Shareholders' Equity

12 Months Ended

Dec. 31, 2014

Shareholders' Equity

Shareholders' Equity

Note 4. Shareholders’ Equity

We have common shares available for issuance under the terms of our equity compensation plan, as then in effect, or our Share Award Plan. We awarded 81,700 common shares with an aggregate market value of $1,750,  82,600 common shares with an aggregate market value of $1,888 and 78,492 common shares with an aggregate market value of $1,775 to our officers and certain employees of Reit Management & Research LLC, or RMR, pursuant to our Share Award Plan during the years ended December 31, 2014, 2013 and 2012, respectively. In addition, we awarded each of our Trustees 2,500 common shares in 2014 and 2,000 common shares in each of 2013 and 2012 with an aggregate market value of $306  ($61 to each Trustee), $286  ($57 to each Trustee) and $205  ($41 to each Trustee), respectively, pursuant to our Share Award Plan as part of their annual fees. Shares awarded to the Trustees vest immediately. The shares awarded to our officers and certain employees of our manager vest in five equal annual installments beginning on the date of grant. We include the value of awarded shares in general and administrative expenses in our consolidated income statement at the time the awards vest. At December 31, 2014, 2,725,233 of our common shares remain available for issuance under our Share Award Plan.

A summary of shares granted and vested under the terms of our Share Award Plan from January 1, 2012 to December 31, 2014 is as follows:

		Weighted Average
		Grant Date
	Number of Shares	Fair Value
Unvested shares at December 31, 2011	132,620	$	22.86
Shares granted in 2012	87,092	$	22.38
Shares vested in 2012	(79,678)	$	22.18
Unvested shares at December 31, 2012	140,034	$	23.03
Shares granted in 2013	92,075	$	23.48
Shares vested in 2013	(81,398)	$	23.85
Unvested shares at December 31, 2013	150,711	$	23.84
Shares granted in 2014	94,200	$	21.83
Shares vested in 2014	(91,433)	$	21.87
Unvested shares at December 31, 2014	153,477	$	23.39

The 153,477 unvested shares as of December 31, 2014 are scheduled to vest as follows: 59,133 shares in 2015, 46,193 shares in 2016, 31,810 shares in 2017 and 16,340 shares in 2018. As of December 31, 2014, the estimated future compensation for the unvested shares was $3,393 based on the closing share price of $22.11 on December 31, 2014. The weighted average period over which the compensation expense will be recorded is approximately 1.8 years. We recorded share based compensation expense of $1,914 in 2014, $1,961 in 2013 and $1,827 in 2012.

During the year ended December 31, 2014 and the period from January 1, 2015 to February 24, 2015, we issued 123,462 and 25,263, respectively, of our common shares to RMR as part of the business management fee payable by us under our business management agreement.  See Note 5 for further information regarding this agreement.

Our cash distributions to our common shareholders for the years ended December 31, 2014, 2013 and 2012, were $1.56 per share, $1.56 per share and $1.53 per share, respectively. The characterization of the distributions made in 2014, 2013 and 2012 was 54.00%,  66.19% and 62.65% ordinary income, respectively; 46.00%,  21.30% and 37.35% return of capital, respectively; 0%,  3.10% and 0% capital gain, respectively; and 0%,  9.41% and 0% unrecaptured Section 1250 gain, respectively. On January 12, 2015, we declared a quarterly distribution of $0.39 per share, or $79,530, to our common shareholders of record on January 23, 2015, with respect to our operating results for the quarter ended December 31, 2014; we paid this distribution on February 24, 2015, using cash on hand and borrowings under our revolving credit facility.

In April 2014, we issued 15,525,000 common shares in a public offering, raising net proceeds of approximately $322,807. In January 2013, we issued 11,500,000 common shares in a public offering, raising net proceeds of approximately $261,813. In July 2012, we issued 13,800,000 common shares in a public offering, raising net proceeds of approximately $287,052. In February 2015, we issued 31,050,000 common shares in a public offering, raising net proceeds of approximately $660,014, before expenses.We used the net proceeds from these offerings to repay borrowings outstanding under our revolving credit facility and intend to use the remainder for general business purposes, including the partial funding of the pending acquisition of 38 senior living communities described in Note 3.