UPDATE 2-Centerline cuts dividend, outlook; shares plunge
(Recasts, adds details, share movement)
Dec 28 (Reuters) - Centerline Holding Co CHC.N slashed its dividend and lowered its outlook due to a charge related to securitization of a bond portfolio as it is transforming into an alternative asset management company, sending shares to their lifetime low levels.
Centerline shares were trading down $2.52 at $7.75 in afternoon trade on the New York Stock Exchange.
The New York-based company, which was formerly called CharterMac, expects to take a charge of $45 million to $55 million in the fourth quarter due to the securitization of a $2.8 billion housing bond portfolio with Freddie Mac FRE.N.
Centerline now expects to pay an annual dividend of 60 cents per share, effective 2008 first quarter. The company has been paying an annual dividend of $1.68 per share.
The charge would reduce its 2007 net income by $30 million to $40 million, it said in a statement.
For 2007, Centerline now expects cash available for distribution of $1.70 to $1.75 per share, excluding the transaction costs related to the securitization. Its earlier forecast was $1.89 a share.
Centerline also said an affiliate of Related Companies, its largest shareholder and a New York-based developer, will invest $131 million in the company through newly issued convertible preferred stock.
The company plans to use the net proceeds from the transaction, which is expected to close in January 2008, to reduce debt and fund its growth plans.
For 2008, Centerline forecast adjusted earnings of $1 to $1.10 per share and GAAP earnings of 84 cents to 94 cents per share. (Reporting by Purwa Khandelwal in Bangalore; Editing by Gopakumar Warrier)
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