Capital Stock

12 Months Ended

Dec. 31, 2016

Capital Stock [Abstract]

Capital Stock

NOTE 7. CAPITAL STOCK

The Company has the authority to issue 600,000,000 shares of capital stock, of which (i) 500,000,000 shares are designated as common stock and (ii) 100,000,000 shares are designated as preferred stock, each with a par value of $0.01 per share. Holders of shares of the common stock generally have no preference, conversion, exchange, sinking fund, redemption or appraisal rights and have no preemptive rights to subscribe for any securities of the Company. Subject to the provisions of our charter regarding restrictions on ownership and transfer of our stock, all holders of shares of the common stock will have equal liquidation and other rights.

Our charter authorizes our Board of Directors, without stockholder approval, to reclassify any unissued shares of our common stock into other classes or series of stock and to establish the number of shares in each class or series and to set the preferences, conversion or other rights, voting powers (including voting rights exclusive to such class or series), restrictions (including, without limitation, restrictions on transferability), limitations as to dividends or other distributions, qualifications and terms and conditions of redemption for each such class or series.

Our charter authorizes our Board of Directors, without stockholder approval, to classify any unissued shares of preferred stock and to reclassify any previously classified but unissued shares of any class or series of preferred stock. Prior to issuance of shares of each class or series, our Board of Directors is required by Maryland law and our charter to set the preferences, conversion or other rights, voting powers (including voting rights exclusive to such class or series), restrictions (including, without limitation, restrictions on transferability), limitations as to dividends or other distributions, qualifications and terms and conditions of redemption for each such class or series. Thus, our Board of Directors could authorize the issuance of shares of preferred stock that have priority over our common stock with respect to dividends or rights upon liquidation or with terms and conditions which could have the effect of delaying, deferring or preventing a transaction or a change in control of the Company that might involve a premium price for holders of our common stock or otherwise be in their best interests. No shares of preferred stock have been issued, therefore none are outstanding.

Restrictions on Ownership and Transfer

In order to qualify as a REIT under the Code for each taxable year beginning after December 31, 2013, our shares of stock must be beneficially owned by 100 or more persons during at least 335 days of a taxable year of 12 months or during a proportionate part of a shorter taxable year. Also, for our taxable years beginning after December 31, 2013, no more than 50% of the value of our outstanding shares of capital stock may be owned, directly or constructively, by five or fewer individuals (as defined in the Code to include certain entities) during the second half of any calendar year.

Because the Company’s Board of Directors believes it is at present essential for us to qualify as a REIT, our charter provides that, subject to certain exceptions, no person or entity may beneficially or constructively own, or be deemed to own by virtue of the attribution provisions of the Code, more than 9.8% in value or in number of shares, whichever is more restrictive, of the outstanding shares of any class or series of our capital stock, or the ownership limit.

The Company’s charter also prohibits any person from (i) beneficially or constructively owning or transferring shares of the Company’s capital stock if such ownership or transfer would result in the Company being “closely held” under Section 856(h) of the Code (without regard to whether the ownership interest is held during the last half of a taxable year) or otherwise cause the Company to fail to qualify as a REIT and (ii) transferring shares of the Company’s capital stock if such transfer would result in the Company’s capital stock being beneficially owned by fewer than 100 persons (determined under the principles of Section 856(a)(5) of the Code). Any person who acquires or attempts or intends to acquire beneficial or constructive ownership of shares of the Company’s stock that will or may violate any of the foregoing restrictions on transfer and ownership, or who is the intended transferee of shares of the Company’s stock which are transferred to the trust (as described below), will be required to give written notice immediately to the Company or in the case of a proposed or attempted transaction, to give at least 15 days’ prior written notice, and provide the Company with such other information as the Company may request in order to determine the effect, if any, of such transfer on the Company’s status as a REIT. The foregoing restrictions on transfer and ownership will not apply if the Company’s Board of Directors determines that it is no longer in the Company’s best interests to attempt to qualify, or to continue to qualify, as a REIT, or that compliance with the restrictions on transfer and ownership is no longer required for the Company to qualify as a REIT.

The Company’s Board of Directors, in its sole discretion, may exempt (prospectively or retroactively) a person from certain of the limits described above and may establish or increase an exempted holder limit for such person. The person seeking an exemption must provide to the Board of Directors any such representations, covenants and undertakings as the Board of Directors may deem appropriate in order to conclude that granting the exemption and/or establishing or increasing an excepted holder limit, as the case may be, will not cause the Company to fail to qualify as a REIT. The Company’s Board of Directors may also require a ruling from the IRS or an opinion of counsel in order to determine that granting the exemption will not cause the Company to lose its qualification as a REIT. In connection with granting a waiver of the ownership limit or creating an excepted holder limit or at any other time, the Company’s Board of Directors may from time to time increase or decrease the ownership limit, subject to certain restrictions.

Common Stock Issuances

During 2016 and 2015, the Company completed the following public offerings of its common stock.

($ in thousands, except per share amounts)
			Weighted
			Average
			Price
			Received			Net
Type of Offering	Period		Per Share(1)	Shares		Proceeds(2)
2016
At the Market Offering Program(3)	Second Quarter	$	10.48	646,753	$	6,591
At the Market Offering Program(3)	Third Quarter		10.80	3,818,802	$	40,525
At the Market Offering Program(3)	Fourth Quarter		10.79	6,707,101		71,212
				11,172,656	$	118,328
2015
At the Market Offering Program(3)	First Quarter	$	13.66	1,210,487	$	16,175
At the Market Offering Program(3)	Second Quarter		13.65	5,024,530		67,100
				6,235,017	$	83,275

(1) Weighted average price received per share is gross of underwriters’ discount, if applicable, and other offering costs.

(2) Net proceeds are net of the underwriters’ discount, if applicable, and other offering costs.

(3) The Company has entered into four equity distribution agreements, three of which have been cancelled and replaced with the current agreement, to publicly offer and sell shares of the Company’s common stock in at the market and privately negotiated transactions from time to time. As of December 31, 2016, shares with a value of $15.0 million remain available for issuance under the July 2016 Equity Distribution Agreement.

Share Repurchase Program

On July 29, 2015, the Company’s Board of Directors authorized the repurchase of up to 2,000,000 shares of the Company’s common stock. As part of the share repurchase program, shares may be purchased in open market transactions, including through block purchases, through privately negotiated transactions, or pursuant to any trading plan that may be adopted in accordance with Rule 10b5-1 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Open market repurchases will be made in accordance with Exchange Act Rule 10b-18, which sets certain restrictions on the method, timing, price and volume of open market stock repurchases. The timing, manner, price and amount of any repurchases will be determined by the Company in its discretion and will be subject to economic and market conditions, stock price, applicable legal requirements and other factors. The authorization does not obligate the Company to acquire any particular amount of common stock and the program may be suspended or discontinued at the Company’s discretion without prior notice.

From the inception of the share repurchase program through December 31, 2016, the Company repurchased a total of 1,216,243 shares at an aggregate cost of approximately $10.8 million, including commissions and fees, for a weighted average price of $8.92 per share. No shares were repurchased during the year ended December 31, 2016.

($ in thousands, except per share amounts)
		Weighted
		Average
		Price
		Paid	Shares		Net
Period		Per Share	Repurchased		Cost
2016
Third Quarter	$	8.89	1,069,720	$	9,512
Fourth Quarter		9.14	146,523		1,340

Cash Dividends

The table below presents the cash dividends declared on the Company’s common stock.

(in thousands, except per share data)
Year	Per Share Amount			Total
2014	$	2.16	$	22,643
2015		1.92		38,748
2016		1.68		41,388
2017(1)		0.28		9,245

The effect of the dividends declared during 2017 is not reflected in the Company’s consolidated financial statements as of December 31, 2016.