Shareholders' Equity

12 Months Ended

Dec. 31, 2016

Stockholders' Equity Note [Abstract]

Shareholders' Equity

Shareholders’ Equity

Common Share Issuances

On August 19, 2016, we sold 11,000,000 of our common shares at a price of $30.75 per share in a public offering. On August 26, 2016, we sold 1,650,000 of our common shares at a price of $30.75 per share pursuant to an overallotment option granted to the underwriters. Aggregate net proceeds from these sales were $371,956 after underwriters' discount and other offering expenses.

Common Share Awards

We have common shares available for issuance under the terms of our equity compensation plan, or our Share Award Plan. During the years ended December 31, 2016, 2015 and 2014, we awarded 79,100 common shares with an aggregate market value of $2,260, 76,250 common shares with an aggregate market value of $1,957 and 79,725 common shares with an aggregate market value of $2,272, respectively, to our officers and certain other employees of our manager, RMR LLC, pursuant to the Share Award Plan. The value of the share grants was based upon the closing price of our common stock on The NASDAQ Stock Market LLC, or Nasdaq, or the New York Stock Exchange, or the NYSE, as applicable, on the date of the grant. See Note 10 for a further discussion of the grants we made to our officers and certain other employees of RMR LLC. In addition, we awarded each of our Trustees 2,500 common shares in each of 2016, 2015 and 2014 with an aggregate market value of $319 ($64 per trustee), $445 ($74 per trustee) and $366 ($73 per trustee), respectively, as part of their annual compensation. The values of the share grants were based upon the closing price of our common shares on the NYSE on the dates of the grants.  The shares awarded to our Trustees vest immediately. The shares awarded to our officers and certain other employees of RMR LLC vest in five annual installments beginning on the date of grant. Share awards are expensed over their vesting period and the value of such share awards are included in general and administrative expense in our consolidated statements of comprehensive income. At December 31, 2016, 2,585,527 of our common shares remain reserved for issuance under our current Share Award Plan.

A summary of shares granted and vested under the terms of the Share Award Plan for the years ended December 31, 2016, 2015 and 2014 is as follows:

	2016				2015				2014
	Number of Shares		Weighted Average Grant Date Fair Value		Number of Shares		Weighted Average Grant Date Fair Value		Number of Shares		Weighted Average Grant Date Fair Value
Unvested shares, beginning of year	147,004		$	25.95	150,192		$	28.52	145,365		$	27.55
Shares granted	91,600		28.15		91,250		26.32		92,225		28.61
Shares vested	(90,069	)	28.07		(93,248	)	27.16		(87,398	)	28.69
Shares repurchased or forfeited	—		—		(1,190	)	—		—		—
Unvested shares, end of year	148,535		$	29.40	147,004		$	25.95	150,192		$	28.52

The 148,535 unvested shares as of December 31, 2016 are scheduled to vest as follows: 58,090 shares in 2017, 44,295 shares in 2018, 30,330 shares in 2019 and 15,820 shares in 2020. As of December 31, 2016, the estimated future compensation expense for the unvested shares was $4,715 based on the closing price on December 31, 2016 of our common shares of $31.74. The weighted average period over which the compensation expense will be recorded is approximately 22 months. During the years ended December 31, 2016, 2015 and 2014, we recorded $2,834, $2,475 and $2,437, respectively, of compensation expense related to the Share Award Plan. These unvested shares are re-measured at fair value on a recurring basis using quoted market prices of the underlying shares.

Stock Repurchases

In September 2016, we purchased an aggregate of 20,689 of our common shares valued at an average price per common share of $29.64, based on the closing price of our common shares on Nasdaq, on the dates of repurchase, from certain of our officers and certain other employees of RMR LLC in satisfaction of tax withholding and payment obligations in connection with the vesting of awards of our common shares. In September 2015, we purchased an aggregate of 16,340 of our common shares valued at $25.62 per common share, the closing price of our common shares on the NYSE on that day, from certain of our officers and certain other employees of RMR LLC in satisfaction of tax withholding and payment obligations in connection with the vesting of awards of our common shares.

Preferred Shares

On February 10, 2017, we redeemed all 11,600,000 of our outstanding 7.125% Series D cumulative redeemable preferred shares at the stated liquidation preference of $25.00 per share plus accrued and unpaid dividends to the date of redemption. We currently expect to reduce net income available for common shareholders in the first quarter of 2017 by $9,893, which represents the amount by which the liquidation preference for our Series D cumulative redeemable preferred shares that were redeemed exceeded our carrying amount for those preferred shares as of the date of redemption.

Common Share Distributions

Cash distributions paid or payable by us to our common shareholders for the years ended December 31, 2016, 2015 and 2014 were $2.03 per share, or $314,135, $1.99 per share, or $299,967, and $1.95 per share, or $292,029, respectively. As described in Note 10, on December 14, 2015, we distributed 2,515,344, or $0.0166 per share for each of our common shares, of RMR Inc. shares of class A common stock we owned, to our common shareholders as a special distribution.  This distribution resulted in a taxable in kind distribution of $0.1974 for each of our common shares. The characterization of our distributions paid in 2016 was 93.23% ordinary income, 6.17% return of capital and 0.6% qualified dividend. The characterization of our distributions paid in 2015 was 90.67% ordinary income, 8.58% return of capital and 0.75% qualified dividend.  The characterization of our distributions paid in 2014 was 100% ordinary income.

On January 13, 2017, we declared a distribution of $0.51 per common share, or $83,777, which we paid on February 21, 2017, to shareholders of record on January 23, 2017 using cash on hand and borrowings under our revolving credit facility.

Cumulative Other Comprehensive Income (Loss)

Cumulative other comprehensive income (loss) represents the net unrealized gain (loss) on our available for sale equity investments and our share of the comprehensive income (loss) of AIC. See Notes 10 and 14 for further information regarding these investments.