HI Jacob,
FIrst off - we like the industry in which it operates. Industrial, residential and healthcare REITs are ones we prefer over Retail and Office REITs.
In terms how how WPT Industrial stacks up against others in the industrials industry? At 52%, WPT has the highest debt to gross book value in the industry. Several of the industry leaders like Granite have a ratio below 30%. At 2.9 times, it also has one of the smallest interest coverage ratios and at 130% through the first six months of the year, it has one of the highest AFFO payout ratios. Granted it is down from 133% through the first six months of 2019.
As a percentage of adjusted cash flow from operations, the payout ratio stands at 106.9% as compared to 105.1% last year.
An AFFO ratio above 100% is not a great sign. Although it is not the only one, it certainly is not sustainable over the long term. The issue is that we are dealing with a pandemic, so many of these numbers are impacted. That being said, WPT's ratio has always been on the higher end as compared to peers.
On the bright side, the company collected 99.5% of rents last quarter and increase occupancy from to 97.4% from 95.7%. In a recent update, it also said it is collecting at a 99%+ clip - it is one of the reasons we like the industry.
The company appears fairly valued, trading inline with book value ($12.99) and at a slight discount to net asset value ($13.25). The company is expected to grow at a mid-to-high single-digit pace. Given it seems appropriately valued, one would expect similar growth in its stock price.
Overall it is a solid stock. The payout ratios are a little high, but it is growing at a decent pace and rent collections are incredibly strong.
Mat