XML 30 R20.htm IDEA: XBRL DOCUMENT

Share-Based Payments

9 Months Ended

Sep. 30, 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.

In April 2022, as part of their annual compensation, we granted to non-employee trustees a total of 95,084 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.

The aggregate grant-date fair value of the Time-Based LTIP Units and the LTIP Units granted during the nine months ended September 30, 2022 was $25.7 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 based on the following significant assumptions:


Expected volatility		30.0% to 41.0%
Risk-free interest rate		0.4% to 2.9%
Post-grant restriction periods		2 to 6 years

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 LTIP Units expire on the tenth anniversary of their grant date.

The aggregate grant-date fair value of the AO LTIP Units granted during the nine months ended September 30, 2022 was $6.6 million, valued using Monte Carlo simulations based on the following significant assumptions:


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.

ESPP

Pursuant to the ESPP, employees purchased 39,851 common shares for $801,000 during the nine months ended September 30, 2022. The following is a summary of the significant assumptions used to value the ESPP common shares using the Black-Scholes model:


Expected volatility		23.0%
Dividend yield		1.6%
Risk-free interest rate		0.2%
Expected life		6 months

Share-Based Compensation Expense

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


	Three Months Ended September 30,					Nine Months Ended September 30,
	2022		2021		X	2022		2021

	(In thousands)
Time-Based LTIP Units	$	3,496	$	3,999		$	15,824	$	12,494
AO LTIP Units and Performance-Based LTIP Units		2,167		3,216			9,914		9,615
LTIP Units		—		—			1,000		1,091
Other equity awards ⁽¹⁾		1,413		1,473			4,239		4,395
Share-based compensation expense - other		7,076		8,688			30,977		27,595
Formation Awards		281		476			1,424		1,923
OP Units and LTIP Units ⁽²⁾		(423)		1,676			408		6,725
Special Time-Based LTIP Units and Special Performance-Based LTIP Units ⁽³⁾		690		1,328			2,537		4,218
Share-based compensation related to Formation Transaction and special equity awards ⁽⁴⁾		548		3,480			4,369		12,866
Total share-based compensation expense		7,624		12,168			35,346		40,461
Less: amount capitalized		(675)		(740)			(3,022)		(2,141)
Share-based compensation expense	$	6,949	$	11,428		$	32,324	$	38,320

(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)	Includes share-based compensation expense for LTIP Units and OP Units issued in the Formation Transaction, which fully vested in July 2022.

(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 September 30, 2022, we had $50.5 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.