Office Properties Income Trust’s stock dropped sharply Thursday after the real-estate-investment trust said “deterioration in market conditions” is forcing it to slash its dividend to a fraction of its earlier level.
Office Properties Income Trust’s stock
OPI,
fell by 11.3% in premarket trading.
The new dividend rate will immediately increase OPI’s liquidity by about $47 million per year.
“Given the deterioration in market conditions since we last addressed our dividend rate in the first half of 2023, we believe it is prudent to further reduce the dividend to increase our liquidity and financial flexibility when addressing future leasing costs, capital expenditures and debt maturities,” said Chief Operating Officer Yael Duffy.
The company said its new dividend will be a penny a share per, down from 25 cents a share in the previous quarter. The distribution will take place on or about Feb. 15 to shareholders of record as of Jan. 22.
In the first quarter of 2023, its cash distribution was 55 cents a share, or a rate of $2.20 a year.
As of Sept. 30, about 64% of its revenues were from investment-grade rated tenants.
The company’s portfolio includes 154 properties with approximately 20.7 million square feet located in 30 states and Washington, D.C.
OPI is managed by The RMR Group
RMR,
an alternative-asset management company with about $36 billion in assets under management as of Sept. 30.
RMR stock was down 7.8% in the past year, compared to a 20.5% gain by the S&P 500
SPX.
Office space has been subject to higher vacancies as more workers are doing their jobs from home in the wake of the COVID-19 pandemic.
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