FTAI Aviation (FTAI) 10-Q 2021 Q3 Quarterly report

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

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

For the quarterly period ended September 30, 2021

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

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

(Exact name of registrant as specified in its charter)

Delaware		32-0434238
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
1345 Avenue of the Americas, 45th Floor	New York	NY	10105
(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:
Class A common shares, $0.01 par value per share	FTAI	New York Stock Exchange
8.25% Fixed-to-Floating Rate Series A Cumulative Perpetual Redeemable Preferred Shares	FTAI PR A	New York Stock Exchange
8.00% Fixed-to-Floating Rate Series B Cumulative Perpetual Redeemable Preferred Shares	FTAI PR B	New York Stock Exchange
8.25% Fixed-Rate Reset Series C Cumulative Perpetual Redeemable Preferred Shares	FTAI PR C	New York Stock Exchange

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

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). Yes þ No ¨ 

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 filer	þ	Accelerated filer	¨
Non-accelerated filer	¨	Smaller reporting company	☐
		Emerging growth company	☐

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.  ¨

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

There were 99,180,385 common shares outstanding representing limited liability company interests at October 26, 2021.

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 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, including, but not limited to, the ongoing COVID-19 pandemic and other public health crises, 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;

•changes in our asset composition, investment strategy and liquidity as a result of a potential spin-off of our infrastructure business or other factors;

•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 enter 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 and intermodal transport sectors;

•the competitive market for acquisition opportunities;

•risks related to operating through joint ventures, partnerships, consortium arrangements or 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 and maintenance 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;

2

•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 merger of Fortress Investment Group LLC with affiliates of SoftBank Group Corp.;

•volatility in the market price of our 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.

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FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

INDEX TO FORM 10-Q

	PART I - FINANCIAL INFORMATION
Item 1.	Unaudited Consolidated Financial Statements of Fortress Transportation and Infrastructure Investors LLC:	5
	Consolidated Balance Sheets as of September 30, 2021 and December 31, 2020	5
	Consolidated Statements of Operations for the three and nine months ended September 30, 2021 and 2020	6
	Consolidated Statements of Comprehensive (Loss) Income for the three and nine months ended September 30, 2021 and 2020	7
	Consolidated Statement of Changes in Equity for the three and nine months ended September 30, 2021 and 2020	8
	Consolidated Statements of Cash Flows for the nine months ended September 30, 2021 and 2020	9
	Notes to Consolidated Financial Statements	11
	Note 1: Organization	11
	Note 2: Summary of Significant Accounting Policies	11
	Note 3: Discontinued Operations	15
	Note 4: Acquisition of Transtar, LLC	15
	Note 5: Leasing Equipment, net	17
	Note 6: Finance Leases, net	18
	Note 7: Property, Plant and Equipment, net	18
	Note 8: Investments	19
	Note 9: Intangible Assets and Liabilities, net	20
	Note 10: Debt, net	21
	Note 11: Fair Value Measurements	23
	Note 12: Derivative Financial Instruments	25
	Note 13: Revenues	25
	Note 14: Leases	28
	Note 15: Equity-Based Compensation	29
	Note 16: Retirement Benefit Plans	29
	Note 17: Income Taxes	30
	Note 18: Management Agreement and Affiliate Transactions	30
	Note 19: Segment Information	33
	Note 20: Earnings per Share and Equity	43
	Note 21: Commitments and Contingencies	44
	Note 22: Subsequent Events	44
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	45
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	66
Item 4.	Controls and Procedures	67
	PART II - OTHER INFORMATION
Item 1.	Legal Proceedings	68
Item 1A.	Risk Factors	68
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	90
Item 3.	Defaults Upon Senior Securities	90
Item 4.	Mine Safety Disclosures	90
Item 5.	Other Information	90
Item 6.	Exhibits	90

4

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except share and per share data)

		(Unaudited)
	Notes	September 30, 2021		December 31, 2020
Assets
Cash and cash equivalents	2	$	176,052	$	121,703
Restricted cash	2	283,398		39,715
Accounts receivable, net		205,680		91,691
Leasing equipment, net	5	1,696,594		1,635,259
Operating lease right-of-use assets, net	14	74,643		62,355
Finance leases, net	6	13,795		6,927
Property, plant, and equipment, net	7	1,527,770		964,363
Investments	8	110,963		146,515
Intangible assets, net	9	80,737		18,786
Goodwill		239,941		122,735
Other assets	2	272,944		177,928
Total assets		$	4,682,517	$	3,387,977
Liabilities
Accounts payable and accrued liabilities		$	213,441	$	113,185
Debt, net	10	2,983,989		1,904,762
Maintenance deposits		100,700		148,293
Security deposits		35,167		37,064
Operating lease liabilities	14	74,134		62,001
Other liabilities		71,044		23,351
Total liabilities		$	3,478,475	$	2,288,656
Commitments and contingencies	21	0		0
Equity
Common shares ($0.01 par value per share; 2,000,000,000 shares authorized; 97,896,522 and 85,617,146 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively)		$	979	$	856
Preferred shares ($0.01 par value per share; 200,000,000 shares authorized; 13,320,000 and 9,120,000 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively)		133		91
Additional paid in capital		1,420,247		1,130,106
Accumulated deficit		(120,136)		(28,158)
Accumulated other comprehensive loss		(103,755)		(26,237)
Shareholders' equity		1,197,468		1,076,658
Non-controlling interest in equity of consolidated subsidiaries		6,574		22,663
Total equity		1,204,042		1,099,321
Total liabilities and equity		$	4,682,517	$	3,387,977

See accompanying notes to consolidated financial statements.

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FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)

(Dollars in thousands, except share and per share data)

		Three Months Ended September 30,				Nine Months Ended September 30,
	Notes	2021		2020		2021		2020
Revenues
Equipment leasing revenues		$	99,174	$	69,799	$	237,352	$	236,082
Infrastructure revenues		36,788		13,910		72,674		54,776
Total revenues	13	135,962		83,709		310,026		290,858
Expenses
Operating expenses		52,793		23,128		108,973		81,144
General and administrative		4,422		4,241		12,329		13,292
Acquisition and transaction expenses		7,130		2,442		13,172		9,297
Management fees and incentive allocation to affiliate	18	3,845		4,591		11,948		14,113
Depreciation and amortization	5, 7, 9	53,368		42,626		145,274		126,543
Asset impairment		859		3,915		3,048		14,391
Interest expense		54,500		26,904		124,994		71,559
Total expenses		176,917		107,847		419,738		330,339
Other income (expense)
Equity in losses of unconsolidated entities	8	(4,082)		(2,501)		(9,860)		(5,445)
Gain (loss) on sale of assets, net		12,685		(1,114)		17,483		(2,165)
Loss on extinguishment of debt	10	—		—		(3,254)		(4,724)
Interest income		483		58		1,222		121
Other (expense) income		(8,068)		—		(8,771)		32
Total other income (expense)		1,018		(3,557)		(3,180)		(12,181)
Loss from continuing operations before income taxes		(39,937)		(27,695)		(112,892)		(51,662)
Benefit from income taxes	17	(494)		(2,486)		(1,965)		(6,334)
Net loss from continuing operations		(39,443)		(25,209)		(110,927)		(45,328)
Net income from discontinued operations, net of income taxes		—		—		—		1,331
Net loss		(39,443)		(25,209)		(110,927)		(43,997)
Less: Net loss attributable to non-controlling interests in consolidated subsidiaries		(7,363)		(3,876)		(18,949)		(12,724)
Less: Dividends on preferred shares		6,791		4,625		17,967		13,243
Net loss attributable to shareholders		$	(38,871)	$	(25,958)	$	(109,945)	$	(44,516)
(Loss) earnings per share:	20
Basic
Continuing operations		$	(0.44)	$	(0.30)	$	(1.27)	$	(0.53)
Discontinued operations		$	—	$	—	$	—	$	0.02
Diluted
Continuing operations		$	(0.44)	$	(0.30)	$	(1.27)	$	(0.53)
Discontinued operations		$	—	$	—	$	—	$	0.02
Weighted average shares outstanding:
Basic		88,277,897		86,022,302		86,787,072		86,013,485
Diluted		88,277,897		86,022,302		86,787,072		86,013,485

See accompanying notes to consolidated financial statements.

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FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME (unaudited)

(Dollars in thousands)

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Net loss	$	(39,443)	$	(25,209)	$	(110,927)	$	(43,997)
Other comprehensive loss:
Other comprehensive loss related to equity method investees, net (1)	(54,640)		(13,468)		(77,518)		(16,822)
Comprehensive loss	(94,083)		(38,677)		(188,445)		(60,819)
Comprehensive loss attributable to non-controlling interest	(7,363)		(3,876)		(18,949)		(12,724)
Comprehensive loss attributable to shareholders	$	(86,720)	$	(34,801)	$	(169,496)	$	(48,095)

________________________________________________________

(1) Net of deferred tax expense (benefit) of $1,798 and $(3,580) for the three months ended September 30, 2021 and 2020, respectively, and $(2,674) and $(4,474) for the nine months ended September 30, 2021 and 2020, respectively.

See accompanying notes to consolidated financial statements.

7

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (unaudited)

(Dollars in thousands)

	Three and Nine Months Ended September 30, 2021
	Common Shares		Preferred Shares		Additional Paid In Capital		Accumulated Deficit		Accumulated Other Comprehensive (Loss) Income		Non-Controlling Interest in Equity of Consolidated Subsidiaries		Total Equity
Equity - December 31, 2020	$	856	$	91	$	1,130,106	$	(28,158)	$	(26,237)	$	22,663	$	1,099,321
Net loss							(59,898)				(11,586)		(71,484)
Other comprehensive income							—		(22,878)		—		(22,878)
Total comprehensive (loss) income							(59,898)		(22,878)		(11,586)		(94,362)
Settlement of equity-based compensation											(183)		(183)
Issuance of common shares	—				455								455
Dividends declared - common shares					(56,795)								(56,795)
Issuance of preferred shares			42		101,158								101,200
Dividends declared - preferred shares					(11,176)								(11,176)
Equity-based compensation											2,553		2,553
Equity - June 30, 2021	$	856	$	133	$	1,163,748	$	(88,056)	$	(49,115)	$	13,447	$	1,041,013
Net loss							(32,080)				(7,363)		(39,443)
Other comprehensive loss							—		(54,640)		—		(54,640)
Total comprehensive loss							(32,080)		(54,640)		(7,363)		(94,083)
Settlement of equity-based compensation											(238)		(238)
Issuance of common shares	123				291,701								291,824
Conversion of participating securities					(2)								(2)
Dividends declared - common shares					(28,409)								(28,409)
Dividends declared - preferred shares					(6,791)								(6,791)
Equity-based compensation											728		728
Equity - September 30, 2021	$	979	$	133	$	1,420,247	$	(120,136)	$	(103,755)	$	6,574	$	1,204,042

	Three and Nine Months Ended September 30, 2020
	Common Shares		Preferred Shares		Additional Paid In Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Non-Controlling Interest in Equity of Consolidated Subsidiaries		Total Equity
Equity - December 31, 2019	$	849	$	81	$	1,110,122	$	190,453	$	372	$	36,980	$	1,338,857
Net loss							(9,940)				(8,848)		(18,788)
Other comprehensive loss							—		(3,354)		—		(3,354)
Total comprehensive loss							(9,940)		(3,354)		(8,848)		(22,142)
Settlement of equity-based compensation											(42)		(42)
Issuance of common shares	7				304								311
Conversion of participating securities					(7)								(7)
Dividends declared - common shares					0		(56,782)						(56,782)
Issuance costs of preferred shares					(788)								(788)
Dividends declared - preferred shares							(8,618)						(8,618)
Equity-based compensation											702		702
Equity - June 30, 2020	$	856	$	81	$	1,109,631	$	115,113	$	(2,982)	$	28,792	$	1,251,491
Net loss							(21,333)				(3,876)		(25,209)
Other comprehensive loss							—		(13,468)		—		(13,468)
Total comprehensive loss							(21,333)		(13,468)		(3,876)		(38,677)
Settlement of equity-based compensation											(68)		(68)
Dividends declared - common shares					0		(28,395)						(28,395)
Issuance of preferred shares			10		20,490								20,500
Dividends declared - preferred shares							(4,625)						(4,625)
Equity-based compensation											621		621
Equity - September 30, 2020	$	856	$	91	$	1,130,121	$	60,760	$	(16,450)	$	25,469	$	1,200,847

See accompanying notes to consolidated financial statements.

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FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

(Dollars in thousands)

	Nine Months Ended September 30,
	2021		2020
Cash flows from operating activities:
Net loss	$	(110,927)	$	(43,997)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Equity in losses of unconsolidated entities	9,860		5,445
Gain on sale of subsidiaries	—		(1,331)
(Gain) loss on sale of assets, net	(17,483)		2,165
Security deposits and maintenance claims included in earnings	(30,866)		(12,275)
Loss on extinguishment of debt	3,254		4,724
Equity-based compensation	3,281		1,323
Depreciation and amortization	145,274		126,543
Asset impairment	3,048		14,391
Deferred taxes	(2,311)		(7,374)
Change in fair value of non-hedge derivative	(1,979)		181
Amortization of lease intangibles and incentives	21,348		23,394
Amortization of deferred financing costs	18,853		6,156
Bad debt expense, net	817		1,997
Other	(240)		1,152
Change in:
Accounts receivable	(100,821)		(43,014)
Other assets	(34,499)		1,253
Accounts payable and accrued liabilities	71,285		(32,415)
Management fees payable to affiliate	(844)		(20,965)
Other liabilities	2,242		1,040
Net cash (used in) provided by operating activities	(20,708)		28,393
Cash flows from investing activities:
Investment in unconsolidated entities	(54,499)		(4,407)
Principal collections on finance leases	1,707		7,001
Acquisition of business, net of cash acquired	(627,399)		—
Acquisition of leasing equipment	(299,564)		(252,859)
Acquisition of property, plant and equipment	(109,405)		(209,662)
Acquisition of lease intangibles	(7,403)		1,997
Purchase deposits for acquisitions	(13,790)		(5,320)
Proceeds from sale of leasing equipment	78,463		53,707
Proceeds from deposit on sale of aircraft and engine	600		—
Return of deposit on sale of engine	1,010		2,350
Net cash used in investing activities	$	(1,030,280)	$	(407,193)

See accompanying notes to consolidated financial statements.

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FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

(Dollars in thousands)

	Nine Months Ended September 30,
	2021		2020
Cash flows from financing activities:
Proceeds from debt	$	2,553,600	$	883,981
Repayment of debt	(1,452,704)		(495,991)
Payment of deferred financing costs	(45,123)		(20,416)
Receipt of security deposits	1,390		1,564
Return of security deposits	(1,034)		(3,815)
Receipt of maintenance deposits	23,075		25,102
Release of maintenance deposits	(19,615)		(12,429)
Proceeds from issuance of common shares, net of underwriter's discount	291,822		—
Proceeds from issuance of preferred shares, net of underwriter's discount and issuance costs	101,201		20,223
Purchase of non-controlling interest	—		(110)
Settlement of equity-based compensation	(421)		—
Cash dividends - common shares	(85,204)		(85,177)
Cash dividends - preferred shares	(17,967)		(13,243)
Net cash provided by financing activities	$	1,349,020	$	299,689
Net increase (decrease) in cash and cash equivalents and restricted cash	298,032		(79,111)
Cash and cash equivalents and restricted cash, beginning of period	161,418		242,517
Cash and cash equivalents and restricted cash, end of period	$	459,450	$	163,406
Supplemental disclosure of non-cash investing and financing activities:
Acquisition of leasing equipment	$	66,988	$	59,056
Acquisition of property, plant and equipment	(1,062)		(9,406)
Settled and assumed security deposits	(1,909)		(6,215)
Billed, assumed and settled maintenance deposits	(30,302)		(34,253)
Non-cash change in equity method investment	(77,518)		(16,822)
Issuance of common shares	455		304

See accompanying notes to consolidated financial statements.

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FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(Dollars in tables in thousands, unless otherwise noted)

1. ORGANIZATION

Fortress Transportation and Infrastructure Investors LLC (“we”, “us”, “our” or the “Company”) is a Delaware limited liability company which, through its subsidiary, Fortress Worldwide Transportation and Infrastructure General Partnership (the “Partnership”), owns and leases aviation equipment and also owns and operates (i) a multi-modal crude oil and refined products terminal in Beaumont, Texas (“Jefferson Terminal”), (ii) a deep-water port located along the Delaware River with an underground storage cavern and multiple industrial development opportunities (“Repauno”), (iii) an equity method investment in a multi-modal terminal located along the Ohio River with multiple industrial development opportunities, including a power plant under construction (“Long Ridge”) and (iv) 5 freight railroads and one switching company (“Transtar”) that provide rail service to certain manufacturing and production facilities. Additionally, we own and lease offshore energy equipment and shipping containers. We have 4 reportable segments, (i) Aviation Leasing, (ii) Jefferson Terminal, (iii) Ports and Terminals and (iv) Transtar, which operate in 2 primary businesses, Equipment Leasing and Infrastructure (see Note 19).

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 (“GAAP”) and include the accounts of us and our subsidiaries.

Principles of Consolidation—We consolidate all entities in which we have a controlling financial interest and control over significant operating decisions, as well as variable interest entities (“VIEs”) in which we are the primary beneficiary. All significant intercompany transactions and balances have been eliminated. All adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. The ownership interest of other investors in consolidated subsidiaries is recorded as non-controlling interest.

We use the equity method of accounting for investments in entities in which we exercise significant influence but which do not meet the requirements for consolidation. Under the equity method, we record our proportionate share of the underlying net income (loss) of these entities as well as the proportionate interest in adjustments to other comprehensive income (loss).

Use of Estimates—The preparation of financial statements in conformity with 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, we 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 counterparty 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 we operate, which could adversely impact the pricing of the services offered by us 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 our leasing equipment or operating assets. Capital market risk is the risk that we are unable to obtain capital at reasonable rates to fund the growth of our business or to refinance existing debt facilities. We, through our subsidiaries, also conduct operations outside of the United States; such international operations are subject to the same risks as those associated with our 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. We do not have significant exposure to foreign currency risk as all of our leasing arrangements and the majority of terminal services revenue are denominated in U.S. dollars.

Variable Interest Entities—The assessment of whether an entity is a 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.

Delaware River Partners LLC

During 2016, through Delaware River Partners LLC (“DRP”), a consolidated subsidiary, we 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. We currently hold an approximately 98% economic interest, and a 100% voting interest in DRP. DRP is solely reliant on us to finance its activities and therefore is a VIE. We concluded that we were the primary beneficiary; and accordingly, DRP has been presented on a consolidated basis in the accompanying financial statements.

11

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(Dollars in tables in thousands, unless otherwise noted)

GM-FTAI Holdco LLC

In September 2021, through GM-FTAI Holdco LLC (“Holdco”), we acquired a 50% interest in Aleon Renewable Metals LLC (“Aleon”) and a 1% interest in Gladieux Metals Recycling (“GMR”) for $52.5 million. Aleon plans to develop a lithium-ion battery recycling business across the United States. Each planned location will collect, discharge and disassemble lithium-ion batteries to extract various metals in high-purity form for resale into the lithium-ion battery production market. GMR specializes in recycling spent catalyst produced in the petroleum refining industry. Aleon and GMR are governed by separate boards of directors. Holdco is solely reliant on its interest holders to finance its activities and therefore is a VIE. We concluded that we are not the primary beneficiary of Holdco; therefore, we do not consolidate Holdco and account for this investment in accordance with the equity method.

Cash and Cash Equivalents—We 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 prepaid interest and principal pursuant to the requirements of certain of our debt agreements (see Note 10) and other qualifying construction projects at Jefferson Terminal.

Inventory—We hold aircraft engine modules, spare parts and used material inventory for trading and to support operations within our Aviation Leasing segment. Aviation inventory is carried at the lower of cost or net realizable value on our balance sheet. We had Aviation inventory of $82.3 million and $58.2 million as of September 30, 2021 and December 31, 2020, respectively, which is included in Other assets in the Consolidated Balance Sheets.

Commodities inventory is carried at the lower of cost or net realizable value on our balance sheet. Commodities are removed from inventory based on the average cost at the time of sale. We had commodities inventory of $4.7 million and $0.1 million as of September 30, 2021 and December 31, 2020, respectively, which is included in Other assets in the Consolidated Balance Sheets.

Deferred Financing Costs—Costs incurred in connection with obtaining long term financing are capitalized and amortized to interest expense over the term of the underlying loans. Unamortized deferred financing costs of $60.9 million and $36.2 million as of September 30, 2021 and December 31, 2020, respectively, are recorded as a component of debt in the Consolidated Balance Sheets.

We also have unamortized deferred revolver fees related to our revolving debt of $0.4 million and $1.6 million as of September 30, 2021 and December 31, 2020, respectively, which are included in Other assets in the Consolidated Balance Sheets.

Amortization expense was $14.4 million and $2.1 million for the three months ended September 30, 2021 and 2020, respectively, and $18.9 million and $6.2 million for the nine months ended September 30, 2021 and 2020, respectively, and is included in Interest expense in the Consolidated Statements of Operations.

Revenue Recognition

Equipment Leasing Revenues

Operating Leases—We lease equipment pursuant to operating leases. Operating leases with fixed rentals and step rentals are recognized on a straight-line basis over the term of the lease, 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 the leased asset or at the end of the lease. Typically, under our aircraft lease agreements, the lessee is responsible for maintenance, repairs and other 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 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 revenues. 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 material effect on the amount of revenue recognized in the period.

For purchase and lease back transactions, we account for the transaction as a single arrangement. We allocate the consideration paid based on the relative fair value of the aircraft and lease. The fair value of the lease may include a lease premium or discount.

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FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(Dollars in tables in thousands, unless otherwise noted)

In April 2020, the FASB Staff issued a question-and-answer document (the “Q&A”) regarding accounting for lease concessions related to the effects of the COVID-19 pandemic. The Q&A permits an entity to elect to forgo the evaluation of the enforceable rights and obligations of a lease contract required under ASC 842, Leases, as long as the total rent payments after the lease concessions are substantially the same, or less than, the total rent payments in the existing lease. The impact of the COVID-19 related lease concessions granted above did not have a material impact on our results of operations during the nine months ended September 30, 2021.

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 finance lease income. The principal component of the lease payment is reflected as a reduction 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.

Infrastructure Revenues

Terminal Services Revenues—Terminal services are provided to customers for the receipt and redelivery of various commodities. These revenues are recognized over time, i.e., as the services are rendered and the customer simultaneously receives and consumes the benefit over time.

Rail Revenues—Rail revenues generally consist of the following performance obligations: industrial switching, interline services, demurrage and storage. Switching revenues are derived from the performance of switching services, which involve the movement of cars from one point to another within the limits of an individual plant, industrial area, or a rail yard. Switching revenues are recognized as the services are performed, and the services are completed on the same day they are initiated.

Interline revenues are derived from transportation services for railcars that originate or terminate at our railroads and involve one or more other carriers. For interline traffic, one railroad typically invoices a customer on behalf of all railroads participating in the route directed by the customer. The invoicing railroad then pays the other railroads its portion of the total amount invoiced on a monthly basis. We record revenue related to interline traffic for transportation service segments provided by carriers along railroads that are not owned or controlled by us on a net basis. Interline revenues are recognized as the transportation movements occur.

Our ancillary services revenue primarily relates to demurrage and storage services. Demurrage represents charges assessed by railroads for the detention of cars by shippers or receivers of freight beyond a specified free time and is recognized on a per day basis. Storage services revenue is earned for the provision of storage of shippers’ railcars and is generally recognized on a per day, per car basis, as the storage services are provided.

Lease Income—Lease income consists of rental income from tenants for storage space. Lease income is recognized on a straight-line basis over the term of the relevant lease agreement.

Crude Marketing Revenues—Crude marketing revenues consist of marketing revenue related to Canadian crude oil. The revenues are recognized over time, i.e., as the services are rendered and the customer simultaneously receives and consumes the benefit over time.

Other Revenue—Other revenue primarily consists of revenue related to the handling, storage and sale of raw materials. Other revenue consists of two performance obligations: handling and storage of raw materials. The revenues are recognized over time, i.e., as the services are rendered and the customer simultaneously receives and consumes the benefit over time.

Additionally, other revenue consists of revenue related to derivative trading activities. See Commodity Derivatives below for additional information.

Payment terms for Infrastructure Revenues are generally short term in nature.

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 recognized in Operating lease right-of-use assets, net and Operating lease liabilities in our Consolidated Balance Sheets, respectively. Finance lease ROU assets are recognized in Property, plant and equipment, net 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. 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.

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FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(Dollars in tables in thousands, unless otherwise noted)

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. 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—We are subject to concentrations of credit risk with respect to amounts due from customers on our finance leases and operating leases. We attempt to limit our credit risk by performing ongoing credit evaluations and, when deemed necessary, enter into collateral arrangements. During both the three and nine months ended September 30, 2021 and 2020, one customer in the Aviation Leasing segment accounted for approximately 10% of total revenue. During the three months ended September 30, 2021, one customer in the Transtar segment accounted for approximately 14% of total revenue.

As of September 30, 2021, there were two customers in the Aviation Leasing segment that represented 26% and 10% of total accounts receivable, net and one customer in the Jefferson Terminal segment that represented 21% of total accounts receivable, net. As of December 31, 2020, accounts receivable from 2 customers in the Aviation Leasing segment represented 40% and 15% of total accounts receivable, net.

We maintain cash and restricted cash balances, which generally exceed federally insured limits, and subject us to credit risk, in high credit quality financial institutions. We monitor the financial condition of these institutions and have not experienced any losses associated with these accounts.

Allowance for Doubtful Accounts—We determine the allowance for doubtful accounts based on our assessment of the collectability of our receivables on a customer-by-customer basis. The allowance for doubtful accounts was $4.9 million and $4.6 million as of September 30, 2021 and December 31, 2020, respectively. There was bad debt expense of $1.6 million and $0.2 million for the three months ended September 30, 2021 and 2020, respectively, and $0.8 million and $2.0 million for the nine months ended September 30, 2021 and 2020, respectively, and is included in Operating expenses in the Consolidated Statements of Operations.

Comprehensive Income (Loss)—Comprehensive income (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. Our comprehensive income (loss) represents net income (loss), as presented in the Consolidated Statements of Operations, adjusted for fair value changes related to other comprehensive income (loss) related to our equity method investees.

Derivative Financial Instruments

Electricity Derivatives—Through our equity method investment in Long Ridge, we enter into derivative contracts as part of a risk management program to mitigate price risk associated with certain electricity price exposures. We primarily use swap derivative contracts, which are agreements to buy or sell a quantity of electricity at a predetermined future date and at a predetermined price.

Cash Flow Hedges

Certain of these derivative instruments are designated and qualify as cash flow hedges. Our share of the derivative's gain or loss is reported as Other comprehensive income (loss) related to equity method investees in our Consolidated Statements of Comprehensive (Loss) Income and recorded in Accumulated other comprehensive (loss) income in our Consolidated Balance Sheets.

Derivatives Not Designated As Hedging Instruments

Certain of these derivative instruments are not designated as hedging instruments for accounting purposes. The change in fair value of these contracts is recognized in Equity in earnings (losses) in unconsolidated entities in the Consolidated Statements of Operations. The cash flow impact of derivative contracts that are not designated as hedging instruments is recognized in Equity in earnings (losses) in unconsolidated entities in our Consolidated Statements of Cash Flows.

Commodity Derivatives—We also enter into short-term and long-term crude forward contracts. Gains and losses related to our crude sales and purchase derivatives are recorded on a gross basis and are included in Crude marketing revenues and Operating expenses, respectively, in our Consolidated Statements of Operations. The cash flow impact of these derivatives is recognized in Change in fair value of non-hedge derivatives in our Consolidated Statements of Cash Flows.

Additionally, depending on market conditions, we enter into short-term forward purchase and sales contracts for butane. Gains and losses related to our butane derivatives are recorded on a net basis and are included in Other revenue in our Consolidated Statements of Operations, as these contracts are considered part of central operating activities. The cash flow impact of these derivatives is recognized in Change in fair value of non-hedge derivatives in our Consolidated Statements of Cash Flows.

See Note 12 for additional details related to our commodity derivatives.

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FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(Dollars in tables in thousands, unless otherwise noted)

Some of our derivatives are used for speculative purposes. We record all derivative assets and liabilities on a gross basis at fair value, which are included in Other assets and Other liabilities, respectively, in our Consolidated Balance Sheets.

Other Assets—Other assets is primarily comprised of lease incentives of $44.6 million and $55.1 million, purchase deposits of $12.2 million and $6.1 million, prepaid expenses of $23.7 million and $10.1 million, notes receivable of $31.7 million and $0.7 million, maintenance right assets of $22.6 million and $6.4 million and aircraft engine modules, spare parts and used material inventory of $82.3 million and $58.2 million as of September 30, 2021 and December 31, 2020, respectively.

Dividends—Dividends are recorded if and when declared by the Board of Directors. For both the three and nine months ended September 30, 2021 and 2020, the Board of Directors declared cash dividends of $0.33 and $0.99 per common share, respectively.

Additionally, in the quarter ended September 30, 2021, the Board of Directors declared cash dividends on the Series A Preferred Shares, Series B Preferred Shares and Series C Preferred Shares of $0.52, $0.50 and $0.52 per share, respectively.

Recent Accounting Pronouncements—In March 2020 and January 2021, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting and ASU 2021-01, Reference Rate Reform: Scope, respectively. Together, the ASUs temporarily simplify the accounting for contract modifications, including hedging relationships, due to the transition from LIBOR and other interbank offered rates to alternative reference interest rates. For example, entities can elect not to remeasure the contracts at the modification date or reassess a previous accounting determination if certain conditions are met. Additionally, entities can elect to continue applying hedge accounting for hedging relationships affected by reference rate reform if certain conditions are met. The new standard was effective upon issuance and generally can be applied to applicable contract modifications through December 31, 2022. Adoption did not have a material impact on our consolidated financial statements.

In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes (Topic 740). This standard simplifies the accounting for income taxes by eliminating certain exceptions to the guidance in ASC 740 related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. The standard also simplifies aspects of the accounting for franchise taxes and enacted changes in tax laws or rates and clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill. The standard is effective for public companies for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020 and early adoption is permitted. We adopted this guidance in the first quarter of 2021, which did not have a material impact on our consolidated financial statements.

Unadopted Accounting Pronouncements—In July 2021, the FASB issued ASU 2021-05, Leases (Topic 842): Lessors—Certain Leases with Variable Lease Payments. This ASU requires lessors to classify and account for a lease with variable lease payments that do not depend on a reference index or a rate as an operating lease if (i) the lease would have been classified as a sales-type lease or a direct financing lease under Topic 842 and (ii) the lessor would have otherwise recognized a day-one loss. This standard is effective for all reporting periods beginning after December 15, 2021. We are currently assessing the impact this guidance may have on our consolidated financial statements.

3. DISCONTINUED OPERATIONS

In December 2019, we completed the sale of substantially all of our railroad business (“CMQR”), which was previously reported as our Railroad segment. Under ASC 205-20, this disposition met the criteria to be reported as discontinued operations. Accordingly, the results of operations of CMQR have been reported as discontinued operations for all periods presented. During the nine months ended September 30, 2020, we recognized a gain on sale of $1.3 million which is reported in Net income from discontinued operations, net of income taxes in the Consolidated Statements of Operations. There were no non-cash items or capital expenditures during the nine months ended September 30, 2020.

4. ACQUISITION OF TRANSTAR, LLC

On July 28, 2021, we completed the acquisition for 100% of the equity interests of Transtar, LLC (“Transtar”) from United States Steel Corporation (“USS”) for total consideration of $636.0 million. Transtar is comprised of 5 freight railroads and one switching company, of which two railroads are connected to USS’s largest production facilities. We also entered into an exclusive rail partnership with USS, under which we will provide rail service to USS for an initial term of 15 years with minimum volume commitments for the first five years. Transtar operates as a separate reportable segment within our Infrastructure business. See Note 19 for additional information. The results of operations at Transtar have been included in the Consolidated Statements of Operations as of the effective date of the acquisition. In connection with the acquisition, we recorded $3.9 million and $7.0 million of acquisition and transaction expense during the three and nine months ended September 30, 2021, respectively.

We funded the transaction with bridge loans in an aggregate principal amount of $650 million. In September 2021, we issued new equity and debt and repaid in full the bridge loans. See Notes 10 and 20 for additional information.

The following fair values assigned to assets acquired and liabilities assumed are preliminary based on management’s estimates and assumptions. The final valuation and related allocation of the purchase price is subject to change as additional information is received and will be completed no later than 12 months after the closing date. The final acquisition accounting adjustments may

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FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(Dollars in tables in thousands, unless otherwise noted)

be materially different and may include (i) changes in fair values of Property, plant and equipment and associated salvage values; (ii) changes in allocations to Intangible assets, such as above or below market leases, customer relationships, as well as goodwill; and, (iii) other changes to assets and liabilities, such as working capital accounts and inventory.

The following table summarizes the preliminary allocation of the purchase price, as presented in our Consolidated Balance Sheets:

Fair value of assets acquired:
Cash and cash equivalents	$	8,610
Accounts receivable, net	18,625
Operating lease right-of-use assets, net	10,831
Property, plant and equipment, net	506,479
Intangible assets, net	62,500
Other assets	15,594
Total assets	622,639
Fair value of liabilities assumed:
Accounts payable and accrued liabilities	47,010
Operating lease liabilities	10,689
Pension and other postretirement benefits (1)	37,552
Other liabilities	8,587
Total liabilities	103,838
Goodwill (2)	117,206
Total purchase consideration	$	636,007

________________________________________________________

(1) Included in Other liabilities in the Consolidated Balance Sheets.

(2) Goodwill is primarily attributable to the assembled workforce of Transtar and the synergies expected to be achieved. This goodwill is assigned to the new Transtar segment and is tax deductible for income tax purposes.

The following table presents the identifiable intangible assets and their estimated useful lives:

	Estimated useful life in years	Fair value
Above/below market leases	2 - 7	$	1,500
Customer relationships	13 - 15	61,000
Total		$	62,500

The following table presents the property, plant and equipment and their estimated useful lives:

	Estimated useful life in years	Fair value
Railcars and locomotives	1 - 40	$	126,055
Track and track related assets	1 - 40	88,121
Land, site improvements and rights	N/A	91,890
Bridges and tunnels	15 - 55	176,309
Buildings and improvements	3 - 25	12,533
Railroad equipment	2 - 15	2,712
Terminal machinery and equipment	2 - 15	3,215
Vehicles	2 - 5	3,538
Construction in progress	N/A	1,928
Computer hardware and software	2 - 22	178
Total		$	506,479

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FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(Dollars in tables in thousands, unless otherwise noted)

The unaudited financial information in the table below summarizes the combined results of operations of FTAI and Transtar on a pro forma basis, as though the companies had been combined as of January 1, 2020. These pro forma results were based on estimates and assumptions which we believe are reasonable. The pro forma adjustments are primarily comprised of the following:

•The allocation of the purchase price and related adjustments, including adjustments to depreciation and amortization expense related to the fair value of property, plant and equipment and intangible assets acquired;

•Impacts of debt financing, including interest for debt issued and amortization of deferred financing costs;

•The exclusion of acquisition-related costs incurred during the three and nine months ended September 30, 2021 and allocation of substantially all acquisition-related costs to the nine months ended September 30, 2020; and

•Associated tax-related impacts of adjustments.

The pro forma financial information is presented for informational purposes only and is not indicative of the results of operations that would have been achieved if the acquisition had taken place as of January 1, 2020.

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Total revenue	$	146,233	$	111,415	$	389,569	$	374,184
Net loss attributable to shareholders	(24,778)		(23,549)		(87,666)		(62,521)

5. LEASING EQUIPMENT, NET

Leasing equipment, net is summarized as follows:

	September 30, 2021		December 31, 2020
Leasing equipment	$	2,137,509	$	2,042,404
Less: accumulated depreciation	(440,915)		(407,145)
Leasing equipment, net	$	1,696,594	$	1,635,259

During the nine months ended September 30, 2021, we evaluated our leasing equipment portfolio and identified certain assets with indicators of impairment, including, but not limited to, the redelivery of unserviceable leasing equipment and a decline in market values due to the ongoing COVID-19 pandemic for leasing equipment we have decided to sell. For these assets, we performed a recoverability assessment at the individual asset level and determined that the carrying amounts exceeded the estimated future undiscounted net cash flows and these assets were impaired. To determine fair value, we used both a market approach, using quoted market prices for the same or similar assets, and an income approach, using discounted cash flows and an estimated discount rate. As a result, we adjusted the carrying value of these assets to fair value and recognized transactional impairment charges of $3.0 million, net of redelivery compensation.

The following table presents information related to our acquisitions and dispositions of aviation leasing equipment during the nine months ended September 30, 2021:

Acquisitions:
Aircraft	24
Engines	44
Dispositions:
Aircraft	4
Engines	31

Depreciation expense for leasing equipment is summarized as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Depreciation expense for leasing equipment	$	36,406	$	35,104	$	107,000	$	104,121

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FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(Dollars in tables in thousands, unless otherwise noted)

6. FINANCE LEASES, NET

Finance leases, net are summarized as follows:

	September 30, 2021		December 31, 2020
Finance leases	$	16,148	$	9,389
Unearned revenue	(2,353)		(2,462)
Finance leases, net	$	13,795	$	6,927

During the nine months ended September 30, 2021, we entered into 52-month sales-type lease arrangements for 5 airframes.

7. PROPERTY, PLANT AND EQUIPMENT, NET

Property, plant and equipment, net is summarized as follows:

	September 30, 2021		December 31, 2020
Land, site improvements and rights	$	151,185	$	52,047
Construction in progress	126,537		425,261
Bridges and tunnels	176,310		—
Buildings and improvements	18,826		4,491
Terminal machinery and equipment	937,319		557,788
Track and track related assets	96,497		2,349
Railroad equipment	7,792		5,560
Railcars and locomotives	126,429		—
Computer hardware and software	5,337		5,101
Furniture and fixtures	3,113		2,449
Other	10,033		5,870
	1,659,378		1,060,916
Less: accumulated depreciation	(131,608)		(96,553)
Property, plant and equipment, net	$	1,527,770	$	964,363

During the nine months ended September 30, 2021, we added property, plant and equipment and placed additional assets into service of $598.5 million, which primarily consist of assets acquired in our acquisition of Transtar and terminal machinery and equipment placed in service or under development at Jefferson Terminal and Repauno.

Depreciation expense for property, plant and equipment is summarized as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Depreciation expense	$	15,291	$	6,634	$	34,826	$	19,757

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FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(Dollars in tables in thousands, unless otherwise noted)

8. INVESTMENTS

The following table presents the ownership interests and carrying values of our investments:

			Carrying Value
	Investment	Ownership Percentage	September 30, 2021		December 31, 2020
Advanced Engine Repair JV	Equity method	25%	$	21,670	$	22,721
Intermodal Finance I, Ltd.	Equity method	51%	—		—
Long Ridge Terminal LLC	Equity method	50%	35,538		122,539
FYX Trust Holdco LLC	Equity	14%	1,255		1,255
GM-FTAI Holdco LLC	Equity method	50%	52,500		—
Investments			$	110,963	$	146,515

We did not recognize any other-than-temporary impairments for the three and nine months ended September 30, 2021 or 2020.

The following table presents our proportionate share of equity in income (losses):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Advanced Engine Repair JV	$	(369)	$	(247)	$	(1,050)	$	(1,432)
Intermodal Finance I, Ltd.	76		32		452		(51)
Long Ridge Terminal LLC	(3,789)		(2,286)		(9,262)		(3,962)
Total	$	(4,082)	$	(2,501)	$	(9,860)	$	(5,445)

Equity Method Investments

Long Ridge Terminal LLC

In December 2019, Ohio River Shareholder LLC (“ORP”) contributed its equity interests in Long Ridge into Long Ridge Terminal LLC and sold a 49.9% interest (the “Long Ridge Transaction”) for $150 million in cash, plus an earn out. We no longer have a controlling interest in Long Ridge but still maintain significant influence through our retained interest and, therefore, now account for this investment in accordance with the equity method. Following the sale we deconsolidated ORP, which held the assets of Long Ridge.

Advanced Engine Repair JV

In December 2016, we invested $15 million for a 25% interest in an advanced engine repair joint venture. We focus on developing new cost savings programs for engine repairs. We exercise significant influence over this investment and account for this investment as an equity method investment.

In August 2019, we expanded the scope of our joint venture and invested an additional $13.5 million and maintained a 25% interest.

GM-FTAI Holdco LLC

In September 2021, through GM-FTAI Holdco LLC, we invested $52.5 million for a 50% interest in Aleon and a 1% interest in GMR. Aleon plans to develop a lithium-ion battery recycling business across the United States. Each planned location will collect, discharge and disassemble lithium-ion batteries to extract various metals in high-purity form for resale into the lithium-ion battery production market. GMR specializes in recycling spent catalyst produced in the petroleum refining industry.

Equity Investments

FYX Trust Holdco LLC

In July 2020, we invested $1.3 million for a 14% interest in an operating company that provides roadside assistance services for the intermodal and over-the-road trucking industries. FYX Trust Holdco LLC (“FYX”) has developed a mobile and web-based application that connects fleet managers, owner-operators, and drivers with repair vendors to efficiently and reliably quote, dispatch, monitor, and bill roadside repair services.

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FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(Dollars in tables in thousands, unless otherwise noted)

9. INTANGIBLE ASSETS AND LIABILITIES, NET

Intangible assets and liabilities, net are summarized as follows:

	September 30, 2021
	Aviation Leasing		Jefferson Terminal		Transtar		Total
Intangible assets
Acquired favorable lease intangibles	$	42,751	$	—	$	1,500	$	44,251
Less: Accumulated amortization	(34,092)		—		(63)		(34,155)
Acquired favorable lease intangibles, net	8,659		—		1,437		10,096
Customer relationships	—		35,513		61,000		96,513
Less: Accumulated amortization	—		(25,150)		(722)		(25,872)
Acquired customer relationships, net	—		10,363		60,278		70,641
Total intangible assets, net	$	8,659	$	10,363	$	61,715	$	80,737
Intangible liabilities
Acquired unfavorable lease intangibles	$	7,148	$	—	$	100	$	7,248
Less: Accumulated amortization	(5,886)		—		(2)		(5,888)
Acquired unfavorable lease intangibles, net	$	1,262	$	—	$	98	$	1,360

	December 31, 2020
	Aviation Leasing		Jefferson Terminal		Transtar		Total
Intangible assets
Acquired favorable lease intangibles	$	35,349	$	—	$	—	$	35,349
Less: Accumulated amortization	(29,591)		—		—		(29,591)
Acquired favorable lease intangibles, net	5,758		—		—		5,758
Customer relationships	—		35,513		—		35,513
Less: Accumulated amortization	—		(22,485)		—		(22,485)
Acquired customer relationships, net	—		13,028		—		13,028
Total intangible assets, net	$	5,758	$	13,028	$	—	$	18,786
Intangible liabilities
Acquired unfavorable lease intangibles	$	7,151	$	—	$	—	$	7,151
Less: Accumulated amortization	(4,604)		—		—		(4,604)
Acquired unfavorable lease intangibles, net	$	2,547	$	—	$	—	$	2,547

Intangible liabilities relate to unfavorable lease intangibles and are included as a component of Other liabilities in the Consolidated Balance Sheets.

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FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(Dollars in tables in thousands, unless otherwise noted)

Amortization of intangible assets and liabilities is as follows:

	Classification in Consolidated Statements of Operations	Three Months Ended September 30,				Nine Months Ended September 30,
		2021		2020		2021		2020
Lease intangibles	Equipment leasing revenues	$	1,266	$	953	$	3,216	$	3,016
Lease intangibles	Depreciation and amortization	61		—		61		—
Customer relationships	Depreciation and amortization	1,610		888		3,387		2,665
Total		$	2,937	$	1,841	$	6,664	$	5,681

As of September 30, 2021, estimated net annual amortization of intangibles is as follows:

Remainder of 2021	$	2,818
2022	10,333
2023	9,577
2024	8,374
2025	5,209
Thereafter	43,066
Total	$	79,377

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FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(Dollars in tables in thousands, unless otherwise noted)

10. DEBT, NET

Our debt, net is summarized as follows:

	September 30, 2021				December 31, 2020
	Outstanding Borrowings		Stated Interest Rate	Maturity Date	Outstanding Borrowings
Loans payable
Revolving Credit Facility (1)	$	50,000	(i) Base Rate + 2.00%; or (ii) Adjusted Eurodollar Rate + 3.00%	1/31/22	$	—
DRP Revolver (2)	25,000		(i) Base Rate + 1.50%; or (ii) Base Rate + 2.50% (Eurodollar)	11/5/21	25,000
EB-5 Loan Agreement	26,100		5.75%	1/25/26	—
Total loans payable	101,100				25,000
Bonds payable
Series 2020 Bonds	263,980		(i) Tax Exempt Series 2020A Bonds: 3.625% (ii) Tax Exempt Series 2020A Bonds: 4.00% (iii) Taxable Series 2020B Bonds: 6.00%	(i) 1/1/35 (ii) 1/1/50 (iii) 1/1/25	263,980
Series 2021 Bonds	425,000		(i) Series 2021A Bonds: 1.875% to 3.000% (ii) Series 2021B Bonds: 4.100%	(i) 1/1/26 to 1/1/50 (ii) 1/1/28	—
Senior Notes due 2022 (3)	—		N/A	N/A	399,331
Senior Notes due 2025 (4)	852,320		6.50%	10/1/25	852,673
Senior Notes due 2027	400,000		9.75%	8/1/27	400,000
Senior Notes due 2028 (5)	1,002,494		5.50%	5/1/28	—
Total bonds payable	2,943,794				1,915,984
Debt	3,044,894				1,940,984
Less: Debt issuance costs	(60,905)				(36,222)
Total debt, net	$	2,983,989			$	1,904,762
Total debt due within one year	$	75,000			$	25,000

________________________________________________________

(1) Requires a quarterly commitment fee at a rate of 0.50% on the average daily unused portion, as well as customary letter of credit fees and agency fees.

(2) Requires a quarterly commitment fee at a rate of 0.875% on the average daily unused portion, as well as customary letter of credit fees and agency fees.

(3) Includes an unamortized discount of $2,230 and an unamortized premium of $1,561 at December 31, 2020.

(4) Includes an unamortized discount of $3,713 and $4,303 at September 30, 2021 and December 31, 2020, respectively, and an unamortized premium of $6,033 and $6,976 at September 30, 2021 and December 31, 2020, respectively.

(5) Includes an unamortized premium of $2,494 at September 30, 2021.

EB-5 Loan Agreement—On January 25, 2021, Jefferson entered into a non-recourse loan agreement under the U.S. Citizenship and Immigration Services EB-5 Program (“EB-5 Loan Agreement”) to pay for the development, construction and acquisition of certain facilities at Jefferson Terminal. The maximum aggregate principal amount available under the EB-5 Loan Agreement is $61.2 million, of which $26.1 million is available under the first tranche and $35.1 million is available under the second tranche. The loans mature in 5 years from the funding of each individual tranche with an option to extend the maturity for both tranches by two one-year periods. If the option to extend the maturity is exercised, the interest rate will increase to 6.25% from 5.75% for the extension period.

Senior Notes due 2028—On April 12, 2021, we issued $500 million aggregate principal amount of senior unsecured notes due 2028 (the “Senior Notes due 2028”). The Senior Notes due 2028 bear interest at a rate of 5.50% per annum, payable semi-annually in arrears on May 1 and November 1 of each year, commencing on November 1, 2021. We used a portion of the proceeds to redeem in full the Senior Notes due 2022 (see below), and used the remaining net proceeds for general corporate purposes, including the funding of acquisitions and investments, including aviation investments.

On September 24, 2021, we issued an additional $500 million aggregate principal amount of the Senior Notes due 2028 at an offering price of 100.50%, plus accrued interest from and including April 12, 2021. We used a portion of the net proceeds in the amount of $358.3 million to repay in full the Bridge Loans (as defined below).

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FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(Dollars in tables in thousands, unless otherwise noted)

Senior Notes due 2022—On May 7, 2021, we redeemed in full the Senior Notes due 2022, which totaled $400 million aggregate principal plus accrued and unpaid interest, and recognized a loss on extinguishment of debt of $3.3 million.

Bridge Loan Agreement—On July 28, 2021, in connection with our acquisition of Transtar, we entered into an agreement for senior unsecured bridge term loans (“Bridge Loans”) in an aggregate principal amount of $650 million, which we used to finance the acquisition and other certain fees associated with the transaction.

On September 14, 2021, we used net proceeds in the amount of $291.7 million from an equity offering (see Note 20) to repay a portion of the Bridge Loans. On September 24, 2021, we used a portion of the net proceeds in the amount of $358.3 million from our issuance of the Senior Notes due 2028 to repay in full the Bridge Loans. We recorded fees of approximately $12.2 million which are included in Interest expense in the Consolidated Statements of Operations.

Series 2021 Bonds—On August 18, 2021, Jefferson issued $425 million aggregate principal amount of Series 2021 Bonds, which are designated as $225 million of Series 2021A Dock and Wharf Facility Revenue Bonds (the “Series 2021A Bonds”) and $200 million of Series 2021B Taxable Facility Revenue Bonds (the “Taxable Series 2021B Bonds”).

The Series 2021A Bonds consist of:

i)$39.1 million aggregate principal amount of Serial Bonds maturing between January 1, 2026 and January 1, 2031, and bearing interest at specified fixed rates ranging from 1.875% to 2.625% per annum,

ii)$38.2 million aggregate principal amount of Term Bonds maturing January 1, 2036, and bearing interest at a fixed rate of 2.750% per annum,

iii)$44.9 million aggregate principal amount of Term Bonds maturing January 1, 2041, and bearing interest at a fixed rate of 2.875% per annum, and

iv)$102.8 million aggregate principal amount of Term Bonds maturing January 1, 2050, and bearing interest at a fixed rate of 3.00% per annum.

The Taxable Series 2021B Bonds will mature on January 1, 2028, and bear interest at a fixed rate of 4.100% per annum.

Jefferson used a portion of the net proceeds from the Series 2021 Bonds to repay certain indebtedness, and intend to use a portion of the net proceeds to pay for or reimburse the cost of development, construction and acquisition of certain facilities.

We were in compliance with all debt covenants as of September 30, 2021.

11. 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 us to develop our 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).

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FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(Dollars in tables in thousands, unless otherwise noted)

The following tables set forth our financial assets measured at fair value on a recurring basis as of September 30, 2021 and December 31, 2020, 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, 2021		September 30, 2021
	Total		Level 1		Level 2		Level 3		Valuation Technique
Assets
Cash and cash equivalents	$	176,052	$	176,052	$	—	$	—	Market
Restricted cash	283,398		283,398		—		—		Market
Derivative assets	1,979		—		1,979		—		Income
Total assets	$	461,429	$	459,450	$	1,979	$	—
	Fair Value as of		Fair Value Measurements Using Fair Value Hierarchy as of
	December 31, 2020		December 31, 2020
	Total		Level 1		Level 2		Level 3		Valuation Technique
Assets
Cash and cash equivalents	$	121,703	$	121,703	$	—	$	—	Market
Restricted cash	39,715		39,715		—		—		Market
Total	$	161,418	$	161,418	$	—	$	—

Our 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.

Except as discussed below, our financial instruments other than cash and cash equivalents and restricted cash consist principally of accounts receivable, accounts payable and accrued liabilities, loans payable, bonds payable, security deposits, maintenance deposits and management fees payable, whose fair values approximate their carrying values based on an evaluation of pricing data, vendor quotes, and historical trading activity or due to their short maturity profiles.

The fair value of our bonds and notes payable reported as debt, net in the Consolidated Balance Sheets are presented in the table below:

	September 30, 2021		December 31, 2020
Series 2020 A Bonds (1)	$	191,362	$	186,306
Series 2020 B Bonds (1)	81,768		79,723
Series 2021 A Bonds (1)	219,071		—
Series 2021 B Bonds (1)	196,042		—
Senior Notes due 2022	—		403,536
Senior Notes due 2025	876,299		888,701
Senior Notes due 2027	453,256		460,340
Senior Notes due 2028	1,008,960		—

________________________________________________________

(1) Fair value is based upon market prices for similar municipal securities.

The fair value of all other items reported as debt, net in the Consolidated Balance Sheets approximate their carrying values due to their bearing market rates of interest and are classified as Level 2 within the fair value hierarchy.

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FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(Dollars in tables in thousands, unless otherwise noted)

We measure the fair value of certain assets and liabilities on a non-recurring basis when 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. We record such assets at fair value at acquisition or 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 our assumptions as to future cash flows from operation of the underlying businesses and the leasing and eventual sale of assets.

12. DERIVATIVE FINANCIAL INSTRUMENTS

Commodity Derivatives

Crude Oil

Depending on market conditions, we source crude oil from producers in Canada, arranging logistics to Jefferson Terminal and marketing crude oil to third parties. We exited this strategy in the fourth quarter of 2019. These crude oil forward purchase and sales contracts are not designated in hedging relationships.

Butane

Depending on market conditions, Repauno enters into forward purchase and sales contracts for butane. These derivatives are short-term in nature and are used for trading purposes.

The following table presents information related to our butane derivative contracts:

	September 30, 2021		December 31, 2020
Notional Amount (BBL in thousands)	493		N/A
Fair Value of Assets (1)	$	1,979	$	—
Term	1 to 6 months		N/A

________________________________________________________

(1) Included in Other assets in the Consolidated Balance Sheets.

The following table presents a summary of the changes in fair value for all Level 3 derivatives:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Beginning Balance	$	—	$	—	$	—	$	181
Net losses recognized in earnings	—		—		—		(181)
Ending Balance	$	—	$	—	$	—	$	—

There were no transfers into or out of Level 3 during the periods presented.

13. REVENUES

We disaggregate our revenue from contracts with customers by products and services provided for each of our segments, as we believe it best depicts the nature, amount, timing and uncertainty of our revenue. Revenues attributed to our Equipment Leasing business unit are within the scope of ASC 842, while revenues attributed to our Infrastructure business unit are within the scope of ASC 606, unless otherwise noted. Under the provisions of ASC 842, we have elected to exclude sales and other similar taxes from lease payments in arrangements where we are a lessor.

25

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(Dollars in tables in thousands, unless otherwise noted)

	Three Months Ended September 30, 2021
	Equipment Leasing		Infrastructure
	Aviation Leasing		Jefferson Terminal		Ports and Terminals		Transtar		Corporate and Other		Total
Equipment leasing revenues
Lease income	$	40,392	$	—	$	—	$	—	$	2,386	$	42,778
Maintenance revenue	40,252		—		—		—		—		40,252
Finance lease income	439		—		—		—		—		439
Other revenue	12,855		—		—		—		2,850		15,705
Total equipment leasing revenues	93,938		—		—		—		5,236		99,174
Infrastructure revenues
Lease income	—		433		—		358		—		791
Rail revenues	—		—		—		24,182		—		24,182
Terminal services revenues	—		11,469		—		—		—		11,469
Crude marketing revenues	—		—		—		—		—		—
Other revenue	—		—		(458)		—		804		346
Total infrastructure revenues	—		11,902		(458)		24,540		804		36,788
Total revenues	$	93,938	$	11,902	$	(458)	$	24,540	$	6,040	$	135,962

	Three Months Ended September 30, 2020
	Equipment Leasing		Infrastructure
	Aviation Leasing		Jefferson Terminal		Ports and Terminals		Transtar		Corporate and Other		Total
Equipment leasing revenues
Lease income	$	38,537	$	—	$	—	$	—	$	1,903	$	40,440
Maintenance revenue	25,609		—		—		—		—		25,609
Finance lease income	591		—		—		—		—		591
Other revenue	1,754		—		—		—		1,405		3,159
Total equipment leasing revenues	66,491		—		—		—		3,308		69,799
Infrastructure revenues
Lease income	—		368		—		—		—		368
Terminal services revenues	—		11,329		—		—		—		11,329
Crude marketing revenues	—		—		—		—		—		—
Other revenue	—		—		1,242		—		971		2,213
Total infrastructure revenues	—		11,697		1,242		—		971		13,910
Total revenues	$	66,491	$	11,697	$	1,242	$	—	$	4,279	$	83,709

26

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(Dollars in tables in thousands, unless otherwise noted)

	Nine Months Ended September 30, 2021
	Equipment Leasing		Infrastructure
	Aviation Leasing		Jefferson Terminal		Ports and Terminals		Transtar		Corporate and Other		Total
Equipment leasing revenues
Lease income	$	120,389	$	—	$	—	$	—	$	5,518	$	125,907
Maintenance revenue	87,763		—		—		—		—		87,763
Finance lease income	1,285		—		—		—		—		1,285
Other revenue	19,045		—		—		—		3,352		22,397
Total equipment leasing revenues	228,482		—		—		—		8,870		237,352
Infrastructure revenues
Lease income	—		1,295		—		358		—		1,653
Rail revenues	—		—		—		24,182		—		24,182
Terminal services revenues	—		32,853		157		—		—		33,010
Crude marketing revenues	—		—		—		—		—		—
Other revenue	—		—		9,825		—		4,004		13,829
Total infrastructure revenues	—		34,148		9,982		24,540		4,004		72,674
Total revenues	$	228,482	$	34,148	$	9,982	$	24,540	$	12,874	$	310,026

	Nine Months Ended September 30, 2020
	Equipment Leasing		Infrastructure
	Aviation Leasing		Jefferson Terminal		Ports and Terminals		Transtar		Corporate and Other		Total
Equipment leasing revenues
Lease income	$	127,983	$	—	$	—	$	—	$	6,904	$	134,887
Maintenance revenue	84,709		—		—		—		—		84,709
Finance lease income	1,433		—		—		—		—		1,433
Other revenue	10,617		—		—		—		4,436		15,053
Total equipment leasing revenues	224,742		—		—		—		11,340		236,082
Infrastructure revenues
Lease income	—		775		—		—		—		775
Terminal services revenues	—		40,534		—		—		—		40,534
Crude marketing revenues	—		8,210		—		—		—		8,210
Other revenue	—		—		1,556		—		3,701		5,257
Total infrastructure revenues	—		49,519		1,556		—		3,701		54,776
Total revenues	$	224,742	$	49,519	$	1,556	$	—	$	15,041	$	290,858

Presented below are the contracted minimum future annual revenues to be received under existing operating and finance leases across several market sectors as of September 30, 2021:

	Operating Leases		Finance Leases
Remainder of 2021	$	46,354	$	408
2022	134,253		1,291
2023	96,095		531
2024	69,352		113
2025	47,450		10
Thereafter	32,865		—
Total	$	426,369	$	2,353

27

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(Dollars in tables in thousands, unless otherwise noted)

14. LEASES

We have commitments as lessees under lease arrangements primarily for real estate, equipment and vehicles. Our leases have remaining lease terms ranging from approximately two months to 41 years.

The following table presents lease related costs:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Amortization of right-of-use assets	$	161	$	—	$	161	$	—
Interest on lease liabilities	11		—		11		—
Finance lease expense	172		—		172		—
Operating lease expense	1,780		1,230		4,227		3,594
Short-term lease expense	320		84		900		534
Variable lease expense	540		111		1,177		1,215
Total lease expense	$	2,812	$	1,425	$	6,476	$	5,343

The following table presents information related to our operating leases as of and for the nine months ended September 30, 2021:

Right-of-use assets, net	$	74,643
Lease liabilities	74,134
Weighted average remaining lease term	33.6 years
Weighted average incremental borrowing rate	5.6		%
Cash paid for amounts included in the measurement of operating lease liabilities	$	4,208

The following table presents future minimum lease payments under non-cancellable operating leases as of September 30, 2021:

Remainder of 2021	$	4,224
2022	9,589
2023	7,875
2024	6,901
2025	6,677
Thereafter	148,455
Total undiscounted lease payments	183,721
Less: Imputed interest	109,587
Total lease liabilities	$	74,134

In July 2021, in connection with our acquisition of Transtar, we assumed ROU assets of approximately $10.8 million with a weighted average remaining term of 5.5 years.

Additionally, during the nine months ended September 30, 2021, we entered into a new lease for real estate, which had a ROU asset value of $2.7 million and a lease term of approximately five years at commencement.

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FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(Dollars in tables in thousands, unless otherwise noted)

15. EQUITY-BASED COMPENSATION

In 2015, we established a Nonqualified Stock Option and Incentive Award Plan (“Incentive Plan”) which provides for the ability to grant 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 us, each as determined by the Compensation Committee of the Board of Directors.

As of September 30, 2021, the Incentive Plan provides for the issuance of up to 29.8 million shares. We account for equity-based compensation expense in accordance with ASC 718 Compensation-Stock Compensation 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 related to our stock-based compensation arrangements:

	Three Months Ended September 30,				Nine Months Ended September 30,				Remaining Expense To Be Recognized, If All Vesting Conditions Are Met		Weighted Average Remaining Contractual Term (in years)
	2021		2020		2021		2020
Restricted Shares	$	553	$	427	$	2,664	$	857	$	4,712	1.2
Common Units	175		194		617		466		1,230		1.1
Total	$	728	$	621	$	3,281	$	1,323	$	5,942

Options

During the nine months ended September 30, 2021, FIG LLC (the “Manager”), an affiliate of Fortress Investment Group LLC, transferred 25,998 of its options to certain of the Manager’s employees. Additionally, certain of the Manager’s employees exercised 165,268 options at a weighted average exercise price of $18.22 and received a net 55,092 common shares.

In connection with our March 2021 offering of preferred shares (see Note 20), we granted options to the Manager related to 355,932 common shares at an exercise price of $29.50, which had a grant date fair value of $3.7 million. The assumptions used in valuing the options were: a 1.70% risk-free rate, a 3.16% dividend yield, a 45.60% volatility and a ten-year term.

In connection with our September 2021 offering of common shares (see Note 20), we granted options to the Manager related to 1,200,000 common shares at an exercise price of $25.50, which had a grant date fair value of $9.2 million. The assumptions used in valuing the options were: a 1.34% risk-free rate, a 3.64% dividend yield, a 44.78% volatility and a ten-year term.

Common Units

During the nine months ended September 30, 2021, we issued 1,052,632 common units of our subsidiary that had a grant date fair value of $1.2 million and vest over three years. These awards are subject to continued employment, and the compensation expense is recognized ratably over the vesting periods. The fair value of these awards was based on the fair value of the operating subsidiary on the grant date, which was 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.

Restricted Shares

During the nine months ended September 30, 2021, we issued restricted shares of our subsidiary that had a grant date fair value of $5.3 million and vest over three years. These awards are subject to continued employment, and the compensation expense is recognized ratably over the vesting periods. The fair value of these awards was based on the fair value of the operating subsidiary on the grant date, which was 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.

16. RETIREMENT BENEFIT PLANS

In connection with the acquisition of Transtar (see Note 4), we assumed certain retirement benefit obligations related to eligible Transtar employees.

Defined Benefit Pensions

Our pension plan covers certain eligible Transtar employees. These plans are noncontributory. Pension benefits earned are generally based on years of service and compensation during active employment.

29

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(Dollars in tables in thousands, unless otherwise noted)

Postretirement Benefits

Our unfunded postretirement plan provides healthcare and life insurance benefits for eligible retirees and dependents of Transtar. Depending on retirement date and employee classification, certain healthcare plans contain contribution and cost-sharing features such as deductibles and co-insurance. The remaining healthcare and life insurance plans are non-contributory.

The following table summarizes our retirement benefit plan costs for the three and nine months ended September 30, 2021. Service costs and interest costs are recorded in Operating expenses and Other (expense) income, respectively, in the Consolidated Statements of Operations.

	Pension Benefits		Postretirement Benefits
Service costs	$	392	$	431
Interest costs	45		139
Total	$	437	$	570

17. INCOME TAXES

The current and deferred components of the income tax benefit included in the Consolidated Statements of Operations are as follows: 

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Current:
Federal	$	74	$	(35)	$	130	$	33
State and local	80		79		241		330
Foreign	31		(27)		(25)		295
Total current provision	185		17		346		658
Deferred:
Federal	(670)		(656)		(2,137)		(1,534)
State and local	—		—		—		—
Foreign	(9)		(1,847)		(174)		(5,458)
Total deferred benefit	(679)		(2,503)		(2,311)		(6,992)
Benefit from income taxes	$	(494)	$	(2,486)	$	(1,965)	$	(6,334)

We are taxed as a flow-through entity for U.S. income tax purposes and our taxable income or loss generated is the responsibility of our owners. Taxable income or loss generated by our corporate subsidiaries is subject to U.S. federal, state and foreign corporate income tax in locations where they conduct business.

Our effective tax rate differs from the U.S. federal tax rate of 21% primarily due to a significant portion of our 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 months ended September 30, 2021, we had not established a liability for uncertain tax positions as no such positions existed. In general, our tax returns and the tax returns of our corporate subsidiaries are subject to U.S. federal, state, local and foreign income tax examinations by tax authorities. Generally, we are not subject to examination by taxing authorities for tax years prior to 2017. 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, 2021.

18. MANAGEMENT AGREEMENT AND AFFILIATE TRANSACTIONS

The Manager is paid annual fees in exchange for advising us on various aspects of our business, formulating our investment strategies, arranging for the acquisition and disposition of assets, arranging for financing, monitoring performance, and managing our 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 our behalf, including the costs of legal, accounting and other administrative activities. Additionally, we have entered into certain incentive allocation arrangements with Master GP, which owns approximately 0.05% of the Partnership and is the general partner of the Partnership.

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 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.

30

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(Dollars in tables in thousands, unless otherwise noted)

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 GAAP excluding our 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 our 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.

One of our 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 our 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. 

Capital Gains Incentive Allocation is calculated and distributable in arrears as of the end of each calendar year and is equal to 10% of our pro rata share of cumulative realized gains from the date of the IPO through the end of the applicable calendar year, net of our 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. 

The following table summarizes the management fees, income incentive allocation and capital gains incentive allocation:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Management fees	$	3,845	$	4,591	$	11,948	$	14,113
Income incentive allocation	—		—		—		—
Capital gains incentive allocation	—		—		—		—
Total	$	3,845	$	4,591	$	11,948	$	14,113

We pay all of our operating expenses, except those specifically required to be borne by the Manager under the Management Agreement. The expenses required to be paid by us include, but are not limited to, issuance and transaction costs incident to the acquisition, disposition and financing of our assets, legal and auditing fees and expenses, the compensation and expenses of our independent directors, the costs associated with the establishment and maintenance of any credit facilities and other indebtedness of ours (including commitment fees, legal fees, closing costs, etc.), expenses associated with other securities offerings of 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 our shareholders, costs incurred by the Manager or its affiliates for travel on our behalf, costs associated with any computer software or hardware that is used for us, costs to obtain liability insurance to indemnify our directors and officers and the compensation and expenses of our transfer agent.

We 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; we do not reimburse the Manager for these expenses.

31

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(Dollars in tables in thousands, unless otherwise noted)

The following table summarizes our reimbursements to the Manager:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Classification in the Consolidated Statements of Operations:
General and administrative	$	1,927	$	2,347	$	6,138	$	6,737
Acquisition and transaction expenses	617		515		1,588		1,562
Total	$	2,544	$	2,862	$	7,726	$	8,299

If we terminate the Management Agreement, we 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 our 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 an offering of our common shares or other equity securities (including securities issued as consideration in an acquisition), we grant the Manager options to purchase common shares in an amount equal to 10% of the number of common shares being sold in the offering (or if the issuance relates to equity securities other than our common shares, options to purchase a number of common shares equal to 10% of the gross capital raised in the equity issuance divided by the fair market value of a common 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 common share as of the date of the equity issuance if it relates to equity securities other than our common shares). Any ultimate purchaser of common shares for which such options are granted may be an affiliate of Fortress.

The following table summarizes amounts due to the Manager, which are included within accounts payable and accrued liabilities in the Consolidated Balance Sheets:

	September 30, 2021		December 31, 2020
Accrued management fees	$	1,211	$	1,461
Other payables	724		1,317

As of September 30, 2021 and December 31, 2020, there were no receivables from the Manager.

Other Affiliate Transactions

As of September 30, 2021 and December 31, 2020 an affiliate of our Manager owns an approximately 20% interest in Jefferson Terminal which has been accounted for as a component of non-controlling interest in consolidated subsidiaries in the consolidated financial statements. The carrying amount of this non-controlling interest at September 30, 2021 and December 31, 2020 was $1.6 million and $17.2 million, respectively.

The following table presents the amount of this non-controlling interest share of net loss:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Non-controlling interest share of net loss	$	7,364	$	3,809	$	18,918	$	12,490

On June 21, 2018, we, through a wholly owned subsidiary, completed a private offering with several third parties (the “Holders”) to tender their approximately 20% stake in Jefferson Terminal. We increased our majority interest in Jefferson Terminal in exchange for Class B Units of another wholly owned subsidiary, which provide the right to convert such Class B Units to a fixed amount of our shares, equivalent to approximately 1.9 million shares, at a Holder’s request. We have the option to satisfy any exchange request by delivering either common shares or cash. The Holders are entitled to receive distributions equivalent to the distributions paid to our shareholders. This transaction resulted in a purchase of non-controlling interest shares. See Note 18 for details related to conversions during the period.

32

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(Dollars in tables in thousands, unless otherwise noted)

In July 2020, we purchased a 14% interest in FYX from an affiliate of our Manager, which retained a non-controlling interest in FYX subsequent to the transaction. Additionally, other investors in FYX are also affiliates of our Manager. See Note 7 for additional information related to FYX.

During the nine months ended September 30, 2021, we granted options to the Manager in connection with the offering of the Series C Preferred Shares (as defined in Note 20) and the offering of common shares in September 2021. See Notes 15 and 20 for additional information.

On May 4, 2021, the Company received a promissory note from Long Ridge Terminal LLC, an affiliate, in exchange for a loan in the principal amount of $5.8 million. The note bears interest at a rate of 10% per annum, with a maturity date of December 31, 2021. The total principal amount plus all accrued and unpaid interest will be due and payable on the maturity date. Interest income was $0.1 million and $0.2 million during the three and nine months ended September 30, 2021.

19. SEGMENT INFORMATION

Our reportable segments represent strategic business units comprised of investments in different types of transportation and infrastructure assets. We have 4 reportable segments which operate in the Equipment Leasing and Infrastructure businesses across several market sectors. Our reportable segments are (i) Aviation Leasing, (ii) Jefferson Terminal, (iii) Ports and Terminals and (iv) Transtar. The Aviation Leasing segment consists of aircraft and aircraft engines held for lease and are typically held long-term. The Jefferson Terminal segment consists of a multi-modal crude oil and refined products terminal and other related assets. The Ports and Terminals segment 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 an equity method investment in Long Ridge, which is a 1,660-acre multi-modal port located along the Ohio River with rail, dock, and multiple industrial development opportunities, including a power plant under construction.

In July 2021, we acquired Transtar and it operates as a separate reportable segment within our Infrastructure business. Transtar is comprised of 5 freight railroads and one switching company that provide rail service to certain manufacturing and production facilities. See Note 4 for additional information.

Corporate and Other primarily consists of debt, unallocated company level general and administrative expenses, and management fees. Additionally, Corporate and Other includes (i) offshore energy related assets, which consist of vessels and equipment that support offshore oil and gas drilling and production which are typically subject to operating leases, (ii) an investment in an unconsolidated entity engaged in the acquisition and leasing of shipping containers and (iii) railroad assets which consist of equipment that support a railcar cleaning business.

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. We evaluate investment performance for each reportable segment primarily based on net income attributable to shareholders and Adjusted EBITDA.

Adjusted EBITDA 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 amortization expense, 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.

We believe that net income (loss) attributable to shareholders, as defined by GAAP, is the most appropriate earnings measurement with which to reconcile Adjusted EBITDA. Adjusted EBITDA should not be considered as an alternative to net income (loss) attributable to shareholders as determined in accordance with GAAP.

33

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(Dollars in tables in thousands, unless otherwise noted)

The following tables set forth certain information for each reportable segment:

I. For the Three Months Ended September 30, 2021

	Three Months Ended September 30, 2021
	Equipment Leasing			Infrastructure
	Aviation Leasing			Jefferson Terminal		Ports and Terminals		Transtar		Corporate and Other		Total
Revenues
Equipment leasing revenues	$	93,938		$	—	$	—	$	—	$	5,236	$	99,174
Infrastructure revenues	—			11,902		(458)		24,540		804		36,788
Total revenues	93,938			11,902		(458)		24,540		6,040		135,962
Expenses
Operating expenses	15,411			12,441		5,272		12,877		6,792		52,793
General and administrative	—			—		—		—		4,422		4,422
Acquisition and transaction expenses	858			—		—		851		5,421		7,130
Management fees and incentive allocation to affiliate	—			—		—		—		3,845		3,845
Depreciation and amortization	34,288			9,405		2,299		5,270		2,106		53,368
Asset impairment	859			—		—		—		—		859
Interest expense	—			4,080		283		37		50,100		54,500
Total expenses	51,416			25,926		7,854		19,035		72,686		176,917
Other income (expense)
Equity in (losses) earnings of unconsolidated entities	(369)			—		(3,789)		—		76		(4,082)
Gain on sale of assets, net	12,685			—		—		—		—		12,685
Interest income	339			—		145		—		(1)		483
Other expense	(1,680)			(2,090)		(4,100)		(197)		(1)		(8,068)
Total other income (expense)	10,975			(2,090)		(7,744)		(197)		74		1,018
Income (loss) from continuing operations before income taxes	53,497		0	(16,114)		(16,056)		5,308		(66,572)		(39,937)
Provision for (benefit from) income taxes	129			47		(1,798)		1,128		—		(494)
Net income (loss) from continuing operations	53,368			(16,161)		(14,258)		4,180		(66,572)		(39,443)
Less: Net loss attributable to non-controlling interests in consolidated subsidiaries	—			(7,189)		(174)		—		—		(7,363)
Less: Dividends on preferred shares	—			—		—		—		6,791		6,791
Net income (loss) from continuing operations attributable to shareholders	$	53,368		$	(8,972)	$	(14,084)	$	4,180	$	(73,363)	$	(38,871)

34

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(Dollars in tables in thousands, unless otherwise noted)

The following table sets forth a reconciliation of Adjusted EBITDA to net loss attributable to shareholders from continuing operations:

	Three Months Ended September 30, 2021
	Equipment Leasing		Infrastructure
	Aviation Leasing		Jefferson Terminal		Ports and Terminals		Transtar		Corporate and Other		Total
Adjusted EBITDA	$	96,002	$	1,946	$	2,766	$	11,466	$	(15,791)	$	96,389
Add: Non-controlling share of Adjusted EBITDA											3,420
Add: Equity in losses of unconsolidated entities											(4,082)
Less: Pro-rata share of Adjusted EBITDA from unconsolidated entities											(7,470)
Less: Interest expense											(54,500)
Less: Depreciation and amortization expense											(59,811)
Less: Incentive allocations											—
Less: Asset impairment charges											(859)
Less: Changes in fair value of non-hedge derivative instruments											(4,594)
Less: Losses on the modification or extinguishment of debt and capital lease obligations											—
Less: Acquisition and transaction expenses											(7,130)
Less: Equity-based compensation expense											(728)
Less: Benefit from income taxes											494
Net loss attributable to shareholders from continuing operations											$	(38,871)

Summary information with respect to our geographic sources of revenue, based on location of customer, is as follows:

	Three Months Ended September 30, 2021
	Equipment Leasing		Infrastructure
	Aviation Leasing		Jefferson Terminal		Ports and Terminals		Transtar		Corporate and Other		Total
Revenues
Asia	$	36,421	$	—	$	—	$	—	$	5,236	$	41,657
Europe	35,708		—		—		—		—		35,708
North America	18,152		11,902		(458)		24,540		804		54,940
South America	3,657		—		—		—		—		3,657
Total	$	93,938	$	11,902	$	(458)	$	24,540	$	6,040	$	135,962

35

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(Dollars in tables in thousands, unless otherwise noted)

II. For the Nine Months Ended September 30, 2021

	Nine Months Ended September 30, 2021
	Equipment Leasing			Infrastructure
	Aviation Leasing			Jefferson Terminal		Ports and Terminals		Transtar		Corporate and Other		Total
Revenues
Equipment leasing revenues	$	228,482		$	—	$	—	$	—	$	8,870	$	237,352
Infrastructure revenues	—			34,148		9,982		24,540		4,004		72,674
Total revenues	228,482			34,148		9,982		24,540		12,874		310,026
Expenses
Operating expenses	28,806			35,939		12,202		12,877		19,149		108,973
General and administrative	—			—		—		—		12,329		12,329
Acquisition and transaction expenses	2,890			—		—		851		9,431		13,172
Management fees and incentive allocation to affiliate	—			—		—		—		11,948		11,948
Depreciation and amortization	100,583			26,438		6,726		5,270		6,257		145,274
Asset impairment	3,048			—		—		—		—		3,048
Interest expense	—			8,496		857		37		115,604		124,994
Total expenses	135,327			70,873		19,785		19,035		174,718		419,738
Other income (expense)
Equity in (losses) earnings of unconsolidated entities	(1,050)			—		(9,262)		—		452		(9,860)
Gain on sale of assets, net	17,467			—		16		—		—		17,483
Loss on extinguishment of debt	—			—		—		—		(3,254)		(3,254)
Interest income	963			—		236		—		23		1,222
Other (expense) income	(1,680)			(2,795)		(4,100)		(197)		1		(8,771)
Total other income (expense)	15,700			(2,795)		(13,110)		(197)		(2,778)		(3,180)
Income (loss) from continuing operations before income taxes	108,855		0	(39,520)		(22,913)		5,308		(164,622)		(112,892)
Provision for (benefit from) income taxes	83			163		(3,265)		1,128		(74)		(1,965)
Net income (loss) from continuing operations	108,772			(39,683)		(19,648)		4,180		(164,548)		(110,927)
Less: Net loss attributable to non-controlling interests in consolidated subsidiaries	—			(18,743)		(206)		—		—		(18,949)
Less: Dividends on preferred shares	—			—		—		—		17,967		17,967
Net income (loss) from continuing operations attributable to shareholders	$	108,772		$	(20,940)	$	(19,442)	$	4,180	$	(182,515)	$	(109,945)

36

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(Dollars in tables in thousands, unless otherwise noted)

The following table sets forth a reconciliation of Adjusted EBITDA to net loss attributable to shareholders from continuing operations:

	Nine Months Ended September 30, 2021
	Equipment Leasing		Infrastructure
	Aviation Leasing		Jefferson Terminal		Ports and Terminals		Transtar		Corporate and Other		Total
Adjusted EBITDA	$	236,868	$	8,329	$	3,274	$	11,466	$	(48,440)	$	211,497
Add: Non-controlling share of Adjusted EBITDA											8,706
Add: Equity in losses of unconsolidated entities											(9,860)
Less: Pro-rata share of Adjusted EBITDA from unconsolidated entities											(9,861)
Less: Interest expense											(124,994)
Less: Depreciation and amortization expense											(166,622)
Less: Incentive allocations											—
Less: Asset impairment charges											(3,048)
Less: Changes in fair value of non-hedge derivative instruments											1,979
Less: Losses on the modification or extinguishment of debt and capital lease obligations											(3,254)
Less: Acquisition and transaction expenses											(13,172)
Less: Equity-based compensation expense											(3,281)
Less: Benefit from income taxes											1,965
Net loss attributable to shareholders from continuing operations											$	(109,945)

Summary information with respect to our geographic sources of revenue, based on location of customer, is as follows:

	Nine Months Ended September 30, 2021
	Equipment Leasing		Infrastructure
	Aviation Leasing		Jefferson Terminal		Ports and Terminals		Transtar		Corporate and Other		Total
Revenues
Africa	$	235	$	—	$	—	$	—	$	—	$	235
Asia	93,924		—		—		—		8,870		102,794
Europe	89,109		—		—		—		—		89,109
North America	39,102		34,148		9,982		24,540		4,004		111,776
South America	6,112		—		—		—		—		6,112
Total	$	228,482	$	34,148	$	9,982	$	24,540	$	12,874	$	310,026

37

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(Dollars in tables in thousands, unless otherwise noted)

III. For the Three Months Ended September 30, 2020

	Three Months Ended September 30, 2020
	Equipment Leasing		Infrastructure
	Aviation Leasing		Jefferson Terminal		Ports and Terminals		Transtar		Corporate and Other		Total
Revenues
Equipment leasing revenues	$	66,491	$	—	$	—	$	—	$	3,308	$	69,799
Infrastructure revenues	—		11,697		1,242		—		971		13,910
Total revenues	66,491		11,697		1,242		—		4,279		83,709
Expenses
Operating expenses	4,515		9,661		2,704		—		6,248		23,128
General and administrative	—		—		—		—		4,241		4,241
Acquisition and transaction expenses	2,060		—		20		—		362		2,442
Management fees and incentive allocation to affiliate	—		—		—		—		4,591		4,591
Depreciation and amortization	33,014		7,250		368		—		1,994		42,626
Asset impairment	3,915		—		—		—		—		3,915
Interest expense	—		1,487		298		—		25,119		26,904
Total expenses	43,504		18,398		3,390		—		42,555		107,847
Other income (expense)
Equity in (losses) earnings of unconsolidated entities	(247)		—		(2,285)		—		31		(2,501)
Loss on sale of assets, net	(1,114)		—		—		—		—		(1,114)
Interest income	41		—		—		—		17		58
Total other (expense) income	(1,320)		—		(2,285)		—		48		(3,557)
Income (loss) from continuing operations before income taxes	21,667		(6,701)		(4,433)		—		(38,228)		(27,695)
(Benefit from) provision for income taxes	(1,873)		3		(656)		—		40		(2,486)
Net income (loss) from continuing operations	23,540		(6,704)		(3,777)		—		(38,268)		(25,209)
Less: Net loss attributable to non-controlling interests in consolidated subsidiaries	—		(3,809)		(67)		—		—		(3,876)
Less: Dividends on preferred shares	—		—		—		—		4,625		4,625
Net income (loss) from continuing operations attributable to shareholders	$	23,540	$	(2,895)	$	(3,710)	$	—	$	(42,893)	$	(25,958)

38

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(Dollars in tables in thousands, unless otherwise noted)

The following table sets forth a reconciliation of Adjusted EBITDA to net loss attributable to shareholders from continuing operations:

	Three Months Ended September 30, 2020
	Equipment Leasing		Infrastructure
	Aviation Leasing		Jefferson Terminal		Ports and Terminals		Transtar		Corporate and Other		Total
Adjusted EBITDA	$	70,562	$	4,348	$	(837)	$	—	$	(15,437)	$	58,636
Add: Non-controlling share of Adjusted EBITDA											1,955
Add: Equity in losses of unconsolidated entities											(2,501)
Less: Pro-rata share of Adjusted EBITDA from unconsolidated entities											(120)
Less: Interest expense											(26,904)
Less: Depreciation and amortization expense											(52,532)
Less: Incentive allocations											—
Less: Asset impairment charges											(3,915)
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											(2,442)
Less: Equity-based compensation expense											(621)
Less: Benefit from income taxes											2,486
Net loss attributable to shareholders from continuing operations											$	(25,958)

Summary information with respect to our geographic sources of revenue, based on location of customer, is as follows:

	Three Months Ended September 30, 2020
	Equipment Leasing		Infrastructure
	Aviation Leasing		Jefferson Terminal		Ports and Terminals		Transtar		Corporate and Other		Total
Revenues
Africa	$	1,781	$	—	$	—	$	—	$	—	$	1,781
Asia	28,522		—		—		—		3,308		31,830
Europe	29,011		—		—		—		—		29,011
North America	6,911		11,697		1,242		—		971		20,821
South America	266		—		—		—		—		266
Total	$	66,491	$	11,697	$	1,242	$	—	$	4,279	$	83,709

39

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(Dollars in tables in thousands, unless otherwise noted)

IV. For the Nine Months Ended September 30, 2020

	Nine Months Ended September 30, 2020
	Equipment Leasing		Infrastructure
	Aviation Leasing		Jefferson Terminal		Ports and Terminals		Transtar		Corporate and Other		Total
Revenues
Equipment leasing revenues	$	224,742	$	—	$	—	$	—	$	11,340	$	236,082
Infrastructure revenues	—		49,519		1,556		—		3,701		54,776
Total revenues	224,742		49,519		1,556		—		15,041		290,858
Expenses
Operating expenses	13,163		43,894		6,579		—		17,508		81,144
General and administrative	—		—		—		—		13,292		13,292
Acquisition and transaction expenses	6,845		—		821		—		1,631		9,297
Management fees and incentive allocation to affiliate	—		—		—		—		14,113		14,113
Depreciation and amortization	97,848		21,636		1,122		—		5,937		126,543
Asset impairment	14,391		—		—		—		—		14,391
Interest expense	—		7,225		1,045		—		63,289		71,559
Total expenses	132,247		72,755		9,567		—		115,770		330,339
Other income (expense)
Equity in losses of unconsolidated entities	(1,432)		—		(3,961)		—		(52)		(5,445)
Loss on sale of assets, net	(2,158)		(7)		—		—		—		(2,165)
Loss on extinguishment of debt	—		(4,724)		—		—		—		(4,724)
Interest income	70		22		—		—		29		121
Other income	—		32		—		—		—		32
Total other expense	(3,520)		(4,677)		(3,961)		—		(23)		(12,181)
Income (loss) from continuing operations before income taxes	88,975		(27,913)		(11,972)		—		(100,752)		(51,662)
(Benefit from) provision for income taxes	(5,255)		212		(1,534)		—		243		(6,334)
Net income (loss) from continuing operations	94,230		(28,125)		(10,438)		—		(100,995)		(45,328)
Less: Net loss attributable to non-controlling interests in consolidated subsidiaries	—		(12,490)		(234)		—		—		(12,724)
Less: Dividends on preferred shares	—		—		—		—		13,243		13,243
Net income (loss) from continuing operations attributable to shareholders	$	94,230	$	(15,635)	$	(10,204)	$	—	$	(114,238)	$	(45,847)

40

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(Dollars in tables in thousands, unless otherwise noted)

The following table sets forth a reconciliation of Adjusted EBITDA to net loss attributable to shareholders from continuing operations:

	Nine Months Ended September 30, 2020
	Equipment Leasing		Infrastructure
	Aviation Leasing		Jefferson Terminal		Ports and Terminals		Transtar		Corporate and Other		Total
Adjusted EBITDA	$	231,453	$	11,885	$	(3,038)	$	—	$	(43,197)	$	197,103
Add: Non-controlling share of Adjusted EBITDA											7,406
Add: Equity in losses of unconsolidated entities											(5,445)
Less: Pro-rata share of Adjusted EBITDA from unconsolidated entities											167
Less: Interest expense											(71,559)
Less: Depreciation and amortization expense											(149,937)
Less: Incentive allocations											—
Less: Asset impairment charges											(14,391)
Less: Changes in fair value of non-hedge derivative instruments											(181)
Less: Losses on the modification or extinguishment of debt and capital lease obligations											(4,724)
Less: Acquisition and transaction expenses											(9,297)
Less: Equity-based compensation expense											(1,323)
Less: Benefit from income taxes											6,334
Net loss attributable to shareholders from continuing operations											$	(45,847)

Summary information with respect to our geographic sources of revenue, based on location of customer, is as follows:

	Nine Months Ended September 30, 2020
	Equipment Leasing		Infrastructure
	Aviation Leasing		Jefferson Terminal		Ports and Terminals		Transtar		Corporate and Other		Total
Revenues
Africa	$	10,254	$	—	$	—	$	—	$	—	$	10,254
Asia	86,799		—		—		—		11,340		98,139
Europe	99,870		—		—		—		—		99,870
North America	24,980		49,519		1,556		—		3,701		79,756
South America	2,839		—		—		—		—		2,839
Total	$	224,742	$	49,519	$	1,556	$	—	$	15,041	$	290,858

41

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(Dollars in tables in thousands, unless otherwise noted)

V. Balance Sheet and Location of Long-Lived Assets

The following tables sets forth summarized balance sheet information and the geographic location of property, plant and equipment and leasing equipment, net:

	September 30, 2021
	Equipment Leasing		Infrastructure
	Aviation Leasing		Jefferson Terminal		Ports and Terminals		Transtar		Corporate and Other		Total
Total assets	$	1,869,233	$	1,304,236	$	364,058	$	771,895	$	373,095	$	4,682,517
Debt, net	—		692,970		25,000		—		2,266,019		2,983,989
Total liabilities	171,434		825,331		36,541		112,860		2,332,309		3,478,475
Non-controlling interests in equity of consolidated subsidiaries	—		4,352		1,698		—		524		6,574
Total equity	1,697,799		478,905		327,517		659,035		(1,959,214)		1,204,042
Total liabilities and equity	$	1,869,233	$	1,304,236	$	364,058	$	771,895	$	373,095	$	4,682,517

	September 30, 2021
	Equipment Leasing		Infrastructure
	Aviation Leasing		Jefferson Terminal		Ports and Terminals		Transtar		Corporate and Other		Total
Property, plant and equipment and leasing equipment, net
Asia	$	400,718	$	—	$	—	$	—	$	66,490	$	467,208
Europe	738,692		—		—		—		—		738,692
North America	279,794		741,606		279,360		502,219		113,402		1,916,381
South America	102,083		—		—		—		—		102,083
Total	$	1,521,287	$	741,606	$	279,360	$	502,219	$	179,892	$	3,224,364

	December 31, 2020
	Equipment Leasing		Infrastructure
	Aviation Leasing		Jefferson Terminal		Ports and Terminals		Transtar		Corporate and Other		Total
Total assets	$	1,704,205	$	989,928	$	400,217	$	—	$	293,627	$	3,387,977
Debt, net	—		253,473		25,000		—		1,626,289		1,904,762
Total liabilities	219,692		365,629		38,242		—		1,665,093		2,288,656
Non-controlling interests in equity of consolidated subsidiaries	—		20,785		1,354		—		524		22,663
Total equity	1,484,513		624,299		361,975		—		(1,371,466)		1,099,321
Total liabilities and equity	$	1,704,205	$	989,928	$	400,217	$	—	$	293,627	$	3,387,977

42

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(Dollars in tables in thousands, unless otherwise noted)

	December 31, 2020
	Equipment Leasing		Infrastructure
	Aviation Leasing		Jefferson Terminal		Ports and Terminals		Transtar		Corporate and Other		Total
Property, plant and equipment and leasing equipment, net
Asia	$	445,566	$	—	$	—	$	—	$	56,702	$	502,268
Europe	774,300		—		—		—		—		774,300
North America	208,190		702,393		269,680		—		117,782		1,298,045
South America	25,009		—		—		—		—		25,009
Total	$	1,453,065	$	702,393	$	269,680	$	—	$	174,484	$	2,599,622

20. EARNINGS PER SHARE AND EQUITY

Basic earnings per common share (“EPS”) is calculated by dividing net income attributable to shareholders by the weighted average number of common shares outstanding, plus any participating securities. Diluted EPS is calculated by dividing net income attributable to shareholders by the weighted average number of common shares 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:

	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands, except share and per share data)	2021		2020		2021		2020
Net loss from continuing operations	$	(39,443)	$	(25,209)	$	(110,927)	$	(45,328)
Net income from discontinued operations, net of income taxes	—		—		—		1,331
Net loss	(39,443)		(25,209)		(110,927)		(43,997)
Less: Net loss attributable to non-controlling interests in consolidated subsidiaries	(7,363)		(3,876)		(18,949)		(12,724)
Less: Dividends on preferred shares	6,791		4,625		17,967		13,243
Net loss attributable to shareholders	$	(38,871)	$	(25,958)	$	(109,945)	$	(44,516)
Weighted Average Common Shares Outstanding - Basic (1)	88,277,897		86,022,302		86,787,072		86,013,485
Weighted Average Common Shares Outstanding - Diluted (1)	88,277,897		86,022,302		86,787,072		86,013,485
Basic
Continuing operations	$	(0.44)	$	(0.30)	$	(1.27)	$	(0.53)
Discontinued operations	$	—	$	—	$	—	$	0.02
Diluted
Continuing operations	$	(0.44)	$	(0.30)	$	(1.27)	$	(0.53)
Discontinued operations	$	—	$	—	$	—	$	0.02

________________________________________________________

(1) Three and nine months ended September 30, 2021 and 2020 includes participating securities which can be converted into a fixed amount of our shares.

For the three months ended September 30, 2021 and 2020, 950,524 and 21,244 shares, respectively, and for the nine months ended September 30, 2021 and 2020, 940,254 and 504 shares, respectively, have been excluded from the calculation of Diluted EPS because the impact would be anti-dilutive.

During the nine months ended September 30, 2021, we issued 17,155 common shares to certain directors as compensation.

During the nine months ended September 30, 2021, certain holders of Class B Units (see Note 18) converted 279,678 Class B Units in exchange for 207,129 common shares.

43

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(Dollars in tables in thousands, unless otherwise noted)

Preferred Shares

In March 2021, in a public offering, we issued 4,200,000 shares of 8.25% Fixed-Rate Reset Series C Cumulative Perpetual Redeemable Preferred Shares (“Series C Preferred Shares”), par value $0.01 per share, with a liquidation preference of $25.00 per share for net proceeds of approximately $101.2 million. See Note 15 for information related to options issued to the Manager in connection with such offering.

Common Shares

In September 2021, we issued 12,000,000 common shares, par value $0.01 per share, at a price of $25.50 per share. We received net proceeds of $291.7 million after deducting underwriting discounts and offering expenses. The proceeds were used to repay a portion of the Bridge Loans (see Note 10). See Note 15 for information related to options issued to the Manager in connection with such offering.

21. COMMITMENTS AND CONTINGENCIES

In the normal course of business we, and our 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 charter and the range of potential losses against the obligation is $0.0 million to $3.3 million. Our maximum exposure under other arrangements is unknown as no additional claims have been made. We believe the risk of loss in connection with such arrangements is remote.

We have also entered into an arrangement with our non-controlling interest holder of Repauno, as part of the initial acquisition, whereby the non-controlling interest holder may receive additional payments contingent upon the achievement of certain conditions, not to exceed $15.0 million. We will account for such amounts when and if such conditions are achieved. The contingency related to $5.0 million of the total $15.0 million was resolved during the nine months ended September 30, 2021. The $5.0 million payment was recorded as a payable and included in the cost of the asset acquisition.

Jefferson entered into a two-year pipeline capacity agreement for a recently completed pipeline. Under the agreement, which took effect in the second quarter of 2021, Jefferson is obligated to pay fixed marketing fees over the two-year agreement, which totals a minimum of $10.2 million per year.

22. SUBSEQUENT EVENTS

In October 2021, the underwriters of our September 2021 equity offering exercised an option to purchase an additional 1,283,863 common shares, par value $0.01 per share, at a price of $25.50 per share.

Dividends

On October 28, 2021, our Board of Directors declared a cash dividend on our common shares and eligible participating securities of $0.33 per share for the quarter ended September 30, 2021, payable on November 29, 2021 to the holders of record on November 15, 2021.

Additionally, on October 28, 2021, our Board of Directors also declared cash dividends on the Series A Preferred Shares, Series B Preferred Shares and Series C Preferred Shares of $0.52, $0.50 and $0.52 per share, respectively, payable on December 15, 2021 to the holders of record on December 1, 2021.

44

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 LLC (the “Company,” “we,” “our” or “us”). Our MD&A should be read in conjunction with our 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 and acquire high quality infrastructure and related equipment that is essential for the transportation of goods and people globally. We target assets that, on a combined basis, generate strong cash flows with potential for earnings growth and asset appreciation. We believe that there is 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 September 30, 2021, we had total consolidated assets of $4.7 billion and total equity of $1.2 billion.

Impact of COVID-19

Due to the outbreak of COVID-19, we have taken measures to protect the health and safety of our employees, including having employees work remotely, where possible. Market conditions due to the outbreak of COVID-19 resulted in asset impairment charges and a decline in our equipment leasing revenues during the nine months ended September 30, 2021. A number of our lessees continue to experience increased financial stress due to the significant decline in travel demand, particularly as various regions experience spikes in COVID-19 cases. A number of these lessees have been placed on non-accrual status as of September 30, 2021; however, we believe our overall portfolio exposure is limited by maintenance reserves and security deposits which are secured against lessee defaults. The value of these deposits was $134.4 million as of September 30, 2021. The extent of the impact of the COVID-19 pandemic on our operational and financial performance will depend on future developments, including the duration, severity and spread of the pandemic, as well as additional waves of COVID-19 infections and the ultimate impact of related restrictions imposed by the U.S. and international governments, all of which remain uncertain. For additional detail, see Liquidity and Capital Resources and Part II, Item 1A. Risk Factors—“The COVID-19 pandemic has severely disrupted the global economy and may have, and the emergence of similar crises could have, material adverse effects on our business, results of operations or financial condition.”

Operating Segments

Our operations consist of two primary strategic business units – Infrastructure and Equipment Leasing. Our Infrastructure Business acquires long-lived assets that provide mission-critical services or functions to transportation networks and typically have high barriers to entry. We target or develop 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.

Our reportable segments are comprised of interests in different types of infrastructure and equipment leasing assets. We currently conduct our business through the following four reportable segments: (i) Aviation Leasing, which is within the Equipment Leasing Business, and (ii) Jefferson Terminal, (iii) Ports and Terminals and (iv) Transtar, which together comprise our Infrastructure Business. The Aviation Leasing segment consists of aircraft and aircraft engines held for lease and are typically held long-term. The Jefferson Terminal segment consists of a multi-modal crude and refined products terminal and other related assets which were acquired in 2014. The Ports and Terminals segment consists of Repauno, acquired in 2016, a 1,630-acre deep-water port located along the Delaware River with an underground storage cavern and multiple industrial development opportunities. Additionally, Ports and Terminals includes an equity method investment (“Long Ridge”), which is a 1,660-acre multi-modal port located along the Ohio River with rail, dock, and multiple industrial development opportunities, including a power plant under construction.

In July 2021, we acquired Transtar and it operates as a separate reportable segment. Transtar is comprised of five freight railroads and one switching company that provide rail service to certain manufacturing and production facilities. See Note 4 to the consolidated financial statements for additional information.

Corporate and Other primarily consists of debt, unallocated corporate general and administrative expenses, and management fees. Additionally, Corporate and Other includes (i) offshore energy related assets which consist of vessels and equipment that support offshore oil and gas activities and are typically subject to operating leases, (ii) an investment in an unconsolidated entity engaged in the leasing of shipping containers and (iii) railroad assets which consist of equipment that support a railcar cleaning business.

45

Our 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 December 27, 2017, SoftBank Group Corp. (“SoftBank”) completed its acquisition of Fortress (the “SoftBank Merger”). In connection with the Softbank Merger, Fortress operates within SoftBank as an independent business headquartered in New York.

Results of Operations

Adjusted EBITDA (Non-GAAP)

The chief operating decision maker (“CODM”) utilizes Adjusted EBITDA as the key performance measure. This performance measure provides the CODM with the information necessary to assess operational performance, as well as 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.

Adjusted EBITDA 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 amortization expense, 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.

46

Comparison of the three and nine months ended September 30, 2021 and 2020

The following table presents our consolidated results of operations:

	Three Months Ended September 30,				Change		Nine Months Ended September 30,				Change
(in thousands)	2021		2020				2021		2020
Revenues
Equipment leasing revenues
Lease income	$	42,778	$	40,440	$	2,338	$	125,907	$	134,887	$	(8,980)
Maintenance revenue	40,252		25,609		14,643		87,763		84,709		3,054
Finance lease income	439		591		(152)		1,285		1,433		(148)
Other revenue	15,705		3,159		12,546		22,397		15,053		7,344
Total equipment leasing revenues	99,174		69,799		29,375		237,352		236,082		1,270
Infrastructure revenues
Lease income	791		368		423		1,653		775		878
Rail revenues	24,182		—		24,182		24,182		—		24,182
Terminal services revenues	11,469		11,329		140		33,010		40,534		(7,524)
Crude marketing revenues	—		—		—		—		8,210		(8,210)
Other revenue	346		2,213		(1,867)		13,829		5,257		8,572
Total infrastructure revenues	36,788		13,910		22,878		72,674		54,776		17,898
Total revenues	135,962		83,709		52,253		310,026		290,858		19,168
Expenses
Operating expenses	52,793		23,128		29,665		108,973		81,144		27,829
General and administrative	4,422		4,241		181		12,329		13,292		(963)
Acquisition and transaction expenses	7,130		2,442		4,688		13,172		9,297		3,875
Management fees and incentive allocation to affiliate	3,845		4,591		(746)		11,948		14,113		(2,165)
Depreciation and amortization	53,368		42,626		10,742		145,274		126,543		18,731
Asset impairment	859		3,915		(3,056)		3,048		14,391		(11,343)
Interest expense	54,500		26,904		27,596		124,994		71,559		53,435
Total expenses	176,917		107,847		69,070		419,738		330,339		89,399
Other (expense) income
Equity in losses of unconsolidated entities	(4,082)		(2,501)		(1,581)		(9,860)		(5,445)		(4,415)
Gain (loss) on sale of assets, net	12,685		(1,114)		13,799		17,483		(2,165)		19,648
Loss on extinguishment of debt	—		—		—		(3,254)		(4,724)		1,470
Interest income	483		58		425		1,222		121		1,101
Other (expense) income	(8,068)		—		(8,068)		(8,771)		32		(8,803)
Total other income (expense)	1,018		(3,557)		4,575		(3,180)		(12,181)		9,001
Loss from continuing operations before income taxes	(39,937)		(27,695)		(12,242)		(112,892)		(51,662)		(61,230)
Benefit from income taxes	(494)		(2,486)		1,992		(1,965)		(6,334)		4,369
Net loss from continued operations	(39,443)		(25,209)		(14,234)		(110,927)		(45,328)		(65,599)
Net income from discontinued operations, net of income taxes	—		—		—		—		1,331		(1,331)
Net loss	(39,443)		(25,209)		(14,234)		(110,927)		(43,997)		(66,930)
Less: Net loss attributable to non-controlling interest in consolidated subsidiaries	(7,363)		(3,876)		(3,487)		(18,949)		(12,724)		(6,225)
Less: Dividends on preferred shares	6,791		4,625		2,166		17,967		13,243		4,724
Net loss attributable to shareholders	$	(38,871)	$	(25,958)	$	(12,913)	$	(109,945)	$	(44,516)	$	(65,429)

47

The following table sets forth a reconciliation of net loss attributable to shareholders from continuing operations to Adjusted EBITDA:

	Three Months Ended September 30,				Change		Nine Months Ended September 30,				Change
(in thousands)	2021		2020				2021		2020
Net loss attributable to shareholders from continuing operations	$	(38,871)	$	(25,958)	$	(12,913)	$	(109,945)	$	(45,847)	$	(64,098)
Add: Benefit from income taxes	(494)		(2,486)		1,992		(1,965)		(6,334)		4,369
Add: Equity-based compensation expense	728		621		107		3,281		1,323		1,958
Add: Acquisition and transaction expenses	7,130		2,442		4,688		13,172		9,297		3,875
Add: Losses on the modification or extinguishment of debt and capital lease obligations	—		—		—		3,254		4,724		(1,470)
Add: Changes in fair value of non-hedge derivative instruments	4,594		—		4,594		(1,979)		181		(2,160)
Add: Asset impairment charges	859		3,915		(3,056)		3,048		14,391		(11,343)
Add: Incentive allocations	—		—		—		—		—		—
Add: Depreciation and amortization expense (1)	59,811		52,532		7,279		166,622		149,937		16,685
Add: Interest expense	54,500		26,904		27,596		124,994		71,559		53,435
Add: Pro-rata share of Adjusted EBITDA from unconsolidated entities (2)	7,470		120		7,350		9,861		(167)		10,028
Less: Equity in losses of unconsolidated entities	4,082		2,501		1,581		9,860		5,445		4,415
Less: Non-controlling share of Adjusted EBITDA (3)	(3,420)		(1,955)		(1,465)		(8,706)		(7,406)		(1,300)
Adjusted EBITDA (non-GAAP)	$	96,389	$	58,636	$	37,753	$	211,497	$	197,103	$	14,394

________________________________________________________

(1) Includes the following items for the three months ended September 30, 2021 and 2020: (i) depreciation and amortization expense of $53,368 and $42,626, (ii) lease intangible amortization of $1,266 and $953 and (iii) amortization for lease incentives of $5,177 and $8,953, respectively. Includes the following items for the nine months ended September 30, 2021 and 2020: (i) depreciation and amortization expense of $145,274 and $126,543, (ii) lease intangible amortization of $3,216 and $3,016 and (iii) amortization for lease incentives of $18,132 and $20,378, respectively.

(2) Includes the following items for the three months ended September 30, 2021 and 2020: (i) net loss of $(4,163) and $(2,590), (ii) interest expense of $300 and $367, (iii) depreciation and amortization expense of $3,009 and $1,389, (iv) acquisition and transaction expenses of $0 and $(79) and (v) changes in fair value of non-hedge derivative instruments of $8,324 and $1,033, respectively. Includes the following items for the nine months ended September 30, 2021 and 2020: (i) net loss of $(10,336) and $(5,593), (ii) interest expense of $827 and $848, (iii) depreciation and amortization expense of $6,821 and $3,797, (iv) acquisition and transaction expenses of $0 and $533, (v) changes in fair value of non-hedge derivative instruments of $12,525 and $248 and (vi) asset impairment of $24 and $0, respectively.

(3) Includes the following items for the three months ended September 30, 2021 and 2020: (i) equity-based compensation of $130 and $97, (ii) provision for income taxes of $10 and $1, (iii) interest expense of $927 and $322, (iv) depreciation and amortization expense of $2,194 and $1,535 and (v) changes in fair value of non-hedge derivative instruments of $159 and $0, respectively. Includes the following items for the nine months ended September 30, 2021 and 2020: (i) equity based compensation of $620 and $196, (ii) provision for income taxes of $36 and $44, (iii) interest expense of $1,940 and $1,553, (iv) depreciation and amortization expense of $6,177 and $4,583, (v) changes in fair value of non-hedge derivative instruments of $(67) and $38 and (vi) loss on extinguishment of debt of $0 and $992, respectively.

Revenues

Comparison of the three months ended September 30, 2021 and 2020

Total revenues increased $52.3 million primarily due to higher revenues of $24.5 million in the Transtar segment and $27.4 million in the Aviation Leasing segment.

Equipment Leasing

Maintenance revenue increased $14.6 million, primarily due to an increase in the number of engines placed on lease and higher aircraft and engine utilization.

Other revenue increased $12.5 million, which primarily reflects (i) an increase of $11.1 million in the Aviation Leasing segment primarily due to an increase in engine parts sales and higher end-of-lease redelivery compensation and (ii) an increase of $1.4 million in the offshore energy business which reflects higher victualling income on one of our vessels.

Lease income increased $2.3 million, primarily due to an increase in the number of aircraft and engines placed on lease, partially offset by an increase in aircraft redelivered.

Infrastructure

Rail revenues increased $24.2 million due to our acquisition of Transtar in July 2021.

48

Other revenue decreased $1.9 million, primarily due to a loss on butane forward purchase contracts at Repauno.

Comparison of the nine months ended September 30, 2021 and 2020

Total revenues increased $19.2 million, primarily due to higher revenues of $24.5 million in the Transtar segment, $8.4 million in the Ports and Terminals segment and $3.7 million in the Aviation Leasing segment, partially offset by lower revenues of $15.4 million in the Jefferson Terminal segment.

Equipment Leasing

Lease income decreased $9.0 million, primarily due to an increase in aircraft redelivered and an increase in the number of customers placed on non-accrual status, partially offset by an increase in the number of aircraft and engines placed on lease.

Other revenue increased $7.3 million, primarily due to an increase in engine parts sales, partially offset by lower end-of-lease redelivery compensation and the settlement of an engine loss during the nine months ended September 30, 2020.

Maintenance revenue increased $3.1 million, primarily due to an increase in aircraft and engine utilization, partially offset by an increase in aircraft and engines redelivered and a decrease in the recognition of maintenance deposits due to the early redelivery of aircraft.

Infrastructure

Rail revenues increased $24.2 million due to our acquisition of Transtar in July 2021.

Other revenue increased $8.6 million, primarily due to (i) a gain on butane forward purchase and sale contracts at Repauno and (ii) operations commencing at the LPG facility at Repauno.

Crude marketing revenues decreased $8.2 million due to Jefferson Terminal exiting the crude marketing strategy in the fourth quarter of 2019.

Terminal services revenues decreased $7.5 million which primarily reflects lower volumes at Jefferson Terminal due to lower global oil demand related to COVID-19.

Expenses

Comparison of the three months ended September 30, 2021 and 2020

Total expenses increased $69.1 million, primarily due to higher (i) interest expense, (ii) operating expenses, (iii) depreciation and amortization and (iv) acquisition and transaction expenses, partially offset by lower (v) asset impairment charges.

Interest expense increased $27.6 million, primarily due to:

•an increase of $25.0 million in Corporate and Other which reflects an increase in the average outstanding debt of approximately $892.7 million due to increases in (i) the Senior Notes due 2028 of $667.5 million, (ii) the Bridge Loans (as defined below in Liquidity and Capital Resources) of $433.3 million, (iii) the Senior Notes due 2025 of $406.8 million and (iv) the Revolving Credit Facility (as defined below in Liquidity and Capital Resources) of $83.3 million, partially offset by a decrease in (v) the Senior Notes due 2022 of $698.3 million, which was redeemed in full in May 2021.

•an increase of $2.6 million at Jefferson Terminal due to the issuance of the Series 2021 Bonds in August 2021 and EB-5 Loan Agreement which commenced in January 2021.

Operating expenses increased $29.7 million which primarily reflects:

•an increase in compensation and benefits of $8.9 million primarily due to the acquisition of Transtar in July 2021;

•an increase of $8.2 million in facility operating expense which primarily reflects (i) an increase of $3.2 million due to the acquisition of Transtar in July 2021, (ii) an increase of $2.6 million in the Aviation Leasing segment primarily due to shipping and storage costs and (iii) an increase of $1.3 million in the Jefferson Terminal segment primarily due to an increase in third-party services;

•an increase of $6.4 million in costs associated with the sale of inventory in the Aviation Leasing segment;

•an increase of $1.5 million in repairs and maintenance primarily due to (i) the acquisition of Transtar in July 2021 and (ii) increases in the Aviation Leasing segment and our offshore energy business; and

•an increase of $1.3 million in bad debt expense in the Aviation Leasing segment.

Depreciation and amortization increased $10.7 million primarily due to (i) the acquisition of Transtar in July 2021 and (ii) assets placed into service at Repauno and Jefferson Terminal.

Acquisition and transaction expenses increased $4.7 million primarily due to professional fees related to the acquisition of Transtar in July 2021.

Asset impairment decreased $3.1 million due to higher impairment charges in 2020 compared to 2021 in the Aviation Leasing segment.

49

Comparison of the nine months ended September 30, 2021 and 2020

Total expenses increased $89.4 million, primarily due to higher (i) interest expense, (ii) operating expenses and (iii) depreciation and amortization, partially offset by lower (iv) asset impairment charges.

Interest expense increased $53.4 million, primarily due to:

•an increase of $52.3 million in Corporate and Other which reflects an increase in the average outstanding debt of approximately $688.8 million primarily due to increases in (i) the Senior Notes due 2025 of $407.1 million, (ii) the Senior Notes due 2028 of $389.2 million, (iii) the Senior Notes due 2027 of $266.7 million, (iv) the Bridge Loans of $144.4 million and (v) the Revolving Credit Facility of $10.0 million, partially offset by a decrease in (vi) the Senior Notes due 2022 of $520.7 million, which was redeemed in full in May 2021.

•an increase of $1.3 million at Jefferson Terminal due to (i) the issuance of the Series 2021 Bonds in August 2021 and the EB-5 Loan Agreement which commenced in January 2021, partially offset by (ii) a debt refinancing in the first quarter of 2020 which lowered their average interest rate.

Operating expenses increased $27.8 million which primarily reflects:

•an increase of $10.7 million in compensation and benefits primarily due to (i) the acquisition of Transtar in July 2021 and (ii) increases at Repauno and our railcar cleaning business due to an increase in headcount;

•an increase of $7.0 million in facility operating expense which primarily reflects (i) an increase of $4.1 million in the Aviation Leasing segment primarily due to shipping and storage costs, (ii) an increase of $3.2 million due to the acquisition of Transtar in July 2021 and (iii) an increase of $1.1 million at Repauno primarily due to increased activity;

•an increase of $3.4 million in repairs and maintenance primarily due to (i) our offshore energy business and (ii) the acquisition of Transtar in July 2021; and

•an increase of $2.2 million in insurance costs in the Jefferson Terminal segment due to build out of new assets.

Depreciation and amortization increased $18.7 million primarily due to (i) assets placed into service at Repauno and Jefferson Terminal, (ii) the acquisition of Transtar in July 2021 and (iii) additional assets acquired in the Aviation Leasing segment.

Asset impairment decreased $11.3 million due to higher impairment charges in 2020 compared to 2021 in the Aviation Leasing segment.

Other income (expense)

Total other income increased $4.6 million during the three months ended September 30, 2021, which primarily reflects (i) an increase of $13.8 million in gain on sale of assets, net in the Aviation Leasing segment, partially offset by (ii) an increase of $8.1 million in other expense primarily due to (a) a write-off of an earn-out receivable at Long Ridge and (b) losses related to crude oil forward transactions at Jefferson Terminal and (iii) an increase of $1.6 million in equity in losses of unconsolidated entities primarily due to an unrealized loss on power swaps at Long Ridge.

Total other expense decreased $9.0 million during the nine months ended September 30, 2021, which primarily reflects (i) an increase of $19.6 million in gain on sale of assets, net in the Aviation Leasing segment, partially offset by (ii) an increase of $8.8 million in other expense primarily due to (a) a write-off of an earn-out receivable at Long Ridge and (b) losses related to crude oil forward transactions at Jefferson Terminal and (iii) an increase of $4.4 million in equity in losses in unconsolidated entities primarily due to an unrealized loss on power swaps at Long Ridge.

Net loss from continuing operations

Net loss from continuing operations increased $14.2 million and $65.6 million during the three and nine months ended September 30, 2021, respectively, primarily due to the changes noted above.

Adjusted EBITDA (Non-GAAP)

Adjusted EBITDA increased $37.8 million and $14.4 million during the three and nine months ended September 30, 2021, respectively, primarily due to the changes noted above.

50

Aviation Leasing Segment

As of September 30, 2021, in our Aviation Leasing segment, we own and manage 294 aviation assets, consisting of 90 commercial aircraft and 204 engines.

As of September 30, 2021, 77 of our commercial aircraft and 127 of our 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 74% utilized during the three months ended September 30, 2021, based on the percent of days on-lease in the quarter weighted by the monthly average equity value of our aviation leasing equipment, excluding airframes. Our aircraft currently have a weighted average remaining lease term of 36 months, and our engines currently on-lease have an average remaining lease term of 18 months. The table below provides additional information on the assets in our Aviation Leasing segment:

Aviation Assets	Widebody	Narrowbody	Total
Aircraft
Assets at January 1, 2021	15	63	78
Purchases	—	24	24
Sales	(4)	—	(4)
Transfers	1	(9)	(8)
Assets at September 30, 2021	12	78	90
Engines
Assets at January 1, 2021	88	98	186
Purchases	8	36	44
Sales	(19)	(12)	(31)
Transfers	(2)	7	5
Assets at September 30, 2021	75	129	204

51

The following table presents our results of operations:

	Three Months Ended September 30,				Change		Nine Months Ended September 30,				Change
(in thousands)	2021		2020				2021		2020
Equipment leasing revenues
Lease income	$	40,392	$	38,537	$	1,855	$	120,389	$	127,983	$	(7,594)
Maintenance revenue	40,252		25,609		14,643		87,763		84,709		3,054
Finance lease income	439		591		(152)		1,285		1,433		(148)
Other revenue	12,855		1,754		11,101		19,045		10,617		8,428
Total revenues	93,938		66,491		27,447		228,482		224,742		3,740
Expenses
Operating expenses	15,411		4,515		10,896		28,806		13,163		15,643
Acquisition and transaction expenses	858		2,060		(1,202)		2,890		6,845		(3,955)
Depreciation and amortization	34,288		33,014		1,274		100,583		97,848		2,735
Asset impairment	859		3,915		(3,056)		3,048		14,391		(11,343)
Total expenses	51,416		43,504		7,912		135,327		132,247		3,080
Other income (expense)
Equity in losses of unconsolidated entities	(369)		(247)		(122)		(1,050)		(1,432)		382
Gain (loss) on sale of assets, net	12,685		(1,114)		13,799		17,467		(2,158)		19,625
Interest income	339		41		298		963		70		893
Other expense	(1,680)		—		(1,680)		(1,680)		—		(1,680)
Total other income (expense)	10,975		(1,320)		12,295		15,700		(3,520)		19,220
Income before income taxes	53,497		21,667		31,830		108,855		88,975		19,880
Provision for (benefit from) income taxes	129		(1,873)		2,002		83		(5,255)		5,338
Net income	53,368		23,540		29,828		108,772		94,230		14,542
Less: Net loss attributable to non-controlling interest in consolidated subsidiaries	—		—		—		—		—		—
Net income attributable to shareholders	$	53,368	$	23,540	$	29,828	$	108,772	$	94,230	$	14,542

52

The following table sets forth a reconciliation of net income attributable to shareholders to Adjusted EBITDA:

	Three Months Ended September 30,				Change		Nine Months Ended September 30,				Change
(in thousands)	2021		2020				2021		2020
Net income attributable to shareholders	$	53,368	$	23,540	$	29,828	$	108,772	$	94,230	$	14,542
Add: Provision for (benefit from) income taxes	129		(1,873)		2,002		83		(5,255)		5,338
Add: Equity-based compensation expense	—		—		—		—		—		—
Add: Acquisition and transaction expenses	858		2,060		(1,202)		2,890		6,845		(3,955)
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	859		3,915		(3,056)		3,048		14,391		(11,343)
Add: Incentive allocations	—		—		—		—		—		—
Add: Depreciation and amortization expense (1)	40,731		42,920		(2,189)		121,931		121,242		689
Add: Interest expense	—		—		—		—		—		—
Add: Pro-rata share of Adjusted EBITDA from unconsolidated entities (2)	(312)		(247)		(65)		(906)		(1,432)		526
Less: Equity in losses of unconsolidated entities	369		247		122		1,050		1,432		(382)
Less: Non-controlling share of Adjusted EBITDA	—		—		—		—		—		—
Adjusted EBITDA (non-GAAP)	$	96,002	$	70,562	$	25,440	$	236,868	$	231,453	$	5,415

________________________________________________________

(1) Includes the following items for the three months ended September 30, 2021 and 2020: (i) depreciation expense of $34,288 and $33,014, (ii) lease intangible amortization of $1,266 and $953 and (iii) amortization for lease incentives of $5,177 and $8,953, respectively. Includes the following items for the nine months ended September 30, 2021 and 2020: (i) depreciation expense of $100,583 and $97,848, (ii) lease intangible amortization of $3,216 and $3,016 and (iii) amortization for lease incentives of $18,132 and $20,378, respectively.

(2) Includes the following items for the three months ended September 30, 2021 and 2020: (i) net loss of $(369) and $(247) and (ii) depreciation and amortization of $57 and $0, respectively. Includes the following items for the nine months ended September 30, 2021 and 2020: (i) net loss of $(1,050) and $(1,432) and (ii) depreciation and amortization of $144 and $0, respectively.

Revenues

Comparison of the three months ended September 30, 2021 and 2020

Total revenue increased $27.4 million driven by higher maintenance revenue, other revenue and lease income.

•Maintenance revenue increased $14.6 million primarily due to an increase in the number of engines placed on lease and higher aircraft and engine utilization.

•Other revenue increased $11.1 million primarily due to an increase in engine parts sales and higher end-of-lease redelivery compensation.

•Lease income increased $1.9 million primarily due to an increase in the number of aircraft and engines placed on lease, partially offset by an increase in aircraft redelivered.

Comparison of the nine months ended September 30, 2021 and 2020

Total revenue increased $3.7 million driven by higher other revenue and maintenance revenue, partially offset by lower lease income.

•Other revenue increased $8.4 million primarily due to an increase in engine parts sales, partially offset by lower end-of-lease redelivery compensation and the settlement of an engine loss during the nine months ended September 30, 2020.

•Maintenance revenue increased $3.1 million primarily due to an increase in aircraft and engine utilization, partially offset by an increase in aircraft and engines redelivered and a decrease in the recognition of maintenance deposits due to the early redelivery of aircraft.

•Lease income decreased $7.6 million primarily due to an increase in aircraft redelivered and an increase in the number of customers placed on non-accrual status, partially offset by an increase in the number of aircraft and engines placed on lease.

53

Expenses

Comparison of the three months ended September 30, 2021 and 2020

Total expenses increased $7.9 million primarily due to an increase in operating expenses and depreciation and amortization expense, partially offset by a decrease in asset impairment and acquisition and transaction expenses.

•Operating expenses increased $10.9 million primarily as a result of an increase in costs associated with the sale of engine parts, shipping and storage fees, bad debt expense and other operating expenses.

•Depreciation and amortization expense increased $1.3 million driven by an increase in the number of assets owned and on lease, partially offset by an increase in the number of aircraft redelivered and parted out into our engine leasing pool.

•Asset impairment decreased $3.1 million for the adjustment of the carrying value of leasing equipment to fair value, net of redelivery compensation. See Note 5 to the consolidated financial statements for additional information.

•Acquisition and transaction expense decreased $1.2 million driven by lower compensation and related costs associated with the acquisition of aviation leasing equipment.

Comparison of the nine months ended September 30, 2021 and 2020

Total expenses increased $3.1 million primarily due to an increase in operating expenses and depreciation and amortization expense, partially offset by a decrease in asset impairment and acquisition and transaction expenses.

•Operating expenses increased $15.6 million primarily as a result of an increase in costs associated with the sale of engine parts, shipping and storage fees and other operating expense.

•Depreciation and amortization expense increased $2.7 million driven by an increase in the number of assets owned and on lease, partially offset by an increase in the number of aircraft redelivered and parted out into our engine leasing pool.

•Asset impairment decreased $11.3 million for the adjustment of the carrying value of leasing equipment to fair value, net of redelivery compensation. See Note 5 to the consolidated financial statements for additional information.

•Acquisition and transaction expense decreased $4.0 million driven by lower compensation and related costs associated with the acquisition of aviation leasing equipment.

Other income (expense)

Total other income increased $12.3 million during the three months ended September 30, 2021, primarily due to an increase of $13.8 million in gain on the sale of leasing equipment in 2021 and an increase of $0.3 million in interest income, partially offset by an increase of $1.7 million in other expenses and an increase of $0.1 million in Aviation Leasing’s proportionate share of the unconsolidated entities’ net loss.

Total other income increased $19.2 million during the nine months ended September 30, 2021, primarily due to an increase of $19.6 million in gain on the sale of leasing equipment in 2021, an increase of $0.9 million in interest income and a decrease of $0.4 million in Aviation Leasing’s proportionate share of the unconsolidated entities’ net loss, partially offset by an increase of $1.7 million in other expenses.

Adjusted EBITDA (Non-GAAP)

Adjusted EBITDA increased $25.4 million and $5.4 million during the three and nine months ended September 30, 2021, respectively, primarily due to the changes noted above.

54

Jefferson Terminal Segment

The following table presents our results of operations:

	Three Months Ended September 30,				Change		Nine Months Ended September 30,				Change
(in thousands)	2021		2020				2021		2020
Infrastructure revenues
Lease income	$	433	$	368	$	65	$	1,295	$	775	$	520
Terminal services revenues	11,469		11,329		140		32,853		40,534		(7,681)
Crude marketing revenues	—		—		—		—		8,210		(8,210)
Total revenues	11,902		11,697		205		34,148		49,519		(15,371)
Expenses
Operating expenses	12,441		9,661		2,780		35,939		43,894		(7,955)
Depreciation and amortization	9,405		7,250		2,155		26,438		21,636		4,802
Interest expense	4,080		1,487		2,593		8,496		7,225		1,271
Total expenses	25,926		18,398		7,528		70,873		72,755		(1,882)
Other (expense) income
Loss on sale of assets, net	—		—		—		—		(7)		7
Loss on extinguishment of debt	—		—		—		—		(4,724)		4,724
Interest income	—		—		—		—		22		(22)
Other (expense) income	(2,090)		—		(2,090)		(2,795)		32		(2,827)
Total other expense	(2,090)		—		(2,090)		(2,795)		(4,677)		1,882
Loss before income taxes	(16,114)		(6,701)		(9,413)		(39,520)		(27,913)		(11,607)
Provision for income taxes	47		3		44		163		212		(49)
Net loss	(16,161)		(6,704)		(9,457)		(39,683)		(28,125)		(11,558)
Less: Net loss attributable to non-controlling interest in consolidated subsidiaries	(7,189)		(3,809)		(3,380)		(18,743)		(12,490)		(6,253)
Net loss attributable to shareholders	$	(8,972)	$	(2,895)	$	(6,077)	$	(20,940)	$	(15,635)	$	(5,305)

55

The following table sets forth a reconciliation of net loss attributable to shareholders to Adjusted EBITDA:

	Three Months Ended September 30,				Change		Nine Months Ended September 30,				Change
(in thousands)	2021		2020				2021		2020
Net loss attributable to shareholders	$	(8,972)	$	(2,895)	$	(6,077)	$	(20,940)	$	(15,635)	$	(5,305)
Add: Provision for income taxes	47		3		44		163		212		(49)
Add: Equity-based compensation expense	553		428		125		2,664		857		1,807
Add: Acquisition and transaction expenses	—		—		—		—		—		—
Add: Losses on the modification or extinguishment of debt and capital lease obligations	—		—		—		—		4,724		(4,724)
Add: Changes in fair value of non-hedge derivative instruments	—		—		—		—		181		(181)
Add: Asset impairment charges	—		—		—		—		—		—
Add: Incentive allocations	—		—		—		—		—		—
Add: Depreciation and amortization expense	9,405		7,250		2,155		26,438		21,636		4,802
Add: Interest expense	4,080		1,487		2,593		8,496		7,225		1,271
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)	(3,167)		(1,925)		(1,242)		(8,492)		(7,315)		(1,177)
Adjusted EBITDA (non-GAAP)	$	1,946	$	4,348	$	(2,402)	$	8,329	$	11,885	$	(3,556)

________________________________________________________

(1) Includes the following items for the three months ended September 30, 2021 and 2020: (i) equity-based compensation of $124 and $90, (ii) provision for income taxes of $10 and $1, (iii) interest expense of $918 and $312 and (iv) depreciation and amortization expense of $2,115 and $1,522, respectively. Includes the following items for the nine months ended September 30, 2021 and 2020: (i) equity-based compensation of $599 and $180, (ii) provision for income taxes of $36 and $44, (iii) interest expense of $1,911 and $1,517, (iv) changes in fair value of non-hedge derivative instruments of $0 and $38, (v) depreciation and amortization expense of $5,946 and $4,544 and (vi) loss on extinguishment of debt of $0 and $992, respectively.

Revenues

Total revenues decreased $15.4 million during the nine months ended September 30, 2021, primarily due to decreases in (i) crude marketing revenues of $8.2 million due to Jefferson Terminal exiting the crude marketing strategy in the fourth quarter of 2019 and (ii) terminal services revenue of $7.7 million which primarily reflects lower volumes due to lower global oil demand related to COVID-19.

Expenses

Total expenses increased $7.5 million during the three months ended September 30, 2021, which reflects:

•an increase in interest expense of $2.6 million due to the issuance of the Series 2021 Bonds in August 2021 and EB-5 Loan Agreement which commenced in January 2021;

•an increase in operating expenses of $2.8 million primarily due to increases in (i) facility operations expense of $1.3 million due to an increase in third-party services, (ii) insurance expense of $0.8 million due to build out of new assets and (iii) compensation and benefits of $0.6 million due to increased headcount; and

•an increase in depreciation and amortization of $2.2 million due to additional assets being placed into service.

Total expenses decreased $1.9 million during the nine months ended September 30, 2021, which reflects:

•a decrease in operating expenses of $8.0 million, primarily due to (i) Jefferson Terminal exiting the crude marketing strategy in the fourth quarter of 2019, partially offset by (ii) an increase in facility operations expense;

•an increase in depreciation and amortization of $4.8 million due to additional assets being placed into service; and

•an increase in interest expense of $1.3 million due to (i) the issuance of the Series 2021 Bonds in August 2021 and the EB-5 Loan Agreement which commenced in January 2021, partially offset by (ii) a debt refinancing in the first quarter of 2020 which lowered their average interest rate.

Other expense

Total other expense increased $2.1 million during the three months ended September 30, 2021, primarily due to losses related to crude oil forward transactions.

56

Total other expense decreased $1.9 million during the nine months ended September 30, 2021, which primarily reflects a loss on extinguishment of debt of $4.7 million in 2020, partially offset by losses related to crude oil forward transactions.

Adjusted EBITDA (Non-GAAP)

Adjusted EBITDA decreased $2.4 million and $3.6 million during the three and nine months ended September 30, 2021, respectively, primarily due to the changes noted above.

Ports and Terminals

The following table presents our results of operations:

	Three Months Ended September 30,				Change		Nine Months Ended September 30,				Change
(in thousands)	2021		2020				2021		2020
Infrastructure revenues
Terminal services revenues	$	—	$	—	$	—	$	157	$	—	$	157
Other revenue	(458)		1,242		(1,700)		9,825		1,556		8,269
Total revenues	(458)		1,242		(1,700)		9,982		1,556		8,426
Expenses
Operating expenses	5,272		2,704		2,568		12,202		6,579		5,623
Acquisition and transaction expenses	—		20		(20)		—		821		(821)
Depreciation and amortization	2,299		368		1,931		6,726		1,122		5,604
Interest expense	283		298		(15)		857		1,045		(188)
Total expenses	7,854		3,390		4,464		19,785		9,567		10,218
Other (expense) income
Equity in losses of unconsolidated entities	(3,789)		(2,285)		(1,504)		(9,262)		(3,961)		(5,301)
Gain on sale of equipment, net	—		—		—		16		—		16
Interest income	145		—		145		236		—		236
Other expense	(4,100)		—		(4,100)		(4,100)		—		(4,100)
Total other expense	(7,744)		(2,285)		(5,459)		(13,110)		(3,961)		(9,149)
Loss before income taxes	(16,056)		(4,433)		(11,623)		(22,913)		(11,972)		(10,941)
Benefit from income taxes	(1,798)		(656)		(1,142)		(3,265)		(1,534)		(1,731)
Net loss	(14,258)		(3,777)		(10,481)		(19,648)		(10,438)		(9,210)
Less: Net loss attributable to non-controlling interest in consolidated subsidiaries	(174)		(67)		(107)		(206)		(234)		28
Net loss attributable to shareholders	$	(14,084)	$	(3,710)	$	(10,374)	$	(19,442)	$	(10,204)	$	(9,238)

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The following table sets forth a reconciliation of net loss attributable to shareholders to Adjusted EBITDA:

	Three Months Ended September 30,				Change		Nine Months Ended September 30,				Change
(in thousands)	2021		2020				2021		2020
Net loss attributable to shareholders	$	(14,084)	$	(3,710)	$	(10,374)	$	(19,442)	$	(10,204)	$	(9,238)
Add: Benefit from income taxes	(1,798)		(656)		(1,142)		(3,265)		(1,534)		(1,731)
Add: Equity-based compensation expense	175		193		(18)		617		466		151
Add: Acquisition and transaction expenses	—		20		(20)		—		821		(821)
Add: Losses on the modification or extinguishment of debt and capital lease obligations	—		—		—		—		—		—
Add: Changes in fair value of non-hedge derivative instruments	4,594		—		4,594		(1,979)		—		(1,979)
Add: Asset impairment charges	—		—		—		—		—		—
Add: Incentive allocations	—		—		—		—		—		—
Add: Depreciation and amortization expense	2,299		368		1,931		6,726		1,122		5,604
Add: Interest expense	283		298		(15)		857		1,045		(188)
Add: Pro-rata share of Adjusted EBITDA from unconsolidated entities (1)	7,761		395		7,366		10,712		1,376		9,336
Less: Equity in losses of unconsolidated entities	3,789		2,285		1,504		9,262		3,961		5,301
Less: Non-controlling share of Adjusted EBITDA (2)	(253)		(30)		(223)		(214)		(91)		(123)
Adjusted EBITDA (non-GAAP)	$	2,766	$	(837)	$	3,603	$	3,274	$	(3,038)	$	6,312

________________________________________________________

(1) Includes the following items for the three months ended September 30, 2021 and 2020: (i) net loss of $(3,789) and $(2,285), (ii) interest expense of $274 and $337, (iii) depreciation and amortization expense of $2,952 and $1,389, (iv) acquisition and transaction expenses of $0 and $(79) and (v) changes in fair value of non-hedge derivative instruments of $8,324 and $1,033, respectively. Includes the following items for the nine months ended September 30, 2021 and 2020: (i) net loss of $(9,262) and $(3,961), (ii) interest expense of $748 and $759, (iii) depreciation and amortization expense of $6,677 and $3,797, (iv) acquisition and transaction expenses of $0 and $533, (v) changes in fair value of non-hedge derivative instruments of $12,525 and $248 and (vi) asset impairment of $24 and $0, respectively.

(2) Includes the following items for the three months ended September 30, 2021 and 2020: (i) equity-based compensation of $6 and $7, (ii) interest expense of $9 and $10, (iii) depreciation and amortization expense of $79 and $13 and (iv) changes in fair value of non-hedge derivative instruments of $159 and $0, respectively. Includes the following items for the nine months ended September 30, 2021 and 2020: (i) equity-based compensation of $21 and $16, (ii) interest expense of $29 and $36, (iii) depreciation and amortization expense of $231 and $39 and (iv) changes in fair value of non-hedge derivative instruments of $(67) and $0, respectively.

Revenues

Total revenue decreased $1.7 million during the three months ended September 30, 2021, primarily due to a loss on butane forward purchase contracts at Repauno.

Total revenue increased $8.4 million during the nine months ended September 30, 2021, primarily due to (i) a gain on butane forward purchase and sale contracts at Repauno and (ii) operations commencing at the LPG facility at Repauno.

Expenses

Total expenses increased $4.5 million during the three months ended September 30, 2021 which reflects (i) higher operating expenses of $2.6 million due to increased activity at Repauno and (ii) higher depreciation and amortization of $1.9 million due to operations commencing at the LPG facility and additional assets placed into service at Repauno.

Total expenses increased $10.2 million during the nine months ended September 30, 2021 which reflects (i) higher operating expenses of $5.6 million due to increased activity at Repauno and (ii) higher depreciation and amortization of $5.6 million due to operations commencing at the LPG facility and additional assets placed into service at Repauno, partially offset by (iii) lower acquisition and transaction expense of $0.8 million at Long Ridge due to lower professional fees.

Other expense

Total other expense increased $5.5 million and $9.1 million during the three and nine months ended September 30, 2021, respectively, which reflects an increase in other expense and equity in losses in unconsolidated entities primarily due to unrealized losses on power swaps at Long Ridge.

Adjusted EBITDA (Non-GAAP)

Adjusted EBITDA increased $3.6 million and $6.3 million during the three and nine months ended September 30, 2021, respectively, primarily due to the changes noted above.

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Transtar

The following table presents our results of operations:

	Three Months Ended September 30,				Change		Nine Months Ended September 30,				Change
(in thousands)	2021		2020				2021		2020
Infrastructure revenues
Lease income	$	358	$	—	$	358	$	358	$	—	$	358
Rail revenues	24,182		—		24,182		24,182		—		24,182
Total revenues	24,540		—		24,540		24,540		—		24,540
Expenses
Operating expenses	12,877		—		12,877		12,877		—		12,877
Acquisition and transaction expenses	851		—		851		851		—		851
Depreciation and amortization	5,270		—		5,270		5,270		—		5,270
Interest expense	37		—		37		37		—		37
Total expenses	19,035		—		19,035		19,035		—		19,035
Other expense
Other expense	(197)		—		(197)		(197)		—		(197)
Total other expense	(197)		—		(197)		(197)		—		(197)
Income before income taxes	5,308		—		5,308		5,308		—		5,308
Provision for income taxes	1,128		—		1,128		1,128		—		1,128
Net income	4,180		—		4,180		4,180		—		4,180
Less: Net loss attributable to non-controlling interest in consolidated subsidiaries	—		—		—		—		—		—
Net income attributable to shareholders	$	4,180	$	—	$	4,180	$	4,180	$	—	$	4,180

The following table sets forth a reconciliation of net loss attributable to shareholders to Adjusted EBITDA:

	Three Months Ended September 30,				Change		Nine Months Ended September 30,				Change
(in thousands)	2021		2020				2021		2020
Net income attributable to shareholders	$	4,180	$	—	$	4,180	$	4,180	$	—	$	4,180
Add: Provision for income taxes	1,128		—		1,128		1,128		—		1,128
Add: Equity-based compensation expense	—		—		—		—		—		—
Add: Acquisition and transaction expenses	851		—		851		851		—		851
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	5,270		—		5,270		5,270		—		5,270
Add: Interest expense	37		—		37		37		—		37
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	$	11,466	$	—	$	11,466	$	11,466	$	—	$	11,466

All variances during the three and nine months ended September 30, 2021 reflect our acquisition of Transtar in July 2021.

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Corporate and Other

The following table presents our results of operations:

	Three Months Ended September 30,				Change		Nine Months Ended September 30,				Change
(in thousands)	2021		2020				2021		2020
Revenues
Equipment leasing revenues
Lease income	$	2,386	$	1,903	$	483	$	5,518	$	6,904	$	(1,386)
Other revenue	2,850		1,405		1,445		3,352		4,436		(1,084)
Total equipment leasing revenues	5,236		3,308		1,928		8,870		11,340		(2,470)
Infrastructure revenues
Other revenue	804		971		(167)		4,004		3,701		303
Total infrastructure revenues	804		971		(167)		4,004		3,701		303
Total revenues	6,040		4,279		1,761		12,874		15,041		(2,167)
Expenses
Operating expenses	6,792		6,248		544		19,149		17,508		1,641
General and administrative	4,422		4,241		181		12,329		13,292		(963)
Acquisition and transaction expenses	5,421		362		5,059		9,431		1,631		7,800
Management fees and incentive allocation to affiliate	3,845		4,591		(746)		11,948		14,113		(2,165)
Depreciation and amortization	2,106		1,994		112		6,257		5,937		320
Interest expense	50,100		25,119		24,981		115,604		63,289		52,315
Total expenses	72,686		42,555		30,131		174,718		115,770		58,948
Other (expense) income
Equity in earnings (losses) of unconsolidated entities	76		31		45		452		(52)		504
Loss on extinguishment of debt	—		—		—		(3,254)		—		(3,254)
Interest income	(1)		17		(18)		23		29		(6)
Other (expense) income	(1)		—		(1)		1		—		1
Total other income (expense)	74		48		26		(2,778)		(23)		(2,755)
Loss before income taxes	(66,572)		(38,228)		(28,344)		(164,622)		(100,752)		(63,870)
Provision for (benefit from) income taxes	—		40		(40)		(74)		243		(317)
Net loss	(66,572)		(38,268)		(28,304)		(164,548)		(100,995)		(63,553)
Less: Net loss attributable to non-controlling interest in consolidated subsidiaries	—		—		—		—		—		—
Less: Dividends on preferred shares	6,791		4,625		2,166		17,967		13,243		4,724
Net loss attributable to shareholders	$	(73,363)	$	(42,893)	$	(30,470)	$	(182,515)	$	(114,238)	$	(68,277)

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The following table sets forth a reconciliation of net loss attributable to shareholders to Adjusted EBITDA:

	Three Months Ended September 30,				Change		Nine Months Ended September 30,				Change
(in thousands)	2021		2020				2021		2020
Net loss attributable to shareholders	$	(73,363)	$	(42,893)	$	(30,470)	$	(182,515)	$	(114,238)	$	(68,277)
Add: Provision for (benefit from) income taxes	—		40		(40)		(74)		243		(317)
Add: Equity-based compensation expense	—		—		—		—		—		—
Add: Acquisition and transaction expenses	5,421		362		5,059		9,431		1,631		7,800
Add: Losses on the modification or extinguishment of debt and capital lease obligations	—		—		—		3,254		—		3,254
Add: Changes in fair value of non-hedge derivative instruments	—		—		—		—		—		—
Add: Asset impairment charges	—		—		—		—		—		—
Add: Incentive allocations	—		—		—		—		—		—
Add: Depreciation and amortization expense	2,106		1,994		112		6,257		5,937		320
Add: Interest expense	50,100		25,119		24,981		115,604		63,289		52,315
Add: Pro-rata share of Adjusted EBITDA from unconsolidated entities (1)	21		(28)		49		55		(111)		166
Less: Equity in (earnings) losses of unconsolidated entities	(76)		(31)		(45)		(452)		52		(504)
Less: Non-controlling share of Adjusted EBITDA	—		—		—		—		—		—
Adjusted EBITDA (non-GAAP)	$	(15,791)	$	(15,437)	$	(354)	$	(48,440)	$	(43,197)	$	(5,243)

________________________________________________________

(1) Includes the following items for the three months ended September 30, 2021 and 2020: (i) net loss of $(5) and $(58) and (ii) interest expense of $26 and $30, respectively. Includes the following items for the nine months ended September 30, 2021 and 2020: (i) net loss of $(24) and $(200) and (ii) interest expense of $79 and $89, respectively.

Revenues

Total revenues increased $1.8 million during the three months ended September 30, 2021, primarily due to an increase of $1.9 million in the offshore energy business which reflects higher victualling income on one of our vessels.

Total revenues decreased $2.2 million during the nine months ended September 30, 2021, primarily due to a decrease of $2.5 million in the offshore energy business as one of our vessels was on hire longer in 2020 compared to 2021.

Expenses

Comparison of the three months ended September 30, 2021 and 2020

Total expenses increased $30.1 million primarily due to higher (i) interest expense and (ii) acquisition and transaction expenses.

Interest expense increased $25.0 million, which reflects an increase in the average outstanding debt of approximately $892.7 million due to increases in (i) the Senior Notes due 2028 of $667.5 million, (ii) the Bridge Loans (as defined in Note 8) of $433.3 million, (iii) the Senior Notes due 2025 of $406.8 million and (iv) the Revolving Credit Facility (as defined below in Liquidity and Capital Resources) of $83.3 million, partially offset by a decrease in (v) the Senior Notes due 2022 of $698.3 million, which was redeemed in full in May 2021.

Acquisition and transaction expense increased $5.1 million, primarily due to professional fees related to the acquisition of Transtar in July 2021.

Comparison of the nine months ended September 30, 2021 and 2020

Total expenses increased $58.9 million primarily due to higher (i) interest expense and (ii) acquisition and transaction expense, partially offset by lower (iii) management fees and incentive allocation to affiliate.

Interest expense increased $52.3 million, which reflects an increase in the average outstanding debt of approximately $688.8 million primarily due to increases in (i) the Senior Notes due 2025 of $407.1 million, (ii) the Senior Notes due 2028 of $389.2 million, (iii) the Senior Notes due 2027 of $266.7 million, (iv) the Bridge Loans of $144.4 million and (v) the Revolving Credit Facility of $10.0 million, partially offset by a decrease in (vi) the Senior Notes due 2022 of $520.7 million, which was redeemed in full in May 2021.

Acquisition and transaction expense increased $7.8 million, primarily due to professional fees related to the acquisition of Transtar in July 2021.

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Management fees and incentive allocation to affiliate decreased $2.2 million, which reflects a decrease in the base management fee as our average total equity is lower in 2021 compared to 2020.

Other expense

Total other expense increased $2.8 million during the nine months ended September 30, 2021, primarily due to (i) a loss on extinguishment of debt of $3.3 million related to the redemption of the Senior Notes due 2022 in May 2021, partially offset by (ii) an increase of $0.5 million in equity in earnings of unconsolidated entities.

Adjusted EBITDA (Non-GAAP)

Adjusted EBITDA decreased $0.4 million and $5.2 million during the three and nine months ended September 30, 2021, respectively, primarily due to the changes noted above.

Liquidity and Capital Resources

In April 2021, we issued $500 million aggregate principal amount of senior unsecured notes due 2028 (see Note 10 to the consolidated financial statements). On May 7, 2021, we used a portion of the net proceeds to redeem in full the Senior Notes due 2022, which totaled $400 million aggregate principal plus accrued and unpaid interest.

In July 2021, we entered into a senior unsecured bridge term loan facility (the “Bridge Loans”) in an aggregate principal amount of $650 million in order to finance the acquisition of Transtar, which closed on July 28, 2021. We issued new equity and debt in September 2021, as described below, and repaid in full the Bridge Loans.

In August 2021, Jefferson issued $425 million aggregate principal amount of Series 2021 Bonds (see Note 10 to the consolidated financial statements). Jefferson used a portion of the net proceeds from the Series 2021 Bonds to repay certain indebtedness, and intend to use a portion of the net proceeds to pay for or reimburse the cost of development, construction and acquisition of certain facilities.

In September 2021, we issued 12,000,000 common shares and received net proceeds of approximately $291.7 million after deducting underwriting discounts and offering expenses (see Note 20 to the consolidated financial statements). The proceeds were used to repay a portion of the Bridge Loans. Additionally, in October 2021, the underwriters exercised an option to purchase an additional 1,283,863 common shares and we received net proceeds of approximately $31 million.

In September 2021, we issued an additional $500 million aggregate principal amount of the Senior Notes due 2028 (see Note 10 to the consolidated financial statements). We used a portion of the net proceeds to repay in full the Bridge Loans.

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 capital projects amid the COVID-19 pandemic.

Our principal uses of liquidity have been and continue to be (i) acquisitions of transportation infrastructure and equipment, (ii) dividends to our shareholders and holders of eligible participating securities, (iii) expenses associated with our operating activities, and (iv) debt service obligations associated with our investments.

•Cash used for the purpose of making investments was $484.7 million and $470.3 million during the nine months ended September 30, 2021 and 2020, respectively.

•Cash used for the acquisition of a business, net of cash acquired was $627.4 million during the nine months ended September 30, 2021.

•Dividends to shareholders and holders of eligible participating securities were $103.2 million and $98.4 million during the nine months ended September 30, 2021 and 2020, 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 equipment assets (including finance lease collections and maintenance reserve collections) net of operating expenses, (ii) proceeds from borrowings or the issuance of securities and (iii) proceeds from asset sales.

•Cash flows provided from operating activities, plus the principal collections on finance leases and maintenance reserve collections were $4.1 million and $60.5 million during the nine months ended September 30, 2021 and 2020, respectively.

•During the nine months ended September 30, 2021, additional borrowings were obtained in connection with the (i) Senior Notes due 2028 of $1,002.5 million, (ii) Bridge Loans of $650.0 million, (iii) Revolving Credit Facility of $450.0 million, (iv) Series 2021 Bonds of $425.0 million and (v) EB-5 Loan Agreement of $26.1 million. We made total principal repayments of $1,452.7 million relating to the Bridge Loans, Senior Notes due 2022 and Revolving Credit Facility. During the nine months ended September 30, 2020, additional borrowings were obtained in connection with the (i) 2027 Notes of $400.0 million, (ii) Series 2020 Bonds of $264.0 million and (iii) Revolving Credit Facility of $220.0 million. We

62

made total principal repayments of $496.0 million relating to the Revolving Credit Facility, Series 2016 Bonds, Series 2012 Bonds, Jefferson Revolver and FTAI Pride Credit Agreement.

•Proceeds from the sale of assets were $78.5 million and $53.7 million during the nine months ended September 30, 2021 and 2020, respectively.

•Proceeds from the issuance of common shares, net of underwriter’s discount and issuance costs were $291.8 million during the nine months ended September 30, 2021.

•Proceeds from the issuance of preferred shares, net of underwriter’s discount and issuance costs were $101.2 million and $20.2 million during the nine months ended September 30, 2021 and 2020, respectively.

We are currently evaluating several potential Infrastructure and Equipment Leasing transactions, which could occur within the next 12 months. However, as of the date of this filing, other than the acquisition of Transtar, LLC, none of these transactions or negotiations are definitive or included within our planned liquidity needs. We cannot assure if or when any such transaction will be consummated or the terms of any such transaction.

Historical Cash Flow

Comparison of the nine months ended September 30, 2021 and 2020

The following table compares the historical cash flow for the nine months ended September 30, 2021 and 2020:

	Nine Months Ended September 30,
(in thousands)	2021	2020
Cash Flow Data:
Net cash (used in) provided by operating activities	$<