Earnings per share (Notes)

12 Months Ended

Dec. 31, 2019

From time to time, we enter into forward equity sales agreements, discussed in Note 16 – “Stockholders’ Equity” to our consolidated financial statements. We considered the potential dilution resulting from the forward equity sales agreements on the EPS calculations. At inception, the agreements do not have an effect on the computation of basic EPS as no shares are delivered until settlement. The common shares issued upon the settlement of the forward equity sales agreements, weighted for the period these common shares were outstanding, are included in the denominator of basic EPS. To determine the dilution resulting from the forward equity sales agreements during the period of time prior to settlement, we calculate the number of weighted-average shares outstanding – diluted using the treasury stock method.

During the year ended December 31, 2019, we repurchased, in privately negotiated transactions, 275,000 shares of our 7.00% Series D cumulative convertible preferred stock (“Series D Convertible Preferred Stock”). Additionally, in October 2019 we elected to convert 2.3 million outstanding shares of our Series D Convertible Preferred Stock into shares of our common stock. As of December 31, 2019, we had no shares of our Series D Convertible Preferred Stock outstanding. Refer to “7.00% Series D Cumulative Convertible Preferred Stock Repurchases and Conversion” in Note 16 – “Stockholders’ Equity” to our consolidated financial statements for further detail. For the period during which our Series D Convertible Preferred Stock was outstanding, we calculated the number of weighted-average shares outstanding – diluted using the if-converted method. Shares of Alexandria Real Estate Equities, Inc.’s common shares issued upon conversion, weighted for the period the common shares were outstanding, were included in the denominator for the period after the date of conversion. For purposes of calculating diluted EPS, we did not assume conversion of our Series D Convertible Preferred Stock for the years ended December 31, 2019, 2018, and 2017, since the result was antidilutive to EPS attributable to Alexandria Real Estate Equities, Inc.’s common stockholders from continuing operations during those periods.

We account for unvested restricted stock awards that contain nonforfeitable rights to dividends as participating securities and include these securities in the computation of EPS using the two-class method. Our Series D Convertible Preferred Stock and forward equity sales agreements are not participating securities and are therefore not included in the computation of EPS using the two-class method. Under the two-class method, we allocate net income (after amounts attributable to noncontrolling interests, dividends on preferred stock, and preferred stock redemption charge) to common stockholders and unvested restricted stock awards by using the weighted-average shares of each class outstanding for quarter-to-date and year-to-date periods independently, based on their respective participation rights to dividends declared (or accumulated) and undistributed earnings.

The table below is a reconciliation of the numerators and denominators of the basic and diluted EPS computations for the years ended December 31, 2019, 2018, and 2017 (in thousands, except per share amounts):



	Year Ended December 31,
	2019			2018			2017
Net income	$	404,047		$	402,793		$	194,204
Net income attributable to noncontrolling interests	(40,882		)	(23,481		)	(25,111		)
Dividends on preferred stock	(3,204		)	(5,060		)	(7,666		)
Preferred stock redemption charge	(2,580		)	(4,240		)	(11,279		)
Net income attributable to unvested restricted stock awards	(6,386		)	(6,029		)	(4,753		)
Numerator for basic and diluted EPS – net income attributable to Alexandria Real Estate Equities, Inc.’s common stockholders	$	350,995		$	363,983		$	145,395

Denominator for basic EPS – weighted-average shares of common stock outstanding	112,204			103,010			91,546
Dilutive effect of forward equity sales agreements	320			311			517
Denominator for diluted EPS – weighted-average shares of common stock outstanding	112,524			103,321			92,063
Net income per share attributable to Alexandria Real Estate Equities, Inc.’s common stockholders:
Basic	$	3.13		$	3.53		$	1.59
Diluted	$	3.12		$	3.52		$	1.58