Equity |
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| EQUITY |
EQUITY
Amendment to Articles of Incorporation
On February 20, 2020, we filed with the Maryland Department of Assessments and Taxation an Articles Supplementary (i) setting forth the rights, preferences, and terms of the Series C Preferred Stock (as defined below) and (ii) reclassifying and designating 26,000,000 shares of our authorized and unissued shares of common stock as shares of Series C Preferred Stock. The reclassification decreased the number of shares classified as common stock from approximately 91.5 million shares immediately prior to the reclassification to 65.5 million shares immediately after the reclassification.
Amendment to Operating Partnership Agreement
In connection with the authorization of the Series C Preferred Stock, the Operating Partnership adopted the Fourth Amendment to its First Amended and Restated Agreement of Limited Partnership, including Exhibit SC thereto (collectively, the “Amendment”), as amended from time to time, establishing the rights, privileges, and preferences of 6.00% Series C Cumulative Redeemable Preferred Units, a newly-designated class of limited partnership interests (the “Series C Preferred OP Units”). The Amendment provides for the Operating Partnership’s establishment and issuance of an equal number of Series C Preferred OP Units as are issued shares of Series C Preferred Stock by the Company in connection with the Series C Offering (as defined below) upon the Company’s contributions to the Operating Partnership of the net proceeds of the Series C Offering. Generally, the Series C Preferred OP Units provided for under the Amendment have preferences, distribution rights and other provisions substantially equivalent to those of the Series C Preferred Stock.
Stockholders’ Equity
As of March 31, 2020, there were 6,477,647 shares of Series B Preferred Stock (as defined below), par value $0.001 per share, authorized, with 5,977,647 shares issued and outstanding worth an aggregate liquidation value of approximately $149.4 million; and 65,522,353 shares of common stock, par value $0.001 per share, authorized, with 21,346,458 shares issued and outstanding.
As of December 31, 2019, there were 6,485,400 shares of Series B Preferred Stock (as defined below), par value $0.001 per share, authorized, with 4,755,869 shares issued and outstanding worth an aggregate liquidation value of approximately $118.9 million; and 91,514,600 shares of common stock, par value $0.001 per share, authorized, with 20,936,658 shares issued and outstanding.
Non-Controlling Interests in Operating Partnership
We consolidate our Operating Partnership, which is a majority-owned partnership. As of March 31, 2020, and December 31, 2019, we owned approximately 98.7% and 98.6%, respectively, of the outstanding OP Units.
On or after 12 months after becoming a holder of OP Units, each limited partner, other than the Company, has the right, subject to the terms and conditions set forth in the partnership agreement of the Operating Partnership, to require the Operating Partnership to redeem all or a portion of such units in exchange for cash or, at the Company’s option, shares of our common stock on a one-for-one basis. The cash redemption per OP Unit would be based on the market price of our common stock at the time of redemption. A limited partner will not be entitled to exercise redemption rights if the delivery of common stock to the redeeming limited partner would breach restrictions on the ownership of common stock imposed under our charter and other limitations thereof.
We did not issue any new OP Units during either of the three months ended March 31, 2020 or 2019.
No OP Units were tendered for redemption during the three months ended March 31, 2020. Information related to OP Units tendered for redemption during the three months ended March 31, 2019, is provided in the table below (dollars in thousands, except per-unit amounts):
Regardless of the rights described above, the Operating Partnership will not have an obligation to issue cash to a unitholder upon a redemption request if the Company elects to redeem the OP Units for shares of its common stock. When a non-controlling unitholder redeems OP Units and the Company elects to satisfy that redemption through the issuance of common stock, non-controlling interest in the Operating Partnership is reduced, and stockholders’ equity is increased.
The Operating Partnership is required to make distributions on each OP Unit in the same amount as those paid on each share of the Company’s common stock, with the distributions on the OP Units held by the Company being utilized to make distributions to the Company’s common stockholders.
As of each of March 31, 2020, and December 31, 2019, there were 288,303 OP Units held by non-controlling OP Unitholders.
Registration Statement
On March 30, 2017, we filed a universal registration statement on Form S-3 (File No. 333-217042) with the SEC (the “2017 Registration Statement”) to replace our previous registration statement. The 2017 Registration Statement, which was declared effective by the SEC on April 12, 2017, permitted us to issue up to an aggregate of $300.0 million in securities, consisting of common stock, preferred stock, warrants, debt securities, depository shares, subscription rights, and units, including through separate, concurrent offerings of two or more of such securities. Through March 31, 2020, we had issued a total of 9,495,834 shares of common stock (excluding 1,215,565 shares of common stock issued in exchange for certain OP Units that were tendered for redemption) for gross proceeds of approximately $117.4 million and 6,000,000 shares of Series B Preferred Stock (as defined below) for gross proceeds of approximately $147.5 million under the 2017 Registration Statement.
On March 6, 2020, we filed a universal registration statement on Form S-3 (File No. 333-236943) with the SEC (the “2020 Registration Statement”) to replace the 2017 Registration Statement. The 2020 Registration Statement, which was declared effective by the SEC on April 1, 2020, permits us to issue up to an aggregate of $1.0 billion in securities, consisting of common stock, preferred stock, warrants, debt securities, depository shares, subscription rights, and units, including through separate, concurrent offerings of two or more of such securities. As of March 31, 2020, we had not issued any securities under the 2020 Registration Statement. See Note 11, “Subsequent Events,” for equity issuances completed subsequent to March 31, 2020.
In conjunction with the filing of the 2020 Registration Statement, we wrote off approximately $21,000 of unallocated costs associated with the initial filing of the 2017 Registration Statement. These costs were written off to professional fees, which is included within General and administrative expenses on our accompanying Condensed Consolidated Statements of Operations and Comprehensive Income, during the three months ended March 31, 2020.
Equity Issuances
Series B Preferred Stock
On May 31, 2018, we filed a prospectus supplement with the SEC for a continuous public offering of up to 6,000,000 shares (the “Series B Offering”) of our 6.00% Series B Cumulative Redeemable Preferred Stock (the “Series B Preferred Stock”) at an offering price of $25.00 per share. The Series B Preferred Stock was offered on a continuous, “reasonable best efforts” basis by Gladstone Securities, the dealer-manager for the Series B Offering. See Note 6, “Related-Party Transactions—Gladstone Securities—Series B Dealer-Manager Agreement,” for a discussion of the fees and commissions to be paid to Gladstone Securities in connection with the Series B Offering.
The following table provides information on sales of the Series B Preferred Stock that occurred during the three months ended March 31, 2020 and 2019 (dollars in thousands, except per-share amounts):
In addition, during the three months ended March 31, 2020 and 2019, 7,753 and 600 shares, respectively, of the Series B Preferred Stock were tendered for redemption at average cash redemption prices of $23.92 per share and $22.50 per share, respectively. As a result, we paid total redemption costs of approximately $185,000 and $13,000, respectively, to redeem and retire these shares.
The Series B Offering was completed on March 5, 2020 (the “Series B Termination Date”), with the full 6,000,000 allotted shares being sold, and, exclusive of redemptions, resulted in total gross proceeds of approximately $147.5 million and net proceeds, after deducting Series B Selling Commissions, Series B Dealer-Manager Fees, and offering expenses payable by us, of approximately $133.5 million. Excluding Series B Selling Commissions and Series B Dealer-Manager Fees, we incurred approximately $1.5 million of total costs related to the Series B Offering, which were initially recorded as deferred offering costs (included within Other assets, net on the accompanying Condensed Consolidated Balance Sheets) and were applied against the gross proceeds received from the offering through additional paid-in capital as shares of the Series B Preferred Stock were sold.
There is currently no public market for shares of the Series B Preferred Stock; however, we intend to apply to list the Series B Preferred Stock on Nasdaq or another national securities exchange within one calendar year after the Series B Termination Date, though there can be no assurance that a listing will be achieved in such timeframe, or at all.
Series C Preferred Stock
Offering
On February 20, 2020, we filed a prospectus supplement with the SEC for a continuous public offering of up to 400,000 shares of our newly-designated 6.00% Series C Cumulative Redeemable Preferred Stock, par value $0.001 per share (the “Series C Preferred Stock”), on a “reasonable best efforts” basis through Gladstone Securities at an offering price of $25.00 per share, and up to 120,000 shares of our Series C Preferred Stock pursuant to the DRIP at a price of $22.75 per share. No shares of the Series C Preferred Stock were sold pursuant to the prospectus supplement dated February 20, 2020. Subsequent to March 31, 2020, we filed a new prospectus supplement (the “Series C Prospectus Supplement”) with the SEC for a continuous offering of up to 26,000,000 shares of the Series C Preferred Stock, which superseded and replaced the prospectus supplement dated February 20, 2020. See Note 11, “Subsequent Events—Equity Activity—Series C Preferred Stock” for additional information on this offering.
Common Stock
At-the-Market Program
On August 7, 2015, we entered into equity distribution agreements (commonly referred to as “at-the-market agreements”), as amended from time to time, with Cantor Fitzgerald & Co., Ladenburg Thalmann & Co., Inc., and Virtu Americas, LLC (each a “Sales Agent”), under which we may issue and sell, from time to time and through the Sales Agents, shares of our common stock having an aggregate offering price of up to $30.0 million (the “ATM Program”).
No shares of common stock were sold during the three months ended March 31, 2019. The following table provides information on shares of common stock sold by the Sales Agents under the ATM Program during the three months ended March 31, 2020 (dollars in thousands, except per-share amounts):
Distributions
The per-share distributions to preferred and common stockholders declared by our Board of Directors and paid by us (except as noted) during the three months ended March 31, 2020 and 2019 are reflected in the table below.
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