EARNINGS PER SHARE

9 Months Ended

Sep. 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, Series D Convertible Preferred Units (“Series D preferred units”), and Series E Convertible Preferred Units (“Series E 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 or Series E preferred units (refer to Note 4 for further discussion of the Series D and the Series E preferred units). Other than the issuance of RSUs, ISOs, Series D preferred units, and Series E 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 31,821 for the three and nine months ended September 30, 2021 and 27,506 for the three and nine months ended September 30, 2020, 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 they 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, 2021 and 2020:


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


Net income (loss) attributable to controlling interests	$	(9,492)	$	19,629	$	7,179	$	8,819
Dividends to preferred shareholders	(1,607)		(1,607)		(4,821)		(4,921)
Redemption of preferred shares	—		(1)		—		297
Numerator for basic earnings (loss) per share – net income available to common shareholders	(11,099)		18,021		2,358		4,195
Noncontrolling interests – Operating Partnership and Series E preferred units	(1,930)		1,387		(1,013)		248

Dividends to preferred unitholders	160		160		480		480
Numerator for diluted earnings (loss) per share	$	(12,869)	$	19,568	$	1,825	$	4,923
DENOMINATOR
Denominator for basic earnings per share weighted average shares	14,065		12,885		13,501		12,424
Effect of redeemable operating partnership units	865		1,020		917		1,039
Effect of Series D preferred units	228		228		228		—
Effect of Series E preferred units	705		—		239		—
Effect of dilutive restricted stock units and stock options	59		10		32		—
Denominator for diluted earnings per share	15,922		14,143		14,917		13,463



NET EARNINGS (LOSS) PER COMMON SHARE – BASIC	$	(0.79)	$	1.40	$	0.17	$	0.33



NET EARNINGS (LOSS) PER COMMON SHARE – DILUTED	$	(0.81)	$	1.38	$	0.12	$	0.33