CapLease Cuts Dividend for '09

NEW YORK CITY-CapLease plans to reduce its annual dividend beginning next year, according to a release Wednesday from the locally based REIT. The intent behind the dividend cut, according to the release, is to retain cash flow to further reduce leverage through accretive debt repurchases, strengthen its balance sheet and enhance long-term stockholder value.

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.”