Investing In A Hated Sector - 13.6% Yield

Washington Prime Group (WPG) is a landlord of so-called "dead-malls" or lower quality malls with poor sales, traffic, and long-term outlook. Since going public just around 4 years ago, the share price has dropped from $20 per share to $7.34 today. Meanwhile, the company has made significant progress towards improving the quality of its portfolio and positioning its assets for a brighter future.
The market is not giving credit for these improvements and continues to expect a slow and painful death to WPG's malls. We are more optimistic and think that the market is overly pessimistic today.
The company is not out of trouble just yet, but trading at 4.8x FFO, a 13.6% dividend combined with a 66% payout ratio, and ample liquidity to keep improving assets, we are willing to invest in what everyone else is avoiding at all cost.

Retail is Hated Malls are hated today, and to some extent, this is well justified. The US retail space is clearly way overbuilt as compared to other developed nations:

With ~23.5 square foot of retail space per capita, no other country comes even close to the US. That is more than twice the amount in Australia and roughly five times that of the UK and other European countries. Part of this differential can be explained by different consumer behaviors between nations, but it is hard to understand how it would make sense for US consumers to have up to 6.5 times the supply of Switzerland - a country that is even wealthier than... Read more