WPG - Mid-Tier Mall REITs' Earnings Reports Look Awful
The majority of earnings season for mall REITs got crushed into a single afternoon this quarter. The sector has been hit particularly hard by the COVID-19 pandemic, and mall owners apparently decided to get all their bad news out at once.
While every single mall owner reported dreadful results, the numbers were particularly bad for mid-tier mall REITs like Pennsylvania Real Estate Investment Trust (NYSE: PEI) and Washington Prime (NYSE: WPG). Let's take a look.
Two of the most important financial metrics for REITs are net operating income (NOI) and funds from operations (FFO). NOI measures the income generated by a property or set of properties after deducting property-level operating costs from revenue. FFO is a proxy for a REIT's operating cash flow. Unlike NOI, it includes corporate overhead and interest costs. However, it excludes non-cash items like depreciation and amortization that are presented on traditional income statements.