Equity

Common Stock

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 three months ended March 31, 2017, we sold 168,685 shares of our common stock under the ATM Program, at a weighted average price of $23.16 per share, for gross proceeds of $3.9 million. The net proceeds from these sales were $3.8 million, after deducting the sales agents’ fee. As of March 31, 2017, we had the capacity to issue up to an additional $111.8 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 Operating Partnership that are not owned by us. As of March 31, 2017, noncontrolling interests consisted of 1,948,144 OP Units and 41,668 fully-vested LTIP units and represented approximately 2.9% of our Operating Partnership. 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 and 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.

During the three months ended March 31, 2017, 18,852 OP Units were converted into an equivalent number of shares of common stock, resulting in the reclassification of $0.2 million of noncontrolling interest to Rexford Industrial Realty, Inc.’s stockholders’ equity.

2013 Incentive Award Plan

In July 2013, we established the Rexford Industrial Realty, Inc. and Rexford Industrial Realty, L.P. 2013 Incentive Award Plan (the “Plan”), pursuant to which we may make grants of stock options, restricted stock, dividend equivalents, stock payments, restricted stock units, performance shares, LTIP units of partnership interest in our Operating Partnership (“LTIP units”), performance units in our Operating Partnership (“Performance Units”), and other stock based and cash awards to our non-employee directors, employees and consultants. The aggregate number of shares of our common stock, LTIP units and Performance Units that may be issued or transferred pursuant to the Plan is 2,272,689 shares (of which 841,552 shares of common stock, LTIP units and Performance Units remain available for issuance as of March 31, 2017).

Shares of our restricted common stock generally may not be sold, pledged, assigned or transferred in any manner other than by will or the laws of descent and distribution or, subject to the consent or the administrator of the Plan, a domestic relations order, unless and until all restrictions applicable to such shares have lapsed. Such restrictions generally expire upon vesting. Shares of our restricted common stock are participating securities and have full voting rights and nonforfeitable rights to dividends.

LTIP units and Performance Units are each a class of limited partnership units in the Operating Partnership. Initially, LTIP units and performance units do not have full parity with OP Units with respect to liquidating distributions. However, upon the occurrence of certain events described in the Operating Partnership’s partnership agreement, the LTIP units and Performance Units can over time achieve full parity with the OP Units for all purposes. If such parity is reached, vested LTIP units and Performance Units may be converted into an equal number of OP Units, and, upon conversion, enjoy all rights of OP Units. LTIP Units, whether vested or not, receive the same quarterly per-unit distributions as OP Units, which equal the per-share distributions on shares of our common stock. Performance Units that have not vested receive a quarterly per-unit distribution equal to 10% of the distributions paid on OP Units.

The following table sets forth our share-based award activity for the three months ended March 31, 2017:



	Unvested Awards
	Restricted Common Stock		LTIP Units	Performance Units
Balance at January 1, 2017	287,827		241,691	514,998
Granted	86,399		—	—
Forfeited	(7,570	)	—	—
Vested⁽¹⁾	(33,528	)	—	—
Balance at March 31, 2017	333,128		241,691	514,998


(1)	During the three months ended March 31, 2017, 11,989 shares of the Company’s common stock were tendered in accordance with the terms of the Plan to satisfy minimum statutory tax withholding requirements associated with the vesting of restricted shares of common stock.

The following table sets forth the vesting schedule of all unvested share-based awards outstanding as of March 31, 2017:



	Unvested Awards
	Restricted Common Stock	LTIP Units	Performance Units⁽¹⁾
April 1, 2017 - December 31, 2017	133,226	70,837	—
2018	79,201	70,842	315,998
2019	57,886	70,838	199,000
2020	41,501	29,174	—
2021	21,314	—	—
Total	333,128	241,691	514,998

(1)

Represents the maximum number of Performance Units that would be earned on December 14, 2018 and December 29, 2019, in the event that specified maximum total shareholder return (“TSR”) goals are achieved over the three-year performance period from December 15, 2015 through December 14, 2018 and the three-year performance period from December 29, 2016 through December 28, 2019, respectively. The number of Performance Units that ultimately vest will be based on both the Company’s absolute TSR and TSR performance relative to a peer group over each three-year performance period. The maximum number of Performance Units will be earned under the awards if the Company both (i) achieves 50% or higher absolute TSR, inclusive of all dividends paid, over each performance period and (ii) finishes in the 75th or greater percentile of the peer group for TSR over each three-year performance period.

The following table sets forth the amounts expensed and capitalized for all share-based awards for the reported periods presented below (in thousands):



	Three Months Ended March 31,
	2017		2016
Expensed share-based compensation⁽¹⁾	$	1,346	$	934
Capitalized share-based compensation⁽²⁾	50		32
Total share-based compensation	$	1,396	$	966


(1)	Amounts expensed are included in “General and administrative” and “Property expenses” in the accompanying consolidated statements of operations.


(2)	Amounts capitalized, which relate to employees who provide construction and leasing services, are included in “Building and improvements” and “Deferred leasing costs, net” in the consolidated balance sheets.

As of March 31, 2017, there was $10.4 million of total unrecognized compensation expense related to all unvested share-based awards expected to vest, of which we estimate $0.6 million will be capitalized for employees who provide construction and leasing services. As of March 31, 2017, this total unrecognized compensation expense is expected to be recognized over a weighted average remaining period of 30 months.

Changes in Accumulated Other Comprehensive Income

The following table summarizes the changes in our accumulated other comprehensive income balance for the three months ended March 31, 2017 and 2016, which consists solely of adjustments related to our cash flow hedges (in thousands):



	Three Months Ended March 31,
	2017			2016
Beginning Balance	$	3,445		$	(3,033	)
Other comprehensive income before reclassifications	304			(2,258		)
Amounts reclassified from accumulated other comprehensive income to interest expense	448			501
Net current period other comprehensive income	752			(1,757		)
Less other comprehensive income attributable to noncontrolling interests	(21		)	62
Other comprehensive income attributable to common stockholders	731			(1,695		)
Ending Balance	$	4,176		$	(4,728	)