EARNINGS PER SHARE

6 Months Ended

Jun. 30, 2021

Basic earnings per share is computed by dividing net income available to common shareholders by the weighted average number of common shares of beneficial interest (“common shares”) outstanding during the period. Centerspace has issued restricted stock units (“RSUs”) and incentive stock options (“ISOs”) under the 2015 Incentive Plan and Series D Convertible Preferred Units (“Series D preferred units”), which could have a dilutive effect on the 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, there are 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 Centerspace’s sole discretion, it may issue common shares in exchange for Units on a one-for-one basis.

Performance-based RSUs of 31,030 and 27,964 for the three and six months ended June 30, 2021 and 2020, respectively, were excluded from the calculation of diluted earnings per share because they were anti-dilutive.

For the three and six months ended June 30, 2020, Series D preferred units of 228,000 were excluded from the calculation of diluted earnings per share because they were anti-dilutive. For the three and six months ended June 30, 2020, time-based RSUs of 13,000 and 15,000, respectively, were excluded from the calculation of diluted earnings per share because they were anti-dilutive.

For the three and six months ended June 30, 2021, weighted average stock options of 43,629 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. For the three and six months ended June 30, 2020, weighted average stock options of 63,527 and 31,764, respectively, were excluded from the calculation of diluted earnings per share.

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 six months ended June 30, 2021 and 2020:


	(in thousands, except per share data)
	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
NUMERATOR


Net income (loss) attributable to controlling interests	$	21,538	$	(3,803)	$	16,671	$	(10,810)
Dividends to preferred shareholders	(1,607)		(1,609)		(3,214)		(3,314)
Redemption of preferred shares	—		25		—		298
Numerator for basic earnings (loss) per share – net income available to common shareholders	19,931		(5,387)		13,457		(13,826)
Noncontrolling interests – Operating Partnership	1,386		(447)		917		(1,139)
Dividends to preferred unitholders	160		160		320		320
Numerator for diluted earnings (loss) per share	$	21,477	$	(5,674)	$	14,694	$	(14,645)
DENOMINATOR
Denominator for basic earnings per share weighted average shares	13,353		12,280		13,216		12,192
Effect of redeemable operating partnership units	916		1,037		939		1,047
Effect of Series D preferred units	228		—		228		—
Effect of dilutive restricted stock units and stock options	17		—		18		—
Denominator for diluted earnings per share	14,514		13,317		14,401		13,239



NET EARNINGS (LOSS) PER COMMON SHARE – BASIC	$	1.49	$	(0.44)	$	1.02	$	(1.13)



NET EARNINGS (LOSS) PER COMMON SHARE – DILUTED	$	1.48	$	(0.44)	$	1.02	$	(1.13)