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EPR Properties Message Board

  • Gerimak Gerimak Apr 11, 2001 3:23 PM Flag

    Why no BRT dividend

    I'm wondering why nobody has commented on the fact that BRT pays NO dividend, while EPR pays a large dividend. This seems a major difference in management philosophy.

    It seems to me that most EPR shareholders are in it for the dividend. Why put a guy on the EPR board who's basic philosophy is not to pay a dividend?

    I'm also wondering how BRT meets the IRS REIT requirement of paying out 90% of net earnings in dividends. They seem to have earnings, but pay no dividends. What's the story?

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    • I don't really care about how the BRT/EPR fight plays out. I bought some shares in BRT recently so I know a little bit about the company. As to why no dividend - historically (go back 10 years or so), BRT was a high risk mortgage lender, taking second and third positions on marginal real estate and charging high interest for the risks it was taking. When the real estate market tanked in the early 1990s, a lot of BRT's loans became worthless or declined substantially in value. BRT spent several years in a work-out phase, trying to get whatever value it could for the loans, and closing loan offices in places like Texas. During this time, the company stopped its dividend (95% of a negative taxable income is still a zero dividend) and generated tons of net operating loss carryovers for tax purposes. After it cleaned up the loan problems, it used the loss carryovers to reduce taxable income to zero for several more years, thereby eliminating the obligation to pay dividends. The last of the loss carryovers was projected to be used up either in the 3/31/00 quarter (per BRT's SEC filings), so dividends will have to be reinstated now. Since BRT has been earning about $ 1 + per share for the last few years, I'm expecting a dividend of about $ 1 per share to be started within the next quarter or so. This would give a yield of about 11% or so for a mortgage REIT, which isn't too bad, considering the company's cash position (it seems to have learned from its losses).

      Having said all that, the yield is meaningless for determining whether to support EPR or BRT. The real question is whether Gould would be a help or a hindrance on the board and whether he could have any impact as 1 (unpopular) person on the board. I suspect, based on BRT's activities in the past year or two, that Gould wants to sell EPR's theatres for a quick gain and get out. As 1 director, he can't do this, but he could use his position to be an annoyance to EPR's management.

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