Dividends and Distributions

9 Months Ended

Sep. 30, 2018

Redeemable Preferred Shares

Series A Cumulative Non-Voting Preferred Shares

In January 2009, the Company issued 125 Series A Cumulative Non-Voting Preferred Shares of beneficial interest, par value $0.01 per share (Series A Preferred Shares) for proceeds of $0.1 million. The Series A Preferred Shares were redeemable by the Company at any time by notice for a price, payable in cash, equal to 100% of each share’s liquidation value of $1,000, plus all accrued and unpaid dividends, plus, if applicable, a redemption premium. Holders of the Series A Preferred Shares were entitled to receive dividends semiannually at a per annum rate equal to 12.5% of the liquidation value.

In connection with the IPO, all outstanding Series A Preferred Shares were redeemed resulting in a cash payment of approximately $0.1 million, including accrued and unpaid dividends.

Series B Cumulative Convertible Voting Preferred Shares

On December 15, 2010, the Company issued 375,000 Series B Cumulative Convertible Voting Preferred Shares of beneficial interest, par value $0.01 per share (Series B Preferred Shares), for proceeds of $368.5 million. Of the total issuance, 325,000 Series B Preferred Shares were issued to affiliates of Goldman and 50,000 were issued to an affiliate of China Merchant Holdings International, an affiliate of the majority partner in the China JV.

In connection with the IPO, Goldman and CMHI converted their Series B Preferred Shares into 28,808,224 and 4,432,034 common shares of the Company, respectively, after taking into account a cash payment of approximately $1.8 million of accrued and unpaid dividends. Goldman sold 5,163,716 common shares of the Company soon after the conversion of the Series B Preferred Shares.

Dividends and Distributions

In order to comply with the REIT requirements of the Internal Revenue Code, or the Code, the Company is generally required to make common share distributions (other than capital gain distributions) to its shareholders at least equal to 90% of its REIT taxable income, as defined in the Code, computed without regard to the dividends paid deduction and net capital gains. The Company’s common share dividend policy is to distribute a percentage of cash flow to ensure distribution requirements of the IRS are met while allowing the Company to retain cash to meet other needs, such as principal amortization, capital improvements and other investment activities.

Common share dividends are characterized for U.S. federal income tax purposes as ordinary income, qualified dividend, capital gains, non-taxable income return of capital, or a combination of the four. Common share dividends that exceed current and accumulated earnings and profits (calculated for tax purposes) constitute a return of capital rather than a dividend and generally reduce the shareholder’s basis in the common share. To the extent that a dividend exceeds both current and accumulated earnings and profits and the shareholder’s basis in the common share, it will generally be treated as a gain from the sale or exchange of that shareholder’s common share. At the beginning of each year, we notify our shareholders of the taxability of the common share dividends paid during the preceding year. The payment of common share dividends is dependent upon our financial condition, operating results, and REIT distribution requirements and may be adjusted at the discretion of the Company’s Board of Trustees.

The following tables summarize dividends declared and distributions paid to the holders of common shares and Series B Preferred Shares for the nine months ended September 30, 2018 and 2017.



Nine Months Ended September 30, 2018
Month Declared/Paid	Dividend Per Share		Distributions Declared				Distributions Paid
			Common Shares		Series B Preferred Shares		Common Shares			Series B Preferred Shares
(In thousands, except per share amounts)
January ^(a)	$	0.019	$	1,291	$	619	$	1,291		$	619
March/April	0.140		20,145		—		20,145
March ^(c)							(79		)	—		Dividend equivalents accrued on unvested restricted stock units to be paid when the awards vest.
March/April							20			—		Dividend equivalents paid on unvested restricted stock units that are not expected to vest (recognized as additional compensation).
June/July	0.190		27,250		—		27,246			—
June ^(d)							(114		)	—		Dividend equivalents accrued on unvested restricted stock units to be paid when the awards vest.
June/July							28			—		Dividend equivalents paid on unvested restricted stock units that are not expected to vest (recognized as additional compensation).
September/October	0.190		28,072		—		—
			$	76,758			$	48,537

Series B Preferred Shares - Fixed Dividend
January ^(a)					1,198					1,198
Total distributions paid to holders of Series B Preferred Shares ^(b)					$	1,817				$	1,817


(a)	Stub period dividend paid to shareholders of record prior to the IPO.


(b)	Last Participating and Fixed Dividend paid to holders of Series B Preferred Shares in connection with the conversion to common shares on the IPO date.


(c)	Declared in March and included in the $20.1 million declared, see description to the right regarding timing of payment.


(d)	Declared in June and included in the $27.3 million declared, see description to the right regarding timing of payment.



Nine Months Ended September 30, 2017
Month Declared/Paid	Dividend Per Share		Distributions Declared					Distributions Paid
			Common Shares		Series B Preferred Shares			Common Shares		Series B Preferred Shares
(In thousands, except per share amounts)
March/April	$	0.073	$	5,053	$	2,421	^(a)	$	5,053	$	2,421
June/July	0.073		5,054		2,422		^(a)	5,054		2,422
September/October	0.073		5,053		2,421		^(a)	—		—
			$	15,160	7,264			$	10,107	4,843

Series B Preferred Shares - Fixed Dividend
March/April					4,688					4,688
June/July					4,687					4,687
September/October					4,688					—
Total distributions paid or accrued to holders of Series B Preferred Shares					$	21,327				$	14,218


(a)	Participating Dividend.