Shareholders of BXP will see a 30 percent reduction in dividends as the office landlord seeks to finance its $2 billion project at 343 Madison Avenue. The dividend is set to decrease from 98 cents per share to 70 cents per share, allowing the company to retain an additional $50 million each quarter.
“When you launch something like 343, our needs for capital are greater, and $50 million a quarter is very significant,” said BXP chief executive officer Owen Thomas at an investor conference.
The development, which spans 1 million square feet and is connected to Grand Central Terminal on the former site of the Metropolitan Transportation Authority’s headquarters, lost a potential partner this summer when Norges Bank withdrew from plans to take a 45 percent stake in the project. BXP is actively searching for another partner who could cover up to half of the development cost. According to Thomas, bringing in such a partner would help secure a $1 billion construction loan and reduce BXP’s direct financial exposure on the project to approximately $500 million.
In the absence of a new partner, BXP appears prepared to self-finance by raising $1 billion through sales of land and suburban office properties. Vertical construction has already begun at 343 Madison Avenue, and BXP has signed a letter of intent with a tenant for about 30 percent of the building’s leasable space.
On Monday, shares of BXP dropped by one percent to $76 per share, which remains about one-third below its value before the pandemic.
