Earnings Per Common Share

3 Months Ended

Mar. 31, 2020

Basic income (loss) per common share (“EPS”) is computed based on the weighted average number of common shares outstanding. Diluted income (loss) per common share is computed based on the weighted average number of common shares outstanding plus the impact of forward equity sales agreements using the treasury stock method and common shares issuable from the assumed conversion of DownREIT units, stock options, certain performance restricted stock units, and unvested restricted stock units. Only those instruments having a dilutive impact on the Company’s basic income (loss) per share are included in diluted income (loss) per share during the periods presented.

Restricted stock and certain performance restricted stock units are considered participating securities, because dividend payments are not forfeited even if the underlying award does not vest, and require use of the two-class method when computing basic and diluted earnings per share.

During the three months ended March 31, 2020 and 2019, the Company utilized the forward sale provisions under the 2019 ATM Program to sell up to an aggregate of 2.0 million and 3.6 million shares of common stock, respectively, with a one year term. During the three months ended March 31, 2020, the Company settled all 16.8 million shares previously outstanding under ATM forward contracts, leaving no shares outstanding thereunder. The Company did not settle any shares under ATM forward contracts during the three months ended March 31, 2019.

In November 2019, the Company entered into the 2019 forward equity sales agreement to sell an aggregate of 15.6 million shares of its common stock, including shares sold through the exercise of underwriters’ options. During the three months ended March 31, 2020, the Company settled all 15.6 million shares under the 2019 forward equity sales agreement.

Additionally, in December 2018, the Company entered into the 2018 forward equity sales agreement to sell an aggregate of 15.3 million shares of its common stock, including shares sold through the exercise of underwriters’ options. During the three months ended March 31, 2019, no shares were settled under the 2018 forward equity sales agreement.

The Company considered the potential dilution resulting from the forward agreements to the calculation of earnings per share. At inception, the agreements do not have an effect on the computation of basic EPS as no shares are delivered until settlement. However, the Company uses the treasury stock method to determine the dilution, if any, resulting from the forward sales agreements during the period of time prior to settlement. The aggregate effect on the Company’s diluted weighted-average common shares for the three months ended March 31, 2020 and 2019, was 0.8 million and 1.1 million weighted-average incremental shares, respectively, from the forward equity sales agreements.

The following table illustrates the computation of basic and diluted earnings per share (in thousands, except per share amounts):



	Three Months Ended March 31,
	2020			2019
Numerator
Net income (loss)	$	282,540		$	64,990
Noncontrolling interests' share in earnings	(3,460		)	(3,520		)
Net income (loss) attributable to Healthpeak Properties, Inc.	279,080			61,470
Less: Participating securities' share in earnings	(1,616		)	(441		)
Net income (loss) applicable to common shares	$	277,464		$	61,029

Numerator - Dilutive
Net income (loss) applicable to common shares	$	277,464		$	61,029
Add: distributions on dilutive convertible units and other	2,515			—
Dilutive net income (loss) available to common shares	$	279,979		$	61,029
Denominator
Basic weighted average shares outstanding	506,476			477,766
Dilutive potential common shares - equity awards	318			272
Dilutive potential common shares - forward equity agreements⁽¹⁾	808			1,093
Dilutive potential common shares - DownREIT conversions	7,443			—
Diluted weighted average common shares	515,045			479,131
Earnings per common share:
Basic	$	0.55		$	0.13
Diluted	$	0.54		$	0.13

_______________________________________


(1)	For the three months ended March 31, 2020, represents the dilutive impact of 32 million shares that were settled during the three months then ended. For the three months ended March 31, 2019, represents the dilutive impact of 19 million shares of common stock under forward sales agreements that had not been settled as of March 31, 2019.

For the three months ended March 31, 2020, all 7 million DownREIT shares were dilutive. For the three months ended March 31, 2019, 6 million shares issuable upon conversion of DownREIT units were not included because they are anti-dilutive. Additionally, for the three months ended March 31, 2020 and 2019, 31 million and 18 million shares of common stock, respectively, issuable pursuant to the settlement of forward equity sales agreements were not included because they are anti-dilutive (see discussion above). For all periods presented in the table above, approximately 1 million shares of common stock subject to outstanding equity awards (restricted stock units and stock options) were not included because they are anti-dilutive.