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Share-Based Payments

6 Months Ended

Jun. 30, 2020

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

11.Share-Based Payments

LTIP and Time-Based LTIP Units

During the six months ended June 30, 2020, we granted 381,504 LTIP Units with time-based vesting requirements ("Time-Based LTIP Units") to management and other employees with a weighted average grant-date fair value of $38.52 per unit that vest over four years, 25.0% per year, subject to continued employment. Compensation expense for these units is being recognized over a four-year period. The aggregate grant-date fair value of these Time-Based LTIP Units granted during the six months ended June 30, 2020 was $14.7 million, valued using Monte Carlo simulations.

During the six months ended June 30, 2020, we granted 90,094 fully vested LTIP Units, with a grant-date fair value of $40.13 per unit, to certain executives who elected to receive all or a portion of their cash bonus paid in 2020, related to 2019 service, as LTIP Units. Compensation expense totaling $3.6 million for these LTIP Units was recognized in 2019.

In April 2020, as part of their annual compensation, we granted a total of 54,607 fully vested LTIP Units to certain of our trustees with an aggregate grant-date fair value of $1.5 million.

The following is a summary of the significant assumptions used to value the LTIP and Time-Based LTIP Units:


Expected volatility		18.0% to 29.0%
Risk-free interest rate		0.3% to 1.5%
Post-grant restriction periods		2 to 3 years

Performance-Based LTIP

During the six months ended June 30, 2020, we granted 593,100 LTIP Units with performance-based vesting requirements ("Performance-Based LTIP Units") to management and other employees with a weighted average grant-date fair value of $18.67 per unit. Our Performance-Based LTIP Units have a three-year performance period. 50% of any Performance-Based LTIP Units that are earned vest at the end of the three-year performance period and the remaining 50% on the fourth anniversary of the date of grant, subject to continued employment. If, however, the Performance-Based LTIP Units do not achieve a positive absolute total shareholder return (“TSR”) at the end of the three-year performance period, but satisfy the relative performance criteria thereof, 50% of the units that otherwise would have been retained will be forfeited, and the remaining 50% will be earned and vest if and when we achieve a positive TSR during the succeeding seven years, measured at the end of each quarter.

The aggregate grant-date fair value of the Performance-Based LTIP Units granted during the six months ended June 30, 2020, was $11.1 million, valued using Monte Carlo simulations. Compensation expense for the Performance-Based LTIP Units is being recognized over a four-year period. The following is a summary of the significant assumptions used to value the Performance-Based LTIP Units:


Expected volatility		15.0%
Dividend yield		2.3%
Risk-free interest rate		1.3%

ESPP

Pursuant to the ESPP, employees purchased 35,307 common shares for $887,000 during the six months ended June 30, 2020. The following is a summary of the significant assumptions used to value the ESPP common shares using the Black-Scholes model:


Expected volatility		13.0%
Dividend yield		1.1%
Risk-free interest rate		1.7%

Expected life

6 months

Share-Based Compensation Expense

The following is a summary of share-based compensation expense:


	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019

	(In thousands)
Time-Based LTIP Units	$	4,288	$	2,840	$	7,639	$	5,774
Performance-Based LTIP Units		6,219		1,980		10,208		4,188
LTIP Units		1,100		1,000		1,100		1,000
Other equity awards ⁽¹⁾		1,590		981		3,139		2,040
Share-based compensation expense - other		13,197		6,801		22,086		13,002
Formation Awards		1,339		1,229		2,598		2,889
OP Units ⁽²⁾		5,977		6,813		12,618		14,744
LTIP Units ⁽²⁾		103		115		215		223
Special Performance-Based LTIP Units ⁽³⁾		687		640		1,358		1,284
Special Time-Based LTIP Units ⁽³⁾		752		726		1,510		1,514
Share-based compensation related to Formation Transaction and special equity awards ⁽⁴⁾		8,858		9,523		18,299		20,654
Total share-based compensation expense		22,055		16,324		40,385		33,656
Less amount capitalized		(1,243)		(799)		(2,211)		(1,542)
Share-based compensation expense	$	20,812	$	15,525	$	38,174	$	32,114

(1)	Primarily comprising compensation expense for certain executives who have elected to receive all or a portion of any cash bonus that may be paid in the subsequent year related to past service in the form of fully vested LTIP Units and related to our ESPP.

(2)	Represents share-based compensation expense for LTIP Units and OP Units subject to post-Combination employment obligations.

(3)	Represents equity awards issued related to our successful pursuit of Amazon's additional headquarters in National Landing.

(4)	Included in "General and administrative expense: Share-based compensation related to Formation Transaction and special equity awards" in the accompanying statements of operations.

As of June 30, 2020, we had $74.0 million of total unrecognized compensation expense related to unvested share-based payment arrangements, which is expected to be recognized over a weighted average period of 2.0 years.