PARTNER'S EQUITY OF THE PARENT COMPANY

12 Months Ended

Dec. 31, 2019

Equity [Abstract]

PARTNERS' EQUITY OF THE OPERATING PARTNERSHIP

13. PARTNERS' EQUITY OF THE PARENT COMPANY

Earnings per Common Partnership Unit

The following tables detail the number of units and net income used to calculate basic and diluted earnings per common partnership unit (in thousands, except unit and per unit amounts; results may not add due to rounding):

	Year Ended December 31,
	2019						2018						2017
	Basic			Diluted			Basic			Diluted			Basic			Diluted
Numerator
Net income	$	34,529		$	34,529		$	135,472		$	135,472		$	121,177		$	121,177
Net income attributable to noncontrolling interests	(69		)	(69		)	(55		)	(55		)	(29		)	(29		)
Nonforfeitable dividends allocated to unvested restricted unitholders	(396		)	(396		)	(369		)	(369		)	(327		)	(327		)
Preferred unit dividends	—			—			—			—			(2,032		)	(2,032		)
Preferred unit redemption charge	—			—			—			—			(3,181		)	(3,181		)
Net income attributable to common unitholders	$	34,064		$	34,064		$	135,048		$	135,048		$	115,608		$	115,608
Denominator
Weighted-average units outstanding	177,114,932			177,114,932			179,959,370			179,959,370			176,964,149			176,964,149
Contingent securities/Share based compensation	—			553,872			—			1,121,744			—			1,323,816
Total weighted-average units outstanding	177,114,932			177,668,804			179,959,370			181,081,114			176,964,149			178,287,965
Earnings per Common Partnership Unit:
Net income attributable to common unitholders	$	0.19		$	0.19		$	0.75		$	0.75		$	0.65		$	0.65

Unvested restricted units are considered participating securities which require the use of the two-class method for the computation of basic and diluted earnings per unit. For the years ended December 31, 2019, 2018 and 2017, earnings representing nonforfeitable dividends were allocated to the unvested restricted units issued to the Parent Company’s executives and other employees under the Parent Company’s shareholder-approved long-term incentive plan.

Common Partnership Units and Preferred Mirror Units

The Operating Partnership issues partnership units to the Parent Company in exchange for the contribution of the net proceeds of any equity security issuance by the Parent Company. The number and terms of such partnership units correspond to the number and terms of the related equity securities issued by the Parent Company. In addition, the Operating Partnership may also issue separate classes of partnership units. Historically, the Operating Partnership has had the following types of partnership units outstanding: (i) Preferred Partnership Units which have been issued to parties other than the Parent Company; (ii) Preferred Mirror Partnership Units which have been issued to the Parent Company; and (iii) Common Partnership Units which include both interests held by the Parent Company and those held by other limited partners.

Preferred Mirror Partnership Units

In exchange for the proceeds received in corresponding offerings by the Parent Company of preferred shares of beneficial interest, the Operating Partnership has issued to the Parent Company a corresponding amount of Preferred Mirror Partnership Units with terms consistent with that of the preferred securities issued by the Parent Company.

No preferred units were outstanding as of December 31, 2019 or December 31, 2018.

Common Partnership Units (Redeemable and General)

The Operating Partnership has two classes of Common Partnership Units outstanding as of December 31, 2019: (i) Class A Limited Partnership Interest which are held by both the Parent Company and outside third parties and (ii) General Partnership Interests which are held solely by the Parent Company (collectively, the Class A Limited Partnership Interest, and General Partnership Interests are referred to as “Common Partnership Units”). The holders of the Common Partnership Units are entitled to share in cash distributions from, and in profits and losses of, the Operating Partnership, in proportion to their respective percentage interests, subject to preferential distributions on the preferred mirror units and the preferred units.

The Common Partnership Units held by the Parent Company (comprised of both General Partnership Units and Class A Limited Partnership Units) are presented as partner’s equity in the consolidated financial statements. Class A Limited Partnership Interest held by parties other than the Parent Company are redeemable at the option of the holder for a like number of common shares of the Parent Company, or cash, or a combination thereof, at the election of the Parent Company. Because the form of settlement of these redemption rights are not within the control of the Operating Partnership, these Common Partnership Units have been excluded from partner’s equity and are presented as redeemable limited partnership units measured at the potential cash redemption value as of the end of the periods presented based on the closing market price of the Parent Company’s common shares at December 31, 2019, 2018 and 2017, which was $15.75, $12.87 and$18.19, respectively. As of December 31, 2019, 981,634 Class A Units were outstanding and owned by outside limited partners of the Operating Partnership. As of December 31, 2018 and 2017, 982,871 and 1,479,799 Class A Units were outstanding and owned by outside limited partners of the Operating Partnership, respectively.

On December 11, 2019, the Operating Partnership declared a distribution of $0.19 per common unit, totaling $33.8 million, which was paid on January 22, 2020 to unitholders of record as of January 8, 2020.  

On April 11, 2017, the Operating Partnership redeemed all of its outstanding 4,000,000 Series E-Linked Preferred Mirror Units at an aggregate redemption price of $25.51 per unit, which includes $2.0 million of dividends accrued through the redemption date. The redemption of preferred units was funded with existing cash balances on hand.

Also, on April 11, 2017, the Operating Partnership recognized a $3.2 million charge related to the underwriting discount and related expenses incurred at issuance of the Series E-Linked Preferred Mirror Units on April 11, 2012. This charge is included in the earnings per share calculations above, as well as within the Operating Partnership’s consolidated statements of operations as a reduction in net income to arrive at net income attributable to common partnership unitholders under the caption “Preferred unit redemption charge.” There were no comparable charges for the years ended December 31, 2019 or 2018.

Common Unit Repurchases

In connection with the Parent Company’s common share repurchase program, one common unit of the Operating Partnership is retired for each common share repurchased. On January 3, 2019, the Board of Trustees replenished this program by authorizing the Parent Company to repurchase of up to $150.0 million common shares under the program from and after January 3, 2019. During the year ended December 31, 2019, the Company Repurchased 1,337,169 common units at an average price of $12.92 per unit, totaling $17.3 million. During the year ended December 31, 2018, the Company repurchased and retired 1,729,278 common units at an average price of $12.64 per unit, totaling $21.9 million. During the year ended December 31, 2017, there were no unit repurchases under the program. The Company expects to fund any additional unit repurchases with a combination of available cash balances and availability under its unsecured revolving credit facility. The timing and amounts of any purchases will depend on a variety of factors, including market conditions, regulatory requirements, unit prices, capital availability and other factors as determined by the Company’s management team. The repurchase program does not require the purchase of any minimum number of units and may be suspended or discontinued at any time without notice.

The common units repurchased were retired and, as a result, were accounted for in accordance with Maryland law, which does not contemplate treasury stock. The repurchases were recorded as a reduction of common units (at $0.01 par value per unit) and a decrease to General Partnership Capital.

Continuous Offering Program

On January 10, 2017, the Parent Company entered into a continuous offering program (the “Offering Program”), under which it may sell up to an aggregate of 16,000,000 common units until January 10, 2020 in at-the-market offerings. In connection with the commencement of the Offering Program, $0.2 million of upfront costs were recorded to General Partner Capital.

There was no activity under the Offering Program during 2019. During 2018 and 2017, the Parent Company issued 23,311 and 2,858,991 common units under the Offering Program at weighted average prices per unit of $18.04 and $18.19, receiving net cash proceeds of $0.4 million and $51.2 million, respectively. As of December 31, 2019, 13,117,698 common shares remain available for issuance under the Offering Program.