Yahoo Finance Equity Residential to Pay $8 Special Dividend on Asset Sale
Ushering in good news for its shareholders, Equity Residential EQR recently announced a special cash dividend of $8.00 per common share, which is primarily the outcome of a non-core assets sale worth over $6 billion. The special dividend will be paid on Mar 10, 2016 to shareholders of record on Mar 3.
Further, this residential real estate investment trust (REIT) revealed that its non-core assets sale generated an unlevered internal rate of return of 11.3%. Following these assets sale, the company intends to focus exclusively on owning, building and operating assets in coastal gateway cities, specifically higher-density urban locations that are situated close to public transportation, job centers as well as other amenities.
Notably, concurrent with its third-quarter earnings release, the company had revealed its deal to sell 72 properties to Starwood Capital Group, through a controlled affiliate, for $5.365 billion.
At the same time, the company had also disclosed plans to shed another 26 assets in several submarkets, mainly in Connecticut and the non-core submarkets of Massachusetts, in 2016. Certain other assets in core markets may also be disposed this year. On Jan 27, 2016, the company completed the sale of 72 properties to controlled affiliates of Starwood Capital Group.
Also, apart from the above-mentioned special dividend, the company has plans for an additional special dividend of around $2.00–$4.00 per share, to be paid later this year, from proceeds of additional asset sales.
Along with special dividends, the company would continue to pay its regular quarterly dividend. In fact, it expects to declare the record and payment dates for its regular first-quarter dividend on Mar 11, 2016.
Usually, special dividends are paid by REITs on capital gains from assets sales to avoid paying tax. Notably, solid dividend payouts remain arguably the biggest attraction for REIT investors as the U.S. law requires these companies to distribute 90% of their annual taxable income in the form of dividends to shareholders.
Equity Residential currently carries a Zacks Rank #3 (Hold). Investors interested in the residential REIT industry may consider stocks like Avalonbay Communities Inc. AVB, Essex Property Trust Inc. ESS and Mid-America Apartment Communities Inc. MAA. All these stocks hold a Zacks Rank #2 (Buy).
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