COPT Defense Properties Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

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

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

12 Months Ended

Dec. 31, 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 Years Ended December 31,
	2020		2019		2018
Numerator:
Net income attributable to COPT	$	97,374	$	191,692	$	72,301


Income attributable to share-based compensation awards	(431)		(656)		(462)
Numerator for basic EPS on net income attributable to COPT common shareholders	$	96,943	$	191,036	$	71,839
Redeemable noncontrolling interests	—		132		—
Income attributable to share-based compensation awards	27		33		—
Numerator for diluted EPS on net income attributable to COPT common shareholders	$	96,970	$	191,201	$	71,839
Denominator (all weighted averages):
Denominator for basic EPS (common shares)	111,788		111,196		103,946
Dilutive effect of redeemable noncontrolling interests	—		119		—
Dilutive effect of share-based compensation awards	288		308		134
Dilutive effect of forward equity sale agreements	—		—		45

Denominator for diluted EPS (common shares)	112,076		111,623		104,125
Basic EPS	$	0.87	$	1.72	$	0.69
Diluted EPS	$	0.87	$	1.71	$	0.69

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 Years Ended December 31,
	2020	2019	2018
Conversion of common units	1,236	1,299	2,468
Conversion of redeemable noncontrolling interests	957	896	936
Conversion of Series I Preferred Units	171	176	176

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

•weighted average restricted shares and deferred share awards of 430,000 for 2020, 441,000 for 2019 and 452,000 for 2018;

•weighted average unvested TB-PIUs of 89,000 for 2020 and 51,000 for 2019;

•weighted average options of 12,000 for 2019 and 42,000 for 2018; and

•weighted average shares related to COPT’s forward equity sale agreements of 376,000 for 2019.

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 Years Ended December 31,
	2020		2019		2018
Numerator:
Net income attributable to COPLP	$	98,854	$	194,619	$	74,703
Preferred unit distributions	(300)		(564)		(660)

Income attributable to share-based compensation awards	(511)		(785)		(462)
Numerator for basic EPU on net income attributable to COPLP common unitholders	98,043		193,270		73,581
Redeemable noncontrolling interests	—		132		—
Income attributable to share-based compensation awards	—		33		—
Numerator for diluted EPU on net income attributable to COPLP common unitholders	$	98,043	$	193,435	$	73,581
Denominator (all weighted averages):
Denominator for basic EPU (common units)	113,024		112,495		106,414
Dilutive effect of redeemable noncontrolling interests	—		119		—
Dilutive effect of share-based compensation awards	288		308		134
Dilutive effect of forward equity sale agreements	—		—		45
Denominator for diluted EPU (common units)	113,312		112,922		106,593
Basic EPU	$	0.87	$	1.72	$	0.69
Diluted EPU	$	0.87	$	1.71	$	0.69

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 Units Excluded from Denominator for the Years Ended December 31,
	2020	2019	2018
Conversion of redeemable noncontrolling interests	957	896	936
Conversion of Series I Preferred Units	171	176	176

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

•weighted average restricted units and deferred share awards of 430,000 for 2020, 441,000 for 2019 and 452,000 for 2018;

•weighted average unvested TB-PIUs of 89,000 for 2020 and 51,000 for 2019;

•weighted average options of 12,000 for 2019 and 42,000 for 2018; and

•weighted average shares related to COPT’s forward equity sale agreements of 376,000 for 2019.