Shareholders' Equity

12 Months Ended

Dec. 31, 2013

Shareholders' Equity

Shareholders' Equity

3. Shareholders' Equity

Common Share Issuances

        On March 22, 2013, we sold 16,100,000 of our common shares at a price of $25.55 per share in a public offering for net proceeds of $393,543 after underwriting discounts and other offering expenses.

        On November 13, 2013, we sold 9,775,000 of our common shares at a price of $28.00 per share in a public offering for net proceeds of $261,668 after underwriting discounts and other offering expenses.

        On February 7, 2014, we issued 11,328 of our common shares to RMR as part of its compensation under our business management agreement. See Note 8 for further information regarding this agreement.

Share Awards

        We reserved an aggregate of 3,000,000 and 3,128,791 shares of our common shares to be issued under the terms of our 2012 Equity Compensation Plan and our 1995 Share Award Plan and 2003 Share Award Plan, respectively, collectively referred to as the Award Plans. During the years ended December 31, 2013, 2012 and 2011, we awarded 84,125 common shares with an aggregate market value of $2,307, 74,017 common shares with an aggregate market value of $1,852 and 67,300 common shares with an aggregate market value of $1,628, respectively, to our officers and certain employees of our manager, RMR, pursuant to the Award Plans. See Note 8 for a further discussion of the grants we made to our officers and certain employees of RMR. In addition, we awarded each of our Trustees 2,000 common shares in each of 2013, 2012 and 2011 with an aggregate market value of $307 ($61 per trustee), $256 ($51 per trustee) and $243 ($49 per trustee), respectively, as part of their annual compensation. The shares awarded to our Trustees vest immediately. The shares awarded to our officers and certain employees of RMR vest in five annual installments beginning on the date of grant. Share awards are expensed over their vesting period and the value of such share awards are included in general and administrative expense in our Consolidated Statements of Income and Comprehensive Income. At December 31 2013, 2,822,383 of our common shares remain reserved for issuance under our 2012 Equity Compensation Plan.

        A summary of shares granted and vested under the terms of the Award Plans for the years ended December 31, 2013, 2012 and 2011 is as follows:

	2013					2012					2011
	Number of Shares			Weighted Average Grant Date Fair Value		Number of Shares			Weighted Average Grant Date Fair Value		Number of Shares			Weighted Average Grant Date Fair Value
Unvested shares, beginning of year		127,654		$	24.88		114,110		$	22.70		93,432		$	22.31
Shares granted		94,125			27.77		84,017			25.09		77,300			24.20
Shares vested		(75,889	)		28.10		(69,213	)		24.82		(56,622	)		23.76
Shares forfeited		(525	)		26.61		(1,260	)		24.03		—			—
Unvested shares, end of year		145,365			27.55		127,654			24.88		114,110			22.70

        The 145,365 unvested shares as of December 31, 2013 are scheduled to vest as follows: 53,913 shares in 2014, 43,753 shares in 2015, 30,943 shares in 2016 and 16,756 shares in 2017. As of December 31, 2013, the estimated future compensation expense for the unvested shares was $3,929 based on the closing price on December 31, 2013 of our common shares of $27.03. The weighted average period over which the compensation expense will be recorded is approximately 21 months. During the years ended December 31, 2013, 2012 and 2011, we recorded $2,400, $1,888 and $1,405, respectively, of compensation expense related to the Award Plans.

Preferred Shares

        On July 1, 2013, we redeemed our 6,700,000 outstanding 7.00% Series C cumulative redeemable preferred shares at the stated liquidation preference of $25.00 per share plus accrued and unpaid distributions to the date of redemption. We reduced net income available for common shareholders by $5,627, which represented the amount by which the liquidation preference for our Series C cumulative redeemable preferred shares that were redeemed exceeded our carrying amount for those preferred shares as of the date of redemption.

        Each of our Series D cumulative redeemable preferred shares has a distribution rate of $1.78125 per annum, or 7.125%, payable in equal quarterly amounts, and has a liquidation preference of $25.00 per share ($290,000 in aggregate). The Series D cumulative redeemable preferred shares are redeemable for $25.00 per share each plus accrued and unpaid distributions at our option at any time on or after January 15, 2017, or at the option of the holders of the Series D cumulative redeemable preferred shares if a change of control occurs which results in our common shares (or the common securities of an acquiring or surviving entity) not being listed or quoted on the New York Stock Exchange, or NYSE, or certain other exchanges or quotation systems. Also, upon the occurrence of such a change of control, holders of our Series D cumulative redeemable preferred shares that are not redeemed may at their option convert those Series D cumulative redeemable preferred shares into our common shares (or certain alternative consideration) at a conversion rate generally based on their $25.00 liquidation preference and the market price of our common shares at the time of conversion, subject to a cap.

Common Share Distributions

        Cash distributions paid or payable by us to our common shareholders for the years ended December 31 2013, 2012 and 2011 were $1.89 per share, $1.82 per share, and $1.80 per share, respectively. The characterization of our distributions paid in 2013 was 95.90% ordinary income, 2.95% return of capital and 1.15% qualified dividend. The characterization of our distributions paid in 2012 and 2011 was 100.0% ordinary income.

        On January 3, 2014, we declared a distribution of $0.48 per common share which we paid on February 21, 2014, to shareholders of record on January 13, 2014 using existing cash balances and borrowings under our revolving credit facility.

Cumulative Other Comprehensive Income

        Cumulative other comprehensive income represents the unrealized gain on TA common shares we own and our share of the comprehensive income of AIC. See Note 8 for further information regarding these investments.