12. PARTNERS’ EQUITY OF THE OPERATING PARTNERSHIP

Earnings per Common Partnership Unit

The following tables detail the number of units and net income used to calculate basic and diluted earnings per common partnership unit (in thousands, except unit and per unit amounts; results may not add due to rounding):

	Year ended December 31,
	2017						2016						2015
	Basic			Diluted			Basic			Diluted			Basic			Diluted
Numerator
Net income (loss)	$	121,859		$	121,859		$	40,501		$	40,501		$	(30,740	)	$	(30,740	)
Nonforfeitable dividends allocated to unvested restricted unitholders		(327	)		(327	)		(341	)		(341	)		(329	)		(329	)
Preferred unit dividends		(2,032	)		(2,032	)		(6,900	)		(6,900	)		(6,900	)		(6,900	)
Preferred unit redemption charge		(3,181	)		(3,181	)		-			-			-			-
Net (income) loss attributable to noncontrolling interests		(29	)		(29	)		(15	)		(15	)		3			3
Net income (loss) attributable to common unitholders	$	116,290		$	116,290		$	33,245		$	33,245		$	(37,966	)	$	(37,966	)
Denominator
Weighted-average units outstanding		176,964,149			176,964,149			176,523,800			176,523,800			179,697,262			179,697,262
Contingent securities/Share based compensation		-			1,323,816			-			992,651			-			-
Total weighted-average units outstanding		176,964,149			178,287,965			176,523,800			177,516,451			179,697,262			179,697,262
Earnings (loss) per Common Partnership Unit:
Net income (loss) attributable to common unitholders	$	0.66		$	0.65		$	0.19		$	0.19		$	(0.21	)	$	(0.21	)

Unvested restricted units are considered participating securities which require the use of the two-class method for the computation of basic and diluted earnings per unit. For the years ended December 31, 2017, 2016 and 2015, earnings representing nonforfeitable dividends were allocated to the unvested restricted units issued to the Parent Company’s executives and other employees under the Parent Company’s shareholder-approved long-term incentive plan.

Common Partnership Units and Preferred Mirror Units

The Operating Partnership issues partnership units to the Parent Company in exchange for the contribution of the net proceeds of any equity security issuance by the Parent Company. The number and terms of such partnership units correspond to the number and terms of the related equity securities issued by the Parent Company. In addition, the Operating Partnership may also issue separate classes of partnership units. Historically, the Operating Partnership has had the following types of partnership units outstanding: (i) Preferred Partnership Units which have been issued to parties other than the Parent Company; (ii) Preferred Mirror Partnership Units which have been issued to the Parent Company; and (iii) Common Partnership Units which include both interests held by the Parent Company and those held by other limited partners.

Preferred Mirror Partnership Units

In exchange for the proceeds received in corresponding offerings by the Parent Company of preferred units of beneficial interest, the Operating Partnership has issued to the Parent Company a corresponding amount of Preferred Mirror Partnership Units with terms consistent with that of the preferred securities issued by the Parent Company.

Common Partnership Units (Redeemable and General)

The Operating Partnership has two classes of Common Partnership Units: (i) Class A Limited Partnership Interest which are held by both the Parent Company and outside third parties and (ii) General Partnership Interests which are held by the Parent Company (collectively, the Class A Limited Partnership Interest, and General Partnership Interests are referred to as “Common Partnership Units”). The holders of the Common Partnership Units are entitled to share in cash distributions from, and in profits and losses of, the Operating Partnership, in proportion to their respective percentage interests, subject to preferential distributions on the preferred mirror units and the preferred units.

The Common Partnership Units held by the Parent Company (comprised of both General Partnership Units and Class A Limited Partnership Units) are presented as partner’s equity in the consolidated financial statements. Class A Limited Partnership Interest held by parties other than the Parent Company are redeemable at the option of the holder for a like number of common shares of the Parent Company, or cash, or a combination thereof, at the election of the Parent Company. Because the form of settlement of these redemption rights are not within the control of the Operating Partnership, these Common Partnership Units have been excluded from partner’s equity and are presented as redeemable limited partnership units measured at the potential cash redemption value as of the end of the periods presented based on the closing market price of the Parent Company’s common shares at December 31, 2017, 2016 and 2015, which was $18.19, $16.51, $13.66, respectively. As of both December 31, 2017 and 2016, 1,479,799 of Class A Units were outstanding and owned by outside limited partners of the Operating Partnership. As of December 31, 2015, 1,535,102 of Class A Units were outstanding and owned by outside limited partners of the Operating Partnership.

On December 7, 2017, the Operating Partnership declared a distribution of $0.18 per common unit, totaling $32.4 million, which was paid on January 23, 2018 to unitholders of record as of January 9, 2018.

On April 11, 2017, the Operating Partnership redeemed all of its outstanding 4,000,000 Series E-Linked Preferred Mirror Units at an aggregate redemption price of $25.51 per unit, which includes $2.0 million of dividends accrued through the redemption date. The redemption of preferred units was funded with existing cash balances on hand.

Also on April 11, 2017, the Operating Partnership recognized a $3.2 million charge related to the underwriting discount and related expenses incurred at issuance of the Series E-Linked Preferred Mirror Units on April 11, 2012. This charge is included in the earnings per share calculations above, as well as within the Operating Partnership’s consolidated income statements as a reduction in net income to arrive at net income attributable to common partnership unitholders under the caption “Preferred unit redemption charge.” There were no comparable charges for years ended December 31, 2016 or 2015.

Common Unit Repurchases

In connection with the Parent Company’s common share repurchase program, one common unit is retired for each common share repurchased. As of July 22, 2015, $100.0 million common share were authorized for repurchase under the program, with a corresponding retirement of a number of common units equal to the number of common shares repurchased. During the years ended December 31, 2017 and 2016, there were no unit repurchases under the program. During the year ended December 31, 2015, the Company repurchased and retired 5,209,437 common units at an average purchase price of $12.90 per unit and totaling $67.3 million. All of the repurchases under the current common unit repurchase program occurred during 2015. The Company expects to fund the unit repurchases with a combination of available cash balances and availability under its unsecured revolving credit facility. The timing and amounts of any purchases will depend on a variety of factors, including market conditions, regulatory requirements, unit prices, capital availability and other factors as determined by the Company’s management team. The repurchase program does not require the purchase of any minimum number of units and may be suspended or discontinued at any time without notice.

The common units repurchased were retired and, as a result, were accounted for in accordance with Maryland law, which does not contemplate treasury stock. The repurchases were recorded as a reduction of common units (at $0.01 par value per share) and a decrease to additional paid-in-capital.

Continuous Offering Program

On January 10, 2017, the Parent Company entered into a continuous offering program (the “Offering Program”), under which it may sell up to an aggregate of 16,000,000 common units until January 10, 2020 in at-the-market offerings. In connection with the commencement of the Offering Program, $0.2 million of upfront costs were recorded to General Partner Capital. This program is a replacement of a prior continuous offering program that expired on November 3, 2016.

During 2017, the Parent Company issued 2,858,991 common units under the Offering Program at a weighted average price per unit of $18.19, receiving cash proceeds, net of issuance costs, of $51.2 million. No shares were issued during 2016 or 2015 under the Offering Program. The Parent Company has the ability to issue a total of 16,000,000 common units under the program through January 10, 2020, of which 13,141,009 common units remain available for future issuance.