Stockholders’ Equity

Preferred Stock

Holders of our Series A Preferred Stock are entitled to receive dividends at an annual rate of 7.75% of the liquidation preference of $25.00 per share or $1.9375 per share per annum. Dividends are cumulative and payable quarterly in arrears.

Holders of our Series B Preferred Stock are entitled to receive dividends at an annual rate of 7.75% of the liquidation preference of $25.00 per share or $1.9375 per share per annum until December 27, 2024. After December 27, 2024, holders are entitled to receive dividends at a floating rate equal to three-month LIBOR plus a spread of 5.18% of the $25.00 liquidation preference per annum. Dividends are cumulative and payable quarterly in arrears.

In August 2017, we completed a public offering of 11,500,000 shares of 7.50% Fixed-to-Floating Series C Cumulative Redeemable Preferred Stock (the "Series C Preferred Stock") at the price of $25.00 per share. Holders of our Series C Preferred Stock are entitled to receive dividends at an annual rate of 7.50% of the liquidation preference of $25.00 per share or $1.875 per share per annum until September 27, 2027. After September 27, 2027, holders are entitled to receive dividends at a floating rate equal to three-month LIBOR plus a spread of 5.289% of the $25.00 liquidation preference per annum. Dividends are cumulative and payable quarterly in arrears.

As of July 27, 2017, we have the option to redeem shares of Series A Preferred Stock for $25.00 per share, plus any accumulated and unpaid dividends through the date of redemption. We have the option to redeem shares of Series B Preferred Stock after December 27, 2024 and shares of Series C Preferred Stock after September 27, 2027 for $25.00 per share, plus any accumulated and unpaid dividends through the date of the redemption. Shares of Series B and Series C Preferred Stock are not redeemable, convertible into or exchangeable for any other property or any other securities of the Company prior to those times, except under circumstances intended to preserve our qualification as a REIT or upon the occurrence of a change in control.

Common Stock

In December 2017, we entered into an equity distribution agreement with a placement agent under which we may sell up to 17,000,000 shares of our common stock from time to time in at-the-market or privately negotiated transactions. These shares are registered with the SEC under our automatic shelf registration statement (as amended and/or supplemented). As of March 31, 2018, we have not sold any shares of common stock under the equity distribution agreement.

Securities Convertible into Shares of Common Stock

The non-controlling interest holder of the Operating Partnership units, a wholly-owned Invesco subsidiary, has the right to cause the Operating Partnership to redeem their operating partnership units ("OP Units") for cash equal to the market value of an equivalent number of shares of common stock, or at our option, we may purchase their OP Units by issuing one share of common stock for each OP Unit redeemed. We also have an equity incentive plan which allows us to grant securities convertible into our common stock to our independent directors and employees of our Manager and its affiliates.

Share Repurchase Program

During the three months ended March 31, 2018 and three months ended March 31, 2017, we did not repurchase any shares of our common stock. As of March 31, 2018, we had authority to purchase 18,239,082 shares of our common stock through our share repurchase program. The share repurchase program has no stated expiration date.

Share-Based Compensation

We established the 2009 Equity Incentive Plan for grants of common stock and other equity based awards to our independent directors and officers and employees of our Manager and its affiliates (the "Incentive Plan"). Under the Incentive Plan, a total of 1,000,000 shares of common stock are authorized for issuance. Unless terminated earlier, the Incentive Plan will terminate in 2019, but will continue to govern the unexpired awards. As of March 31, 2018, 778,288 shares of common stock remain available for future issuance under the Incentive Plan.

We recognized compensation expense of approximately $93,000 (March 31, 2017: $85,000) for shares issued to our independent directors under the Incentive Plan for the three months ended March 31, 2018. During the three months ended March 31, 2018 and 2017, we issued 7,177 shares and 5,456 shares of common stock, respectively, to our independent directors. The fair market value of the shares granted was determined by the closing stock market price on the date of the grant. The grants vested immediately.

We recognized compensation expense of approximately $14,000 (March 31, 2017: $31,000) for the three months ended March 31, 2018 for restricted stock units awarded to employees of our Manager and its affiliates under the Incentive Plan. Our Manager reimburses us for the cost of these restricted stock awards under the terms of our management agreement. At March 31, 2018 there was approximately $306,000 of total unrecognized compensation cost related to restricted stock unit awards that is expected to be recognized over a period of up to 48 months, with a weighted-average remaining vesting period of 23 months.

The following table summarizes the activity related to restricted stock units awarded to employees of our Manager and its affiliates for the three months ended March 31, 2018.



	Three Months Ended March 31,
	2018
	Restricted Stock Units		Weighted Average Grant Date Fair Value ⁽¹⁾
Unvested at the beginning of the period	19,827		$	14.35
Shares granted during the period	7,055		15.37
Shares vested during the period	(7,697	)	14.75
Unvested at the end of the period	19,185		$	14.56


(1)	The grant date fair value of restricted stock awards is based on the closing market price of our common stock at the grant date.

Accumulated Other Comprehensive Income

The following tables present the components of total other comprehensive income (loss), net and accumulated other comprehensive income ("AOCI") for the three months ended March 31, 2018 and 2017. The tables exclude gains and losses on MBS and GSE CRTs that are accounted for under the fair value option.



	Three Months Ended March 31, 2018
$ in thousands	Equity method investments		Available-for-sale securities		Derivatives and hedging		Total
Total other comprehensive income/(loss)
Unrealized gain (loss) on mortgage-backed and credit risk transfer securities, net	—		(132,317	)	—		(132,317	)
Reclassification of unrealized (gain) loss on sale of mortgage-backed and credit risk transfer securities to gain (loss) on investments, net	—		9,237		—		9,237
Reclassification of amortization of net deferred (gain) loss on de-designated interest rate swaps to repurchase agreements interest expense	—		—		(6,539	)	(6,539	)
Currency translation adjustments on investment in unconsolidated venture	312		—		—		312
Total other comprehensive income/(loss)	312		(123,080	)	(6,539	)	(129,307	)

AOCI balance at beginning of period	947		136,188		123,894		261,029
Total other comprehensive income/(loss)	312		(123,080	)	(6,539	)	(129,307	)
Other comprehensive income/(loss) attributable to non-controlling interest	(4	)	1,552		82		1,630
AOCI balance at end of period	1,255		14,660		117,437		133,352



	Three Months Ended March 31, 2017
$ in thousands	Equity method investments		Available-for-sale securities		Derivatives and hedging		Total
Total other comprehensive income/(loss)
Unrealized gain (loss) on mortgage-backed and credit risk transfer securities, net	—		16,289		—		16,289
Reclassification of unrealized (gain) loss on sale of mortgage-backed and credit risk transfer securities to gain (loss) on investments, net	—		850		—		850
Reclassification of amortization of net deferred (gain) loss on de-designated interest rate swaps to repurchase agreements interest expense	—		—		(6,298	)	(6,298	)
Currency translation adjustments on investment in unconsolidated venture	(615	)	—		—		(615	)
Total other comprehensive income/(loss)	(615	)	17,139		(6,298	)	10,226

AOCI balance at beginning of period	95		144,458		149,115		293,668
Total other comprehensive income/(loss)	(615	)	17,139		(6,298	)	10,226
Other comprehensive income/(loss) attributable to non-controlling interest	8		(216	)	79		(129	)
AOCI balance at end of period	(512	)	161,381		142,896		303,765

Amounts recorded in AOCI before we discontinued cash flow hedge accounting for our interest rate swaps are reclassified to interest expense on repurchase agreements on the condensed consolidated statements of operations as interest is accrued and paid on the related repurchase agreements over the remaining original life of the interest rate swap agreements.

Dividends

On March 15, 2018, we declared the following dividends:


•	a dividend of $0.42 per share of common stock to be paid on April 26, 2018 to stockholders of record as of the close of business on March 27, 2018; and


•	a dividend of $0.4844 per share of Series A Preferred Stock to be paid on April 25, 2018 to stockholders of record as of the close of business on April 1, 2018.

On February 15, 2018, we declared the following dividends:


•	a dividend of $0.4844 per share of Series B Preferred Stock payable on March 27, 2018 to stockholders of record as of the close of business on March 5, 2018; and


•	a dividend of $0.46875 per share of Series C Preferred Stock payable on March 27, 2018 to stockholders of record as of the close of business on March 5, 2018.