Note 5 –Equity

Preferred Stock

General

The Company’s charter authorizes the issuance of 10,000 shares of preferred stock, par value $0.001 per share. As of December 31, 2019 and 2018, there were 3,105 shares issued and outstanding.

On September 15, 2017, the Company closed on the issuance of 3,105 shares of its Series A Cumulative Redeemable Preferred Stock, $0.001 par value per share, with an initial liquidation preference of $25 per share (“Series A Preferred Stock”), inclusive of 405 shares issued in connection with the underwriters’ exercise of their over-allotment option. The Company may, at its option, redeem the Series A Preferred Stock for cash in whole or in part, from time to time, at any time on or after September 15, 2022, at a cash redemption price of $25 per share. The Series A Preferred Stock has no voting rights, except for limited voting rights if the Company fails to pay dividends for six quarterly periods. The issuance resulted in the Company receiving net proceeds of $74,959, which were primarily used to repay borrowings on the Company’s Revolving Credit Facility. The Company assessed the characteristics of the Series A Preferred Stock in accordance with the provisions of ASC Topic 480 – “Distinguishing Liabilities from Equity,” and concluded that the Series A Preferred Stock be classified as permanent equity.

Preferred Stock Dividends

Dividend activity on our preferred stock during the years ended December 31, 2019 and 2018 is summarized in the following table:

 

The holders of the Series A Preferred Stock are entitled to receive dividend payments only when, as and if declared by the Board (or a duly authorized committee of the Board). Dividends will accrue or be payable in cash from the original issue date, on a cumulative basis, quarterly in arrears on each dividend payment date at a fixed rate per annum equal to 7.50% of the liquidation preference of $25 per share (equivalent to $1.875 per share on an annual basis). Dividends on the Series A Preferred Stock will be cumulative and will accrue whether or not (i) funds are legally available for the payment of those dividends, (ii) the Company has earnings or (iii) those dividends are declared by the Board. The quarterly dividend payment dates on the Series A Preferred Stock are January 31, April 30, July 31 and October 31 of each year, which commenced on October 31, 2017. During the years ended December 31, 2019 and 2018, the Company paid preferred dividends of $5,822 and $5,821, respectively.

Common Stock

General

The Company has 500,000 of authorized shares of common stock, $0.001 par value. As of December 31, 2019 and 2018, there were 43,806 and 25,944 outstanding shares of common stock, respectively.

Common Stock Dividends

Dividend activity on our common stock during the years ended December 31, 2019 and 2018 is summarized in the following table:

During the year ended December 31, 2019, the Company paid total dividends on its common stock, LTIP Units, and OP Units in the amount of $29,171, consisting of the dividends declared for the fourth quarter of 2018 through the third quarter of 2019. Additionally, during the year ended December 31, 2018, the Company paid total dividends on its common stock, LTIP Units and OP Units in the amount of $18,918, consisting of the dividends declared for the fourth quarter of 2017 through the third quarter of 2018.

As of December 31, 2019 and 2018, the Company had an accrued dividend balance of $580 and $316 for dividends payable on the aggregate annual and long-term LTIP Units that are subject to retroactive receipt of dividends on the amount of LTIP Units ultimately earned. During the year ended December 31, 2019, $349 of dividends were accrued and $85 of dividends were paid related to these LTIP Units. During the year ended December 31, 2018, $245 of dividends were accrued and $46 of dividends were paid related to these units.

The amount of the dividends paid to the Company’s stockholders is determined by the Company’s Board and is dependent on a number of factors, including funds available for payment of dividends, the Company’s financial condition and capital expenditure requirements except that, in accordance with the Company’s organizational documents and Maryland law, the Company may not make dividend distributions that would: (i) cause it to be unable to pay its debts as they become due in the usual course of business; (ii) cause its total assets to be less than the sum of its total liabilities plus senior liquidation preferences; or (iii) jeopardize its ability to maintain its qualification as a REIT.

Other Common Stock Activity During 2019

On December 13, 2019, the Company closed an underwritten public offering of its common stock and on December 26, 2019 the Company closed on the related over-allotment option granted to the underwriters. These transactions resulted in the issuance of 6,900 shares of the Company’s common stock at a public offering price of $13.00 per share, generating net proceeds of $84,702.  

On March 18, 2019, the Company closed an underwritten public offering of its common stock and on March 25, 2019, the Company closed on part of the related over-allotment option granted to the underwriters. These transactions resulted in the issuance of 8,233 shares of the Company’s common stock at a public offering price of $9.75 per share, generating net proceeds of $75,723.

The Company, its Advisor, and the Operating Partnership have entered into a Sales Agreement with a number of financial institutions, pursuant to which the Company may offer and sell, from time to time, up to $50 million of its common stock (the “ATM Program”), inclusive of any amounts sold under its prior sales agreement. During the year ended December 31, 2019, the Company issued 2,632 shares of its common stock at an average offering price of $11.24 per share pursuant to the ATM Program, generating net proceeds of $29,073.

Other Common Stock Activity During 2018

 

On December 14, 2018, the Company closed an underwritten public offering of its common stock and on December 26, 2018 the Company closed on the related over-allotment option granted to the underwriters. These transactions resulted in the issuance of 3,651 shares of the Company's common stock at a public offering price of $9.00 per share, generating net proceeds of $31,540.

During the year ended December 31, 2018, the Company issued 662 shares of its common stock at an average offering price of $9.41 per share pursuant to the ATM Program, generating net proceeds of $5,767.

On June 30, 2017, the Company closed an underwritten public offering of its common stock and on July 20, 2017, the Company closed on the related over-allotment option granted to the underwriters. These transactions resulted in the issuance of 4,025 shares of the Company’s  common stock at a public offering price of $9.00 per share, generating net proceeds of $33,795.

In order to help the Company qualify as a REIT, among other purposes, the Company’s charter, subject to certain exceptions, restricts the number of shares of the Company’s common stock that a person may beneficially or constructively own. The Company’s charter provides that, subject to certain exceptions, no person may beneficially or constructively own more than 9.8%,in value or in number of shares, whichever is more restrictive, of the outstanding shares of any class or series of the Company’s capital stock. On June 27, 2016, the Board approved a waiver of the 9.8% ownership limit in the Company’s charter allowing ZH USA, LLC to own up to 16.9% of the Company’s outstanding shares of common stock.

OP Units

OP Units are limited partnership interests in the Company's Operating Partnership. OP Units are redeemable by the holder for cash or, at the Company's option, an equivalent number of shares of the Company's common stock. During the year ended December 31, 2019, the Company issued an aggregate of 49 OP Units with a value of $506 in connection with a facility acquisition. Additionally, during the year ended December 31, 2019, two OP Unit holders redeemed an aggregate of 51 OP Units that were issued during 2017 in connection with a facility acquisition. The Company redeemed such OP Units for shares of its common stock with a value of $519.   During the year ended December 31, 2018, the Company issued an aggregate of 1,899 OP Units with a value of $16,363 in connection with three facility acquisitions. As of December 31, 2019 and 2018, there were 3,143 and 3,145 OP Units issued and outstanding,  respectively, with an aggregate value of $27,881 and $27,894, respectively. The OP Unit value is based on the Company’s closing common stock price on the date of the respective transaction and is included as a component of noncontrolling interest in the Company’s Consolidated Balance Sheets as of December 31, 2019 and 2018. The Company has a sufficient number of common shares authorized to cover the redemption of outstanding OP Units.