2024-01-22 12:44:50 ET
Summary
- Piedmont Office broke with stability when it reduced its quarterly dividend distribution but now offers a 7% dividend yield that was 256% covered by AFFO from its most recent quarter.
- The office REIT is currently trading at a 50% discount to book value per share.
- Leasing continues to be strong despite work-from-home headwinds with a focus on Class A office properties forming a tailwind for the REIT.
Before the pandemic, Piedmont Office ( PDM ) was a relatively predictable REIT that invested in office properties while paying out a $0.21 per share cash dividend every quarter as it grew adjusted FFO in the low single digits. The pandemic ushered in a new, now seemingly permanent zeitgeist of work-from-home that has materially tapered corporate demand for office space and turned the asset from conservative to speculative. Inflation and the subsequent spike of base interest rates to a more than 22-year high of 5.25% to 5.50% compounded an already critical backdrop where corporate layoffs and a volatile economy have kept investor sentiment low....
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Piedmont Office: Steep Discount To Book And A Covered 7% Dividend Yield