Washington Prime Group (WPG) had a reasonable chance to succeed with its turnaround plan, which required relatively stable rent revenues to help fund the redevelopment of its in-transition malls. However, with its malls now closed, more stores in or approaching bankruptcy, and its access to additional capital likely limited, combined with the pressure of loan covenants, we believe the company’s future is irretrievably lost and are moving WPG shares to a Sell. We note that its 5.95% bonds due in 2024 are trading at 54 cents on the dollar.
This note was originally published in the May 2020 edition of The Turnaround Letter, published on April 30, 2020.