FTAI Aviation Ltd. 10-Q

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, 2020 December 31, 2019 Assets Cash and cash equivalents 2 $ 119,799 $ 226,512 Restricted cash 2 43,607 16,005 Accounts receivable, net 78,054 49,470 Leasing equipment, net 4 1,703,498 1,707,059 Operating lease right-of-use assets, net 13 62,588 37,466 Finance leases, net 5 13,189 8,315 Property, plant, and equipment, net 6 917,872 732,109 Investments 7 158,215 180,550 Intangible assets, net 8 21,142 27,692 Goodwill 122,735 122,639 Other assets 2 134,631 129,105 Total assets $ 3,375,330 $ 3,236,922 Liabilities Accounts payable and accrued liabilities $ 88,050 $ 144,855 Debt, net 9 1,801,573 1,420,928 Maintenance deposits 154,661 208,944 Security deposits 35,836 45,252 Operating lease liabilities 13 62,209 36,968 Other liabilities 32,154 41,118 Total liabilities $ 2,174,483 $ 1,898,065 Commitments and contingencies 19 Equity Common shares ($ 0.01 par value per share; 2,000,000,000 shares authorized; 85,617,146 and 84,917,448 shares issued and outstanding as of September 30, 2020 and December 31, 2019, respectively) $ 856 $ 849 Preferred shares ($ 0.01 par value per share; 200,000,000 shares authorized; 9,120,000 and 8,050,000 shares issued and outstanding as of September 30, 2020 and December 31, 2019, respectively) 91 81 Additional paid in capital 1,130,121 1,110,122 Retained earnings 60,760 190,453 Accumulated other comprehensive (loss) income ( 16,450 ) 372 Shareholders' equity 1,175,378 1,301,877 Non-controlling interest in equity of consolidated subsidiaries 25,469 36,980 Total equity 1,200,847 1,338,857 Total liabilities and equity $ 3,375,330 $ 3,236,922 See accompanying notes to consolidated financial statements. 5 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 2020 2019 2020 2019 Revenues Equipment leasing revenues $ 69,799 $ 87,259 $ 236,082 $ 238,911 Infrastructure revenues 13,910 65,441 54,776 178,531 Total revenues 12 83,709 152,700 290,858 417,442 Expenses Operating expenses 23,128 82,719 81,144 222,812 General and administrative 4,241 5,535 13,292 13,270 Acquisition and transaction expenses 2,442 5,343 9,297 9,125 Management fees and incentive allocation to affiliate 16 4,591 7,378 14,113 16,926 Depreciation and amortization 4, 6, 8 42,626 43,265 126,543 124,180 Asset impairment 3,915 — 14,391 — Interest expense 26,904 25,190 71,559 71,318 Total expenses 107,847 169,430 330,339 457,631 Other (expense) income Equity in losses of unconsolidated entities 7 ( 2,501 ) ( 974 ) ( 5,445 ) ( 1,527 ) (Loss) gain on sale of assets, net ( 1,114 ) 37,060 ( 2,165 ) 61,400 Loss on extinguishment of debt 9 — — ( 4,724 ) — Interest income 58 121 121 452 Other income — 1,131 32 3,465 Total other (expense) income ( 3,557 ) 37,338 ( 12,181 ) 63,790 (Loss) income from continuing operations before income taxes ( 27,695 ) 20,608 ( 51,662 ) 23,601 (Benefit from) provision for income taxes 15 ( 2,486 ) 872 ( 6,334 ) ( 1,189 ) Net (loss) income from continuing operations ( 25,209 ) 19,736 ( 45,328 ) 24,790 Net income from discontinued operations, net of income taxes — 940 1,331 1,883 Net (loss) income ( 25,209 ) 20,676 ( 43,997 ) 26,673 Less: Net (loss) income attributable to non-controlling interests in consolidated subsidiaries: Continuing operations ( 3,876 ) ( 5,111 ) ( 12,724 ) ( 13,051 ) Discontinued operations — 116 — 101 Dividends on preferred shares 4,625 — 13,243 — Net (loss) income attributable to shareholders $ ( 25,958 ) $ 25,671 $ ( 44,516 ) $ 39,623 (Loss) earnings per share: 18 Basic Continuing operations $ ( 0.30 ) $ 0.29 $ ( 0.53 ) $ 0.44 Discontinued operations $ — $ 0.01 $ 0.02 $ 0.02 Diluted Continuing operations $ ( 0.30 ) $ 0.29 $ ( 0.53 ) $ 0.44 Discontinued operations $ — $ 0.01 $ 0.02 $ 0.02 Weighted average shares outstanding: Basic 86,022,302 85,996,067 86,013,485 85,990,131 Diluted 86,022,302 86,005,604 86,013,485 86,013,539 See accompanying notes to consolidated financial statements. 6 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, 2020 2019 2020 2019 Net (loss) income $ ( 25,209 ) $ 20,676 $ ( 43,997 ) $ 26,673 Other comprehensive (loss) income: Other comprehensive (loss) income related to equity method investees, net (1) ( 13,468 ) ( 8,584 ) ( 16,822 ) 25,474 Comprehensive (loss) income ( 38,677 ) 12,092 ( 60,819 ) 52,147 Comprehensive (loss) income attributable to non-controlling interest: Continuing operations ( 3,876 ) ( 5,111 ) ( 12,724 ) ( 13,051 ) Discontinued operations — 116 — 101 Comprehensive (loss) income attributable to shareholders $ ( 34,801 ) $ 17,087 $ ( 48,095 ) $ 65,097 ________________________________________________________ (1) Net of deferred tax (benefit) expense of $( 3,580 ) and $( 2,282 ) for the three months ended September 30, 2020 and 2019, respectively, and $( 4,474 ) and $ 3,904 for the nine months ended September 30, 2020 and 2019, 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, 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 ( 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 ( 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 Three and Nine Months Ended September 30, 2019 Common Shares Preferred Shares Additional Paid In Capital (Accumulated Deficit) Retained Earnings Accumulated Other Comprehensive Income (Loss) Non-Controlling Interest in Equity of Consolidated Subsidiaries Total Equity Equity - December 31, 2018 $ 840 $ — $ 1,029,376 $ ( 32,817 ) $ — $ 56,383 $ 1,053,782 Net income (loss) 13,952 ( 7,955 ) 5,997 Other comprehensive income — 34,058 — 34,058 Total comprehensive income (loss) 13,952 34,058 ( 7,955 ) 40,055 Issuance of common shares 8 234 — 242 Conversion of participating securities ( 7 ) ( 7 ) Dividends declared - common shares ( 56,767 ) — ( 56,767 ) Equity-based compensation — 928 928 Equity - June 30, 2019 $ 848 $ — $ 972,836 $ ( 18,865 ) $ 34,058 $ 49,356 $ 1,038,233 Net income (loss) 25,671 ( 4,995 ) 20,676 Other comprehensive loss — ( 8,584 ) — ( 8,584 ) Total comprehensive income (loss) 25,671 ( 8,584 ) ( 4,995 ) 12,092 Issuance of common shares 1 150 — 151 Conversion of participating securities ( 1 ) ( 1 ) Dividends declared - common shares ( 28,387 ) — ( 28,387 ) Issuance of preferred shares 35 82,853 82,888 Equity-based compensation — 676 676 Equity - September 30, 2019 $ 849 $ 35 $ 1,027,451 $ 6,806 $ 25,474 $ 45,037 $ 1,105,652 See accompanying notes to consolidated financial statements. 8 FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) (Dollars in thousands) Nine Months Ended September 30, 2020 2019 Cash flows from operating activities: Net (loss) income $ ( 43,997 ) $ 26,673 Adjustments to reconcile net (loss) income to net cash provided by operating activities: Equity in losses of unconsolidated entities 5,445 1,527 Gain on sale of subsidiaries ( 1,331 ) — Loss (gain) on sale of assets, net 2,165 ( 61,416 ) Security deposits and maintenance claims included in earnings ( 12,275 ) ( 3,863 ) Loss on extinguishment of debt 4,724 — Equity-based compensation 1,323 1,604 Depreciation and amortization 126,543 125,877 Asset impairment 14,391 — Change in current and deferred income taxes ( 7,374 ) ( 1,906 ) Change in fair value of non-hedge derivative 181 4,130 Amortization of lease intangibles and incentives 23,394 24,008 Amortization of deferred financing costs 6,156 5,995 Bad debt expense 1,997 3,139 Other 1,152 748 Change in: Accounts receivable ( 43,014 ) ( 16,002 ) Other assets 1,253 ( 15,128 ) Accounts payable and accrued liabilities ( 32,415 ) 2,101 Management fees payable to affiliate ( 20,965 ) 8,961 Other liabilities 1,040 ( 13,735 ) Net cash provided by operating activities 28,393 92,713 Cash flows from investing activities: Investment in unconsolidated entities ( 4,407 ) ( 13,500 ) Principal collections on finance leases 7,001 13,094 Acquisition of leasing equipment ( 252,859 ) ( 287,508 ) Acquisition of property, plant and equipment ( 209,662 ) ( 243,707 ) Acquisition of lease intangibles 1,997 ( 101 ) Purchase deposits for acquisitions ( 5,320 ) ( 45,852 ) Proceeds from sale of leasing equipment 53,707 166,290 Proceeds from sale of property, plant and equipment — 7 Return of capital distributions from unconsolidated entities — 1,424 Return of deposit on sale of engine 2,350 — Net cash used in investing activities $ ( 407,193 ) $ ( 409,853 ) See accompanying notes to consolidated financial statements. 9 FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) (Dollars in thousands) Nine Months Ended September 30, 2020 2019 Cash flows from financing activities: Proceeds from debt $ 883,981 $ 568,704 Repayment of debt ( 495,991 ) ( 218,934 ) Payment of deferred financing costs ( 20,416 ) ( 31,585 ) Receipt of security deposits 1,564 5,802 Return of security deposits ( 3,815 ) ( 368 ) Receipt of maintenance deposits 25,102 49,356 Release of maintenance deposits ( 12,429 ) ( 23,822 ) Proceeds from issuance of preferred shares, net of underwriter's discount and issuance costs 20,223 82,888 Purchase of non-controlling interest ( 110 ) — Cash dividends - common shares ( 85,177 ) ( 85,154 ) Cash dividends - preferred shares ( 13,243 ) — Net cash provided by financing activities $ 299,689 $ 346,887 Net (decrease) increase in cash and cash equivalents and restricted cash ( 79,111 ) 29,747 Cash and cash equivalents and restricted cash, beginning of period 242,517 120,837 Cash and cash equivalents and restricted cash, end of period $ 163,406 $ 150,584 Supplemental disclosure of non-cash investing and financing activities: Acquisition of leasing equipment $ 59,056 $ 3,386 Acquisition of property, plant and equipment ( 9,406 ) ( 22,736 ) Settled and assumed security deposits ( 6,215 ) ( 1,007 ) Billed, assumed and settled maintenance deposits ( 34,253 ) 12,471 Change in fair value of cash flow hedge — 25,474 Non-cash change in equity method investment ( 16,822 ) — Issuance of common shares 304 385 See accompanying notes to consolidated financial statements. 10 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”) and (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”). Additionally, we own and lease offshore energy equipment and shipping containers. We have three reportable segments, (i) Aviation Leasing, (ii) Jefferson Terminal and (iii) Ports and Terminals, which operate in two primary businesses, Equipment Leasing and Infrastructure (see Note 17). 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. 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. 11 FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (Dollars in tables in thousands, unless otherwise noted) Restricted Cash — Restricted cash consists of prepaid interest and principal pursuant to the requirements of certain of our debt agreements (see Note 9) and other qualifying construction projects at Jefferson Terminal. Inventory — 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 $ 1.5 million and $ 5.6 million as of September 30, 2020 and December 31, 2019, 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 $ 31.3 million and $ 18.1 million as of September 30, 2020 and December 31, 2019, 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 $ 2.0 million and $ 1.7 million as of September 30, 2020 and December 31, 2019, respectively, which are included in Other assets in the Consolidated Balance Sheets. Amortization expense was $ 2.1 million an d $ 1.9 million for the three months ended September 30, 2020 and 2019, respectively, and $ 6.2 million and $ 6.0 million for the nine months ended September 30, 2020 and 2019, 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 net 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 amount 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. For purchase and lease back transactions, we account for the transaction as a single arrangement. We allocate the consideration paid based on the fair value of the aircraft and lease. The fair value of the lease may include a lease premium or discount. 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 three and nine months ended September 30, 2020. 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 lease 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. 12 FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (Dollars in tables in thousands, unless otherwise noted) 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 s of the relevant lease agreement. Crude Marketing Revenues —Crude marketing revenues consists 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. 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. 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. During the three months ended September 30, 2020, one customer in the Aviation Leasing segment accounted for approximately 11 % of total revenue. During the three months ended September 30, 2019, one customer in the Jefferson Terminal segment accounted for approximately 17 % of total revenue. During the nine months ended September 30, 2020, one customer in the Aviation segment accounted for approximately 11 % of total revenue. During the nine months ended September 30, 2019, one customer in the Jefferson Terminal segment accounted for approximately 19 % of total revenue. As of September 30, 2020, there were two customers in the Aviation Leasing segment that represented 32 % and 14 % of total accounts receivable, net, respectively. As of December 31, 2019, accounts receivable from one customer in the Jefferson Terminal segment represented 16 % 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 $ 2.8 million and $ 1.3 million as of September 30, 2020 and December 31, 2019, respectively. Bad debt expense was $ 0.2 million and $ 0.0 million for the three months ended September 30, 2020 and 2019, respectively, and $ 2.0 million and $ 3.0 million for the nine months ended September 30, 2020 and 2019, 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 related to our equity method investees. 13 FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (Dollars in tables in thousands, unless otherwise noted) 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 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 Investment 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. See Note 11 for additional details. 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. To the extent that we have outstanding derivatives, they are not used for speculative purposes. We record all derivative assets and liabilities on a gross basis at fair value and 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 $ 48.5 million and $ 45.3 million, prepaid expenses of $ 6.0 million and $ 4.1 million, notes receivable of $ 7.8 million and $ 2.4 million and maintenance right assets of $ 13.6 million and $ 24.5 million as of September 30, 2020 and December 31, 2019, respectively. Dividends— Dividends are recorded if and when declared by the Board of Directors. For both the three and nine months ended September 30, 2020 and 2019, the Board of Directors declared a cash dividend of $ 0.33 and $ 0.99 per common share. Additionally, in the quarter ended September 30, 2020, the Board of Directors declared a cash dividend on the Series A Preferred Shares and Series B Preferred Shares of $ 0.52 and $ 0.50 per share, respectively. Recent Accounting Pronouncements — In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”) . For assets held at amortized cost basis, ASU 2016-13 eliminates the probable initial recognition threshold in current GAAP and, instead, requires an entity to reflect its current estimate of all expected credit losses. The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of the financial assets to present the net amount expected to be collected. For available for sale debt securities, credit losses should be measured in a manner similar to current GAAP, however this ASU requires that credit losses be presented as an allowance rather than as a write-down. This ASU affects entities holding financial assets and net investment in leases that are not accounted for at fair value through net income. The amendments affect loans, debt securities, trade receivables, net investments in leases, off balance sheet credit exposures, reinsurance receivables, and any other financial assets not excluded from the scope that have the contractual right to receive cash. We adopted this ASU in the first quarter of 2020 and adoption did not have a material impact on our consolidated financial statements. In January 2017, the FASB issued ASU 2017-04, Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment (“ASU 2017-04”). ASU 2017-04 addresses concerns over the cost and complexity of the two-step goodwill impairment test by removing the second step of the test. An entity will apply a one-step quantitative test and record the amount of goodwill impairment as the excess of a reporting unit's carrying amount over its fair value, not to exceed the total amount of goodwill allocated to the reporting unit. The new guidance does not amend the optional qualitative assessment of goodwill impairment. We adopted this ASU in the first quarter of 2020 and adoption did not have a material impact on our consolidated financial statements. In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement . This ASU eliminates, adds and modifies certain disclosure requirements for fair value measurements as part of its disclosure framework project. We adopted this ASU in the first quarter of 2020 and adoption did not have a material impact on our consolidated financial statements. 14 FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (Dollars in tables in thousands, unless otherwise noted) In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting , which temporarily simplifies 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. Unadopted Accounting Pronouncements — 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 are currently assessing the impact this guidance will 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. The following table presents the significant components of net income from discontinued operations: Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Revenues Total revenues $ — $ 9,521 $ — $ 28,411 Expenses Operating expense — 7,398 — 23,280 Acquisition and transaction expenses — 275 — 275 Depreciation and amortization — 479 — 1,697 Interest expense — 298 — 945 Total expenses — 8,450 — 26,197 Gain on sale of assets, net — 1 1,331 16 Other income — 1 1,331 16 Income before income taxes — 1,072 1,331 2,230 Provision for income taxes — 132 — 347 Net income — 940 1,331 1,883 Less: Net income (loss) attributable to non-controlling interests in consolidated subsidiaries — 116 — 101 Net income attributable to shareholders $ — $ 824 $ 1,331 $ 1,782 The following table presents the significant non-cash items and capital expenditures from discontinued operations: Nine Months Ended September 30, 2020 2019 Operating activities: Depreciation and amortization $ — $ 1,697 Bad debt expense — 156 Share-based compensation expense — 438 Investing activities: Purchases of property, plant and equipment $ — $ 4,500 15 FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (Dollars in tables in thousands, unless otherwise noted) 4. LEASING EQUIPMENT, NET Leasing equipment, net is summarized as follows: September 30, 2020 December 31, 2019 Leasing equipment $ 2,099,803 $ 2,019,773 Less: accumulated depreciation ( 396,305 ) ( 312,714 ) Leasing equipment, net $ 1,703,498 $ 1,707,059 During the nine months ended September 30, 2020, we performed impairment analyses over certain of our leasing equipment and determined that the carrying amount of certain assets were not recoverable. 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 $ 14.4 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, 2020: Acquisitions: Aircraft 19 Engines 22 Dispositions: Aircraft — Engines 20 Depreciation expense for leasing equipment is summarized as follows: Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Depreciation expense for leasing equipment $ 35,104 $ 36,034 $ 104,121 $ 103,080 5. FINANCE LEASES, NET Finance leases, net are summarized as follows: September 30, 2020 December 31, 2019 Finance leases $ 16,748 $ 12,388 Unearned revenue ( 3,559 ) ( 4,073 ) Finance leases, net $ 13,189 $ 8,315 We entered into a 15 month sales-type lease agreement for three of our engines during the nine months ended September 30, 2020. 16 FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (Dollars in tables in thousands, unless otherwise noted) 6. PROPERTY, PLANT AND EQUIPMENT, NET Property, plant and equipment, net is summarized as follows: September 30, 2020 December 31, 2019 Land, site improvements and rights $ 52,045 $ 51,901 Construction in progress 393,111 211,110 Buildings and improvements 4,341 3,783 Terminal machinery and equipment 536,664 519,603 Track and track related assets 2,350 2,208 Railroad equipment 5,671 4,823 Computer hardware and software 5,093 4,325 Furniture and fixtures 2,457 2,322 Other 5,888 1,969 1,007,620 802,044 Less: accumulated depreciation ( 89,748 ) ( 69,935 ) Property, plant and equipment, net $ 917,872 $ 732,109 During the nine months ended September 30, 2020, we added property, plant and equipment of $ 205.6 million, which primarily consists of 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, 2020 2019 2020 2019 Depreciation expense for property, plant and equipment: Continuing operations $ 6,634 $ 6,343 $ 19,757 $ 18,435 Discontinued operations — 479 — 1,682 Total $ 6,634 $ 6,822 $ 19,757 $ 20,117 7. INVESTMENTS The following table presents the ownership interests and carrying values of our investments: Carrying Value Investment Ownership Percentage September 30, 2020 December 31, 2019 Advanced Engine Repair JV Equity method 25 % $ 23,220 $ 24,652 Intermodal Finance I, Ltd. Equity method 51 % 51 501 Long Ridge Terminal LLC Equity method 50 % 133,688 155,397 FYX Trust Holdco LLC Equity 14 % 1,256 — Investments $ 158,215 $ 180,550 We did not recognize any other-than-temporary impairments for the three and nine months ended September 30, 2020 or 2019. 17 FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (Dollars in tables in thousands, unless otherwise noted) The following table presents our proportionate share of equity in income (losses): Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Advanced Engine Repair JV $ ( 247 ) $ ( 885 ) $ ( 1,432 ) $ ( 1,328 ) JGP Energy Partners LLC — ( 162 ) — ( 290 ) Intermodal Finance I, Ltd. 32 73 ( 51 ) 91 Long Ridge Terminal LLC ( 2,286 ) — ( 3,962 ) — Total $ ( 2,501 ) $ ( 974 ) $ ( 5,445 ) $ ( 1,527 ) 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 25 % interest in an advanced engine repair joint venture. We focus on developing new costs 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. JGP Energy Partners LLC In 2016, we initiated activities in a 50 % non-controlling interest in JGP, a joint venture. JGP was governed by a designated operating committee selected by the members in proportion to their equity interests. JGP was solely reliant on its members to finance its activities and therefore was a VIE. Initially, we concluded that we were not the primary beneficiary of JGP as the members shared equally in the risks and rewards and decision making authority of the entity and, therefore, we did not consolidate JGP and instead accounted for this investment in accordance with the equity method. In December 2019, we purchased the remaining 50 % interest in JGP from the joint venture partner for a purchase price of approximately $ 30 million, consolidated JGP and no longer account for this as an equity method investment. Intermodal Finance I, Ltd. In 2012, we acquired a 51 % non-controlling interest in Intermodal Finance I, Ltd. (“Intermodal”), a joint venture. Intermodal is governed by a board of directors, and its shareholders have voting rights through their equity interests. As such, Intermodal is not within the scope of ASC 810-20 and should be evaluated for consolidation under the voting interest model. Due to the existence of substantive participating rights of the 49 % equity investor, including the joint approval of material operating and capital decisions, such as material contracts and capital expenditures consistent with ASC 810-10-25-11, we do not have unilateral rights over this investment; therefore, we do not consolidate Intermodal but account for this investment in accordance with the equity method. We do not have a variable interest in this investment as none of the criteria of ASC 810-10-15-14 were met. As of September 30, 2020, Intermodal owns a portfolio of approximately 2,000 shipping containers subject to multiple operating leases. 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. 18 FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (Dollars in tables in thousands, unless otherwise noted) 8. INTANGIBLE ASSETS AND LIABILITIES, NET Intangible assets and liabilities, net are summarized as follows: September 30, 2020 Aviation Leasing Jefferson Terminal Total Intangible assets Acquired favorable lease intangibles $ 35,349 $ — $ 35,349 Less: Accumulated amortization ( 28,124 ) — ( 28,124 ) Acquired favorable lease intangibles, net 7,225 — 7,225 Customer relationships — 35,513 35,513 Less: Accumulated amortization — ( 21,596 ) ( 21,596 ) Acquired customer relationships, net — 13,917 13,917 Total intangible assets, net $ 7,225 $ 13,917 $ 21,142 Intangible liabilities Acquired unfavorable lease intangibles $ 7,151 $ — $ 7,151 Less: Accumulated amortization ( 3,868 ) — ( 3,868 ) Acquired unfavorable lease intangibles, net $ 3,283 $ — $ 3,283 December 31, 2019 Aviation Leasing Jefferson Terminal Total Intangible assets Acquired favorable lease intangibles $ 49,762 $ — $ 49,762 Less: Accumulated amortization ( 38,652 ) — ( 38,652 ) Acquired favorable lease intangibles, net 11,110 — 11,110 Customer relationships — 35,513 35,513 Less: Accumulated amortization — ( 18,931 ) ( 18,931 ) Acquired customer relationships, net — 16,582 16,582 Total intangible assets, net $ 11,110 $ 16,582 $ 27,692 Intangible liabilities Acquired unfavorable lease intangibles $ 5,170 $ — $ 5,170 Less: Accumulated amortization ( 3,014 ) — ( 3,014 ) Acquired unfavorable lease intangibles, net $ 2,156 $ — $ 2,156 Intangible liabilities relate to unfavorable lease intangibles and are included as a component of other liabilities in the Consolidated Balance Sheets. 19 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, 2020 2019 2020 2019 Lease intangibles Equipment leasing revenues $ 953 $ 1,072 $ 3,016 $ 5,736 Customer relationships: Depreciation and amortization Continuing operations 888 888 2,665 2,665 Discontinued operations — — — 15 Total $ 1,841 $ 1,960 $ 5,681 $ 8,416 As of September 30, 2020, estimated net annual amortization of intangibles is as follows: Remainder of 2020 $ 1,647 2021 6,295 2022 4,338 2023 3,343 2024 2,236 Thereafter — Total $ 17,859 20 FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (Dollars in tables in thousands, unless otherwise noted) 9. DEBT, NET Our debt, net is summarized as follows: September 30, 2020 December 31, 2019 Outstanding Borrowings Stated Interest Rate Maturity Date Outstanding Borrowings Loans payable FTAI Pride Credit Agreement $ — N/A N/A $ 36,009 Revolving Credit Facility (1) — (i) Base Rate + 2.00 %; or (ii) Adjusted Eurodollar Rate + 3.00 % 1/31/2022 — Jefferson Revolver — N/A N/A 50,000 DRP Revolver (2) 25,000 (i) Base Rate + 1.50 %; or (ii) Base Rate + 2.50 % (Eurodollar) 11/5/2021 25,000 Total loans payable 25,000 111,009 Bonds payable Series 2012 Bonds (3) — N/A N/A 41,059 Series 2016 Bonds — N/A N/A 144,200 Series 2020 Bonds 263,980 See below See below — Senior Notes due 2022 (4) 698,413 6.75 % 3/15/2022 697,814 Senior Notes due 2025 (5) 445,507 6.50 % 10/1/2025 444,957 Senior Notes due 2027 400,000 9.75 % 8/1/2027 — Total bonds payable 1,807,900 1,328,030 Debt 1,832,900 1,439,039 Less: Debt issuance costs ( 31,327 ) ( 18,111 ) Total debt, net $ 1,801,573 $ 1,420,928 Total debt due within one year $ — $ 182,019 ________________________________________________________ (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 unamortized premium of $ 1,509 as of December 31, 2019. (4) Includes unamortized discount of $ 3,790 and $ 5,429 at September 30, 2020 and December 31, 2019, respectively, and an unamortized premium of $ 2,203 and $ 3,243 at September 30, 2020 and December 31, 2019, respectively. (5) Includes unamortized discount of $ 4,493 and $ 5,043 at September 30, 2020 and December 31, 2019, respectively. Series 2020 Bonds — On February 11, 2020, our subsidiary (“Jefferson”) issued Series 2020 Bonds in an aggregate principal amount of approximately $ 264.0 million (“Jefferson Refinancing”). The Series 2020 Bonds are designated as $ 184.9 million of Series 2020A Dock and Wharf Facility Revenue Bonds (the “Tax Exempt Series 2020A Bonds”), and $ 79.1 million of Series 2020B Taxable Facility Revenue Bonds (the “Taxable Series 2020B Bonds”). The Tax Exempt Series 2020A Bonds maturing on January 1, 2035 ($ 53.5 million aggregate principal amount) bear interest at a fixed rate of 3.625 %. The Tax Exempt Series 2020A Bonds maturing on January 1, 2050 ($ 131.4 million aggregate principal amount) bear interest at a fixed rate of 4.00 %. The Taxable Series 2020B Bonds will mature on January 1, 2025 and bear interest at a fixed rate of 6.00 %. Jefferson used a portion of the net proceeds from this offering to refund, redeem and defease the Series 2012 Bonds, Series 2016 Bonds and Jefferson Revolver, and intends to use a portion of the net proceeds to pay for or reimburse the cost of development, construction and acquisition of certain facilities, to fund certain reserve and funded interest accounts related to the Series 2020 Bonds, and to pay for or reimburse certain costs of issuance of the Series 2020 Bonds. 21 FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (Dollars in tables in thousands, unless otherwise noted) Jefferson recognized a loss on extinguishment of debt of $ 4.7 million as a result of this transaction. FTAI Pride Credit Agreement — During March 2020, we repaid the FTAI Pride Credit Agreement in full. Revolving Credit Facility — On May 11, 2020, we entered into an amendment to the Revolving Credit Facility which, among other things, (i) permits the incurrence of additional secured indebtedness to finance the potential acquisition of certain aviation assets, subject to certain limitations, (ii) provides that, to the extent borrowings under the Existing Credit Agreement exceed $ 150 million, we will pledge certain aviation assets as additional collateral and (iii) incorporates certain other updates, including procedures by which the parties will select a replacement benchmark interest rate in the event that LIBOR is no longer available or appropriate as a reference rate upon which to determine the interest rate under the Existing Credit Agreement. Senior Notes due 2027 — On July 28, 2020, we issued $ 400 million aggregate principal amount of senior unsecured notes due 2027 (the “2027 Notes”). The 2027 Notes bear interest at a rate of 9.75 % per annum, payable semi-annually in arrears on February 1 and August 1 of each year, commencing on February 1, 2021. We used a portion of the proceeds to repay $ 220 million of outstanding borrowings under the Revolving Credit Facility, and intend to use the remaining proceeds for general corporate purposes, and the funding of future acquisitions and investments, including aviation investments. We were in compliance with all debt covenants as of September 30, 2020. 10. 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). 22 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, 2020 and December 31, 2019, 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, 2020 September 30, 2020 Total Level 1 Level 2 Level 3 Valuation Technique Assets Cash and cash equivalents $ 119,799 $ 119,799 $ — $ — Market Restricted cash 43,607 43,607 — — Market Total assets $ 163,406 $ 163,406 $ — $ — Fair Value as of Fair Value Measurements Using Fair Value Hierarchy as of December 31, 2019 December 31, 2019 Total Level 1 Level 2 Level 3 Valuation Technique Assets Cash and cash equivalents $ 226,512 $ 226,512 $ — $ — Market Restricted cash 16,005 16,005 — — Market Derivative assets 181 — — 181 Income Total $ 242,698 $ 242,517 $ — $ 181 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. The fair value of our commodity derivative assets and liabilities classified as Level 3 measurements are estimated by applying the income approach, which is based on discounted projected future cash flows. The valuation of our electricity derivatives within our equity method investment in Long Ridge is based on management’s best estimate of certain key assumptions, which include extrapolated power forward curves for periods with unobservable market pricing, credit valuation adjustments utilizing estimated cash flows, estimated price volatility and probability of default, and the discount rate. The valuation of our commodity derivatives is based on management’s best estimate of certain key assumptions, which include an estimated differential factor for varying quality of commodity and the discount rate. 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, 2020 December 31, 2019 Series 2012 Bonds (1) $ — $ 41,450 Series 2016 Bonds (1) — 145,143 Series A 2020 Bonds (2) 180,811 — Series B 2020 Bonds (2) 77,971 — Senior Notes due 2022 696,962 731,451 Senior Notes due 2025 445,365 475,884 Senior Notes due 2027 428,404 — ________________________________________________________ (1) These bonds were defeased as part of the Jefferson Refinancing. See Note 9 for additional details. (2) Fair value is based upon market prices for similar municipal securities. 23 FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (Dollars in tables in thousands, unless otherwise noted) Due to the COVID-19 pandemic, the fair values of our notes and bonds fluctuated significantly during 2020 and may continue to fluctuate based on market conditions and other factors. The fair value of all other items reported as debt, net in the Consolidated Balance Sheet approximate their carrying values due to their bearing market rates of interest and are classified as Level 2 within the fair value hierarchy. 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 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. 11. DERIVATIVE FINANCIAL INSTRUMENTS Commodity Derivatives 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. The following table presents a summary of the changes in fair value for all Level 3 derivatives: Three Months Ended September 30, 2020 Three Months Ended September 30, 2019 Nine Months Ended September 30, 2020 Nine Months Ended September 30, 2019 Crude Oil Forwards Electricity Swaps (1) Crude Oil Forwards Crude Oil Forwards Electricity Swaps (1) Crude Oil Forwards Beginning Balance $ — $ 42,761 $ 4,277 $ 181 $ — $ 6,545 Net unrealized gains (losses) recognized in earnings — ( 644 ) ( 3,736 ) ( 181 ) 1,873 ( 6,003 ) (Losses) gains recognized in other comprehensive income — ( 10,866 ) — — 29,378 — Purchases — — — — 314 Sales — — — — ( 854 ) Settlements — — — — — 539 Ending Balance $ — $ 31,251 $ 541 $ — $ 31,251 $ 541 ________________________________________________________ (1) These derivatives were deconsolidated in December 2019 due to the Long Ridge Transaction. See Note 7 for additional details. There were no transfers into or out of Level 3 during the periods presented. 12. 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. 24 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, 2020 Equipment Leasing Infrastructure Aviation Leasing Jefferson Terminal Ports and Terminals 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 Three Months Ended September 30, 2019 Equipment Leasing Infrastructure Aviation Leasing Jefferson Terminal Ports and Terminals Corporate and Other Total Equipment leasing revenues Lease income $ 50,169 $ — $ — $ 666 $ 50,835 Maintenance revenue 35,426 — — — 35,426 Finance lease income 496 — — — 496 Other revenue 214 — — 288 502 Total equipment leasing revenues 86,305 — — 954 87,259 Infrastructure revenues Lease income — 627 249 — 876 Terminal services revenues — 9,505 2,330 — 11,835 Crude marketing revenues — 50,405 — — 50,405 Other revenue — — 1,595 730 2,325 Total infrastructure revenues — 60,537 4,174 730 65,441 Total revenues $ 86,305 $ 60,537 $ 4,174 $ 1,684 $ 152,700 25 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, 2020 Equipment Leasing Infrastructure Aviation Leasing Jefferson Terminal Ports and Terminals 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 Nine Months Ended September 30, 2019 Equipment Leasing Infrastructure Aviation Leasing Jefferson Terminal Ports and Terminals Corporate and Other Total Equipment leasing revenues Lease income $ 146,203 $ — $ — $ 5,756 $ 151,959 Maintenance revenue 82,572 — — — 82,572 Finance lease income 2,203 — — — 2,203 Other revenue 719 — — 1,458 2,177 Total equipment leasing revenues 231,697 — — 7,214 238,911 Infrastructure revenues Lease income — 1,756 869 — 2,625 Terminal services revenues — 21,909 5,176 — 27,085 Crude marketing revenues — 140,388 — — 140,388 Other revenue — — 6,109 2,324 8,433 Total infrastructure revenues — 164,053 12,154 2,324 178,531 Total revenues $ 231,697 $ 164,053 $ 12,154 $ 9,538 $ 417,442 26 FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (Dollars in tables in thousands, unless otherwise noted) 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, 2020: Operating Leases Finance Leases Remainder of 2020 $ 44,313 $ 637 2021 146,046 1,752 2022 96,718 897 2023 61,932 273 2024 37,687 — Thereafter 21,718 — Total $ 408,414 $ 3,559 13. 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 1 to 42 years. The following table presents lease related costs: Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Operating lease expense $ 1,230 $ 1,618 $ 3,594 $ 4,817 Short-term lease expense 84 612 534 2,344 Variable lease expense 111 578 1,215 1,475 Sublease income — ( 279 ) — ( 833 ) Lease expense from continuing operations 1,425 2,529 5,343 7,803 Finance lease expense — 76 — 234 Operating lease expense — 938 — 2,788 Lease expense from discontinued operations — 1,014 — 3,022 Total lease expense $ 1,425 $ 3,543 $ 5,343 $ 10,825 The following table presents information related to our operating leases as of and for the nine months ended September 30, 2020: Right-of-use assets, net $ 62,588 Lease liabilities 62,209 Weighted average remaining lease term 40.2 years Weighted average incremental borrowing rate 6.2 % Cash paid for amounts included in the measurement of operating lease liabilities Continuing operations $ 3,594 Discontinued operations $ — 27 FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (Dollars in tables in thousands, unless otherwise noted) The following table presents future minimum lease payments under non-cancellable operating leases as of September 30, 2020: Remainder of 2020 $ 1,201 2021 4,759 2022 4,632 2023 4,585 2024 4,354 Thereafter 149,992 Total undiscounted lease payments 169,523 Less: Imputed interest 107,314 Total lease liabilities $ 62,209 During the nine months ended September 30, 2020, we amended a lease agreement for real estate in connection with the Jefferson Refinancing. The amended lease had a ROU asset value of $ 59.8 million and a lease term of approximately 43 years at commencement. 14. EQUITY-BASED COMPENSATION In 2015, we established a Nonqualified Stock Option and Incentive Award Plan (“Incentive Plan”) which provides for the ability to award 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, 2020, the Incentive Plan provides for the issuance of up to 29.9 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) 2020 2019 2020 2019 Restricted Shares $ 427 $ 273 $ 857 $ 819 $ 4,193 1.4 Common Units 194 132 466 347 1,134 1.1 Total - continuing operations $ 621 $ 405 $ 1,323 $ 1,166 $ 5,327 Total - discontinued operations $ — $ 271 $ — $ 438 During the nine months ended September 30, 2020, FIG LLC (the “Manager”), an affiliate of Fortress Investment Group LLC, transferred 252,472 of its options to certain of the Manager’s employees. Restricted Shares During the nine months ended September 30, 2020, we issued 545,806 restricted shares of our subsidiary that had a grant date fair value of $ 4.0 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 each 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. 28 FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (Dollars in tables in thousands, unless otherwise noted) Common Units During the nine months ended September 30, 2020, we issued 831,140 common units of our subsidiaries that had a grant date fair value of $ 0.9 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 each 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. 15. INCOME TAXES The current and deferred components of the income tax (benefit) provision included in the Consolidated Statements of Operations are as follows: Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Current: Federal $ ( 35 ) $ 16 $ 33 $ 86 State and local 79 87 330 195 Foreign ( 27 ) ( 17 ) 295 143 Total current provision 17 86 658 424 Deferred: Federal ( 656 ) — ( 1,534 ) ( 1,760 ) State and local — — — ( 639 ) Foreign ( 1,847 ) 786 ( 5,458 ) 786 Total deferred provision ( 2,503 ) 786 ( 6,992 ) ( 1,613 ) (Benefit from) provision for income taxes: Continuing operations ( 2,486 ) 872 ( 6,334 ) ( 1,189 ) Discontinued operations — 132 — 347 Total $ ( 2,486 ) $ 1,004 $ ( 6,334 ) $ ( 842 ) 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, 2020, 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 2016. 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, 2020. 16. 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. 29 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. A subsidiary of ours 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, 2020 2019 2020 2019 Management fees $ 4,591 $ 3,642 $ 14,113 $ 10,817 Income incentive allocation — — — — Capital gains incentive allocation — 3,736 — 6,109 Total $ 4,591 $ 7,378 $ 14,113 $ 16,926 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. The following table summarizes our reimbursements to the Manager: Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 (1) 2020 2019 (1) Classification in the Consolidated Statements of Operations: General and administrative $ 2,347 $ 4,397 $ 6,737 $ 9,959 Acquisition and transaction expenses 515 4,040 1,562 7,810 Total $ 2,862 $ 8,437 $ 8,299 $ 17,769 ________________________________________________________ (1) Due to the Aviation Restructuring (as defined in Note 17), during the three and nine months ended September 30, 2019, $ 1,742 and $ 4,971 , respectively, was restated from the Corporate and Other segment to the Aviation Leasing segment, of which $ 749 and $ 2,043 , respectively, was reclassified from General and administrative to Operating expenses and $ 993 and $ 2,928 , respectively, remained in Acquisition and transaction expenses. See Note 17 for additional details. 30 FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (Dollars in tables in thousands, unless otherwise noted) 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, 2020 December 31, 2019 Accrued management fees $ 1,480 $ 1,410 Other payables (1) 956 21,992 ________________________________________________________ (1) Includes $ 21.2 million related to incentive fees, as of December 31, 2019, which we paid in 2020. As of September 30, 2020 and December 31, 2019, there were no receivables from the Manager. Other Affiliate Transactions As of September 30, 2020 and December 31, 2019 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, 2020 and December 31, 2019 was $ 21.2 million and $ 33.7 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, 2020 2019 2020 2019 Non-controlling interest share of net loss $ 3,809 $ 5,030 $ 12,490 $ 12,885 In connection with the Capital Call Agreement related to the Series 2016 Bonds, we, and an affiliate of our Manager, entered into a Fee and Support Agreement. The Fee and Support Agreement provides that the affiliate of the Manager is compensated for its guarantee of a portion of the obligations under the Standby Bond Purchase Agreement. This affiliate of the Manager received fees of $ 1.7 million, which are amortized as interest expense to the earlier of the redemption date or February 13, 2020. In connection with the amendment to the Jefferson Revolver, on December 20, 2018, our subsidiary and an affiliate of our Manager entered into an amended and restated Fee and Support Agreement, and our subsidiary issued a $ 0.3 million promissory note to the affiliate of our Manager, as consideration for the fee payable pursuant to the amended and restated Fee and Support Agreement. In February 2020, the Fee and Support Agreement was terminated in connection with the Jefferson Refinancing. 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. 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. 31 FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (Dollars in tables in thousands, unless otherwise noted) During the three months ended September 30, 2020, we granted options to the Manager in connection with preferred shares sold under the ATM Program (as defined in Note 18). See Note 18 for additional information 17. SEGMENT INFORMATION Our reportable segments represent strategic business units comprised of investments in different types of transportation and infrastructure assets. We have three 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 and (iii) Ports and Terminals. 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 December 2019, we completed the sale of substantially all of our railroad business, which was formerly reported as our Railroad segment. Under ASC 205-20, this disposition met the criteria to be reported as discontinued operations and the assets, liabilities and results of operations have been presented as discontinued operations for all periods presented. Additionally, in accordance with ASC 280, we assessed our reportable segments. We determined that our retained investment of the railroad business no longer met the requirement as a reportable segment. Accordingly, we have presented this operating segment, along with Corporate results, within Corporate and Other effective in 2019. All prior periods have been restated for historical comparison across segments. 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 long-term operating leases, (ii) an investment in an unconsolidated entity engaged in the acquisition and leasing of shipping containers and (iii) railroad assets retained after the December 2019 sale, which consist of equipment that support a railcar cleaning business. Aviation Leasing Organizational Restructuring We recently completed an organizational restructuring of the Aviation Leasing segment. Previously, Aviation Leasing’s employees were employed by the Manager and compensation and related costs associated with these employees were reimbursed to the Manager, per the Management Agreement (see Note 16). These costs were reported within Corporate and Other. Effective in the first quarter of 2020, Aviation Leasing’s employees are employed by one of our subsidiaries. Compensation and related costs incurred by this subsidiary will be reported within the Aviation Leasing segment. Prior periods have been restated for historical comparison. The following table presents our adjustments for the three months ended September 30, 2019. As Previously Reported Adjustments As Reported Aviation Leasing Corporate and Other Aviation Leasing Corporate and Other Aviation Leasing Corporate and Other Operating expenses $ 2,473 $ 4,381 $ 749 $ — $ 3,222 $ 4,381 General and administrative — 6,284 — ( 749 ) — 5,535 Acquisition and transaction expenses 65 5,278 993 ( 993 ) 1,058 4,285 The following table presents our adjustments for the nine months ended September 30, 2019. As Previously Reported Adjustments As Reported Aviation Leasing Corporate and Other Aviation Leasing Corporate and Other Aviation Leasing Corporate and Other Operating expenses $ 11,272 $ 11,088 $ 2,043 $ — $ 13,315 $ 11,088 General and administrative — 15,313 — ( 2,043 ) — 13,270 Acquisition and transaction expenses 78 9,047 2,928 ( 2,928 ) 3,006 6,119 32 FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (Dollars in tables in thousands, unless otherwise noted) 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, 2020 Three Months Ended September 30, 2020 Equipment Leasing Infrastructure Aviation Leasing Jefferson Terminal Ports and Terminals 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 (expense) income Equity in (losses) income 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 from continuing operations attributable to non-controlling interests in consolidated subsidiaries — ( 3,809 ) ( 67 ) — ( 3,876 ) 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 ) 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, 2020 Equipment Leasing Infrastructure Aviation Leasing Jefferson Terminal Ports and Terminals 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 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 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, 2020 Nine Months Ended September 30, 2020 Equipment Leasing Infrastructure Aviation Leasing Jefferson Terminal Ports and Terminals 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 (expense) income 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 from continuing operations attributable to non-controlling interests in consolidated subsidiaries — ( 12,490 ) ( 234 ) — ( 12,724 ) 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 ) 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, 2020 Equipment Leasing Infrastructure Aviation Leasing Jefferson Terminal Ports and Terminals 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 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 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, 2019 Three Months Ended September 30, 2019 Equipment Leasing Infrastructure Aviation Leasing Jefferson Terminal Ports and Terminals Corporate and Other Total Revenues Equipment leasing revenues $ 86,305 $ — $ — $ 954 $ 87,259 Infrastructure revenues — 60,537 4,174 730 65,441 Total revenues 86,305 60,537 4,174 1,684 152,700 Expenses Operating expenses 3,222 69,712 5,404 4,381 82,719 General and administrative — — — 5,535 5,535 Acquisition and transaction expenses 1,058 — — 4,285 5,343 Management fees and incentive allocation to affiliate — — — 7,378 7,378 Depreciation and amortization 33,911 5,717 1,687 1,950 43,265 Interest expense — 3,927 469 20,794 25,190 Total expenses 38,191 79,356 7,560 44,323 169,430 Other income (expense) Equity in (losses) earnings of unconsolidated entities ( 885 ) ( 162 ) — 73 ( 974 ) Gain on sale of assets, net 37,060 — — — 37,060 Interest income 31 26 47 17 121 Other income (expense) — 772 ( 644 ) 1,003 1,131 Total other income (expense) 36,206 636 ( 597 ) 1,093 37,338 Income (loss) from continuing operations before income taxes 84,320 ( 18,183 ) ( 3,983 ) ( 41,546 ) 20,608 Provision for income taxes 816 56 — — 872 Net income (loss) from continuing operations 83,504 ( 18,239 ) ( 3,983 ) ( 41,546 ) 19,736 Less: Net loss from continuing operations attributable to non-controlling interests in consolidated subsidiaries — ( 5,031 ) ( 80 ) — ( 5,111 ) Net income (loss) from continuing operations attributable to shareholders $ 83,504 $ ( 13,208 ) $ ( 3,903 ) $ ( 41,546 ) $ 24,847 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 income attributable to shareholders from continuing operations: Three Months Ended September 30, 2019 Equipment Leasing Infrastructure Aviation Leasing Jefferson Terminal Ports and Terminals Corporate and Other Total Adjusted EBITDA $ 126,009 $ ( 2,112 ) $ ( 927 ) $ ( 10,967 ) $ 112,003 Add: Non-controlling share of Adjusted EBITDA 2,928 Add: Equity in losses of unconsolidated entities ( 974 ) Less: Pro-rata share of Adjusted EBITDA from unconsolidated entities 801 Less: Interest expense ( 25,190 ) Less: Depreciation and amortization expense ( 49,985 ) Less: Incentive allocations ( 3,736 ) Less: Asset impairment charges — Less: Changes in fair value of non-hedge derivative instruments ( 4,380 ) Less: Losses on the modification or extinguishment of debt and capital lease obligations — Less: Acquisition and transaction expenses ( 5,343 ) Less: Equity-based compensation expense ( 405 ) Less: Benefit from income taxes ( 872 ) Net income attributable to shareholders from continuing operations $ 24,847 Summary information with respect to our geographic sources of revenue, based on location of customer, is as follows: Three Months Ended September 30, 2019 Equipment Leasing Infrastructure Aviation Leasing Jefferson Terminal Ports and Terminals Corporate and Other Total Revenues Africa $ 4,470 $ — $ — $ — $ 4,470 Asia 28,777 — — 954 29,731 Europe 43,217 — — — 43,217 North America 8,278 60,537 4,174 730 73,719 South America 1,563 — — — 1,563 Total $ 86,305 $ 60,537 $ 4,174 $ 1,684 $ 152,700 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, 2019 Nine Months Ended September 30, 2019 Equipment Leasing Infrastructure Aviation Leasing Jefferson Terminal Ports and Terminals Corporate and Other Total Revenues Equipment leasing revenues $ 231,697 $ — $ — $ 7,214 $ 238,911 Infrastructure revenues — 164,053 12,154 2,324 178,531 Total revenues 231,697 164,053 12,154 9,538 417,442 Expenses Operating expenses 13,315 183,346 15,063 11,088 222,812 General and administrative — — — 13,270 13,270 Acquisition and transaction expenses 3,006 — — 6,119 9,125 Management fees and incentive allocation to affiliate — — — 16,926 16,926 Depreciation and amortization 97,183 16,392 5,240 5,365 124,180 Interest expense — 12,375 1,113 57,830 71,318 Total expenses 113,504 212,113 21,416 110,598 457,631 Other income (expense) Equity in (losses) earnings of unconsolidated entities ( 1,328 ) ( 290 ) — 91 ( 1,527 ) Gain on sale of assets, net 61,388 12 — — 61,400 Interest income 85 97 241 29 452 Other income — 589 1,873 1,003 3,465 Total other income 60,145 408 2,114 1,123 63,790 Income (loss) from continuing operations before income taxes 178,338 ( 47,652 ) ( 7,148 ) ( 99,937 ) 23,601 (Benefit from) provision for income taxes ( 1,373 ) 180 — 4 ( 1,189 ) Net income (loss) from continuing operations 179,711 ( 47,832 ) ( 7,148 ) ( 99,941 ) 24,790 Less: Net loss from continuing operations attributable to non-controlling interests in consolidated subsidiaries — ( 12,885 ) ( 166 ) — ( 13,051 ) Net income (loss) from continuing operations attributable to shareholders $ 179,711 $ ( 34,947 ) $ ( 6,982 ) $ ( 99,941 ) $ 37,841 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 income attributable to shareholders from continuing operations: Nine Months Ended September 30, 2019 Equipment Leasing Infrastructure Aviation Leasing Jefferson Terminal Ports and Terminals Corporate and Other Total Adjusted EBITDA $ 302,535 $ ( 5,965 ) $ ( 2,242 ) $ ( 24,874 ) $ 269,454 Add: Non-controlling share of Adjusted EBITDA 7,866 Add: Equity in losses of unconsolidated entities ( 1,527 ) Less: Pro-rata share of Adjusted EBITDA from unconsolidated entities 895 Less: Interest expense ( 71,318 ) Less: Depreciation and amortization expense ( 148,188 ) Less: Incentive allocations ( 6,109 ) Less: Asset impairment charges — Less: Changes in fair value of non-hedge derivative instruments ( 4,130 ) Less: Losses on the modification or extinguishment of debt and capital lease obligations — Less: Acquisition and transaction expenses ( 9,125 ) Less: Equity-based compensation expense ( 1,166 ) Less: Benefit from income taxes 1,189 Net income attributable to shareholders from continuing operations $ 37,841 Summary information with respect to our geographic sources of revenue, based on location of customer, is as follows: Nine Months Ended September 30, 2019 Equipment Leasing Infrastructure Aviation Leasing Jefferson Terminal Ports and Terminals Corporate and Other Total Revenues Africa $ 10,155 $ — $ — $ — $ 10,155 Asia 76,301 — — 7,214 83,515 Europe 110,515 — — — 110,515 North America 28,708 164,053 12,154 2,324 207,239 South America 6,018 — — — 6,018 Total $ 231,697 $ 164,053 $ 12,154 $ 9,538 $ 417,442 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, 2020 Equipment Leasing Infrastructure Aviation Leasing Jefferson Terminal Ports and Terminals Corporate and Other Total Total assets $ 1,718,772 $ 949,031 $ 408,046 $ 299,481 $ 3,375,330 Debt, net — 253,130 25,000 1,523,443 1,801,573 Total liabilities 232,928 360,471 44,949 1,536,135 2,174,483 Non-controlling interests in equity of consolidated subsidiaries — 23,970 975 524 25,469 Total equity 1,485,844 588,560 363,097 ( 1,236,654 ) 1,200,847 Total liabilities and equity $ 1,718,772 $ 949,031 $ 408,046 $ 299,481 $ 3,375,330 September 30, 2020 Equipment Leasing Infrastructure Aviation Leasing Jefferson Terminal Ports and Terminals Corporate and Other Total Property, plant and equipment and leasing equipment, net Africa $ 13,466 $ — $ — $ — $ 13,466 Asia 484,148 — — 49,971 534,119 Europe 777,282 — — — 777,282 North America 239,426 666,939 264,986 119,318 1,290,669 South America 5,834 — — — 5,834 Total $ 1,520,156 $ 666,939 $ 264,986 $ 169,289 $ 2,621,370 42 FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (Dollars in tables in thousands, unless otherwise noted) December 31, 2019 Equipment Leasing Infrastructure Aviation Leasing Jefferson Terminal Ports and Terminals Corporate and Other Total Total assets $ 1,694,837 $ 781,422 $ 366,402 $ 394,261 $ 3,236,922 Debt, net — 233,077 25,000 1,162,851 1,420,928 Total liabilities 285,099 324,509 63,930 1,224,527 1,898,065 Non-controlling interests in equity of consolidated subsidiaries — 35,671 785 524 36,980 Total equity 1,409,738 456,913 302,472 ( 830,266 ) 1,338,857 Total liabilities and equity $ 1,694,837 $ 781,422 $ 366,402 $ 394,261 $ 3,236,922 December 31, 2019 Equipment Leasing Infrastructure Aviation Leasing Jefferson Terminal Ports and Terminals Corporate and Other Total Property, plant and equipment and leasing equipment, net Africa $ 43,348 $ — $ — $ — $ 43,348 Asia 487,913 — — 37,548 525,461 Europe 647,029 — — — 647,029 North America 311,185 560,059 200,319 123,067 1,194,630 South America 28,700 — — — 28,700 Total $ 1,518,175 $ 560,059 $ 200,319 $ 160,615 $ 2,439,168 43 FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (Dollars in tables in thousands, unless otherwise noted) 18. 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) 2020 2019 2020 2019 Net (loss) income from continuing operations $ ( 25,209 ) $ 19,736 $ ( 45,328 ) $ 24,790 Net income from discontinued operations, net of income taxes — 940 1,331 1,883 Net (loss) income ( 25,209 ) 20,676 ( 43,997 ) 26,673 Less: Net (loss) income attributable to non-controlling interests in consolidated subsidiaries: Continuing operations ( 3,876 ) ( 5,111 ) ( 12,724 ) ( 13,051 ) Discontinued operations — 116 — 101 Dividends on preferred shares 4,625 — 13,243 — Net (loss) income attributable to shareholders $ ( 25,958 ) $ 25,671 $ ( 44,516 ) $ 39,623 Weighted Average Common Shares Outstanding - Basic (1) 86,022,302 85,996,067 86,013,485 85,990,131 Weighted Average Common Shares Outstanding - Diluted (1) 86,022,302 86,005,604 86,013,485 86,013,539 Basic Continuing operations $ ( 0.30 ) $ 0.29 $ ( 0.53 ) $ 0.44 Discontinued operations $ — $ 0.01 $ 0.02 $ 0.02 Diluted Continuing operations $ ( 0.30 ) $ 0.29 $ ( 0.53 ) $ 0.44 Discontinued operations $ — $ 0.01 $ 0.02 $ 0.02 ________________________________________________________ (1) The three and nine months ended September 30, 2020 and 2019 includes participating securities which can be converted into a fixed amount of our shares. For the three months ended September 30, 2020 and 2019, 228,934 and 165,232 shares, respectively, and for the nine months ended September 30, 2020 and 2019, 401,604 and 140,313 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, 2020, we issued 24,683 common shares to certain directors as compensation. During the nine months ended September 30, 2020, certain holders of Class B Units (see Note 16) converted 911,448 Class B Units in exchange for 675,015 common shares. At the Market Program On June 30, 2020, we entered into an At Market Issuance Sales Agreement with a third party to sell shares of our Series A Preferred Shares and Series B Preferred Shares (collectively, the “ATM Shares”), having an aggregate offering price of up to $ 100 million, from time to time, through an “at-the market” equity offering program (the “ATM Program”). During the three months ended September 30, 2020, we sold 1,070,000 ATM Shares at a weighted average price of $ 19.54 per share for net proceeds of $ 20.6 million. In connection with the shares sold under the ATM Program, we granted options to the Manager relating to 129,988 common shares, which had a grant date fair value of $ 0.7 million. 19. 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. 44 FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (Dollars in tables in thousands, unless otherwise noted) We have also entered into an arrangement with our non-controlling interest holder of Repauno, as part of the 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. 20. SUBSEQUENT EVENTS On October 29, 2020, 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, 2020, payable on November 30, 2020 to the holders of record on November 16, 2020. Additionally, on October 29, 2020, our Board of Directors also declared a cash dividend on the Series A Preferred Shares and Series B Preferred Shares of $ 0.52 per share and $ 0.50 per share, respectively, payable on December 15, 2020 to the holders of record on December 1, 2020. 45