Equity and Mezzanine Equity |
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| Equity and Mezzanine Equity |
Equity and Mezzanine Equity
Distributions
We paid the following distributions per share for the years ended December 31, 2019, 2018, and 2017:
For federal income tax purposes, distributions paid to stockholders may be characterized as ordinary income, capital gains, return of capital or a combination of the foregoing. The characterization of distributions during each of the last three years is reflected in the table below:
Recent Activity
Common Stock ATM Program
On December 3, 2019, we entered into an At-the-Market Equity Offering Sales Agreement (the “Common Stock Sales Agreement”), with Robert W. Baird & Co. Incorporated (“Baird”), Goldman Sachs & Co. LLC (“Goldman Sachs”), Stifel, Nicolaus & Company, Incorporated (“Stifel”), BTIG, LLC, and Fifth Third Securities, Inc. (“Fifth Third”) (collectively the “Common Stock Sales Agents”), pursuant to which we may sell shares of our common stock in an aggregate offering price of up to $250.0 million. Previously, we had a common stock ATM program with Cantor Fitzgerald & Co (“Cantor”) that was terminated upon entering into the Common Stock Sales Agreement. Under both programs, during the year ended December 31, 2019, we sold 3.0 million shares of common stock, raising $64.5 million in net proceeds. As of December 31, 2019, we had a remaining capacity to sell up to $237.5 million of common stock under the Common Stock Sales Agreement. The proceeds from these issuances were used to acquire real estate, repay outstanding debt and for other general corporate purposes.
Series A and B Preferred Stock ATM Programs
Previously under another open market sales agreement with Cantor (the “Series A and B Preferred ATM Program”), we could, from time to time, offer to sell (i) shares of our 7.75% Series A Cumulative Redeemable Preferred Stock (“Series A Preferred Stock”), and (ii) shares of our 7.50% Series B Cumulative Redeemable Preferred Stock, (“Series B Preferred Stock”), having an aggregate offering price of up to $40.0 million, through Cantor, acting as sales agent and/or principal. We did not sell any shares of our Series A or Series B Preferred Stock during the year ended December 31, 2019.
On October 28, 2019, we terminated the Series A and B Preferred ATM Program with Cantor, as the Series A Preferred Stock and Series B Preferred Stock were fully redeemed on this date.
Series A and B Preferred Stock Redemption
On October 28, 2019, we voluntarily redeemed all 1,000,000 outstanding shares of our Series A Preferred Stock and all 1,264,000 outstanding shares of our Series B Preferred Stock at a redemption price of $25.1506944 per share and $25.1458333 per share, respectively, which represents the liquidation preference per share, plus accrued and unpaid dividends through October 28, 2019 for an aggregate redemption price of approximately $56.9 million. In connection with this redemption, we recognize a $2.7 million decrease to net income available to common shareholders pertaining to the original issuance costs incurred upon the issuance of our Series A and B Preferred Stock.
Mezzanine Equity
Both our 7.00% Series D Cumulative Redeemable Preferred Stock (“Series D Preferred Stock”), and 6.625% Series E Cumulative Redeemable Preferred Stock (“Series E Preferred Stock”) are classified as mezzanine equity in our consolidated balance sheet because both are redeemable at the option of the shareholder upon a change of control of greater than 50% in accordance with ASC 480-10-S99 “Distinguishing Liabilities from Equity,” which requires mezzanine equity classification for preferred stock issuances with redemption features which are outside of the control of the issuer. A change in control of the Company, outside of our control, is only possible if a tender offer is accepted by over 90% of our shareholders. All other change in control situations would require input from our Board of Directors. In addition, our Series E Preferred Stock is redeemable at the option of the shareholder in the event a delisting event occurs. We will periodically evaluate the likelihood that a change of control or delisting event of greater than 50% will take place, and if we deem this probable, we would adjust the Series D Preferred Stock and Series E Preferred Stock presented in mezzanine equity to their redemption value, with the offset to gain (loss) on extinguishment. We currently believe the likelihood of a change of control of greater than 50% is remote.
Under a third open market sales agreement with Cantor (the “Series D Preferred ATM Program”), we may, from time to time, offer to sell shares of our Series D Preferred Stock, having an aggregate offering price of up to $50.0 million through Cantor, acting as sales agent and/or principal. We did not sell any shares of our Series D Preferred under our Series D Preferred ATM Program during the year ended December 31, 2019. We have not allocated any funds on our Universal Shelf (defined below) towards the Series D Preferred ATM Program.
Series E Preferred Stock
On October 4, 2019, we completed an underwritten public offering of 2,760,000 shares of our newly designated Series E Preferred Stock, at a public offering price of $25.00 per share, raising $69.0 million in gross proceeds and approximately $66.6 million in net proceeds, after payment of underwriting discounts and commissions. We used the net proceeds from this offering to redeem all outstanding shares of our Series A Preferred Stock and Series B Preferred Stock, and pay down our Credit Facility.
On December 3, 2019, we entered into an At-the -Market Equity Offering Sales Agreement (the “Series E Preferred Stock Sales Agreement”), with Baird, Goldman Sachs, Stifel, Fifth Third, and U.S. Bancorp Investments, Inc. (the “Series E Preferred Stock Sales Agents”), pursuant to which we may, from time to time, offer to sell shares of our Series E Preferred Stock in an aggregate offering price of up to $100.0 million. We did not sell any of our Series E Preferred Stock pursuant to the Series E Preferred Stock Sales Agreement during the year ended December 31, 2019.
Amendments to Articles of Incorporation
On April 11, 2018, we filed with the Maryland State Department of Assessments and Taxation an Articles Supplementary reclassifying 3,500,000 authorized but unissued shares of our convertible senior common stock (the “Senior Common Stock”), as authorized but unissued shares of our common stock. As a result of the reclassification, there were 57,969 authorized but unissued shares of Senior Common Stock.
On April 11, 2018, we also filed with the Maryland State Department of Assessments and Taxation an Articles of Amendment to increase the number of shares of capital stock we have authority to issue to 100,000,000 and authorized common stock to 87,700,000 shares.
On September 27, 2019, the Company filed with the Maryland State Department of Assessments and Taxation the Articles Supplementary (i) setting forth the rights, preferences and terms of its newly designated Series E Preferred Stock and (ii) reclassifying and designating 4,000,000 shares of the Company’s authorized and unissued shares of common stock as shares of Series E Preferred Stock. The reclassification decreased the number of shares classified as common stock from 87,700,000 shares immediately prior to the reclassification to 83,700,000 shares immediately after the reclassification.
On December 2, 2019, the Company filed with the Maryland State Department of Assessments and Taxation the Articles Supplementary reclassifying 2,600,000 authorized but unissued shares of our Series A Preferred Sock as 2,590,000 shares of our common stock and 10,000 shares of our Series E Preferred Stock, and reclassifying 2,750,000 authorized but unissued shares of our Series B Preferred Stock as 2,750,000 shares of our Series E Preferred Stock. After giving effect to such reclassifications, we have authorized 86,290,000 shares of Common Stock, 6,000,000 shares of Series D Preferred Stock, 6,760,000 shares of Series E Preferred Stock and 950,000 shares of our Senior Common Stock.
Universal Shelf Registration Statement
On January 11, 2019, we filed a universal registration statement on Form S-3, File No. 333-229209, and an amendment thereto on Form-S-3/A on January 24, 2019 (collectively referred to as the “Universal Shelf”). The Universal Shelf became effective on February 13, 2019 and replaced our prior universal shelf registration statement. The Universal Shelf allows us to issue up to $500.0 million of securities. As of December 31, 2019, we had the ability to issue up to $438.0 million under the Universal Shelf.
Non-controlling Interests in Operating Partnership
As of December 31, 2019 and 2018, we owned approximately 98.6% and 97.5%, respectively, of the outstanding OP Units. On October 30, 2018, we issued 742,937 OP units as partial consideration to acquire a 218,703 square foot, two property portfolio located in Detroit, Michigan for $21.7 million. During November 2019, 263,300 OP units were redeemed for Common Stock.
The Operating Partnership is required to make distributions on each OP Unit in the same amount as those paid on each share of the Company’s common stock, with the distributions on the OP Units held by the Company being utilized to make distributions to the Company’s common stockholders.
As of December 31, 2019 and 2018, there were 479,637 and 742,937 outstanding OP Units held by Non-controlling OP Unitholders, respectively.
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