Noncontrolling Interest

The table below summarizes the activity for noncontrolling interest in the Company for the nine months ended September 30, 2017 and the year ended December 31, 2016.



	LTIP Units		Other Common Units		Total Noncontrolling Common Units		Noncontrolling Interest
Balance at December 31, 2015	1,610,105		1,915,872		3,525,977		4.9	%
Granted/Issued	176,396		—		176,396		N/A
Forfeited	—		—		—		N/A
Conversions from LTIP units to Other Common Units	(209,985	)	209,985		—		N/A
Redemptions from Other Common Units to common stock	—		(68,492	)	(68,492	)	N/A
Balance at December 31, 2016	1,576,516		2,057,365		3,633,881		4.3	%
Granted/Issued	126,239		687,827		814,066		N/A
Forfeited	—		—		—		N/A
Conversions from LTIP units to Other Common Units	(231,816	)	231,816		—		N/A
Redemptions from Other Common Units to common stock	—		(300,991	)	(300,991	)	N/A
Balance at September 30, 2017	1,470,939		2,676,017		4,146,956		4.2	%

LTIP Units

LTIP units granted on January 6, 2017 to independent directors, subject to the recipient’s continued service, will vest on January 1, 2018. LTIP units granted on January 6, 2017 to certain senior executive officers and senior employees, subject to the recipient’s continued employment, will vest quarterly over four years, with the first vesting date having been March 31, 2017.

The fair value of the LTIP units at the date of grant was determined by a lattice-binomial option-pricing model based on a Monte Carlo simulation. The fair value of the LTIP units are based on Level 3 inputs and are non-recurring fair value measurements. The table below sets forth the assumptions used in valuing such LTIP units granted during the nine months ended September 30, 2017.



LTIP Units	Assumptions
Grant date	January 6, 2017
Expected term (years)	10
Expected volatility	23.0		%
Expected dividend yield	6.0		%
Risk-free interest rate	1.61		%
Fair value of LTIP units at issuance (in thousands)	$	2,924
LTIP units at issuance	126,239
Fair value unit price per LTIP unit at issuance	$	23.16

The following table summarizes activity related to the Company’s unvested LTIP units for the nine months ended September 30, 2017 and the year ended December 31, 2016.



Unvested LTIP Units	LTIP Units
Balance at December 31, 2015	534,910
Granted	176,396
Vested	(307,883	)
Forfeited	—
Balance at December 31, 2016	403,423
Granted	126,239
Vested	(157,816	)
Forfeited	—
Balance at September 30, 2017	371,846

The unrecognized compensation expense associated with the Company’s LTIP units at September 30, 2017 was approximately $6.0 million and is expected to be recognized over a weighted average period of approximately 2.6 years.

The following table summarizes the fair value at vesting for the LTIP units vested during the three and nine months ended September 30, 2017 and September 30, 2016.



	Three months ended September 30,				Nine months ended September 30,
	2017		2016		2017		2016
Vested LTIP units	44,942		45,874		157,816		262,025
Fair value of vested LTIP units (in thousands)	$	1,235	$	1,124	$	4,146	$	5,306

Other Common Units

As partial consideration for a property acquired on May 31, 2017, the Company granted 687,827 Other Common Units with a fair value of approximately $18.6 million. The number of Other Common Units granted was calculated based on the trailing five-day average common stock closing price ending on the second business day that immediately preceded the grant date. The fair value of the Other Common Units granted was calculated based on the Company's closing stock price on the New York Stock Exchange on the grant date multiplied by the number of Other Common Units granted. The issuance of the Other Common Units was effected in reliance upon an exemption from registration provided by Section 4(a)(2) under the Securities Act of 1933, as amended, and Regulation D promulgated thereunder. The Company relied on the exemption based on representations given by the holders of the Other Common Units. Subject to certain restrictions, the Other Common Units may be redeemed for cash or, at the Company’s election, common stock on a one-for-one basis, subject to adjustment, as provided in the operating partnership agreement.