Stockholders’ Equity

6 Months Ended

Jun. 30, 2024

Equity [Abstract]

Stockholders’ Equity

Stockholders’ Equity

As of June 30, 2024 and December 31, 2023, the Company had 2.6 million and 2.3 million shares of common stock outstanding, respectively, including unvested restricted shares. As of June 30, 2024, all of the Company’s shares of common stock outstanding were Class A common stock, including unvested restricted shares.

Rights Offering

In February 2023, the Company raised gross proceeds of $5.0 million ($4.1 million of net proceeds) from its Rights Offering, which entitled holders of rights to purchase 0.20130805 of a share of its Class A common stock for every right held at a subscription price of $12.95 per whole share. As a result, the Company issued 386,100 shares of its Class A common stock subscribed for in the Rights Offering on February 27, 2023. In connection with the Rights Offering, Bellevue Capital Partners, LLC, an entity which controls the Advisor (“Bellevue”), and its affiliates acquired approximately 367,956 shares. For more information please see Note 9 — Related Party Transactions and Arrangements.

Dividends

On July 1, 2022, the Company announced that it suspended paying dividends and has not declared or paid dividends, beginning with the quarter ended June 30, 2022.

Class A Common Stock Issued to the Advisor In Lieu of Cash

Pursuant to the terms of the Advisory Agreement, as amended, and the Property Management Agreement, as amended, the Advisor may elect to receive shares of the Company’s Class A common stock in lieu of cash as payment for the monthly services it provides. For more information on the Advisory Agreement please see Note 9 — Related Party Transactions and Arrangements. The related expenses are reflected as $1.1 million for the three months ended June 30, 2024, and $1.6 million and $0.5 million for the six months ended June 30, 2024 and 2023, respectively. There were no shares issued in lieu of cash for asset management and property management services rendered during the three months ended June 30, 2023.

The following table shows the shares issued in relation to the advisory and property management agreements as of June 30, 2024 and 2023:

Period of Issuance	Recipient	Agreement	Shares Issued		Closing Share Price
January 2023	The Advisor	Advisory Agreement	31,407 (1)	$	15.44 (1)
March 2024	The Advisor	Advisory Agreement	70,607	$	7.54
April 2024	The Advisor	Advisory Agreement	68,308	$	6.58
April 2024	The Advisor	Property Management Agreement	22,857	$	6.58
May 2024	The Advisor	Advisory Agreement	83,543	$	5.72

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(1)Retroactively adjusted for the effects of the Reverse Stock Split (see Note 1 — Organization for additional information).

Stockholder Rights Plan

In May 2020, the Company announced that its board of directors had approved a stockholder rights plan, but did not take actions to declare a dividend for the plan to become effective. In August 2020, in connection with the listing of the Company’s shares on the NYSE and the related bifurcation of common stock into Class A and Class B common stock, the Company entered into an amended and restated rights agreement, which amended and restated the stockholders rights plan approved in May 2020 and declared a dividend payable in August 2020, of one Class A right for and on each share of Class A common stock and one Class B right for and on each share of Class B common stock, in each case, outstanding on the close of business on August 28, 2020 to the stockholders of record on that date. Each right entitles the registered holder to purchase from the Company one one-thousandth of a share of Series A Preferred Stock, par value $0.01 per share (“Series A Preferred Stock”), of the Company at a price of $55.00 per one one-thousandth of a share of Series A Preferred Stock, represented by a right, subject to adjustment. The expiration date of these rights has subsequently been extended to August 18, 2025.

Distribution Reinvestment Plan

An amendment and restatement of the distribution reinvestment plan (the “A&R DRIP”) in connection with the listing of the Company’s shares on the NYSE became effective on August 28, 2020. The A&R DRIP allows stockholders who have elected to participate to have dividends paid with respect to all or a portion of their shares of Class A common stock and Class B common stock reinvested in additional shares of Class A common stock. Shares received by participants in the A&R DRIP will represent shares that are, at the election of the Company, either (i) acquired directly from the Company, which would issue new shares, at a price based on the average of the high and low sales prices of Class A common stock on the NYSE on the date of reinvestment, or (ii) acquired through open market purchases by the plan administrator at a price based on the weighted-average of the actual prices paid for all of the shares of Class A common stock purchased by the plan administrator with proceeds from reinvested dividends to participants for the related quarter, less a per share processing fee.

Shares issued by the Company pursuant to the A&R DRIP, if any, would be recorded within stockholders’ equity in the consolidated balance sheets in the period dividends or other distributions are declared. During the six months ended June 30, 2024 and year ended December 31, 2023, any DRIP transactions were settled through open market transactions and no shares were issued by the Company.

Non-Controlling Interest

Following the end of the performance period, which ended on August 18, 2023, as required under the 2020 OPP the compensation committee of the board of directors of the Company determined that none of the 501,605 of the LTIP Units subject to the 2020 OPP had been earned, and these LTIP Units were thus automatically forfeited effective as of August 18, 2023. On that date, the Company reclassified $25.8 million of amounts reflected in non-controlling interest for these LTIP Units to additional paid in capital on its consolidated balance sheet and consolidated statement of changes in equity. No amounts remain in non-controlling interests after the expiration date. For additional information on the 2020 OPP, please see Note 11 — Equity-Based Compensation.

Tender Offers by an Affiliate of the Advisor

On September 27, 2023, Bellevue announced a tender offer to purchase up to 350,000 shares of the Company’s Class A common stock at a purchase price equal to $10.25 per share. The tender offer expired on October 26, 2023 and, 223,460 shares were tendered and accepted by Bellevue for a purchase price to Bellevue of an aggregate of approximately $2.3 million, less any fees, expenses, or taxes withheld.

On May 7, 2024, Bellevue announced a tender offer to purchase up to 125,000 shares of the Company’s Class A common stock, at a purchase price equal to $11.00 per share. The tender offer expired on July 15, 2024 and 125,000 shares were tendered and accepted by Bellevue for a purchase price to Bellevue of an aggregate of approximately $1.4 million, less any fees, expenses, or taxes withheld. For additional information please see Note 14 — Subsequent Events.