EARNINGS PER SHARE

9 Months Ended

Sep. 30, 2020

Basic earnings per share is computed by dividing net income available to common shareholders by the weighted average number of our common shares of beneficial interest (“common shares”) outstanding during the period. We have issued restricted stock units (“RSUs”) and incentive stock options ("ISOs") under our 2015 Incentive Plan and Series D Convertible Preferred Units ("Series D preferred units"), which could have a dilutive effect on our earnings per share upon exercise of the RSUs or ISOs or upon conversion of the Series D preferred units (refer to Note 4 for further discussion of the Series D preferred units). Other than the issuance of RSUs, ISOs, and Series D preferred units, we have no outstanding options, warrants, convertible stock or other contractual obligations requiring issuance of additional shares that would result in dilution of earnings. Under the terms of the Operating Partnership’s Agreement of Limited Partnership, limited partners have the right to require the Operating Partnership to redeem their limited partnership units (“Units”) any time following the first anniversary of the date they acquired such Units (“Exchange Right”). Upon the exercise of Exchange Rights, and in our sole discretion, we may issue common shares in exchange for Units on a one-for-one basis.

Performance-based RSUs of 27,506 and 37,822 for the three months ended September 30, 2020 and 2019, respectively, and 27,506 and 37,822 for the nine months ended September 30, 2020 and 2019, respectively, were excluded from the calculation of diluted earnings per share because they were anti-dilutive.

For the nine months ended September 30, 2020, Series D preferred units of 228,000 and time-based RSUs of 13,000 were excluded from the calculation of diluted earnings per share because they were anti-dilutive.

For the three and nine months ended September 30, 2020, weighted average stock options of 140,554 and 68,292, respectively, were excluded from the calculation of diluted earnings per share because the assumed proceeds per share plus the average unearned compensation were greater than the average market price of common shares for the periods ended and, therefore were anti-dilutive.

The following table presents a reconciliation of the numerator and denominator used to calculate basic and diluted earnings per share reported in the condensed consolidated financial statements for the three and nine months ended September 30, 2020 and 2019:


	(in thousands, except per share data)
	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
NUMERATOR


Net income (loss) attributable to controlling interests	$	19,629	$	31,596	$	8,819	$	30,011
Dividends to preferred shareholders	(1,607)		(1,705)		(4,921)		(5,116)
Redemption of preferred shares	(1)		—		297		—
Numerator for basic earnings (loss) per share – net income available to common shareholders	18,021		29,891		4,195		24,895
Noncontrolling interests – Operating Partnership	1,387		3,145		248		2,550
Dividends to preferred unitholders	160		160		480		377
Numerator for diluted earnings (loss) per share	$	19,568	$	33,196	$	4,923	$	27,822
DENOMINATOR
Denominator for basic earnings per share weighted average shares	12,885		11,625		12,424		11,705
Effect of redeemable operating partnership units	1,020		1,223		1,039		1,282
Effect of Series D preferred units	228		228		—		181
Effect of dilutive restricted stock units and stock options	10		11		—		6
Denominator for diluted earnings per share	14,143		13,087		13,463		13,174



NET EARNINGS (LOSS) PER COMMON SHARE – BASIC	$	1.40	$	2.57	$	0.33	$	2.11



NET EARNINGS (LOSS) PER COMMON SHARE – DILUTED	$	1.38	$	2.54	$	0.33	$	2.11