Shareholders' Equity, Noncontrolling Interests and Other Comprehensive Loss

9 Months Ended

Sep. 30, 2020

Stockholders 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 addition to the share repurchase activity discussed below, the Company completed the following transactions in its Common Shares during the nine months ended September 30, 2020:

•

The Company withheld 2,075 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 $6.3 million and $5.4 million in connection with Restricted Shares and Units (Note 13) for the nine months ended September 30, 2020 and 2019, respectively.

In addition to the ATM Program activity discussed below, the Company completed the following transactions in its Common Shares during the year ended December 31, 2019:

•

The Company withheld 2,468 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 $8.8 million in connection with Restricted Shares and Units (Note 13).

ATM Program

The Company has an at-the-market equity issuance program (“ATM Program”) which provides the Company an efficient and low-cost vehicle for raising public equity to fund its capital needs. The Company entered into its current $250.0 million ATM Program (which replaced its prior program) in the second quarter of 2019 and also added an optional “forward purchase” component. The Company has not issued any shares on a forward basis during the nine months ended September 30, 2020 or for the year ended December 31, 2019. During the year ended December 31, 2019, the Company sold 5,164,055 Common Shares under its ATM Program for gross proceeds of $147.7 million, or $145.5 million net of issuance costs, at a weighted-average gross price per share of $28.61. During the nine months ended September 30, 2020, the Company did not sell any Common Shares under its ATM Program.

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 year ended December 31, 2019. During the first quarter of 2020, the Company repurchased 1,219,065 Common Shares for $22.4 million, inclusive of $0.1 million of fees at a weighted average price per share of $18.29, under the share repurchase program, under which $122.6 million remains available as of September 30, 2020.

Dividends and Distributions

The following table sets forth the distributions declared and/or paid during the periods presented:

Date Declared	Amount Per Share		Record Date	Payment Date

November 13, 2018	$	0.28	December 31, 2018	January 15, 2019
February 28, 2019	$	0.28	March 29, 2019	April 15, 2019
May 9, 2019	$	0.28	June 28, 2019	July 15, 2019
August 13, 2019	$	0.28	September 30, 2019	October 15, 2019
November 5, 2019	$	0.29	December 31, 2019	January 15, 2020
February 26, 2020	$	0.29	March 31, 2020	April 15, 2020

Beginning with the second quarter of 2020, the Board temporarily suspended distributions on its common shares and common units, which suspension the Board has determined to continue through the fourth quarter of 2020; however, distributions of $0.1 million were payable to preferred unit holders at June 30, 2020 and September 30, 2020. Assuming that current operating conditions continue to prevail, the Company currently expects to reinstate quarterly distributions in the first quarter of 2021, which would be subject to Board approval at that time.

Accumulated Other Comprehensive Loss

The following tables set forth the activity in accumulated other comprehensive loss for three and nine months ended September 30, 2020 and 2019 (in thousands):

	Gains or Losses on Derivative Instruments
Balance at July 1, 2020	$	(90,209	)

Other comprehensive income before reclassifications - swap agreements		952
Reclassification of realized interest on swap agreements		5,506
Net current period other comprehensive income		6,458
Net current period other comprehensive income attributable to noncontrolling interests		(2,122	)
Balance at September 30, 2020	$	(85,873	)

Balance at July 1, 2019	$	(29,570	)

Other comprehensive loss before reclassifications - swap agreements		(15,388	)
Reclassification of realized interest on swap agreements		(288	)
Net current period other comprehensive loss		(15,676	)
Net current period other comprehensive loss attributable to noncontrolling interests		1,108
Balance at September 30, 2019	$	(44,138	)

	Gains or Losses on Derivative Instruments
Balance at January 1, 2020	$	(31,175	)

Other comprehensive loss before reclassifications - swap agreements		(82,444	)
Reclassification of realized interest on swap agreements		9,598
Net current period other comprehensive loss		(72,846	)
Net current period other comprehensive loss attributable to noncontrolling interests		18,148
Balance at September 30, 2020	$	(85,873	)

Balance at January 1, 2019	$	516

Other comprehensive loss before reclassifications - swap agreements		(51,347	)
Reclassification of realized interest on swap agreements		(1,374	)
Net current period other comprehensive loss		(52,721	)
Net current period other comprehensive loss attributable to noncontrolling interests		8,067
Balance at September 30, 2019	$	(44,138	)

Noncontrolling Interests

The following tables summarize the change in the noncontrolling interests for the three and nine months ended September 30, 2020 and 2019 (dollars in thousands):

	Noncontrolling Interests in Operating Partnership ^(a)			Noncontrolling Interests in Partially-Owned Affiliates ^(b)			Total
Balance at July 1, 2020	$	90,321		$	547,418		$	637,739
Distributions on Preferred OP Units		(123	)		—			(123	)
Net loss for the three months ended September 30, 2020		(352	)		(28,907	)		(29,259	)
Other comprehensive loss - unrealized earnings (loss) on valuation of swap agreements		183			(166	)		17
Reclassification of realized interest expense on swap agreements		63			2,042			2,105
Noncontrolling interest contributions		—			8,427			8,427
Noncontrolling interest distributions		—			(20,117	)		(20,117	)
Employee Long-term Incentive Plan Unit Awards		2,181			—			2,181
Reallocation of noncontrolling interests ^(c)		(2,100	)		—			(2,100	)
Balance at September 30, 2020	$	90,173		$	508,697		$	598,870

Balance at July 1, 2019	$	103,705		$	515,205		$	618,910
Distributions declared of $0.28 per Common OP Unit		(1,765	)		—			(1,765	)
Net income (loss) for the three months ended September 30, 2019		785			(2,403	)		(1,618	)
Conversion of 41,646 Common OP Units to Common Shares by limited partners of the Operating Partnership		(720	)		—			(720	)
Other comprehensive income - unrealized loss on valuation of swap agreements		(864	)		(251	)		(1,115	)
Reclassification of realized interest expense on swap agreements		(16	)		23			7
Noncontrolling interest contributions		—			129,438			129,438
Noncontrolling interest distributions		—			(29,713	)		(29,713	)
Employee Long-term Incentive Plan Unit Awards		1,768			—			1,768
Reallocation of noncontrolling interests ^(c)		(5,251	)		—			(5,251	)
Balance at September 30, 2019	$	97,642		$	612,299		$	709,941

	Noncontrolling Interests in Operating Partnership ^(a)			Noncontrolling Interests in Partially-Owned Affiliates ^(b)			Total
Balance at January 1, 2020	$	97,670		$	546,987		$	644,657
Distributions declared of $0.29 per Common OP Unit		(2,095	)		—			(2,095	)
Net income (loss) for the nine months ended September 30, 2020		570			(35,958	)		(35,388	)
Conversion of 407,594 Common OP Units to Common Shares by limited partners of the Operating Partnership		(6,544	)		—			(6,544	)
Other comprehensive loss - unrealized loss on valuation of swap agreements		(3,268	)		(18,423	)		(21,691	)
Cumulative effect of change in accounting principle (Note 1)		—			(11	)		(11	)
Acquisition of noncontrolling interest		—			588			588
Reclassification of realized interest expense on swap agreements		111			3,432			3,543
Noncontrolling interest contributions		—			36,736			36,736
Noncontrolling interest distributions		—			(24,654	)		(24,654	)
Employee Long-term Incentive Plan Unit Awards		7,973			—			7,973
Reallocation of noncontrolling interests ^(c)		(4,244	)		—			(4,244	)
Balance at September 30, 2020	$	90,173		$	508,697		$	598,870

Balance at January 1, 2019	$	104,223		$	518,219		$	622,442
Distributions declared of $0.84 per Common OP Unit		(5,322	)		—			(5,322	)
Net income (loss) for the nine months ended September 30, 2019		2,437			(27,633	)		(25,196	)
Conversion of 249,464 Common OP Units to Common Shares by limited partners of the Operating Partnership		(4,230	)		—			(4,230	)
Other comprehensive income - unrealized loss on valuation of swap agreements		(2,686	)		(5,320	)		(8,006	)
Reclassification of realized interest expense on swap agreements		(61	)		—			(61	)
Noncontrolling interest contributions		—			161,628			161,628
Noncontrolling interest distributions		—			(34,595	)		(34,595	)
Employee Long-term Incentive Plan Unit Awards		6,965			—			6,965
Reallocation of noncontrolling interests ^(c)		(3,684	)		—			(3,684	)
Balance at September 30, 2019	$	97,642		$	612,299		$	709,941

(a)

Noncontrolling interests in the Operating Partnership are comprised of (i) the limited partners’ 3,101,958 and 3,306,879 Common OP Units at September 30, 2020 and September 30, 2019; (ii) 188 Series A Preferred OP Units at September 30, 2020 and September 30, 2019; (iii) 126,593 and 136,593 Series C Preferred OP Units at September 30, 2020 and September 30, 2019; and (iv) 2,886,207 and 2,673,610 LTIP units at September 30, 2020 and September 30, 2019, respectively, as discussed in Share Incentive 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 Mervyns II, and six other subsidiaries.

(c)	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.

Preferred OP Units

There were no issuances of Preferred OP Units during the nine months ended September 30, 2020 or the year ended December 31, 2019.

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 September 30, 2020, 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.

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 September 30, 2020, 15,000 Series C Preferred OP Units were converted into 51,887 Common OP Units and then into Common Shares.