Earnings Per Common Share

9 Months Ended

Sep. 30, 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.

Refer to Note 11 for a discussion of the sale of shares under and settlement of forward sales agreements during the periods presented. 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 calculate 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 nine months ended September 30, 2020 and 2019 was 0.3 million and 1.9 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 September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Numerator
Net income (loss)	$	(59,581)	$	(42,308)	$	278,008	$	12,702
Noncontrolling interests' share in earnings	(3,836)		(3,555)		(10,839)		(10,692)
Net income (loss) attributable to Healthpeak Properties, Inc.	(63,417)		(45,863)		267,169		2,010
Less: Participating securities' share in earnings	(351)		(386)		(2,151)		(1,223)


Net income (loss) applicable to common shares	$	(63,768)	$	(46,249)	$	265,018	$	787





Denominator
Basic weighted average shares outstanding	538,333		491,203		527,908		482,595
Dilutive potential common shares - equity awards(1)	—		—		279		296
Dilutive potential common shares - forward equity agreements(2)	—		—		268		1,901

Diluted weighted average common shares	538,333		491,203		528,455		484,792








Earnings (loss) per common share:
Basic	$	(0.12)	$	(0.09)	$	0.50	$	0.00
Diluted	$	(0.12)	$	(0.09)	$	0.50	$	0.00

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(1)For all periods presented, represents the dilutive impact of 1 million outstanding equity awards (restricted stock units and stock options).

(2)For the nine months ended September 30, 2020, represents the dilutive impact of 32 million shares that were settled during the nine months then ended. For the nine months ended September 30, 2019, represents the dilutive impact of 11 million shares that were settled during the nine months then ended and 19 million shares of common stock under forward sales agreements that had not been settled as of September 30, 2019. For the three months ended September 30, 2020, forward sales agreements had no dilutive impact as all agreements were settled prior to the start of the period. For the three months ended September 30, 2020 and September 30, 2019, diluted loss per share is calculated using the weighted average common shares outstanding as a result of the Company generating a net loss applicable to common shares for the period.

For all periods presented in the table above, all 7 million shares issuable upon conversion of DownREIT units were not included because they are anti-dilutive.