Uniti Group Inc. [UNIT] Filings

10-Q 1 unit-20230930.htm 10-Q unit-20230930

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

_______________________________________________________________

FORM 10-Q

_______________________________________________________________

(Mark One)


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

For the quarterly period ended September 30, 2023


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

For the transition period from _______ to _______

Commission File Number: 001-36708

_______________________________________________________________

Uniti Group Inc.

(Exact name of registrant as specified in its charter)

_______________________________________________________________


Maryland			46-5230630
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

2101 Riverfront Drive, Suite A Little Rock, Arkansas			72202
(Address of principal executive offices)			(Zip Code)

Registrant’s telephone number, including area code: (501) 850-0820

_______________________________________________________________

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock	UNIT	The NASDAQ Global Select Market

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

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	x	Accelerated filer	o

Non-accelerated filer	o	Smaller reporting company	o
		Emerging growth company	o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

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

As of October 26, 2023, the registrant had 238,672,102 shares of common stock, $0.0001 par value per share, outstanding.

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q includes forward-looking statements as defined under U.S. federal securities law. Forward-looking statements include all statements that are not historical statements of fact and those regarding our intent, belief or expectations, including, but not limited to, statements regarding: our expectations regarding the settlement we have entered into with Windstream Holdings, Inc. (together with Windstream Holdings II, LLC, its successor in interest, and its subsidiaries, “Windstream”); the future prospects and financial health of Windstream; our expectations about our ability to maintain our status as a real estate investment trust (a “REIT”); our expectations regarding the future growth and demand of the telecommunication industry, future financing plans, business strategies, growth prospects, operating and financial performance, and our future liquidity needs and access to capital; expectations regarding future deployment of fiber strand miles and small cell networks and recognition of revenue related thereto; expectations regarding levels of capital expenditures; expectations regarding the deductibility of goodwill for tax purposes; expectations regarding reclassification of accumulated other comprehensive income (loss) related to derivatives to interest expense; expectations regarding the amortization of intangible assets; and expectations regarding the payment of dividends.

Words such as “anticipate(s),” “expect(s),” “intend(s),” “plan(s),” “believe(s),” “may,” “will,” “would,” “could,” “should,” “seek(s)” and similar expressions, or the negative of these terms, are intended to identify such forward-looking statements. These statements are based on management's current expectations and beliefs and are subject to a number of risks and uncertainties that could lead to actual results differing materially from those projected, forecasted or expected. Although we believe that the assumptions underlying the forward-looking statements are reasonable, we can give no assurance that our expectations will be attained. Factors which could have a material adverse effect on our operations and future prospects or which could cause actual results to differ materially from our expectations include, but are not limited to:

•the future prospects of our largest customer, Windstream, following its emergence from bankruptcy;

•adverse impacts of inflation and higher interest rates on our employees, our business, the business of our customers and other business partners and the global financial markets;

•the ability and willingness of our customers to meet and/or perform their obligations under any contractual arrangements entered into with us, including master lease arrangements;

•the ability and willingness of our customers to renew their leases with us upon their expiration, our ability to reach agreement on the price of such renewal or ability to obtain a satisfactory renewal rent from an independent appraisal, and the ability to reposition our properties on the same or better terms in the event of nonrenewal or in the event we replace an existing tenant;

•the availability of and our ability to identify suitable acquisition opportunities and our ability to acquire and lease the respective properties on favorable terms or operate and integrate the acquired businesses;

•our ability to generate sufficient cash flows to service our outstanding indebtedness and fund our capital funding commitments;

•our ability to access debt and equity capital markets;

•the impact on our business or the business of our customers as a result of credit rating downgrades and fluctuating interest rates;

•our ability to retain our key management personnel;

•our ability to maintain our status as a REIT;

•changes in the U.S. tax law and other federal, state or local laws, whether or not specific to REITs;

•covenants in our debt agreements that may limit our operational flexibility;

•the possibility that we may experience equipment failures, natural disasters, cyber-attacks or terrorist attacks for which our insurance may not provide adequate coverage;

•the risk that we fail to fully realize the potential benefits of or have difficulty in integrating the companies we acquire;

•other risks inherent in the communications industry and in the ownership of communications distribution systems, including potential liability relating to environmental matters and illiquidity of real estate investments; and

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•additional factors discussed in Part I, Item 2 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Part II, Item 1A “Risk Factors” of this Quarterly Report on Form 10-Q and in Part I, Item 1A "Risk Factors" of our Annual Report on Form 10-K, as well as those described from time to time in our future reports filed with the U.S. Securities and Exchange Commission (the “SEC”).

Forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q. Except in the normal course of our public disclosure obligations, we expressly disclaim any obligation to release publicly any updates or revisions to any forward-looking statements to reflect any change in our expectations or any change in events, conditions or circumstances on which any such statement is based.

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Uniti Group Inc.

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		Page
PART I.	FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)	5
	Uniti Group Inc.
	Condensed Consolidated Balance Sheets	5
	Condensed Consolidated Statements of Loss	6
	Condensed Consolidated Statements of Comprehensive Loss	7
	Condensed Consolidated Statements of Shareholders’ Deficit	8
	Condensed Consolidated Statements of Cash Flows	9
	Notes to Condensed Consolidated Financial Statements	11
	1.Organization and Description of Business	11
	2.Basis of Presentation and Summary of Significant Accounting Policies	11
	3.Revenues	13
	4.Leases	14
	5.Investments in Unconsolidated Entities	16
	6.Fair Value of Financial Instruments	16
	7.Property, Plant and Equipment	18
	8.Derivative Instruments and Hedging Activities	18
	9.Goodwill and Intangible Assets and Liabilities	19
	10.Notes and Other Debt	20
	11.Earnings Per Share	24
	12.Segment Information	26
	13.Commitments and Contingencies	29
	14.Accumulated Other Comprehensive Loss	31

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	31
	1.Overview	31
	2.Results of Operations	32
	3.Non-GAAP Financial Measures	39
	4.Liquidity and Capital Resources	42
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	48
Item 4.	Controls and Procedures	48

PART II.	OTHER INFORMATION

Item 1.	Legal Proceedings	49
Item 1A.	Risk Factors	49
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	49
Item 3.	Defaults Upon Senior Securities	49
Item 4.	Mine Safety Disclosures	49
Item 5.	Other Information	49
Item 6.	Exhibits	50

Signatures		51

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PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

Uniti Group Inc.

Condensed Consolidated Balance Sheets


	(Unaudited)
(Thousands, except par value)	September 30, 2023		December 31, 2022
Assets:
Property, plant and equipment, net	$	3,962,436	$	3,754,547
Cash and cash equivalents	34,119		43,803
Accounts receivable, net	46,824		42,631
Goodwill	208,378		361,378
Intangible assets, net	312,541		334,846
Straight-line revenue receivable	87,733		68,595
Operating lease right-of-use assets, net	121,816		88,545
Other assets	79,000		77,597
Investment in unconsolidated entities	37,686		38,656
Deferred income tax assets, net	90,792		40,631
Total Assets	$	4,981,325	$	4,851,229
Liabilities and Shareholders' Deficit:
Liabilities:
Accounts payable, accrued expenses and other liabilities	$	133,958	$	122,195
Settlement payable (Note 13)	185,855		251,098
Intangible liabilities, net	159,071		167,092
Accrued interest payable	50,778		121,316
Deferred revenue	1,214,287		1,190,041
Dividends payable	69		2
Operating lease liabilities	81,302		66,356
Finance lease obligations	18,388		15,520
Notes and other debt, net	5,582,057		5,188,815
Total liabilities	7,425,765		7,122,435

Commitments and contingencies (Note 13)

Shareholders' Deficit:
Preferred stock, $0.0001 par value, 50,000 shares authorized; no shares issued and outstanding	—		—
Common stock, $0.0001 par value, 500,000 shares authorized; issued and outstanding: 236,540 shares at September 30, 2023 and 235,829 at December 31, 2022	24		24
Additional paid-in capital	1,218,815		1,210,033
Distributions in excess of accumulated earnings	(3,665,569)		(3,483,634)
Total Uniti shareholders' deficit	(2,446,730)		(2,273,577)
Noncontrolling interests:
Operating partnership units	2,040		2,121
Cumulative non-voting convertible preferred stock, $0.01 par value, 6 shares authorized, 3 issued and outstanding	250		250
Total shareholders' deficit	(2,444,440)		(2,271,206)
Total Liabilities and Shareholders' Deficit	$	4,981,325	$	4,851,229

The accompanying notes are an integral part of these condensed consolidated financial statements.

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Uniti Group Inc.

Condensed Consolidated Statements of Loss

(unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
(Thousands, except per share data)	2023		2022		2023		2022
Revenues:
Uniti Leasing	$	214,588	$	208,623	$	637,849	$	618,878
Uniti Fiber	76,067		74,480		226,326		226,234
Total revenues	290,655		283,103		864,175		845,112
Costs and Expenses:
Interest expense, net	120,691		97,731		389,243		290,280
Depreciation and amortization	77,337		73,516		231,379		217,276
General and administrative expense	25,481		26,863		77,331		75,818
Operating expense (exclusive of depreciation and amortization)	37,392		36,291		109,878		108,184
Goodwill impairment (Note 2)	153,000		216,000		153,000		216,000
Transaction related and other costs	1,441		2,375		9,805		7,324
Gain on sale of real estate	(1,424)		(94)		(1,424)		(344)
Gain on sale of operations	—		(176)		—		(176)
Other expense (income), net	1,435		74		21,323		(8,254)
Total costs and expenses	415,353		452,580		990,535		906,108

Loss before income taxes and equity in earnings from unconsolidated entities	(124,698)		(169,477)		(126,360)		(60,996)
Income tax benefit	(43,095)		(13,056)		(49,864)		(10,183)
Equity in earnings from unconsolidated entities	(670)		(672)		(1,990)		(1,696)
Net loss	(80,933)		(155,749)		(74,506)		(49,117)
Net (loss) income attributable to noncontrolling interests	(36)		(70)		(33)		135
Net loss attributable to shareholders	(80,897)		(155,679)		(74,473)		(49,252)
Participating securities' share in earnings	(321)		(226)		(890)		(897)
Dividends declared on convertible preferred stock	(5)		(5)		(15)		(15)
Net loss attributable to common shareholders	$	(81,223)	$	(155,910)	$	(75,378)	$	(50,164)

Loss per common share:
Basic	$	(0.34)	$	(0.66)	$	(0.32)	$	(0.21)
Diluted	$	(0.34)	$	(0.66)	$	(0.32)	$	(0.21)

Weighted-average number of common shares outstanding:
Basic	236,533		235,739		236,352		235,483
Diluted	236,533		235,739		236,352		235,483

The accompanying notes are an integral part of these condensed consolidated financial statements.

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Uniti Group Inc.

Condensed Consolidated Statements of Comprehensive Loss

(unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
(Thousands)	2023		2022		2023		2022
Net loss	$	(80,933)	$	(155,749)	$	(74,506)	$	(49,117)
Other comprehensive income:
Interest rate swap termination	—		2,829		—		8,488
Other comprehensive income	—		2,829		—		8,488
Comprehensive loss	(80,933)		(152,920)		(74,506)		(40,629)
Comprehensive (loss) income attributable to noncontrolling interest	(36)		(69)		(33)		147
Comprehensive loss attributable to shareholders	$	(80,897)	$	(152,851)	$	(74,473)	$	(40,776)

The accompanying notes are an integral part of these condensed consolidated financial statements.

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Uniti Group Inc.

Condensed Consolidated Statements of Shareholders’ Deficit

(unaudited)


	For the three months ended September 30,
(Thousands, except share data)	Preferred Stock		Common Stock		Additional Paid-in Capital	Accumulated Other Comprehensive Loss	Distributions in Excess of Accumulated Earnings	Noncontrolling Interest - OP Units	Noncontrolling Interest - Non- voting Preferred Shares	Total Shareholders' Deficit
	Shares	Amount	Shares	Amount
Balance at June 30, 2022	—	—	235,699,513	24	1,224,427	(3,516)	(3,298,455)	2,072	250	(2,075,198)
Net loss	—	—	—	—	—	—	(155,679)	(70)	—	(155,749)
Other comprehensive income	—	—	—	—	—	2,828	—	1	—	2,829
Common stock dividends declared ($0.15 per share)	—	—	—	—	—	—	(35,584)	—	—	(35,584)
Distributions to noncontrolling interest declared	—	—	—	—	—	—	—	49	—	49
Payments related to tax withholding for stock-based compensation	—	—	—	—	2	—	—	—	—	2
Stock-based compensation	—	—	1,201	—	3,151	—	—	—	—	3,151
Issuance of common stock - employee stock purchase plan	—	—	40,530	—	325	—	—	—	—	325
Balance at September 30, 2022	—	—	235,741,244	24	1,227,905	(688)	(3,489,718)	2,052	250	(2,260,175)

Balance at June 30, 2023	—	—	236,430,752	24	1,215,260	—	(3,548,870)	2,092	250	(2,331,244)
Net loss	—	—	—	—	—	—	(80,897)	(36)	—	(80,933)
Common stock dividends declared ($0.15 per share)	—	—	—	—	—	—	(35,802)	—	—	(35,802)
Distributions to noncontrolling interest declared	—	—	—	—	—	—	—	(16)	—	(16)
Payments related to tax withholding for stock-based compensation	—	—	—	—	(9)	—	—	—	—	(9)
Stock-based compensation	—	—	3,227	—	3,148	—	—	—	—	3,148
Issuance of common stock - employee stock purchase plan	—	—	105,737	—	416	—	—	—	—	416
Balance at September 30, 2023	—	—	236,539,716	24	1,218,815	—	(3,665,569)	2,040	250	(2,444,440)

	For the nine months ended September 30,
(Thousands, except share data)	Preferred Stock		Common Stock		Additional Paid-in Capital	Accumulated Other Comprehensive Loss	Distributions in Excess of Accumulated Earnings	Noncontrolling Interest - OP Units	Noncontrolling Interest - Non- voting Preferred Shares	Total Shareholders' Deficit
	Shares	Amount	Shares	Amount
Balance at December 31, 2021	—	—	234,779,247	23	1,214,830	(9,164)	(3,333,481)	13,893	125	(2,113,774)
Net loss	—	—	—	—	—	—	(49,252)	135	—	(49,117)
Other comprehensive income	—	—	—	—	—	8,476	—	12	—	8,488
Common stock dividends declared ($0.45 per share)	—	—	—	—	—	—	(106,860)	—	—	(106,860)
Distributions to noncontrolling interest declared	—	—	—	—	—	—	—	(111)	—	(111)
Cumulative non-voting convertible preferred stock	—	—	—	—	—	—	(125)	—	125	—
Exchange of noncontrolling interest	—	—	244,682	—	7,257	—	—	(11,877)	—	(4,620)
Payments related to tax withholding for stock-based compensation	—	—	—	—	(4,434)	—	—	—	—	(4,434)
Stock-based compensation	—	—	647,461	1	9,663	—	—	—	—	9,664
Issuance of common stock - employee stock purchase plan	—	—	69,854	—	589	—	—	—	—	589
Balance at September 30, 2022	—	—	235,741,244	24	1,227,905	(688)	(3,489,718)	2,052	250	(2,260,175)

Balance at December 31, 2022	—	—	235,829,485	24	1,210,033	—	(3,483,634)	2,121	250	(2,271,206)
Net loss	—	—	—	—	—	—	(74,473)	(33)	—	(74,506)
Common stock dividends declared ($0.45 per share)	—	—	—	—	—	—	(107,462)	—	—	(107,462)
Distributions to noncontrolling interest declared	—	—	—	—	—	—	—	(48)	—	(48)
Payment for settlement of common stock warrant	—	—	—	—	(56)	—	—	—	—	(56)
Termination of bond hedge option	—	—	—	—	59	—	—	—	—	59
Payments related to tax withholding for stock-based compensation	—	—	—	—	(1,359)	—	—	—	—	(1,359)
Stock-based compensation	—	—	537,590	—	9,408	—	—	—	—	9,408
Issuance of common stock - employee stock purchase plan	—	—	172,641	—	730	—	—	—		730
Balance at September 30, 2023	—	—	236,539,716	24	1,218,815	—	(3,665,569)	2,040	250	(2,444,440)

The accompanying notes are an integral part of these condensed consolidated financial statements.

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Uniti Group Inc.

Condensed Consolidated Statements of Cash Flows

(unaudited)


	Nine Months Ended September 30,
(Thousands)	2023		2022
Cash flow from operating activities
Net loss	$	(74,506)	$	(49,117)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	231,379		217,276
Amortization of deferred financing costs and debt discount	13,975		13,510
Loss on extinguishment of debt, net	31,187		—
Interest rate swap termination	—		8,488
Deferred income taxes	(50,161)		(21,723)
Equity in earnings of unconsolidated entities	(1,990)		(1,696)
Distributions of cumulative earnings from unconsolidated entities	2,959		2,959
Cash paid for interest rate swap settlement	—		(9,591)
Straight-line revenues and amortization of below-market lease intangibles	(28,795)		(31,066)
Stock-based compensation	9,408		9,664
Goodwill impairment (see Note 2)	153,000		216,000
Gain on sale of unconsolidated entity (see Note 5)	—		(7,923)
Gain on sale of real estate	(1,424)		(344)
(Gain) loss on asset disposals	(242)		902
Gain on sale of operations	—		(176)
Accretion of settlement obligation	8,273		8,733
Other	2		(126)
Changes in assets and liabilities:
Accounts receivable	(4,194)		(2,863)
Other assets	10,530		7,756
Accounts payable, accrued expenses and other liabilities	(108,826)		(75,556)
Net cash provided by operating activities	190,575		285,107
Cash flow from investing activities
Capital expenditures	(368,264)		(292,666)
Proceeds from sale of unconsolidated entity (see Note 5)	—		32,527
Proceeds from sale of real estate, net cash	1,530		575
Proceeds from sale of operations	—		541
Proceeds from sale of other equipment	1,581		338
Net cash used in investing activities	(365,153)		(258,685)
Cash flow from financing activities
Repayment of debt	(2,263,662)		—
Proceeds from issuance of notes	2,600,000		—
Dividends paid	(107,395)		(107,362)
Payments of settlement payable	(73,516)		—
Distributions paid to noncontrolling interest	(48)		(217)
Payment for exchange of noncontrolling interest	—		(4,620)
Borrowings under revolving credit facility	450,000		180,000
Payments under revolving credit facility	(367,000)		(105,000)
Finance lease payments	(1,601)		(887)
Payments for financing costs	(26,955)		—
Payment for settlement of common stock warrant	(56)		—

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Termination of bond hedge option	59		—
Costs related to the early repayment of debt	(44,303)		—

Employee stock purchase program	730		589
Payments related to tax withholding for stock-based compensation	(1,359)		(4,434)
Net cash provided by (used in) financing activities	164,894		(41,931)
Net decrease in cash and cash equivalents	(9,684)		(15,509)
Cash and cash equivalents at beginning of period	43,803		58,903
Cash and cash equivalents at end of period	$	34,119	$	43,394

Non-cash investing and financing activities:
Property and equipment acquired but not yet paid	$	12,134	$	12,751
Tenant capital improvements	94,322		120,239

The accompanying notes are an integral part of these condensed consolidated financial statements.

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Uniti Group Inc.

Notes to the Condensed Consolidated Financial Statements

(unaudited)

Note 1. Organization and Description of Business

Uniti Group Inc. (the “Company,” “Uniti,” “we,” “us,” or “our”) was incorporated in the state of Maryland on September 4, 2014. We are an independent internally managed real estate investment trust (“REIT”) engaged in the acquisition, construction and leasing of mission critical infrastructure in the communications industry. We are principally focused on acquiring and constructing fiber optic, copper and coaxial broadband networks and data centers. We manage our operations focused on our two primary lines of business: Uniti Fiber and Uniti Leasing.

The Company operates through a customary “up-REIT” structure, pursuant to which we hold substantially all of our assets through a partnership, Uniti Group LP, a Delaware limited partnership (the “Operating Partnership”) that we control as general partner. The up-REIT structure is intended to facilitate future acquisition opportunities by providing the Company with the ability to use common units of the Operating Partnership as a tax-efficient acquisition currency. As of September 30, 2023, we are the sole general partner of the Operating Partnership and own approximately 99.96% of the partnership interests in the Operating Partnership.

Note 2. Basis of Presentation and Summary of Significant Accounting Policies

The accompanying Condensed Consolidated Financial Statements include all accounts of the Company and its wholly-owned and/or controlled subsidiaries, including the Operating Partnership. Under the Accounting Standards Codification 810, Consolidation (“ASC 810”), the Operating Partnership is considered a variable interest entity and is consolidated in the Condensed Consolidated Financial Statements of Uniti Group Inc. because the Company is the primary beneficiary. All material intercompany balances and transactions have been eliminated.

ASC 810 provides guidance on the identification of entities for which control is achieved through means other than voting rights (“variable interest entities” or “VIEs”) and the determination of which business enterprise, if any, should consolidate the VIEs. Generally, the consideration of whether an entity is a VIE applies when either: (1) the equity investors (if any) lack (i) the ability to make decisions about the entity’s activities through voting or similar rights, (ii) the obligation to absorb the expected losses of the entity, or (iii) the right to receive the expected residual returns of the entity; (2) the equity investment at risk is insufficient to finance that entity’s activities without additional subordinated financial support; or (3) the equity investors have voting rights that are not proportionate to their economic interests and substantially all of the activities of the entity involve or are conducted on behalf of an investor with a disproportionately small voting interest. The Company consolidates VIEs in which it is considered to be the primary beneficiary. The primary beneficiary is defined as the entity having both of the following characteristics: (1) the power to direct the activities that, when taken together, most significantly impact the VIE’s performance; and (2) the obligation to absorb losses and right to receive the returns from the VIE that would be significant to the VIE.

The accompanying Condensed Consolidated Financial Statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information set forth in the Accounting Standards Codification (“ASC”), as published by the Financial Accounting Standards Board (the “FASB”), and with the applicable rules and regulations of the Securities and Exchange Commission (the “SEC”). Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair statement of results for the interim period have been included. Operating results from any interim period are not necessarily indicative of the results that may be expected for the full fiscal year. The accompanying Condensed Consolidated Financial Statements and related notes should be read in conjunction with the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K filed with the SEC on February 28, 2023, as amended by Amendment No. 1 thereto filed on Form 10-K/A with the SEC on March 29, 2023 (the “Annual Report”). Accordingly, significant accounting policies and other disclosures normally provided have been omitted from the accompanying Condensed Consolidated Financial Statements and related notes since such items are disclosed in our Annual Report.

Concentration of Credit Risks—Prior to September 2020, we were party to a long-term exclusive triple-net lease (the “Master Lease”) with Windstream Holdings, Inc. (together with Windstream Holdings II, LLC, its successor in interest, and its subsidiaries, “Windstream”) pursuant to which a substantial portion of our real property was leased to Windstream and from which a substantial portion of our leasing revenues were derived. On September 18, 2020, Uniti and Windstream

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bifurcated the Master Lease and entered into two structurally similar master leases (collectively, the “Windstream Leases”), which amended and restated the Master Lease in its entirety. The Windstream Leases consist of (a) a master lease (the "ILEC MLA") that governs Uniti owned assets used for Windstream's incumbent local exchange carrier ("ILEC") operations and (b) a master lease (the "CLEC MLA") that governs Uniti owned assets used for Windstream's consumer competitive local exchange carrier ("CLEC") operations. Revenue under the Windstream Leases provided 66.9% and 66.4% of our revenue for the nine months ended September 30, 2023 and 2022, respectively. Because a substantial portion of our revenue and cash flows are derived from lease payments by Windstream pursuant to the Windstream Leases, there could be a material adverse impact on our consolidated results of operations, liquidity, financial condition and/or ability to pay dividends and service debt if Windstream were to default under the Windstream Leases or otherwise experiences operating or liquidity difficulties and becomes unable to generate sufficient cash to make payments to us.

We monitor the credit quality of Windstream through numerous methods, including by (i) reviewing credit ratings of Windstream by nationally recognized credit agencies, (ii) reviewing the financial statements of Windstream that are required to be delivered to us pursuant to the Windstream Leases, (iii) monitoring news reports regarding Windstream and its business, (iv) conducting research to ascertain industry trends potentially affecting Windstream, (v) monitoring Windstream’s compliance with the terms of the Windstream Leases and (vi) monitoring the timeliness of its payments under the Windstream Leases.

As of the date of this Quarterly Report on Form 10-Q, Windstream is current on all lease payments. We note that in August 2020, Moody’s Investor Service assigned a B3 corporate family rating with a stable outlook to Windstream in connection with its post-emergence exit financing. At the same time, S&P Global Ratings assigned Windstream a B- issuer rating with a stable outlook. Both ratings remain current as of the date of this filing. In order to assist us in our continuing assessment of Windstream’s creditworthiness, we periodically receive certain confidential financial information and metrics from Windstream.

Goodwill—As of September 30, 2023 and December 31, 2022, all of our goodwill is included in our Uniti Fiber segment. Goodwill is recognized for the excess of purchase price over the fair value of net assets of businesses acquired. Goodwill is reviewed for impairment on an annual basis during the fourth quarter. Application of the goodwill impairment test requires significant judgment, including: the identification of reporting units; assignment of assets and liabilities to reporting units; and assignment of goodwill to reporting units. In accordance with ASC 350-20, Intangibles-Goodwill and Other, we evaluate goodwill for impairment between annual impairment tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount (a “Triggering Event”). On the occurrence of a Triggering Event, an entity has the option to first assess qualitative factors to determine whether a quantitative impairment test is necessary. If it is more likely than not that goodwill is impaired, the fair value of the reporting unit must be estimated and compared with its carrying value.

In performing the quantitative assessment of goodwill, we estimate the fair value of our fiber reporting unit using a combination of an income approach based on the present value of estimated future cash flows and a market approach based on market data of comparable businesses, and acquisition multiples paid in recent transactions. Inherent in our preparation of cash flow projections are significant assumptions and estimates derived from a review of our operating results and business plans, which include expected revenue and expense growth rates, capital expenditure plans and discount rate. In determining these assumptions, we consider our ability to execute on our plans, future economic conditions, interest rates and other market data. Many of the factors used in assessing fair value are outside the control of management, and these assumptions and estimates may change in future periods. Small changes in these assumptions or estimates could materially affect our cash flow projections, and therefore could affect the likelihood and amount of potential impairment in future periods. Potential events that could negatively impact these assumptions or estimates may include customer losses or poor execution of our business plans, which impact revenue growth, cost escalation impacting margin, the level of capital expenditures required to sustain our growth and market factors, including stock price fluctuations and increased interest rates, impacting our discount rate. For example, if we were to experience a significant delay in our permitting process in the construction of our fiber networks, the timing of effected cash flows could impact long term growth rates and negatively impact the income approach, leading to potential impairment. As a result, should our expectations of average projected revenue growth percentage, average projected EBITDA margin percentage and/or average projected capital expenditures as a percentage of revenue change, we may experience future impairment to goodwill (while other assumptions remain constant). Furthermore, a deterioration in market factors such as stock prices or increased interest rates and/or declines in acquisition multiples utilized in the market approach could affect the likelihood and amount of potential impairment. We evaluate the appropriateness of each valuation methodology in determining the weighting applied to each methodology in the determination of the concluded fair value. If the carrying amount of a reporting unit's net assets is less than its fair value, no impairment exists. If the carrying amount of the reporting unit is greater than the fair value of the reporting unit, an impairment loss must be recognized for the excess and recorded in the Consolidated Statements of Loss not to exceed the carrying amount of goodwill.

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In connection with the preparation of the Condensed Consolidated Financial Statements for the three and nine months ended September 30, 2023, the Company identified a Triggering Event and, therefore, performed a qualitative and quantitative goodwill impairment test. The Triggering Event was a result of macroeconomic and financial market factors, specifically the continuing rise in interest rates, impacting our discount rate. As a result of the interim assessment of goodwill, we concluded that the fair value of the Uniti Fiber segment, estimated using a combination of the income approach and market approach, is less than its carrying amount. Accordingly, we recorded a $153.0 million ($113.9 million net of tax) goodwill impairment charge in the Uniti Fiber segment during the three months ended September 30, 2023.

In connection with the preparation of the Condensed Consolidated Financial Statements for the three and nine months ended September 30, 2022, the Company identified a Triggering Event and, therefore, performed a qualitative and quantitative goodwill impairment test. The Triggering Event was a result of macroeconomic and financial market factors, specifically increased interest rates, impacting our discount rate. As a result of this interim assessment of goodwill, we concluded that the fair value of the Uniti Fiber segment, estimated using a combination of the income approach and market approach, is less than its carrying amount. Accordingly, we recorded a $216.0 million ($205.7 million net of tax) goodwill impairment charge in the Uniti Fiber segment during the three months ended September 30, 2022.

Recently Adopted Accounting Pronouncements

In March 2022, the FASB issued Accounting Standards Update ("ASU") 2022-02, Financial Instruments—Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures ("ASU 2022-02"), which eliminates the accounting guidance for troubled debt restructurings and requires the disclosure of current-period gross write-offs of financing receivables and net investment in leases by year of origination. The Company adopted ASU 2022-02 on January 1, 2023, and the adoption had no impact on the Company's consolidated financial statements.

In December 2022, the FASB issued ASU 2022-06, Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848 ("ASU 2022-06"), which provides additional relief for contract modifications completed after the December 31, 2022 LIBOR sunset date. The amendment allows for a deferral until December 31, 2024. The Company adopted ASU 2022-06 at issuance, and the adoption had no impact on the Company's consolidated financial statements.

Note 3. Revenues

Disaggregation of Revenues

The following table presents our revenues disaggregated by revenue stream.


	Three Months Ended September 30,				Nine Months Ended September 30,
(Thousands)	2023		2022		2023		2022
Revenue disaggregated by revenue stream
Revenue from contracts with customers
Uniti Fiber
Lit backhaul	$	18,246	$	19,969	$	57,221	$	59,344
Enterprise and wholesale	24,211		21,423		70,144		63,359
E-Rate and government	15,911		15,245		43,947		48,026
Other	786		703		2,264		2,076
Uniti Fiber	$	59,154	$	57,340	$	173,576	$	172,805
Uniti Leasing	1,868		1,201		5,142		3,553
Total revenue from contracts with customers	61,022		58,541		178,718		176,358
Revenue accounted for under leasing guidance
Uniti Leasing	212,720		207,422		632,707		615,325
Uniti Fiber	16,913		17,140		52,750		53,429
Total revenue accounted for under leasing guidance	229,633		224,562		685,457		668,754
Total revenue	$	290,655	$	283,103	$	864,175	$	845,112

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At September 30, 2023 and December 31, 2022, lease receivables were $20.9 million and $26.2 million, respectively, and receivables from contracts with customers were $16.4 million and $16.1 million, respectively.

Contract Assets (Unbilled Revenue) and Liabilities (Deferred Revenue)

Contract assets primarily consist of unbilled construction revenue where we are utilizing our costs incurred as the measure of progress of satisfying our performance obligations. Contract assets are reported within accounts receivable, net on our Condensed Consolidated Balance Sheets. When the contract price is invoiced, the related unbilled receivable is reclassified to trade accounts receivable, where the balance will be settled upon the collection of the invoiced amount. Contract liabilities are generally comprised of upfront fees charged to the customer for the cost of establishing the necessary components of the Company’s network prior to the commencement of use by the customer. Fees charged to customers for the recurring use of the Company’s network are recognized during the related periods of service. Upfront fees that are billed in advance of providing services are deferred until such time the customer accepts the Company’s network and then are recognized as service revenues ratably over a period in which substantive services required under the revenue arrangement are expected to be performed, which is the initial term of the arrangement. During the three and nine months ended September 30, 2023, we recognized revenues of $0.9 million and $3.5 million which was included in the December 31, 2022 contract liabilities balance.

The following table provides information about contract assets and contract liabilities accounted for under ASC 606.


(Thousands)	Contract Assets		Contract Liabilities
Balance at December 31, 2022	$	173	$	8,699
Balance at September 30, 2023	$	44	$	11,129

Transaction Price Allocated to Remaining Performance Obligations

Performance obligations within contracts to stand ready to provide services are typically satisfied over time or as those services are provided. Contract liabilities primarily relate to deferred revenue from upfront customer payments. The deferred revenue is recognized, and the liability reduced, over the contract term as the Company completes the performance obligation. As of September 30, 2023, our future revenues (i.e., transaction price related to remaining performance obligations) under contracts accounted for under ASC 606 totaled $646.1 million, of which $584.9 million is related to contracts that are currently being invoiced and have an average remaining contract term of 3.4 years, while $61.2 million represents our backlog for sales bookings which have yet to be installed and have an average contract term of 5.0 years. We do not disclose the value of unsatisfied performance obligations for contracts that have an original expected duration of one year or less.

Note 4. Leases

Lessor Accounting

We lease communications towers, ground space, colocation space and dark fiber to tenants under operating leases. Our leases have initial lease terms ranging from less than one year to 35 years, most of which include options to extend or renew the leases for less than one year to 20 years (based on the satisfaction of certain conditions as defined in the lease agreements), and some of which may include options to terminate the leases within one to six months. Certain lease agreements contain provisions for future rent increases. Payments due under the lease contracts include fixed payments plus, for some of our leases, variable payments.

The components of lease income for the three and nine months ended September 30, 2023 and 2022, respectively, are as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
(Thousands)	2023		2022		2023		2022
Lease income - operating leases	$	229,633	$	224,562	$	685,457	$	668,754

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Lease payments to be received under non-cancellable operating leases where we are the lessor for the remainder of the lease terms as of September 30, 2023 are as follows:


(Thousands)	September 30, 2023⁽¹⁾
2023	$	196,452
2024	804,866
2025	813,967
2026	815,516
2027	816,453
Thereafter	2,351,694
Total lease receivables	$	5,798,948
(1) Total future minimum lease payments to be received include $4.9 billion relating to the Windstream Leases.

The underlying assets under operating leases where we are the lessor are summarized as follows:


(Thousands)	September 30, 2023		December 31, 2022
Land	$	26,533	$	26,549
Building and improvements	347,002		346,093
Poles	309,901		296,941
Fiber	3,802,120		3,529,835
Equipment	437		437
Copper	3,978,336		3,964,439
Conduit	89,963		89,963
Tower assets	1,165		1,397
Finance lease assets	2,615		28,126
Other assets	10,434		10,434
	8,568,506		8,294,214
Less: accumulated depreciation	(5,660,717)		(5,542,726)
Underlying assets under operating leases, net	$	2,907,789	$	2,751,488

Depreciation expense for the underlying assets under operating leases where we are the lessor for the three and nine months ended September 30, 2023 and 2022, respectively, is summarized as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
(Thousands)	2023		2022		2023		2022
Depreciation expense for underlying assets under operating leases	$	45,795	$	44,127	$	136,640	$	130,858

Lessee Accounting

We have commitments under operating leases for communications towers, ground space, colocation space, dark fiber and buildings. We also have finance leases for dark fiber and automobiles. Our leases have initial lease terms ranging from less than one year to 30 years, most of which include options to extend or renew the leases for less than one year to 20 years, and some of which may include options to terminate the leases within one to six months. Certain lease agreements contain provisions for future rent increases. Payments due under the lease contracts include fixed payments plus, for some of our leases, variable payments.

As of September 30, 2023, we have short term lease commitments amounting to approximately $3.40 million.

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Future lease payments under non-cancellable leases as of September 30, 2023 are as follows:


(Thousands)	Operating Leases		Finance Leases
2023	$	4,169	$	928
2024	17,941		3,521
2025	15,090		3,468
2026	11,701		3,335
2027	9,060		2,960
Thereafter	101,405		12,934
Total undiscounted lease payments	$	159,366	$	27,146
Less: imputed interest	(78,064)		(8,758)
Total lease liabilities	$	81,302	$	18,388

Note 5. Investments in Unconsolidated Entities

Fiber Holdings

BB Fiber Holdings LLC (“Fiber Holdings”) was primarily established to develop fiber networks as real estate property for long-term investment. On July 1, 2020, the Company completed the sale of an ownership stake in the entity that controls the Company’s Midwest fiber network assets (the “Propco”). Fiber Holdings has a 47.5% ownership in the Propco that is under a long-term, triple net lease with our joint venture partner. Our ownership interest in Fiber Holdings represents approximately a 20% economic interest in the Propco. The Company’s current investment and maximum exposure to loss as a result of its involvement with Fiber Holdings, an equity method unconsolidated entity, was approximately $37.7 million as of September 30, 2023. The Company has not provided financial support to Fiber Holdings.

Harmoni

On June 21, 2022, the Company completed the sale of its investment in Harmoni Towers LP to Palistar Communications Infrastructure GP LLC, our partner in the investment, for total cash consideration of $32.5 million. As a result of the transaction, during the second quarter of 2022 we recorded a pre-tax gain of $7.9 million within other expense (income), net and $6.7 million of income tax expense within our Consolidated Statements of Income.

Note 6. Fair Value of Financial Instruments

FASB ASC 820, Fair Value Measurements, establishes a hierarchy of valuation techniques based on the observability of inputs utilized in measuring assets and liabilities at fair values. This hierarchy establishes market-based or observable inputs as the preferred source of values, followed by valuation models using management assumptions in the absence of market inputs. The three levels of the hierarchy are as follows:

Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity can access at the assessment date;

Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly; and

Level 3 – Unobservable inputs for the asset or liability.

Our financial instruments consist of cash and cash equivalents, accounts and other receivables, our outstanding notes and other debt, settlement payable, interest and dividends payable.

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The following table summarizes the fair value of our financial instruments at September 30, 2023 and December 31, 2022:


(Thousands)	Total		Quoted Prices in Active Markets (Level 1)		Prices with Other Observable Inputs (Level 2)		Prices with Unobservable Inputs (Level 3)
At September 30, 2023
Liabilities
Senior secured notes - 10.50%, due February 15, 2028	$	2,530,476	$	—	$	2,530,476	$	—
Senior secured notes - 4.75%, due April 15, 2028	460,130		—		460,130		—
Senior unsecured notes - 6.00%, due January 15, 2030	441,809		—		441,809		—
Senior unsecured notes - 6.50%, due February 15, 2029	723,720		—		723,720		—
Exchangeable senior notes - 4.00%, due June 15, 2024	118,016		—		118,016		—
Convertible senior notes - 7.50% due December 1, 2027	263,535		—		263,535		—
Senior secured revolving credit facility, variable rate, due September 24, 2027	270,973		—		270,973		—
Settlement payable	174,075		—		174,075		—
Total	$	4,982,734	$	—	$	4,982,734	$	—


(Thousands)	Total		Quoted Prices in Active Markets (Level 1)		Prices with Other Observable Inputs (Level 2)		Prices with Unobservable Inputs (Level 3)
At December 31, 2022
Liabilities
Senior secured notes - 7.875%, due February 15, 2025	$	2,208,319	$	—	$	2,208,319	$	—
Senior secured notes - 4.75%, due April 15, 2028	469,740		—		469,740		—
Senior unsecured notes - 6.00%, due January 15, 2030	467,401		—		467,401		—
Senior unsecured notes - 6.50% , due February 15, 2029	759,917		—		759,917		—
Exchangeable senior notes - 4.00%, due June 15, 2024	127,024		—		127,024		—
Convertible senior notes - 7.50%, due December 1, 2027	297,765				297,765
Senior secured revolving credit facility, variable rate, due December 10, 2024	187,981		—		187,981		—
Settlement payable	232,350		—		232,350		—
Total	$	4,750,497	$	—	$	4,750,497	$	—

The carrying value of cash and cash equivalents, accounts and other receivables, and accounts, interest and dividends payable approximate fair values due to the short-term nature of these financial instruments.

The total principal balance of our outstanding notes and other debt was $5.68 billion at September 30, 2023, with a fair value of $4.98 billion. The estimated fair value of our outstanding notes and other debt was based on available external pricing data and current market rates for similar debt instruments, among other factors, which are classified as Level 2 inputs within the fair value hierarchy.

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Uniti is required to make $490.1 million of cash payments to Windstream in equal installments over 20 consecutive quarters beginning October 2020 (the “Settlement Payable”). See Note 13. The Settlement Payable was initially recorded at fair value, using the present value of future cash flows. The future cash flows are discounted using discount rate inputs based on observable market data. Accordingly, we classify inputs used as Level 2 in the fair value hierarchy. As of September 30, 2023, the remaining Settlement Payable is $185.9 million. There have been no changes in the valuation methodologies used since the initial recording.

Note 7. Property, Plant and Equipment

The carrying value of property, plant and equipment is as follows:


(Thousands)	Depreciable Lives	September 30, 2023		December 31, 2022
Land	Indefinite	$	30,035	$	28,845
Building and improvements	3 - 40 years	364,714		363,077
Poles	30 years	309,901		296,941
Fiber	30 years	4,763,091		4,434,506
Equipment	5 - 7 years	451,758		399,473
Copper	20 years	3,978,336		3,964,439
Conduit	30 years	89,963		89,963
Tower assets	20 years	4,031		5,619
Finance lease assets	(1)	52,403		73,487
Other assets	15 - 20 years	10,436		10,436
Corporate assets	3 - 7 years	15,641		14,883
Construction in progress	(1)	57,597		46,508
		10,127,906		9,728,177
Less accumulated depreciation		(6,165,470)		(5,973,630)
Net property, plant and equipment		$	3,962,436	$	3,754,547

(1) See our Annual Report for property, plant and equipment accounting policies.

Depreciation expense for the three and nine months ended September 30, 2023 was $69.9 million and $209.1 million, respectively. Depreciation expense for the three and nine months ended September 30, 2022 was $66.1 million and $194.9 million, respectively.

Note 8. Derivative Instruments and Hedging Activities

Exchangeable Notes Hedge Transactions

On June 25, 2019, concurrently with the pricing of the 4.00% Exchangeable Notes due June 15, 2024 (the "Exchangeable Notes"), and on June 27, 2019, concurrently with the exercise by the initial purchasers involved in the offering of the Exchangeable Notes (the “Initial Purchasers”) of their option to purchase additional Exchangeable Notes, Uniti Fiber Holdings Inc., the issuer of the Exchangeable Notes, entered into exchangeable note hedge transactions with respect to the Company’s common stock (the “Note Hedge Transactions”) with certain of the Initial Purchasers or their respective affiliates (collectively, the “Counterparties”). The Note Hedge Transactions cover, subject to anti-dilution adjustments substantially similar to those applicable to the Exchangeable Notes, the same number of shares of the Company’s common stock that initially underlie the Exchangeable Notes in the aggregate and are exercisable upon exchange of the Exchangeable Notes. The Note Hedge Transactions have an initial strike price that corresponds to the initial exchange price of the Exchangeable Notes, subject to anti-dilution adjustments substantially similar to those applicable to the Exchangeable Notes. The Note Hedge Transactions will expire upon the maturity of the Exchangeable Notes, if not earlier exercised. The Note Hedge Transactions are intended to reduce potential dilution to the Company’s common stock upon any exchange of the Exchangeable Notes and/or offset any cash payments Uniti Fiber Holdings Inc.is required to make in excess of the principal amount of exchanged Exchangeable Notes, as the case may be, in the event that the market value per share of the Company’s common stock, as measured under the Note Hedge Transactions, at the time of exercise is greater than the strike price of the Note Hedge Transactions.

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The Note Hedge Transactions are separate transactions, entered into by Uniti Fiber Holdings Inc. with the Counterparties, and are not part of the terms of the Exchangeable Notes. Holders of the Exchangeable Notes will not have any rights with respect to the Note Hedge Transactions. The Note Hedge Transactions meet certain accounting criteria under GAAP, are recorded in additional paid-in capital on our Condensed Consolidated Balance Sheets and are not accounted for as derivatives that are remeasured each reporting period.

Warrant Transactions

On June 25, 2019, concurrently with the pricing of the Exchangeable Notes, and on June 27, 2019 concurrently with the exercise by the Initial Purchasers of their option to purchase additional Exchangeable Notes, the Company entered into warrant transactions to sell to the Counterparties warrants (the “Warrants”) to acquire, subject to anti-dilution adjustments, up to approximately 27.8 million shares of the Company’s common stock in the aggregate at an exercise price of approximately $16.42 per share. The initial maximum number of shares of the Company’s common stock that could be issued pursuant to the Warrants was approximately 55.5 million. The maximum number of shares of the Company's common stock that could be issued pursuant to the Warrants has subsequently decreased due to the partial unwind agreements that the Company entered into with the Counterparties in connection with each repurchase of Exchangeable Notes. The Company offered and sold the Warrants in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933, as amended. If the market value per share of the Company’s common stock, as measured under the Warrants, at the time of exercise exceeds the strike price of the Warrants, the Warrants will have a dilutive effect on the Company’s common stock unless, subject to the terms of the Warrants, the Company elects to cash settle the Warrants. The Warrants will expire over a period beginning in September 2024.

The Warrants are separate transactions, entered into by the Company with the Counterparties, and are not part of the terms of the Exchangeable Notes. Holders of the Exchangeable Notes will not have any rights with respect to the Warrants. The Warrants meet certain accounting criteria under GAAP, are recorded in additional paid-in capital on our Condensed Consolidated Balance Sheets and are not accounted for as derivatives that are remeasured each reporting period.

Note 9. Goodwill and Intangible Assets and Liabilities

Changes in the carrying value of goodwill occurring during the nine months ended September 30, 2023 are as follows:


(Thousands)	Uniti Fiber		Total
Goodwill at December 31, 2022	$	672,878	$	672,878
Accumulated impairment charges as of December 31, 2022	(311,500)		(311,500)
Balance at December 31, 2022	$	361,378	$	361,378

Goodwill Impairment (Note 2)	$	(153,000)	$	(153,000)
Balance at September 30, 2023	$	208,378	$	208,378

Goodwill at September 30, 2023	$	672,878	$	672,878
Accumulated impairment charges as of September 30, 2023	(464,500)		(464,500)
Balance at September 30, 2023	$	208,378	$	208,378

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Carrying value of intangible assets and liabilities at September 30, 2023 and December 31, 2022 are as follows:


(Thousands)	September 30, 2023				December 31, 2022
	Original Cost		Accumulated Amortization		Original Cost		Accumulated Amortization
Finite life intangible assets:
Customer lists	$	416,104	$	(145,845)	$	416,104	$	(128,728)
Contracts	52,536		(19,701)		52,536		(14,776)
Underlying Rights	10,497		(1,050)		10,497		(787)

Total intangible assets	$	479,137			$	479,137
Less: accumulated amortization	(166,596)				(144,291)
Total intangible assets, net	$	312,541			$	334,846

Finite life intangible liabilities:
Below-market leases	$	191,154	(32,083)		$	191,154	(24,062)

Finite life intangible liabilities:
Below-market leases	$	191,154			$	191,154
Less: accumulated amortization	(32,083)				(24,062)
Total intangible liabilities, net	$	159,071			$	167,092

As of September 30, 2023, the remaining weighted average amortization period of the Company’s intangible assets was 13.6 years.

Amortization expense for the three and nine months ended September 30, 2023 was $7.4 million and $22.3 million, respectively. Amortization expense for the three and nine months ended September 30, 2022 was $7.5 million and $22.3 million, respectively. Amortization expense is estimated to be $29.8 million for the full year of 2023, $29.7 million in 2024, $29.7 million in 2025, $29.7 million in 2026, and $29.7 million for 2027.

We recognize the amortization of below-market leases in revenue. Revenue related to the amortization of the below-market leases for the three and nine months ended September 30, 2023 was $2.7 million and $8.0 million. Revenue related to the amortization of the below-market leases for the three and nine months ended September 30, 2022, was $2.7 million and $8.0 million. As of September 30, 2023, the remaining weighted average amortization period of the Company’s intangible liabilities was 16.3 years. Revenue due to the amortization of the below-market leases is estimated to be $10.7 million for the full year of 2023, $10.7 million in 2024, $10.7 million in 2025, $10.7 million in 2026, and $10.7 million in 2027.

Note 10. Notes and Other Debt

All debt, including the senior secured credit facility and notes described below, are obligations of the Operating Partnership and/or certain of its subsidiaries as discussed below. The Company is, however, a guarantor of such debt.

Notes and other debt are as follows:


(Thousands)	September 30, 2023		December 31, 2022
Principal amount	$	5,680,442	$	5,262,373
Less unamortized discount, premium and debt issuance costs	(98,385)		(73,558)
Notes and other debt less unamortized discount, premium and debt issuance costs	$	5,582,057	$	5,188,815

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Notes and other debt at September 30, 2023 and December 31, 2022 consisted of the following:

September 30, 2023

December 31, 2022

(Thousands)

Principal

Unamortized

Discount,

Premium and

Debt Issuance

Costs

Principal

Unamortized

Discount,

Premium and

Debt Issuance

Costs

Senior secured notes - 7.875% due February 15, 2025

(discount is based on imputed interest rate of 8.38%)