Partners’ Capital, Mezzanine Capital and Distributions

At June 30, 2018, our outstanding common units consisted of 122,539,221 Class A units and 39,997 Class B units.

Distributions

We paid or will pay the following distributions to our common unitholders in 2017 and 2018:



Distribution For	Date Paid		Per Unit Amount		Total Amount
2017
1^st Quarter	May 15, 2017		$	0.7200	$	88,257
2^nd Quarter	August 14, 2017		$	0.7225	$	88,563
3^rd Quarter	November 14, 2017		$	0.5000	$	61,290
4^th Quarter	February 14, 2018		$	0.5100	$	62,515
2018
1^st Quarter	May 15, 2018		$	0.5200	$	63,741
2^nd Quarter	August 14, 2018	⁽¹⁾	$	0.5300	$	64,967

(1) This distribution was declared on July 16, 2018 and will be paid to unitholders of record as of July 31, 2018.

Class A Convertible Preferred Units

On September 1, 2017, we sold $750 million of our preferred units in a private placement, comprised of 22,249,494 units for a cash purchase price per unit of $33.71 (subject to certain adjustments, the “Issue Price”) to two initial purchasers. Our general partner executed an amendment to our partnership agreement in connection therewith, which, among other things, authorized and established the rights and preferences of our preferred units. Our preferred units are a new class of security that ranks senior to all of our currently outstanding classes or series of limited partner interests with respect to distribution and/or liquidation rights. Holders of our preferred units vote on an as-converted basis with holders of our common units and have certain class voting rights, including with respect to any amendment to the partnership agreement that would adversely affect the rights, preferences or privileges, or otherwise modify the terms, of those preferred units.

Accounting for the Class A Convertible Preferred Units

Our preferred units are considered redeemable securities under GAAP due to the existence of redemption provisions upon a deemed liquidation event that is outside our control. Therefore, we present them as temporary equity in the mezzanine section of the Consolidated Balance Sheet. Because our preferred units are not currently redeemable and we do not have plans or expect any events that constitute a change of control in our partnership agreement, we present our preferred units at their initial carrying amount. However, we would be required to adjust that carrying amount if it becomes probable that we would be required to redeem our preferred units.

Initial and Subsequent Measurement

We initially recognized our preferred units at their issuance date fair value, net of issuance costs. We will not be required to adjust the carrying amount of our preferred units until it becomes probable that they would become redeemable. Once redemption becomes probable, we would adjust the carrying amount of our preferred units to the redemption value over a period of time comprising the date the feature first becomes probable and the date the units can first be redeemed.

Preferred unit distributions are recognized on the date in which they are declared. In January 2018, we declared a $16.5 million distribution on our preferred units owned as of January 31, 2018. This distribution was paid in kind ("PIK") through the issuance of 490,252 additional preferred units. In April 2018, we declared a $16.9 million distribution on our preferred units owned of record as of May 1, 2018. This distribution was PIK through the issuance of 500,976 additional preferred units. The following tables show the change in our mezzanine and preferred units balances from December 31, 2017 to June 30, 2018:



	As of June 30,
Mezzanine Capital Balance	2018
Balance as of December 31, 2017	$	697,151
Distribution paid-in-kind	33,414
Allocation of Distribution paid in-kind to Preferred Distribution Rate Reset Election (Note 16)	(2,106		)
Balance as of June 30, 2018	$	728,459



	Six months ended June 30,
Number of Class A Convertible Preferred Units	2018
Balance as of December 31, 2017	$	22,411,728
Distribution paid-in-kind	991,228
Balance as of June 30, 2018	$	23,402,956

Net income attributable to common unitholders is reduced by preferred unit distributions that accumulated during the period. During 2018, net income attributable to common unitholders was reduced by $34.1 million as a result of distributions that accumulated during the period. With respect to our preferred units to be issued relating to the second quarter of 2018, we elected to make a PIK payment for the quarterly distribution, which will result in the issuance of an additional 511,934 preferred units. This PIK amount equates to a distribution of $0.7374 per preferred unit for the quarter, or $2.9496 annualized. These distributions will be paid on August 14, 2018 to unitholders holders of record at the close of business July 31, 2018.