5 US REITs suspend dividends amid 2024 cuts

Five US real estate investment trusts have suspended dividends so far this year, while six other REITs have lowered regular dividend payouts based on the latest year-to-date tally of REIT dividend announcements.

The activity contrasts with the more than one-third of the US REIT industry that raised dividends during the first three quarters of 2024, according to an analysis of S&P Global Market Intelligence data.

SITE Centers, 4 other REITs suspend dividends

Shopping center landlord SITE Centers Corp. was the most recent addition to the list of REITs that suspended dividends this year, announcing Oct. 30 that it did not declare dividends on its common shares for the third quarter as a way of maximizing the capitalization of Curbline Properties Corp. and preserve funds for operations. On Oct. 1, Site Centers announced the completion of Curbline Properties' spinoff, which is now an independent publicly traded REIT trading on the New York Stock Exchange under the ticker CURB.

Office-focused Paramount Group Inc. declared on Sept. 13 that it will be halting regular quarterly dividends that would have been payable on Oct. 15, 2024. Before the suspension, the office landlord paid three regular quarterly dividends during the year, totaling 10.5 cents per common share.

"The decision by our board of directors to suspend our regular quarterly dividend aligns with our commitment to fortify our balance sheet and maintain the utmost financial flexibility," according to Paramount Group's CEO Albert Behler.

About a month before Paramount's suspension, communications REIT Uniti Group Inc. disclosed Aug. 1 that the company would suspend dividend payments or other distributions until the consummation of the REIT's acquisition of Windstream Holdings II LLC, a merger deal announced May 3.

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Another REIT declaring a dividend suspension in the third quarter was diversified REIT Generation Income Properties, announcing July 3 that it would temporarily halt its monthly cash distribution to strengthen its financial position. The suspension began with the July dividends, as the REIT projected that it had met its 2024 distribution requirement.

Diversified REIT Presidio Property Trust was the first to suspend dividends this year, halting its quarterly payout on May 14.

Besides these five REITs, five others are not paying regular dividends on their common stock following suspensions announced in previous years.

6 dividend cuts in 2024 YTD

Among the six US REITs that reduced dividends this year, Office Properties Income Trust was the first to announce a cut, reducing its quarterly dividend to 1 cent per share from 25 cents on Jan. 11.

"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," according to Office Properties Income Trust's President and COO Yael Duffy.

Duffy added that the new dividend rate will immediately raise the office REIT's liquidity by roughly $47 million per year and increase liquidity by $105 million per year compared to the dividend rate paid in the first quarter of 2023.

Raising liquidity is also why hotel-focused Service Properties Trust announced Oct. 16 that it would slash its quarterly cash distribution by 95.0% to 1 cent per share.

"Given the slow recovery of our hotel portfolio in combination with our hotel capital improvement and renovation program and our deteriorating leverage metrics, we believe it is prudent to reduce the distribution to increase SVC's liquidity and enhance our financial flexibility," according to Service Properties Trust's President and Chief Investment Officer Todd Hargreaves. Hargreaves estimated that the dividend cut would preserve roughly $127 million of liquidity annually.

The hotel REIT also declared plans to sell 114 focused service hotels managed by Sonesta International Hotels Corp. with an aggregate of 14,925 keys and an aggregate net carrying value of $850.0 million. "We are also planning to sell 114 hotels to generate additional liquidity and concentrate the Sonesta portfolio on full-service hotels and certain higher performing focused service hotels. We expect these sales will also result in reduced capital expenditure and leverage, improve portfolio performance and better position SVC’s hotel portfolio for the long term," Hargreaves added.

Healthcare REIT Medical Properties Trust Inc. made the third-biggest dividend cut year to date as it reduced its quarterly dividend by 46.7% to 8 cents per share on Aug. 22.

During the first half of the year, two diversified REITs — Global Net Lease and JBG Smith Properties — reduced their quarterly dividends by 22.3% and 22.2%, respectively. Meanwhile, communications-focused American Tower Corp. trimmed its quarterly payout by 4.7% to $1.62 per share on May 14. Previously, the communications REIT announced a dividend hike from $1.62 per share to $1.70 for the fourth quarter of 2023 on Dec. 14, 2023.

More than half of REIT dividends exceed pre-pandemic levels

Approximately 55.1% of publicly traded US REITs are paying higher dividends than their pre-pandemic levels reported at the end of 2019, according to Market Intelligence data.

About 5.5% are paying the same, while 39.4% are below pre-pandemic levels.

Single-family rental REIT American Homes 4 Rent leads the list of REITs with the largest increase in dividends since the end of 2019, with over five times its pre-pandemic payout at 26 cents per share. Three REITs have more than doubled their dividend payments since 2019: communications-focused SBA Communications Corp., industrial-focused Rexford Industrial Realty Inc. and single-family rental REIT Invitation Homes Inc.