Annual report pursuant to Section 13 and 15(d)

Stockholders' Equity

Stockholders' Equity
12 Months Ended
Dec. 31, 2013
Equity [Abstract]  
Stockholders' Equity
7. Stockholders’ Equity

Prior to IPO

Prior to the IPO, MMREIS had issued and outstanding 1,000 shares of Series A Redeemable Preferred Stock (Series A Preferred) and 234,489 shares of common stock. Terms of the Series A Preferred were as follows:

Liquidation Preference

In the event of voluntary or involuntary liquidation, the Series A Preferred stockholders were entitled to be paid, before any payment was to be made in respect of MMREIS’s common stock, an amount equal to $10 per share of Series A Preferred plus all accrued but unpaid dividends for each share of Series A Preferred. If, upon liquidation, the assets of MMREIS available for distribution to its stockholders were insufficient to pay the holders of Series A Preferred, the entire remaining assets of MMREIS available for distribution would have been distributed ratably among the holders of the Series A Preferred in proportion to the full amount to which they would have otherwise been respectively entitled.

After the payment or setting apart for payment to the holders of the Series A Preferred, the remaining assets and funds of MMREIS available for distribution to the stockholders would have been distributed among the holders of common stock pro rata on the basis of the number of shares of common stock then outstanding.


MMREIS was permitted to redeem any or all shares of Series A Preferred by paying an amount equal to $10 per share plus all declared and unpaid dividends with respect to such shares at the redemption date. Series A Preferred shares were not convertible into common stock.

Voting Rights

The Series A Preferred stockholders did not have voting rights.


Prior to the IPO, MMREIS distributed substantially all of its net income to MMC in the form of cash dividends. The stockholders of Series A Preferred were entitled to receive dividends, payable in preference and priority to any distribution on common stock, at a rate determined by the Board of Directors, when and as declared by the Board of Directors. The right to dividends on the Series A Preferred was not cumulative, and no right accrued to the holders of Series A Preferred by reason of the fact that dividends on such shares were not declared and paid in any prior year, nor are any undeclared or unpaid dividends entitled to bear or accrue interest. No dividends were paid with respect to common stock unless Series A Preferred stockholders received a dividend return in such year in the amount of $10 for each outstanding share of Series A Preferred. To the extent that dividends were declared on any common share, a dividend in an equal amount was to be paid on each outstanding share of Series A Preferred.

Total preferred dividends declared and paid for the twelve months ended December 31, 2013, 2012 and 2011 were $37.7 million, $30.8 million and $16.5 million, respectively. No dividends were declared for common stock for the twelve months ended December 31, 2013, 2012 and 2011.


On November 5, 2013, the Company completed its IPO of 6,900,000 shares of common stock at a price to the public of $12.00 per share. The Company’s shares are traded on the New York Stock Exchange. The Company sold 4,173,413 shares of common stock in the IPO, including 900,000 shares of common stock pursuant to the exercise of the underwriters’ option to purchase additional shares. Selling stockholders sold an aggregate of 2,726,587 shares in the IPO at the same price to the public. The Company did not receive any of the proceeds from the sale of such shares by the selling stockholders. The Company received proceeds from its IPO of $42.3 million, including the underwriters’ full exercise of their option to purchase additional shares and after deducting the underwriting discounts and commissions of $3.5 million and IPO related expenses of $4.3 million.


Common Stock

On October 30, 2013 and prior to completion of the Company’s IPO, MMC and the other stockholders of MMREIS contributed all of the 1,000 issued and outstanding shares of Series A Preferred, $10.00 par value and 234,489 issued and outstanding shares of MMREIS common stock, $1.00 par value, in exchange for 32,357,901 shares of Marcus & Millichap common stock, $0.0001 par value. The 234,489 issued and outstanding shares of MMREIS common stock included 28,749 shares owned by MMREIS managing directors.

As of December 31, 2013, there were 36,600,897 shares of common stock, $0.0001 par value, issued and outstanding. The issued and outstanding common stock as of December 31, 2013 includes 32,357,901 shares of common stock discussed above, 4,173,413 shares of common stock sold in the IPO, 39,583 shares of fully vested unrestricted common stock issued to certain individuals in connection with the IPO and 30,000 restricted stock issued to the non-employee directors.

Following the IPO, the Company does not intend to pay a regular dividend. The Company will evaluate its dividend policy in the future. Any declaration and payment of future dividends to holders of the Company’s common stock will be at the discretion of the board of directors and will depend on many factors, including the Company’s financial condition, earnings, cash flows, capital requirements, level of indebtedness, statutory and contractual restrictions applicable to the payment of dividends and other considerations that the board of directors deems relevant.

Preferred Stock

Following the IPO, the Company has 25,000,000 authorized shares of preferred stock with a par value $0.0001 per share. At December 31, 2013, there were no preferred shares issued or outstanding.

Deemed Capital Contribution (Distribution) from MMC

Deemed capital contribution (distribution) from MMC in additional paid in capital consists of the following (in thousands):


     Year Ended
December 31,
     2013     2012      2011  

Deemed capital contribution from MMC (prior to IPO)

   $ 2,655      $ 4,209       $ 1,610   

Deferred taxes assets, net

     26,572        —           —     

SARs liability

     (19,970     —           —     

Notes payable to former stockholders

     (12,230     —           —     

Interest expense related to notes payable to former stockholders

     (318     —           —     









   $ (3,291   $ 4,209       $ 1,610   










Deemed capital contribution from MMC (prior to IPO) related to compensation cost for unvested restricted stock and SARs, net of applicable taxes.

In conjunction with the IPO and the termination of the tax-sharing agreement between MMREIS and MMC, certain liabilities and legal obligations of MMREIS that had been previously assumed by MMC were transferred back to MMREIS as non-cash deemed contributions (distributions) from MMC. Such liabilities and legal obligations included (i) the assumption of a liability of $20.0 million related to amounts frozen under the SARs program based on a frozen value calculated as of March 31, 2013; (ii) the assumption of a liability of $12.2 million related to notes payable to certain former stockholders of MMREIS in settlement of SARs and restricted stock awards which were redeemed by MMREIS upon the termination of employment by these former stockholders; (iii) the assumption of a liability of approximately $0.3 million related to interest payable associated with notes payable to former stockholders. See Note 5 – “Notes Payable” for additional information; and (iv) deferred tax assets, net totaling $26.6 million using an effective tax rate of 40.0% primarily pertaining to these and other items in connection with IPO. See Note 9 – “Income Taxes” for additional information.

Accumulated Other Comprehensive Income

The Company did not have other comprehensive income for each of the years ended December 31, 2013, 2012 and 2011.