Members’/Shareholders' Equity

12 Months Ended

Sep. 30, 2021

Public Offering of Common Stock

On June 30, 2021, the Company entered into an Underwriting Agreement (the "Underwriting Agreement") with Truist Securities, Inc., as the representative of the other several underwriters named in the Underwriting Agreement. On July 2, 2021, the Company issued 1,666,667 shares of common stock at a price to the public of $30.00 per share in accordance with the Underwriting Agreement. Net proceeds from the issuance were approximately $46.7 million, after deducting the underwriting fees and other offering costs incurred.

Dividends

For the years ended September 30, 2021 and 2020, the Company declared quarterly cash dividends on its common units and common stock totaling approximately $18.1 million and $15 million, respectively. The cash dividends were declared for all issued and outstanding common shares or units, including vested and unvested under the respective Long Term Incentive Plan in effect during the period of dividend declaration. The portion of the cash dividend attributable to the unvested restricted shares issued under the 2021 LTIP is included in accrued liabilities on the consolidated balance sheet and will be paid in cash once the unvested restricted shares fully vest. Any accrued but unpaid cash dividends attributable to the unvested restricted shares issued under the 2018 LTIP was paid in accordance with the Merger Agreement immediately prior consummation of the Merger. See Note 9 - Revolving Credit Facility for discussion over the Company's restrictions on certain payments, including dividends.

The table below summarizes the following cash distributions declared to common shareholders and unitholders during the years ended 2021 and 2020:


Quarter Ended	Per Share/Unit Distribution(1)		Total Distribution
2021
September 30, 2021	$	0.28	$	5.5
June 30, 2021	$	—	$	—
March 31, 2021(2)	$	0.29	$	8.8
December 31, 2020	$	0.30	$	3.8

2020
September 30, 2020	$	0.20	$	2.5
June 30, 2020	$	0.20	$	2.5
March 31, 2020	$	0.40	$	5.0
December 31, 2019	$	0.40	$	5.0

_____________________

(1)Per unit amounts for dividends declared before the Closing Date of the Merger have been effected by giving adjustment to the 1-for-12 reverse stock split and exchange ratio of 97.796467.

(2)On February 4, 2021, the Board of Managers of REP LLC declared a $3.8 million cash dividend, paid on February 5, 2021. On March 4, 2021, the Board of Directors of the Company declared a cash dividend of $0.28 per share or $5.0 million total, paid on May 7, 2021.

Share-Based and Unit-Based Compensation

In connection with the Merger, the Company shareholders adopted an omnibus equity incentive plan, the 2021 LTIP, for the employees, consultants and the directors of the Company and its affiliates who perform services for the Company. The holders of unvested restricted units issued under the 2018 LTIP were issued substitute awards under the 2021 LTIP at the closing of the Merger. Upon the closing of the Merger and after giving effect to the adjustment resulting from the 1-for-12 reverse stock split, the 2021 LTIP had 1,387,022 shares of common stock available for issuance, of which 989,283 shares remained available as of September 30, 2021.

2021 Long-Term Incentive Plan

The 2021 LTIP will provide for potential grants of: (i) incentive stock options qualified as such under U.S. federal income tax laws ("ISO's:); (ii) stock options that do not qualify as incentive stock options; (iii) stock appreciation rights, or SARs; (iv) restricted stock awards; (v) restricted stock units, or RSUs; (vi) stock awards; (vii) performance awards; (viii) dividend equivalents; (ix) other stock-based awards; (x) cash awards; and (xi) substitute awards, all of which will collectively be referred to as the "Awards".

The 2021 LTIP authorizes the Compensation Committee to administer the plan and designate eligible persons as participants, determine the type or types of Awards to be granted to an eligible person, determine the number of shares of stock or amount of cash to be covered by the Awards, approve the forms of award agreements for use under the plan, determine the terms and conditions of any Award, modify, waive or adjust any term or condition of an Award that has been granted, among other responsibilities delegated by the Company's Board.

Restricted Shares: The Company granted 397,739 restricted shares to executives, employees and independent directors of the Company during the year ended September 30, 2021, of which 198,024 restricted shares were issued as substitute awards under the 2021 LTIP at the closing of the Merger. The holder of these restricted shares receives dividends, in arrears, once the shares vest. The Company has accrued for these dividends which are reported in accrued liabilities and other non-current liabilities. The Company estimates the fair values of the restricted shares as the closing price of the Company's common stock on the grant date of the award, with the expense amortized on a straight-line basis and recognized over the vesting period.

The following table shows a summary of the restricted shares granted during the year ended September 30, 2021:


2021 Long-Term Incentive Plan
Grant Date	Restricted Shares	Vesting Period	Average Price		Compensation Expense

					(In thousands)
February 26, 2021	198,024	8-32 months	$	13.33	$	744
March 1, 2021	3,374	12 months	$	24.21	44
March 15, 2021	158,582	N/A(1)	$	28.99	4,597
April 1, 2021	37,759	12 months	$	28.99	719
					$	6,104

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(1)On April 1, 2021, these restricted shares fully vested.

The following table presents the Company's restricted stock activity during the year ended September 30, 2021 under the 2021 LTIP:


2021 Long-Term Incentive Plan
	Restricted Shares	Weighted Average Grant Date Fair Value
Unvested at September 30, 2020	—	$	—
Granted	397,739	$	21.16
Vested	(169,370)	$	28.99
Forfeited	—	$	—
Unvested at September 30, 2021	228,369	$	15.35

Total share-based compensation expense of $6.1 million is included in general and administrative costs on the Company's consolidated statement of operations for the restricted share awards granted under the 2021 LTIP during the year ended September 30, 2021. The Company will recognize any forfeited shares, and any unpaid dividends for those shares, as they occur as an increase to accrued liabilities and a reduction from shareholders' equity on the consolidated balance sheet. Approximately $2.3 million of additional share-based compensation expense will be recognized over the weighted average life for these grants of 21 months.

2018 Long-Term Incentive Plan

In connection with the Merger and in accordance with the Merger Agreement, each unvested restricted unit outstanding under the 2018 LTIP was converted into restricted shares of the Company under the 2021 LTIP. The holders of unvested restricted units issued under the 2018 LTIP were issued substitute awards under the 2021 LTIP at the closing of the Merger.

Restricted Units: The Company granted 13,309 restricted units to executives and employees of the Company during the year ended September 30, 2021. The Company determined the fair value of the common units in accordance with ASC 718 using an options pricing model. The holder of these restricted units participated in dividend distributions in which the accrued dividends would be paid once the shares vest. Immediately prior to the consummation of the Merger and in accordance with the Merger Agreement, any accrued but unpaid cash dividends on the unvested restricted units issued under the 2018 LTIP was paid. The total expense was amortized on a straight-line basis and recognized over the vesting period.

The following table shows a summary of the restricted units granted and the expense during the years ended September 30, 2021 and 2020:


2018 Long-Term Incentive Plan
Grant Date	Restricted Units	Vesting Period	Average Price		Compensation Expense
					2021		2020
					(In thousands)
April 29, 2019	14,766	36 months	$	113.25	$	278	$	676
February 1, 2020	15,767	36 months	$	100.69	203		287
October 1, 2020	13,309	36 months	$	112.47	208		—
					$	689	$	963

The following table presents the Company's restricted stock unit activity during the year ended September 30, 2021 under the 2018 LTIP:


2018 Long-Term Incentive Plan
	Restricted Units	Weighted Average Grant Date Fair Value
Unvested at September 30, 2020	23,909	$	105.62
Granted	13,309	$	112.47
Vested	(10,213)	$	107.30
Forfeited	(2,706)	$	104.89
Converted(1)	(24,299)	$	108.75
Unvested at September 30, 2021	—	$	—

_____________________

(1)The holders of unvested restricted units issued under the 2018 LTIP were issued substitute awards under the 2021 LTIP at the closing of the Merger.

Total unit-based compensation expense of $0.7 million and $1.0 million, respectively, is included in general and administrative costs on the Company's consolidated statement of operations for all of the issuances outstanding for the year ended September 30, 2021 and 2020. The Company recognized any forfeited shares, and any unpaid dividends for those shares, as they occurred as an increase to accrued liabilities and a reduction from shareholders' equity on the consolidated balance sheet.