PARTNER'S EQUITY OF THE PARENT COMPANY

12 Months Ended

Dec. 31, 2020

14. PARTNERS' EQUITY OF THE PARENT COMPANY

Earnings per Common Partnership Unit

The following table details 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,
	2020				2019				2018
	Basic		Diluted		Basic		Diluted		Basic		Diluted
Numerator
Net income	$	307,326	$	307,326	$	34,529	$	34,529	$	135,472	$	135,472
Net income attributable to noncontrolling interests	(20)		(20)		(69)		(69)		(55)		(55)
Nonforfeitable dividends allocated to unvested restricted unitholders	(410)		(410)		(396)		(396)		(369)		(369)


Net income attributable to common unitholders	$	306,896	$	306,896	$	34,064	$	34,064	$	135,048	$	135,048
Denominator
Weighted-average units outstanding	172,907,713		172,907,713		177,114,932		177,114,932		179,959,370		179,959,370
Contingent securities/Share based compensation	—		390,997		—		553,872		—		1,121,744
Total weighted-average units outstanding	172,907,713		173,298,710		177,114,932		177,668,804		179,959,370		181,081,114
Earnings per Common Partnership Unit:
Net income attributable to common unitholders	$	1.77	$	1.77	$	0.19	$	0.19	$	0.75	$	0.75

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, 2020, 2019 and 2018, 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, 2020 or December 31, 2019.

Common Partnership Units (Redeemable and General)

The Operating Partnership has two classes of Common Partnership Units outstanding as of December 31, 2020: (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, 2020, 2019 and 2018, which was $11.91, $15.75 and $12.87, respectively. Class A Units of 981,634 as of December 31, 2020 and 2019 and 982,871 as of December 31, 2018, respectively, were outstanding and owned by outside limited partners of the Operating Partnership.

On December 8, 2020, the Operating Partnership declared a distribution of $0.19 per common unit, totaling $32.7 million, which was paid on January 20, 2021 to unitholders of record as of January 6, 2021.

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, 2020 the Company repurchased and retired 6,248,483 common units at an average price of $9.60 per unit, totaling $60.0 million. 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. 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”), which permitted it to sell up to an aggregate of 16,000,000 common units 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 2020 and 2019. During 2018, the Parent Company issued 23,311 common units under the Offering Program at a weighted average price per unit of $18.04, receiving net cash proceeds of $0.4 million. As of December 31, 2020, no common shares remained available for issuance under the Offering Program, which terminated on January 10, 2020.