Shareholders’ Equity

Common Share Issuances:

See Note 13 for information regarding equity issuances related to share-based compensation.

Common Share Repurchases:

On August 24, 2015, our Board of Trustees approved a common share repurchase program. On March 17, 2016, our Board of Trustees authorized the repurchase of up to $150.0 million of our outstanding common shares over the twelve month period following the date of authorization. In March 2017, this share repurchase authorization, of which $106.6 million was not utilized, expired. On March 15, 2017, our Board of Trustees authorized the repurchase of up to an additional $150.0 million of our outstanding common shares over the twelve month period following the date of authorization. In March 2018, this share repurchase authorization, of which $81.0 million was not utilized, expired. On March 14, 2018, our Board of Trustees authorized the repurchase of up to an additional $150.0 million of our outstanding common shares over the twelve month period following the date of authorization.

During the year ended December 31, 2018, we purchased and retired 2,970,209 of our common shares at a weighted average price of $29.67 per share for a total investment of $88.1 million, of which $69.0 million was under the March 2017 authorization and $19.1 million was under the March 2018 authorization. During the year ended December 31, 2017, we did not purchase any common shares under our common share repurchase program. During the year ended December 31, 2016, we purchased and retired 2,491,675 of our common shares at a weighted average price of $27.68 per share, for a total investment of $69.0 million. The $130.9 million of remaining authorization available under our share repurchase program as of December 31, 2018 is scheduled to expire on March 14, 2019.

During the years ended December 31, 2018, 2017 and 2016, certain of our employees surrendered 193,521, 43,329 and 31,025 common shares owned by them, respectively, to satisfy their statutory tax withholding obligations in connection with the vesting of such common shares.

Common Share and Unit Distributions:

On September 26, 2018, our Board of Trustees declared a special, one-time cash distribution of $2.50 per common share/unit to shareholders/unitholders of record on October 9, 2018. On October 23, 2018, we paid this distribution to such shareholders/unitholders in the aggregate amount of $304.7 million. We did not pay any cash distributions to our common shareholders in 2017 or 2016. Our credit agreement contains a number of financial and other covenants, including a covenant which restricts our ability to make distributions under certain circumstances. See Note 7 for additional information regarding our credit agreement.

The following characterizes distributions paid per common share for the years ended December 31, 2018, 2017, and 2016:



	Year Ended December 31,
	2018		2017		2016
Ordinary income	100.0	%	—	%	—	%
Return of capital	—	%	—	%	—	%
Capital gain	—	%	—	%	—	%
Unrecaptured Section 1250 gain	—	%	—	%	—	%
	100.0	%	—	%	—	%

Series D Preferred Shares:

Each of our 4,915,196 series D cumulative convertible preferred shares accrue dividends of $1.625, or 6.50% per annum of the liquidation amount, payable in equal quarterly payments. Our series D preferred shares are convertible, at the holder's option, into our common shares at a conversion rate of 0.5215 common shares per series D preferred share, which is equivalent to a conversion price of $47.94 per common share, or 2,563,275 additional common shares at December 31, 2018. The conversion rate changed from 0.480775 to 0.5215 common shares per series D preferred share effective October 10, 2018 as a result of the common share distribution declared by our Board of Trustees. On or after November 20, 2011, if our common shares trade at or above the then applicable conversion price, we may, at our option, convert some or all of the series D preferred shares into common shares at the then applicable conversion rate. If a fundamental change occurs, which generally will be deemed to occur upon a change in control or a termination of trading of our common shares (or other equity securities into which our series D preferred shares are then convertible), holders of our series D preferred shares will have a special right to convert their series D preferred shares into a number of our common shares per $25.00 liquidation preference, plus accrued and unpaid distributions, divided by 98% of the average closing market price of our common shares for a specified period before such event is effective, unless we exercise our right to repurchase these series D preferred shares for cash, at a purchase price equal to 100% of their liquidation preference, plus accrued and unpaid distributions. The issuance of a large number of common shares as a result of the exercise of this conversion right after a fundamental change may have a dilutive effect on net income attributable to Equity Commonwealth common shareholders per share for future periods. As of December 31, 2018, we had 4,915,196 outstanding series D preferred shares that were convertible into 2,563,275 of our common shares.

Series E Preferred Shares:

On May 15, 2016, we redeemed all of our 11,000,000 outstanding series E preferred shares at a price of $25.00 per share, for a total of $275.0 million, plus any accrued and unpaid dividends. The redemption payment occurred on May 16, 2016 (the first business day following the redemption date). We recorded $9.6 million related to the excess fair value of consideration paid over the carrying value of the preferred shares as a reduction to net income attributable to common shareholders for the year ended December 31, 2016.

Preferred Share Distributions:

Under our governing documents and Maryland law, distributions to our shareholders are to be authorized and declared by our Board of Trustees. In 2018, our Board of Trustees declared distributions on our series D preferred shares to date as follows:



Declaration Date	Record Date	Payment Date	Dividend Per Share
January 12, 2018	January 30, 2018	February 15, 2018	$	0.40625
April 11, 2018	April 27, 2018	May 15, 2018	$	0.40625
July 12, 2018	July 30, 2018	August 15, 2018	$	0.40625
September 26, 2018	October 29, 2018	November 15, 2018	$	0.40625

Alternative Minimum Tax:

Alternative minimum tax adjustments are to be apportioned between a REIT and its shareholders under Internal Revenue Code Section 59(d). Although regulations have not yet been issued under that provision, based on regulations issued pursuant to a similar provision of prior law and the legislative history of the current provision, it appears that such alternative minimum tax adjustments are to be apportioned to a REIT’s shareholders to the extent that the REIT distributes its regular taxable income. It is our policy to distribute all of our regular taxable income and accordingly, all of our alternative minimum tax adjustments are being apportioned to our shareholders.

We have determined that 0% and 96.31% of each distribution to our shareholders for the tax years ended December 31, 2017 and 2016, respectively, consists of an alternative minimum tax adjustment. Our taxable earnings in 2018 are no longer subject to an alternative minimum tax adjustment as a result of H.R. 1, the Tax Cuts and Jobs Act, which generally takes effect for taxable years beginning on or after January 1, 2018 (subject to certain exceptions).