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OPI Slashes Dividend Amid Market Conditions


Shares of Office Properties Income Trust (OPI) experienced a significant drop on Thursday, following an announcement from the real estate investment trust regarding the need to reduce its dividend due to deteriorating market conditions. The stock fell by 11.3% in premarket trading.

The decision to slash the dividend will immediately boost OPI’s liquidity by approximately $47 million per year. This move aims to provide the company with increased financial flexibility in addressing leasing costs, capital expenditures, and debt maturities amidst challenging market conditions.

Yael Duffy, Chief Operating Officer of OPI, stated, “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.”

The new dividend rate will be reduced to just one cent per share, a significant decrease from the previous quarter’s 25 cents per share. Shareholders of record as of Jan. 22 can expect to receive the distribution on or about Feb. 15.

Previously, OPI had a cash distribution of 55 cents per share in the first quarter of 2023, amounting to an annual rate of $2.20.

Office Properties Income Trust generates approximately 64% of its revenues from investment-grade rated tenants. Its diverse portfolio consists of 154 properties spanning 30 states and Washington, D.C., encompassing approximately 20.7 million square feet.

Managed by The RMR Group, an alternative-asset management company with around $36 billion in assets under management as of Sept. 30, OPI has experienced a decline of 7.8% in its stock price over the past year, as opposed to the S&P 500’s 20.5% gain.

Due to the shift towards remote work in the aftermath of the COVID-19 pandemic, office spaces have faced higher vacancy rates.

Read Also: Medical Properties Trust Struggles as Tenant Falls Behind on Rent

In related news, Medical Properties Trust witnessed a drop in its stock price, reaching a 14-year low. This decline was driven by a tenant falling $50 million behind on rent.

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