SHAREHOLDERS' EQUITY

Preferred Stock

On August 1, 2012, the Company closed an offering of 2,300,000 shares of 8.50% Series A Cumulative Redeemable Preferred Stock, par value of $0.01 per share and liquidation preference $25.00 per share. The Company received net proceeds before expenses of $55,689, including the additional proceeds from the underwriters' overallotment option which was fully exercised.

Common Stock

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



	Nine Months Ended
	September 30,
	2012	2011
Balance at beginning of period	40,382,530	30,342,897
Common stock issued under ATM program	402,494	409,237
Common stock issued under DRIP	9,279	2,111
Common stock issued via public offering	13,332,748	9,200,000
Common stock issued or redeemed under Stock and Incentive Plans	241,663	426,031
Balance at end of period	54,368,714	40,380,276

The Company has a continuous equity placement program (also known as an "at the market" program, or "ATM") whereby the Company may offer and sell through its sales agent, JMP Securities LLC, up to 8,000,000 shares of its common stock. During the nine months ended September 30, 2012, the Company received proceeds of $3,721, net of $57 in broker sales commission, for 402,494 shares of common stock sold under this program at an average price of $9.39. The Company did not issue any common stock under this program during the three months ended September 30, 2012.

The Company has a Dividend Reinvestment and Share Purchase Plan ("DRIP") which 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 Company declared a third quarter common stock dividend of $0.29 per share payable on October 31, 2012 to shareholders of record as of October 5, 2012. There is no dividend reinvestment discount for third quarter dividends reinvested through the DRIP.

In February 2012, the Company closed a secondary offering of 13,332,748 shares of its common stock which includes 832,487 shares issued pursuant to an option to purchase additional shares that was exercised by the underwriters, at a public offering price of $9.12 per share for total net proceeds of approximately $119,992 after deduction of underwriters' compensation and expenses.

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, 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, 1,805,276 shares remain available for issuance as of September 30, 2012.

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



	Three Months Ended			Nine Months Ended
	September 30,			September 30,
	2012		2011	2012		2011
Restricted stock at beginning of period	454,117		330,500	365,506		25,000
Restricted stock granted	—		35,006	220,821		358,006
Restricted stock vested	(2,917	)	—	(135,127	)	(17,500	)
Restricted stock outstanding at end of period	451,200		365,506	451,200		365,506

As of September 30, 2012, the fair value of the Company’s outstanding restricted stock remaining to be amortized into compensation expense is $3,438.

During the three months ended September 30, 2012, 25,000 SARs were exercised with a weighted average exercise price of $6.61. During the nine months ended September 30, 2012, 31,875 SARs were exercised with a weighted average exercise price of $6.71. No SARs were granted, forfeited, or exercised during the three and nine months ended September 30, 2011. As of September 30, 2012, the Company has 27,500 SARs outstanding, all of which are vested and exercisable at an exercise price of $7.06 per share. The remaining contractual term on these outstanding SARs as of September 30, 2012 is 15 months. As of September 30, 2012 and December 31, 2011, the fair value of the Company’s outstanding SARs of $103 and $77, respectively, are recorded as liabilities on its consolidated balance sheet for the respective periods.

Total stock-based compensation expense recognized by the Company for the three and nine months ended September 30, 2012 was $490 and $1,410, respectively, compared to $139 and $492, respectively, for the three and nine months ended September 30, 2011.

Additional Paid-In Capital

The following table presents a rollforward of the Company's changes in additional paid-in capital for the nine months ended September 30, 2012:



	Additional Paid-In Capital
Balance as of January 1, 2012	$	634,683
Common stock issuances:
DRIP issuances	90
ATM issuances	3,674
Secondary offering	119,859
Incentive plans	192
Amortization of restricted stock	1,268
Capitalized expenses	(119		)
Balance as of September 30, 2012	$	759,647

Accumulated Other Comprehensive Income

Accumulated other comprehensive income as of September 30, 2012 and December 31, 2011 is comprised of the following items:



	September 30, 2012			December 31, 2011
Available for sale investments:
Unrealized gains	$	110,332		$	36,091
Unrealized losses	(10,747		)	(13,902		)
	99,585			22,189
Hedging instruments:
Unrealized losses	(43,695		)	(25,444		)
	(43,695		)	(25,444		)
Accumulated other comprehensive income (loss)	$	55,890		$	(3,255	)

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