The retail sector is being hit by the so-called "retail apocalypse," as online sales gain ground and physical-store sales languish. Real estate investment trust (REIT) Washington Prime Group (NYSE: WPG) owns enclosed malls, which are facing the biggest threat.
Given the stock's 30% dividend yield, however, aggressive investors with a value bent might be tempted to take a stake. Here's what you need to know before you do that.
The retail apocalypse is having the biggest impact on enclosed malls, which are largely what Washington Prime Group owns. It directly controls around 91 properties, with partial interests bringing its total mall exposure up to 108 assets. One of the biggest issues the REIT faces, however, is the quality of the malls it operates. The average sales per square foot at its malls are around the $400 mark, while better-positioned competitors have average rents between $650 and $850 per square foot.