Equity | 7. Equity The following table summarizes the changes in our stockholders’ equity for the three months ended September 30, 2019 and 2018 (amounts in thousands, except share amounts): Shares Common Stock Par Value Additional Paid-in Capital Retained Earnings (Deficit) Cumulative Dividends Accumulated Other Comprehensive Income (Loss) Non- controlling Interest in Operating Partnership Total Equity Three months ended September 30, 2019 Balance at June 30, 2019 69,601,138 $ 696 $ 1,155,327 $ 18,023 $ (172,642 ) $ (4,751 ) $ 141,272 $ 1,137,925 Cumulative effect adjustment related to adoption of Leases (Topic 842) — — — — — — — Stock based compensation — 223 — — — 491 714 Dividends and distributions paid ($0.26 per share) — — — (18,835 ) — (2,563 ) (21,398 ) Redemption of common units for shares of common stock 245,125 2 3,508 — — — (3,510 ) — Issuance of common stock 3,493,413 35 67,665 — — — — 67,700 Unrealized loss on interest rate swaps, net — — — — (1,642 ) (165 ) (1,807 ) Net income — — 549 — — 54 603 Allocation of non-controlling interest in Operating Partnership — (1,694 ) — — — 1,694 — Balance at September 30, 2019 73,339,676 $ 733 $ 1,225,029 $ 18,572 $ (191,477 ) $ (6,393 ) $ 137,273 $ 1,183,737 Three months ended September 30, 2018 Balance at June 30, 2018 60,376,466 $ 604 $ 1,008,615 $ 10,086 $ (107,573 ) $ 5,692 $ 138,604 $ 1,056,028 Stock based compensation — 113 — — — 618 731 Dividends and distributions paid ($0.26 per share) — — (15,709 ) — (2,636 ) (18,345 ) Redemption of common units for shares of common stock 442,375 4 6,803 — — — (6,807 ) — Unrealized gain (loss) on interest rate swaps, net — — — — 397 9 406 Net income — — 2,155 — — 327 2,482 Allocation of non-controlling interest in Operating Partnership — 72 — — — (72 ) — Balance at September 30, 2018 60,818,841 $ 608 $ 1,015,603 $ 12,241 $ (123,282 ) $ 6,089 $ 130,043 $ 1,041,302 The following table summarizes the changes in our stockholders’ equity for the nine months ended September 30, 2019 and 2018 (amounts in thousands, except share amounts): Shares Common Stock Par Value Additional Paid-in Capital Retained Earnings (Deficit) Cumulative Dividends Accumulated Other Comprehensive Income (Loss) Non- controlling Interest in Operating Partnership Total Equity Nine months ended September 30, 2019 Balance at December 31, 2018 60,849,206 $ 608 $ 1,017,415 $ 12,831 $ (139,103 ) $ 2,412 $ 131,090 $ 1,025,253 Cumulative effect adjustment related to adoption of Leases (Topic 842) — — (34 ) — — — (34 ) Stock based compensation — 617 — — — 1,528 2,145 Dividends and distributions paid ($0.78 per share) — — — (52,374 ) — (7,733 ) (60,107 ) Grant of unvested restricted stock 89,961 1 (1 ) — — — — — Redemption of common units for shares of common stock 339,929 3 5,012 — — — (5,015 ) — Issuance of common stock 12,060,580 121 219,743 — — — — 219,864 Unrealized loss on interest rate swaps, net — — — — (8,805 ) (1,192 ) (9,997 ) Net income — — 5,775 838 6,613 Allocation of non-controlling interest in Operating Partnership — (17,757 ) — — — 17,757 — Balance at September 30, 2019 73,339,676 $ 733 $ 1,225,029 $ 18,572 $ (191,477 ) $ (6,393 ) $ 137,273 $ 1,183,737 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 ($0.78 per share) — — — (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 On January 18, 2019, the Company granted an aggregate of 143,538 performance-based long term incentive plan units in the Operating Partnership (“LTIP units”) to members of management pursuant to the 2015 Equity Incentive Plan, as amended (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 two separate tranches of 45,238 LTIP units and 98,300 LTIP units with performance periods ending on December 31, 2020 and December 31, 2021, respectively. Fifty percent of the LTIP units vest when earned following the end of the applicable performance period and 50% of the earned award is subject to an additional one year of vesting. The Company also granted, during the nine months ended September 30, 2019, an aggregate of 64,881 shares of restricted common stock to members of management pursuant to the 2015 Equity Incentive Plan, of which an aggregate of 17,645 shares will vest on January 18, 2021, an aggregate of 36,396 shares will vest on January 18, 2022, and an aggregate of 10,840 shares will vest on February 28, 2022, subject, in each case, to the grantee’s continued employment and the other terms of the awards. On March 11, 2019, the Company issued an aggregate of 3,080 shares of restricted common stock to certain employees pursuant to the 2015 Equity Incentive Plan. The shares of restricted common stock 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 the Company’s 2019 annual meeting of stockholders, the Company issued an aggregate of 22,000 shares of restricted common stock to its non-employee directors pursuant to the 2015 Equity Incentive Plan. The shares of restricted common stock will vest upon the earlier of the anniversary of the grant date or the next annual stockholder meeting. A summary of our shares of restricted common stock and LTIP unit awards at September 30, 2019 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, 2018 24,020 $ 20.74 636,381 $ 11.47 Granted 89,961 17.49 143,538 19.20 Vested (21,784 ) 20.81 (463,000 ) 8.91 Forfeited — — (32,448 ) 19.15 Outstanding, September 30, 2019 92,197 $ 17.55 284,471 $ 18.66 We recognized $2.1 million in compensation expense related to our shares of restricted common stock and the LTIP unit awards for the nine months ended September 30, 2019. As of September 30, 2019, unrecognized compensation expense for both sets of awards was $4.3 million, which will be amortized over the applicable vesting period. A summary of dividends declared by the Company’s 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 Payment Date Dividend (1) Q1 2019 May 2, 2019 June 10, 2019 June 27, 2019 $ 0.26 Q2 2019 July 31, 2019 September 12, 2019 September 26, 2019 $ 0.26 Q3 2019 October 30, 2019 November 13, 2019 December 27, 2019 $ 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. ATM Programs 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., pursuant to which we could issue and sell shares of our common stock having an aggregate offering price of up to $100.0 million from time to time (the “2017 ATM Program”) 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 “Securities Act”). As of September 30, 2019, there were no shares remaining available for sale under the 2017 ATM Program. On March 4, 2019, we entered into separate equity distribution agreements with each of Citigroup Global Markets Inc., BMO Capital Markets Corp., BTIG, LLC, Capital One Securities, Inc., Jefferies LLC, Raymond James & Associates, Inc., RBC Capital Markets, LLC, SunTrust Robinson Humphrey, Inc. and Wells Fargo Securities, LLC pursuant to which we may issue and sell shares of our common stock having an aggregate offering price of up to $200.0 million from time to time (the “2019 ATM Program” and together with the 2017 ATM Program, the “ATM Programs”) in negotiated transactions or transactions that are deemed to be “at the market” offerings as defined in Rule 415 under the Securities Act. Under the 2019 ATM Program, we may also enter into one or more forward transactions (each, a “forward sale transaction”) under separate master forward sale confirmations and related supplemental confirmations with each of Citibank, N.A., Bank of Montreal, Jefferies LLC, Raymond James & Associates, Inc., Royal Bank of Canada and Wells Fargo Bank, National Association for the sale of shares of our common stock on a forward basis. The following table sets forth certain information with respect to sales made under each of the ATM Programs as of September 30, 2019 (amounts in thousands except share amounts): 2017 ATM Program 2019 ATM Program For the Three Months Ended: Number of Shares Sold Net Proceeds Number of Shares Sold (1) Net Proceeds (1) March 31, 2019 366,455 $ 6,504 — $ — June 30, 2019 — — 1,200,712 21,155 September 30, 2019 1,398,814 25,494 2,094,599 42,362 Total 1,765,269 $ 31,998 3,295,311 $ 63,517 (1) During the nine months ended September 30, 2019, we entered into and fully settled forward sale transactions under the 2019 ATM Program by selling and issuing an aggregate of 1,200,712 shares of our common stock in exchange for net proceeds to us of approximately $21.2 million, after deducting offering costs We have used the net proceeds received from such sales for general corporate purposes. As of September 30, 2019, we had approximately $135.8 million of gross sales of our common stock available under the 2019 ATM Program. Offering of Common Stock on a Forward Basis On June 21, 2018, we completed an underwritten public offering of an aggregate of 20,700,000 The public offering included 13,700,000 shares sold by us directly to the underwriters (including 2,700,000 shares pursuant to the underwriters’ exercise of their option to purchase additional shares), resulting in net proceeds to us of approximately $252.9 million, after deducting underwriting discounts and commissions and our offering expenses. In connection with the public offering, we also entered into forward sale agreements On March 27, 2019, we physically settled a portion of the forward sale agreements by issuing an aggregate of 6,700,000 shares of our common stock in exchange for approximately $119.2 million in net proceeds after deducting underwriting discounts and commissions and our offering expenses. On June 14, 2019, we completed the physical settlement of the remaining shares underlying the forward sale agreements by issuing an aggregate of 300,000 shares of our common stock in exchange for approximately $5.3 million in net proceeds after deducting underwriting discounts and commissions and our offering expenses. The Company accounted for the forward sale agreements as equity. |