7% Series A Cumulative Redeemable Preferred Stock

6 Months Ended

Jun. 30, 2019

Equity [Abstract]

7% Series A Cumulative Redeemable Preferred Stock

9. 7% Series A Cumulative Redeemable Preferred Stock

In connection with the Merger, the Company issued 97,032,848 shares of Series A Preferred Stock. The terms of these shares provide the Company with the right to redeem such shares at any time for an amount equal to the liquidation preference, plus any accumulated and unpaid dividends. In addition, the terms of these shares include an option for a holder of such shares to require the Company to redeem all or a portion of such holder’s shares on or after November 14, 2020 for an amount equal to the liquidation preference, plus any accumulated and unpaid dividends. The initial dividend rate on these shares is 7% per annum. The dividend rate increased from 7% to 11% per annum on May 14, 2018. Due to the put option provided to the holders of these shares, such shares have been classified outside permanent stockholder’s equity.

The initial liquidation preference of $1.90 per share will be subject to downward adjustment should net costs and payments relating to litigation and regulatory matters for alleged legacy acts exceed $3.5 million from the date of the Merger described in Note 1. The Company recognizes changes in the redemption value immediately as they occur and adjusts the carrying amount of the Series A Preferred Stock to equal the redemption value at the end of each reporting period. As of June 30, 2019, the initial liquidation preference has not been adjusted.

As of June 30, 2019 and December 31, 2018, BRE Holdings owned approximately 0.5 million and 0.9 million shares of the Series A Preferred Stock, respectively.

On January 15, 2019, we paid a dividend on our Series A Preferred Stock of $0.0523 per share to stockholders of record on January 1, 2019.

On March 25, 2019, the Board of Directors of the Company declared a dividend on the Series A Preferred Stock of $0.0523 per share, which was paid on April 15, 2019 to stockholders of record on April 1, 2019. On July 1, 2019, the Board of Directors of the Company declared a dividend on the Series A Preferred Stock of $0.0523 per share, which was paid on July 15, 2019 to stockholders of record on July 1, 2019. The Company accrued dividends of $1.2 million and $2.3 million at June 30, 2019 and December 31, 2018, respectively, which are included in accounts payable, accrued expenses and other liabilities in the condensed consolidated balance sheets.

On March 26, 2019, the Board of Directors of the Company approved the redemption of 20,945,000 shares of Series A Preferred Stock from holders of record on March 29, 2019 (representing approximately 47.80% of the total Series A Preferred Stock outstanding). The shares of Series A Preferred Stock were redeemed on May 1, 2019. The shares of Series A Preferred Stock were redeemed on a pro rata basis from each stockholder at a redemption rate of $1.9099 per share, which was comprised of the $1.90 liquidation preference per share and $0.0099 in accumulated and unpaid dividends per share earned through the redemption date for an aggregate redemption amount of approximately $40.0 million.