COPT Defense Properties Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Earnings Per Share ("EPS") and Earnings Per Unit ("EPU")

Earnings Per Share ("EPS") and Earnings Per Unit ("EPU")

9 Months Ended

Sep. 30, 2020

Earnings Per Share (“EPS”) and Earnings Per Unit (“EPU”)

COPT and Subsidiaries EPS

We present both basic and diluted EPS. We compute basic EPS by dividing net income available to common shareholders allocable to unrestricted common shares under the two-class method by the weighted average number of unrestricted common shares outstanding during the period. Our computation of diluted EPS is similar except that:

•the denominator is increased to include: (1) the weighted average number of potential additional common shares that would have been outstanding if securities that are convertible into common shares were converted; and (2) the effect of dilutive potential common shares outstanding during the period attributable to COPT’s forward equity sale agreements, redeemable noncontrolling interests and our share-based compensation using the treasury stock or if-converted methods; and

•the numerator is adjusted to add back any changes in income or loss that would result from the assumed conversion into common shares that we add to the denominator.

Summaries of the numerator and denominator for purposes of basic and diluted EPS calculations are set forth below (in thousands, except per share data):


	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2020		2019		2020		2019
Numerator:
Net (loss) income attributable to COPT	$	(31,845)	$	21,257	$	15,706	$	148,907
Income attributable to share-based compensation awards	(145)		(123)		(365)		(495)
Numerator for basic EPS on net (loss) income attributable to COPT common shareholders	(31,990)		21,134		15,341		148,412

Redeemable noncontrolling interests	—		—		—		100


Income attributable to share-based compensation awards	—		5		6		26
Numerator for diluted EPS on net (loss) income attributable to COPT common shareholders	$	(31,990)	$	21,139	$	15,347	$	148,538
Denominator (all weighted averages):
Denominator for basic EPS (common shares)	111,811		111,582		111,778		111,036


Dilutive effect of redeemable noncontrolling interests	—		—		—		123
Dilutive effect of share-based compensation awards	—		361		278		313
Denominator for diluted EPS (common shares)	111,811		111,943		112,056		111,472
Basic EPS	$	(0.29)	$	0.19	$	0.14	$	1.34
Diluted EPS	$	(0.29)	$	0.19	$	0.14	$	1.33

Our diluted EPS computations do not include the effects of the following securities since the conversions of such securities would increase diluted EPS for the respective periods (in thousands):


	Weighted Average Shares Excluded from Denominator
	For the Three Months Ended September 30,		For the Nine Months Ended September 30,
	2020	2019	2020	2019
Conversion of common units	1,240	1,312	1,235	1,323
Conversion of redeemable noncontrolling interests	973	975	954	893
Conversion of Series I preferred units	176	176	176	176

The following securities were also excluded from the computation of diluted EPS because their effect was antidilutive:

•weighted average shares related to COPT’s forward equity sale agreements for the nine months ended September 30, 2019 of 503,000;

•weighted average restricted shares and deferred share awards for the three months ended September 30, 2020 and 2019 of 429,000 and 436,000, respectively, and for the nine months ended September 30, 2020 and 2019 of 432,000 and 441,000, respectively;

•weighted average options for the three and nine months ended ended September 30, 2019 of 3,000 and 16,000, respectively; and

•weighted average unvested TB-PIUs for the three months ended September 30, 2020 and 2019 of 91,000 and 62,000, respectively, and for the nine months ended September 30, 2020 and 2019 of 85,000 and 47,000, respectively.

COPLP and Subsidiaries EPU

We present both basic and diluted EPU. We compute basic EPU by dividing net income available to common unitholders allocable to unrestricted common units under the two-class method by the weighted average number of unrestricted common units outstanding during the period. Our computation of diluted EPU is similar except that:

•the denominator is increased to include: (1) the weighted average number of potential additional common units that would have been outstanding if securities that are convertible into our common units were converted; and (2) the effect of dilutive potential common units outstanding during the period attributable to COPT’s forward equity sale agreements, redeemable noncontrolling interests and our share-based compensation using the treasury stock or if-converted methods; and

•the numerator is adjusted to add back any changes in income or loss that would result from the assumed conversion into common units that we add to the denominator.

Summaries of the numerator and denominator for purposes of basic and diluted EPU calculations are set forth below (in thousands, except per unit data):


	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2020		2019		2020		2019
Numerator:
Net (loss) income attributable to COPLP	$	(32,154)	$	21,681	$	16,122	$	151,257
Preferred unit distributions	(77)		(157)		(231)		(487)
Income attributable to share-based compensation awards	(119)		(139)		(374)		(592)
Numerator for basic EPU on net (loss) income attributable to COPLP common unitholders	(32,350)		21,385		15,517		150,178
Redeemable noncontrolling interests	—		—		—		100

Income attributable to share-based compensation awards	—		5		—		26

Numerator for diluted EPU on net (loss) income attributable to COPLP common unitholders	$	(32,350)	$	21,390	$	15,517	$	150,304
Denominator (all weighted averages):
Denominator for basic EPU (common units)	113,051		112,894		113,013		112,359

Dilutive effect of redeemable noncontrolling interests	—		—		—		123
Dilutive effect of share-based compensation awards	—		361		278		313

Denominator for diluted EPU (common units)	113,051		113,255		113,291		112,795
Basic EPU	$	(0.29)	$	0.19	$	0.14	$	1.34
Diluted EPU	$	(0.29)	$	0.19	$	0.14	$	1.33

Our diluted EPU computations do not include the effects of the following securities since the conversions of such securities would increase diluted EPU for the respective periods (in thousands):


	Weighted Average Shares Excluded from Denominator
	For the Three Months Ended September 30,		For the Nine Months Ended September 30,
	2020	2019	2020	2019
Conversion of redeemable noncontrolling interests	973	975	954	893
Conversion of Series I preferred units	176	176	176	176

The following securities were also excluded from the computation of diluted EPU because their effect was antidilutive:

•weighted average shares related to COPT’s forward equity sale agreements for the nine months ended September 30, 2019 of 503,000;

•weighted average restricted units and deferred share awards for the three months ended September 30, 2020 and 2019 of 429,000 and 436,000, respectively, and for the nine months ended September 30, 2020 and 2019 of 432,000 and 441,000, respectively;

•weighted average options for the three and nine months ended September 30, 2019 of 3,000 and 16,000, respectively; and