The Washington Prime Group (NYSE: WPG) has filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the Southern District of Texas.
The financial position of Washington Prime
After the Covid-19 enforced lockdowns were introduced last year, they closed a few of their 100 shopping centers across the country, temporarily. Many of their tenants, also impacted by the situation, failed to keep up with rental payments. Some businesses were forced to close permanently. It appears Washington Prime has been negotiating for debtor-in-possession financing to the tune of $100 million, in an effort to support operations during bankruptcy.
Their financial situation has gradually worsened since the onset of the pandemic around the end of the first quarter of 2020. Their rental income dropped by $20M from Q1 2020 to Q1 2021, while cash flows dropped from $10M to $3.3M.
The company was able to skip a bond interest payment of $23M after negotiations with creditors. While discussions were going on, creditors had to extend a forbearance agreement multiple times.
The developments and challenges seem to be reflected in the share price of the company, which is down by 62% over the 12-month period.
Investor recourse for losses in Washington Prime
Cases of investors seeking damages for losses suffered in Washington Prime are rising. Known for their attractive dividend payouts, it is possible the REITS are unsuitably recommended by advisors in an effort to ‘chase yield.’ The recommendation of Washington Prime to investors could be the result of this syndrome.
It is a legal requirement for broker-dealers to act in the best interest of their clients and make recommendations that are consistent with their profile as well as investment objectives. They are required to carry out due diligence on the security they wish to recommend and declare the risks carried by the investment at the time of making the recommendation.
Not complying with any of these requirements could open them up for claims from investors for losses they incur as a result of such investments.
Investment fraud lawyers at Haselkorn & Thibaut, P.A., are investigating potential claims involving broker-dealers who may have unsuitably recommended Washington Prime Group to investors. It is a national investor protection law firm with offices nationwide.
If you have an investment in Washington Prime, or another mall REIT, and believe you could be the victim of an unsuitable recommendation by your advisor, or any other malpractice, you are invited to approach us for a free consultation. Contact Haselkorn & Thibaut, P.A. at 1-800-856-3352 or visit InvestmentFraudLawyers.com
