Office Properties Income Trust (OPI)

Office Properties Income Trust (OPI) stock dropped by 37.58% due to an announcement by the real estate investment trust (REIT) that it would significantly reduce its dividend due to deteriorating market conditions.

• Dividend Cut and Market Impact: Office Properties Income Trust cited the "deterioration in market conditions" as the reason behind its decision to slash its dividend to a fraction of its previous level. As a result of this announcement, OPI's stock plummeted by as much as 38% during early-afternoon trading. The REIT stated that the new dividend rate would immediately increase its liquidity by approximately $47 million per year. Chief Operating Officer Yael Duffy emphasized the need to enhance financial flexibility, considering future leasing costs, capital expenditures, and debt maturities.
• New Dividend Rate: The revised quarterly dividend for OPI will be just one cent per share, marking a significant reduction from the previous quarter's 25 cents per share. The distribution is scheduled to occur on or about February 15th and will be payable to shareholders of record as of January 22nd. To put this into perspective, in the first quarter of 2023, OPI had a cash distribution rate of 55 cents per share or $2.20 per year.
• Challenges in the Real Estate Sector: OPI's decision to cut its dividend comes amidst challenging market conditions in the real estate sector, characterized by elevated vacancy and sublease levels. This situation was previously acknowledged by the company during its third-quarter earnings call with analysts on October 31st. In summary, Office Properties Income Trust (OPI) saw a significant stock drop of 37.58% due to its decision to substantially reduce its dividend in response to deteriorating market conditions in the real estate sector.