American real estate investment trust, Washington Prime Group (NYSE: WPG) stock exited the market at $4.60 on Monday, down 4.56%. However, the stock did jump 30% in later sessions after the firm announced a week-long extension to noteholders and lenders regarding forbearance pacts. The REIT is in constant negotiation with lenders and noteholders for restructuring its debt.
Not a very healthy rear view
In February 2021, the company saw a sharp decline, and its total return over the previous year has remained sunken. The interest payment of $23.2M, which was due on February 15, also did not make it to the final closure. Since then, WPG has been trying to be on the same page as stakeholders and noteholders. This mall REIT primarily invests in shopping centers, and is headquartered in Columbus, Ohio.
Struggling to keep the balance
Unfortunately, though Q1-2021 financial figures did not speak of a very healthy picture for WPG as well, there has been a consistent plunge in NOI, weak FFO, negative leasing spreads, and dipping occupancy rates. Meanwhile, WPG has designated a non-core properties status to seven malls, five of which were its “Tier 1” assets in the quarter prior to Q1.
The revenue in Q1 is reported at $131.93M, taking a dip of 13.54% from a year before. Net income for the first quarter is reported at $-51.87M, a whopping decline of 853.58%. Diluted EPS of Washington Prime Group in Q1 came in at -2.52, which is a sharp dip of 1,675% from the previous year.
The road ahead for WPG investors
The company is now planning to hand a major portion of its enclosed malls covered by non-recourse mortgages to the lenders to keep the debt off. Sadly though, the news doesn’t rest here. The asset value of WPG is not enough to cover the cost of its entire debt. Stock gurus are suggestions to avoid WPG common and preferred shares in the wake of such circumstances.