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Non-Controlling Interests, Preferred Shares, Common Shares and Common Shares in Treasury
 12 Months Ended
Dec. 31, 2013
Equity [Abstract]  
Non-Controlling Interests, Preferred Shares, Common Shares and Common Shares in Treasury

10.    Non-Controlling Interests, Preferred Shares, Common Shares and Common Shares in Treasury

Non-Controlling Interests

Non-controlling interests relate to the following (in millions):

 

     December 31,  
     2013      2012  

Consolidated joint venture interests

    $ 15.8      $ 16.9  

Operating partnership units

      7.4        7.4  
  

 

 

     

 

 

  
   $ 23.2      $ 24.3  
  

 

 

     

 

 

  

At December 31, 2013 and 2012, the Company had 369,176 operating partnership units (“OP Units”) outstanding. These OP Units, issued to different partnerships, are exchangeable at the election of the OP Unit holder and, under certain circumstances, at the option of the Company into an equivalent number of the Company’s common shares or for the equivalent amount of cash. Most of these OP Units have registration rights agreements equivalent to the number of OP Units held by the holder if the Company elects to settle in its common shares. The OP Units are classified on the Company’s balance sheet as non-controlling interests.

 

Preferred Shares

The Company’s preferred shares outstanding at December 31 are as follows (in thousands):

 

     December 31,  
     2013      2012  

Class H — 7.375% cumulative redeemable preferred shares, without par value, $500 liquidation value; 750,000 shares authorized; 110,000 and 410,000 shares issued and outstanding at December 31, 2013 and 2012, respectively

    $ 55,000       $ 205,000   

Class J — 6.5% cumulative redeemable preferred shares, without par value, $500 liquidation value; 750,000 shares authorized; 400,000 shares issued and outstanding at December 31, 2013 and 2012

      200,000         200,000   

Class K — 6.25% cumulative redeemable preferred shares, without par value, $500 liquidation value; 750,000 shares authorized; 300,000 issued and outstanding at December 31, 2013

      150,000         —  
  

 

 

     

 

 

  
   $ 405,000       $ 405,000   
  

 

 

     

 

 

  

In April 2013, the Company issued $150.0 million of its newly designated 6.25% Class K Cumulative Redeemable Preferred Shares (the “Class K Preferred Shares”) at a price of $500.00 per Class K Preferred Share (or $25.00 per depositary share). In addition, in May 2013, the Company redeemed $150.0 million of its $205.0 million of 7.375% Class H Cumulative Redeemable Preferred Shares (the “Class H Preferred Shares”) at a redemption price of $25.1127 per Class H depositary share (the sum of $25.00 per depositary share and dividends per depositary share of $0.1127 prorated to the redemption date). The Company recorded a charge of $5.2 million to net loss attributable to common shareholders in 2013 relating to the prorated write-off of the Class H Preferred Share original issuance costs. In 2012 and 2011, the Company also recorded charges of $5.8 million and $6.4 million, respectively, to net loss attributable to common shareholders related to the write-off of preferred share original issuance costs triggered by the redemption of the related preferred shares.

The Class H, Class J and Class K depositary shares represent 1/20 of a Class H, Class J and Class K preferred share and have a stated value of $500 per share. The Class H depositary shares are redeemable by the Company. The Class J depositary shares are not redeemable by the Company prior to August 1, 2017, and the Class K depositary shares are not redeemable by the Company prior to April 9, 2018, except in certain circumstances relating to the preservation of the Company’s status as a REIT.

The Company’s authorized preferred shares consist of the following:

 

  •  

750,000 Class A Cumulative Redeemable Preferred Shares, without par value

 

  •  

750,000 Class B Cumulative Redeemable Preferred Shares, without par value

 

  •  

750,000 Class C Cumulative Redeemable Preferred Shares, without par value

 

  •  

750,000 Class D Cumulative Redeemable Preferred Shares, without par value

 

  •  

750,000 Class E Cumulative Redeemable Preferred Shares, without par value

 

  •  

750,000 Class F Cumulative Redeemable Preferred Shares, without par value

 

  •  

750,000 Class G Cumulative Redeemable Preferred Shares, without par value

 

  •  

750,000 Class H Cumulative Redeemable Preferred Shares, without par value

 

  •  

750,000 Class I Cumulative Redeemable Preferred Shares, without par value

 

  •  

750,000 Class J Cumulative Redeemable Preferred Shares, without par value

 

  •  

750,000 Class K Cumulative Redeemable Preferred Shares, without par value

 

  •  

750,000 Non-Cumulative Preferred Shares, without par value

 

  •  

2,000,000 Cumulative Voting Preferred Shares, without par value

Common Shares

The Company’s common shares have a $0.10 per share par value. Dividends declared per share of common stock were $0.54, $0.48 and $0.22 for 2013, 2012 and 2011, respectively, which were paid in cash.

The Company issued common shares, including through the use of its continuous equity programs, for the years ended December 31, 2013, 2012 and 2011, as follows (amounts in millions, except per share):

 

     Number of
Shares Sold		      Average Price
Per Share		      Net Proceeds  

2013

      44.1       $ 18.76       $ 788.0   

2012

      36.5       $ 13.98       $ 492.1   

2011

      9.5       $ 13.71       $ 129.7   

Equity Derivative Instruments—Otto Transaction

In 2009, the Company issued 32.9 million common shares and warrants to purchase 10.0 million common shares to Mr. Alexander Otto (the “Investor”) and certain members of the Otto family (collectively with the Investor, the “Otto Family”) for aggregate gross proceeds of $112.5 million (the “Stock Purchase Agreement”). No separate consideration was paid for the warrants. The share issuances, together with the warrant issuances, are collectively referred to as the “Otto Transaction.” In March 2011, the Otto Family exercised all 10.0 million warrants for cash at $6.00 per common share. The exercise price of the warrants was subject to downward adjustment if the weighted-average purchase price of all additional common shares sold, as defined, from the date of issuance of the applicable warrant was less than $6.00 per share (herein, along with the share issuances, referred to as “Downward Price Protection Provisions”).

Although not triggered prior to the exercise date of March 18, 2011, the exercise price of the warrants was subject to the Downward Price Protection Provisions, described above, which resulted in the warrants being required to be recorded at fair value as of the shareholder approval date of the Stock Purchase Agreement, which was April 9, 2009, and marked-to-market through earnings as of each balance sheet date thereafter until the exercise date. These equity derivative instruments were issued as part of the Company’s overall deleveraging strategy and were not issued in connection with any speculative trading activity or to mitigate any market risks.

The fair value of the Company’s equity derivative instruments (warrants) was $74.3 million at the exercise date. Upon exercise and issuance of common shares, this liability was reclassified to paid-in capital and aggregated with the cash proceeds in the consolidated statement of equity. The gain of $21.9 million for this contract was recorded as Gain on Equity Derivative Instruments in the Company’s consolidated statement of operations and was derived principally from the changes in the Company’s stock price from the shareholder approval date through the exercise date of the warrants.

Measurement of Fair Value—Equity Derivative Instruments Valued on a Recurring Basis

The valuation of these instruments was determined using an option pricing model that considered all relevant assumptions including the Downward Price Protection Provisions. The two key unobservable input assumptions included in the valuation of the warrants were the volatility and dividend yield. Both measures were susceptible to change over time given the impact of movements in the Company’s common share price on each. The dividend yield assumptions used ranged from 3.0% to 3.2% from January 1 through the exercise date in 2011. The volatility assumption used was 36.6% based on implied volatility in the first quarter of 2011. The Company determined that this assumption was more representative of how a market participant would value the instruments given the shorter term nature of the warrants. The Company determined that the warrants fell within Level 3 of the fair value hierarchy due to the volatility and dividend yield assumptions used in the overall valuation.