Earnings Per Share

Earnings per share ("EPS") is calculated using the two-class method, which allocates earnings among common stock and participating securities to calculate EPS when an entity's capital structure includes either two or more classes of common stock or common stock and participating securities. HPU holders were current and former Company employees who purchased high performance common stock units under the Company's High Performance Unit Program. These HPU units were treated as a separate class of common stock. All of the Company's outstanding HPUs were repurchased and retired on August 13, 2015 (refer to Note 13).

The following table presents a reconciliation of income (loss) from continuing operations used in the basic and diluted EPS calculations ($ in thousands, except for per share data):



	For the Years Ended December 31,
	2017			2016			2015
Income (loss) from continuing operations	$	(40,198	)	$	(23,384	)	$	(115,050	)
Income from sales of real estate	92,049			105,296			93,816
Net (income) loss attributable to noncontrolling interests	(4,526		)	(4,876		)	3,722
Preferred dividends	(48,444		)	(51,320		)	(51,320		)
Premium above book value on redemption of preferred stock	(16,314		)	—			—
Income (loss) from continuing operations attributable to iStar Inc. and allocable to common shareholders, HPU holders and Participating Security Holders for basic earnings per common share⁽¹⁾	$	(17,433	)	$	25,716		$	(68,832	)
Add: Effect of joint venture shares	—			7			—
Income (loss) from continuing operations attributable to iStar Inc. and allocable to common shareholders, HPU holders and Participating Security Holders for diluted earnings per common share⁽¹⁾	$	(17,433	)	$	25,723		$	(68,832	)

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(1)	For the year ended December 31, 2016, includes income from continuing operations allocable to Participating Security Holders of $8 and $8 on a basic and dilutive basis, respectively.



	For the Years Ended December 31,
	2017			2016		2015
Earnings allocable to common shares:
Numerator for basic earnings per share:
Income (loss) from continuing operations attributable to iStar Inc. and allocable to common shareholders	$	(17,433	)	$	25,708	$	(67,449	)
Income from discontinued operations	4,939			18,264		14,774
Gain from discontinued operations	123,418			—		—
Net income (loss) attributable to iStar Inc. and allocable to common shareholders	$	110,924		$	43,972	$	(52,675	)

Numerator for diluted earnings per share:
Income (loss) from continuing operations attributable to iStar Inc. and allocable to common shareholders	$	(17,433	)	$	25,715	$	(67,449	)
Income from discontinued operations	4,939			18,264		14,774
Gain from discontinued operations	123,418			—		—
Net income (loss) attributable to iStar Inc. and allocable to common shareholders	$	110,924		$	43,979	$	(52,675	)

Denominator for basic and diluted earnings per share:
Weighted average common shares outstanding for basic earnings per common share	71,021			73,453		84,987
Add: Effect of assumed shares issued under treasury stock method or restricted stock units	—			84		—
Add: Effect of joint venture shares	—			298		—
Weighted average common shares outstanding for diluted earnings per common share	71,021			73,835		84,987

Basic earnings per common share:
Income (loss) from continuing operations attributable to iStar Inc. and allocable to common shareholders	$	(0.25	)	$	0.35	$	(0.79	)
Income from discontinued operations	0.07			0.25		0.17
Gain from discontinued operations	1.74			—		—
Net income (loss) attributable to iStar Inc. and allocable to common shareholders	$	1.56		$	0.60	$	(0.62	)

Diluted earnings per common share:
Income (loss) from continuing operations attributable to iStar Inc. and allocable to common shareholders	$	(0.25	)	$	0.35	$	(0.79	)
Income from discontinued operations	0.07			0.25		0.17
Gain from discontinued operations	1.74			—		—
Net income (loss) attributable to iStar Inc. and allocable to common shareholders	$	1.56		$	0.60	$	(0.62	)



	For the Years Ended December 31,
	2017		2016		2015
Earnings allocable to HPUs ⁽¹⁾:
Numerator for basic and diluted earnings per HPU share:
Income (loss) from continuing operations attributable to iStar Inc. and allocable to HPU holders	$	—	$	—	$	(1,383	)
Income from discontinued operations	—		—		303
Net income (loss) attributable to iStar Inc. and allocable to HPU holders	$	—	$	—	$	(1,080	)

Denominator for basic and diluted earnings per HPU share:
Weighted average HPUs outstanding for basic and diluted earnings per share	—		—		9

Basic and diluted earnings per HPU share:
Income (loss) from continuing operations attributable to iStar Inc. and allocable to HPU holders	$	—	$	—	$	(153.67	)
Income from discontinued operations	—		—		33.67
Net income (loss) attributable to iStar Inc. and allocable to HPU holders	$	—	$	—	$	(120.00	)

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(1)	All of the Company's outstanding HPUs were repurchased and retired on August 13, 2015 (refer to Note 13).

For the years ended December 31, 2017, 2016 and 2015, the following shares were not included in the diluted EPS calculation because they were anti-dilutive (in thousands)^(1)(2)(3)(4):



	For the Years Ended December 31,
	2017	2016	2015
Joint venture shares	255	—	298
3.00% convertible senior unsecured notes	—	14,764	16,992
Series J convertible perpetual preferred stock	15,635	15,635	15,635
1.50% convertible senior unsecured notes	—	9,868	11,567

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(1)	For the year ended December 31, 2015, the effect of the Company's unvested Units, market-based Units and CSEs were anti-dilutive.


(2)	For the year ended December 31, 2016, the effect of 16 and 125 unvested time and market-based Units, respectively, were anti-dilutive.


(3)	For the year ended December 31, 2017, the effect of 6 and 17 unvested time and market-based Units, respectively, were anti-dilutive.

(4)

The Company will settle conversions of the 3.125% Convertible Notes by paying the conversion value in cash up to the original principal amount of the notes being converted and shares of common stock to the extent of any conversion premium. The amount of cash and shares of common stock, if any, due upon conversion will be based on a daily conversion value calculated for each trading day in a 40 consecutive day observation period. Based upon the conversion price of the 3.125% Convertible Notes, no shares of common stock would have been issuable upon conversion of the 3.125% Convertible Notes for the year ended December 31, 2017 and therefore the 3.125% Convertible Notes had no effect on diluted EPS for such periods.