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Stockholders' Equity
3 Months Ended
Mar. 31, 2017
Equity [Abstract]  
Stockholders' Equity
Stockholders’ Equity
Preferred Stock
Holders of the our Series A Preferred Stock are entitled to receive dividends at an annual rate of 7.75% of the liquidation preference of $25.00 per share or $1.9375 per share per annum. The dividends are cumulative and payable quarterly in arrears.
Holders of our Series B Preferred Stock are entitled to receive dividends at an annual rate of 7.75% of the liquidation preference of $25.00 per share or $1.9375 per share per annum until December 27, 2024. After December 27, 2024, holders are entitled to receive dividends at a floating rate equal to three-month LIBOR plus a spread of 5.18% of the $25.00 liquidation preference per annum. Dividends are cumulative and payable quarterly in arrears.
We may elect to redeem shares of preferred stock at its option after July 26, 2017 (with respect to the Series A Preferred Stock) and after December 27, 2024 (with respect to the Series B Preferred Stock) for $25.00 per share, plus any accumulated and unpaid dividends through the date of the redemption. These shares are not redeemable, convertible into or exchangeable for any other property or any other securities of the Company prior to those times, except under circumstances intended to preserve our qualification as a REIT or upon the occurrence of a change in control.
Accumulated Other Comprehensive Income
The following table presents the components of accumulated other comprehensive income at March 31, 2017 and December 31, 2016, respectively. The table excludes MBS and GSE CRTs that are accounted for under the fair value option.
 
March 31, 2017
$ in thousands
Equity method investments
 
Available-for-sale securities
 
Derivatives and hedging
 
Total
Other comprehensive income/(loss), net
 
 
 
 
 
 
 
Unrealized gain (loss) on mortgage-backed and credit risk transfer securities, net

 
16,289

 

 
16,289

Reclassification of unrealized (gain) loss on sale of mortgage-backed and credit risk transfer securities to gain (loss) on investments, net

 
850

 

 
850

Reclassification of amortization of net deferred (gain) loss on de-designated interest rate swaps to repurchase agreements interest expense

 

 
(6,298
)
 
(6,298
)
Currency translation adjustments on investment in unconsolidated ventures
(615
)
 

 

 
(615
)
Other comprehensive income/(loss), net
(615
)
 
17,139

 
(6,298
)
 
10,226

 
 
 
 
 
 
 
 
Balance at beginning of period
95

 
144,458

 
149,115

 
293,668

Other comprehensive income/(loss), net
(615
)
 
17,139

 
(6,298
)
 
10,226

Other comprehensive income/(loss) attributable to non-controlling interest
8

 
(216
)
 
79

 
(129
)
Balance at end of period
(512
)
 
161,381

 
142,896

 
303,765

 
December 31, 2016
$ in thousands
Equity method investments
 
Available-for-sale securities
 
Derivatives and hedging
 
Total
Other comprehensive income/(loss), net
 
 
 
 
 
 
 
Unrealized gain (loss) on mortgage-backed and credit risk transfer securities, net

 
(37,632
)
 

 
(37,632
)
Reclassification of unrealized (gain) loss on sale of mortgage-backed and credit risk transfer securities to gain (loss) on investments, net

 
6,134

 

 
6,134

Reclassification of amortization of net deferred (gain) loss on de-designated interest rate swaps to repurchase agreements interest expense

 

 
5,154

 
5,154

Currency translation adjustments on investment in unconsolidated ventures
128

 

 

 
128

Other comprehensive income/(loss), net
128

 
(31,498
)
 
5,154

 
(26,216
)
 
 
 
 
 
 
 
 
Balance at beginning of period
(32
)
 
170,383

 
148,273

 
318,624

Other comprehensive income/(loss), net
128

 
(31,498
)
 
5,154

 
(26,216
)
Other comprehensive income/(loss) attributable to non-controlling interest
(1
)
 
412

 
(63
)
 
348

Rebalancing of ownership percentage of non-controlling interest

 
5,161

 
(4,249
)
 
912

Balance at end of period
95

 
144,458

 
149,115

 
293,668


Effective December 31, 2013, we voluntarily discontinued cash flow hedge accounting for our interest rate swaps to gain greater flexibility in managing interest rate exposures. Amounts recorded in AOCI before we discontinued cash flow hedge accounting for our interest rate swaps are reclassified to interest expense on repurchase agreements on the condensed consolidated statements of operations as interest is accrued and paid on the related repurchase agreements over the remaining original life of the interest rate swap agreements.
Securities Convertible into Shares of Common Stock
The non-controlling interest holder of the Operating Partnership units, a wholly-owned Invesco subsidiary, has the right to cause the Operating Partnership to redeem their operating partnership ("OP Units") for cash equal to the market value of an equivalent number of shares of common stock, or at our option, we may purchase their OP Units by issuing one share of common stock for each OP Unit redeemed. We also have an equity incentive plan which allows us to grant securities convertible into our common stock to our non-executive directors and employees of our Manager and its affiliates.
Share Repurchase Program
During the three months ended March 31, 2017, we did not repurchase any shares of our common stock. During the three months ended March 31, 2016, we repurchased and concurrently retired 2,063,451 shares of our common stock at a weighted average repurchase price of $12.12 per share for a net cost of $25.0 million, including acquisition expenses. As of March 31, 2017, we have authority to purchase 18,239,082 additional shares of our common stock under our share repurchase program. The share repurchase program has no stated expiration date.
Share-Based Compensation
We established the 2009 Equity Incentive Plan for grants of common stock and other equity based awards to our independent directors and officers and employees of our Manager and its affiliates (the “Incentive Plan”). Under the Incentive Plan, a total of 1,000,000 shares of common stock are authorized for issuance. Unless terminated earlier, the Incentive Plan will terminate in 2019, but will continue to govern the unexpired awards. As of March 31, 2017, 812,070 shares of common stock remain available for future issuance under the Incentive Plan.
We recognized compensation expense of approximately $85,000 (March 31, 2016: $85,000) related to awards to our independent directors for the three months ended March 31, 2017. During the three months ended March 31, 2017 and 2016, we issued 5,456 shares and 7,748 shares of common stock, respectively, pursuant to the Incentive Plan to our independent directors. The fair market value of the shares granted was determined by the closing stock market price on the date of the grant. The grants vested immediately.
We recognized compensation expense of approximately $31,000 (March 31, 2016: $32,000) for the three months ended March 31, 2017, related to restricted stock units awarded to employees of our Manager and its affiliates which is reimbursed by our Manager under the management agreement. At March 31, 2017 there was approximately $296,000 of total unrecognized compensation cost related to restricted stock unit awards that is expected to be recognized over a period of up to 48 months, with a weighted-average remaining vesting period of 23 months.
The following table summarizes the activity related to restricted stock units awarded to employees of our Manager and its affiliates for the three months ended March 31, 2017.
 
Three Months Ended March 31,
 
2017
 
Restricted Stock Units
 
Weighted Average Grant Date Fair Value (1)
Unvested at the beginning of the period
18,807

 
$
14.37

Shares granted during the period
8,115

 
15.55

Shares vested during the period
(7,095
)
 
15.78

Unvested at the end of the period
19,827

 
$
14.35

(1)
The grant date fair value of restricted stock awards is based on the closing market price of our common stock at the grant date.
Dividends
On March 15, 2017, we declared the following dividends:
a dividend of $0.40 per share of common stock to be paid on April 26, 2017 to stockholders of record as of the close of business on March 27, 2017;
a dividend of $0.4844 per share of Series A Preferred Stock to be paid on April 25, 2017 to stockholders of record as of the close of business on April 1, 2017; and
a dividend of $0.4844 per share of Series B Preferred Stock to be paid on June 27, 2017 to stockholders of record as of the close of business on June 5, 2017.