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Stockholders' Equity | 9 Months Ended
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Sep. 30, 2023
Equity [Abstract] |
Stockholders' Equity | Stockholders' Equity Common Stock The following table provides a reconciliation of the beginning and ending shares of common stock outstanding for the nine months ended September 30, 2023 and the twelve months ended December 31, 2022:
| NINE MONTHS ENDED SEPTEMBER 30, 2023 | TWELVE MONTHS ENDED DECEMBER 31, 2022
Balance, beginning of period | 380,589,894 |  | 150,457,433 |
Issuance of common stock | 7,397 |  | 229,618,304 |
Non-vested share-based awards, net of withheld shares | 262,821 |  | 514,157 |
Balance, end of period | 380,860,112 |  | 380,589,894 |
At-The-Market Equity Offering Program The Company has equity distribution agreements with various sales agents with respect to the at-the-market (“ATM”) equity offering program of common stock with an aggregate sales amount of up to $750.0 million. As of September 30, 2023, $750.0 million remained available for issuance under our current ATM equity offering program. During the nine months ended September 30, 2023, the Company did not sell any shares or enter into any forward sale agreements to sell shares of common stock through its ATM equity offering program. Common Stock Dividends During the nine months ended September 30, 2023, the Company declared and paid common stock dividends totaling $0.93 per share. On October 30, 2023, the Company declared a quarterly common stock dividend in the amount of $0.31 per share payable on November 30, 2023 to stockholders of record on November 14, 2023. Earnings Per Common Share The Company uses the two-class method of computing net earnings per common shares. The Company's non-vested share-based awards are considered participating securities pursuant to the two-class method. The following table sets forth the computation of basic and diluted earnings per common share for the three and nine months ended September 30, 2023 and 2022.
| THREE MONTHS ENDED SEPTEMBER 30, | NINE MONTHS ENDED SEPTEMBER 30,
Dollars in thousands, except per share data | 2023 | 2022 | 2023 | 2022
Weighted average common shares outstanding |  |  |  |
Weighted average common shares outstanding | 380,857,560 |  | 330,788,997 |  | 380,828,004 |  | 211,740,767 |
Non-vested shares | (1,932,221) |  | (1,983,742) |  | (1,941,897) |  | (1,933,957) |
Weighted average common shares outstanding - basic | 378,925,339 |  | 328,805,255 |  | 378,886,107 |  | 209,806,810 |
Weighted average common shares outstanding - basic | 378,925,339 |  | 328,805,255 |  | 378,886,107 |  | 209,806,810 |
Dilutive effect of forward equity shares | — |  | — |  | — |  | — |
Dilutive effect of OP Units | — |  | 3,167,668 |  | — |  | 1,067,493 |
Dilutive effect of employee stock purchase plan | — |  | 58,461 |  | — |  | 69,687 |
Weighted average common shares outstanding - diluted | 378,925,339 |  | 332,031,384 |  | 378,886,107 |  | 210,943,990 |
Net (loss) income | $ | (68,604) |  | $ | 28,616 |  | $ | (240,408) |  | $ | 76,973 |
Income allocated to participating securities | (636) |  | (610) |  | (1,868) |  | (1,817) |
Loss (income) attributable to non-controlling interest | 760 |  | (312) |  | 2,680 |  | (312) |
Adjustment to loss attributable to non-controlling interest for legally outstanding restricted units | (29) |  | — |  | (122) |  | — |
Net (loss) income applicable to common stockholders - basic | $ | (68,509) |  | $ | 27,694 |  | $ | (239,718) |  | $ | 74,844 |
Basic earnings per common share - net income | $ | (0.18) |  | $ | 0.08 |  | $ | (0.63) |  | $ | 0.36 |
Diluted earnings per common share - net income | $ | (0.18) |  | $ | 0.08 |  | $ | (0.63) |  | $ | 0.35 |
The effect of OP units totaling 4,042,993 shares and options under the Company's Employee Stock Purchase Plan (the "ESPP") to purchase the Company's common stock totaling 26,678 shares for the three months ended September 30, 2023 were excluded from the calculation of diluted loss per common share because the effect was anti-dilutive due to the loss from continuing operations incurred during that period. Incentive Plans Equity Awards During the nine months ended September 30, 2023, the Company made the following equity awards: •During the first quarter of 2023, the Company granted non-vested stock awards to its named executive officers and other members of senior management and employees with a grant date fair value of $5.4 million, which consisted of an aggregate of 270,494 non-vested shares with vesting periods ranging from three to eight years. •During the second quarter of 2023, the Company granted to its 12 independent directors an aggregate of 42,768 shares of non-vested stock awards with a grant date fair value of $0.7 million, and an aggregate of 57,868 LTIP Series D units with a grant date fair value of $1.1 million. The Company also granted a non-vested stock award to a new employee, which consisted of 508 non-vested shares. A summary of the activity under the Company's share-based incentive plans for the three and nine months ended September 30, 2023 and 2022 is included in the table below.
| THREE MONTHS ENDED SEPTEMBER 30, | NINE MONTHS ENDED SEPTEMBER 30,
| 2023 | 2022 | 2023 | 2022
Share-based awards, beginning of period | 1,932,221 |  | 1,941,709 |  | 1,795,128 |  | 1,562,028 |
Granted | — |  | 71,852 |  | 313,770 |  | 513,876 |
Vested | — |  | (7,434) |  | (152,314) |  | (68,481) |
Forfeited | — |  | (4,130) |  | (24,363) |  | (5,426) |
Share-based awards, end of period | 1,932,221 |  | 2,001,997 |  | 1,932,221 |  | 2,001,997 |
During the nine months ended September 30, 2023 and 2022, the Company withheld 38,632 and 8,745 shares of common stock, respectively, from participants to pay estimated withholding taxes related to shares that vested. Restricted Stock Units Prior to 2022, the Company granted long-term incentive awards, comprised of restricted stock, based on backward-looking performance measured at the end of the calendar year. The Company adopted a new incentive compensation structure effective January 2022, comprised of restricted stock and restricted stock units ("RSUs"). The RSUs are granted at the beginning of the year with three-year forward-looking performance targets. On January 4, 2023, the Company granted RSUs to members of senior management, with a grant date fair value of $3.7 million, which consisted of an aggregate 165,174 RSUs with a five-year vesting period. Approximately 43% of the RSUs vest based on two market performance conditions. Relative and absolute total shareholder return ("TSR") awards containing these market performance conditions were valued using independent specialists. The Company utilized a Monte Carlo simulation to calculate the weighted average grant date fair values of $24.23 for the absolute TSR component and $27.84 for the relative TSR component for the January 2023 grant using the following assumptions:
|  | THREE MONTHS ENDED MARCH 31,
Volatility |  |  | 34.0 | %
Dividend assumption |  |  | Accrued
Expected term |  |  | 3 years
Risk-free rate |  |  | 4.42 | %
Stock price (per share) |  |  | $20.21
The remaining 57% of the RSUs vest based upon certain operating performance conditions. With respect to the operating performance conditions of the January 4, 2023 grant, the grant date fair value was $20.21 based on the Company's share price on the date of grant. The combined weighted average grant date fair value of the January RSUs was $22.55 per share. The following is a summary of the RSU activity during the three and nine months ended September 30, 2023:
| THREE MONTHS ENDED SEPTEMBER 30, | NINE MONTHS ENDED SEPTEMBER 30,
| Restricted Stock Units | Weighted Average Grant Date Fair Value | Restricted Stock Units | Weighted Average Grant Date Fair Value
Non-vested, beginning of period | 363,250 |  | $ | 28.57 |  | 294,932 |  | $ | 33.04 |
Granted | — |  | — |  | 165,174 |  | 22.55 |
Vested/Forfeited | — |  | — |  | (17,606) |  | 33.04 |
Probability adjustment of 2022 & 2023 RSUs | (47,196) |  | 20.21 |  | (126,446) |  | 27.40 |
Non-vested, end of period | 316,054 |  | $ | 27.77 |  | 316,054 |  | $ | 27.77 |
LTIP Series C Units In January 2023, the Company modified its incentive compensation structure to award LTIP Series C units ("LTIP-C units) in the OP to named executive officers in lieu of RSUs. The LTIP-C units were granted with three-year forward-looking performance targets, with a grant date fair value of $7.1 million, which consisted of an aggregate 448,249 LTIP-C units with a five-year vesting period. Approximately 43% of the LTIP-C units vest based on two market performance conditions. Relative and absolute TSR awards containing these market performance conditions were valued using independent specialists. The Company utilized a Monte Carlo simulation to calculate the weighted average grant date fair values of $12.24 for the absolute TSR component and $13.98 for the relative TSR component for the January 2023 grant using the following assumption:
|  | THREE MONTHS ENDED MARCH 31,
Volatility |  |  | 34.0 | %
Dividend assumption |  |  | Accrued
Expected term |  |  | 3 years
Risk-free rate |  |  | 4.42 | %
Stock price (per share) |  |  | $20.21
The remaining 57% of the LTIP-C units vest based upon certain operating performance conditions. With respect to the operating performance conditions of the January 4, 2023 grant, the grant date fair value was $20.21 based on the Company's share price on the date of grant. The combined weighted average grant date fair value of the January LTIP-C units was $15.85 per share. The Company records amortization expense based on the probability of achieving certain operating performance conditions, which is evaluated throughout the performance period. Employee Stock Purchase Plan Legacy HR maintained an ESPP prior to the completion of the Merger. The outstanding options to purchase shares of the common stock of Legacy HR became options to purchase class A common stock of the Company upon completion of the Merger. No new options will be granted under the ESPP. A summary of the activity under the ESPP for the three and nine months ended September 30, 2023 and 2022 is included in the table below.
| THREE MONTHS ENDED SEPTEMBER 30, | NINE MONTHS ENDED SEPTEMBER 30,
| 2023 | 2022 | 2023 | 2022
Outstanding and exercisable, beginning of period | 179,369 |  | 405,534 |  | 340,976 |  | 348,514 |
Granted | — |  | — |  | — |  | 255,960 |
Exercised | (2,580) |  | (4,576) |  | (7,397) |  | (17,094) |
Forfeited | (4,680) |  | (37,628) |  | (28,471) |  | (83,417) |
Expired | — |  | — |  | (132,999) |  | (140,633) |
Outstanding and exercisable, end of period | 172,109 |  | 363,330 |  | 172,109 |  | 363,330 |
The following table represents expected amortization of the Company's non-vested shares issued as of September 30, 2023:
Dollars in millions | FUTURE AMORTIZATION of non-vested shares
2023 | $ | 4.1 |
2024 | 13.3 |
2025 | 10.8 |
2026 | 8.0 |
2027 | 2.4 |
2028 and thereafter | 0.5 |
Total | $ | 39.1 |

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