Earnings per Common Share

Basic earnings per common share is calculated by dividing income from continuing operations attributable to common shareholders, including loss on disposal of hotel properties, by the weighted-average number of common shares outstanding during the period excluding the weighted-average number of unvested restricted shares outstanding during the period. Diluted earnings per common share is calculated by dividing income from continuing operations attributable to common shareholders, including loss on disposal of hotel properties, by the weighted-average number of common shares outstanding during the period, plus any shares that could potentially be outstanding during the period. Potential shares consist of unvested restricted share grants and unvested performance units, calculated using the treasury stock method. Any anti-dilutive shares have been excluded from the diluted earnings per share calculation.

Unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating shares and are considered in the computation of earnings per share pursuant to the two-class method. If there were any undistributed earnings allocable to participating shares, they would be deducted from net income attributable to common shareholders utilized in the basic and diluted earnings per share calculations.

For the three and nine months ended September 30, 2014, zero and $39,000, respectively, represented undistributed earnings that were allocated to participating shares. For the three and nine months ended September 30, 2013, $0.1 million and $0.1 million, respectively, represented undistributed earnings that were allocated to participating shares.

The limited partners’ outstanding limited partnership units in the Operating Partnership (which may be redeemed for common shares of beneficial interest under certain circumstances) have been excluded from the diluted earnings per share calculation as there was no effect on the amounts for the three and nine months ended September 30, 2014 and 2013, since the limited partners’ share of income would also be added back to net income attributable to common shareholders.

The computation of basic and diluted earnings per common share is as follows (in thousands, except share and per share data):



	For the three months ended September 30,						For the nine months ended September 30,
	2014			2013			2014			2013
Numerator:
Income from continuing operations attributable to common shareholders, including loss on disposal of hotel properties	$	36,760		$	33,334		$	101,596		$	80,166
Add: Income from discontinued operations	—			3,135			—			5,310
Net income attributable to common shareholders	36,760			36,469			101,596			85,476
Less: Dividends paid on unvested restricted shares	(262		)	(216		)	(731		)	(712		)
Less: Undistributed earnings attributable to unvested restricted shares	—			(97		)	(39		)	(86		)
Net income attributable to common shareholders excluding amounts attributable to unvested restricted shares	$	36,498		$	36,156		$	100,826		$	84,678
Denominator:
Weighted-average number of common shares - basic	131,106,440			121,594,219			126,070,309			116,697,417
Unvested restricted shares	318,145			249,029			306,630			212,672
Unvested performance units	962,258			906,873			920,962			887,581
Weighted-average number of common shares - diluted	132,386,843			122,750,121			127,297,901			117,797,670

Income from continuing operations attributable to common shareholders, including loss on disposal of hotel properties - basic	$	0.28		$	0.27		$	0.80		$	0.68
Discontinued operations	—			0.03			—			0.05
Net income attributable to common shareholders - basic	$	0.28		$	0.30		$	0.80		$	0.73

Income from continuing operations attributable to common shareholders, including loss on disposal of hotel properties - diluted	$	0.28		$	0.27		$	0.79		$	0.67
Discontinued operations	—			0.03			—			0.05
Net income attributable to common shareholders - diluted	$	0.28		$	0.30		$	0.79		$	0.72