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Earnings per Share

6 Months Ended

Jun. 30, 2021

(12) Earnings per Share

The Company calculates its basic and diluted earnings (loss) per share using the two-class method for all periods presented, which defines unvested share-based payment awards that contain nonforfeitable rights to dividends as participating securities. The two-class method is an allocation formula that determines earnings per share for each share of common stock and participating securities according to dividends declared and participation rights in undistributed earnings. Under this method, all earnings (distributed and undistributed) are allocated to common shares and participating securities based on their respective rights to receive dividends. The unvested restricted shares of its common stock granted to certain current and former employees and affiliates of the Manager qualify as participating securities. These restricted shares have the same rights as the Company’s other shares of common stock and Class A common stock (which Class A shares were converted to common shares in February 2020), including participating in any dividends, and therefore are included in the Company’s basic and diluted earnings per share calculation. For the three months ended June 30, 2021 and 2020, $0.1 million and $0.1 million, respectively, of common stock dividends declared and undistributed net income attributable to common stockholders were allocated to unvested shares of our common stock pursuant to stock grants made under the Company’s Incentive Plan. For the six months ended June 30, 2021 and 2020, $0.3 million and $0.4 million, respectively, of common stock dividends declared and undistributed net income attributable to common stockholders were allocated to unvested shares of our common stock pursuant to stock grants made under the Company’s Incentive Plan. See Note 14 for details.

In connection with the issuance of Series B Preferred Stock and the Warrants described in Note 13, the Company elected the accreted redemption value method whereby the discount created based on the relative fair value of the Warrants to the fair value of the Series B Preferred Stock and the related issuance costs will be accreted as a non-cash dividend on preferred stock over four years using the effective interest method. Such adjustments are included in Accretion of Discount on Series B Cumulative Redeemable Preferred Stock on the Company’s consolidated statements of changes in equity and treated as a deemed dividend on preferred stock for GAAP and income tax purposes. For the three months ended June 30, 2021 and 2020, this adjustment totaled $24.0 million and $0.4 million, respectively. For the six months ended June 30, 2021 and 2020, this adjustment totaled $25.4 million and $0.4 million, respectively.

On June 16, 2021, the Company redeemed all 9,000,000 outstanding shares of Series B Preferred Stock, made a make-whole payment of $22.5 million and wrote-off $22.5 million of unamortized discount, including the unamortized amounts related to the allocated Warrant fair value and transaction costs. The Series B Preferred Stock make-whole payment and write-off of unamortized discount are included in the Company’s consolidated statements of changes in equity and described in Note 13 and are not recognized as an expense for purposes of calculating either taxable income or the Company’s minimum distribution requirement for purposes of maintaining its REIT status.

The computation of diluted earnings per common share is based on the weighted average number of participating securities outstanding plus the incremental shares that would be outstanding assuming exercise of the Warrants. The number of incremental common shares is calculated utilizing the treasury stock method. For the three months ended June 30, 2021, the Warrants are excluded from the calculation of diluted earnings per common share since their effect would be anti-dilutive. For the six months ended June 30, 2021, the Warrants are included in the calculation of diluted earnings per common share because the Company generated earnings on a per common share basis and the average market price of the Company’s common stock during the six months ended June 30, 2021 was $11.90, which exceeds the strike price of $7.50 per common share for Warrants currently outstanding.

The following table sets forth the calculation of basic and diluted earnings per common share based on the weighted-average number of shares of common stock outstanding for the three and six months ended June 30, 2021 and 2020 (in thousands, except share and per share data):

	Three Months Ended June 30,						Six Months Ended June 30,
	2021			2020			2021			2020
Net Income (Loss)	$	32,391		$	42,928		$	64,347		$	(189,862	)
Preferred Stock Dividends ⁽¹⁾		(6,799	)		(2,255	)		(12,923	)		(2,258	)
Participating Securities' Share in Earnings (Loss)		(148	)		(125	)		(294	)		(393	)
Series B Preferred Stock Redemption Make-Whole Payment⁽²⁾		(22,485	)		—			(22,485	)		—
Series B Preferred Stock Accretion and Write-off of Discount⁽³⁾		(23,997	)		(443	)		(25,449	)		(443	)
Net (Loss) Income Attributable to Common Stockholders	$	(21,038	)	$	40,105		$	3,196		$	(192,956	)
Weighted Average Common Shares Outstanding, Basic		76,899,270			76,644,038			76,897,453			76,554,680
Incremental shares of common stock issued from the assumed exercise of the Warrants		—			—			4,433,898			—
Weighted Average Common Shares Outstanding, Diluted		76,899,270			76,644,038		$	81,331,351		$	76,554,680
(Loss) Earnings Per Common Share, Basic⁽⁴⁾	$	(0.27	)	$	0.52		$	0.04		$	(2.53	)
(Loss) Earnings Per Common Share, Diluted⁽⁴⁾	$	(0.27	)	$	0.52		$	0.04		$	(2.53	)

(1)

Includes preferred stock dividends declared and paid for Series A preferred stock and Series B Preferred Stock shares outstanding for the three and six months ended June 30, 2021 and 2020, and undeclared dividends for Series C Preferred Stock shares outstanding of $0.6 million for the three and six months ended June 30, 2021.

(2)

Represents the make-whole payment to the holder of the Series B Preferred Stock for an amount equal to the present value of all remaining dividend payments due on such share of Series B Preferred Stock from and after the redemption date (and not including any declared or paid dividends or accrued dividends prior to such redemption date) through the second anniversary of the original issue date, computed in accordance with the terms of the Articles Supplementary. See Note 13 to these consolidated financial statements for details.

(3)

Series B Preferred Stock Accretion and Write-off of Discount, including Allocated Warrant Fair Value and Transaction Costs includes amounts recorded as deemed dividends and the write-off of unamortized transaction costs and the unaccreted portion of the allocated Warrant fair value related to the Company’s Series B Preferred Stock. For the three months ended June 30, 2021, the write-off of unamortized transaction costs and unaccreted allocated Warrant fair value was $22.5 million.

(4)

Basic and diluted (loss) earnings per common share are computed independently based on the weighted-average shares of common stock outstanding. Diluted (loss) earnings per common share also includes the impact of participating securities outstanding plus any incremental shares that would be outstanding assuming the exercise of the Warrants. Accordingly, the sum of the quarterly (loss) earnings per common share amounts may not agree to the total for the six months ended June 30, 2021.