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Brookdale Senior Living Inc. Message Board

  • whowants2be whowants2be Mar 11, 2008 12:43 PM Flag

    BKD dividend

    What are the odds that this dividend level can be maintained?

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    • If they keep the dividend at $0.25 per quarter for the rest of the year, then yes, it's $1 for the year. They are only "cutting" temporarily and will presumably go back to the near 100% of cash (or maybe less, if they want to be more conservative) after the buyback is finished. if they don't, the cash not paid in dividends will presumably go to high-return uses--like buybacks, expansions, etc.

      My only beef with this post is that the company IS making money, nearly $200mm expected in 2008 before putting it to discretionary uses. Anyone who says they are not is simply trying to push the stock down. Readers: while some penny stocks can be pushed around by retail investors, a company with a float of $900 million lives or dies by the institutional holder. Please refrain from blatant lies--they serve no purpose as they don't move the stock and only serve to confuse.

      If you are a serious poster, how are the assets worth 25% less today than 2 years ago? Revenue per unit is up, cash flow per unit is up, and only the equity market valuations are down. As a reader of Buffett/Graham will know, "Mr. Market" sets the price, not the value. The fed funds is actually lower than in early '06, and even though spreads are higher, that's a price issue due to banks' pain, not an issue with the value of Brookdale's assets...meaning that when the credit crisis/crunch/debacle eases, price should approach value again.

      Please explain how the Democrats taking over also makes Brookdale "really over?" 89% of revenue comes from private sources--do you mean that those people will face higher taxes or worsening wealth and won't be able to afford price increases--or are you talking about the 11% of revenue that comes from the government?

      Lastly, Fortress has Brookdale shares in their private equity fund, which I believe is paid back in 2010. Redemptions at the hedge fund don't affect the private equity fund (as far as i know). I would like to see Fortress pass along the BKD shares to their LPs, which would take the 60% concentration and break it into smaller pieces without selling a share. Of course some of those LPs may elect to sell, but that would be a short-term phenomenon.

      I don't think the rest of us are going to take a year off, but I probably should.

    • so will there be one in 1st qtr or not?

    • "can be" or "will be?" it is 100% that it can be maintained due to cash on the balance sheet, revolving credit, and untapped mortgage potential. the cash flow - dividend shortfall is only likely to be $5mm per quarter ($20mm per year) in 2008, in a downside scenario.

      I think the only reason that they would cut the dividend at this point (other than a meltdown) is to buyback stock--which is really just suspending the dividend for a quarter or two--and is certainly just as good or better than a dividend. if they can buyback stock with a cost of capital of 5%-6% mortgage debt, that is hugely accretive. even sale/leasebacks at higher single digit cap rates would be accretive. if they outright sell properties to buy stock, foregoing some EBITDAR, that may not be as good--but still likely accretive to CFFO / share.

      • 1 Reply to bacchus6
      • Does anyone really pay a dividend out of negative cash flow??? I presume they will cut it back by maybe half, to make cash flow positive, and help buy back some stock - tho buy backs are almost always losers, at least a sign of slower growth.

        But here - I presume much of the value of this stock involves real estate, so even if they can maintain cash flow, the share price falls and the yield goes up (already has), which would be a good thing - but only with positive cash flow.

18.21May 3 4:02 PMEDT