10. Convertible Senior Notes

On October 8, 2014, we issued $431.3 million of 3.75% Convertible Senior Notes due 2017 (the “2017 Notes”). On February 15, 2013, we issued $600.0 million of 4.55% Convertible Senior Notes due 2018 (the “2018 Notes”). On July 3, 2013, we issued $460.0 million of 4.00% Convertible Senior Notes due 2019 (the “2019 Notes”). The following summarizes the unsecured convertible senior notes (collectively, the “Convertible Notes”) outstanding as of June 30, 2016 (dollars in thousands):


									Remaining
	Principal		Coupon		Effective		Conversion	Maturity	Period of
	Amount		Rate		Rate(1)		Rate(2)	Date	Amortization
2017 Notes	$	431,250	3.75	%	5.87	%	41.7397	10/15/2017	1.3	years
2018 Notes	$	599,981	4.55	%	6.10	%	46.7513	3/1/2018	1.7	years
2019 Notes	$	341,363	4.00	%	5.35	%	49.4927	1/15/2019	2.5	years


	As of		As of
	June 30, 2016		December 31, 2015
Total principal	$	1,372,594	$	1,372,594
Unamortized discount		(37,055)		(47,351)
Unamortized deferred financing costs		(1,115)		(1,448)
Carrying amount of debt components	$	1,334,424	$	1,323,795
Carrying amount of conversion option equity components recorded in additional paid-in capital	$	46,343	$	46,343

(1)

Effective rate includes the effects of underwriter purchase discount and the adjustment for the conversion option, the value of which reduced the initial liability and was recorded in additional paid-in-capital.

(2)

The conversion rate represents the number of shares of common stock issuable per $1,000 principal amount of Convertible Notes converted, as adjusted in accordance with the indentures governing the Convertible Notes (including the applicable supplemental indentures) as a result of the spin-off of our former single family residential (“SFR”) segment to our stockholders in January 2014 and cash dividend payments.

The if-converted value of the 2019 Notes exceeded their principal amount by $8.8 million at June 30, 2016 since the closing market price of the Company’s common stock of $20.72 per share exceeded the implicit conversion price of $20.20 per share. The if‑converted values of the 2017 Notes and 2018 Notes were less than their principal amounts by $58.3 million and $18.8 million at June 30, 2016, respectively, since the closing market price of the Company’s common stock of $20.72 per share was less than the implicit conversion prices of $23.96 and $21.39, respectively. The Company has asserted its intent and ability to settle the principal amount of the Convertible Notes in cash. As a result, conversion of this principal amount, totaling 62.5 million shares, was not included in the computation of diluted EPS. However, the conversion spread value for the 2019 Notes, representing 0.4 million shares and 0.5 million shares for the three and six months ended June 30, 2016, respectively, was included in the computation of diluted EPS as the notes were “in-the-money.” No dilution related to the 2017 Notes or 2018 Notes was included in the computation of diluted EPS for the three and six months ended June 30, 2016 as these notes were not “in-the-money.” See further discussion in Note 17.

We did not repurchase any Convertible Notes during the three and six months ended June 30, 2016. During the three and six months ended June 30, 2015, we repurchased $14.5 million and $118.6 million aggregate principal amount of our 2019 Notes, respectively, for $16.5 million and $136.3 million plus transaction expenses of $0.1 million, respectively. The repurchase price was allocated between the fair value of the liability component and the fair value of the equity component of the convertible security. The portion of the repurchase price attributable to the equity component totaled $17.7 million and was recognized as a reduction of additional paid-in capital during the six months ended June 30, 2015. The remaining repurchase price was attributable to the liability component. The difference between this amount and the net carrying amount of the liability and debt issuance costs was reflected as a loss on extinguishment of debt in our condensed consolidated statement of operations. For the three and six months ended June 30, 2015, the loss on extinguishment of debt totaled $0.6 million and $5.9 million, respectively, consisting principally of the write-off of unamortized debt discount.

Conditions for Conversion

Prior to April 15, 2017 for the 2017 Notes, September 1, 2017 for the 2018 Notes and July 15, 2018 for the 2019 Notes, the Convertible Notes will be convertible only upon satisfaction of one or more of the following conditions: (1) the closing market price of the Company’s common stock is at least 110%, in the case of the 2017 Notes, or 130%, in the case of the 2018 Notes and the 2019 Notes, of the conversion price of the respective Convertible Notes for at least 20 out of 30 trading days prior to the end of the preceding fiscal quarter, (2) the trading price of the Convertible Notes is less than 98% of the product of (i) the conversion rate and (ii) the closing price of the Company’s common stock during any five consecutive trading day period, (3) the Company issues certain equity instruments at less than the 10-day average closing market price of its common stock or the per-share value of certain distributions exceeds the market price of the Company’s common stock by more than 10% or (4) other specified corporate events (significant consolidation, sale, merger, share exchange, fundamental change, etc.) occur.

On or after April 15, 2017, in the case of the 2017 Notes, September 1, 2017, in the case of the 2018 Notes, and July 15, 2018, in the case of the 2019 Notes, holders may convert each of their Convertible Notes at the applicable conversion rate at any time prior to the close of business on the second scheduled trading day immediately preceding the maturity date.