Mandatorily-Redeemable Preferred Stock
|12 Months Ended|
Dec. 31, 2020
|Mandatorily-Redeemable Preferred Stock||MANDATORILY-REDEEMABLE PREFERRED STOCK
In August 2016, we completed a public offering of 6.375% Series A Cumulative Term Preferred Stock, par value $0.001 per share (the “Series A Term Preferred Stock”), at a public offering price of $25.00 per share. As a result of this offering (including the underwriters’ exercise of their option to purchase additional shares to cover over-allotments), we issued a total of 1,150,000 shares of the Series A Term Preferred Stock for gross proceeds of approximately $28.8 million and net proceeds, after deducting underwriting discounts and offering expenses borne by us, of approximately $27.6 million.
Generally, we were not permitted to redeem shares of the Series A Term Preferred Stock prior to September 30, 2018, except in limited circumstances to preserve our qualification as a REIT. Since September 30, 2018, we were permitted to redeem the shares at a redemption price of $25.00 per share, plus any accumulated and unpaid dividends up to, but excluding, the date of redemption. The shares of the Series A Term Preferred Stock had a mandatory redemption date of September 30, 2021, and were not convertible into our common stock or any other securities. As of December 31, 2020, no shares of Series A Term Preferred Stock were redeemed.
We incurred approximately $1.2 million in total offering costs related to this issuance, which have been recorded net of the Series A Term Preferred Stock as presented on the accompanying Consolidated Balance Sheets and are being amortized over the mandatory redemption period as a component of interest expense on the accompanying Consolidated Statements of Operations and Comprehensive Income. The Series A Term Preferred Stock is recorded as a liability on our accompanying Consolidated Balance Sheets in accordance with ASC 480, “Distinguishing Liabilities from Equity,” which states that mandatorily-redeemable financial instruments should be classified as liabilities. In addition, the related dividend payments are treated similarly to interest expense on the accompanying Consolidated Statements of Operations and Comprehensive Income.Due to the short-term maturity of our Series A Term Preferred Stock, its carrying value (exclusive of unamortized offering costs) of approximately $28.8 million was deemed to approximate its fair value as of December 31, 2020. Subsequent to December 31, 2020, we issued a new series of mandatorily-redeemable preferred stock and redeemed all of our outstanding shares of Series A Term Preferred Stock (see Note 11, “Subsequent Events,” for more information on both events). For information on the dividends declared by our Board of Directors and paid by us on the Series A Term Preferred Stock during the years ended December 31, 2020 and 2019, see Note 8, “Equity—Distributions.”
The entire disclosure for terms, amounts, nature of changes, rights and privileges, dividends, and other matters related to preferred stock.
Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef