Equity | 7. Equity The following table summarizes the changes in our stockholders’ equity for the nine months ended September 30, 2018 and 2017 (amounts in thousands, except share amounts): Shares Common Stock Par Value Additional Paid-in Capital Retained Earnings (Deficit) Cumulative Dividends Accumulated Other Comprehensive Income Non- controlling Interest in Operating Partnership Total Equity Nine months ended September 30, 2018 Balance at December 31, 2017 44,787,040 $ 448 $ 740,546 $ 7,127 $ (83,718 ) $ 3,403 $ 123,283 $ 791,089 Stock based compensation — 294 — — — 2,013 2,307 Dividends and distributions paid — — — (39,564 ) — (7,977 ) (47,541 ) Grant of unvested restricted stock 21,328 — — — — — — — Redemption of common units for shares of common stock 628,436 6 9,840 — — — (9,846 ) — Issuance of common stock 15,382,037 154 286,350 — — — — 286,504 Unrealized gain on interest rate swaps, net — — — — 2,686 241 2,927 Net income — — 5,114 902 6,016 Allocation of non-controlling interest in Operating Partnership — (21,427 ) — — — 21,427 — Balance at September 30, 2018 60,818,841 $ 608 $ 1,015,603 $ 12,241 $ (123,282 ) $ 6,089 $ 130,043 $ 1,041,302 Nine months ended September 30, 2017 Balance at December 31, 2016 36,874,810 $ 369 $ 597,164 $ 2,679 $ (42,794 ) $ 3,038 $ 137,844 $ 698,300 Stock based compensation — 240 — — — 1,975 2,215 Dividends and distributions paid — — — (29,401 ) — (6,082 ) (35,483 ) Grant of unvested restricted stock 17,912 — — — — — — — Redemption of common units for shares of common stock 1,361,594 14 20,387 — — — (20,401 ) — Issuance of common stock 5,619,480 56 102,885 — — — — 102,941 Unrealized loss on interest rate swaps, net — — — — (411 ) (286 ) (697 ) Net income — — 3,161 — — 700 3,861 Allocation of non-controlling interest in Operating Partnership — (1,516 ) — — — 1,516 — Balance at September 30, 2017 43,873,796 $ 439 $ 719,160 $ 5,840 $ (72,195 ) $ 2,627 $ 115,266 $ 771,137 The Company granted 891,000 long term incentive plan units in the Operating Partnership (“LTIP units”) On January 4, 2018, the Company granted an aggregate of 173,381 performance-based LTIP units to members of management under the 2015 Equity Incentive Plan, subject to the Company achieving certain absolute and relative total shareholder returns through the performance period. The awards consist of three separate tranches of 32,448 LTIP units, 55,463 LTIP units and 85,470 LTIP units with performance periods ending on December 31, 2018, December 31, 2019 and December 31, 2020, respectively. The performance criteria for each tranche is based 75% on the Company’s absolute total shareholder return performance and 25% on the Company’s relative total shareholder return performance during the relevant performance period, with 50% of the LTIP Units vesting when earned following the end of the applicable performance period and 50% of the earned award subject to an additional one year of vesting. On April 3, 2018, the Company issued an aggregate of 2,236 shares of restricted common stock to certain employees pursuant to our 2015 Equity Incentive Plan. The restricted common stock grants will vest upon the second anniversary of the grant date so long as the grantee remains an employee of the Company on such date. In connection with our 2018 annual meeting of stockholders, we issued an aggregate of 19,092 shares of restricted common stock to our non-employee directors pursuant to our 2015 Equity Incentive Plan. The restricted common stock grants will vest upon the earlier of the anniversary of the date of the grant or the next annual stockholder meeting. In connection with the liquidation of certain private investment funds that contributed assets in our initial public offering, we issued 628,436 shares of our common stock between January 1, 2018 and September 30, 2018 upon redemption of 628,436 common units in accordance with the terms of the partnership agreement of the Operating Partnership. A summary of our shares of restricted common stock and LTIP unit awards at September 30, 2018 is as follows: Restricted Shares Restricted Shares Weighted Average Grant Date Fair Value Per Share LTIP Units LTIP Units Weighted Average Grant Date Fair Value Per Share Outstanding, December 31, 2017 17,912 $ 19.72 926,000 $ 8.91 Granted 21,328 20.87 173,381 18.31 Vested (15,220 ) 19.71 (463,000 ) 8.91 Forfeited — — — — Outstanding, September 30, 2018 24,020 $ 20.74 636,381 $ 11.47 We recognized $2.3 million in compensation expense related to our shares of restricted common stock and the LTIP unit awards for the nine months ended September 30, 2018. As of September 30, 2018, unrecognized compensation expense for both sets of awards was $2.9 million, which will be amortized over the vesting period. A summary of dividends declared by the board of directors per share of common stock and per common unit at the date of record is as follows: Quarter Declaration Date Record Date Pay Date Dividend (1) Q1 2018 May 3, 2018 June 11, 2018 June 28, 2018 $ 0.26 Q2 2018 August 1, 2018 September 13, 2018 September 27, 2018 $ 0.26 Q3 2018 October 29, 2018 December 13, 2018 December 27, 2018 $ 0.26 (1) Prior to the end of the performance period as set forth in the applicable LTIP unit award, holders of LTIP units are entitled to receive dividends per LTIP unit equal to 10% of the dividend paid per common unit. After the end of the performance period, the number of LTIP units, both vested and unvested, that LTIP award recipients have earned, if any, are entitled to receive dividends in an amount per LTIP unit equal to dividends, both regular and special, payable per common unit. On March 3, 2017, we entered into separate equity distribution agreements with each of Citigroup Global Markets Inc., BTIG, LLC, Jefferies LLC, Raymond James & Associates, Inc., RBC Capital Markets, LLC and SunTrust Robinson Humphrey, Inc. (collectively, the “managers”), pursuant to which we may issue and sell the shares of our common stock having an aggregate offering price of up to $100.0 million from time to time through the managers, acting as sales agents and/or principals (the “ATM program”). The sales of shares of our common stock under the equity distribution agreements may be made in negotiated transactions or transactions that are deemed to be “at the market” offerings as defined in Rule 415 under the Securities Act of 1933, as amended. The following table sets forth certain information with respect to the ATM program as of September 30, 2018: Number of Shares Sold Net Proceeds For the year ended December 31, 2017 1,569,514 $ 33,263 For the three months ended March 31, 2018 671,666 13,532 For the three months ended June 30, 2018 1,010,371 20,208 For the three months ended September 30, 2018 — — Total 3,251,551 $ 67,003 We have used the proceeds from such sales for general corporate purposes. As of September 30, 2018, we had approximately $32.3 million of gross sales of our common stock available under the ATM program. On June 21, 2018, we completed an underwritten public offering of an aggregate of 20,700,000 consisting of (i) 13,700,000 shares sold by us to the underwriters (including 2,700,000 shares pursuant to the underwriters’ exercise of their option to purchase additional shares) and (ii) 7,000,000 shares offered and sold on a forward basis in connection with forward sales agreements We received approximately $252.9 million in net proceeds from the sale of shares offered by us in the offering . Subject to the Company’s right to elect cash or net share settlement, we expect to physically settle the forward sales agreements no later than December 21, 2018. Assuming the forward sales agreements are physically settled in full, we expect to receive an additional $129.3 million of net proceeds, after deducting underwriting discounts, commissions and estimated offering expenses. |