Common and Preferred Shares

12 Months Ended

Dec. 31, 2021

Common and Preferred Shares [Abstract]

Common And Preferred Shares

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 Company's Board declared cash dividends totaling $1.50 and $1.515 per common share for the years ended December 31, 2021 and 2020, respectively. The monthly cash dividend to common shareholders was temporarily suspended following the common share dividend paid on May 15, 2020 to shareholders of record as of April 30, 2020. On August 15, 2021, following termination of the Covenant Relief Period, the Company resumed paying regular monthly cash dividends to common shareholders.

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, 2021 and 2020 are as follows:

	Cash Distributions Per Share
	2021		2020
Taxable ordinary income (1)	$	1.2500	$	0.8888
Return of capital	—		0.5634
Long-term capital gain (2)	—		0.4378
Totals	$	1.2500	$	1.8900

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

(2) Of the long-term capital gain, $0.1439 was unrecaptured section 1250 gain for the year ended December 31, 2020. There were no unrecaptured section 1250 gains for the year ended December 31, 2021.

During the year ended December 31, 2021 and 2020, the Company issued an aggregate of 11,798 and 36,176 common shares under its DSP Plan for net proceeds of $0.6 million and $1.1 million, respectively.

During the year ended December 31, 2020, the Company's Board approved a share repurchase program pursuant to which the Company may repurchase up to $150.0 million of the Company's common shares. The share repurchase program was scheduled to expire on December 31, 2020; however, the Company suspended the program on the effective date of the covenant modification agreements, June 29, 2020. During the year ended December 31, 2020, the Company repurchased 4,066,716 common shares under the share repurchase program for approximately $106.0 million. The repurchases were made under a Rule 10b5-1 trading plan.

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, 2021, the Series C preferred shares are convertible, at the holder’s option, into the Company’s common shares at a conversion rate of 0.4148 common shares per Series C preferred share, which is equivalent to a conversion price of $60.27 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 Company's Board declared cash dividends totaling $1.4375 per Series C preferred share for each of the years ended December 31, 2021 and 2020. There were non-cash distributions associated with conversion adjustments of $0.0522 and $0.2131 per Series C preferred share for the years ended December 31, 2021 and 2020, 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, 2021 and 2020 are as follows:

	Cash Distributions per Share
	2021		2020
Taxable ordinary income (1)	$	1.4375	$	0.9631
Return of capital	—		—
Long-term capital gain (2)	—		0.4744
Totals	$	1.4375	$	1.4375

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

(2) Of the long-term capital gain, $0.1559 was unrecaptured section 1250 gains for the year ended December 31, 2020. There were no unrecaptured section 1250 gains for the year ended December 31, 2021.

	Non-cash Distributions per Share
	2021		2020
Taxable ordinary income (3)	$	0.0522	$	0.0958
Return of capital	—		0.0701
Long-term capital gain (4)	—		0.0472
Totals	$	0.0522	$	0.2131

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

(4) Of the long-term capital gain, $0.0155 was unrecaptured section 1250 gains for the year ended December 31, 2020. There were no unrecaptured section 1250 gains for the year ended December 31, 2021.

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, 2021, the Series E preferred shares are convertible, at the holder’s option, into the Company’s common shares at a conversion rate of 0.4826 common shares per Series E preferred share, which is equivalent to a conversion price of $51.80 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 Company's Board declared cash dividends totaling $2.25 per Series E preferred share for each of the years ended December 31, 2021 and 2020. There were non-cash distributions associated with conversion adjustments of $0.1695 per Series E preferred share for the year ended December 31, 2020. 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, 2021 and 2020 are as follows:

	Cash Distributions per Share
	2021		2020
Taxable ordinary income (1)	$	2.2500	$	1.5075
Return of capital	—		—
Long-term capital gain (2)	—		0.7425
Totals	$	2.2500	$	2.2500

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

(2) Of the long-term capital gain, $0.2441 was unrecaptured section 1250 gains for the year ended December 31, 2020. There were no unrecaptured section 1250 gains for the year ended December 31, 2021.

	Non-cash Distributions per Share
	2021		2020
Taxable ordinary income (3)	$	—	$	0.0176
Return of capital	—		0.1432
Long-term capital gain (4)	—		0.0087
Totals	$	—	$	0.1695

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

(4) Of the long-term capital gain, $0.0610 was unrecaptured section 1250 gains for the year ended December 31, 2020. There were no unrecaptured section 1250 gains for the year ended December 31, 2021.

Series G Preferred Shares

The Company has outstanding 6.0 million 5.75% Series G cumulative redeemable preferred shares (Series G preferred shares). 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 Company's Board declared cash dividends totaling $1.4375 per Series G preferred share for each of the years ended December 31, 2021 and 2020. 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, 2021 and 2020 are as follows:

	Cash Distributions per Share
	2021		2020
Taxable ordinary income (1)	$	1.4375	$	0.9631
Return of capital	—		—
Long-term capital gain (2)	—		0.4744
Totals	$	1.4375	$	1.4375

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

(2) Of the long-term capital gain, $0.1559 was unrecaptured section 1250 gains for the year ended December 31, 2020. There were no unrecaptured section 1250 gains for the year ended December 31, 2021.