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.
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.