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Shareholders' Equity, Noncontrolling Interests and Other Comprehensive Loss
 3 Months Ended
Mar. 31, 2025
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

ATM Program

The Company has an at-the-market equity issuance program (“ATM Program”) that provides the Company with an efficient vehicle for raising public equity capital to fund its needs. In February 2025, the Company entered into its current $500.0 million ATM Program, which includes an optional “forward sale” component, and concurrently terminated its existing $400.0 million ATM Program. As of March 31, 2025, $443.7 million remains available for future share issuance.

As of March 31, 2025, the Company had 2,445,106 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 $22.81 and would result in the Company receiving $55.8 million in net cash proceeds if it was to physically settle the shares. In March 2025, the Company settled 11,172,699 shares outstanding under the ATM forward and received proceeds of $277.9 million.

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, the Company completed the following transactions during the three months ended March 31, 2025:

•
The Company withheld 5,635 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 $2.4 million in connection with Restricted Shares and 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 three months ended March 31, 2025 or 2024. Under the share repurchase program $122.5 million remains available as of March 31, 2025.

Dividends and Distributions

During the three months ended March 31, 2025 and 2024, the Company declared distributions on Common Shares/OP Units of $0.20 and $0.18 per Common Share/OP Unit, respectively.

 

Noncontrolling Interests

The following tables summarize the change in the noncontrolling interests for the three months ended March 31, 2025 and 2024 (dollars in thousands, except per unit data):

 

 

Noncontrolling
Interests in
Operating
Partnership (a)

 

 

Noncontrolling
Interests in
Partially-Owned
Affiliates (b)

 

 

Total

 

 

Redeemable Noncontrolling Interests (c)

 

Balance as of January 1, 2025

 

$

85,730

 

 

$

350,287

 

 

$

436,017

 

 

$

30,583

 

Distributions declared of $0.20 per Common OP Unit and distributions on Preferred OP Units

 

 

(1,444

)

 

 

—

 

 

 

(1,444

)

 

 

—

 

Net income (loss) for the three months ended March 31, 2025

 

 

163

 

 

 

(11,759

)

 

 

(11,596

)

 

 

(1,669

)

Conversion of 113,092 Common OP Units and 0 Series C Preferred Units to Common Shares by limited partners of the Operating Partnership

 

 

(1,718

)

 

 

—

 

 

 

(1,718

)

 

 

—

 

Other comprehensive income - unrealized loss on valuation of swap agreements

 

 

(456

)

 

 

(1,381

)

 

 

(1,837

)

 

 

—

 

Consolidation of previously unconsolidated investment

 

 

—

 

 

 

29,573

 

 

 

29,573

 

 

 

—

 

Reclassification of realized interest expense on swap agreements

 

 

(13

)

 

 

(753

)

 

 

(766

)

 

 

—

 

City Point Loan accrued interest

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(3,017

)

Noncontrolling interest contributions

 

 

—

 

 

 

7,990

 

 

 

7,990

 

 

 

—

 

Noncontrolling interest distributions

 

 

—

 

 

 

(4,799

)

 

 

(4,799

)

 

 

—

 

Employee Long-term Incentive Plan Unit Awards

 

 

2,462

 

 

 

—

 

 

 

2,462

 

 

 

—

 

Reallocation of noncontrolling interests (d)

 

 

10,904

 

 

 

—

 

 

 

10,904

 

 

 

—

 

Balance as of March 31, 2025

 

$

95,628

 

 

$

369,158

 

 

$

464,786

 

 

$

25,897

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance as of January 1, 2024

 

$

99,718

 

 

$

346,582

 

 

$

446,300

 

 

$

50,339

 

Distributions declared of $0.18 per Common OP Unit and distributions on Preferred OP Units

 

 

(1,453

)

 

 

—

 

 

 

(1,453

)

 

 

—

 

Net income (loss) for the three months ended March 31, 2024

 

 

326

 

 

 

(7,898

)

 

 

(7,572

)

 

 

(2,554

)

Conversion of 795,145 Common OP Units to Common Shares by limited partners of the Operating Partnership

 

 

(12,913

)

 

 

—

 

 

 

(12,913

)

 

 

—

 

Other comprehensive income - unrealized gain on valuation of swap agreements

 

 

859

 

 

 

5,378

 

 

 

6,237

 

 

 

—

 

Reclassification of realized interest expense on swap agreements

 

 

(54

)

 

 

(3,697

)

 

 

(3,751

)

 

 

—

 

City Point Loan accrued interest

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(2,323

)

Capital call receivable

 

 

—

 

 

 

(6,153

)

 

 

(6,153

)

 

 

—

 

Noncontrolling interest contributions

 

 

—

 

 

 

43,709

 

 

 

43,709

 

 

 

—

 

Noncontrolling interest distributions

 

 

—

 

 

 

(5,459

)

 

 

(5,459

)

 

 

—

 

Employee Long-term Incentive Plan Unit Awards

 

 

4,043

 

 

 

—

 

 

 

4,043

 

 

 

—

 

Reallocation of noncontrolling interests (d)

 

 

2,181

 

 

 

—

 

 

 

2,181

 

 

 

—

 

Balance as of March 31, 2024

 

$

92,707

 

 

$

372,462

 

 

$

465,169

 

 

$

45,462

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(a)
Noncontrolling interests in the Operating Partnership are comprised of (i) the limited partners’ 2,054,386 and 2,219,958 Common OP Units as of March 31, 2025 and 2024, respectively; (ii) 188 Series A Preferred OP Units as of both March 31, 2025 and 2024; (iii) 66,519 and 126,384 Series C Preferred OP Units as of March 31, 2025 and 2024, respectively; and (iv) 5,224,927 and 4,749,661 LTIP units as of March 31, 2025 and 2024, 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.

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 March 31, 2025, 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 $0.9 million allowance for credit loss as of March 31, 2025, is 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. As of March 31, 2025, the Company determined that the carrying value of the City Point NCI exceeded the maximum redemption value and no adjustment was required.

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 March 31, 2025, the redemption value of the 8833 Beverly NCI was $0.1 million. As of March 31, 2025, 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 March 31, 2025, 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% 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 March 31, 2025, 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.