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Cashing In Dividends From Excessive Fear To Generate Income From Mall REITs

Published Sun, 04 Aug 2019 09:10:00 -0400 on Seeking Alpha

Co-produced with Beyond Saving and Trapping Value for High Dividend Opportunities

At High Dividend Opportunities, we recognize that the market frequently overreacts. It often gets overzealous to the upside and it also gets overzealous to the downside. Our primary goal is to achieve a high level of current income. When the market gets overzealous to the downside, it provides us the opportunity to invest in quality companies at yields that are unobtainable when that fear dissipates. The mall sector is one area where we believe the market has too much fear.
We have taken advantage of these discounts investing in Washington Prime Group (WPG) which is currently yielding at 28%, and Macerich (MAC) yielding over 9% while owning some of the highest quality malls in the world. This combination provides us exposure to one of the highest yielding mall REITs in WPG, while also one of the highest quality mall REITs in terms of average rent and sales in MAC.
On the preferred equity side, we have locked in 10%+ yields from WPG, as well as 9% yields from Pennsylvania REIT (PEI) when their preferred shares declined, currently yielding OVER 8%.
There is no question that mall REITs have had significant headwinds. Where the bear argument falls apart is the belief that these headwinds are permanent. The situation today is not dissimilar to what happened to mall REITs 20 years ago.
Recent Troubles
Mall REITs have been under siege since summer of 2016. The... Read more

Stock name Last trade   P/E Earnings/Share Dividend/Share Dividend yield
CBL & ASSOCIATES PROPERTIES 1.38   0.0 -0.95 0.35 27.34
TANGER FACTORY OUTLET CENTERS 16.50   21.4 0.77 1.42 8.35
SIMON PROPERTY GROUP 155.27   20.8 7.48 8.40 5.21


Older articles featuring Cbl & Associates Properties (CBL):
Retail REITs: Double-Digit Yields, Secular Shifts And Mean-Reversion
We Need To Talk About Dividend Cuts - They Are A Necessary Evil
REIT Preferreds: Higher-Yield Without Excess Risk
Dividend Cuts And Overdue Rent: REIT Earnings Recap
Our High Yield REIT Portfolio - Optimizing Rebound Potential
Now Is Not The Time To Be A High-Yield REIT Investor
Macerich: Debunking Three Bear Theses, Including Why I Want A Dividend Cut
Introducing This Growing Dividend Portfolio
Washington Prime Is Undervalued Regardless If It Cuts The Dividend
Our 2020 High Yield REIT Portfolio