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  • sam_0534 sam_0534 Jan 9, 1999 11:55 AM Flag

    Anybody read streetcom today??? What doe

    Inevitably, some REITs will struggle. Companies
    like Patriot American ( (NYSE:PAH - news) ) and Prison
    Realty are likely to face continued challenges from past
    missteps. Others like Kranzco ( (NYSE:KRT - news) ) and
    Lexford ( (NYSE:LFT - news) ), with heavy debt loads and
    second-tier properties, are likely to be laggards as
    investors continue to prize asset quality.




    Real Consolidation

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    • Chris Edmonds' analysis seemed a bit superficial.
      Sounds like he read Cleo's posts on CCA thread and drew
      quick conclusions. Even Cleo admitted the merger was
      great for PZN (in her view, at the expense of CCA
      shareholders). Here's what I think Edmonds is
      overlooking:

      PZN isn't issuing capital for "vague reasons".
      Although the boilerplate language in SEC filings may not
      detail specific projects. Again, on the CCA thread (and
      of course in quarterly conference calls, etc.), it's
      been well detailed how much capital CCA needs for
      projects that are already announced (not to mention the
      big special dividend at the end of this year). Unlike
      losers such as PAH, CCA also knows where its capital
      will come from (HSBC).

      As far as PZN's
      missteps, Edmonds didn't mention any. Taking Cleo's
      position (anti-merger), one would have to say PZN got a
      bargain in its combination with CCA. If nothing else, the
      FFO from the "old" PZN facilities should double, plus
      PZN will now get all of CCA's income (and then
      some).

      Of course, Cleo would also say that the market
      doesn't like this deal because mgmt is lining their
      pockets. But again, in her words, that got fixed with the
      settlement of the class action.

      Once the market
      "experts" such as Edmonds overcome this superficial
      analysis and ignorance, I'm hopeful they'll see that PZN
      has everything going for it that every other REIT can
      only envy.

      Remember 1997 when PZN first went
      public? The experts made it the hottest REIT offering
      ever and the best performing of the year. That was
      when it was one-fifth the size it is now, received
      rents based on half the valuations, had a growth rate
      less than half of what is now expected, and had to
      negotiate (and be dependent on) another public company (but
      had a stock price of almost twice what it is
      now).

      OK, Cleo, we all lost our growth company. That's
      history. Time for PZN to get appreciated.

 
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