Equity |
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| Equity |
EQUITY
Amendment to Articles of Incorporation
On January 10th, 2018, we filed with the Maryland Department of Assessments and Taxation Articles Supplementary to reclassify and designate 6,500,000 shares of our authorized and unissued shares of capital stock as shares of Series B Preferred Stock (as defined below). The reclassification decreased the number of shares classified from 98,000,000 to 91,500,000.
Stockholders’ Equity
As of December 31, 2019, there were 6,500,000 shares of Series B Preferred Stock, 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 91,500,000 shares of common stock, par value $0.001 per share, authorized, with 20,936,658 shares issued and outstanding. As of December 31, 2018, there were 6,500,000 shares of Series B Preferred Stock, par value $0.001 per share, authorized, with 1,144,393 shares issued and outstanding worth an aggregate liquidation value of approximately 28,609,825; and 91,500,000 shares of common stock, par value $0.001 per share, authorized, with 17,891,340 shares issued and outstanding.
Non-Controlling Interests in Operating Partnership
We consolidate our Operating Partnership, which is a majority-owned partnership. As of December 31, 2019 and 2018, we owned approximately 98.6% and 96.9%, respectively, of the outstanding OP Units.
On or after 12 months after becoming a holder of OP Units, each non-controlling OP Unitholder 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 the year ended December 31, 2018. Information related to OP Units issued during the year December 31, 2019, is provided in the table below (dollars in thousands, except per-unit amounts):
Information related to OP Units tendered for redemption during the years ended December 31, 2019 and 2018 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 OP 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 December 31, 2019 and 2018, there were 288,303 and 570,879 OP Units held by non-controlling OP Unitholders, respectively. As of December 31, 2019, none of the 288,303 OP Units were eligible to be tendered for redemption.
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, which expired on April 1, 2017. The 2017 Registration Statement, which was declared effective by the SEC on April 12, 2017, permits 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 December 31, 2019, we have issued a total of 7,870,469 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 $96.7 million and 4,770,469 shares of Series B Preferred Stock (as defined below) for gross proceeds of approximately $117.3 million under the 2017 Registration Statement. See Note 11, “Subsequent Events” for equity issuances completed subsequent to December 31, 2019.
2019 Equity Issuances
Series B Preferred Stock
On January 10, 2018, we filed a prospectus supplement with the SEC for a continuous public offering of our Series B Preferred Stock, which was terminated on May 31, 2018, prior to any shares being sold. On May 31, 2018, we filed a revised prospectus supplement with the SEC for a continuous public offering of up to 6,000,000 shares (the “Series B Offering”) of our Series B Preferred Stock at an offering price of $25.00 per share for gross proceeds of up to $150.0 million and net proceeds, after deducting dealer-manager fees, selling commissions, and estimated expenses of the offering payable by us, of up to approximately $131.3 million, assuming all shares of the Series B Preferred Stock are sold in the offering. The Series B Preferred Stock is being 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—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 years ended December 31, 2019 and 2018 (dollars in thousands, except per-share amounts):
In addition, during the year ended December 31, 2019, 14,600 shares of the Series B Preferred Stock were tendered for redemption at a weighted-average cash redemption price of $23.30 per share. As a result, we paid total redemption costs of approximately $340,000 to redeem and retire these shares. No shares of the Series B Preferred Stock were redeemed during the year ended December 31, 2018.
As of December 31, 2019, excluding Selling Commissions and Dealer-Manager Fees, we have incurred approximately $1.2 million of total costs related to this offering, which are initially recorded as deferred offering costs (included within Other assets, net on the accompanying Consolidated Balance Sheets) and are applied against the gross proceeds received from the offering through additional paid-in capital as shares of the Series B Preferred Stock are sold. See Note 11, “Subsequent Events—Equity Activity—Series B Preferred Stock,” for sales of Series B Preferred Stock completed subsequent to December 31, 2019.
The Series B Offering will terminate on the date (the “Termination Date”) that is the earlier of either June 1, 2023 (unless terminated earlier or extended by our Board of Directors), or the date on which all 6,000,000 shares offered in the offering are 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 Termination Date, though there can be no assurance that a listing will be achieved in such timeframe, or at all.
Common Stock
Follow-on Offerings
During the years ended December 31, 2019 and 2018, we completed one and two, respectively, overnight public offerings of our common stock, which are summarized in the following table (dollars in thousands, except per-share amounts):
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”). The following table provides information on shares of common stock sold by the Sales Agents under the ATM Program during the years ended December 31, 2019 and 2018 (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 years ended December 31, 2019 and 2018 are reflected in the table below.
For federal income tax characterization purposes, distributions paid to stockholders may be characterized as ordinary income, capital gains, return of capital, or a combination thereof. The characterization of distributions on our preferred and common stock during each of the years ended December 31, 2019 and 2018 is reflected in the following table:
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