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. The Company declared dividends of $0.43681 for the period August 1, 2012 through October 15, 2012 and $0.53125 per share of preferred stock for the period October 16, 2012 through January 15, 2013.

Common Stock

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



	2012		2011
Balance as of January 1,	40,382,530		30,342,897
Common stock issued under ATM program	402,494		409,237
Common stock issued under DRIP	13,480		4,365
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
Common stock repurchased	(104,000	)	—
Balance as of December 31,	54,268,915		40,382,530

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 year ended December 31, 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 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. A total of 3,000,000 shares have been reserved for issuance under the DRIP. The Company declared a fourth quarter common stock dividend of $0.29 per share payable on January 31, 2013 to shareholders of record as of December 31, 2012. There was no dividend reinvestment discount for fourth 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.

In November 2012, the Company announced that its Board of Directors had authorized the repurchase of up to $50,000 of its outstanding shares of common stock through December 31, 2014. The shares are expected to be repurchased from time to time through privately negotiated transactions or open market transactions, including pursuant to a trading plan in accordance with Rules 10b5-1 and 10b-18 under the Securities Exchange Act of 1934, as amended, or by any combination of such methods. The manner, price, number and timing of share repurchases will be subject to a variety of factors, including market conditions and applicable Securities and Exchange Commission rules. The Company will only repurchase shares when the repurchase price per share is less than the Company's estimate of the current net book value of its common stock. During the fourth quarter of 2012, the Company repurchased 104,000 shares of its common stock at an average price of $8.86 per share after commissions.

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, incentive awards, 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 December 31, 2012. Total stock-based compensation expense recognized by the Company for the year ended December 31, 2012 was $1,828 compared to $917 for the year ended December 31, 2011 and $627 for the year ended December 31, 2010.

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



	2012		2011
Restricted stock outstanding at January 1,	365,506		25,000
Restricted stock granted	220,821		358,006
Restricted stock vested	(138,044	)	(17,500	)
Restricted stock outstanding at December 31,	448,283		365,506

The restricted stock granted in 2012 and 2011 had fair values of $2,073 and $3,729, respectively at their grant dates. As of December 31, 2012, the fair value of the Company’s outstanding restricted stock remaining to be amortized into compensation expense is $2,983, of which $1,720 is expected to be amortized in 2013, $820 in 2014, $386 in 2015, and $57 in 2016.

As of December 31, 2012, the Company also has SARs and stock options outstanding, all of which were granted pursuant to the Company's 2004 Stock Incentive Plan. No new awards may be granted under this plan. The following table presents a rollforward of the SARs activity for the periods presented:



	2012				2011
	Quantity		Weighted-Average Price		Quantity		Weighted-Average Price
SARs outstanding at January 1,	59,375		$	6.87	136,875		$	7.31
SARs exercised	(31,875	)	6.71		(77,500	)	7.64
SARs outstanding at December 31,	27,500		$	7.06	59,375		$	6.87

As of December 31, 2012, all of the Company's outstanding SARs are vested and exercisable at any time prior to their expiration date of December 31, 2013. As of December 31, 2012 and December 31, 2011, the fair value of the Company’s outstanding SARs of $66 and $77, respectively, are recorded as liabilities on its consolidated balance sheet for the respective periods.

The Company has not granted any stock options since the year ended December 31, 2008, and the compensation cost related to all stock options has been expensed in prior periods. All outstanding stock options as of December 31, 2012 will expire by May 16, 2013. The following table presents a rollforward of the stock option activity for the periods presented:



	2012				2011
	Quantity		Weighted-Average Price		Quantity		Weighted-Average Price
Stock options outstanding at January 1,	30,000		$	9.42	45,000		$	8.75
Stock options expired	(10,000	)	9.02		—		—
Stock options exercised	(5,000	)	9.02		(15,000	)	7.43
Stock options outstanding at December 31,	15,000		$	9.81	30,000		$	9.42

Accumulated Other Comprehensive Income

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



	December 31, 2012			December 31, 2011
Available for sale investments:
Unrealized gains	$	104,870		$	36,091
Unrealized losses	(12,623		)	(13,902		)
	92,247			22,189
Hedging instruments:
Unrealized losses	(39,736		)	(25,444		)
	(39,736		)	(25,444		)
Accumulated other comprehensive income (loss)	$	52,511		$	(3,255	)

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