4. Non-Controlling Interest

Non-Controlling Interest in Consolidated Entities

Units of limited partnership interests in the Operating Partnership (“OP units”) that are owned by other limited partners are included in non-controlling interest on our condensed consolidated balance sheets. As of March 31, 2014, the Operating Partnership had 16,848,540 OP units outstanding, of which 97.9% were owned by us and 2.1% were owned by other limited partners. The outstanding OP units held by outside limited partners are redeemable for cash, or at our option, for a like number of shares of our common stock.

In January 2014, we agreed to not exercise our right under the Operating Partnership agreement to deliver shares of our common stock in lieu of cash upon a request for redemption of OP units held by certain of our limited partners and instead agreed to redeem such OP units for cash until such time that we have an effective registration statement covering the OP units held by such limited partners. As a result, we are reporting the portion of our non-controlling interest that is redeemable for cash outside of equity as of March 31, 2014. During the three months ended March 31, 2014, we redeemed 112,577 OP units held by our non-controlling interest holders for cash of $1.5 million. Our non-controlling interest holders held 349,798 OP units as of March 31, 2014.

The following is an analysis of the controlling and non-controlling interest from December 31, 2013 to March 31, 2014:

Allocation of Profit and Loss and Cash Distributions prior to our IPO

Prior to the IPO, all profits, losses and cash distributions of the Predecessor were allocated based on the percentages as follows:

Upon the completion of the IPO, the Preferred Units and Common Units in the Predecessor were exchanged for shares of our common stock or OP units in the Operating Partnership, or for certain unit holders in the Predecessor, were redeemed for cash.