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5.50% Series B Cumulative Convertible Preferred Stock | 6 Months Ended
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Jun. 30, 2021
Temporary Equity Disclosure [Abstract] |
5.50% Series B Cumulative Convertible Preferred Stock | 5.50% Series B Cumulative Convertible Preferred Stock Each share of our 5.50% Series B Cumulative Convertible Preferred Stock (the “Series B Convertible Preferred Stock”) is convertible at any time, at the option of the holder, into a number of whole shares of common stock at a conversion price of $18.70 (which represents a conversion rate of 1.3372 shares of our common stock, subject to certain adjustments). The Series B Convertible Preferred Stock is also subject to conversion upon certain events constituting a change of control. Holders of the Series B Convertible Preferred Stock have no voting rights, subject to certain exceptions. The Series B Convertible Preferred Stock dividend for all issued and outstanding shares is set at $1.375 per annum per share. The Company may, at its option, cause the Series B Convertible Preferred Stock to be converted in whole or in part, on a pro-rata basis, into fully paid and nonassessable shares of the Company’s common stock at the conversion price, provided that the “Closing Bid Price” (as defined in the Articles Supplementary) of the Company’s common stock shall have equaled or exceeded 110% of the conversion price for the immediately preceding 45 consecutive trading days ending three days prior to the date of notice of conversion. Additionally, the Series B Convertible Preferred Stock contains cash redemption features that consist of: 1) an optional redemption in which on or after June 11, 2020, the Company may redeem shares of the Series B Convertible Preferred Stock, in whole or in part, for cash at a redemption price of $25.00 per share, plus any accumulated, accrued and unpaid dividends; 2) a special optional redemption, in which on or prior to the occurrence of a Change of Control (as defined), the Company may redeem shares of the Series B Convertible Preferred Stock, in whole or in part, for cash at a redemption price of $25.00 per share; and 3) a REIT Termination Event and Listing Event Redemption, in which at any time (i) a REIT Termination Event (defined below) occurs or (ii) the Company’s common stock fails to be listed on the NYSE, NYSE American, or NASDAQ, or listed or quoted on an exchange or quotation system that is a successor thereto (each a “National Exchange”), the holder of Series B Convertible Preferred Stock shall have the right to require the Company to redeem any or all shares of Series B Convertible Preferred Stock at 103% of the liquidation preference ($25.00 per share, plus any accumulated, accrued, and unpaid dividends) in cash. A REIT Termination Event, shall mean the earliest of: (i) filing of income tax return where the Company does not compute its income as a REIT; (ii) stockholders’ approval on ceasing to be qualified as a REIT; (iii) board of directors’ approval on ceasing to be qualified as a REIT; (iv) board’s determination based on the advice of counsel to cease to be qualified as a REIT; or (v) determination within the meaning of Section 1313(a) of the Code to cease to be qualified as a REIT. On December 4, 2019, we entered into equity distribution agreements with certain sales agents to sell from time to time shares of our Series B Convertible Preferred Stock having an aggregate offering price of up to $40.0 million. Sales of shares of our Series B Convertible Preferred Stock may be made in negotiated transactions or transactions that are deemed to be “at-the-market” offerings as defined in Rule 415 of the Securities Act of 1933, as amended (the “Securities Act”), including sales made directly on the NYSE, the existing trading market for our Series B Convertible Preferred Stock, or sales made to or through a market maker other than on an exchange or through an electronic communications network. We will pay each of the sales agents a commission, which in each case shall not be more than 2.0% of the gross sales price of the shares of our Series B Convertible Preferred Stock sold through such sales agents. As of June 30, 2021, we have sold approximately 65,000 shares of our Series B Convertible Preferred Stock and received proceeds of approximately $1.2 million under this program. The issuance activity is summarized below (in thousands):
| Three Months Ended June 30, |  | Six Months Ended June 30, |  |
| 2021 |  | 2020 |  | 2021 |  | 2020 |  |
Series B Convertible Preferred Stock shares issued | — |  |  | — |  |  | — |  |  | 23 |  |  |
Gross proceeds received | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 439 |  |  |
Commissions and other expenses | — |  |  | — |  |  | — |  |  | 7 |  |  |
Net proceeds | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 432 |  |  |
Series B Convertible Preferred Stock does not meet the requirements for permanent equity classification prescribed by the authoritative guidance because of certain cash redemption features that are outside our control. As such, the Series B Convertible Preferred Stock is classified outside of permanent equity. The following table summarizes dividends declared (in thousands):
| Three Months Ended June 30, |  | Six Months Ended June 30, |
| 2021 |  | 2020 |  | 2021 |  | 2020 |  |  |
Series B Convertible Preferred Stock | $ | 1,068 |  |  | $ | 1,730 |  |  | $ | 2,631 |  |  | $ | 3,460 |  |  |  |
During 2021, Braemar entered into privately negotiated exchange agreements with certain holders of its 5.50% Series B Cumulative Convertible Preferred Stock, par value $0.01 per share in reliance on Section 3(a)(9) of the Securities Act. The table below summarizes the activity (in thousands):
| Three Months Ended June 30, 2021 |  | Six Months Ended June 30, 2021 |
| Preferred Shares Tendered |  | Common Shares Issued |  | Preferred Shares Tendered |  | Common Shares Issued |
Series B Convertible Preferred Stock | 1,437 |  | 5,636 |  | 1,923 |  | 7,171 |

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- Definition The entire disclosure for terms, amounts, nature of changes, rights and privileges, dividends, and other matters related to preferred stock. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -URI http://asc.fasb.org/topic&trid=2208762 + Details
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