It was just under a month ago that commercial mREIT bellweather iStar Financial (SFI) decided to skip its third-quarter dividend and pay out the remainder of its 2008 taxable income as a fourth-quarter dividend. A couple weeks later, competitor RAIT Financial cut its dividend from $0.46/share to just $0.35/share. Now, it's Arbor's turn to take out the axe. Arbor Realty Trust, a New York-based commercial loan originator, sliced its dividend from $0.62/share to just $0.24/share for the third quarter and warned that it will not pay a fourth-quarter dividend at all.
Arbor explained the cut in the dividend thusly:
Arbor explained the cut in the dividend thusly:
This [third quarter] dividend represents the estimated balance needed to distribute 100% of the Company's taxable income for 2008. Taxable income is expected to be less than the Company originally anticipated, primarily due to tax differences associated with certain of the Company's unconsolidated equity investments.
In recent years, the Company has paid out more than 100% of taxable income and, where possible, the Company has sought to maintain a consistent and recurring dividend. For 2008 and for the immediate future, the Company expects to limit dividends to 100% of taxable income. This decision reflects the continued difficult economic environment and the need to focus on capital retention.
All eyes now turn to competitors like Capital Trust (CT) and Anthracite Capital (AHR), who have already declared their third-quarter dividends. Will these two mighty players in the commercial mREIT arena see their dividends decimated in the fourth quarter of 2008?
