penalties, forced liquidation of the assets and/or the inability to operate and, if applicable, lease the assets. We may need to incur significant costs to comply with the laws and regulations applicable to any such new acquisition. The failure to comply with these laws and regulations could cause us to incur significant costs, fines or penalties or require the assets to be removed from service for a period of time resulting in reduced income from these assets. In addition, if our acquisitions in other sectors produce insufficient revenues, or produce investment losses, or if we are unable to efficiently manage our expanded operations, our results of operations will be adversely affected, and our reputation and business may be harmed.
We may acquire operating businesses, including businesses whose operations are not fully matured and stabilized. These businesses may be subject to significant operating and development risks, including increased competition, cost overruns and delays, and difficulties in obtaining approvals or financing. These factors could materially affect our business, financial condition, liquidity and results of operations.
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We have acquired, and may in the future acquire, operating businesses including businesses whose operations are not fully matured and stabilized (such as Jefferson Terminal). While we have deep experience in the construction and operation of these companies, we are nevertheless subject to significant risks and contingencies of an operating business, and these risks are greater where the operations of such businesses are not fully matured and stabilized. Key factors that may affect our operating businesses include, but are not limited to:
competition from market participants;
general economic and/or industry trends, including pricing for the products or services offered by our operating businesses;
the issuance and/or continued availability of necessary permits, licenses, approvals and agreements from governmental agencies and third parties as are required to construct and operate such businesses;
changes or deficiencies in the design or construction of development projects;
unforeseen engineering, environmental or geological problems;
potential increases in construction and operating costs due to changes in the cost and availability of fuel, power, materials and supplies;
the availability and cost of skilled labor and equipment;
our ability to enter into additional satisfactory agreements with contractors and to maintain good relationships with these contractors in order to construct development projects within our expected cost parameters and time frame, and the ability of those contractors to perform their obligations under the contracts and to maintain their creditworthiness;
potential liability for injury or casualty losses which are not covered by insurance;
potential opposition from non-governmental organizations, environmental groups, local or other groups which may delay or prevent development activities;
local and economic conditions;
changes in legal requirements; and
force majeure events, including catastrophes and adverse weather conditions.
Any of these factors could materially affect our business, financial condition, liquidity and results of operations.

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The agreements governing our indebtedness place restrictions on us and our subsidiaries, reducing operational flexibility and creating default risks.
The agreements governing our indebtedness, including, but not limited to, the indentureindentures governing our Senior Notes and the second amended and restated revolving credit facility entered into on September 20, 2022, as amended by Amendment No. 1, dated as of November 22, 2022 (the “Revolving Credit Facility”), contain covenants that place restrictions on us and our subsidiaries. The indentureindentures governing our Senior Notes restricts,and the Revolving Credit Facility restrict among other things, our and certain of our subsidiaries’ ability to:
•merge, consolidate or transfer all, or substantially all, of our assets;
•incur additional debt or issue preferred stock;shares;
•make certain investments or acquisitions;
•create liens on our or our subsidiaries’ assets;
•sell assets;
•make distributions on or repurchase our stock;shares;
•enter into transactions with affiliates; and
•create dividend restrictions and other payment restrictions that affect our subsidiaries.
These covenants could impair our ability to grow our business, take advantage of attractive business opportunities, pay dividends on our ordinary shares or successfully compete. A breach of any of these covenants could result in an event of default. Cross-default provisions in our debt agreements could cause an event of default under one debt agreement to trigger an event of default under our other debt agreements. Upon the occurrence of an event of default under any of our debt agreements, the lenders or holders thereof could elect to declare all outstanding debt under such agreements to be immediately due and payable.
Terrorist attacks or other hostilities could negatively impact our operations and our profitability and may expose us to liability and reputational damage.
Terrorist attacks may negatively affect our operations. Such attacks have contributed to economic instability in the United States and elsewhere, and further acts of terrorism, violence or war could similarly affect world trade and the industries in which we and our customers operate. In addition, terrorist attacks or hostilities may directly impact airports or aircraft ports where our containers and vessels travel, or our physical facilities or those of our customers. In addition, it is also possible that our assets could be involved in a terrorist attack.attack or other hostilities. The consequences of any terrorist attacks or hostilities are unpredictable, and we may not be able to foresee events that could have a material adverse effect on our operations. Although our lease and charter agreements generally require the counterparties to indemnify us against all damages arising out of the use of our assets, and we carry insurance to potentially offset any costs in the event that our customer indemnifications prove to be insufficient, our insurance does not cover certain types of terrorist attacks, and we may not be fully protected from liability or the reputational damage that could arise from a terrorist attack which utilizes our assets.
Because we are a recently formed company with a limited operating history, our historical financial and operating data may not be representative of our future results.
We are a recently formed limited liability company with a limited operating history. Our results of operations, financial condition and cash flows reflected in our consolidated financial statements may not be indicative of the results we would have achieved if we were a public company or results that may be achieved in future periods. Consequently, there can be no assurance that we will be able to generate sufficient income to pay our operating expenses and make satisfactory distributions to our shareholders, or any distributions at all. Further, we only make acquisitions identified by our Manager. As a result of this concentration of assets, our financial performance depends on the performance of our Manager in identifying target assets, the availability of opportunities falling within our asset acquisition strategy and the performance of those underlying assets.

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Our leases and charters typically require payments in U.S. dollars, but many of our customers operate in other currencies; if foreign currencies devalue against the U.S. dollar, our lessees or charterers may be unable to meet their payment obligations to us in a timely manner.
Our current leases and charters typically require that payments be made in U.S. dollars. If the currency that our lessees or charterers typically use in operating their businesses devalues against the U.S. dollar, our lessees or charterers could encounter difficulties in making payments to us in U.S. dollars. Furthermore, many foreign countries have currency and exchange laws regulating international payments that may impede or prevent payments from being paid to us in U.S. dollars. Future leases or charters may provide for payments to be made in euros or other foreign currencies. Any change in the currency exchange rate that reduces the amount of U.S. dollars obtained by us upon conversion of future lease payments denominated in euros or other foreign currencies, may, if not appropriately hedged by us, have a material adverse effect on us and increase the volatility of our earnings.
Our inability to obtain sufficient capital would constrain our ability to grow our portfolio and to increase our revenues.
Our business is capital intensive, and we have used and may continue to employ leverage to finance our operations. Accordingly, our ability to successfully execute our business strategy and maintain our operations depends on the availability and cost of debt and equity capital. Additionally, our ability to borrow against our assets is dependent, in part, on the appraised value of such assets. If the appraised value of such assets declines, we may be required to reduce the principal outstanding under our debt facilities or otherwise be unable to incur new borrowings.
We can give no assurance that the capital we need will be available to us on favorable terms, or at all. Our inability to obtain sufficient capital, or to renew or expand our credit facilities, could result in increased funding costs and would limit our ability to:
•meet the terms and maturities of our existing and future debt facilities;
•purchase new assets or refinance existing assets;
•fund our working capital needs and maintain adequate liquidity; and
•finance other growth initiatives.
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In addition, we conduct our operations so that neither we nor any of our subsidiaries are required to register as an investment company under the Investment Company Act of 1940 (the “Investment Company Act”). As such, certain forms of financing such as finance leases may not be available to us. Please see “- If we are deemed an investment company“investment company” under the Investment Company Act, it could have a material adverse effect on our business, prospects, financial condition, results of operations and cash flows.”
The effects of various environmental regulations may negatively affect the industries in which we operate which could have a material adverse effect on our financial condition, results of operations and cash flows.
We are subject to federal, state, local and foreign laws and regulations relating to the protection of the environment, including those governing the discharge of pollutants to air and water, the management and disposal of hazardous substances and wastes, the cleanup of contaminated sites and noise and emission levels. levels and greenhouse gas emissions. Legislative and regulatory measures currently under consideration or being implemented by government authorities to address climate change could require reductions in our greenhouse gas or other emissions, establish a carbon tax or increase fuel or energy taxes. These legal requirements are expected to result in increased capital expenditures and compliance costs, and could result in higher costs and may require us to acquire emission credits or carbon offsets. These costs and restrictions could harm our business and results of operations by increasing our expenses or requiring us to alter our operations. The inconsistent international, regional and/or national requirements associated with climate change regulations also create economic and regulatory uncertainty.
Under some environmental laws in the United States and certain other countries, strict liability may be imposed on the owners or operators of assets, which could render us liable for environmental and natural resource damages without regard to negligence or fault on our part. We could incur substantial costs, including cleanup costs, fines and third-party claims for property or natural resource damage and personal injury, as a result of violations of or liabilities under environmental laws and regulations in connection with our or our lessee’s or charterer’s current or historical operations, any of which could have a material adverse effect on our results of operations and financial condition. In addition, a variety of new legislation is being enacted, or considered for enactment, at the federal, state and local levels relating to greenhouse gas emissions and climate change. While there has historically been a lack of consistent climate change legislation, as climate change concerns continue to grow, further legislation and regulations are expected to continue in areas such as greenhouse gas emissions control, emission disclosure requirements and building codes or other infrastructure requirements that impose energy efficiency standards. Government mandates, standards or regulations intended to mitigate or reduce greenhouse gas emissions or projected climate change impacts could result in increased energy and transportation costs, and increased compliance expenses and other financial obligations to meet permitting or development requirements that we may be unable to fully recover (due to market conditions or other factors), any of which could result in reduced profits and adversely affect our results of operations. While we typically maintain liability insurance coverage and typically require our lessees to provide us with indemnity against certain losses, the insurance coverage is subject to large deductibles, limits on maximum coverage and significant exclusions and may not be sufficient or available to protect against any or all liabilities and such indemnities may not cover or be sufficient to protect us against losses arising from environmental damage. In addition, changes to environmental standards or regulations in the industries in which we operate could limit the economic life of the assets we acquire or reduce their value, and also require us to make significant additional investments in order to maintain compliance, which would negatively impact our cash flows and results of operations.

The discontinuation of the LIBOR benchmark interest rate may have an impact on our business.
On July 27, 2017, the U.K. Financial Conduct Authority (the "FCA"), which regulates LIBOR, announced that it will no longer persuade or compel banks to submit rates for the calculation of LIBOR rates after 2021. On November 30, 2020, ICE Benchmark Administration, or the IBA, the administrator of LIBOR, with the support of the United States Federal Reserve and the FCA, announced plans to consult on ceasing publication of LIBOR on December 31, 2021, for only the one-week and two-month LIBOR tenors, and on June 30, 2023, for all other LIBOR tenors. The U.S. Federal Reserve concurrently issued a statement advising banks to stop new LIBOR issuances by the end of 2021. The IBA ceased publication of one-week and two-month USD LIBOR settings after December 31, 2021, and the remaining USD LIBOR settings after June 30, 2023, other than certain USD LIBOR settings that are expected to continue to be published under a synthetic methodology until September 2024.
In the United States, the Alternative Reference Rate Committee (“ARRC”), a group of diverse private-market participants assembled by the Federal Reserve Board and the Federal Reserve Bank of New York, was tasked with identifying alternative reference rates to replace LIBOR. The Secured Overnight Finance Rate (“SOFR”) has emerged as the ARRC's preferred alternative rate for LIBOR. SOFR is a broad measure of the cost of borrowing cash overnight collateralized by Treasury securities in the repurchase agreement market. At this time, it is not possible to predict how markets will respond to SOFR or other alternative reference rates.
A cyberattack that bypasses our information technology (“IT”), security systems or the IT security systems of our third-party providers, causing an IT security breach, may lead to a disruption of our IT systems and the loss of business information which may hinder our ability to conduct our business effectively and may result in lost revenues and additional costs.
Parts of our business depend on the secure operation of our IT systems and the IT systems of our third-party providers to manage, process, store, and transmit information associated with aircraft leasing. We have, from time to time, experienced threats to our data and systems, including malware and computer virus attacks. A cyberattack that bypasses our IT security systems or the IT security systems of our third-party providers, causing an IT security breach, could adversely impact our daily
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Our Repauno siteoperations and Hannibal property are subjectlead to environmental lawsthe loss of sensitive information, including our own proprietary information and regulations that may expose us to significantof our customers, suppliers and employees. Such losses could harm our reputation and result in competitive disadvantages, litigation, regulatory enforcement actions, lost revenues, additional costs and liabilities.
Our Repauno site is subject While we devote substantial resources to on-going environmental investigationmaintaining adequate levels of cyber-security, our resources and remediation by the former owner of the property related to historic industrial operations. The former owner is responsible for completion of this work, and we benefit from a related indemnity and insurance policy. If the former owner fails to fulfill its investigation and remediation, or indemnity obligations and the related insurance, which are subject to limits and conditions, fail to cover our costs, we could incur losses. Redevelopment of the property in those areas undergoing investigation and remediation must await state environmental agency confirmation that no further investigation or remediation is required before redevelopment activities can occur in such areas of the property. Therefore, any delay in the former owner’s completion of the environmental work or receipt of related approvals in an area of the property could delay our redevelopment activities. In addition, once received, permits and approvalstechnical sophistication may not be subject to litigation, and projects may be delayed or approvals reversed or modified in litigation. If there is a delay in obtaining any required regulatory approval, it could delay projects and cause us to incur costs.
In connection with our acquisition of Hannibal, the former owner of the property is obligated to perform certain post-closing demolition activities, remove specified containers, equipment and structures and conduct investigation, removal, cleanup and decontamination related thereto. In addition, the former owner is responsible for on-going environmental remediation related to historic industrial operations on and off Hannibal. Pursuant to an order issued by the Ohio Environmental Protection Agency (“Ohio EPA”), the former owner is responsible for completing the removal and off-site disposal of electrolytic pots associated with the former use of Hannibal as an aluminum reduction plant. In addition, Hannibal is located adjacent to the former Ormet Corporation Superfund site (the “Ormet site”), which is owned and operated by the former owner of Hannibal.  Pursuant to an order with the United States Environmental Protection Agency (“US EPA”), the former owner is obligated to pump groundwater that has been impacted by the adjacent Ormet site beneath our site and discharge it to the Ohio River and monitor the groundwater annually. Hannibal is also subject to an environmental covenant related to the adjacent Ormet site that, inter alia, restricts the use of groundwater beneath our site and requires US EPA consent for activities on Hannibal that could disrupt the groundwater monitoring or pumping.  The former owner is contractually obligated to complete its regulatory obligations on Hannibal and we benefit from a related indemnity and insurance policy. If the former owner fails to fulfill its demolition, removal, investigation, remediation or monitoring obligations, or indemnity obligations and the related insurance, which are subject to limits and conditions, fail to cover our costs, we could incur losses. Redevelopment of the property in those areas undergoing investigation and remediation pursuant to the Ohio EPA order must await state environmental agency confirmation that no further investigation or remediation is required before redevelopment activities can occur in such area of the property.  Therefore, any delay in the former owner’s completion of the environmental work or receipt of related approvals or consents from Ohio EPA or US EPA could delay our redevelopment activities.
In addition, a portion of Hannibal is proposed for redevelopment as a combined cycle gas-fired electric generating facility. Although environmental investigations in that portion of the property have not identified material impacts to soils or groundwater that reasonably would be expectedadequate to prevent or delay redevelopment, impacted materials could be encountered during construction that require special handling and/or result in delays to the project. In addition, the constructionall types of an electric generating plant will require environmental permits and approvals from federal, state and local environmental agencies. Once received, permits and approvals may be subject to litigation, and projects may be delayed or approvals reversed or modified in litigation. If there is a delay in obtaining any required regulatory approval, it could delay projects and cause us to incur costs.
Moreover, new, stricter environmental laws, regulations or enforcement policies, including those imposed in response to climate change, could be implemented that significantly increase our compliance costs, or require us to adopt more costly methods of operation. If we are not able to transform Repauno or Hannibal into hubs for industrial and energy development in a timely manner, their future prospects could be materially and adversely affected, which may have a material adverse effect on our business, operating results and financial condition.

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cyberattacks.
If we are deemed an “investment company” under the Investment Company Act, it could have a material adverse effect on our business, prospects, financial condition, results of operations and cash flows.
We conduct our operations so that neither we nor any of our subsidiaries are required to register as an investment company under the Investment Company Act. Section 3(a)(1)(A) of the Investment Company Act defines an investment company as any issuer that is or holds itself out as being engaged primarily, or proposes to engage primarily, in the business of investing, reinvesting or trading in securities. Section 3(a)(1)(C) of the Investment Company Act defines an investment company as any issuer that is engaged or proposes to engage in the business of investing, reinvesting, owning, holding or trading in securities and owns or proposes to acquire investment securities having a value exceeding 40% of the value of the issuer’s total assets (exclusive of U.S. government securities and cash items) on an unconsolidated basis. Excluded from the term “investment securities,” among other things, are U.S. government securities and securities issued by majority-owned subsidiaries that are not themselves investment companies and are not relying on the exception from the definition of investment company for certain privately-offered investment vehicles set forth in Section 3(c)(1) or Section 3(c)(7) of the Investment Company Act.
We are a holding company that is not an investment company because we are engaged in the business of holding securities of our wholly-owned and majority-owned subsidiaries, which are engaged in transportation and related businesses which lease assets pursuant to operating leases and finance leases. The Investment Company Act may limit our and our subsidiaries’ ability to enter into financing leases and engage in other types of financial activity because less than 40% of the value of our and our subsidiaries’ total assets (exclusive of U.S. government securities and cash items) on an unconsolidated basis can consist of “investment securities.”
If we or any of our subsidiaries were required to register as an investment company under the Investment Company Act, the registered entity would become subject to substantial regulation that would significantly change our operations, and we would not be able to conduct our business as described in this report. We have not obtained a formal determination from the SEC as to our status under the Investment Company Act and, consequently, any violation of the Investment Company Act would subject us to material adverse consequences.
Because we are incorporated under the laws of the Cayman Islands, you may face difficulties in protecting your interests, and your ability to protect your rights through the U.S. federal courts may be limited.
We are an exempted company incorporated under the laws of the Cayman Islands. As a result, it may be difficult for investors to effect service of process within the United States upon our directors or officers, or enforce judgments obtained in the United States courts against our directors or officers.
Our corporate affairs are governed by our Articles, the Companies Act (As Revised) of the Cayman Islands (the ‘‘Cayman Companies Act’’) and the common law of the Cayman Islands. The rights of shareholders to take action against the directors, actions by minority shareholders and the fiduciary responsibilities of our directors to us under Cayman Islands law are to a large extent governed by the common law of the Cayman Islands. The common law of the Cayman Islands is derived in part from comparatively limited judicial precedent in the Cayman Islands as well as from English common law, the decisions of whose courts are of persuasive authority, but are not binding on a court in the Cayman Islands. The rights of our shareholders and the fiduciary responsibilities of our directors under Cayman Islands law are different from what they would be under statutes or judicial precedent in some jurisdictions in the United States. In particular, the Cayman Islands has a different body of securities laws as compared to the United States, and certain states, such as Delaware, may have more fully developed and judicially interpreted bodies of corporate law. In addition, Cayman Islands companies may not have standing to initiate a shareholders derivative action in a federal court of the United States.
We have been advised by Maples and Calder (Cayman) LLP, our Cayman Islands legal counsel, that the courts of the Cayman Islands are unlikely (1) to recognize or enforce against us judgments of courts of the United States predicated upon the civil liability provisions of the federal securities laws of the United States or any state; and (2) in original actions brought in the Cayman Islands, to impose liabilities against us predicated upon the civil liability provisions of the federal securities laws of the United States or any state, so far as the liabilities imposed by those provisions are penal in nature. In those circumstances, although there is no statutory enforcement in the Cayman Islands of judgments obtained in the United States, the courts of the Cayman Islands will recognize and enforce a foreign money judgment of a foreign court of competent jurisdiction without retrial on the merits based on the principle that a judgment of a competent foreign court imposes upon the judgment debtor an obligation to pay the sum for which judgment has been given provided certain conditions are met. For a foreign judgment to be enforced in the Cayman Islands, such judgment must be final and conclusive and for a liquidated sum, and must not be in respect of taxes or a fine or penalty, inconsistent with a Cayman Islands judgment in respect of the same matter, impeachable on the grounds of fraud or obtained in a manner, or be of a kind the enforcement of which is, contrary to natural justice or the public policy of the Cayman Islands (awards of punitive or multiple damages may well be held to be contrary to public policy). A Cayman Islands Court may stay enforcement proceedings if concurrent proceedings are being brought elsewhere.
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As a result of all of the above, public shareholders may have more difficulty in protecting their interests in the face of actions taken by management, members of the board of directors or controlling shareholders than they would as public shareholders of a United States company.
The Financial Action Task Force has increased monitoring of the Cayman Islands.
In February 2021, the Cayman Islands was added to the Financial Action Task Force (‘‘FATF’’) list of jurisdictions whose anti-money laundering/counter-terrorist and proliferation financing practices are under increased monitoring, commonly referred to as the ‘‘FATF grey list.’’ The FATF was established in July 1989 by a Group of Seven (G-7) Summit and is a task force composed of member governments who agree to fund the FATF on temporary basis with specific goals and projects– it is an international policy-making body that sets international anti-money laundering standards and counter-terrorist financing measures. The FATF monitors countries to ensure they implement the FATF Standards fully and effectively and holds countries to account that do not comply. When the FATF places a jurisdiction under increased monitoring, it means the country has committed to resolve swiftly the identified strategic deficiencies within agreed timeframes and is subject to increased monitoring during that timeframe. In June 2023, the FATF confirmed that the Cayman Islands had satisfied all FATF recommended actions, recognizing that the jurisdiction has a robust and effective anti-money laundering / counter-terrorist financing regime. Following successful completion of an on-site inspection by the FATF, the Cayman Islands will be eligible to be removed from the FATF grey list at the FATF's October 2023 plenary.
The Cayman Islands are included in the EU AML High-Risk Third Countries List.
On March 13, 2022, the European Commission (‘‘EC’’) updated its list of ’high-risk third countries’ (‘‘EU AML List’’) identified as having strategic deficiencies in their anti-money laundering/counter-terrorist financing regimes to add nine countries, including the Cayman Islands. The EC has noted it is committed to there being a greater alignment between the EU AML List and the FATF listing process. The addition of the Cayman Islands to the EU AML List is a direct result of the inclusion of the Cayman Islands on the FATF grey list in February 2021. It is unclear how long this designation will remain in place and what ramifications, if any, the designation will have for the Company. Our assets are exposed to unplanned interruptions caused by events outside of our control which may disrupt our business and cause damage or losses that may not be adequately covered by insurance.
Projects in the aerospace products and services sector are exposed to a variety of unplanned interruptions which could cause our results of operations to suffer.
Projects in the aerospace products and services sector are exposed to unplanned interruptions caused by breakdown or failure of equipment, aging infrastructure, employee error or contractor or subcontractor failure, limitations that may be imposed by equipment conditions or environmental, safety or other regulatory requirements, fuel supply or fuel transportation reductions or interruptions, labor disputes, difficulties with the implementation or operation of information systems, power outages, pipeline or electricity line ruptures, catastrophic events, such as hurricanes, cyclones, earthquakes, landslides, floods, explosions, fires, or other disasters. Any equipment or system outage or constraint can, among other things, reduce sales, increase costs and affect the ability to meet regulatory service metrics, customer expectations and regulatory reliability and security requirements. Operational disruption, as well as supply disruption, and increased government oversight could adversely impact the cash flows available from these assets. In addition, the cost of repairing or replacing damaged assets could be considerable. Repeated or prolonged interruption may result in temporary or permanent loss of customers, substantial litigation or penalties for regulatory or contractual non-compliance, and any loss from such events may not be recoverable under relevant insurance policies. Although we believe that we are adequately insured against these types of events, no assurance can be given that the occurrence of any such event will not materially adversely affect us.
Risks Related to Our Manager
We are dependent on our Manager and other key personnel at Fortress and may not find suitable replacements if our Manager terminates the Management Agreement or if other key personnel depart.
Our officers and other individuals who perform services for us (other than Jefferson and CMQR employees) are employees of our Manager or other Fortress entities. We are completely reliant on our Manager, which has significant discretion as to the implementation of our operating policies and strategies, to conduct our business. We are subject to the risk that our Manager will terminate the Management Agreement and that we will not be able to find a suitable replacement for our Manager in a timely manner, at a reasonable cost, or at all. Furthermore, we are dependent on the services of certain key employees of our Manager and certain key employees of Fortress entities whose compensation is partially or entirely dependent upon the amount of management fees earned by our Manager or the incentive allocationspayments distributed to the General PartnerMaster GP and whose continued service is not guaranteed, and the loss of such personnel or services could materially adversely affect our operations. We do not have key man insurance for any of the personnel of the Manager or other Fortress entities that are key to us. An inability to find a suitable replacement for any departing employee of our Manager or Fortress entities on a timely basis could materially adversely affect our ability to operate and grow our business.
In addition, our Manager may assign our Management Agreement to an entity whose business and operations are managed or supervised by Mr. Wesley R. Edens, who is a principal and a Co-Chairmanmember of the board of directors of Fortress, an affiliate of our Manager, and a member of the management committee of Fortress since co-founding Fortress in May 1998. In the event of any such assignment to a non-affiliate of Fortress, the functions currently performed by our Manager’s current personnel may be performed by others. We can give you no assurance that such personnel would manage our operations in the same manner as our Manager currently does, and the failure by the personnel of any such entity to acquire assets generating attractive risk-adjusted returns could have a material adverse effect on our business, financial condition, results of operations and cash flows.
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On February 14, 2017,May 22, 2023, Fortress and Mubadala announced that it hadthey have entered into the Merger Agreement with SoftBank Parent and an affiliate of SoftBank, and SoftBank Merger Sub,definitive agreements pursuant to which, SoftBank Merger Subamong other things, certain members of Fortress management and affiliates of Mubadala will merge with and intoacquire 100% of the equity of Fortress with Fortress surviving as a wholly owned subsidiary of SoftBank Parent.that is currently indirectly held by SoftBank. While Fortress’s senior investment professionals are expected to remain in place,at Fortress, including those individuals who perform services for us, there can be no assurance that the SoftBank mergertransaction will not have an impact on us or our relationship with theour Manager.

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There are conflicts of interest in our relationship with our Manager.
Our Management Agreement and the PartnershipServices and Profit Sharing Agreement and our operating agreementArticles were negotiated prior to our IPO and among affiliated parties, and their terms, including fees and other amounts payable, may not be as favorable to us as if they had been negotiated after our IPO with an unaffiliated third-party.
There are conflicts of interest inherent in our relationship with our Manager insofar as our Manager and its affiliates - including investment funds, private investment funds, or businesses managed by our Manager, including Seacastle Ships Holdings Inc., Trac Intermodal and Florida East Coast Railway, L.L.C. - invest in transportation and transportation-related infrastructureaviation assets and whose investment objectives overlap with our asset acquisition objectives. Certain opportunities appropriate for us may also be appropriate for one or more of these other investment vehicles. Certain members of our board of directors and employees of our Manager who are our officers also serve as officers and/or directors of these other entities. For example, we have some of the sameour directors and officers as Seacastle Ships Holdingsare also directors or officers of FTAI Infrastructure, Inc. and Trac Intermodal.(“FTAI Infrastructure”). Although we have the same Manager, we may compete with entities affiliated with our Manager or Fortress including Seacastle Ships Holdings Inc. and Trac Intermodal, for certain target assets. From time to time, affiliates ofentities affiliated with or managed by our Manager or Fortress may focus on investments in assets with a similar profile as our target assets that we may seek to acquire. These affiliates may have meaningful purchasing capacity, which may change over time depending upon a variety of factors, including, but not limited to, available equity capital and debt financing, market conditions and cash on hand. Fortress has multiple existing and planned funds focused on investing in one or more of our target sectors, each with significant current or expected capital commitments. We have previously purchased and may in the future purchase assets from these funds, and have previously co-invested and may in the future co-invest with these funds in transportation and transportation-related infrastructureaviation assets. Fortress funds generally have a fee structure similar to ours, but the fees actually paid will vary depending on the size, terms and performance of each fund.
Our Management Agreement generally does not limit or restrict our Manager or its affiliates from engaging in any business or managing other operating companies similar to us or pooled investment vehicles that invest in assets that meet our asset acquisition objectives. Our Manager intends to engagehas also engaged in additional transportation and infrastructure related management with FTAI Infrastructure in our recent spin-off of our infrastructure assets, and transportation, infrastructure andmay be involved in other investment opportunities in the future, any of which may compete with us for investments or result in a change in our current investment strategy. In addition, our operating agreement providesArticles provide that if Fortress or an affiliate or any of their officers, directors or employees acquire knowledge of a potential transaction that could be a corporate opportunity, they have no duty, to the fullest extent permitted by law, to offer such corporate opportunity to us, our shareholders or our affiliates. In the event that any of our directors and officers who is also a director, officer or employee of Fortress or its affiliates acquires knowledge of a corporate opportunity or is offered a corporate opportunity, provided that this knowledge was not acquired solely in such person’s capacity as a director or officer of FTAI Aviation Ltd. and such person acts in good faith, then to the fullest extent permitted by law such person is deemed to have fully satisfied such person’s fiduciary duties owed to us and is not liable to us if Fortress or its affiliates pursues or acquires the corporate opportunity or if such person did not present the corporate opportunity to us.
The ability of our Manager and its officers and employees to engage in other business activities, subject to the terms of our Management Agreement, may reduce the amount of time our Manager, its officers or other employees spend managing us. In addition, we may engage (subject to our strategy) in material transactions with our Manager or another entity managed by our Manager or one of its affiliates, including Seacastle Ships Holdings Inc., Trac Intermodal and Florida East Coast Railway, L.L.C., which may include, but are not limited to, certain acquisitions, financing arrangements, purchases of debt, co-investments, consumer loans, servicing advances and other assets that present an actual, potential or perceived conflict of interest. Our board of directors adopted a policy regarding the approval of any “related person transactions” pursuant to which certain of the material transactions described above may require disclosure to, and approval by, the independent members of our board of directors. Actual, potential or perceived conflicts have given, and may in the future give, rise to investor dissatisfaction, litigation or regulatory inquiries or enforcement actions. Appropriately dealing with conflicts of interest is complex and difficult, and our reputation could be damaged if we fail, or appear to fail, to deal appropriately with one or more potential, actual or perceived conflicts of interest. Regulatory scrutiny of, or litigation in connection with, conflicts of interest could have a material adverse effect on our reputation, which could materially adversely affect our business in a number of ways, including causing an inability to raise additional funds, a reluctance of counterparties to do business with us, a decrease in the prices of our equity securities and a resulting increased risk of litigation and regulatory enforcement actions.
The structure of our Manager’s and the General Partner’sMaster GP’s compensation arrangements may have unintended consequences for us. We have agreed to pay our Manager a management fee and the General PartnerMaster GP is entitled to receive incentive allocationspayments from Holdcothe Company or its subsidiaries that are each based on different measures of performance. Consequently, there may be conflicts in the incentives of our Manager to generate attractive risk-adjusted returns for us. In addition, because the General PartnerMaster GP and our Manager are both affiliates of Fortress, the Income Incentive Allocationincome incentive payment paid to the General PartnerMaster GP may cause our Manager to place undue emphasis on the maximization of earnings, including through the use of leverage, at the expense of other objectives, such as preservation of capital, to achieve higher incentive allocations.payments. Investments with higher yield potential are generally riskier or more speculative than investments with lower yield potential. This could result in increased risk to the value of our portfolio of assets and our commonordinary shares.
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Our directors have approved a broad asset acquisition strategy for our Manager and dowill not approve each acquisition we make at the direction of our Manager. In addition, we may change our strategy without a shareholder vote, which may result in our acquiring assets that are different, riskier or less profitable than our current assets.

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Our Manager is authorized to follow a broad asset acquisition strategy. We may pursue other types of acquisitions as market conditions evolve. Our Manager makes decisions about our investments in accordance with broad investment guidelines adopted by our board of directors. Accordingly, we may, without a shareholder vote, change our target sectors and acquire a variety of assets that differ from, and are possibly riskier than, our current asset portfolio. Consequently, our Manager has great latitude in determining the types and categories of assets it may decide are proper investments for us, including the latitude to invest in types and categories of assets that may differ from those in our existing portfolio. Our directors will periodically review our strategy and our portfolio of assets. However, our board doeswill not review or pre-approve each proposed acquisition or our related financing arrangements. In addition, in conducting periodic reviews, the directors will rely primarily on information provided to them by our Manager. Furthermore, transactions entered into by our Manager may be difficult or impossible to reverse by the time they are reviewed by the directors even if the transactions contravene the terms of the Management Agreement. In addition, we may change our asset acquisition strategy, including our target asset classes, without a shareholder vote.
Our asset acquisition strategy may evolve in light of existing market conditions and investment opportunities, and this evolution may involve additional risks depending upon the nature of the assets we target and our ability to finance such assets on a short or long-term basis. Opportunities that present unattractive risk-return profiles relative to other available opportunities under particular market conditions may become relatively attractive under changed market conditions and changes in market conditions may therefore result in changes in the assets we target. Decisions to make acquisitions in new asset categories present risks that may be difficult for us to adequately assess and could therefore reduce or eliminate our ability to pay dividends on our commonordinary shares or have adverse effects on our liquidity or financial condition. A change in our asset acquisition strategy may also increase our exposure to interest rate, foreign currency or credit market fluctuations. In addition, a change in our asset acquisition strategy may increase our use of non-match-funded financing, increase the guarantee obligations we agree to incur or increase the number of transactions we enter into with affiliates. Our failure to accurately assess the risks inherent in new asset categories or the financing risks associated with such assets could adversely affect our results of operations and our financial condition.

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Our Manager will not be liable to us for any acts or omissions performed in accordance with the Management Agreement, including with respect to the performance of our assets.
Pursuant to our Management Agreement, our Manager will not assume any responsibility other than to render the services called for thereunder in good faith and will not be responsible for any action of our board of directors in following or declining to follow its advice or recommendations. Our Manager, its members, managers, officers, employees, sub-advisers and any other person controlling or Manager, will not be liable to us or any of our subsidiaries, to our board of directors, or our or any subsidiary’s shareholders or partners for any acts or omissions by our Manager, its members, managers, officers, employees, sub-advisers and any other person controlling or Manager, except liability to the Company,us, our shareholders, directors, officers and employees and persons controlling us, by reason of acts constituting bad faith, willful misconduct, gross negligence or reckless disregard of our Manager’s duties under our Management Agreement. We will, to the full extent lawful, reimburse, indemnify and hold our Manager, its members, managers, officers and employees, sub-advisers and each other person, if any, controlling our Manager harmless of and from any and all expenses, losses, damages, liabilities, demands, charges and claims of any nature whatsoever (including attorneys’ fees) in respect of or arising from any acts or omissions of an indemnified party made in good faith in the performance of our Manager’s duties under our Management Agreement and not constituting such indemnified party’s bad faith, willful misconduct, gross negligence or reckless disregard of our Manager’s duties under our Management Agreement.
Our Manager’s due diligence of potential asset acquisitions or other transactions may not identify all pertinent risks, which could materially affect our business, financial condition, liquidity and results of operations.
Our Manager intends to conduct due diligence with respect to each asset acquisition opportunity or other transaction it pursues. It is possible, however, that our Manager’s due diligence processes will not uncover all relevant facts, particularly with respect to any assets we acquire from third parties. In these cases, our Manager may be given limited access to information about the asset and will rely on information provided by the seller of the asset. In addition, if asset acquisition opportunities are scarce, the process for selecting bidders is competitive, or the timeframe in which we are required to complete diligence is short, our ability to conduct a due diligence investigation may be limited, and we would be required to make decisions based upon a less thorough diligence process than would otherwise be the case. Accordingly, transactions that initially appear to be viable may prove not to be over time, due to the limitations of the due diligence process or other factors.
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Risks Related to Taxation
ShareholdersWe expect the Company to be a passive foreign investment company (“PFIC”) and it could be a controlled foreign corporation (“CFC”) for U.S. federal income tax purposes, which may result in adverse tax considerations for U.S. shareholders.
We expect the Company to be treated as a PFIC and it could be treated as a CFC for U.S. federal income tax purposes. If you are a U.S. person and do not make a valid qualified electing fund (“QEF”) election with respect to us and each of our PFIC subsidiaries, then, unless we are a CFC and you own 10% or more of our shares (by vote or value), you would generally be subject to special deferred tax with respect to certain distributions on our shares, any gain realized on a disposition of our shares, and certain other events. The effect of this deferred tax could be materially adverse to you. Alternatively, if you are such a shareholder and make a valid QEF election for us and each of our PFIC subsidiaries, or if we are a CFC and you own 10% or more of our shares (by vote or value), you will generally not be subject to those taxes, but could recognize taxable income in a taxable year with respect to our shares in excess of any distributions that we make to you in that year, thus giving rise to so called “phantom income” and to a potential out-of-pocket tax liability. No assurances can be given that any given shareholder will be able to make a valid QEF election with respect to us or our PFIC subsidiaries. See “U.S. Federal Income Tax Considerations —Considerations for U.S. Holders—PFIC Status and Related Tax Considerations.”
Assuming we are a PFIC, distributions made by us to a U.S. person will generally not be eligible for taxation at reduced tax rates generally applicable to “qualified dividends” paid by certain U.S. corporations and “qualified foreign corporations” to individuals. The more favorable rates applicable to other corporate dividends could cause individuals to perceive investment in our shares to be relatively less attractive than investment in the shares of other corporations, which could adversely affect the value of our shares.
Investors should consult their tax advisors regarding the potential impact of these rules on their investment in us.
To the extent we recognize income treated as effectively connected with a trade or business in the United States, we would be subject to U.S. federal income taxation on a net income basis, which could adversely affect our business and result in decreased cash available for distribution to our shareholders.
If we are treated as engaged in a trade or business in the United States, the portion of our net income, if any, that is “effectively connected” with such trade or business would be subject to U.S. federal income taxation at maximum corporate rates, currently 21%. In addition, we may be subject to an additional U.S. federal branch profits tax on their shareour effectively connected earnings and profits at a rate of 30%. The imposition of such taxes could adversely affect our business and would result in decreased cash available for distribution to our shareholders. Although we (or one or more of our non-U.S. corporate subsidiaries) are expected to be treated as engaged in a U.S. trade or business, it is currently expected that only a small portion of our taxable income regardlesswill be treated as effectively connected with such U.S. trade or business. However, no assurance can be given that the amount of whether they receive any cash dividends from us.
So long as we wouldeffectively connected income will not be requiredgreater than currently expected, whether due to register as an investment company under the Investment Company Act of 1940a change in our operations or otherwise.
If there is not sufficient trading in our shares, or if we were a U.S. Corporation and 90%50% of our grossshares are held by certain 5% shareholders, we could lose our eligibility for an exemption from U.S. federal income taxation on rental income from our aircraft or ships used in “international traffic” and could be subject to U.S. federal income taxation which would adversely affect our business and result in decreased cash available for each taxable year constitutes “qualifying income” within the meaningdistribution to our shareholders.
We expect that we will be eligible for an exemption under Section 883 of the Internal Revenue Code of 1986, as amended (the “Code”), on a continuing basis, FTAI will be treated, forwhich provides an exemption from U.S. federal income tax purposes,taxation with respect to rental income derived from aircraft and ships used in international traffic by certain foreign corporations. No assurances can be given that we will continue to be eligible for this exemption as changes in our ownership or the amount of our shares that are traded could cause us to cease to be eligible for such exemption. To qualify for this exemption in respect of rental income, the lessor of the aircraft or ships must be organized in a partnershipcountry that grants a comparable exemption to U.S. lessors. The Cayman Islands and the Marshall Islands grant such exemptions. Additionally, certain other requirements must be satisfied. We can satisfy these requirements in any year if, for more than half the days of such year, our shares are primarily and regularly traded on a recognized exchange and certain shareholders, each of whom owns 5% or more of our shares (applying certain attribution rules), do not as an association or publiclycollectively own more than 50% of our shares. Our shares will be considered to be primarily and regularly traded partnershipon a recognized exchange in any year if: (i) the number of trades in our shares effected on such recognized stock exchanges exceed the number of our shares (or direct interests in our shares) that are traded during the year on all securities markets; (ii) trades in our shares are effected on such stock exchanges in more than de minimis quantities on at least 60 days during every calendar quarter in the year; and (iii) the aggregate number of our shares traded on such stock exchanges during the taxable as a corporation. Shareholders mayyear is at least 10% of the average number of our shares outstanding in that class during that year. If we were not eligible for the exemption under Section 883 of the Code, we expect that our U.S. source rental income would generally be subject to U.S. federal state, local and possibly, in some cases, non-U.S. income taxation, on their allocable share of our items of income, gain, loss, deduction and credit (including our allocable share of those items of Holdco or any other entity in which we invest that is treated as a partnership or is otherwise subject to tax on a flow through basis) for each of our taxable years ending with or within their taxable year, regardless of whether they receive cash dividends from us. Shareholders may not receive cash dividends equal to their allocable share of our net taxable income or even the tax liability that results from that income.
In addition, certain of our holdings, including holdings, if any, in a Controlled Foreign Corporation (“CFC”) or a Passive Foreign Investment Company (“PFIC”), may produce taxable income prior to our receipt of cash relating to such income, and shareholders subject to U.S. federal income tax will be required to take such income into account in determining their taxable income.
Under our operating agreement, in the event of an inadvertent partnership termination in which the Internal Revenue Service (“IRS”) has granted us limited relief, each shareholder also is obligated to make such adjustments as are required by the IRS to maintain our status as a partnership. Such adjustments may require shareholders to recognize additional amounts in income during the years in which they have held common shares. We may also be required to make payments to the IRS.
Tax gain or loss on a sale or other disposition of our common shares could be more or less than expected.
If a sale of our common shares by a shareholder is taxable in the United States, the shareholder will recognize gain or loss equal to the difference between the amount realized by such shareholder on such sale and such shareholder’s adjusted tax basis in those shares. Prior distributions to such shareholder in excess of the total net taxable income allocated to such shareholder, which will have decreased such shareholder’s adjusted tax basis in its shares, will effectively increase any gain recognized by such shareholder if the shares are sold at a price greater than such shareholder’s adjusted tax basis in those shares, even if the price is less than their original cost to such shareholder. A portion of the amount realized, whether or not representing gain, may be treated as ordinary income to such shareholder.

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Our ability to make distributions depends on our receiving sufficient cash distributions from our subsidiaries, and we cannot assure our shareholders that we will be able to make cash distributions to them in amounts that are sufficient to fund their tax liabilities.
Our subsidiaries may be subject to local taxes in each of the relevant territories and jurisdictions in which they operate, including taxes on income, profits or gains and withholding taxes. As a result, our funds available for distribution is indirectly reduced by such taxes, and the post-tax return to our shareholders is similarly reduced by such taxes.
In general, a shareholder that is subject to U.S. federal income tax must include in income its allocable share of FTAI’s items of income, gain, loss, deduction, and credit (including, so long as FTAI is treated as a partnership for tax purposes, FTAI’s allocable share of those items of Holdco and any pass-through subsidiaries of Holdco) for each of our taxable years ending with or within such shareholder’s taxable year. However, the cash distributed to a shareholder may not be sufficient to pay the full amount of such shareholder’s tax liability in respect of its investment in us, because each shareholder’s tax liability depends on such shareholder’s particular tax situation and the tax treatment of our underlying activities or assets.
If we are treated as a corporation for U.S. federal income tax purposes, the value of the shares could be adversely affected.
We have not requested, and do not plan to request, a ruling from the IRS on our treatment as a partnership for U.S. federal income tax purposes, or on any other matter affecting us. As of the date of the consummation of our initial public offering, under then current law and assuming full compliance with the terms of our operating agreement (and other relevant documents) and based upon factual statements and representations made by us, our outside counsel opined that we will be treated as a partnership, and not as an association or a publicly traded partnership taxable as a corporation for U.S. federal income tax purposes. However, opinions of counsel are not binding upon the IRS or any court, and the IRS may challenge this conclusion and a court may sustain such a challenge. The factual representations made by us upon which our outside counsel relied relate to our organization, operation, assets, activities, income, and present and future conduct of our operations. In general, if an entity that would otherwise be classified as a partnership for U.S. federal income tax purposes is a “publicly traded partnership” (as defined in the Code) it will be nonetheless treated as a corporation for U.S. federal income tax purposes, unless the exception described below, and upon which we intend to rely, applies. A publicly traded partnership will, however, be treated as a partnership, and not as a corporation for U.S. federal income tax purposes, so long as 90% or more of its gross income for each taxable year constitutes “qualifying income” within the meaning of the Code and it is not required to register as an investment company under the Investment Company Act of 1940. We refer to this exception as the “Qualifying Income Exception.”
Qualifying income generally includes dividends, interest, capital gains from the sale or other disposition of stocks and securities and certain other forms of investment income. We currently expect that a substantial portion of our income will constitute either “Subpart F” income (defined below) derived from CFCs or QEF Inclusions (as defined below). While we believe that such income constitutes qualifying income, no assurance can be given that the IRS will agree with such position. We also believe that our return from investments will include interest, dividends, capital gains and other types of qualifying income, but no assurance can be given as to the types of income that will be earned in any given year.
If we fail to satisfy the Qualifying Income Exception, we would be required to pay U.S. federal income tax at regular corporate rates on our worldwide income. In addition, we would likely be liable for state and local income and/or franchise taxes on such income. Dividends to shareholders would constitute ordinary dividend income taxable to such shareholders to the extent of our earnings and profits, and the payment of these dividends would not be deductible by us. Taxation of us as a publicly traded partnership taxable as a corporation could result in a material adverse effect on our cash flow and the after-tax returns for shareholders and thus could result in a substantial reduction in the value of our common shares.
Non-U.S. Holders (defined below) should anticipate being required to file U.S. tax returns and may be required to pay U.S. tax solely on account of owning and disposing of our common shares.
In light of our intended investment activities, we may be, or may become, engaged in a U.S. trade or business for U.S. federal income tax purposes, in which case some portion of our income would be treated as effectively connected income with respect to Non-U.S. Holders. Moreover, we anticipate that, in the future, we will sell interests in U.S. real holding property corporations (each a “USRPHC”) and therefore be deemed to be engaged in a U.S. trade or business for that reason at such time. If we were to realize gain from the sale or other disposition of a U.S. real property interest (including a USRPHC) or were otherwise engaged in a U.S. trade or business, Non-U.S. Holders generally would be required to file U.S. federal income tax returns and would be subject to U.S. federal withholding tax on their allocable share of the effectively connected income on gain at the highest marginal U.S. federal income tax rates applicable to ordinary income. Non-U.S. holders that are corporations may also be subject to a branch profits tax on their allocable share of such income. In addition, if we were treated as being engaged in a U.S. trade or business, a portion of any gain recognized by a Non-U.S. Holder on the sale or exchange of its common shares could be treated for U.S. federal income tax purposes as effectively connected income, and hence such Non-U.S. Holder could be subject to U.S. federal income tax on the sale or exchange. Accordingly, Non-U.S. Holders should anticipate being required to file U.S. tax returns and may be required to pay U.S. tax solely on account of owning our common shares.

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Non-U.S. Holders that hold (or are deemed to hold) more than 5% of our common shares (or held, or were deemed to hold, more than 5% of our common shares) may be subject to U.S. federal income tax upon the disposition of some or all their common shares.
If a Non-U.S. Holder held more than 5% of our common shares at any time during the 5 year period preceding such Non-U.S. Holder’s disposition of our common shares, and we were considered a USRPHC (determined as if we were a U.S. corporation) at any time during such 5 year period because of our current or previous ownership of U.S. real property interests above a certain threshold, such Non-U.S. Holder may be subject to U.S. tax on such disposition of our common shares (and may have a U.S. tax return filing obligation).
Tax-exempt shareholders may face certain adverse U.S. tax consequences from owning our common shares.
We are not required to manage our operations in a manner that would minimize the likelihood of generating income that would constitute “unrelated business taxable income” (“UBTI”) to the extent allocated to a tax-exempt shareholder. Although we expect to invest through subsidiaries that are treated as corporations for U.S. federal income tax purposes and such corporate investments would generally not result in an allocation of UBTI to a shareholder on account of the activities of those subsidiaries, we may not invest through corporate subsidiaries in all cases. Moreover, UBTI includes income attributable to debt-financed property and we are not prohibited from debt financing our investments, including investments in subsidiaries. Furthermore, we are not prohibited from being (or causing a subsidiary to be) a guarantor of loans made to a subsidiary. If we (or certain of our subsidiaries) were treated as the borrower for U.S. tax purposes on account of those guarantees, some or all of our investments could be considered debt-financed property. The potential for income to be characterized as UBTI could make our common shares an unsuitable investment for a tax-exempt entity. Tax-exempt shareholders are urged to consult their tax advisors regarding the tax consequences of an investment in common shares.
We may hold or acquire certain investments through an entity classified as a PFIC or CFC for U.S. federal income tax purposes.
Certain of our investments may be in non-U.S. corporations or may be acquired through a non-U.S. subsidiary that would be classified as a corporation for U.S. federal income tax purposes. Such an entity may be a PFIC or a CFC for U.S. federal income tax purposes. U.S. Holders indirectly owning an interest in a PFIC or a CFC may experience adverse U.S. tax consequences.
If substantially all of the U.S. source rental income derived from aircraft or ships used to transport passengers or cargo in international traffic (“U.S. source international transport rental income”) of any of our non-U.S. corporate subsidiaries is attributable to activities of personnel based in the United States, such subsidiary could be subject to U.S. federal income tax on a net income basis at regular tax rates, rather than at a rate of 4% on gross income, which would adversely affect our business and result in decreased funds available for distribution to our shareholders.
We expect that the U.S. source international transport rental income of our non-U.S. subsidiaries generally will be subject to U.S. federal income tax, on a gross income basis, at a rate of not in excess of 4% as provided in Section 887 of the Code. If, contrary to expectations, anywe or certain of our non-U.S. subsidiaries that is treated as a corporation for U.S. federal income tax purposes did not comply with certain administrative guidelines of the IRS,U.S. Internal Revenue Service (the “IRS”), such that 90% or more of such subsidiary’sthe U.S. source international transport rental income of the Company or any of such subsidiaries were attributable to the activities of personnel based in the United States (in the case of bareboat leases), or from “regularly scheduled transportation” as defined isin such administrative guidelines (in the case of time-chartertime charter leases), our, or such subsidiary’s, U.S. source rental income would be treated as income effectively connected with the conduct of a trade or business in the United States. In such case, such subsidiary’s U.S. source international transport rental income would be subject to U.S. federal income taxtaxation at athe maximum corporate rate of 35%.as well as state and local taxation. In addition, the Company or such subsidiary would be subject to the U.S. federal branch profits tax on its effectively
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connected earnings and profits at a rate of 30%. The imposition of such taxes wouldcould adversely affect our business and would result in decreased fundscash available for distribution to our shareholders.
OurWe or our subsidiaries may become subject to unanticipated tax liabilities that may have a material adverse effect on our results of operations.
OurSome of our subsidiaries may beare subject to income, withholding or other taxes in certain non-U.S. jurisdictions by reason of their jurisdiction of incorporation, activities and operations, where their assets are used or where the lessees of their assets (or others in possession of their assets) are located, and it is also possible that taxing authorities in any such jurisdictions could assert that we or our subsidiaries are subject to greater taxation than we currently anticipate. For example,Further, the Organisation for Economic Co-operation and Development (the “OECD”) is conducting a project focused on base erosion and profit shifting in international structures, which seeks to establish certain international standards for taxing the worldwide income of multinational companies. In addition, the OECD is working on a “BEPS 2.0” initiative, which is aimed at (i) shifting taxing rights to the jurisdiction of the consumer and (ii) ensuring all companies pay a global minimum tax. On October 8, 2021, the OECD announced an agreement among over 140 countries delineating an implementation plan, on December 20, 2021, the OECD released model rules for the domestic implementation of a 15% global minimum tax, on December 15, 2022, the member states of the European Union unanimously voted to adopt the OECD’s minimum tax rules and phase them into national law, and on February 2, 2023 the OECD released technical guidance on the global minimum tax which was agreed by consensus of the BEPS 2.0 signatory jurisdictions. Legislatures in multiple countries outside of the EU have also drafted legislation consistent with the OECD’s minimum tax proposal. As a result of these developments, the tax laws of certain countries in which we and our affiliates do business could change on a prospective or retroactive basis, and any such changes could increase our liabilities for taxes, interest and penalties, and therefore could harm our business, cash flows, results of operations and financial position. In addition, a portion of certain of our or our non-U.S. corporate subsidiaries’ income is treated as effectively connected with a U.S. trade or business and is accordingly subject to U.S. federal income tax or may be subject to gross-basis U.S. withholding tax. It is possible that the IRS could assert that a greater portion of our or any such non-U.S. subsidiaries’ income is effectively connected income that should be subject to U.S. federal income tax.
Our structure involves complex provisions of U.S. federal income tax law for which no clear precedent or authority may be available. Our structure also is subject to potential legislative, judicial or administrative change and differing interpretations, possibly on a retroactive basis.withholding tax.

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The U.S. federal income tax treatment of our shareholders depends in some instances on determinations of fact and interpretations of complex provisions of U.S. federal income tax law for which no clear precedent or authority may be available. Prospective investors should be aware that the U.S. federal income tax rules are constantly under review by persons involved in the legislative process, the IRS, and the U.S. Treasury Department, frequently resulting in revised interpretations of established concepts, statutory changes, revisions to regulations and other modifications and interpretations. The IRS pays close attention to the proper application of tax laws to partnerships. The present U.S. federal income tax treatment of an investment in our common shares may be modified by administrative, legislative or judicial interpretation at any time, possibly on a retroactive basis, and any such action may affect our investments and commitments that were previously made, and could adversely affect the value of our shares or cause us to change the way we conduct our business.
Our organizational documents and agreements permit the board of directors to modify our operating agreement from time to time, without the consent of shareholders, in order to address certain changes in Treasury regulations, legislation or interpretation. In some circumstances, such revisions could have a material adverse impact on some or all shareholders. Moreover, we will apply certain assumptions and conventions in an attempt to comply with applicable rules and to report income, gain, deduction, loss and credit to shareholders in a manner that reflects such shareholders’ beneficial ownership of partnership items, taking into account variation in ownership interests during each taxable year because of trading activity. However, these assumptions and conventions may not be in compliance with all aspects of applicable tax requirements. It is possible that the IRS will assert successfully that the conventions and assumptions used by us do not satisfy the technical requirements of the Code and/or Treasury regulations and could require that items of income, gain, deduction, loss or credit, including interest deductions, be adjusted, reallocated, or disallowed, in a manner that adversely affects shareholders.
We could incur a significant tax liability if the IRS successfully asserts that the “anti-stapling” rules apply to our investments in our non-U.S. and U.S. subsidiaries, which would adversely affect our business and result in decreased funds available for distribution to our shareholders.
If we were subject to the “anti-stapling” rules of Section 269B of the Code, we would incur a significant tax liability as a result of owning more than 50% of the value of both U.S. and non-U.S. corporate subsidiaries, whose equity interests constitute “stapled interests” that may only be transferred together. If the “anti-stapling” rules applied, our non-U.S. corporate subsidiaries that are treated as corporations for U.S. federal income tax purposes would be treated as U.S. corporations, which would cause those entities to be subject to U.S. federal corporate income tax on their worldwide income. Because we intend to separately manage and operate our non-U.S. and U.S. corporate subsidiaries and structure their business activities in a manner that would allow us to dispose of such subsidiaries separately, we do not expect that the “anti-stapling” rules will apply. However, there can be no assurance that the IRS would not successfully assert a contrary position, which would adversely affect our business and result in decreased funds available for distribution to our shareholders.
We cannot match transferors and transferees of our shares, and we have therefore adopted certain income tax accounting positions that may not conform with all aspects of applicable tax requirements. The IRS may challenge this treatment, which could adversely affect the value of our shares.
Because we cannot match transferors and transferees of our shares, we have adopted depreciation, amortization and other tax accounting positions that may not conform with all aspects of existing Treasury regulations. A successful IRS challenge to those positions could adversely affect the amount of tax benefits available to our shareholders. It also could affect the timing of these tax benefits or the amount of gain on the sale of our common shares and could have a negative impact on the value of our common shares or result in audits of and adjustments to our shareholders’ tax returns.
We may allocate items of income, gain, loss, and deduction using a monthly or other convention, whereby any such items we recognize in a given month are allocated to our shareholders as of a specified date of such month. As a result, if a shareholder transfers its common shares, it might be allocated income, gain, loss, and deduction realized by us after the date of the transfer. Similarly, if a shareholder acquires additional common shares, it might be allocated income, gain, loss, and deduction realized by us prior to its ownership of such common shares. Consequently, our shareholders may recognize income in excess of cash distributions received from us, and any income so included by a shareholder would increase the basis such shareholder has in it common shares and would offset any gain (or increase the amount of loss) realized by such shareholder on a subsequent disposition of its common shares.
The sale or exchange of 50% or more of our common shares within a 12-month period will result in our termination for U.S. federal income tax purposes.
We will be considered to have terminated as a partnership for U.S. federal income tax purposes if there is a sale or exchange of 50% or more of our common shares within a 12-month period. Our termination would, among other things, result in the closing of our taxable year for all shareholders and could result in a deferral of depreciation and amortization deductions allowable in computing our taxable income.
Recently enacted legislation regarding U.S. federal income tax liability arising from IRS audits could adversely affect our shareholders.

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For taxable years beginning on or after January 1, 2018, we will be liable for U.S. federal income tax liability arising from an IRS audit, unless certain alternative methods are available and we elect to use them. Under the new rules, it is possible that certain shareholders or we may be liable for taxes attributable to adjustments to our taxable income with respect to tax years that closed before such shareholders owned our shares. Accordingly, this new legislation may adversely affect certain shareholders in certain cases. This differs from the existing rules, which generally provide that tax adjustments only affect the persons who were shareholders in the tax year in which the item was reported on our tax return. The changes created by the new legislation are uncertain and in many respects depend on the promulgation of future regulations or other guidance by the U.S. Treasury Department or the IRS.
Risks Related to Our Common Shares
The market price and trading volume of our commonordinary and preferred shares may be volatile, which could result in rapid and substantial losses for our shareholders.
The market price of our commonordinary and preferred shares may be highly volatile and could be subject to wide fluctuations. In addition, the trading volume in our commonordinary and preferred shares may fluctuate and cause significant price variations to occur. If the market price of our commonordinary or preferred shares declines significantly, you may be unable to resell your shares at or above your purchase price, if at all. The market price of our commonordinary and preferred shares may fluctuate or decline significantly in the future. Some of the factors that could negatively affect our share price or result in fluctuations in the price or trading volume of our common shares include:
•a shift in our investor base;
•our quarterly or annual earnings, or those of other comparable companies;
•actual or anticipated fluctuations in our operating results;
•changes in accounting standards, policies, guidance, interpretations or principles;
•announcements by us or our competitors of significant investments, acquisitions or dispositions;
•the failure of securities analysts to cover our commonordinary shares;
•changes in earnings estimates by securities analysts or our ability to meet those estimates;
•the operating and share price performance of other comparable companies;
•prevailing interest rates or rates of return being paid by other comparable companies and the market for securities similar to our preferred shares;
•additional issuances of preferred shares;
•whether we declare distributions on our preferred shares;
•overall market fluctuations;
•general economic conditions; and
•developments in the markets and market sectors in which we participate.
Stock markets in the United States have experienced extreme price and volume fluctuations. Market fluctuations, as well as general political and economic conditions, such as acts of terrorism, prolonged economic uncertainty, a recession or interest rate or currency rate fluctuations, could adversely affect the market price of our commonordinary and preferred shares.
We areAn increase in market interest rates may have an emerging growth company withinadverse effect on the meaningmarket price of our shares.
One of the JOBS Act,factors that investors may consider in deciding whether to buy or sell our shares is our distribution rate as a percentage of our share price relative to market interest rates. If the market price of our shares is based primarily on the earnings and duereturn that we derive from our investments and income with respect to our taking advantage of certain exemptionsinvestments and our related distributions to shareholders, and not from various reporting requirements applicable to emerging growth companies, our common shares could be less attractive to investors.
We are an “emerging growth company” as defined in the JOBS Act. As such, we have taken advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies” including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. As a result, our shareholders may not have access to certain information they may deem important. We will remain an emerging growth company until the earliest of (a) the last day of the first fiscal year in which our annual gross revenues exceed $1.07 billion, (b) the last day of the fiscal year following the fifth anniversary of our initial public offering, (c) the date that we become a “large accelerated filer” as defined in Rule 12b-2 under the Exchange Act, which would occur if the market value of our common shares that are held by non-affiliates exceeds $700 million as of the last business dayinvestments themselves, then interest rate fluctuations and capital market
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conditions will likely affect the market price of our most recently completed second fiscal quarter or (d)shares. For instance, if market interest rates rise without an increase in our distribution rate, the date on which we have issued more than $1 billion in non-convertible debt during the preceding three-year period. Because we have taken advantagemarket price of each of these exemptions,our shares could decrease, as potential investors may findrequire a higher distribution yield on our common shares less attractive as a result. Theor seek other securities paying higher distributions or interest. In addition, rising interest rates would result may be a less active trading market forin increased interest expense on our common sharesoutstanding and future (variable and fixed) rate debt, thereby adversely affecting cash flows and our share price may be more volatile.

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ability to service our indebtedness and pay distributions.
We are required by Section 404 of the Sarbanes-Oxley Act to evaluate the effectiveness of our internal controls, and the outcome of that effort may adversely affect our results of operations, financial condition and liquidity.
As a public company, we are required to comply with Section 404 (“Section 404”) of the Sarbanes-Oxley Act (the timing of when to comply with the auditor attestation requirements will be determined based on whether we take advantage of certain JOBS Act provisions applicable to emerging growth companies).Act. Section 404 requires that we evaluate the effectiveness of our internal control over financial reporting at the end of each fiscal year and to enableinclude a management to report onassessing the effectiveness of those controls. We have undertaken a review of our internal controls over financial reporting in our Annual Report on Form 10-K for that fiscal year. Section 404 also requires an independent registered public accounting firm to attest to, and procedures.report on, management’s assessment of our internal controls over financial reporting. The outcome of our review and the report of our independent registered public accounting firm may adversely affect our results of operations, financial condition and liquidity. During the course of our review, we may identify control deficiencies of varying degrees of severity, and we may incur significant costs to remediate those deficiencies or otherwise improve our internal controls. As a public company, we are required to report control deficiencies that constitute a “material weakness” in our internal control over financial reporting. Furthermore, ifIf we discover a material weakness in our internal control over financial reporting, our share price could decline and our ability to raise capital could be impaired.
Your percentage ownership in us may be diluted in the future.
Your percentage ownership in FTAI Aviation Ltd. may be diluted in the future because of equity awards thatgranted and may be granted to our Manager pursuant to the Management Agreement and the Incentive Plan. Since 2015, we granted our Management Agreement. UponManager an option to acquire 3,903,010 ordinary shares in connection with equity offerings. In the future, upon the successful completion of an offeringadditional offerings of our commonordinary shares or other equity securities (including securities issued as consideration in an acquisition), we will grant to our Manager options to purchase commonordinary shares in an amount equal to 10% of the number of commonordinary shares being sold in such offeringofferings (or if the issuance relates to equity securities other than our commonordinary shares, options to purchase a number of commonordinary shares equal to 10% of the gross capital raised in the equity issuance divided by the fair market value of a commonan ordinary share as of the date of the issuance), with an exercise price equal to the offering price per share paid by the public or other ultimate purchaser or attributed to such securities in connection with an acquisition (or the fair market value of a commonan ordinary share as of the date of the equity issuance if it relates to equity securities other than our commonordinary shares), and any such offering or the exercise of the option in connection with such offering would cause dilution.
Our board of directors has adopted the Fortress Transportation and Infrastructure Investors Nonqualified Stock Option and Incentive Award Plan, (the “Incentive Plan”) which provides for the grant of equity-based awards, including restricted stock,shares, stock options, stock appreciation rights, performance awards, restricted stockshare units, tandem awards and other equity-based and non-equity based awards, in each case to our Manager, to the directors, officers, employees, service providers, consultants and advisors of our Manager who perform services for us, and to our directors, officers, employees, service providers, consultants and advisors. We have initially reserved 30,000,000 commonordinary shares for issuance under the Incentive Plan;Plan. As of June 30, 2023, rights relating to 1,964,263 of our ordinary shares were outstanding under the Incentive Plan. In the future on the date of any equity issuance by us during the Company duringremaining portion of the ten-year term of the Incentive Plan (including in respect of securities issued as consideration in an acquisition), the maximum number of shares available for issuance under the Plan will be increased to include an additional number of commonordinary shares equal to ten percent (10%) of either (i) the total number of commonordinary shares newly issued by the Companyus in such equity issuance or (ii) if such equity issuance relates to equity securities other than our commonordinary shares, a number of our commonordinary shares equal to 10% of (i)(A) the gross capital raised in an equity issuance of equity securities other than commonordinary shares during the ten-year term of the Incentive Plan, divided by (ii)(B) the fair market value of a commonan ordinary share as of the date of such equity issuance.
Sales or issuances of shares of our commonordinary shares could adversely affect the market price of our commonordinary shares.
Sales of substantial amounts of shares of our commonordinary shares in the public market, or the perception that such sales might occur, could adversely affect the market price of our commonordinary shares. The issuance of our commonordinary shares in connection with property, portfolio or business acquisitions or the exercise of outstanding options or otherwise could also have an adverse effect on the market price of our commonordinary shares.
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The incurrence or issuance of debt, which ranks senior to our commonordinary shares upon our liquidation, and future issuances of equity or equity-related securities, which would dilute the holdings of our existing commonordinary shareholders and may be senior to our commonordinary shares for the purposes of making distributions, periodically or upon liquidation, may negatively affect the market price of our commonordinary shares.
We have incurred and may in the future incur or issue debt or issue equity or equity-related securities to finance our operations.operations, acquisitions or investments. Upon our liquidation, lenders and holders of our debt and holders of our preferred shares (if any) would receive a distribution of our available assets before commonordinary shareholders. Any future incurrence or issuance of debt would increase our interest cost and could adversely affect our results of operations and cash flows. We are not required to offer any additional equity securities to existing commonordinary shareholders on a preemptive basis. Therefore, additional issuances of commonordinary shares, directly or through convertible or exchangeable securities (including limited partnership interests in our operating partnership), warrants or options, will dilute the holdings of our existing commonordinary shareholders and such issuances, or the perception of such issuances, may reduce the market price of our commonordinary shares. Any preferred shares issued by us would likely have a preference on distribution payments, periodically or upon liquidation, which could eliminate or otherwise limit our ability to make distributions to commonordinary shareholders. Because our decision to incur or issue debt or issue equity or equity-related securities in the future will depend on market conditions and other factors beyond our control, we cannot predict or estimate the amount, timing, nature or success of our future capital raising efforts. Thus, commonordinary shareholders bear the risk that our future incurrence or issuance of debt or issuance of equity or equity-related securities will adversely affect the market price of our commonordinary shares.

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Our determination of how much leverage to use to finance our acquisitions may adversely affect our return on our assets and may reduce funds available for distribution.
We utilize leverage to finance many of our asset acquisitions, which entitles certain lenders to cash flows prior to retaining a return on our assets. While our Manager targets using only what we believe to be reasonable leverage, our strategy does not limit the amount of leverage we may incur with respect to any specific asset. The return we are able to earn on our assets and funds available for distribution to our shareholders may be significantly reduced due to changes in market conditions, which may cause the cost of our financing to increase relative to the income that can be derived from our assets.
While we currently intend to pay regular quarterly dividends to our shareholders, we may change our dividend policy at any time.
Although we currently intend to pay regular quarterly dividends to holders of our commonordinary shares, we may change our dividend policy at any time. Our net cash provided by operating activities has been less than the amount of distributions to our shareholders. The declaration and payment of dividends to holders of our commonordinary shares will beare at the discretion of our board of directors in accordance with applicable law after taking into account various factors, including actual results of operations, liquidity and financial condition, net cash provided by operating activities, restrictions imposed by applicable law, our taxable income, our operating expenses and other factors our board of directors deem relevant. Our long term goal is to maintain a payout ratio of between 50-60% of funds available for distribution, with remaining amounts used primarily to fund our future acquisitions and opportunities. There can be no assurance that we will continue to pay dividends in amounts or on a basis consistent with prior distributions to our investors, if at all. Because we are a holding company and have no direct operations, we will only be able to pay dividends from our available cash on hand and any funds we receive from our subsidiaries and our ability to receive distributions from our subsidiaries may be limited by the financing agreements to which they are subject. In addition, our existing indebtedness does, and our future indebtedness may, limit our ability to pay dividends on our ordinary and preferred shares. Moreover, pursuant to the PartnershipServices and Profit Sharing Agreement, the General Partner will beMaster GP is entitled to receive incentive allocationspayments before any amounts are distributed by the Companyus based both on our consolidated net income and capital gains income in each fiscal quarter and for each fiscal year, respectively. Furthermore, the terms of our preferred shares generally prevent us from declaring or paying dividends on or repurchasing our ordinary shares or other junior capital unless all accrued distributions on such preferred shares have been paid in full.
Anti-takeover provisions in our operating agreement and Delaware lawArticles could delay or prevent a change in control.
Provisions in our operating agreementArticles may make it more difficult and expensive for a third party to acquire control of us even if a change of control would be beneficial to the interests of our shareholders. For example, our operating agreementArticles provides for a staggered board, requires advance notice for proposals by shareholders and nominations, places limitations on convening shareholder meetings, and authorizes the issuance of preferred shares that could be issued by our board of directors to thwart a takeover attempt. In addition, certain provisions of Delaware law may delay or prevent a transaction that could cause a change in our control. The market price of our shares could be adversely affected to the extent that provisions of our operating agreement discourage potential takeover attempts that our shareholders may favor.
There are certain provisions in our operating agreement regarding exculpation and indemnification of our officers and directors that differ from the Delaware General Corporation Law (the “DGCL”) in a manner that may be less protective of the interests of our shareholders.
Our operating agreement provides that to the fullest extent permitted by applicable law our directors or officers will not be liable to us. Under the DGCL, a director or officer would be liable to us for (i) breach of duty of loyalty to us or our shareholders, (ii) intentional misconduct or knowing violations of the law that are not done in good faith, (iii) improper redemption of shares or declaration of dividend, or (iv) a transaction from which the director derived an improper personal benefit. In addition, our operating agreement provides that we indemnify our directors and officers for acts or omissions to the fullest extent provided by law. Under the DGCL, a corporation can only indemnify directors and officers for acts or omissions if the director or officer acted in good faith, in a manner he reasonably believed to be in the best interests of the corporation, and, in criminal action, if the officer or director had no reasonable cause to believe his conduct was unlawful. Accordingly, our operating agreement may be less protective of the interests of our shareholders, when compared to the DGCL, insofar as it relates to the exculpation and indemnification of our officers and directors.
As a public company, we will incur additional costs and face increased demands on our management.
As a relatively new public company with shares listed on the NYSE, we need to comply with an extensive body of regulations that did not apply to us previously, including certain provisions of the Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act, regulations of the SEC and requirements of the NYSE. We expect these rules and regulations will increase our legal and financial compliance costs and make some activities to our board of directors more time-consuming and costly. For example, as a result of becoming a public company, we have independent directors and board committees. In addition, we may incur additional costs associated with our public company reporting requirements and maintaining directors’ and officers’ liability insurance. We are currently evaluating and monitoring developments with respect to these rules, which may impose additional costs on us and have a material adverse effect on our business, prospects, financial condition, results of operations and cash flows.
If securities or industry analysts do not publish research or reports about our business, or if they downgrade their recommendations regarding our commonordinary shares, our share price and trading volume could decline.

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The trading market for our commonordinary shares are influenced by the research and reports that industry or securities analysts publish about us or our business. If any of the analysts who cover us downgrades our commonordinary units or publishes inaccurate or unfavorable research about our business, our commonordinary share price may decline. If analysts cease coverage of us or fail to regularly publish reports on us, we could lose visibility in the financial markets, which in turn could cause our commonordinary share price or trading volume to decline and our commonordinary shares to be less liquid.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None.
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Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
None.
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Item 6. Exhibits
Exhibit No.Description
2.1
Agreement and Plan of Merger, dated as of August 12, 2022, by and among, FTAI, the Company and FTAI Aviation Merger Sub LLC (incorporated by reference to Annex A to FTAI’s Registration Statement on Form S-4, filed on October 11, 2022).
2.2
Separation and Distribution Agreement, dated as of August 1, 2022, between FTAI Infrastructure Inc. and the Company (incorporated by reference to Exhibit 2.1 of the Company’s Current Report on Form 8-K, filed on August 1, 2022).
3.1
Amended and Restated Memorandum and Articles of Association of the Company (incorporated by reference to Exhibit 3.1 of the Company’s Current Report on Form 8-K, filed on November 14, 2022).
3.2
Share Designation with respect to the 8.25% Fixed-to-Floating Series A Cumulative Perpetual Redeemable Preferred Shares (included as part of Exhibit 3.1 hereto).
3.3
Share Designation with respect to the 8.00% Fixed-to-Floating Series B Cumulative Perpetual Redeemable Preferred Shares (included as part of Exhibit 3.1 hereto).
3.4
Share Designation with respect to the 8.25% Fixed-Rate Reset Series C Cumulative Perpetual Redeemable Preferred Shares (included as part of Exhibit 3.1 hereto).
3.5
Share Designation with respect to the 9.500% Fixed-Rate Reset Series D Cumulative Perpetual Redeemable Preferred Shares of FTAI Aviation Ltd. (incorporated by reference to Exhibit 4.1 of the Company’s Registration Statement on Form 8-A, filed on March 15, 2023).
3.6
Form of Certificate representing the 8.25% Fixed-to-Floating Rate Series A Cumulative Perpetual Redeemable Preferred Shares of FTAI Aviation Ltd. (included as part of Exhibit 3.1 hereto).
3.7
Form of Certificate representing the 8.00% Fixed-to-Floating Rate Series B Cumulative Perpetual Redeemable Preferred Shares of FTAI Aviation Ltd. (included as part of Exhibit 3.1 hereto).
3.8
Form of Certificate representing the 8.25% Fixed-Rate Reset Series C Cumulative Perpetual Redeemable Preferred Shares of FTAI Aviation Ltd. (included as part of Exhibit 3.1 hereto).
3.9
Form of certificate representing the 9.500% Fixed-Rate Reset Series D Cumulative Perpetual Redeemable Preferred Shares of FTAI Aviation Ltd. (incorporated by reference to Exhibit 4.2 of the Company’s Registration Statement on Form 8-A, filed on March 15, 2023).
4.1
Indenture, dated September 18, 2018, between the Company and U.S. Bank National Association, as trustee, relating to the Company’s 6.50% senior unsecured notes due 2025 (incorporated by reference to Exhibit 4.1 of the Company’s Current Report on Form 8-K, filed on September 18, 2018).
4.2
Form of global note representing the Company’s 6.50% senior unsecured notes due 2025 (included in Exhibit 4.1).
4.3
First Supplemental Indenture, dated May 21, 2019, between the Company and U.S. Bank National Association, as trustee, relating to the Company’s 6.50% senior unsecured notes due 2025 (incorporated by reference to Exhibit 4.1 of the Company’s Current Report on Form 8-K, filed on May 21, 2019).
4.4
Second Supplemental Indenture, dated December 23, 2020, between the Company and U.S. Bank National Association, as trustee, relating to the Company’s 6.50% senior unsecured notes due 2025 (incorporated by reference to Exhibit 4.1 of the Company’s Current Report on Form 8-K, filed on December 23, 2020).
4.5
2025 Notes Guarantee, dated November 10, 2022 (incorporated by reference to Exhibit 4.1 of the Company’s Current Report on Form 8-K, filed on November 14, 2022).
4.6
Indenture, dated April 12, 2021, between the Company and U.S. Bank National Association, as trustee, relating to the Company’s 5.50% senior unsecured notes due 2028 (incorporated by reference to Exhibit 4.1 to the Company’s Form 8-K, filed April 12, 2021).
4.7
Form of global note representing the Company’s 5.50% senior unsecured notes due 2028 (included in Exhibit 4.6).
4.8
First Supplemental Indenture, dated as of September 24, 2021, between the Company and U.S. Bank National Association, as trustee, relating to the Company’s 5.50% senior unsecured notes due 2028 (incorporated by reference to Exhibit 4.1 of the Company’s Current Report on Form 8-K, filed on September 24, 2021).
4.9
2028 Notes Guarantee, dated November 10, 2022 (incorporated by reference to Exhibit 4.3 of the Company’s Current Report on Form 8-K, filed on November 14, 2022).
4.10
Indenture, dated July 28, 2020, between the Company and U.S. Bank National Association, as trustee, relating to the Company’s 9.75% senior unsecured notes due 2027 (incorporated by reference to Exhibit 4.1 of the Company’s Current Report on Form 8-K, filed on July 28, 2020).
4.11
Form of global note representing the Company’s 9.75% senior unsecured notes due 2027 (included in Exhibit 4.10).
4.12
2027 Notes Guarantee, dated November 10, 2022 (incorporated by reference to Exhibit 4.2 of the Company’s Current Report on Form 8-K, filed on November 14, 2022).
4.13
Revolver Guarantee, dated November 10, 2022 (incorporated by reference to Exhibit 4.4 of the Company’s Current Report on Form 8-K, filed on November 14, 2022).
4.14
Description of Securities Registered under Section 12 of the Exchange Act.
†
10.1
Management and Advisory Agreement, dated as of July 31, 2022, between the Company, FTAI Aviation Ltd., the Subsidiaries that are party thereto and FIG LLC (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K, filed on August 1, 2022).
10.2
Services and Profit Sharing Agreement, dated November 10, 2022, by and among FTAI Aviation Holdco Ltd., the Company and Fortress Worldwide Transportation and Infrastructure Master GP LLC (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K, filed on November 14, 2022).
†
10.3
Amended and Restated Registration Rights Agreement, dated November 10, 2022, by and among FTAI Aviation Ltd., the Company, Fortress Worldwide Transportation and Infrastructure Master GP LLC and FIG LLC (incorporated by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K, filed on November 14, 2022).
†
10.4
FTAI Aviation Ltd. Nonqualified Stock Option and Incentive Award Plan, dated as of February 23, 2023.
See Index to Exhibits immediately following the signature page of this Form 10-Q.
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Exhibit No.Description
†
10.5
Form of FTAI Aviation Ltd. Director and Officer Indemnification Agreement (incorporated by reference to Exhibit 10.6 to the Company’s Registration Statement on Form S-4, filed on October 4, 2022).
†
10.6
Form of Director Award Agreement pursuant to the FTAI Aviation Ltd. Nonqualified Stock Option and Incentive Plan (incorporated by reference to Exhibit 10.7 to the Company’s Registration Statement on Form S-4, filed on October 4, 2022).
†
10.7
Form of Award Agreement under the FTAI Aviation Ltd. Nonqualified Stock Option and Incentive Award Plan (incorporated by reference to Exhibit 10.8 to the Company’s Registration Statement on Form S-4, filed on October 4, 2022).
10.8
Trademark License Agreement, dated as of August 1, 2022, between Fortress Transportation and Infrastructure Investors LLC and FTAI Infrastructure Inc. (incorporated by reference to Exhibit 10.3 of the Company’s Current Report on Form 8-K, filed August 1, 2022).
10.9
Second Amended and Restated Credit Agreement, dated as of September 20, 2022, between the Company, the lenders and issuing banks from time to time party thereto and JPMorgan Chase Bank, N.A., as administrative agent (incorporated by reference to Exhibit 10.1 of the Company's Current Report on Form 8-K, filed September 21, 2022).
10.10
Amendment No. 1 to the Second Amended and Restated Credit Agreement, dated as of November 22, 2022, between the Company, the lenders and issuing banks from time to time party thereto and JPMorgan Chase Bank, N.A., as administrative agent (incorporated by reference to Exhibit 10.10 of the Company’s Annual Report on Form 10-K, filed February 27, 2023).
10.11
Amendment No. 2 to the Second Amended and Restated Credit Agreement, dated as of April 10, 2023, between the Company, the lenders and issuing banks from time to time party thereto and JPMorgan Chase Bank, N.A., as administrative agent.
31.1
Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2
Certification of Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1
Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2
Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101 The following financial information from the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2022, formatted in iXBRL (Inline Extensible Business Reporting Language): (i) Consolidated Balance Sheets; (ii) Consolidated Statements of Operations; (iii) Consolidated Statements of Comprehensive Income (Loss); (iv) Consolidated Statements of Changes in Equity; (v) Consolidated Statements of Cash Flows; and (vi) Notes to Consolidated Financial Statements.
104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
†Management contracts and compensatory plans or arrangements.
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SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized:

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC
FTAI Aviation Ltd.
By:/s/ Joseph P. Adams, Jr.Date:November 3, 2017July 27, 2023
Joseph P. Adams, Jr.
Chairman and Chief Executive Officer
By:/s/ Scott ChristopherEun (Angela) NamDate:November 3, 2017July 27, 2023
Scott Christopher
Chief Financial Officer and
Chief Accounting Officer


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INDEX TO EXHIBITS
Eun (Angela) Nam
Exhibit No.Description
3.1
Certificate of Formation (incorporated by reference to Exhibit 3.1 of Amendment No. 4 to the Company's Registration Statement on Form S-1, filed on April 30, 2015).
3.2
Amended and Restated Limited Liability Company Agreement of Fortress Transportation and Infrastructure Investors LLC (incorporated by reference to Exhibit 3.2 of the Company's Current Report on Form 8-K, filed on May 21, 2015).
3.3
First Amendment to Amended and Restated Limited Liability Company Agreement of Fortress Transportation and Infrastructure Investors LLC (incorporated by reference to Exhibit 3.3 of the Company's Annual Report on Form 10-K, filed on March 10, 2016).
4.1
Indenture, dated March 15, 2017, between Fortress Transportation and Infrastructure Investors LLC and U.S. Bank National
Association, as trustee, relating to the Company’s 6.75% senior unsecured notes due 2022 (incorporated by reference to Exhibit 4.1 of the Company’s Current Report on Form 8-K, filed on March 15, 2017).

4.2
Form of global note representing the Company’s 6.75% senior unsecured notes due 2022 (included in Exhibit 4.1).
4.3
Second Supplemental Indenture, dated August 23, 2017, between Fortress Transportation and Infrastructure Investors LLC and U.S. Bank National Association, as trustee, relating to the Company’s 6.75% senior unsecured notes due 2022 (incorporated by reference to Exhibit 4.1 of the Company’s Current Report on Form 8-K, filed on August 23, 2017).

10.1
Fourth Amended and Restated Partnership Agreement of Fortress Worldwide Transportation and Infrastructure General Partnership (incorporated by reference to Exhibit 10.1 of the Company's Current Report on Form 8-K, filed on May 21, 2015).
†
10.2
Management and Advisory Agreement, dated as of May 20, 2015, between Fortress Transportation and Infrastructure Investors LLC and FIG LLC (incorporated by reference to Exhibit 10.2 of the Company's Current Report on Form 8-K, filed on May 21, 2015).
†
10.3
Registration Rights Agreement, dated as of May 20, 2015, among Fortress Transportation and Infrastructure Investors LLC, FIG LLC and Fortress Transportation and Infrastructure Master GP LLC (incorporated by reference to Exhibit 10.3 of the Company's Current Report on Form 8-K, filed on May 21, 2015).
10.4
Fortress Transportation and Infrastructure Investors LLC Nonqualified Stock Option and Incentive Award Plan (incorporated by reference to Exhibit 10.4 of the Company's Current Report on Form 8-K, filed on May 21, 2015).
10.5
Form of director and officer indemnification agreement of Fortress Transportation and Infrastructure Investors LLC (incorporated by reference to Exhibit 10.5 of Amendment No. 4 to the Company's Registration Statement on Form S-1, filed April 30, 2015).
10.6
Credit Agreement, dated as of August 27, 2014, among Morgan Stanley Senior Funding, Inc., as administrative agent, Jefferson Gulf Coast Energy Partners LLC and the other lenders party thereto (incorporated by reference to Exhibit 10.6 of Amendment No. 4 to the Company's Registration Statement on Form S-1, filed April 30, 2015).
10.7
Trust Indenture and Security Agreement between the District and The Bank of New York Mellon Trust Company, National Association, dated as of February 1, 2016 (incorporated by reference to Exhibit 10.7 of the Company's Annual Report on Form 10-K, filed on March 10, 2016).
10.8
Standby Bond Purchase Agreement among the Port of Beaumont Navigation District of Jefferson County, Texas, The Bank of New York Mellon Trust Company, National Association, Jefferson Railport Terminal II Holdings LLC and Jefferson Railport Terminal II LLC dated as of February 1, 2016 (incorporated by reference to Exhibit 10.8 of the Company's Annual Report on Form 10-K, filed on March 10, 2016).
10.9
Capital Call Agreement, by and among Fortress Transportation and Infrastructure Investors LLC, FTAI Energy Holdings LLC, FTAI Partner Holdings LLC, FTAI Midstream GP Holdings LLC, FTAI Midstream GP LLC, FTAI Midstream Holdings LLC, FTAI Energy Partners LLC and Jefferson Railport Terminal II Holdings LLC, dated as of February 1, 2016 (incorporated by reference to Exhibit 10.9 of the Company's Annual Report on Form 10-K, filed on March 10, 2016).
10.10
Fee and Support Agreement, among FTAI Energy Holdings LLC, FEP Terminal Holdings LLC, FTAI Energy Partners LLC and Jefferson Railport Terminal II LLC, dated as of March 7, 2016 (incorporated by reference to Exhibit 10.10 of the Company's Amended Annual Report on Form 10-K/A, filed on April 29, 2016).
10.11
Lease and Development Agreement (Facilities Lease), dated as of February 1, 2016, by and between the Port of Beaumont Navigation District of Jefferson County, Texas and Jefferson Railport Terminal II LLC (incorporated by reference to Exhibit 10.11 of the Company's Annual Report on Form 10-K, filed on March 10, 2016).
10.12
Deed of Trust of Jefferson Railport Terminal II LLC, dated as of February 1, 2016 (incorporated by reference to Exhibit 10.12 of the Company's Annual Report on Form 10-K, filed on March 10, 2016).
10.13
Credit Agreement, dated January 23, 2017, among Fortress Transportation and Infrastructure Investors LLC, as holdings, Fortress Worldwide Transportation and Infrastructure General Partnership, as IntermediateCo, WWTAI Finance Ltd., as Borrower, the Subsidiary Guarantors from time to time party thereto, the lenders from time to time party thereto and Morgan Stanley Senior Funding, Inc., as Administrative Agent (incorporated by reference to Exhibit 10.1 of the Company's Current Report on Form 8-K, filed on January 27, 2017).
10.14
Credit Agreement, dated June 16, 2017, among Fortress Transportation and Infrastructure Investors LLC, as Borrower, the lenders and issuing banks from time to time party thereto and JPMorgan Chase Bank, N.A., as Administrative Agent (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K, filed on June 22, 2017).
31.1
Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2
Certification of Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1
Certification ofand Chief ExecutiveAccounting Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2
Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INSXBRL Instance Document.
101.SCHXBRL Taxonomy Extension Schema Document.

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101.CALXBRL Taxonomy Extension Calculation Linkbase Document.
101.DEFXBRL Taxonomy Extension Definition Linkbase Document.
101.LABXBRL Taxonomy Extension Label Linkbase Document.
101.PREXBRL Taxonomy Extension Presentation Linkbase Document.
†Management contracts and compensatory plans or arrangements.


99
70