The board expects CapLease's 2009 common stock dividend rate--to be at least $0.20 per share--to be paid quarterly at a rate of $0.05 per share quarterly. The quarterly dividend payment for the first three quarters of 2008 had been $0.20 per share. According to the release, CapLease will not pay a common stock dividend for Q4 '08. These dividend changes will allow the REIT to retain $9.5 million of free cash flow in January '09 and $28.4 million of additional free cash flow annually.
"Our portfolio continues to perform as expected and will provide us with a predictable source of cash flows in 2009 and beyond," says Paul McDowell, chairman and CEO of CapLease, in a statement. "The credit quality of our primarily investment grade tenant base is very high, with an average tenant rating of A- and lease maturity of nine years."
He adds that CapLease has "no near-term refinance risk on our debt; our first debt maturity does not occur until 2010 and may be extended to 2011. The dividend actions will enable us to reduce leverage and strengthen the company's financial and liquidity positions while retaining a conservative payout ratio. Based on current market conditions, we are confident that we can redeploy the cash savings we will generate into highly accretive debt repurchases, as a number of our debt obligations are trading at significant discounts."
The company expects its available cash and cash equivalents as of Dec. 31 to be about $10 million. The cash position is expected to grow to about $20 million in early January 2009, and then to about $25 million in early February 2009, when CapLease receives large semi-annual rent payments from some of its tenants.
In the release, Caplease, which specializes in single-tenant properties, cites factors that could affect performance going forward. They include: continued deterioration in general market conditions or in the commercial real estate markets in particular; declines in the valuation of the assets securing CapLease's term loan facility with Wachovia Bank; adverse changes in the financial condition of the tenants underlying our investments; increases in financing costs; and "changes in our industry, the industries of our tenants, interest rates or the general economy."
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Paul Bubny
Paul Bubny is managing editor of Real Estate Forum and GlobeSt.com. He has been reporting on business since 1988 and on commercial real estate since 2007. He is based at ALM Real Estate Media Group's offices in New York City.
