Shareholders’ Equity, Noncontrolling Interests and Other Comprehensive Income

Common Shares

The Company completed the following transactions in its common shares during the year ended December 31, 2016:

•

The Company issued 4,500,000 Common Shares under its at-the-market ("ATM") equity programs, generating gross proceeds of $157.6 million and net proceeds of $155.7 million. The Company has established a new ATM equity program, effective July 2016, with an additional aggregate offering amount of up to $250.0 million of gross proceeds from the sale of Common Shares, replacing its $200.0 million program that was launched in 2014. As of December 31, 2016, there was $218.0 million remaining under this $250.0 million program.


•	The Company entered into a forward sale agreement to issue 3,600,000 Common Shares for for gross proceeds of $126.8 million and net proceeds of $124.5 million. As of December 31, 2016, these shares have been physically settled.


•	The Company issued 4,830,000 Common Shares in a public offering, generating gross proceeds of $175.2 million and net proceeds of $172.1 million.


•	The Company withheld 3,152 Restricted Shares to pay the employees’ statutory minimum income taxes due on the value of the portion of their Restricted Shares that vested. During 2016, the Company recognized accrued Common Share and Common OP Unit-based compensation totaling $10.9 million in connection with the vesting of Restricted Shares and Units (Note 13).

The Company completed the following transactions in its common shares during the year ended December 31, 2015:


•	The Company withheld 2,481 Restricted Shares to pay the employees’ statutory minimum income taxes due on the value of the portion of their Restricted Shares that vested. During 2015, the Company recognized accrued Common Share and Common OP Unit-based compensation totaling $6.8 million in connection with the vesting of Restricted Shares and Units (Note 13).


•	The Company issued approximately 2,000,000 Common Shares from the ATM program generating net proceeds of approximately $64.4 million.

The Company completed the following transactions in its common shares during the year ended December 31, 2014:


•	The Company issued approximately 4,700,000 Common Shares from the ATM program generating net proceeds of approximately $126.8 million and completed two public share offerings aggregating approximately 7,600,000 Common Shares generating net proceeds of approximately $230.7 million.

Share Repurchases

The Company has a share repurchase program that authorizes management, at its discretion, to repurchase up to $20.0 million of its outstanding Common Shares. The program may be discontinued or extended at any time. There were no Common Shares repurchased by the Company during the years ended December 31, 2016 or 2015. Under this program the Company has repurchased 2.1 million Common Shares, none of which were repurchased after December 2001. As of December 31, 2016, management may repurchase up to approximately $7.5 million of our outstanding Common Shares under this program.

Dividends and Distributions

On November 8, 2016, the Board of Trustees declared an increase of $0.01 to the regular quarterly cash dividend of $0.25 to $0.26 per Common Share, which was paid on January 13, 2017 to holders of record as of December 30, 2016. In addition, on November 8, 2016, the Board of Trustees declared a special cash dividend of $0.15 per Common Share with the same record and payment date as the regular quarterly dividend. The special dividend is a result of the taxable capital gains for 2016 arising from property dispositions within the Funds. See Note 14 for the characterization of the Company's distributions.

Accumulated Other Comprehensive Income

The following table sets forth the activity in accumulated other comprehensive income for the three years ended December 31, 2016 (in thousands):



	Gains or Losses on Derivative Instruments
Balance at January 1, 2014	$	1,132

Other comprehensive loss before reclassifications	(9,061		)
Reclassification of realized interest on swap agreements	3,776
Net current period other comprehensive loss	(5,285		)
Net current period other comprehensive loss attributable to noncontrolling interests	148
Balance at December 31, 2014	(4,005		)

Other comprehensive loss before reclassifications	(5,061		)
Reclassification of realized interest on swap agreements	5,524
Net current period other comprehensive income	463
Net current period other comprehensive income attributable to noncontrolling interests	(921		)
Balance at December 31, 2015	(4,463		)

Other comprehensive loss before reclassifications	(646		)
Reclassification of realized interest on swap agreements	4,576
Net current period other comprehensive income	3,930
Net current period other comprehensive income attributable to noncontrolling interests	(265		)
Balance at December 31, 2016	$	(798	)

Noncontrolling Interests

The following table summarizes the change in the noncontrolling interests for the periods presented (in thousands):



	Noncontrolling Interests in Operating Partnership ^(a)			Noncontrolling Interests in Partially-Owned Affiliates ^(b)			Total

Balance at December 31, 2013	$	48,948		$	368,404		$	417,352
Distributions declared of $1.23 per Common OP Unit	(5,085		)	—			(5,085		)
Net income for the period January 1 through December 31, 2014	3,204			77,878			81,082
Conversion of 136,128 Common OP Units to Common Shares by limited partners of the Operating Partnership	(3,181		)	—			(3,181		)
Issuance of Common OP Units to acquire real estate	44,051			—			44,051
Other comprehensive income - unrealized loss on valuation of swap agreements	(345		)	(902		)	(1,247		)
Reclassification of realized interest expense on swap agreements	115			984			1,099
Noncontrolling interest contributions	—			57,969			57,969
Noncontrolling interest distributions and other reductions	—			(218,152		)	(218,152		)
Employee Long-term Incentive Plan Unit Awards	6,528			—			6,528
Balance at December 31, 2014	94,235			286,181			380,416
Distributions declared of $1.22 per Common OP Unit	(5,983		)	—			(5,983		)
Net income for the period January 1 through December 31, 2015	3,836			80,426			84,262
Conversion of 100,620 Common OP Units to Common Shares by limited partners of the Operating Partnership	(2,451		)	—			(2,451		)
Acquisition of noncontrolling interests	—			(3,561		)	(3,561		)
Other comprehensive income - unrealized loss on valuation of swap agreements	(117		)	(897		)	(1,014		)
Reclassification of realized interest expense on swap agreements	97			1,838			1,935
Noncontrolling interest contributions	—			35,489			35,489
Noncontrolling interest distributions and other reductions	—			(74,950		)	(74,950		)
Employee Long-term Incentive Plan Unit Awards	6,723			—			6,723
Balance at December 31, 2015	96,340			324,526			420,866
Distributions declared of $1.16 per Common OP Unit	(6,753		)	—			(6,753		)
Net income for the period January 1 through December 31, 2016	5,002			56,814			61,816
Conversion of 351,250 Common OP Units to Common Shares by limited partners of the Operating Partnership	(7,892		)	—			(7,892		)
Change in control of previously consolidated investment (Note 4)	(75,713		)	—			(75,713		)
Acquisition of noncontrolling interests ^(c)	—			(25,925		)	(25,925		)
Issuance of Common and Preferred OP Units to acquire real estate	31,429			—			31,429
Other comprehensive income - unrealized loss on valuation of swap agreements	(43		)	(288		)	(331		)
Reclassification of realized interest expense on swap agreements	223			373			596
Noncontrolling interest contributions	—			295,108			295,108
Noncontrolling interest distributions and other reductions	—			(80,769		)	(80,769		)
Employee Long-term Incentive Plan Unit Awards	12,768			—			12,768
Rebalancing adjustment (Note 1)	(35,652		)	—			(35,652		)
Balance at December 31, 2016	$	19,709		$	569,839		$	589,548

__________

(a)

Noncontrolling interests in the Operating Partnership are comprised of (i) the limited partners’ 3,365,668 and 2,931,198 Common OP Units at December 31, 2016 and 2015, respectively; (ii) 188 Series A Preferred OP Units at December 31, 2016 and 2015; (iii) 141,593 Series C Preferred OP Units at December 31, 2016; and (iv) 1,996,388 and 1,922,623 LTIP units as of December 31, 2016 and 2015, respectively, as discussed in Share Incentive Plan (Note 13). Distributions declared for Preferred OP Units are reflected in net income in the table above.


(b)	Noncontrolling interests in partially-owned affiliates comprise third-party interests in Fund I, II, III, IV and V, and Mervyns I and II, and six other subsidiaries.


(c)	During 2016, the Company acquired an additional 8.3% interest in Fund II from a limited partner for $18.4 million, giving the Company an aggregate 28.33% interest. Amount in the table above represents the book value of this transaction.

Preferred OP Units

The Series A Preferred OP Units were issued in 1999 in connection with the acquisition of a property, have a stated value of $1,000 per unit, and are entitled to a preferred quarterly distribution of the greater of (i) $22.50 (9% annually) per Series A Preferred OP Unit or (ii) the quarterly distribution attributable to a Series A Preferred OP Unit if such unit was converted into a Common OP Unit. Through December 31, 2016, 1,392 Series A Preferred OP Units were converted into 185,600 Common OP Units and then into Common Shares. The 188 remaining Series A Preferred OP Units are currently convertible into Common OP Units based on the stated value divided by $7.50. Either the Company or the holders can currently call for the conversion of the Series A Preferred OP Units at the lesser of $7.50 or the market price of the Common Shares as of the conversion date.

During 2016, the Operating Partnership issued 442,478 Common OP Units and 141,593 Series C Preferred OP Units to a third party to acquire Gotham Plaza (Note 4). The Series C Preferred OP Units have a value of $100.00 per unit and are entitled to a preferred quarterly distribution of $0.9375 per unit and are convertible into Common OP Units at a rate based on the share price at the time of conversion. If the share price is below $28.80 on the conversion date, each Series C Preferred OP Unit will be convertible into 3.4722 Common OP Units. If the share price is between $28.80 and $35.20 on the conversion date, each Series C Preferred OP Units will be convertible a number of Common OP Units equal to $100.00 divided by the closing share price. If the share price is above $35.20 on the conversion date, each Series C Preferred OP Units will be convertible into 2.8409 Common OP Units. The Series C Preferred OP Units have a mandatory conversion date of December 31, 2025, at which time all units that have not been converted will automatically be converted into Common OP Units based on the same calculations.

During 2015, the Operating Partnership issued approximately 1,600,000 OP units to a third party to acquire real estate.