Shareholders' Equity

12 Months Ended

Dec. 31, 2019

Shareholders’ Equity

Share Awards

We have common shares available for issuance under the terms of the 2009 Incentive Share Award Plan, or the 2009 Plan. During the years ended December 31, 2019, 2018 and 2017, we granted to our officers and other employees of RMR LLC annual share awards of 103,100, 14,675 and 14,337 of our common shares, respectively, valued at $3,080, $995 and $1,067, in

aggregate, respectively. We also granted each of our eight Trustees 3,000 of our common shares in 2019 with an aggregate value of $575 ($72 per Trustee), each of our then six Trustees 750 common shares in 2018 with an aggregate value of $254 ($42 per Trustee) and each of our then six Trustees 750 common shares in 2017 with an aggregate value of $392 ($65 per Trustee) as part of their annual compensation. In addition, we granted 3,000 of our common shares, with a value of $270 ($90 per Trustee) in connection with the election of three of our Trustees in 2019 and 750 of our common shares, with a value of $41 in connection with the election of one of our Trustees in 2018. The values of the share grants were based upon the closing price of our common shares trading on Nasdaq on the date of grant. The common shares awarded to our Trustees vested immediately. The common shares granted to our officers and certain other employees of RMR LLC vest in five equal annual installments beginning on the date of grant. We include the value of granted shares in general and administrative expenses ratably over the vesting period.

A summary of shares granted, forfeited, vested and unvested under the terms of the 2009 Plan for the years ended December 31, 2019, 2018 and 2017, is as follows:



	2019				2018				2017
	Number of Shares		Weighted Average Grant Date Fair Value		Number of Shares		Weighted Average Grant Date Fair Value		Number of Shares		Weighted Average Grant Date Fair Value
Unvested at beginning of year	55,321		$	73.25	26,062		$	78.24	24,743		$	82.36
Granted	136,100		$	28.84	19,925		$	64.73	18,837		$	77.44
Forfeited	(1,474	)	$	49.10	(255	)	$	52.96	—		$	—
Vested	(83,267	)	$	27.78	(18,634	)	$	63.80	(17,518	)	$	83.20
Unvested acquired in the SIR Merger ⁽¹⁾	—		$	—	28,223		$	27.48	—		$	—
Unvested at end of year	106,680		$	40.16	55,321		$	73.25	26,062		$	78.24


(1)	Represents unvested shares granted under SIR’s equity compensation plan that were converted into shares under the 2009 Plan, and which will have similar vesting requirements as shares granted under the 2009 Plan.

The 106,680 unvested shares as of December 31, 2019 are scheduled to vest as follows: 32,677 shares in 2020, 28,875 shares in 2021, 24,808 shares in 2022 and 20,320 shares in 2023. As of December 31, 2019, the estimated future compensation expense for the unvested shares was $3,672. The weighted average period over which the compensation expense will be recorded is approximately 25 months. During the years ended December 31, 2019, 2018 and 2017, we recorded $3,088, $1,337 and $1,377, respectively, of compensation expense related to the 2009 Plan. At December 31, 2019, 211,334 of our common shares remained available for issuance under the 2009 Plan.

Share Purchases

During the years ended December 31, 2019, 2018 and 2017 we purchased 15,588, 4,984 and 3,590 of our common shares, respectively, at weighted average prices of $29.76, $46.54, $73.63 per common share, respectively, from our Trustees and current and former officers and employees of RMR LLC in satisfaction of tax withholding and payment obligations in connection with the vesting of awards of our common shares.

Distributions

During the years ended December 31, 2019, 2018 and 2017, we paid distributions on our common shares as follows:



	Annual Per Share Distribution		Total Distribution		Characterization of Distribution
Year	Annual Per Share Distribution		Total Distribution		Return of Capital	Ordinary Income	Qualified Dividend
2019	$	2.20	$	105,868	—%	100.00%	—%
2018	$	6.88	$	170,566	68.60%	31.40%	—%
2017	$	6.88	$	145,209	49.35%	50.65%	—%

On January 16, 2020, we declared a dividend payable to common shareholders of record on January 27, 2020 in the amount of $0.55 per share, or $26,511. We expect to pay this distribution on or about February 20, 2020.

2017 Sale of Shares

On July 5, 2017, we sold 6,250,000 of our common shares at a price of $74.00 per share in an underwritten public offering. On August 3, 2017, we sold 726,757 of our common shares at a price of $74.00 per share pursuant to an overallotment option granted to the underwriters for the July offering. The aggregate net proceeds from these sales of $493,866, after payment of the underwriters’ discount and other offering expenses, were used to finance, in part, the FPO Transaction.

Cumulative Other Comprehensive Income (Loss)

Cumulative other comprehensive income (loss) represents our share of the comprehensive income (loss) of our equity method investees, and prior to December 31, 2017, the unrealized gain (loss) on our former investment in RMR Inc.

The following table presents changes in the amounts we recognized in cumulative other comprehensive income (loss) by component for the years ended December 31, 2019, 2018 and 2017:



	Unrealized Gain on Investment in Equity Securities			Equity in Unrealized Gains (Losses) of Investees ⁽¹⁾			Unrealized Loss on Financial Instrument⁽²⁾			Total
Balance at December 31, 2016	$	21,074		$	5,883		$	—		$	26,957
Other comprehensive income before reclassifications	24,042			9,462			—			33,504
Amounts reclassified from cumulative other comprehensive income to net income	—			(34		)	—			(34		)
Net current period other comprehensive income	24,042			9,428			—			33,470
Balance at December 31, 2017	45,116			15,311			—			60,427
Amounts reclassified from cumulative other comprehensive income to retained earnings	(45,116		)	(15,165		)	—			(60,281		)
Balance at January 1, 2018	—			146			—			146
Other comprehensive loss before reclassifications	—			(3		)	—			(3		)
Amounts reclassified from cumulative other comprehensive income to net loss	—			(37		)	—			(37		)
Net current period other comprehensive loss	—			(40		)	—			(40		)
Balance at December 31, 2018	—			106			—			106
Other comprehensive loss before reclassifications	—			90			(200		)	(110		)
Amounts reclassified from cumulative other comprehensive income to net income	—			(196		)	—			(196		)
Net current period other comprehensive loss	—			(106		)	(200		)	(306		)
Balance at December 31, 2019	$	—		$	—		$	(200	)	$	(200	)


(1)	Amounts reclassified from cumulative other comprehensive income (loss) to net income (loss) is included in equity in net losses of investees in our consolidated statements of comprehensive income (loss).


(2)	Amounts reclassified from cumulative other comprehensive income (loss) to net income (loss) is included in interest expense in our consolidated statements of comprehensive income (loss).

Preferred Units of Limited Partnership

On May 1, 2018, one of our subsidiaries redeemed all 1,813,504 of its outstanding 5.5% Series A Cumulative Preferred Units for $11.15 per unit plus accrued and unpaid distributions (an aggregate of $20,310).