Washington Prime Group Remains A Strong Buy - 13% Yield And Sizable Upside

This research report was jointly produced with High Dividend Opportunities co-author Jussi Askola.
Introduction Investing in malls was widely unpopular in the past two years. On one hand, the country appears to be overbuilt with excess retail space per capita. And on the other, Amazon-like (AMZN) e-commerce giants keep on increasing market share at the expense of some traditional retailing - extending the oversupply issue even further.
As a result, some malls are literally dying and losing all of their value along the way. Why would anyone want to invest in such an environment?

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The simple answer is that it all comes down to price and valuations. You have certainly heard the saying that "everything has a price", and this applies particularly well to malls which currently suffer from extreme market pessimism. While the market appears to have taken the attitude of "don't touch at any price", we are willing to bet that even a troubled mall can produce solid returns if bought at a 20-30% cash flow yield. This is especially true if the malls are expected to survive and remain valuable assets in the long run. This is the story of Washington Prime Group (WPG), a mall REIT which has been in the process of re-positioning itself from lower quality to higher quality malls. WPG has been perceived by some investors as a "Ghost malls owner", when, in fact, we see enormous value in its portfolio.
We started accumulating shares in... Read more