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Redeemable Preferred Stock | 12 Months Ended
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Dec. 31, 2022
Temporary Equity Disclosure [Abstract] |
Redeemable Preferred Stock | 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 in the Articles Supplementary), 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 (as 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 December 31, 2022, 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):
|  |  | Year Ended December 31,
|  |  |  |  | 2022 |  | 2021 |  | 2020
Series B Convertible Preferred Stock shares issued |  |  |  |  | — |  |  | — |  |  | 23 |
Gross proceeds received |  |  |  |  | $ | — |  |  | $ | — |  |  | $ | 439 |
Commissions |  |  |  |  | — |  |  | — |  |  | 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):
|  |  | Year Ended December 31, |
|  |  |  |  | 2022 |  | 2021 |  | 2020 |
Series B Convertible Preferred Stock |  |  |  |  | $ | 4,233 |  |  | $ | 4,747 |  |  | $ | 6,919 |  |
During the year ended December 31, 2021, Braemar entered into privately negotiated exchange agreements with certain holders of the Series B Convertible Preferred Stock, in reliance on Section 3(a)(9) of the Securities Act. The table below summarizes the activity (in thousands):
|  |  | Year Ended December 31, 2021 |
|  |  |  |  | Preferred Shares Tendered |  | Common Shares Issued |
Series B Convertible Preferred Stock |  |  |  |  | 1,953 |  |  | 7,291 |  |
There were no preferred stock exchanges for the year ended December 31, 2022. Series E Redeemable Preferred Stock On April 2, 2021, the Company entered into equity distribution agreements with certain sales agents to sell, from time to time, shares of the Series E Redeemable Preferred Stock (the “Series E Preferred Stock”). Pursuant to such equity distribution agreements, the Company is offering a maximum of 20,000,000 shares of Series E Preferred Stock in a primary offering price of $25.00 per share. The Company is also offering a maximum of 8,000,000 shares of the Series E Preferred Stock pursuant to a dividend reinvestment plan (the “DRIP”) at $25.00 per share (the “Stated Value”). The Series E Preferred Stock ranks senior to all classes or series of the Company’s common stock and future junior securities, on a parity with each series of the Company’s outstanding preferred stock (the Series B Convertible Preferred stock, the Series D Preferred Stock and the Series M Preferred Stock (as defined below)) and with any future parity securities and junior to future senior securities and to all of the Company’s existing and future indebtedness, with respect to the payment of dividends and the distribution of amounts upon liquidation, dissolution or winding up of the Company’s affairs. Holders of the Series E Preferred Stock shall have the right to vote for the election of directors of the Company and on all other matters requiring stockholder action by the holders of the common stock, each share being entitled to vote to the same extent as one share of the Company’s common stock, and all such shares voting together as a single class. If and whenever dividends on any shares of the Series E Preferred Stock shall be in arrears for 18 or more monthly periods, whether or not such quarterly periods are consecutive the number of directors then constituting the board shall be increased by two and the holders of such shares of Series E Preferred Stock shall be entitled to vote for the election of the additional directors of the Company who shall each be elected for one-year terms. Each share is redeemable at any time, at the option of the holder, at a redemption price of $25.00 per share, plus any accumulated, accrued, and unpaid dividends, less a redemption fee. Starting on the second anniversary, each share is redeemable at any time, at the option of the Company, at a redemption price of $25.00 per share, plus any accumulated, accrued, and unpaid dividends (with no redemption fee). The Series E Preferred Stock is also subject to conversion upon certain events constituting a change of control. Upon such change of control events, holders have the option to convert their shares of Series E Preferred Stock into a maximum of 5.69476 shares of our common stock. The redemption fee shall be an amount equal to: •8.0% of the stated value of $25.00 per share (the “Stated Value”) beginning on the Original Issue Date (as defined in the Articles Supplementary) of the shares of the Series E Preferred Stock to be redeemed; •5.0% of the Stated Value beginning on the second anniversary from the Original Issue Date of the shares of the Series E Preferred Stock to be redeemed; and •0% of the Stated Value beginning on the third anniversary from the Original Issue Date of the shares of the Series E Preferred Stock to be redeemed. The Company has the right, in its sole discretion, to redeem the shares in cash, or in an equal of shares of common stock or any combination thereof, calculated based on the closing price per share for the single trading day prior to the date of redemption. The Series E Preferred Stock cash dividends are as follows: •8.0% per annum of the Stated Value beginning on the date of the first settlement of the Series E Preferred Stock (the “Date of Initial Closing”); •7.75% per annum of the Stated Value beginning on the first anniversary from the Date of Initial Closing; and •7.5% per annum of the Stated Value beginning on the second anniversary from the Date of Initial Closing. Dividends will be authorized and declared on a monthly basis and payable in arrears on the 15th day of each month to holders of record at the close of business on the last business day of each month immediately preceding the applicable thereafter dividend payment date. Dividends will be computed on the basis of twelve 30-day months and a 360-day year. The Company has a DRIP that allows for participating holders to have their Series E Preferred Stock dividend distributions automatically reinvested in additional shares of the Series E Preferred Stock at a price of $25.00 per share. The issuance activity of the Series E Preferred Stock is summarized below (in thousands):
|  |  | Year Ended December 31, |  |
|  |  |  |  | 2022 |  | 2021 |  |
Series E Preferred Stock shares issued (1) |  |  |  |  | 10,914 |  |  | 1,709 |  |  |
Net proceeds |  |  |  |  | $ | 245,575 |  |  | $ | 38,450 |  |  |
__________________ (1)Exclusive of shares issued under the dividend reinvestment plan. The Series E 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 of the Company’s control. As such, the Series E Preferred Stock is classified outside of permanent equity. At the date of issuance, the carrying amount of the Series E Preferred Stock was less than the redemption value. As a result of the Company’s determination that redemption is probable the carrying value will be adjusted to the redemption amount each reporting period. The redemption value adjustment of Series E Preferred Stock is summarized below (in thousands):
| December 31, 2022 |  | December 31, 2021
Series E Preferred Stock | $ | 291,076 |  |  | $ | 39,339 |
Adjustments to Series E Preferred Stock (1) | $ | 9,403 |  |  | $ | 3,128 |
________ (1) Reflects the excess of the redemption value over the accumulated carrying value. The following table summarizes dividends declared (in thousands):
|  |  | Year Ended December 31, |  |
|  |  |  |  | 2022 |  | 2021 |  |
Series E Preferred Stock |  |  |  |  | $ | 12,694 |  |  | $ | 683 |  |  |
The redemption activities of Series E Preferred Stock is summarized below (in thousands):
|  |  | Year Ended December 31, |  |  |  |  |
|  |  |  |  | 2022 |  | 2021 |  |  |  |  |  |  |
Series E Preferred Stock shares redeemed |  |  |  |  | 14 |  |  | — |  |  |  |  |  |  |  |
Redemption amount, net of redemption fees |  |  |  |  | $ | 365 |  |  | $ | — |  |  |  |  |  |  |  |
Series M Redeemable Preferred Stock On April 2, 2021, the Company entered into equity distribution agreements with certain sales agents to sell, from time to time, shares of the Series M Redeemable Preferred Stock (the “Series M Preferred Stock”). Pursuant to such equity distribution agreements, the Company is offering a maximum of 20,000,000 shares of the Series M Preferred Stock (par value $0.01) in a primary offering price of $25.00 per share (or “Stated Value”). The Company is also offering a maximum of 8,000,000 shares of Series M Preferred Stock pursuant to the DRIP at $25.00 per share. The Series M Preferred Stock ranks senior to all classes or series of the Company’s common stock and future junior securities, on a parity with each series of the Company’s outstanding preferred stock (the Series B Convertible Preferred Stock, the Series D Preferred Stock and the Series E Preferred Stock) and with any future parity securities and junior to future senior securities and to all of the Company’s existing and future indebtedness, with respect to the payment of dividends and the distribution of amounts upon liquidation, dissolution or winding up of the Company’s affairs. Holders of the Series M Preferred Stock shall have the right to vote for the election of directors of the Company and on all other matters requiring stockholder action by the holders of the common stock, each share being entitled to vote to the same extent as one share of the Company’s common stock, and all such shares voting together as a single class. If and whenever dividends on any shares of Series E Preferred Stock shall be in arrears for 18 or more monthly periods, whether or not such quarterly periods are consecutive the number of directors then constituting the board shall be increased by two and the holders of such shares of Series M Preferred Stock shall be entitled to vote for the election of the additional directors of the Company who shall each be elected for one-year terms. Each share is redeemable at any time, at the option of the holder, at a redemption price of $25.00 per share, plus any accumulated, accrued, and unpaid dividends, less a redemption fee. Starting on the second anniversary, each share is redeemable at any time, at the option of the Company, at a redemption price of $25.00 per share, plus any accumulated, accrued, and unpaid dividends (with no redemption fee). The Series M Preferred Stock is also subject to conversion upon certain events constituting a change of control. Upon such change of control events, holders have the option to convert their shares of Series M Preferred Stock into a maximum of 5.69476 shares of our common stock. The redemption fee shall be an amount equal to: •1.5% of the Stated Value of $25.00 per share beginning on the Series M Original Issue Date (as defined below) of the shares of Series M Preferred Stock to be redeemed; and •0% of the Stated Value beginning on the first anniversary from the Series M Original Issue Date of the shares of Series M Preferred Stock to be redeemed. The Company has the right, in its sole discretion, to redeem the shares in cash, or in an equal number of shares of common stock or any combination thereof, calculated based on the closing price per share for the single trading day prior to the date of redemption. Holders of Series M Preferred Stock are entitled to receive cumulative cash dividends at the initial rate of 8.2% per annum of the Stated Value of $25.00 per share (equivalent to an annual dividend rate of $2.05 per share). Beginning one year from the date of original issuance of each share of Series M Preferred Stock (the “Series M Original Issue Date”) and on each one-year anniversary thereafter for such share of Series M Preferred Stock, the dividend rate shall increase by 0.10% per annum; provided, however, that the dividend rate for any share of Series M Preferred Stock shall not exceed 8.7% per annum of the Stated Value. Dividends will be authorized and declared on a monthly basis and payable in arrears on the 15th day of each month to holders of record at the close of business on the last business day of each month immediately preceding the applicable dividend payment date. Dividends will be computed on the basis of twelve 30-day months and a 360-day year. The Company has a DRIP that allows for participating holders to have their Series M Preferred Stock dividend distributions automatically reinvested in additional shares of the Series M Preferred Stock at a price of $25.00 per share. The issuance activity of Series M Preferred Stock is summarized below (in thousands):
|  |  | Year Ended December 31, |  |
|  |  |  |  | 2022 |  | 2021 |  |
Series M Preferred Stock shares issued (1) |  |  |  |  | 1,402 |  |  | 29 |  |
Net proceeds |  |  |  |  | $ | 34,009 |  |  | $ | 704 |  |  |
__________________ (1)Exclusive of shares issued under the dividend reinvestment plan. The Series M 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 the Company’s control. As such, the Series M Preferred Stock is classified outside of permanent equity. At the date of issuance, the carrying amount of the Series M Preferred Stock was less than the redemption value. As a result of the Company’s determination that redemption is probable the carrying value will be adjusted to the redemption amount each reporting period. The redemption value adjustment of Series M Preferred stock is summarized below (in thousands):
| December 31, 2022 |  | December 31, 2021
Series M Preferred Stock | $ | 35,182 |  |  | $ | 715 |
Adjustments to Series M Preferred Stock (1) | $ | 812 |  |  | $ | 133 |
__________________ (1) Reflects the excess of the redemption value over the accumulated carrying value. The following table summarizes dividends declared (in thousands):
|  |  | Year Ended December 31, |
|  |  |  |  | 2022 |  | 2021 |  |
Series M Preferred Stock |  |  |  |  | $ | 1,276 |  |  | $ | 15 |  |  |
The redemption activities of Series M Preferred Stock is summarized below (in thousands):
|  |  |  |  | Year Ended December 31,
|  |  |  |  | 2022 |  | 2021 |
Series M Preferred Stock shares redeemed |  |  |  |  | 5 |  |  | — |  |
Redemption amount, net of redemption fees |  |  |  |  | $ | 134 |  |  | $ | — |  |

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