Stockholders’ Equity

Preferred Stock

On August 16, 2016, we completed an underwritten public offering of 3,600,000 shares of our 5.875% Series A Cumulative Redeemable Preferred Stock (the "Series A Preferred Stock") at a price of $25.00 per share. The net proceeds from the offering were approximately $86.7 million after deducting the underwriters’ discount and offering costs totaling $3.3 million. The Series A Preferred Stock is presented in stockholders' equity on the consolidated balance sheet net of issuance costs.

Dividends on our Series A Preferred Stock are cumulative from the date of original issuance and are payable quarterly in arrears on or about the last day of March, June, September and December of each year, beginning on December 31, 2016, at a rate of 5.875% per annum of its $25.00 per share liquidation preference (equivalent to $1.46875 per share per annum). The Series A Preferred Stock has no stated maturity date and is not subject to any mandatory redemption or sinking fund. The holders of our Series A Preferred Stock rank senior to the holders of our common stock with respect to dividend rights and rights upon the Company’s liquidation, dissolution or winding up of its affairs. The holders of our Series A Preferred Stock generally have no voting rights except for limited voting rights if we fail to pay dividends for six or more quarterly dividend periods (whether or not consecutive). We may not redeem the Series A Preferred Stock prior to August 16, 2021, except in limited circumstances to preserve our status as a REIT or pursuant to a specified change of control transaction. On or after August 16, 2021, we may redeem our Series A Preferred Stock, in whole or in part, at any time or from time to time, for cash at a redemption price of $25.00 per share, plus any accumulated, accrued and unpaid distributions through the date of redemption. Upon the occurrence of a specified change of control transaction, we may, at our option, redeem the Series A Preferred Stock in whole or in part within 120 days after the change of control occurred, by paying $25.00 per share in cash, plus any accrued and unpaid distributions through the date of redemption. If we do not exercise our right to redeem the Series A Preferred Stock, upon the occurrence of a specified change of control transaction, the holders of Series A Preferred Stock have the right to convert some or all of their shares into a number of the Company’s common shares equivalent to $25.00 plus accrued and unpaid dividends, but not to exceed a cap of 2.2738 shares of common stock per share of Series A Preferred Stock, subject to certain adjustments.

Common Stock Issuances

On April 15, 2016, we completed a public follow-on offering of 10,350,000 shares of our common stock, including the underwriters’ exercise in full of its option to purchase 1,350,000 shares of our common stock, at an offering price of $17.65 per share. The net proceeds of the follow-on offering were $174.4 million, after deducting the underwriters’ discount and offering costs totaling $8.3 million. On April 15, 2016, we contributed the net proceeds of the offering to our Operating Partnership in exchange for 10,350,000 common units of partnership interests in the Operating Partnership (“OP Units”).

On February 3, 2015, we completed a public follow-on offering of 11,500,000 shares of our common stock at an offering price of $16.00 per share. The net proceeds of the follow-on offering were $176.2 million, after deducting the underwriters’ discount and offering costs totaling $7.8 million. On February 3, 2015, we contributed the net proceeds of the offering to our Operating Partnership in exchange for 11,500,000 OP Units.

On August 19, 2014, we completed a public follow-on offering of 17,250,000 shares of our common stock at an offering price of $13.50 per share. The net proceeds of the follow-on offering were $221.8 million, after deducting the underwriters’ discount and offering costs of totaling $11.1 million. On August 19, 2014, we contributed the net proceeds of the offering to our Operating Partnership in exchange for 17,250,000 OP Units.

ATM Program

On April 17, 2015, we established an at-the-market equity offering program (the “ATM Program”) pursuant to which we may sell from time to time up to an aggregate of $125.0 million of our common stock through sales agents. During the year ended December 31, 2016, we sold 402,683 shares of our common stock under the ATM Program, at a weighted average price of $23.13 per share, for gross proceeds of $9.3 million. The net proceeds from these sales were $9.2 million, after deducting the sales agents’ fee. During the year ended December 31, 2015, we sold 500 shares of our common stock under the ATM Program at a price of $14.30 per share, for gross proceeds of $7 thousand. As of December 31, 2016, we had the capacity to issue up to an additional $115.7 million of common stock under the ATM Program. Actual sales going forward, if any, will depend on a variety of factors, including among others, market conditions, the trading price of our common stock, determinations by us of the appropriate sources of funding for us and potential uses of funding available to us.

Noncontrolling Interests

Noncontrolling interests in our Operating Partnership relate to interests in the partnership that are not owned by us. As of December 31, 2016, noncontrolling interests consisted of 1,966,996 OP Units and 41,688 fully-vested LTIP units and represented approximately 2.9% of our Operating Partnership as of December 31, 2016. OP Units and shares of our common stock have essentially the same economic characteristics, as they share equally in the total net income or loss distributions of our Operating Partnership. Investors who own OP Units have the right to cause our Operating Partnership to redeem any or all of their units in our Operating Partnership for an amount of cash per unit equal to the then current market value of one share of common stock, or, at our election, shares of our common stock on a one-for-one basis. See Note 14 for a description of LTIP units.

During the years ended December 31, 2016, 2015 and 2014, we redeemed 59,646, 288,234 and 685,915 OP Units, respectively, in exchange for issuing to the holders of the OP Units an equal number of shares of our common stock resulting in the reclassification of $0.6 million, $3.2 million, and $7.8 million, respectively, from noncontrolling interests to total stockholders’ equity.

During the year ended December 31, 2015, we redeemed 8,468 OP Units for approximately $0.1 million at a price of $16.07 per unit. We did not redeem any OP units for cash during the years ended December 31, 2016 and 2014.

As described in Note 3, as part of the REIT Portfolio Acquisition, we acquired 100% of the private REIT’s common stock and 575 of 700 issued and outstanding shares of the private REIT’s 12.5% cumulative non-voting preferred stock. The remaining 125 shares of preferred stock (the “noncontrolling preferred stock”) may be redeemed by us at any time, subject to procedural requirements, at a redemption price equal to $1,000 per share, or an aggregate price of $125,000, plus any dividends thereon that have accrued but have not been repaid at the time of such redemption (the “redemption price”). The noncontrolling preferred stock is entitled to a liquidation preference that is equal to the redemption price noted above. The noncontrolling preferred stock has been classified as noncontrolling interests in our consolidated balance sheets and has balance equal to its liquidation preference.

Changes in Accumulated Other Comprehensive Income (Loss)

The following table summarizes the changes in our AOCI balance for the years ended December 31, 2016 and 2015, which consists solely of adjustments related to our cash flow hedges:



	2016			2015
Accumulated other comprehensive loss - beginning balance	$	(3,033	)	$	(1,331	)
Other comprehensive income (loss) before reclassifications	4,475			(2,781		)
Amounts reclassified from accumulated other comprehensive loss to interest expense	2,218			1,039
Net current period other comprehensive income (loss)	6,693			(1,742		)
Less other comprehensive (income) loss attributable to noncontrolling interests	(215		)	40
Other comprehensive income (loss) attributable to common stockholders	6,478			(1,702		)
Accumulated other comprehensive income (loss) - ending balance	$	3,445		$	(3,033	)

Dividends

Earnings and profits, which determine the taxability of dividends to stockholders, may differ from income reported for financial reporting purposes due to the differences for federal income tax purposes in the treatment of loss on extinguishment of debt, revenue recognition and compensation expense and in the basis of depreciable assets and estimated useful lives used to compute depreciation expense.

The following table summarizes the tax treatment of common stock dividends and preferred stock dividends per share for federal income tax purposes for the years ended December 31, 2016, 2015 and 2014:



	Common Stock												Preferred Stock
	Year Ended December 31,
	2016				2015				2014				2016
Ordinary Income	$	0.452085	99.66	%	$	0.478948	93.91	%	$	0.460750	92.15	%	$	0.548884	99.66	%
Return of Capital	—		—	%	—		—	%	—		—	%	—		—	%
Capital Gain⁽¹⁾	0.001562		0.34	%	0.031052		6.09	%	0.039250		7.85	%	0.001896		0.34	%
Total	$	0.453647	100.00	%	$	0.510000	100.00	%	$	0.500000	100.00	%	$	0.550780	100.00	%


(1)	100.0%, 0.0% and 19.0% of the capital gains reported for the years ended December 31, 2016, 2015 and 2014, respectively, are comprised of an unrecaptured Section 1250 gain.