Common and Preferred Shares

12 Months Ended

Dec. 31, 2019

Common and Preferred Shares [Abstract]

Common and Preferred Shares

On June 3, 2019, the Company filed a shelf registration statement with the SEC, which is effective for a term of three years. The securities covered by this registration statement include common shares, preferred shares, debt securities, depositary shares, warrants, and units. The Company may periodically offer one of more of these securities in amounts, prices and on terms to be announced when and if these securities are offered. The specifics of any future offerings along with the use of proceeds of any securities offered, will be described in detail in a prospectus supplement, or other offering materials, at the time of any offering.

Additionally, on June 3, 2019, the Company filed a shelf registration statement with the SEC, which is effective for a term of three years, for its Dividend Reinvestment and Direct Share Purchase Plan (DSP Plan) which permits the issuance of up to 15,000,000 common shares.

Common Shares

The Board of Trustees declared cash dividends totaling $4.50 and $4.32 per common share for the years ended December 31, 2019 and 2018, respectively.

Of the total distributions calculated for tax purposes, the amounts characterized as ordinary income, return of capital and long-term capital gain for cash distributions paid per common share for the years ended December 31, 2019 and 2018 are as follows:



	Cash Distributions Per Share
	2019		2018
Taxable ordinary income (1)	$	2.7411	$	4.1253
Return of capital	1.3966		—
Long-term capital gain (2)	0.3473		0.1747
Totals	$	4.4850	$	4.3000

(1) Amounts qualify in their entirety as 199A distributions.

(2) Of the long-term capital gain, $0.3473 and $0.0102 were unrecaptured section 1250 gains for the years ended December 31, 2019 and 2018, respectively.

During the year ended December 31, 2019 the Company issued an aggregate of 4,007,113 common shares under its DSP Plan for net proceeds of $305.9 million.

Series C Convertible Preferred Shares

The Company has outstanding 5.4 million 5.75% Series C cumulative convertible preferred shares (Series C preferred shares). The Company will pay cumulative dividends on the Series C preferred shares from the date of original issuance in the amount of $1.4375 per share each year, which is equivalent to 5.75% of the $25 liquidation preference per share. Dividends on the Series C preferred shares are payable quarterly in arrears. The Company does not have the right to redeem the Series C preferred shares except in limited circumstances to preserve the Company’s REIT status. The Series C preferred shares have no stated maturity and will not be subject to any sinking fund or mandatory redemption. As of December 31, 2019, the Series C preferred shares are convertible, at the holder’s option, into the Company’s common shares at a conversion rate of 0.4049 common shares per Series C preferred share, which is equivalent to a conversion price of $61.74 per common share. This conversion ratio may increase over time upon certain specified triggering events including if the Company’s common dividends per share exceeds a quarterly threshold of $0.6875.

Upon the occurrence of certain fundamental changes, the Company will under certain circumstances increase the conversion rate by a number of additional common shares or, in lieu thereof, may in certain circumstances elect to adjust the conversion rate upon the Series C preferred shares becoming convertible into shares of the public acquiring or surviving company.

The Company may, at its option, cause the Series C preferred shares to be automatically converted into that number of common shares that are issuable at the then prevailing conversion rate. The Company may exercise its conversion right only if, at certain times, the closing price of the Company’s common shares equals or exceeds 135% of the then prevailing conversion price of the Series C preferred shares.

Owners of the Series C preferred shares generally have no voting rights, except under certain dividend defaults. Upon conversion, the Company may choose to deliver the conversion value to the owners in cash, common shares, or a combination of cash and common shares.

The Board of Trustees declared cash dividends totaling $1.4375 per Series C preferred share for each of the years ended December 31, 2019 and 2018. There were non-cash distributions associated with conversion adjustments of $0.6822 and $0.6205 per Series C preferred share for the years ended December 31, 2019 and 2018, respectively. The conversion adjustment provision entitles the shareholders of the Series C preferred shares, upon certain quarterly common share dividend thresholds being met, to receive additional common shares of the Company upon a conversion of the preferred shares into common shares. The increase in common shares to be received upon a conversion is a deemed distribution for federal income tax purposes.

For tax purposes, the amounts characterized as ordinary income, return of capital and long-term capital gain for cash distributions paid and non-cash deemed distributions per Series C preferred share for the years ended December 31, 2019 and 2018 are as follows:



	Cash Distributions per Share
	2019		2018
Taxable ordinary income (1)	$	1.2758	$	1.3791
Return of capital	—		—
Long-term capital gain (2)	0.1617		0.0584
Totals	$	1.4375	$	1.4375

(1) Amounts qualify in their entirety as 199A distributions.

(2) Of the long-term capital gain, $0.1617 and $0.0034 were unrecaptured section 1250 gains for the years ended December 31, 2019 and 2018, respectively.



	Non-cash Distributions per Share
	2019		2018
Taxable ordinary income (3)	$	0.1050	$	0.5953
Return of capital	0.5639		—
Long-term capital gain (4)	0.0133		0.0252
Totals	$	0.6822	$	0.6205

(3) Amounts qualify in their entirety as 199A distributions.

(4) Of the long-term capital gain, $0.0133 and $0.0015 were unrecaptured section 1250 gains for the years ended December 31, 2019 and 2018, respectively.

Series E Convertible Preferred Shares

The Company has outstanding 3.4 million 9.00% Series E cumulative convertible preferred shares (Series E preferred shares). The Company will pay cumulative dividends on the Series E preferred shares from the date of original issuance in the amount of $2.25 per share each year, which is equivalent to 9.00% of the $25 liquidation preference per share. Dividends on the Series E preferred shares are payable quarterly in arrears. The Company does not have the right to redeem the Series E preferred shares except in limited circumstances to preserve the Company’s REIT status. The Series E preferred shares have no stated maturity and will not be subject to any sinking fund or mandatory redemption. As of December 31, 2019, the Series E preferred shares are convertible, at the holder’s option, into the Company’s common shares at a conversion rate of 0.4759 common shares per Series E preferred share, which is equivalent to a conversion

price of $52.53 per common share. This conversion ratio may increase over time upon certain specified triggering events including if the Company’s common dividends per share exceeds a quarterly threshold of $0.84.

Upon the occurrence of certain fundamental changes, the Company will under certain circumstances increase the conversion rate by a number of additional common shares or, in lieu thereof, may in certain circumstances elect to adjust the conversion rate upon the Series E preferred shares becoming convertible into shares of the public acquiring or surviving company.

The Company may, at its option, cause the Series E preferred shares to be automatically converted into that number of common shares that are issuable at the then prevailing conversion rate. The Company may exercise its conversion right only if, at certain times, the closing price of the Company’s common shares equals or exceeds 150% of the then prevailing conversion price of the Series E preferred shares.

Owners of the Series E preferred shares generally have no voting rights, except under certain dividend defaults. Upon conversion, the Company may choose to deliver the conversion value to the owners in cash, common shares, or a combination of cash and common shares.

The Board of Trustees declared cash dividends totaling $2.25 per Series E preferred share for each of the years ended December 31, 2019 and 2018. There were non-cash distributions associated with conversion adjustments of $0.6024 and $0.5308 per Series E preferred share for the years ended December 31, 2019 and 2018, respectively. The conversion adjustment provision entitles the shareholders of the Series E preferred shares, upon certain quarterly common share dividend thresholds being met, to receive additional common shares of the Company upon a conversion of the preferred shares into common shares. The increase in common shares to be received upon a conversion is a deemed distribution for federal income tax purposes.

For tax purposes, the amounts characterized as ordinary income, return of capital and long-term capital gain for cash distributions paid and non-cash deemed distributions per Series E preferred share for the years ended December 31, 2019 and 2018 are as follows:



	Cash Distributions per Share
	2019		2018
Taxable ordinary income (1)	$	1.9970	$	2.1586
Return of capital	—		—
Long-term capital gain (2)	0.2530		0.0914
Totals	$	2.2500	$	2.2500

(1) Amounts qualify in their entirety as 199A distributions.

(2) Of the long-term capital gain, $0.2530 and $0.0053 were unrecaptured section 1250 gains for the years ended December 31, 2019 and 2018, respectively.



	Non-cash Distributions per Share
	2019		2018
Taxable ordinary income (3)	$	—	$	0.5092
Return of capital	0.6024		—
Long-term capital gain (4)	—		0.0216
Totals	$	0.6024	$	0.5308

(3) Amounts qualify in their entirety as 199A distributions.

(4) There were no unrecaptured section 1250 gains for the year ended December 31, 2019. Of the long-term capital gain, $0.0013 was unrecaptured section 1250 gains for the year ended December 31, 2018.

Series G Preferred Shares

On November 30, 2017, the Company issued 6.0 million 5.75% Series G cumulative redeemable preferred shares (Series G preferred shares) in a registered public offering for net proceeds of approximately $144.5 million, after underwriting discounts and expenses. The Company will pay cumulative dividends on the Series G preferred shares from the date of original issuance in the amount of $1.4375 per share each year, which is equivalent to 5.75% of the $25.00 liquidation preference per share. Dividends on the Series G preferred shares are payable quarterly in arrears. The Company may not redeem the Series G preferred shares before November 30, 2022, except in limited circumstances to preserve the Company's REIT status. On or after November 30, 2022, the Company may, at its option, redeem the Series G preferred shares in whole at any time or in part from time to time by paying $25.00 per share, plus any accrued and unpaid dividends up to, but not including the date of redemption. The Series G preferred shares have no stated maturity and will not be subject to any sinking fund or mandatory redemption. The Series G preferred shares are not convertible into any of the Company's securities, except under certain circumstances in connection with a change of control. Owners of the Series G preferred shares generally have no voting rights except under certain dividend defaults.

The Board of Trustees declared cash dividends totaling $1.4375 per Series G preferred share for each of the years ended December 31, 2019 and 2018. For tax purposes, the amounts characterized as ordinary income, return of capital and long-term capital gain for cash distributions paid per Series G preferred share for the years ended December 31, 2019 and 2018 are as follows:



	Cash Distributions per Share
	2019		2018
Taxable ordinary income (1)	$	1.2758	$	1.2105
Return of capital	—		—
Long-term capital gain (2)	0.1617		0.0513
Totals	$	1.4375	$	1.2618

(1) Amounts qualify in their entirety as 199A distributions.

(2) Of the long-term capital gain, $0.1617 and $0.0030 were unrecaptured section 1250 gains for the years ended December 31, 2019 and 2018, respectively.