Shareholders of office landlord BXP need to endure short-term pain in the hopes of long-term gain.
The developer lowered its dividend by 30 percent to help pay for a $2 billion office tower going up at 343 Madison Avenue, Crain’s reported. The dividend will drop from 98 cents per share to 70 cents per share. The move is expected to keep $50 million in BXP’s coffers each quarter.
“When you launch something like 343, our needs for capital are greater, and $50 million a quarter is very significant,” BXP chief executive officer Owen Thomas said at an investor conference.
BXP’s 1 million-square-foot development attached to Grand Central Terminal — the site of the Metropolitan Transportation Authority’s former headquarters — took a hit this summer when Norges Bank backed out of a plan to be a 45 percent partner in the project.
BXP is on the hunt for a partner to pick up as much as half of the development cost, which Thomas said would help secure a $1 billion construction loan. The CEO added that BXP’s costs could drop to $500 million under that scenario.
Without a partner, however, BXP seems ready to go it alone on financing 343 Madison. The firm is looking to raise $1 billion by selling land and office properties in suburban locations.
BXP has launched vertical construction at the site. It also agreed to a letter of intent with a tenant for 30 percent of the building’s leasable square footage.
On Monday, BXP’s stock fell by 1 percent to $76 per share. That’s one-third below the stock’s pre-pandemic value.
— Holden Walter-Warner
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