NET INCOME (LOSS) PER SHARE

12 Months Ended

Dec. 31, 2023

Basic net income (loss) per share is computed by dividing net income (loss) 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 its 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 net income (loss) per share upon exercise of the RSUs, ISOs, or upon conversion of the Series D or Series E preferred units (refer to Note 4 for further discussion of the 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 common shares that would result in a dilution of net income (loss). 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.

The following table presents a reconciliation of the numerator and denominator used to calculate basic and diluted net income (loss) per share reported in the Consolidated Financial Statements for the years ended December 31, 2023, 2022, and 2021:


	(in thousands, except per share data)
	Year Ended December 31,
	2023		2022		2021
NUMERATOR


Net income (loss) attributable to controlling interests	41,325		(14,109)		(29)
Dividends to preferred shareholders	(6,428)		(6,428)		(6,428)

Numerator for basic income per share – net income (loss) available to common shareholders	34,897		(20,537)		(6,457)
Noncontrolling interests – Operating Partnership and Series E preferred units	4,877		(4,299)		(2,806)
Dividends to preferred unitholders(1)	—		640		640
Numerator for diluted income (loss) per share	$	39,774	$	(24,196)	$	(8,623)
DENOMINATOR
Denominator for basic income (loss) per share weighted average shares	14,994		15,216		13,803


Effect of Series E preferred units	2,100		—		—
Effect of diluted restricted stock awards and restricted stock units	24		—		—
Denominator for diluted income (loss) per share	17,118		15,216		13,803



NET INCOME (LOSS) PER COMMON SHARE – BASIC	$	2.33	$	(1.35)	$	(0.47)



NET INCOME (LOSS) PER COMMON SHARE – DILUTED	$	2.32	$	(1.35)	$	(0.47)

(1)For the year ended December 31, 2023, dividends to preferred unitholders of $640,000 were excluded from the calculation of diluted net income (loss) per share because they were anti-dilutive.

For the year ended December 31, 2023, Units of 925,000 and Series D preferred units of 228,000, as converted, were excluded from the calculation of diluted net income (loss) per share because they were anti-dilutive. Including these items would have improved net income (loss) per share.

For the year ended December 31, 2022, Units of 978,000, Series E preferred units of 2.2 million, as converted, Series D preferred units of 228,000, as converted, stock options of 28,000, time-based RSUs of 10,000, and performance-based restricted stock awards of 30,000, were excluded from the calculation of diluted net income (loss) per share because they were anti-dilutive. Including these items would have improved net income (loss) per share.

For the year ended December 31, 2021, Units of 899,000, Series E preferred units of 729,000, as converted, Series D preferred Units of 228,000, as converted, stock options of 30,000, time-based RSUs of 15,000, and performance-based restricted stock awards of 32,000 were excluded from the calculation of diluted net income (loss) per share because they were anti-dilutive. Including these items would have improved net income (loss) per share.