Earnings per Common Share

9 Months Ended

Sep. 30, 2023

Basic earnings per common share is calculated by dividing net income attributable to common shareholders 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 net income attributable to common shareholders by the weighted-average number of common shares outstanding during the period, plus any shares that could potentially be outstanding during the period. The potential shares consist of the unvested restricted share grants and unvested performance units, calculated using the treasury stock method, and convertible Series A Preferred Shares,

calculated using the if-converted 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 the participating shares, they would be deducted from net income attributable to common shareholders used in the basic and diluted earnings per share calculations.

The limited partners’ outstanding OP units (which may be redeemed for common shares 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, 2023 and 2022, 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,
	2023		2022		2023		2022
Numerator:
Net income attributable to RLJ	$	16,430	$	17,594	$	68,470	$	35,312
Less: Preferred dividends	(6,279)		(6,279)		(18,836)		(18,836)
Less: Dividends paid on unvested restricted shares	(243)		(118)		(642)		(167)
Less: Undistributed earnings attributable to unvested restricted shares	—		(46)		(133)		(73)
Net income attributable to common shareholders excluding amounts attributable to unvested restricted shares	$	9,908	$	11,151	$	48,859	$	16,236

Denominator:
Weighted-average number of common shares - basic	154,563,284		160,368,297		156,805,643		162,681,840
Unvested restricted shares	446,087		311,171		434,183		319,985
Unvested performance units	72,274		105,241		40,380		62,637
Weighted-average number of common shares - diluted	155,081,645		160,784,709		157,280,206		163,064,462

Net income per share attributable to common shareholders - basic	$	0.06	$	0.07	$	0.31	$	0.10

Net income per share attributable to common shareholders - diluted	$	0.06	$	0.07	$	0.31	$	0.10