8 REITs That Could Cut The Cheese

Core Insights - The article discusses the potential for certain real estate investment trusts (REITs) to cut their dividends, paralleling a broader trend identified in other companies that may reduce dividend payouts in 2024 [4][6]. REITs at Risk of Dividend Cuts - Healthcare Realty Trust (HR): Specializes in healthcare properties with a market cap of approximately $6.2 billion. The company has a portfolio of 700 properties and has recently cut its dividend from $0.325 to $0.31 per share, resulting in a 3% annualized decrease. Analysts project that HR's dividend will exceed its free cash flow or adjusted funds from operations (AFFO) in the coming years, leading to payout ratios above 100% [5][7]. - Easterly Government Properties (DEA): Focuses on Class A office properties leased to U.S. Government agencies, with a market cap of about $1.2 billion. DEA's dividend is projected to remain at $1.06 per share, while AFFO is expected to decline, resulting in payout ratios exceeding 109% in the next few years [9][10]. - Omega Healthcare Investors (OHI): A healthcare REIT with a market cap of approximately $7.0 billion, primarily investing in skilled nursing and assisted living facilities. OHI's dividend yield is 9.31%, but the expected payout ratio is 101.52%, raising concerns about sustainability [11][12]. - Service Properties Trust (SVC): An externally managed REIT with a market cap of around $1.29 billion, investing in hotels and retail properties. SVC's AFFO has significantly declined since the pandemic, leading to a projected payout ratio of 266.67% in 2023, indicating a high risk of further dividend cuts [15][17]. - Ares Commercial Real Estate (ACRE): A mortgage REIT with a market cap of approximately $544 million, specializing in commercial real estate debt. ACRE's dividend payout ratio is expected to reach 302.22% in 2023 due to a significant decline in earnings, raising concerns about the sustainability of its high dividend yield of 13.08% [19][20]. - Granite Point Mortgage Trust (GPMT): An mREIT with a market cap of about $301 million, focusing on senior loans. GPMT has a history of dividend cuts and is projected to have a payout ratio exceeding 100% in 2023, indicating ongoing financial strain [23][25]. - Global Net Lease (GNL): A net lease REIT with a market cap of approximately $2.0 billion, specializing in single-tenant properties. GNL has experienced negative AFFO growth and is expected to have a payout ratio of 100.65% in 2023, raising concerns about future dividend sustainability [27][30]. - AFC Gamma (AFCG): An mREIT focusing on loans to cannabis operators, with a market cap of around $X million. AFCG has already cut its dividend and is facing a high payout ratio of 97.56% in 2023, indicating potential risks to its dividend sustainability [31][33].