Shareholders' Equity, Noncontrolling Interests and Other Comprehensive Loss

6 Months Ended

Jun. 30, 2024

Equity, Including Portion Attributable to Noncontrolling Interest [Abstract]

Shareholders' Equity, Noncontrolling Interests and Other Comprehensive Loss

10. Shareholders’ Equity, Noncontrolling Interests and Other Comprehensive Loss

Common Shares and Units

In January 2024, the Company completed an underwritten offering of 6,900,000 Common Shares (inclusive of the underwriters’ option to purchase 900,000 additional shares) for net proceeds of $113.0 million.

In addition to the ATM Program activity discussed below, the Company completed the following transactions in its Common Shares during the six months ended June 30, 2024:

•The Company withheld 3,410 shares of its restricted Common Shares (“Restricted Shares”) to pay the employees’ statutory minimum income taxes due on the value of the portion of their Restricted Shares that vested.

•The Company recognized Common Share and Common OP Unit-based compensation expense totaling $4.5 million in connection with Restricted Shares and Common OP Units (“Restricted Units”) (Note 13).

ATM Program

The Company has an at-the-market equity issuance program (“ATM Program”) that provides the Company with an efficient vehicle for raising public equity capital to fund its needs. The Company entered into its current $250.0 million ATM Program, which includes an optional “forward sale” component, in the first quarter of 2022. The Company had approximately $192.1 million of availability under the ATM program as of June 30, 2024. The Company did not sell or issue any Common Shares on a forward basis for the six months ended June 30, 2024 or 2023. The Company sold 1,739,288 Common Shares under its ATM Program during the six months ended June 30, 2024 generating $29.9 million of net proceeds after related issuance costs. No such sales were made during the six months ended June 30, 2023.

Share Repurchase Program

During 2018, the Company’s board of trustees (the “Board”) approved a new share repurchase program, which authorizes management, at its discretion, to repurchase up to $200.0 million of its outstanding Common Shares. The program does not obligate the Company to repurchase any specific number of Common Shares and may be discontinued or extended at any time. The Company did not repurchase any shares during the six months ended June 30, 2024 or 2023. Under the share repurchase program $122.5 million remains available as of June 30, 2024.

Dividends and Distributions

During the three months ended June 30, 2024 and 2023, the Company declared distributions on Common Shares/OP Units of $0.18 per Common Share/Unit. During the six months ended June 30, 2024 and 2023, the Company declared distributions on Common Shares/OP Units of $0.36 per Common Share/Unit in the aggregate.

Noncontrolling Interests

The following tables summarize the change in the noncontrolling interests for the three and six months ended June 30, 2024 and 2023 (dollars in thousands, except per unit data):

	Noncontrolling Interests in Operating Partnership (a)			Noncontrolling Interests in Partially-Owned Affiliates (b)			Total			Redeemable Noncontrolling Interests (c)
Balance as of April 1, 2024	$	92,707		$	372,462		$	465,169		$	45,462
Distributions declared of $0.18 per Common OP Unit and distributions on Preferred OP Units		(1,228	)		—			(1,228	)
Net income (loss) for the three months ended June 30, 2024		193			2,238			2,431			(2,292	)
Conversion of 255,304 Common OP Units and 41,599 Series C Preferred Units to Common Shares by limited partners of the Operating Partnership		(6,427	)		—			(6,427	)		—
Other comprehensive income - unrealized gain on valuation of swap agreements		86			2,282			2,368			—
Reclassification of realized interest expense on swap agreements		(50	)		(3,637	)		(3,687	)		—
City Point Loan accrued interest		—			—			—			(2,290	)
Capital call receivable		—			6,153			6,153			—
Noncontrolling interest distributions		—			(7,960	)		(7,960	)		(6	)
Employee Long-term Incentive Plan Unit Awards		2,473			—			2,473			—
Reallocation of noncontrolling interests (d)		(2,071	)		—			(2,071	)		—
Balance as of June 30, 2024	$	85,683		$	371,538		$	457,221		$	40,874
Balance as of April 1, 2023	$	103,219		$	355,962		$	459,181		$	63,269
Distributions declared of $0.18 per Common OP Unit and distributions on Preferred OP Units		(1,341	)		—			(1,341	)		—
Net income (loss) for the three months ended June 30, 2023		697			(6,130	)		(5,433	)		(1,091	)
Conversion of 54,040 Common OP Units to Common Shares by limited partners of the Operating Partnership		(901	)		—			(901	)		—
Other comprehensive income - unrealized gain on valuation of swap agreements		1,169			7,867			9,036			—
Reclassification of realized interest expense on swap agreements		(54	)		(3,583	)		(3,637	)		—
City Point Loan		—			—			—			(796	)
City Point Loan accrued interest		—			—			—			(2,345	)
Noncontrolling interest contributions		—			—			—			796
Noncontrolling interest distributions		—			(5,492	)		(5,492	)		—
Employee Long-term Incentive Plan Unit Awards		2,468			—			2,468			—
Reallocation of noncontrolling interests (d)		(1,444	)		—			(1,444	)		—
Balance as of June 30, 2023	$	103,813		$	348,624		$	452,437		$	59,833

	Noncontrolling Interests in Operating Partnership (a)			Noncontrolling Interests in Partially-Owned Affiliates (b)			Total			Redeemable Noncontrolling Interests (c)
Balance at January 1, 2024	$	99,718		$	346,582		$	446,300		$	50,339
Distributions declared of $0.36 per Common OP Unit and distributions on Preferred OP Units		(2,681	)		—			(2,681	)		—
Net income (loss) for the six months ended June 30, 2024		513			(5,654	)		(5,141	)		(4,846	)
Conversion of 1,050,449 Common OP Units and 41,599 Series C Preferred Units to Common Shares by limited partners of the Operating Partnership		(19,341	)		—			(19,341	)		—
Other comprehensive income - unrealized gain on valuation of swap agreements		945			7,660			8,605			—
Reclassification of realized interest expense on swap agreements		(104	)		(7,334	)		(7,438	)		—
City Point Loan accrued interest		—			—			—			(4,613	)
Capital call receivable		—			—			—			—
Noncontrolling interest contributions		—			43,709			43,709			—
Noncontrolling interest distributions		—			(13,425	)		(13,425	)		(6	)
Employee Long-term Incentive Plan Unit Awards		6,523			—			6,523			—
Reallocation of noncontrolling interests (d)		110			—			110			—
Balance at June 30, 2024	$	85,683		$	371,538		$	457,221		$	40,874
Balance at January 1, 2023	$	99,554		$	389,810		$	489,364		$	67,664
Distributions declared of $0.36 per Common OP Unit and distributions on Preferred OP Units		(2,684	)		—			(2,684	)		—
Net income (loss) for the six months ended June 30, 2023		1,614			3,670			5,284			(3,166	)
Conversion of 91,433 Common OP Units to Common Shares by limited partners of the Operating Partnership		(1,533	)		—			(1,533	)		—
Other comprehensive income - unrealized gain on valuation of swap agreements		255			6,520			6,775			—
Reclassification of realized interest expense on swap agreements		(99	)		(6,258	)		(6,357	)		—
City Point Loan		—			—			—			(796	)
City Point Loan accrued interest		—			—			—			(4,665	)
Noncontrolling interest contributions		—			31,242			31,242			796
Noncontrolling interest distributions		—			(76,360	)		(76,360	)		—
Employee Long-term Incentive Plan Unit Awards		6,366			—			6,366			—
Reallocation of noncontrolling interests (d)		340			—			340			—
Balance at June 30, 2023	$	103,813		$	348,624		$	452,437		$	59,833

(a)Noncontrolling interests in the Operating Partnership are comprised of (i) the limited partners’ 2,065,537 and 2,864,074 Common OP Units as of June 30, 2024 and 2023, respectively; (ii) 188 Series A Preferred OP Units as of both June 30, 2024 and 2023; (iii) 84,785 and 126,384 Series C Preferred OP Units as of June 30, 2024 and 2023, respectively; and (iv) 4,690,993 and 4,298,378 LTIP units as of June 30, 2024 and 2023, respectively, as discussed in the Amended and Restated 2020 Plan (Note 13). Distributions declared for Preferred OP Units are reflected in net income (loss) in the table above.

(b)Noncontrolling interests in partially-owned affiliates comprise third-party interests in Funds II, III, IV and V, and seven other subsidiaries.

(c)Redeemable noncontrolling interests comprise third-party interests that have been granted put rights, as further described below.

(d)Adjustment reflects the difference between the fair value of the consideration received or paid and the book value of the Common Shares, Common OP Units, Preferred OP Units, and LTIP Units involving changes in ownership.

Redeemable Noncontrolling Interests

Williamsburg Portfolio

In connection with the Williamsburg Portfolio acquisition in February 2022, the venture partner has a one-time right to put its 50.01% interest in the property to the Company for redemption at fair value at a future date (“Williamsburg NCI”). As it was unlikely as of the acquisition date that the venture partner would receive any consideration on redemption due to the Company’s preferential returns, the initial fair value of the Williamsburg NCI was determined to be zero. As of June 30, 2024, the Company determined there was no change in the fair value of the Williamsburg NCI.

City Point Loan

In August 2022, the Company provided a loan to other Fund II investors in City Point to fund the investors' pro rata contribution necessary to complete the refinancing of the City Point debt, of which $65.9 million was funded at closing ("City Point Loan"). The City Point Loan is collateralized by the investors' equity in City Point ("City Point NCI"). The City Point Loan, net of a $0.7 million allowance for credit loss as of June 30, 2024, is presented as a reduction of the City Point NCI balance. In connection with the City Point Loan, each partner has a one-time right to put its City Point NCI to the Company for redemption in exchange for the settlement of its proportion of the City Point Loan amount. As of June 30, 2024, the Company determined that the carrying value of the City Point NCI exceeded the maximum redemption value and no adjustment was required.

8833 Beverly Boulevard

In July 2023, the Company entered into a limited partnership agreement to own and operate the 8833 Beverly Boulevard property. Following the formation of the partnership, the Company retained a 97.0% controlling interest. At a future point in time, either party may elect a buy-out right, where either the Company may purchase the venture partner’s interest, or the venture partner may sell its 3.0% interest in the partnership (the "8833 Beverly NCI") to the Company for fair value. As a result of these redemption rights, the 8833 Beverly NCI was initially recorded at fair value. As of June 30, 2024, the redemption value of the 8833 Beverly NCI was $0.1 million. As of June 30, 2024, the Company determined that the carrying value exceeded the maximum redemption value and no adjustment was required.

Preferred OP Units

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 Unit will be convertible into 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 Unit 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. Through June 30, 2024, 56,808 Series C Preferred OP Units were converted into 197,053 Common OP Units and then into Common Shares.

In 1999, the Operating Partnership issued 1,580 Series A Preferred OP Units in connection with the acquisition of a property, which 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 June 30, 2024, 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.