NOTE 6. STOCKHOLDERS’ EQUITY

2013 Initial Public Offering

On January 29, 2013, we completed our initial public offering (“IPO”) of 3,333,334 shares of our common stock at a public offering price of $15.00 per share, which issuance settled on January 31, 2013. Including the underwriters’ option to cover over-allotments, which was exercised on February 15, 2013, we issued a total of 3,780,264 shares, resulting in gross proceeds of $56.7 million and net proceeds, after deducting underwriting discounts and offering expenses borne by us, of approximately $51.3 million. Approximately $37.9 million of these proceeds were invested in new property acquisitions, and an additional $1.7 million was expended or accrued for capital improvements on existing properties. In addition, $10.3 million was used to pay distributions to our stockholders, and the remainder was used for other general corporate purposes.

 

2014 Equity Issuances

On September 25, 2014, we completed a public offering of 1,150,000 shares of our common stock at a public offering price of $12.28 per share. This issuance settled on September 29, 2014, and resulted in gross proceeds of approximately $14.1 million and net proceeds, after deducting underwriting discounts and offering expenses borne by us, of approximately $13.2 million. On October 24, 2014, the underwriters exercised a portion of their over-allotment option in connection with this offering, and, as a result, we issued an additional 73,453 shares. This issuance settled on October 29, 2014, and resulted in gross proceeds of approximately $902,000 and net proceeds, after deducting underwriting discounts and offering expenses borne by us, of approximately $838,000. We used the proceeds received from this offering to repay existing indebtedness, to fund new property acquisitions and for other general corporate purposes.

2015 Equity Issuances

On May 13, 2015, we completed a public offering of 1,250,000 shares of our common stock at a public offering price of $11.40 per share. This issuance settled on May 15, 2015, and resulted in gross proceeds of approximately $14.3 million and net proceeds, after deducting underwriting discounts and offering expenses borne by us, of approximately $13.2 million. On June 10, 2015, the underwriters exercised a portion of their over-allotment option in connection with this offering, and, as a result, we issued an additional 56,597 shares. This issuance settled on June 15, 2015, and resulted in gross proceeds of approximately $645,000 and net proceeds, after deducting underwriting discounts and offering expenses borne by us, of approximately $606,000. We used the proceeds received from this offering to repay existing indebtedness, to fund new property acquisitions and for other general corporate purposes.

On December 11, 2015, we completed a public offering of 900,000 shares of our common stock at a public offering price of $8.82 per share. This issuance settled on December 16, 2015, and resulted in gross proceeds of approximately $7.9 million and net proceeds, after deducting underwriting discounts and offering expenses borne by us, of approximately $7.4 million. The underwriters did not exercise their over-allotment option in connection with this offering. We used the proceeds received from this offering to repay existing indebtedness, to fund new property acquisitions and for other general corporate purposes.

At-the-Market Program

On August 7, 2015, we entered into equity distribution agreements (commonly referred to as “at-the-market agreements” or our “Sales Agreements”) with Cantor Fitzgerald & Co. and Ladenburg Thalmann & Co., Inc., each a “Sales Agent,” under which we may issue and sell, from time to time and through the Sales Agents, shares of our common stock having an aggregate offering price of up to $30.0 million (the “ATM Program”). As of December 31, 2015, we have issued and sold 32,627 shares of our common stock at an average sales price of $9.19 per share under the ATM Program for gross proceeds of approximately $300,000 and net proceeds of $295,000. We used these proceeds for general corporate purposes.

 

Distributions

The distributions to common stockholders declared by our Board of Directors and paid by us during the years ended December 31, 2015, 2014 and 2013 are reflected in the table below.

 

Fiscal Year		Declaration Date		Record Date		Payment Date		Distributions per Common Share
2015		January 13, 2015		January 23, 2015		February 3, 2015		$	0.035
		January 13, 2015		February 18, 2015		February 27, 2015			0.035
		January 13, 2015		March 20, 2015		March 31, 2015			0.035
		April 14, 2015		April 24, 2015		May 4, 2015			0.040
		April 14, 2015		May 19, 2015		May 28, 2015			0.040
		April 14, 2015		June 19, 2015		June 30, 2015			0.040
		July 14, 2015		July 24, 2015		August 4, 2015			0.040
		July 14, 2015		August 20, 2015		August 31, 2015			0.040
		July 14, 2015		September 21, 2015		September 30, 2015			0.040
		October 13, 2015		October 26, 2015		October 29, 2015			0.040
		October 13, 2015		November 17, 2015		November 24, 2015			0.040
		October 13, 2015		December 18, 2015		December 31, 2015			0.040
Year ended December 31, 2015								$	0.465
2014		January 7, 2014		January 22, 2014		January 31, 2014		$	0.03
		January 7, 2014		February 19, 2014		February 28, 2014			0.03
		January 7, 2014		March 17, 2014		March 31, 2014			0.03
		April 8, 2014		April 21, 2014		April 30, 2014			0.03
		April 8, 2014		May 20, 2014		May 30, 2014			0.03
		April 8, 2014		June 19, 2014		June 30, 2014			0.03
		July 15, 2014		July 25, 2014		August 5, 2014			0.03
		July 15, 2014		August 20, 2014		August 29, 2014			0.03
		July 15, 2014		September 19, 2014		September 30, 2014			0.03
		October 7, 2014		October 22, 2014		October 31, 2014			0.03
		October 7, 2014		November 17, 2014		November 26, 2014			0.03
		October 7, 2014		December 19, 2014		December 31, 2014			0.03
Year ended December 31, 2014								$	0.36
2013		February 5, 2013		February 15, 2013		February 28, 2013		$	0.04
		February 5, 2013		March 15, 2013		March 28, 2013			0.04
		April 9, 2013		April 22, 2013		April 30, 2013			0.12
		April 9, 2013		May 20, 2013		May 31, 2013			0.12
		April 9, 2013		June 19, 2013		June 28, 2013			0.12
		July 9, 2013		July 19, 2013		July 31, 2013			0.12
		July 9, 2013		August 21, 2013		August 30, 2013			0.12
		July 9, 2013		September 18, 2013		September 30, 2013			0.12
		October 8, 2013		October 22, 2013		October 31, 2013			0.12
		October 8, 2013		November 14, 2013		November 29, 2013			0.12
		October 8, 2013		December 16, 2013		December 31, 2013			0.12
		December 3, 2013		December 16, 2013		December 31, 2013			0.33	(1)
Year ended December 31, 2013								$	1.49

 

(1)	Represents a one-time declaration to distribute the final amount of remaining earnings and profits from prior years.

 

During the years ended December 31, 2015, 2014 and 2013, we paid aggregate distributions to stockholders of approximately $4.1 million, $2.5 million and $9.7 million, respectively. Approximately $9.6 million of the distributions paid to stockholders during the year ended December 31, 2013, related to the distribution of accumulated earnings and profits from prior years that we were required to pay out by December 31, 2013, in order to qualify as a REIT for our taxable year ended December 31, 2013.

For federal income tax characterization purposes, distributions paid to stockholders may be characterized as ordinary income, capital gains, return of capital or a combination thereof. The characterization of distributions on our common stock during each of the last three years is reflected in the following table:

 

For the Years Ended December 31,		Ordinary Income				Return of Capital				Long-term Capital Gain
2015			62.29540	%			37.34781	%			0.35679	%
2014			95.66078	%			4.33922	%			0.00000	%
2013			100.00000	% (1)			0.00000	%			0.00000	%

 

(1)	98.53746% of this amount was classified as a Qualified Dividend.

Registration Statement

We filed a universal registration statement on Form S-3 (File No. 333-194539) with the SEC on March 13, 2014, which the SEC declared effective on April 2, 2014. This universal registration statement permits us to issue up to an aggregate of $300.0 million in securities, consisting of common stock, senior common stock, preferred stock, subscription rights, debt securities and depository shares, including through separate, concurrent offerings of two or more of such securities. As of December 31, 2015, we have issued 2,156,080 shares of common stock for gross proceeds of $23.3 million under this universal registration statement.

On November 5, 2014, we filed a registration statement on Form S-11 (File No. 333-199896) with the SEC, and on each of April 27 and May 11, 2015, we filed pre-effective amendments to such registration statement, which the SEC declared effective on May 13, 2015. Pursuant to this registration statement, we completed the offering in May 2015 discussed above.