This 23%-Yield REIT Stock Still Looks Shaky After Earnings
Washington Prime (NYSE: WPG) has been a classic battleground stock in recent years. Bulls love its sky-high 23% dividend yield and think that the REIT's brash CEO, Lou Conforti, is making the right moves to respond to the retail apocalypse. Meanwhile, bears point to Washington Prime's declining financial metrics and believe that its ownership of numerous mid-tier malls will lead to further pain in the years ahead. Most bears see the high dividend as an albatross, draining capital from the company and increasing the likelihood of a future crisis.
Last week, Washington Prime released its earnings report for the third quarter, and both bulls and bears could find some support for their views. That said, it was clear from the earnings report that this high-yield REIT is far from completing its long-awaited turnaround.
In the third quarter, comparable net operating income (NOI) for Washington Prime's core properties fell 5.5% year over year. This decline was driven by its "Tier One" mall portfolio, which recorded an 8.8% NOI decline. Management noted that the entire NOI decrease can be explained by the most prominent retail bankruptcies of the past two years: Sears, Bon-Ton, Toys R Us, Payless ShoeSource, Gymboree, and Charlotte Russe.
Source Fool.com
