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Shareholders' Equity / Partners' Capital | 9 Months Ended
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Sep. 30, 2019
Equity [Abstract] |
Shareholders' Equity / Partners' Capital | Shareholders’ Equity / Partners’ Capital When the Company issues common or preferred shares, the Operating Partnership issues an equivalent number of units of partnership interest of a corresponding class to AH4R, with the Operating Partnership receiving the net proceeds from the share issuances. At-the-Market Common Share Offering Program The Company established an at-the-market common share offering program under which we can issue Class A common shares from time to time through various sales agents up to an aggregate of $500.0 million (the “At-the-Market Program”). The program was established in order to use the net proceeds from share issuances to repay borrowings against the Company’s revolving credit and term loan facilities, to acquire and renovate single-family properties and for related activities in accordance with the Company’s business strategy, and for working capital and general corporate purposes. The program may be suspended or terminated by the Company at any time. As of September 30, 2019, no shares have been issued under the At-the-Market Program and $500.0 million remained available for future share issuances. Share Repurchase Program In February 2018, the Company’s board of trustees re-authorized our existing share repurchase program, authorizing the repurchase of up to $300.0 million of our outstanding Class A common shares and up to $250.0 million of our outstanding preferred shares from time to time in the open market or in privately negotiated transactions. The program does not have an expiration date, but may be suspended or discontinued at any time without notice. All repurchased shares are constructively retired and returned to an authorized and unissued status. The Operating Partnership funds the repurchases and constructively retires an equivalent number of corresponding Class A units. During the nine months ended September 30, 2019, we did not repurchase and retire any of our shares. During the nine months ended September 30, 2018, the Company repurchased and retired 1.8 million of our Class A common shares on a settlement date basis, in accordance with the program, at a weighted-average price of $19.36 per share and a total price of $34.9 million. As of September 30, 2019, we had a remaining repurchase authorization of up to $265.1 million of our outstanding Class A common shares and up to $250.0 million of our outstanding preferred shares under the program. Preferred Shares As of September 30, 2019 and December 31, 2018, the Company had the following series of preferred shares outstanding (in thousands, except share data):
|  |  |  |  |  |  |  | September 30, 2019 |  | December 31, 2018
Series |  | Issuance Date |  | Earliest Redemption Date |  | Dividend Rate |  | Outstanding Shares |  | Current Liquidation Value |  | Outstanding Shares |  | Current Liquidation Value
Series D perpetual preferred shares |  | 5/24/2016 |  | 5/24/2021 |  | 6.500 | % |  | 10,750,000 |  |  | $ | 268,750 |  |  | 10,750,000 |  |  | $ | 268,750 |
Series E perpetual preferred shares |  | 6/29/2016 |  | 6/29/2021 |  | 6.350 | % |  | 9,200,000 |  |  | 230,000 |  |  | 9,200,000 |  |  | 230,000 |
Series F perpetual preferred shares |  | 4/24/2017 |  | 4/24/2022 |  | 5.875 | % |  | 6,200,000 |  |  | 155,000 |  |  | 6,200,000 |  |  | 155,000 |
Series G perpetual preferred shares |  | 7/17/2017 |  | 7/17/2022 |  | 5.875 | % |  | 4,600,000 |  |  | 115,000 |  |  | 4,600,000 |  |  | 115,000 |
Series H perpetual preferred shares |  | 9/19/2018 |  | 9/19/2023 |  | 6.250 | % |  | 4,600,000 |  |  | 115,000 |  |  | 4,600,000 |  |  | 115,000 |
Total preferred shares |  |  |  |  |  |  |  | 35,350,000 |  |  | $ | 883,750 |  |  | 35,350,000 |  |  | $ | 883,750 |
Distributions The Company’s board of trustees declared the following distributions during the respective quarters. The Operating Partnership funds the payment of distributions, and the board of trustees declared an equivalent amount of distributions on the corresponding Operating Partnership units.
|  | For the Three Months Ended
Security |  | September 30, 2019 |  | June 30, 2019 |  | March 31, 2019 |  | September 30, 2018 |  | June 30, 2018 |  | March 31, 2018
Class A and Class B common shares |  | $ | 0.05 |  |  | $ | 0.05 |  |  | 0.05 |  |  | $ | 0.05 |  |  | $ | 0.05 |  |  | $ | 0.05 |
5.500% Series C participating preferred shares |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 0.34 |
6.500% Series D perpetual preferred shares |  | 0.41 |  |  | 0.41 |  |  | 0.41 |  |  | 0.41 |  |  | 0.41 |  |  | 0.41 |
6.350% Series E perpetual preferred shares |  | 0.40 |  |  | 0.40 |  |  | 0.40 |  |  | 0.40 |  |  | 0.40 |  |  | 0.40 |
5.875% Series F perpetual preferred shares |  | 0.37 |  |  | 0.37 |  |  | 0.37 |  |  | 0.37 |  |  | 0.37 |  |  | 0.37 |
5.875% Series G perpetual preferred shares |  | 0.37 |  |  | 0.37 |  |  | 0.37 |  |  | 0.37 |  |  | 0.37 |  |  | 0.37 |
6.250% Series H perpetual preferred shares |  | 0.39 |  |  | 0.39 |  |  | 0.39 |  |  | — |  |  | — |  |  | — |
Noncontrolling Interest Noncontrolling interest as reflected in the Company’s condensed consolidated balance sheets primarily consists of the interests held by former American Homes 4 Rent, LLC (“AH LLC”) members in units in the Operating Partnership. Former AH LLC members owned 51,429,990 and 54,243,317, or approximately 14.6% and 15.4%, of the total 352,738,054 and 351,966,447 Class A units in the Operating Partnership as of September 30, 2019 and December 31, 2018, respectively. Noncontrolling interest also includes interests held by non-affiliates in Class A units in the Operating Partnership. Non-affiliate Class A unitholders owned 596,990 and 1,073,509, or approximately 0.2% and 0.3%, of the total 352,738,054 and 351,966,447 Class A units in the Operating Partnership as of September 30, 2019 and December 31, 2018, respectively. The following table summarizes the income or loss allocated to noncontrolling interests as reflected in the Company’s condensed consolidated statements of operations for the three and nine months ended September 30, 2019 and 2018 (in thousands):
| For the Three Months Ended |  | For the Nine Months Ended
| September 30, 2019 |  | September 30, 2018 |  | September 30, 2019 |  | September 30, 2018
Net income allocated to Class A units | $ | 4,099 |  |  | $ | 2,881 |  |  | $ | 11,129 |  |  | $ | 1,104 |
Net loss allocated to noncontrolling interest in a consolidated subsidiary | — |  |  | — |  |  | — |  |  | (259 | )
Total noncontrolling interest | $ | 4,099 |  |  | $ | 2,881 |  |  | $ | 11,129 |  |  | $ | 845 |
Noncontrolling interest as reflected in the Operating Partnership’s condensed consolidated statements of capital consisted solely of the outside ownership interest in a consolidated subsidiary of the Operating Partnership, which was liquidated during the second quarter of 2018. Income and loss allocated to the Operating Partnership’s noncontrolling interest is reflected in noncontrolling interest within the Operating Partnership’s condensed consolidated statements of operations. The Operating Partnership units owned by former AH LLC members and non-affiliates that are reflected as noncontrolling interest in the Company’s condensed consolidated balance sheets are reflected as limited partner capital in the Operating Partnership’s condensed consolidated balance sheets. 2012 Equity Incentive Plan The Company’s employees are compensated through the Operating Partnership, including share-based compensation. When the Company issues Class A common shares under the 2012 Equity Incentive Plan (the “Plan”), the Operating Partnership issues an equivalent number of Class A units to AH4R and non-management members of our board of trustees. During the nine months ended September 30, 2019 and 2018, the Company granted stock options for 20,000 and 140,000 Class A common shares, respectively, and 345,334 and 304,400 restricted stock units, respectively, to certain employees of the Company and members of our board of trustees under the Plan. The options and restricted stock units granted during the nine months ended September 30, 2019 and 2018 generally vest over a four-year service period and the options expire 10 years from the date of grant. Restricted stock units granted to non-management trustees during the nine months ended September 30, 2019 vest over a one-year service period. The following table summarizes stock option activity under the Plan for the nine months ended September 30, 2019 and 2018:
| Shares |  | Weighted-Average Exercise Price |  | Weighted-Average Remaining Contractual Life (in years) |  | Aggregate Intrinsic Value (1) (in thousands)
Options outstanding at January 1, 2018 | 3,052,450 |  |  | $ | 16.65 |  |  | 6.9 |  | $ | 16,421 |
Granted | 140,000 |  |  | 19.40 |  |  |  |  |  |
Exercised | (684,875 | ) |  | 16.04 |  |  |  |  | 4,388 |
Forfeited | (112,750 | ) |  | 17.84 |  |  |  |  |  |
Options outstanding at September 30, 2018 | 2,394,825 |  |  | $ | 16.92 |  |  | 6.4 |  | $ | 12,388 |
Options exercisable at September 30, 2018 | 1,659,050 |  |  | $ | 16.23 |  |  | 5.7 |  | $ | 9,521 |
Options outstanding at January 1, 2019 | 2,252,275 |  |  | $ | 16.92 |  |  | 6.1 |  | $ | 7,713 |
Granted | 20,000 |  |  | 20.48 |  |  |  |  |  |
Exercised | (698,525 | ) |  | 15.90 |  |  |  |  | 5,772 |
Forfeited | (12,350 | ) |  | 20.80 |  |  |  |  |  |
Options outstanding at September 30, 2019 | 1,561,400 |  |  | $ | 17.39 |  |  | 5.6 |  | $ | 13,275 |
Options exercisable at September 30, 2019 | 1,194,750 |  |  | $ | 16.76 |  |  | 5.0 |  | $ | 10,907 |
(1) | Intrinsic value for activities other than exercises is defined as the difference between the grant price and the market value on the last trading day of the period for those stock options where the market value is greater than the grant price. For exercises, intrinsic value is defined as the difference between the grant price and the market value on the date of exercise.
The following table summarizes the Black-Scholes Option Pricing Model inputs used for valuation of the stock options for Class A common shares granted during the nine months ended September 30, 2019 and 2018:
| 2019 |  | 2018
Weighted-average fair value | $ | 2.85 |  |  | $ | 3.03 |
Expected term (years) |  | 7.0 |  |  |  | 7.0 |
Dividend yield |  | 3.0 | % |  |  | 3.0 | %
Volatility |  | 17.3 | % |  |  | 18.9 | %
Risk-free interest rate |  | 2.6 | % |  |  | 2.8 | %
The following table summarizes the activity that relates to the Company’s restricted stock units under the Plan for the nine months ended September 30, 2019 and 2018:
| 2019 |  | 2018
Restricted stock units at beginning of period | 372,375 |  |  | 243,875 |
Units awarded | 345,334 |  |  | 304,400 |
Units vested | (111,000 | ) |  | (80,125 | )
Units forfeited | (11,900 | ) |  | (69,100 | )
Restricted stock units at end of period | 594,809 |  |  | 399,050 |
The Company’s noncash share-based compensation expense relating to corporate administrative employees is included in general and administrative expense and the noncash share-based compensation relating to centralized and field property management employees is included in property management expenses. The following table summarizes the activity that relates to the Company’s noncash share-based compensation expense for the three and nine months ended September 30, 2019 and 2018 (in thousands):
| For the Three Months Ended |  | For the Nine Months Ended
| September 30, 2019 |  | September 30, 2018 |  | September 30, 2019 |  | September 30, 2018
General and administrative expense | $ | 938 |  |  | $ | 491 |  |  | $ | 2,520 |  |  | $ | 1,609 |
Property management expenses | 350 |  |  | 341 |  |  | 989 |  |  | 1,141 |
Total noncash share-based compensation expense | $ | 1,288 |  |  | $ | 832 |  |  | $ | 3,509 |  |  | $ | 2,750 |

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- Definition The entire disclosure for shareholders' equity comprised of portions attributable to the parent entity and noncontrolling interest, including other comprehensive income. Includes, but is not limited to, balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings, accumulated balance for each classification of other comprehensive income and amount of comprehensive income. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -URI http://asc.fasb.org/topic&trid=2208762 + Details
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