This REIT dropped its dividend again. The Hollywood strikes are still causing pain.

MW This REIT dropped its dividend again. The Hollywood strikes are still causing pain.

By Tomi Kilgore

Hudson Pacific Properties suspends its dividend six months after reinstating it, saying studio demand has recovered more slowly than expected

Shares of Hudson Pacific Properties Inc. sank Tuesday after the real-estate investment trust suspended its dividend, as the company continues to struggle nearly a year after the Hollywood writers and actors strikes ended.

The suspension comes six months after the Los Angeles-based REIT, which provides office space to technology and media tenants, reinstated its dividend.

The stock $(HPP.AU)$ dropped 6.6% in midday trading. It is currently trading 17.3% below the closing price of $5.38 on Nov. 9, 2023, the day the strikes ended.

In comparison, shares of movie-theater operator Cinemark Holdings Inc. $(CNK)$ have soared 94.4% since Nov. 9 and Imax Corp.'s stock (IMAX) has rallied 19.4%, while AMC Entertainment Holdings Inc. shares $(AMC)$ have tumbled 42.9%.

"Studio demand has recovered more slowly than anticipated following the union strikes and negotiations, and we no longer foresee the need for a distribution in relation to taxable income in 2024," Hudson Pacific Chief Executive Victor Coleman said. "Our board therefore made the decision to suspend our common stock dividend to preserve capital in an ongoing challenging environment."

The last quarterly dividend of 5 cents a share was paid out on June 17. At current stock prices, the annual dividend rate implied a dividend yield of 4.47%, which was more than triple the implied yield of 1.36% for the S&P 500 SPX.

"The board will continue to monitor the company's financial performance and operating environment to determine the appropriate time to reinstate a quarterly common stock dividend," the company said.

In early March, Hudson Pacific said that it had reinstated a quarterly dividend, citing an "improved liquidity position, strengthened balance sheet and anticipated taxable income distribution requirements for 2024."

That was six months after the company previously suspended its dividend, saying it believed it was "prudent" to save cash during the Hollywood strikes. The last quarterly dividend paid before the suspension was 12.5 cents a share.

The Hollywood writers strike started on May 2, 2023, and expanded to actors on July 14. The writers strike ended on Sept. 26, 2023, and the actors strike was over on Nov. 9.

After the strikes ended, the stock had run up as much as 80% to an 11-month closing high of $9.67 before turning back down.

The stock has tumbled 52.3% year to date, while the Real Estate Select Sector SPDR exchange-traded fund XLRE has gained 11.4% and the S&P 500 has advanced 14.8%.

-Tomi Kilgore

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September 10, 2024 12:06 ET (16:06 GMT)

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