13.

Equity

Redeemable Noncontrolling Interest:

In connection with the Watercrest at Katy joint venture, the Company’s joint venture partner acquired a 5% noncontrolling interest that includes a put option of its membership to the Company at any time commencing on the date on which Watercrest at Katy development opens to residents and concluding on the fifth anniversary thereof, when NOI is: (a) equal to or greater than the NOI threshold established in the joint venture agreement, and (b) has been equal to or greater than the NOI threshold established in the joint venture agreement for the three calendar months immediately preceding the calendar month during which the joint venture partner exercises the put option. The put option is redeemable for cash at a price equal to the appraised market value (less certain transaction-related costs) at the time the put option is exercised (“Put Price”). The Company’s maximum exposure, as a result of these redeemable equity securities, is limited to the Put Price multiplied by the joint venture partner’s 5% membership interest.

13.	Equity (continued)

Stockholders’ Equity:

Public Offerings — Through the close of the Company’s Offerings on September 30, 2015, the Company had received aggregate proceeds of approximately $1.7 billion. While the Company’s Offerings closed on September 30, 2015, the Company continues to provide existing stockholders the opportunity to designate their cash distributions for reinvestment through the Company’s Reinvestment Plan. For the years ended December 31, 2016, 2015 and 2014, the Company received proceeds of approximately $42.6 million (4.4 million shares), $36.8 million (3.7 million shares) and $17.7 million (1.8 million shares), respectively, through the Reinvestment Plan.

Stock Issuance and Offering Costs – The Company incurred costs in connection with the offering and issuance of shares, including selling commissions, marketing support fees, filing fees, legal, accounting, printing and due diligence expense reimbursements, which are recorded as stock issuance and offering costs and deducted from stockholders’ equity. In accordance with the Company’s articles of incorporation, the total amount of selling commissions, marketing support fees, and other organizational and offering costs to be paid by the Company may not exceed 15% of the aggregate gross offering proceeds. Offering costs are generally funded by the Managing Dealer and subsequently reimbursed by the Company subject to this limitation. For the years ended December 31, 2015 and 2014, the Company incurred approximately $57.4 million and $59.8 million, respectively, in stock issuance and other offering costs, as described in Note 11. “Related Party Arrangements.”

Distributions — For the years ended December 31, 2016, 2015 and 2014, the Company declared cash distributions of $74.0 million, $63.2 million and $31.9 million, respectively, of which $31.4 million, $26.4 million and $14.2 million, respectively, were paid in cash to stockholders and $42.6 million, $36.8 million and $17.7 million, respectively, were reinvested pursuant to the Reinvestment Plan. In addition, for the years ended December 31, 2015 and 2014, the Company declared and made stock distributions of approximately 3.2 million and 2.4 million shares of common stock, respectively.

The tax composition of the Company’s distributions declared for the years ended December 31, 2016, 2015 and 2014 were as follows:

	December 31,
	2016			2015			2014
Ordinary income		21.5	%		37.8	%		30.8	%
Capital gain		14.4	%		0.0	%		0.0	%
Unrecaptured Sec. 1250 gain		1.2	%		0.0	%		0.0	%
Return of capital		62.9	%		62.2	%		69.2	%

Redemptions — For the years ended December 31, 2016, 2015 and 2014, the Company received requests for the redemption of common stock of approximately 3.7 million, 1.0 million and 0.3 million shares, respectively, all of which were approved for redemption at an average price of $9.73, $9.51 and $9.24, respectively, and for a total of approximately $36.2 million, $9.3 million and $3.0 million, respectively.

Promoted Interest — For the years ended December 31, 2016, 2015 and 2014, the Company recorded, as a reduction to capital in excess of par value, the following distributions to holders of promoted interest (in thousands):

	December 31,
	2016			2015		2014
Dogwood Forest of Acworth	$	(3,850	)	$	—	$	—
Wellmore of Tega Cay		(2,800	)		—		—
HarborChase of Villages Crossing	―				—		(2,000	)
	$	(6,650	)	$	—	$	(2,000	)

13.	Equity (continued)

Other comprehensive income (loss) — The following table reflects the effect of derivative financial instruments held by Company, or its equity method investments, and included in the consolidated statements of comprehensive loss for the years ended December 31, 2016, 2015 and 2014 (in thousands):

Derivative Financial Instruments	Gain (loss) recognized in other comprehensive loss on derivative financial instruments									Location of gain (loss) reclassified into earnings	Gain (loss) reclassified from accumulated other comprehensive loss into earnings
	Years Ended										Years Ended
	December 31,										December 31,
	2016			2015			2014				2016			2015			2014
Interest rate swaps	$	3,487		$	(4,881	)	$	(3,915	)	Interest expense and loan cost amortization	$	(7,150	)	$	(4,110	)	$	(98	)
Interest rate caps		(1,584	)		(262	)	―			Interest expense and loan cost amortization		(45	)	―			―
Reclassification of interest rate swaps upon derecognition	―				236		―			Interest expense and loan cost amortization	―				(236	)	―
Reclassification of interest rate swaps due to ineffectiveness		(18	)		33		―			Interest expense and loan cost amortization		18			(33	)	―
Interest rate cap held by unconsolidated joint venture		(1	)		(9	)		10		Not applicable	―			―			―
Total	$	1,884		$	(4,883	)	$	(3,905	)		$	(7,177	)	$	(4,379	)	$	(98	)