Airlease Ltd. and Alexander Haagen Properties : No. 1 on Divvying It Up

Real estate investment trusts, not surprisingly, dominate the list of companies with the highest dividend yields among The Times 100. But this time a REIT shared top billing with an aircraft-leasing partnership.

Airlease, a small San Francisco-based lessor of commercial planes, had a lofty dividend yield of 12.3%, which tied it with Alexander Haagen Properties, a Manhattan Beach-based REIT that focuses on shopping centers and other commercial properties. The Media City Center mall in Burbank is a Haagen project, for instance.

Airlease is organized as a master limited partnership that, like a REIT, has public investors and posts an above-average dividend yield because it’s allowed to pass through most of its earnings to those investors without having that income first taxed at the corporate level.

(Or course, the investors--who are sometimes called unit holders if the partnership issues “units” instead of shares of stock--are taxed on their individual income. And technically, partnerships often call their payouts “distributions,” though they are similar to dividends.)

The payouts of Airlease and Haagen represent a high yield in good part because their stock prices have been under pressure of late, even as their dividends have remained steady. The yield is calculated by dividing the annual dividend by the stock’s price.

In Haagen’s case, Wall Street’s concern about the poor health of retailers in some of Haagen’s properties has sent its stock tumbling about 35% since mid-1994, even as Haagen’s annual dividend has remained at $1.44 a share over that time.

Airlease last year paid out $2.07 on each of its units, which included a special distribution of 10 cents. Unlike Haagen, Airlease has adjusted its payout up and down in recent years to correspond to its operating results.

But Airlease, after raising its total distribution from $1.85 per unit in 1994, has watched its units droop by about 10% so far this year, thereby lifting their yield.

How much longer Airlease can attain such yields is questionable. In its 1995 annual report, the partnership said it’s scheduled to lose its tax exemption at the end of 1997, at which point its profits would be taxed at the corporate level before being distributed to unit holders.

Airlease said it’s studying its options in preparation for that event, including whether to delist its units from the New York Stock Exchange or liquidate the partnership altogether.