NET INCOME (LOSS) PER SHARE

6 Months Ended

Jun. 30, 2024

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 the 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 vesting of the RSUs, upon exercising of ISOs, or upon conversion of the Series D or Series E preferred units (refer to Note 4 for further discussion of the Series D and the Series E preferred units). The Company calculates diluted net income (loss) per share using the treasury stock method for RSUs and ISOs and the if converted method for Series D preferred units and Series E 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 Condensed Consolidated Financial Statements for the three and six months ended June 30, 2024 and 2023.


	(in thousands, except per share data)
	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
NUMERATOR


Net income (loss) attributable to controlling interests	$	(1,296)	$	(1,863)	$	(5,201)	$	41,708
Dividends to preferred shareholders	(1,607)		(1,607)		(3,214)		(3,214)

Numerator for basic income (loss) per share – net income (loss) available to common shareholders	(2,903)		(3,470)		(8,415)		38,494
Noncontrolling interests – Operating Partnership and Series E preferred units (1)	—		—		—		7,854

Dividends to Series D preferred unitholders (2)	—		—		—		320
Numerator for diluted income (loss) per share	$	(2,903)	$	(3,470)	$	(8,415)	$	46,668
DENOMINATOR
Denominator for basic income (loss) per share weighted average shares	14,972		14,949		14,947		14,987
Effect of redeemable operating partnership units	—		—		—		967
Effect of Series D preferred units	—		—		—		228
Effect of Series E preferred units	—		—		—		2,111
Effect of dilutive restricted stock units and stock options	—		—		—		20
Denominator for diluted income (loss) per share	14,972		14,949		14,947		18,313



NET INCOME (LOSS) PER COMMON SHARE – BASIC	$	(0.19)	$	(0.23)	$	(0.56)	$	2.57



NET INCOME (LOSS) PER COMMON SHARE – DILUTED	$	(0.19)	$	(0.23)	$	(0.56)	$	2.55

(1)For the three and six months ended June 30, 2024 and the three months ended June 30, 2023, the impact of Units and Series E preferred units was excluded from the calculation of net income (loss) per common share - diluted as they were anti-dilutive.

(2)For the three and six months ended June 30, 2024 and the three months ended June 30, 2023, dividends to preferred unitholders are excluded from the calculation of net income (loss) per common share - diluted as they were anti-dilutive.

For the three months ended June 30, 2024, operating partnership units of 835,000, Series D preferred units of 228,000, as converted, Series E preferred units of 2.1 million, as converted, time-based RSUs of 32,000, and performance-based RSUs of 41,000 were excluded from the calculation of diluted net income (loss) per share because they were anti-dilutive as including these items would have improved net loss per share.

For the three months ended June 30, 2023, operating partnership units of 965,000, Series D preferred units of 228,000, as converted, Series E preferred units of 2.1 million, as converted, time-based RSUs and stock options of 24,000, and performance-based RSUs of 26,000 were excluded from the calculation of diluted income (loss) per share because they were anti-dilutive as including these items would have improved net loss per share.

For the six months ended June 30, 2024, operating partnership units of 845,000, Series D preferred units of 228,000, as converted, Series E preferred units of 2.1 million, as converted, time-based RSUs of 26,000, and performance-based RSUs of 41,000 were excluded from the calculation of diluted net income (loss) per share because they were anti-dilutive as including these items would have improved net loss per share.

For the six months ended June 30, 2023, performance-based RSUs of 26,000 were excluded from the calculation of diluted net income per share because they were anti-dilutive as including these items would have improved net income per share.