| Shareholders' Equity, Noncontrolling Interests and Other Comprehensive Loss | 10. Shareholders’ Equity, Noncontrolling Interests and Other Comprehensive Loss Common Shares and Units In addition to the share repurchase activity discussed below, the Company completed the following transactions in its common shares during the six months ended June 30, 2020:
•
The Company withheld 2,075 Restricted Shares to pay the employees’ statutory minimum income taxes due on the value of the portion of their Restricted Shares that vested.
•
The Company recognized Common Share and Common OP Unit-based compensation expense totaling $4.2 million and $3.7 million in connection with Restricted Shares and Units ( Note 13 ) for the six months ended June 30, 2020 and 2019, respectively. In addition to the ATM Program activity discussed below, the Company completed the following transactions in its common shares during the year ended December 31, 2019:
•
The Company withheld 2,468 Restricted Shares to pay the employees’ statutory minimum income taxes due on the value of the portion of their Restricted Shares that vested.
•
The Company recognized Common Share and Common OP Unit-based compensation expense totaling $8.8 million in connection with Restricted Shares and Units ( Note 13 ). ATM Program The Company has an at-the-market equity issuance program (“ATM Program”) which provides the Company an efficient and low-cost vehicle for raising public equity to fund its capital needs. The Company entered into its current $250.0 million ATM Program (which replaced its prior program) in the second quarter of 2019 and also added an optional “forward purchase” component. The Company has not issued any shares on a forward basis during the six months ended June 30, 2020 or for the year ended December 31, 2019. During the year ended December 31, 2019, the Company sold 5,164,055 Common Shares under its ATM Program for gross proceeds of $147.7 million, or $145.5 million net of issuance costs, at a weighted-average gross price per share of $28.61. During the six months ended June 30, 2020, the Company did not sell any Common Shares under its ATM Program. Share Repurchase Program During 2018, the Company’s board of trustees (the “Board”) approved a new share repurchase program, which authorizes management, at its discretion, to repurchase up to $200.0 million of its outstanding Common Shares. The program does not obligate the Company to repurchase any specific number of Common Shares and may be discontinued or extended at any time. The Company did not repurchase any shares during the year ended December 31, 2019. During the six months ended June 30, 2020, the Company repurchased 1,219,065 Common Shares for $22.4 million, inclusive of $0.1 million of fees at a weighted average price per share of $18.29, under the share repurchase program, under which $122.6 million remains available as of June 30, 2020. Dividends and Distributions The following table sets forth the distributions declared and/or paid during the periods presented:
Date Declared
Amount Per Share
Record Date
Payment Date
November 13, 2018
$
0.28
December 31, 2018
January 15, 2019
February 28, 2019
$
0.28
March 29, 2019
April 15, 2019
May 9, 2019
$
0.28
June 28, 2019
July 15, 2019
August 13, 2019
$
0.28
September 30, 2019
October 15, 2019
November 5, 2019
$
0.29
December 31, 2019
January 15, 2020
February 26, 2020
$
0.29
March 31, 2020
April 15, 2020
The Company’s Board voted to suspend the distributions on the Common Shares and Common OP Units for the quarters ending June 30, 2020 and September 30, 2020; however, distributions of $0.1 million were payable to preferred unit holders at June 30, 2020. The Board has not made any decisions regarding its dividend policy beyond the third quarter of 2020 and will closely monitor the Company’s financial performance and economic outlook and assess when to reinitiate an appropriate dividend t o maintain compliance with its REIT taxable income requirements. Accumulated Other Comprehensive Loss The following tables set forth the activity in accumulated other comprehensive loss for three and six months ended June 30, 2020 and 2019 (in thousands):
Gains or Losses on Derivative Instruments
Balance at April 1, 2020
$
(85,715
)
Other comprehensive loss before reclassifications - swap agreements
(8,621
)
Reclassification of realized interest on swap agreements
3,115
Net current period other comprehensive loss
(5,506
)
Net current period other comprehensive loss attributable to noncontrolling interests
1,012
Balance at June 30, 2020
$
(90,209
)
Balance at April 1, 2019
$
(11,021
)
Other comprehensive loss before reclassifications - swap agreements
(22,652
)
Reclassification of realized interest on swap agreements
(535
)
Net current period other comprehensive loss
(23,187
)
Net current period other comprehensive loss attributable to noncontrolling interests
4,638
Balance at June 30, 2019
$
(29,570
)
Gains or Losses on Derivative Instruments
Balance at January 1, 2020
$
(31,175
)
Other comprehensive loss before reclassifications - swap agreements
(83,395
)
Reclassification of realized interest on swap agreements
4,092
Net current period other comprehensive loss
(79,303
)
Net current period other comprehensive loss attributable to noncontrolling interests
20,269
Balance at June 30, 2020
$
(90,209
)
Balance at January 1, 2019
$
516
Other comprehensive loss before reclassifications - swap agreements
(35,958
)
Reclassification of realized interest on swap agreements
(1,086
)
Net current period other comprehensive loss
(37,044
)
Net current period other comprehensive loss attributable to noncontrolling interests
6,958
Balance at June 30, 2019
$
(29,570
) Noncontrolling Interests The following tables summarize the change in the noncontrolling interests for the three and six months ended June 30, 2020 and 2019 (dollars in thousands):
Noncontrolling Interests in Operating Partnership (a)
Noncontrolling Interests in Partially-Owned Affiliates (b)
Total
Balance at April 1, 2020
$
93,382
$
483,714
$
577,096
Distributions declared of $0.00 per Common OP Unit
(123
)
—
(123
)
Net income for the three months ended June 30, 2020
1,259
44,237
45,496
Conversion of 259,712 Common OP Units to Common Shares by limited partners of the Operating Partnership
(4,072
)
—
(4,072
)
Other comprehensive loss - unrealized loss on valuation of swap agreements
(310
)
(1,869
)
(2,179
)
Reclassification of realized interest expense on swap agreements
42
1,125
1,167
Noncontrolling interest gain
—
588
588
Noncontrolling interest contributions
—
21,041
21,041
Noncontrolling interest distributions
—
(1,418
)
(1,418
)
Employee Long-term Incentive Plan Unit Awards
2,142
—
2,142
Reallocation of noncontrolling interests (c)
(1,999
)
—
(1,999
)
Balance at June 30, 2020
$
90,321
$
547,418
$
637,739
Balance at April 1, 2019
$
105,044
$
535,377
$
640,421
Distributions declared of $0.28 per Common OP Unit
(1,776
)
—
(1,776
)
Net income (loss) for the three months ended June 30, 2019
722
(15,039
)
(14,317
)
Conversion of 33,289 Common OP Units to Common Shares by limited partners of the Operating Partnership
(557
)
—
(557
)
Other comprehensive income - unrealized loss on valuation of swap agreements
(1,127
)
(3,464
)
(4,591
)
Reclassification of realized interest expense on swap agreements
(23
)
(24
)
(47
)
Noncontrolling interest contributions
—
—
—
Noncontrolling interest distributions
—
(1,645
)
(1,645
)
Employee Long-term Incentive Plan Unit Awards
1,835
—
1,835
Reallocation of noncontrolling interests (c)
(413
)
—
(413
)
Balance at June 30, 2019
$
103,705
$
515,205
$
618,910
Noncontrolling Interests in Operating Partnership (a)
Noncontrolling Interests in Partially-Owned Affiliates (b)
Total
Balance at January 1, 2020
$
97,670
$
546,987
$
644,657
Distributions declared of $0.29 per Common OP Unit
(1,972
)
—
(1,972
)
Net income (loss) for the six months ended June 30, 2020
923
(7,052
)
(6,129
)
Conversion of 407,594 Common OP Units to Common Shares by limited partners of the Operating Partnership
(6,544
)
—
(6,544
)
Other comprehensive loss - unrealized loss on valuation of swap agreements
(3,451
)
(18,257
)
(21,708
)
Cumulative effect of change in accounting principle ( Note 1 )
—
(11
)
(11
)
Noncontrolling interest gain
—
588
588
Reclassification of realized interest expense on swap agreements
49
1,390
1,439
Noncontrolling interest contributions
—
28,309
28,309
Noncontrolling interest distributions
—
(4,536
)
(4,536
)
Employee Long-term Incentive Plan Unit Awards
5,790
—
5,790
Reallocation of noncontrolling interests (c)
(2,144
)
—
(2,144
)
Balance at June 30, 2020
$
90,321
$
547,418
$
637,739
Balance at January 1, 2019
$
104,223
$
518,219
$
622,442
Distributions declared of $0.56 per Common OP Unit
(3,557
)
—
(3,557
)
Net income (loss) for the six months ended June 30, 2019
1,653
(25,231
)
(23,578
)
Conversion of 207,818 Common OP Units to Common Shares by limited partners of the Operating Partnership
(3,510
)
—
(3,510
)
Other comprehensive income - unrealized loss on valuation of swap agreements
(1,822
)
(5,068
)
(6,890
)
Reclassification of realized interest expense on swap agreements
(44
)
(24
)
(68
)
Noncontrolling interest contributions
—
32,191
32,191
Noncontrolling interest distributions
—
(4,882
)
(4,882
)
Employee Long-term Incentive Plan Unit Awards
5,195
—
5,195
Reallocation of noncontrolling interests (c)
1,567
—
1,567
Balance at June 30, 2019
$
103,705
$
515,205
$
618,910
(a)
Noncontrolling interests in the Operating Partnership are comprised of (i) the limited partners’ 3,101,958 and 3,320,325 Common OP Units at June 30, 2020 and June 30, 2019; (ii) 188 Series A Preferred OP Units at June 30, 2020 and June 30, 2019; (iii) 126,593 and 136,593 Series C Preferred OP Units at June 30, 2020 and June 30, 2019; and (iv) 2,886,207 and 2,715,679 LTIP units at June 30, 2020 and June 30, 2019, respectively, as discussed in Share Incentive Plan ( Note 13
(b)
Noncontrolling interests in partially-owned affiliates comprise third-party interests in Funds II, III, IV and V, and Mervyns II, and six other subsidiaries.
(c)
Adjustment reflects the difference between the fair value of the consideration received or paid and the book value of the Common Shares, Common OP Units, Preferred OP Units, and LTIP Units involving changes in ownership. Preferred OP Units There were no issuances of Preferred OP Units during the six months ended June 30, 2020 or the year ended December 31, 2019. In 1999, the Operating Partnership issued 1,580 Series A Preferred OP Units in connection with the acquisition of a property, which have a stated value of $1,000 per unit, and are entitled to a preferred quarterly distribution of the greater of (i) $22.50 (9% annually) per Series A Preferred OP Unit or (ii) the quarterly distribution attributable to a Series A Preferred OP Unit if such unit was converted into a Common OP Unit. Through June 30, 2020, 1,392 Series A Preferred OP Units were converted into 185,600 Common OP Units and then into Common Shares. The 188 remaining Series A Preferred OP Units are currently convertible into Common OP Units based on the stated value divided by $7.50. Either the Company or the holders can currently call for the conversion of the Series A Preferred OP Units at the lesser of $7.50 or the market price of the Common Shares as of the conversion date. During 2016, the Operating Partnership issued 442,478 Common OP Units and 141,593 Series C Preferred OP Units to a third party to acquire Gotham Plaza ( Note 4 ). The Series C Preferred OP Units have a value of $100.00 per unit and are entitled to a preferred quarterly distribution of $0.9375 per unit and are convertible into Common OP Units at a rate based on the share price at the time of conversion. If the share price is below $28.80 on the conversion date, each Series C Preferred OP Unit will be convertible into 3.4722 Common OP Units. If the share price is between $28.80 and $35.20 on the conversion date, each Series C Preferred OP Unit will be convertible into a number of Common OP Units equal to $100.00 divided by the closing share price. If the share price is above $35.20 on the conversion date, each Series C Preferred OP Unit will be convertible into 2.8409 Common OP Units. The Series C Preferred OP Units have a mandatory conversion date of December 31, 2025, at which time all units that have not been converted will automatically be converted into Common OP Units based on the same calculations. Through June 30, 2020, 15,000 Series C Preferred OP Units were converted into 51,887 Common OP Units and then into Common Shares. |
