Shareholders' Equity, Noncontrolling Interests and Other Comprehensive Loss

12 Months Ended

Dec. 31, 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

Public Offerings

From time to time, the Company may offer its shares of beneficial interest through public offerings registered with the SEC. In connection with such offerings, the Company may issue and sell the offered shares upon settlement of the offering or, alternatively, enter into forward sale agreements with respect to all or a portion of the sold in such public offerings, pursuant to which the offered shares are borrowed by the forward sale purchasers and the issuance of such shares takes place upon settlement of the applicable forward sale agreement in accordance with its terms.

On January 8, 2024, the Company completed a primary offering of 6,900,000 Common Shares (inclusive of 900,000 shares sold pursuant to the exercise in full of the underwriters’ option to purchase additional Common Shares) at a public offering price of $16.38 per share resulting in net proceeds of $113.0 million after deduction of offering expenses.

On October 2, 2024, the Company completed another primary offering of 5,750,000 Common Shares (inclusive of 750,000 shares sold pursuant to the exercise in full of the underwriters’ option to purchase additional Common Shares) at a public offering price of $22.89 per share resulting in net proceeds of $131.6 million after deduction of the underwriting discounts and expenses. These shares were subject to forward sales agreements, which required settlement by September 30, 2025. The Company did not initially receive any proceeds from the sale of Common Shares in the offering, which were sold to the underwriters by the forward purchasers of their respective affiliates. On October 16, 2024, the Company physically settled the forward sales agreements in exchange for total net proceeds of $131.6 million.

ATM Program

The Company has an at-the-market equity issuance program (“ATM Program”) that provides the Company an efficient vehicle for raising public equity capital to fund its needs. On November 1, 2024, the Company entered into its current $400.0 million ATM Program, which includes an optional “forward sale” component, and concurrently terminated its existing $250.0 million ATM Program. As of December 31, 2024, $126.7 million remains available for future share issuance.

During the year ended December 31, 2024, the Company issued 10,273,250 shares under its ATM Program for net proceeds of $216.9 million after deduction of issuance costs, at a weighted-average gross price per share of $21.38. During the year ended December 31, 2023, the Company did not sell any Common Shares under its ATM Program. During the year ended December 31, 2022, the Company sold 5,525,419 Common Shares under its $250.0 million ATM Program for net proceeds of $119.5 million after deduction of issuance costs, at an average price per share of $21.63.

As of December 31, 2024, the Company had 10,910,488 forward shares outstanding under its ATM Program. All forward sales agreements require settlement within one-year of the various effective dates. The net forward sales price per share of the forward shares under the ATM program was $24.79 and would result in the Company receiving $270.5 million in net cash proceeds if it was to physically settle the shares. The Company did not issue any shares on a forward basis as of December 31, 2022 or 2023.

Subsequent to the year ended December 31, 2024, the Company sold a total of 262,211 shares under the ATM Program at an average price per share of $23.85 for an aggregate net value of $6.2 million, all of which were sold subject to the ATM forward sales agreements.

The Company did not receive any proceeds from the sale of shares at the time it entered into each of the respective forward sale agreements. The Company determined that the ATM forward sales agreements meet the criteria for equity classification and, therefore, are exempt from derivative accounting. The Company recorded the ATM forward sales agreements at fair value at inception, which was determined to be zero. Subsequent changes to fair value are not required under equity classification.

Common Shares and Units

In addition to the ATM Program and share repurchase activity discussed above, the Company completed the following transactions during the year ended December 31, 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 $9.4 million in connection with Restricted Shares and restricted Common OP Units (“Restricted Units”) (Note 13).

In addition to the ATM Program and share repurchase activity discussed above, the Company completed the following transactions during the year ended December 31, 2023:

•The Company withheld 3,251 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 $9.2 million in connection with Restricted Shares and restricted Common OP Units (“Restricted Units”) (Note 13).

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 years ended December 31, 2024, 2023 and 2022. Under the share repurchase program $122.5 million remains available at December 31, 2024.

Dividends and Distributions

During the year ended December 31, 2024 and 2023, the Company declared distributions on Common Shares/OP Units of $0.74 per Common Share/OP Unit and $0.72 per Common Share/OP Unit, respectively.

Noncontrolling Interests

The following tables summarize the change in the noncontrolling interests for the years ended December 31, 2024, 2023 and 2022 (dollars in thousands):

	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 $0.74 per Common OP Unit and distributions on Preferred OP Units		(5,639	)		—			(5,639	)		—
Net income (loss) for the year ended December 31, 2024		1,409			(7,005	)		(5,596	)		(7,915	)
Conversion of 1,084,851 Common OP Units and 59,865 Series C Preferred Units to Common Shares by limited partners of the Operating Partnership		(20,929	)		—			(20,929	)		—
Other comprehensive income - unrealized gain on valuation of swap agreements		501			7,564			8,065			—
Reclassification of realized interest expense on swap agreements		(156	)		(11,221	)		(11,377	)		—
City Point Loan accrued interest		—			—			—			(11,825	)
Noncontrolling interest contributions		—			51,118			51,118			—
Noncontrolling interest distributions		—			(36,751	)		(36,751	)		(16	)
Employee Long-term Incentive Plan Unit Awards		11,519			—			11,519			—
Reallocation of noncontrolling interests (d)		(693	)		—			(693	)		—
Balance at December 31, 2024	$	85,730		$	350,287		$	436,017		$	30,583
Balance at January 1, 2023	$	99,554		$	389,810		$	489,364		$	67,664
Distributions declared of $0.72 per Common OP Unit and distributions on Preferred OP Units		(5,352	)		—			(5,352	)		—
Net income (loss) for the year ended December 31, 2023		1,785			(15,168	)		(13,383	)		(8,239	)
Conversion of 151,257 Common OP Units to Common Shares by limited partners of the Operating Partnership		(2,521	)		—			(2,521	)		—
Other comprehensive income - unrealized gain on valuation of swap agreements		(613	)		6,015			5,402			—
Reclassification of realized interest expense on swap agreements		(210	)		(13,501	)		(13,711	)		—
City Point Loan		—			—			—			(796	)
City Point Loan accrued interest		—			—			—			(9,350	)
Noncontrolling interest contributions		—			59,612			59,612			1,110
Noncontrolling interest distributions		—			(80,186	)		(80,186	)		(50	)
Employee and trustee stock compensation, net		11,064			—			11,064			—
Reallocation of noncontrolling interests (d)		(3,989	)		—			(3,989	)		—
Balance at December 31, 2023	$	99,718		$	346,582		$	446,300		$	50,339

	Noncontrolling Interests in Operating Partnership (a)			Noncontrolling Interests in Partially-Owned Affiliates (b)			Total			Redeemable Noncontrolling Interests (c)
Balance at January 1, 2022	$	94,120		$	534,202		$	628,322		$	—
Distributions declared of $0.72 per Common OP Unit		(5,094	)		—			(5,094	)		—
Net loss for the year ended December 31, 2022		(1,308	)		(22,962	)		(24,270	)		(5,536	)
Conversion of 234,473 Common OP Units to Common Shares by limited partners of the Operating Partnership		(3,945	)		—			(3,945	)		—
Other comprehensive income - unrealized gain on valuation of swap agreements		4,641			15,567			20,208			—
Reclassification of realized interest expense on swap agreements		58			1,793			1,851			—
City Point Loan		—			—			—			(65,391	)
City Point Loan accrued interest		—			—			—			(3,923	)
Employee and trustee stock compensation, net		10,000			—			10,000			—
Noncontrolling interest distributions		—			(79,838	)		(79,838	)		—
Noncontrolling interest contributions		—			109,428			109,428			65,945
Acquisition of noncontrolling interest (e)		—			(91,811	)		(91,811	)		—
Reclassification of redeemable noncontrolling interests(f)		—			(76,569	)		(76,569	)		76,569
Reallocation of noncontrolling interests (d)		1,082			—			1,082			—
Balance at December 31, 2022	$	99,554		$	389,810		$	489,364		$	67,664

(a)Noncontrolling interests in the Operating Partnership are comprised of (i) the limited partners’ 2,054,386, 2,855,574, and 3,062,108 Common OP Units at December 31, 2024, 2023 and 2022, respectively; (ii) 188 Series A Preferred OP Units at December 31, 2024, 2023 and 2022; (iii) 66,519 Series C Preferred OP Units at December 31, 2024 and 126,384 at December 31, 2023 and 2022; and (iv) 4,667,742, 4,247,054, and 3,512,414 LTIP units at December 31, 2024, 2023 and 2022, 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.

(e)Represents the acquisition of the 11.67% noncontrolling interest in Fund II acquired on June 27, 2022 for $18.5 million and of a 21.67% interest in Fund II on August 1, 2022 for $5.8 million (Note 1).

(f)Represents the reclassification of redeemable noncontrolling interests related to the City Point Loan in the third quarter of 2022.

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 after five years have passed (“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 December 31, 2024, the fair value of the Williamsburg NCI was zero.

City Point Loan

In August 2022, the Company provided a loan, through a separate lending subsidiary, to other Fund II investors in City Point, through a separate borrower subsidiary, 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 has a five-year term which matures on August 1, 2027 and is collateralized by the investors' equity in City Point ("City Point NCI"). Because the City Point Loan was granted in return for a capital contribution from the investors, and is collateralized by the City Point NCI, the City Point Loan and accrued interest, net of a $0.8 million and $0.7 million allowance for CECL as of December 31, 2024 and 2023, respectively, are presented as a reduction of the City Point NCI balance. The borrower subsidiary of the City Point Loan was determined to be a VIE for which the Company is not the primary beneficiary. The maximum loss in the VIE is limited to the amount of the City Point Loan and any accrued interest. 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 plus either (i) a fixed cash amount or (ii) a cash amount equal to the value of fixed number of Common Shares of the Company on the trading day

prior to the election, which began in August 2023 ("Redemption Value"). As a result of granting these redemption rights, the City Point NCI, net of the City Point Loan, has been reclassified and presented as Redeemable noncontrolling interests on the Company's Consolidated Balance Sheets. Given the carrying value of the City Point NCI at the time of the transaction exceeded the maximum Redemption Value, the Company did not recognize any initial adjustment to accrete the City Point NCI to the Redemption Value. The Company is required to periodically evaluate the maximum redemption amount of the City Point NCI interest and recognize an increase in the carrying value if the redemption value exceeds the then current carrying value. At December 31, 2024, the Company determined that the carrying value exceeded the maximum Redemption Value and no adjustment was required. The Company determined that its valuation was classified within Level 3 of the fair value hierarchy. The estimated fair market value of this noncontrolling interest was based upon a discounted cash flow model, for which a capitalization rate of 5.25% and discount rate of 6.25% were utilized in the model based upon unobservable rates that the Company believes to be within a reasonable range of current market rates.

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 December 31, 2024, the redemption value of the 8833 Beverly NCI was $0.1 million. As of December 31, 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 December 31, 2024, 75,074 Series C Preferred OP Units were converted into 260,475 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 (9.00% 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, 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.