Earnings per Share/Unit

Aimco

Aimco calculates earnings per share based on the weighted average number of shares of Common Stock, participating securities, common stock equivalents and dilutive convertible securities outstanding during the period. The following table illustrates Aimco’s calculation of basic and diluted earnings per share for the three months ended March 31, 2015 and 2014 (in thousands, except per share data):



	Three Months Ended
	March 31,
	2015			2014
Numerator:
Income from continuing operations	$	18,457		$	12,040
Gain on dispositions of real estate, net of tax	85,693			69,492
Income from continuing operations and gain on dispositions attributable to noncontrolling interests	(10,890		)	(16,605		)
Income attributable to preferred stockholders	(3,522		)	(454		)
Income attributable to participating securities	(394		)	(239		)
Income from continuing operations attributable to Aimco common stockholders	$	89,344		$	64,234

Net income	$	104,150		$	81,532
Net income attributable to noncontrolling interests	(10,890		)	(16,605		)
Net income attributable to preferred stockholders	(3,522		)	(454		)
Net income attributable to participating securities	(394		)	(239		)
Net income attributable to Aimco common stockholders	$	89,344		$	64,234

Denominator:
Weighted average common shares outstanding – basic	153,821			145,473
Dilutive potential common shares	456			208
Weighted average common shares outstanding – diluted	154,277			145,681

Earnings attributable to Aimco per common share – basic and diluted:
Income from continuing operations	$	0.58		$	0.44
Net income	$	0.58		$	0.44

The Aimco Operating Partnership

The Aimco Operating Partnership calculates earnings per unit based on the weighted average number of common partnership units and equivalents, participating securities and dilutive convertible securities outstanding during the period. The Aimco Operating Partnership considers both common OP Units and HPUs, which have identical rights to distributions and undistributed earnings, to be common units for purposes of the earnings per unit data presented below. The following table illustrates the Aimco Operating Partnership’s calculation of basic and diluted earnings per unit for the three months ended March 31, 2015 and 2014 (in thousands, except per unit data):



	Three Months Ended
	March 31,
	2015			2014
Numerator:
Income from continuing operations	$	18,457		$	12,040
Gain on dispositions of real estate, net of tax	85,693			69,492
Income from continuing operations and gain on dispositions attributable to noncontrolling interests	(4,756		)	(11,389		)
Income attributable to the Aimco Operating Partnership’s preferred unitholders	(5,258		)	(2,059		)
Income attributable to participating securities	(394		)	(239		)
Income from continuing operations attributable to the Aimco Operating Partnership’s common unitholders	$	93,742		$	67,845

Net income	$	104,150		$	81,532
Net income attributable to noncontrolling interests	(4,756		)	(11,389		)
Net income attributable to the Aimco Operating Partnership’s preferred unitholders	(5,258		)	(2,059		)
Net income attributable to participating securities	(394		)	(239		)
Net income attributable to the Aimco Operating Partnership’s common unitholders	$	93,742		$	67,845

Denominator:
Weighted average common units outstanding – basic	161,461			153,329
Dilutive potential common units	456			208
Weighted average common units outstanding – diluted	161,917			153,537

Earnings attributable to the Aimco Operating Partnership per common unit – basic and diluted:
Income from continuing operations	$	0.58		$	0.44
Net income	$	0.58		$	0.44

Aimco and the Aimco Operating Partnership

As of March 31, 2015, the common share equivalents or common partnership unit equivalents that could potentially dilute basic earnings per share or unit in future periods totaled 1.9 million. These securities represent options to purchase shares of Common Stock, which, if exercised, would result in Aimco’s issuance of additional shares and the Aimco Operating Partnership’s issuance to Aimco of additional common partnership units equal to the number of shares purchased under the options. The effect of these securities was dilutive for the three months ended March 31, 2015 and 2014, and accordingly has been included in the denominator for calculating diluted earnings per share and unit during these periods. Participating securities, consisting of unvested restricted shares of Common Stock, receive dividends similar to shares of Common Stock and common partnership units and totaled 0.8 million shares and 0.5 million shares at March 31, 2015 and 2014, respectively. The effect of participating securities is included in basic and diluted earnings per share and unit computations for the periods presented above using the two-class method of allocating distributed and undistributed earnings.

Various classes of preferred OP Units of the Aimco Operating Partnership are outstanding. Depending on the terms of each class, these preferred OP Units are convertible into common OP Units or redeemable for cash or, at the Aimco Operating Partnership’s option, Common Stock, and are paid distributions varying from 1.9% to 8.8% per annum per unit. As of March 31, 2015, a total of 3.3 million preferred OP Units were outstanding with an aggregate redemption value of $87.9 million and were potentially redeemable for approximately 2.2 million shares of Common Stock (based on the period end market price), or cash at the Aimco Operating Partnership’s option. The Aimco Operating Partnership has a redemption policy that requires cash settlement of redemption requests for the preferred OP Units, subject to limited exceptions. Accordingly, we have excluded these securities from earnings per share and unit computations for the periods presented above, and we expect to exclude them in future periods.