SHAREHOLDERS' EQUITY

Common Stock

The Company has a continuous equity placement program (“EPP”) whereby the Company may offer and sell through its sales agent shares of its common stock in negotiated transactions or transactions that are deemed to be “at the market offerings,” as defined in Rule 415 under the 1933 Act, including sales made directly on the New York Stock Exchange or sales made to or through a market maker other than on an exchange. During the six months ended June 30, 2011, the Company has received proceeds of $4,332, net of broker sales commission, for 409,237 shares of common stock sold under this program at an average price of $10.75. The Company originally registered 5,000,000 shares under the EPP, and as of June 30, 2011, has 538,147 remaining shares to be issued under the EPP.

During the six months ended June 30, 2011, the Company closed a public offering of 9,200,000 shares of its common stock, including 1,200,000 shares pursuant to an overallotment option that was fully exercised by the underwriters, at a public offering price of $10.35 per share for total net proceeds of $90,459 after deduction of underwriting discounts, commissions, and expenses. The Company has used these proceeds to acquire additional investments consistent with its investment policy.

The following table presents a summary of the changes in the number of common shares outstanding for the periods indicated:



	Three Months Ended		Six Months Ended
	June 30,		June 30,
	2011	2010	2011	2010
Balance at beginning of period	40,318,159	15,037,802	30,342,897	13,931,512
Common stock issued under EPP	—	70,100	409,237	1,140,200
Common stock issued via public offering	—	—	9,200,000	—
Common stock redeemed under 2004 Stock and Incentive Plan	5,000	50,000	15,000	50,000
Common stock issued under 2009 Stock and Incentive Plan	20,000	10,840	376,025	47,030
Balance at end of period	40,343,159	15,168,742	40,343,159	15,168,742

Incentive Plans. Pursuant to the Company’s 2009 Stock and Incentive Plan, the Company may grant stock-based compensation to eligible employees, directors or consultants or advisers to the Company, including stock awards, stock options, stock appreciation rights (“SARs”), dividend equivalent rights, performance shares, and restricted stock units. Of the 2,500,000 shares of common stock authorized for issuance under this plan, 2,076,945 shares remain available as of June 30, 2011. Although the Company is no longer issuing stock-based compensation under its 2004 Stock Incentive Plan, there are stock options, SARs, and restricted stock still outstanding (and exercisable if vested) thereunder as of June 30, 2011.

Stock options and restricted stock that the Company has issued may be settled only in shares of its common stock, and therefore are treated as equity awards with their fair value measured at the grant date as required by ASC Topic 718. The compensation cost related to all stock options has been expensed in prior periods. As of June 30, 2011, the fair value of the Company’s outstanding restricted stock remaining to be amortized into net income is $3,008.

The Company did not grant any stock options during the three and six months ended June 30, 2011 or June 30, 2010, and there were no forfeitures of its outstanding stock options for those same periods. The following tables presents a rollforward of the stock option activity for the periods presented:



	Three Months Ended
	June 30,
	2011				2010
	Number of Shares		Weighted-Average Exercise Price		Number of Shares		Weighted- Average Exercise Price
Options outstanding at beginning of period	35,000		$	9.13	95,000		$	8.59
Options exercised	(5,000	)	7.43		(50,000	)	8.45
Options outstanding at end of period (all vested and exercisable)	30,000		$	9.42	45,000		$	8.75



	Six Months Ended
	June 30,
	2011				2010
	Number of Shares		Weighted-Average Exercise Price		Number of Shares		Weighted- Average Exercise Price
Options outstanding at beginning of period	45,000		$	8.75	95,000		$	8.59
Options exercised	(15,000	)	7.43		(50,000	)	8.45
Options outstanding at end of period (all vested and exercisable)	30,000		$	9.42	45,000		$	8.75

The following table presents a rollforward of the restricted stock activity for the periods presented:



	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2011		2010		2011		2010
Restricted stock at beginning of period	320,500		25,000		25,000		32,500
Restricted stock granted	20,000		10,000		323,000		10,000
Restricted stock vested	(10,000	)	(10,000	)	(17,500	)	(17,500	)
Restricted stock forfeited	—		—		—		—
Restricted stock outstanding at end of period	330,500		25,000		330,500		25,000

SARs issued by the Company may be settled only in cash, and therefore have been treated as liability awards with their fair value measured at the grant date and remeasured at the end of each reporting period as required by ASC Topic 718. As of June 30, 2011 and December 31, 2010, the fair value of the Company’s outstanding SARs of $322 and $492, respectively, are recorded as liabilities on its consolidated balance sheet for the respective periods. The fair value of SARs is estimated using the Black-Scholes option valuation model based upon the assumptions in the table below.



	June 30, 2011		December 31, 2010
Expected volatility	13.8%-16.8%		16.2%-18.6%
Weighted-average volatility	15.7	%	17.3	%
Expected dividends	11.5%-11.8%		9.9%-10.3%
Expected term (in months)	9		12
Weighted-average risk-free rate	0.56	%	0.81	%
Range of risk-free rates	0.3%-0.9%		0.4%-1.3%

As of June 30, 2011, the Company has 136,875 SARs outstanding, all of which are vested and exercisable at a weighted average price of $7.31 at any time prior to their expiration dates. The weighted average remaining contractual term on these outstanding SARs as of June 30, 2011 is 18 months, and 60,000 of the outstanding SARs are set to expire if they are not exercised on or before December 31, 2011. As of June 30, 2010, there were 278,146 SARs outstanding at a weighted average price of $7.27, and 258,146 of those SARs were vested and exercisable at that time at a weighted average price of $7.29. No SARs were granted, forfeited, or exercised during the three and six months ended June 30, 2011 or June 30, 2010.

Total stock-based compensation expense recognized by the Company for the three and six months ended June 30, 2011 is $258 and $353, respectively, compared to $105 and $163 for the three and six months ended June 30, 2010, respectively.

Additional Paid-In Capital

The following table presents a rollforward of the Company's changes in additional paid-in capital for the six months ended June 30, 2011:



	Additional Paid-In Capital
Balance as of January 1, 2011	$	538,304
Common stock issuances:
EPP issuance	4,284
Public offering	90,343
Incentive plans	657
Amortization of restricted stock	523
Capitalized expenses	(142		)
Balance as of June 30, 2011	$	633,969

Accumulated Other Comprehensive Income

Accumulated other comprehensive income as of June 30, 2011 and December 31, 2010 is comprised of the following items:



	June 30, 2011			December 31, 2010
Available for sale investments:
Unrealized gains	$	24,746		$	20,443
Unrealized losses	(6,446		)	(7,566		)
	18,300			12,877
Hedging instruments:
Unrealized gains	432			692
Unrealized losses	(12,033		)	(3,512		)
	(11,601		)	(2,820		)
Accumulated other comprehensive income	$	6,699		$	10,057

Due to the Company’s REIT status, the items comprising other comprehensive income do not have related tax effects.

Accumulated Deficit

The following table presents a rollforward of the Company's accumulated deficit for the six months ended June 30, 2011:



	Accumulated Deficit
Balance as of January 1, 2011	$	(256,307	)
Net income for the quarter ended March 31, 2011	10,280
Dividends declared ($0.27 per share) for the quarter ended March 31, 2011	(10,886		)
Net income for the quarter ended June 30, 2011	13,594
Dividends declared ($0.27 per share) for the quarter ended June 30, 2011	(10,892		)
Balance as of June 30, 2011	$	(254,211	)

In June 2011, the Company declared dividends of $0.27 per common share to be paid on July 29, 2011 to shareholders of record on June 30, 2011. The Company recently implemented a Dividend Reinvestment and Share Purchase Plan, which is in effect for the dividend declared for the second quarter of 2011. The plan allows registered shareholders to automatically reinvest some or all of their quarterly dividends in shares of the Company’s stock and provides an opportunity for investors to purchase shares of the Company’s stock, potentially at a discount to the prevailing market price. The Dividend Reinvestment Discount for second quarter dividends reinvested through the plan will be 3% of the market purchase price as determined in accordance with the plan.