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Share-Based Payments

3 Months Ended

Mar. 31, 2022

11.Share-Based Payments

LTIP Units and Time-Based LTIP Units

In January 2022, we granted to certain employees 660,785 LTIP Units with time-based vesting requirements ("Time-Based LTIP Units") and a weighted average grant-date fair value of $27.41 per unit that vest ratably over four years subject to continued employment. Compensation expense for these units is being recognized over a four-year period.

In February 2022, we granted 252,206 fully vested LTIP Units to certain employees, who elected to receive all or a portion of their cash bonuses, related to 2021 service, as LTIP Units. The LTIP units had a weighted average grant-date fair value of $22.19 per unit. Compensation expense totaling $5.6 million for these LTIP Units was recognized in 2021.

The aggregate grant-date fair value of the Time-Based LTIP Units and the LTIP Units granted during the three months ended March 31, 2022 was $23.7 million. The Time-Based LTIP Units and the LTIP Units were valued based on the closing common share price on the grant date, less a discount for post-grant restrictions. The discount was determined using Monte Carlo simulations and the following is a summary of the significant assumptions used to value these units:


Expected volatility		41.0%
Risk-free interest rate		0.4% to 1.5%
Post-grant restriction periods		2 years

In April 2022, as part of their annual compensation, we granted to non-employee trustees a total of 2.0 million fully vested LTIP Units with a grant-date fair value of $20.90 per unit, which includes LTIP Units elected in lieu of cash retainers. The LTIP Units may not be sold while a trustee is serving on the Board of Trustees.

Appreciation-Only LTIP Units ("AO LTIP Units")

In January 2022, we granted to certain employees 1.5 million performance-based AO LTIP Units with a weighted average grant-date fair value of $4.44 per unit. The AO LTIP Units are structured in the form of profits interests that provide for a share of appreciation determined by the increase in the value of a common share at the time of conversion over the participation threshold of $32.30. The AO LTIP Units are subject to a TSR modifier whereby the number of AO LTIP Units that will ultimately be earned will be increased or reduced by as much as 25%. The AO LTIP Units have a three-year performance period with 50% of the AO LTIP Units that are earned vesting at the end of the three-year performance period and the remaining 50% vesting on the fourth anniversary of the grant date, subject to continued employment. The AO LTIPs have a 10-year term from the grant date.

The aggregate grant-date fair value of the AO LTIP Units granted during the three months ended March 31, 2022 was $6.6 million, valued using Monte Carlo simulations. The following is a summary of the significant assumptions used to value the AO LTIP Units:


Expected volatility		27.0%
Dividend yield		2.7%
Risk-free interest rate		1.6%

Performance-Based LTIP Units

In January 2022, 469,624 LTIP Units with performance-based vesting requirements ("Performance-Based LTIP Units"), which were unvested as of December 31, 2021, were forfeited as the performance measures were not met.

Share-Based Compensation Expense

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


	Three Months Ended March 31,
	2022		2021

	(In thousands)
Time-Based LTIP Units	$	6,126	$	4,380
AO LTIP Units and Performance-Based LTIP Units		4,157		3,239
Other equity awards ⁽¹⁾		1,427		1,463
Share-based compensation expense - other		11,710		9,082
Formation Awards		374		729
OP Units and LTIP Units ⁽²⁾		583		2,784
Special Time-Based LTIP Units and Special Performance-Based LTIP Units ⁽³⁾		1,287		1,432
Share-based compensation related to Formation Transaction and special equity awards ⁽⁴⁾		2,244		4,945
Total share-based compensation expense		13,954		14,027
Less: amount capitalized		(1,050)		(791)
Share-based compensation expense	$	12,904	$	13,236

(1)	Primarily comprising compensation expense for: (i) fully vested LTIP Units issued to certain employees in lieu of all or a portion of any cash bonuses earned, (ii) restricted share units ("RSUs") and (iii) shares issued under our ESPP.

(2)	Represents share-based compensation expense for LTIP Units and OP Units issued in the Formation Transaction, which are 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 March 31, 2022, we had $76.0 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 3.2 years.