Shareholders' Equity

12 Months Ended

Dec. 31, 2015

Shareholders' Equity

Shareholders' Equity

Note 10. Shareholders’ Equity

Common Share Awards

We have common shares available for issuance under the terms of our 2009 Plan. As described in Note 6, we awarded common shares to our officers and certain employees of RMR LLC in 2013, 2014 and 2015. We also awarded each of our Trustees 2,500common shares in 2015 with an aggregate market value of $247  ($49per Trustee), 2,500common shares in 2014 with an aggregate market value of $318  ($64per Trustee) and 2,000common shares in 2013 with an aggregate market value of $266  ($53per Trustee) as part of their annual compensation.  The values of the share grants were based upon the closing price of our common shares on the NYSE on the date of grant. The common shares awarded to our Trustees vested immediately. The common shares awarded to our officers and certain employees of RMR LLC vest in five equal annual installments beginning on the date of grant.

A summary of shares granted and vested under the terms of our 2009 Plan for the years ended December 31, 2015, 2014 and 2013, is as follows:

	2015			2014			2013
		Weighted			Weighted			Weighted
	Number	Average		Number	Average		Number	Average
	of	Grant Date		of	Grant Date		of	Grant Date
	Shares	Fair Value		Shares	Fair Value		Shares	Fair Value
Unvested shares, beginning of year	90,338	$	23.40	85,451	$	23.71	76,104	$	23.82
Shares granted	65,600		16.59	63,650		23.70	58,350		24.12
Shared forfeited or repurchased	(1,020)		23.41	-		-	(450)		23.68
Shares vested	(58,193)		21.20	(58,763)		24.17	(48,553)		24.38
Unvested shares, end of year	96,725	$	20.11	90,338	$	23.40	85,451	$	23.71

The 96,725 unvested shares as of December 31, 2015 are scheduled to vest as follows: 36,475shares in 2016, 29,100shares in 2017, 20,530shares in 2018 and 10,620shares in 2019. As of December 31, 2015, the estimated future compensation expense for the unvested shares was $1,535based on the closing share price of our common shares on the NYSE on December 31, 2015 of $15.87. The weighted average period over which the compensation expense will be recorded is approximately 22months. During the years ended December 31, 2015, 2014 and 2013, we recorded $932,  $1,165and $1,269, respectively, of compensation expense related to our 2009 Plan.  At December 31, 2015,  1,605,703of our common shares remained available for issuance under our 2009 Plan.

Distributions

On February 26, 2015,  May 25, 2015,  August 24, 2015 and November 23, 2015 we paid a $0.43per share distribution to our common shareholders. On January 11, 2016, we declared a dividend payable to common shareholders of record on January 22, 2016 in the amount of$0.43per share.  We expect to pay this distribution on or about February 25, 2016 using cash on hand and borrowings under our unsecured revolving credit facility.

Cash distributions per share paid or payable by us to our common shareholders for each of the years ended December 31, 2015, 2014, and 2013 were $1.72. As described in Note 6, on December 14, 2015, we distributed 768,032, or 0.0108of a share for each of our common shares, of RMR Inc. shares of class A common stock we owned to our common shareholders as a special distribution.  This distribution resulted in a taxable in-kind distribution of $0.1284for each of our common shares.  The characterization of our distributions paid or accrued in 2015 was 47.44%ordinary income, 37.12%return of capital, 12.90%capital gain,1.61%IRC Section 1250 gain and 0.93%qualified dividend. The characterization of our distributions paid or accrued in 2014 was 55.12%ordinary income, 41.94%return of capital, 2.94%IRC Section 1250 gain.  The characterization of our distributions paid or accrued in 2013 was 82.92%ordinary income and 9.55%return of capital, 7.01%capital gain and 0.52%IRC Section 1250 gain.

Share Issuances and Repurchases

During the year ended December 31, 2015, we issued 23,222of our common shares to RMR LLC, as part of the business management fee payable by us under our business management agreement with RMR LLC. See Note 6 for further information regarding this agreement.

On June 5, 2015, we issued 700,000of our common shares in connection with our acquisition of an interest in RMR Inc. as further described in Note 6.  RMR Inc. is the parent company of RMR LLC, our manager.

On September 24, 2015, we purchased an aggregate of 10,721of our common shares for $16.12per share, the closing price of our common shares on the NYSE on that day, from our officers and certain other employees of RMR LLC in satisfaction of tax withholding and payment obligations in connection with the vesting of awards of restricted common shares. 

Cumulative Other Comprehensive Income (Loss)

Cumulative other comprehensive income (loss) represents the unrealized loss on the RMR Inc. shares we own and our share of the comprehensive income (loss) of SIR and AIC. The following table presents a roll forward of amounts recognized in cumulative other comprehensive income (loss) by component for the years ended December 31, 2015, 2014 and 2013:

	Unrealized Loss		Equity in
	on Investment in		Unrealized Gains
	Available for		(Losses) in
	Sale Securities		Investees		Total
Balance at December 31, 2012	$	-	$	99	$	99
Other comprehensive loss before reclassifications		-		(40)		(40)
Amounts reclassified from cumulative other
comprehensive loss to net income (1)		-		(10)		(10)
Net current period other comprehensive loss		-		(50)		(50)
Balance at December 31, 2013		-		49		49
Other comprehensive loss before reclassifications		-		37		37
Amounts reclassified from cumulative other
comprehensive loss to net income (1)		-		(49)		(49)
Net current period other comprehensive loss		-		(12)		(12)
Balance at December 31, 2014		-		37		37
Other comprehensive loss before reclassifications		(9,391)		(5,592)		(14,983)
Amounts reclassified from cumulative other
comprehensive loss to net income (1)		-		79		79
Net current period other comprehensive loss		(9,391)		(5,513)		(14,904)
Balance at December 31, 2015	$	(9,391)	$	(5,476)	$	(14,867)

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