True North Commercial Real Estate Investment Trust’s shares plummeted Wednesday after the company said it will slash its distribution to unitholders by 50% due to higher inflation and rising interest rates.
Shares declined 39% to 3.55 Canadian dollars ($2.59) at 1:39 p.m. ET.
After markets closed Tuesday, the Canadian REIT said it has faced challenges due to changing office requirements following the pandemic. The company cut its annual cash dividend to C$0.297 per unit, and said the board would reevaluate its distribution policy on a regular basis.
“This decision underlines the board’s and management’s view that the unitholders are best served by a well-capitalized REIT, which bolsters the REIT’s ability to enhance its portfolio and pursue value-creating opportunities,” it said.
True North said the distribution cut reduction is expected to provide it with more financial flexibility to meet its short- and long-term objectives.
Additionally, the company said it has agreed to sell two office properties in Toronto and Ottawa for C$24.8 million, providing it with C$5 million of excess sale proceeds.
