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Noncontrolling Interests in Operating Partnership

9 Months Ended

Sep. 30, 2012

Noncontrolling Interests in Operating Partnership

Noncontrolling Interests in Operating Partnership

13. Noncontrolling Interests in Operating Partnership

The noncontrolling interest ownership in the Operating Partnership represents interests held by entities other than the Company. As of September 30, 2012 and December 31, 2011, the noncontrolling interest unit holders owned 3.53% (3,310,449 units) and 3.12% (2,764,737 units) of the Operating Partnership, respectively. At September 30, 2012, there were also 66,668 performance-based LTIP units outstanding. At September 30, 2012, 3,377,117 shares of our common stock were reserved for issuance upon redemption of units of limited partnership interest in the Operating Partnership.

We record the carrying value of the noncontrolling interests in the operating partnership at fair market value based on the closing stock price of our common stock at the end of the reporting period. The carrying value of such noncontrolling interests will not be adjusted below its cost basis.

In January 2012, as part of an acquisition, the Operating Partnership issued 1,902,000 4.5% Series G preferred units of limited partnership interest, or the Series G preferred units, with a liquidation preference of $25.00 per unit. The Series G preferred unitholders receive annual dividends of $1.125 per unit paid on a quarterly basis and dividends are cumulative, subject to certain provisions. The Series G preferred units are convertible into a number of common units of limited partnership interest in the Operating Partnership equal to (i) the liquidation preference plus accumulated and unpaid distributions on the conversion date divided by (ii) $88.50. The common units of limited partnership interest in the Operating Partnership may be redeemed in exchange for our common stock on a 1-to-1 basis. The Series G preferred units also provide the holder with the right to require the Operating Partnership to repurchase the preferred units for cash before January 31, 2022.

In November 2011, as part of an acquisition, the Operating Partnership issued 80,000 6.0% Series H preferred units, or the Series H preferred units, with a mandatory liquidation preference of $25.00 per unit. The Series H preferred unitholders receive annual dividends of $1.50 per unit paid on a quarterly basis and dividends are cumulative, subject to certain provisions. The Series H preferred units can be redeemed at any time at par for cash at the Operating Partnership’s option or the option of the unitholder.

We have included a rollforward analysis of the activity relating to the noncontrolling interests in the Operating Partnership below (amounts in thousands):

		Nine Months Ended September 30, 2012			Year Ended December 31, 2011
Balance at beginning of period		$	195,030		$	84,338
Distributions		(2,385		)	(1,264		)
Issuance of common units		40,542			60,443
Redemption of common units		(17,467		)	(865		)
Net income		4,876			14,629
Accumulated other comprehensive income allocation		(396		)	(291		)
Fair value adjustment		44,893			38,040
Balance at end of period		$	265,093		$	195,030

The entire disclosure for noncontrolling interest in consolidated subsidiaries, which could include the name of the subsidiary, the ownership percentage held by the parent, the ownership percentage held by the noncontrolling owners, the amount of the noncontrolling interest, the location of this amount on the balance sheet (when not reported separately), an explanation of the increase or decrease in the amount of the noncontrolling interest, the noncontrolling interest share of the net Income or Loss of the subsidiary, the location of this amount on the income statement (when not reported separately), the nature of the noncontrolling interest such as background information and terms, the amount of the noncontrolling interest represented by preferred stock, a description of the preferred stock, and the dividend requirements of the preferred stock.

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