In August I purchased 500 shares Washington Prime Group (WPG) as based on my models I considerred this REIT a distressed security with a too low price. I paid $3,51 per share. Based on the yearly dividend of $1 the yield on cost was 28,5%.
Based on the calculations I made I considerred it a possibility that the dividend would be cut partially, but that it would nevertheless still be a a high dividend.
After owning the stock for almost 4 months I notice that I still consider the calculations I made realistic, but nevertheless I’m closing this position. Although this position is around 1.5% of my portfolio, it’s often keeping my mind busy. Every article on SeekingAlpha with a critical approach on this stock is staying to long in my mind.
For this reason I sold the stock today against a price of $3,83. In the 3,5 months I had these stocks I made a profit of 24%. This is 10% as a result of stock price increases and 14% due to 2 dividend payments. This is a profit of €382,62 on an investment of €1.567,68.
As a result of this sale my yearly estimated dividend income will decrease by $500. A big hit on my expected income, but it seems like I put to much focus on a speculative position. With the proceeds I started a position in Delta Airlines.
Today I sold the 200 shares Washington Prime Group which I purchased just about 2 weeks ago. Why? Reuters publiced this article at the 3rd of April.
This article was quoting unnamed sources telling that Washington Prime Group and Namdar Realty are supposedly preparing a bid on retail chain Bon-Ton Stores to save Bon-Ton from banktruptcy. The reason to acquire Bon-Ton would be stay in control to probably be able to more smoothly manage the process of closing the Bon-Ton store to avoid immediant vacancies in their malls.
The Reuters article with unnamed sources was followed up by a publication on the 10th of April by Bon-Ton about a letter of intent received from WPG and partners.
According to the February Investor Update WPG is owning 13 Bon-Ton rented stores. These stores are 0,9% of the annualized base rent.
I personally don’t feel comfortable by the idea that a real estate company is taking over a tenant to keep operating their stores to avoid vacancies. As investor I of course love a management trying to keep the occupancy rate high, but I don’t believe that the management of a real estate company can make a retailer perform better. At this moment I don’t have any information available about the capex / working capital which WPG would put into Bon-Ton.
For me reason to already sell this stock after just owning it for a few weeks. I keep this stock on my watchlist and I will evaluate again to take a position when more facts are available.
My yearly estimated dividend income will drop with $200 as a result of selling the WPG shares, but I don’t feel comfortable keeping this position at the moment.
Just short after selling the shares a court ruling could make it less likely Bon-Ton will be taken over by a combination of Namdar Realty, WPG and asset manager DW Partners. Still not enough information available for me to take back my position in WPG.
I bought 48 shares of Enbridge against a price of $31,98 with the proceeds from the 200 WPG shares I sold. At the start month I made my first purchase of Enbridge shares I now own 90 shares Enbridge.
My yearly estimated dividend income is increasing with $100,54 as a result of this purchase.
Today I bought 200 shares of Washington Prime Group at a price of $6,21 per share. It’s a more speculative purchase.
Washington Prime Group is a REIT which invests in shopping centers and is a spinoff from Simon Property Group. Washington Prime Group is disfavored in the market at the moment due to amazon fears. Washington Prime Group is aggressively working on the traffic in the malls they own by converting them to local dominant shopping centers by attracting entertainment and foot tenants. They try to increase the traffic by offering a combined shopping and leisure experience.
Washington Prime Group has a dividend of $1,00 per share per year at the moment. This results in a dividend yield of 16,1%. This insane yield is a clear warning sign that the market is expecting a dividend cut. I picked up a few shares as a speculative investment. Washington Prime Group is after reaching a 52 weeks high $9,58 in July down 35% to $6,21.
For me it feels like the market did overreact to this REIT, but I know that in investing feeling is not always the best advisor. Nevertheless I added 200 shares to my portfolio which at the current quarterly dividend of $0,25 brings in an estimated yearly dividend income of $200.