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Corrections Corporation of America Message Board

  • RetiredPaperman RetiredPaperman Jan 9, 1999 8:06 PM Flag

    This weekend's Barron's reports that...

    Starwood and MGI Properties will be dropped from
    the Morgan Stanley REIT index following the close of
    trading January 15th. Four REITs will be added including
    PZN, La Salle Hotel Properties, Philips International
    Realty and Host Marriott.

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    • according to Barron's Online.

    • When I looked around business internet sites not
      to long ago they just indicated "n/a" for estimates.
      Zacks shows 11 analyst's reporting the information too
      for their $2.76 average estimate.We should see a
      $2.40 dividend out of that don't you think? If so: For
      '99 @$2.40/$22.50=10.6%.....for '00 (with 20% growth)
      @$2.90/$22.50=13%....for '01 @3.48/$22.50=15.6%....and for '02 (closer
      then we think)@$4.17/$22.50=18.50%. I guess I can live
      with that.

      As newMK says, "amazing what you can
      find on the internet". And it's getting better and
      better. Maybe I go long some AMZN.....not.

    • I'm looking for the dividend increase to happen after two quarters of $1.92.

    • On November 9th, NationsBank/Montgomery (NBM)
      published a research report on Prison Realty Trust. NBM was
      acting as advisor to CCA & PZN on the merger. NBM
      estimates there will be 106 million fully diluted shares as
      of January 1, 1999. They are estimating a quarterly
      dividend of $.56 per share for the first three quarters of
      1999 and $.59 for the fourth quarter of 1999 ($2.27
      for the year). In addition to the quarterly dividend
      referenced above, PZN will pay a one-time special dividend
      estimated at $2.60 per share. 1999 FFO estimate is $2.83.
      1998 FFO estimate is $2.27. The twelve month price
      target for PZN is $32 based on a multiple of less than
      11 1/2 times 1999 FFO estimate of $2.83. The average
      specialty REIT trades at 11.4 times estimated 1998 FFO and
      has an annual FFO per share growth rate of
      approximately 15%. Thus, with an expected annual FFO per share
      growth rate of 25%, PZN likely deserves a higher
      multiple especially considering the recession-proof nature
      of the corrections industry.

      Legg-Mason Wood
      Walker published a BUY recommendation on November 6th.
      1999 FFO estimate is $2.79. They estimate an FFO
      growth rate of 22%, a special dividend of $2.50 per
      share to be paid in Decemer 1999 and a twelve-month
      price target of $33 per share. Year 2000 FFO estimate
      is $3.46. (This particular report has one of the
      most interesting sentences I have seen in my 28 years
      in the investment business, to wit:

      "The
      stock price was also hurt by a number of operating
      incidents -- escapes, murders, assaults -- that occurred
      following the merger announcement.")

      Putnam, Lovell
      and Thornton (whoever they are) have a 1999 FFO
      estimate of $2.75 with $.62 in the first quarter, $.64 in
      the second quarter, $.70 in the third quarter and
      $.79 in the fourth quarter. They are estimating a
      special dividend in the fourth quarter of $2.50 to $3.00
      per share. This report was published on November
      25th.

      Hope the above is useful to all.

    • Thanks for the Analyst's information.
      Unfortunately this stock is in the "Show Me" category so
      investors will need to see results before pressure on the
      stock price subsides. I still think it will take one or
      two dividend checks for the stock to begin to realize
      it's value.

    • It probably a little burr in the pants of Wall
      Street that Doc arranged his own equity financing with
      HSBC. AND it comes in as regular as money from home
      too. Each month.

      The way Doc's going he'll only
      need the Wall Street firms if he's looking for a free
      lunch and invites one of the turkey's to come in and
      pick up the tab.

      Notice how Smith,Barney and JC
      Bradford just picked up research on CPV, of course with a
      "buy". Kissy,kissy. Expect a secondary there
      soon.

      I've mentioned this in other places but I do find it
      very interesting how Bob and Doc are cutting out Wall
      Street and their little monpoly down there. For years
      places like GE relied on Investments Bankers(IB) to
      underwrite their commercial paper. Now they place it direct
      with money market funds. More and more companies are
      "cutting out the middleman". Wall Street in the past has
      held research over the companies head to get IB
      business. BUt more and more firms are realizing, IMO, it's
      not worth the price. The IB's are starting to hit a
      point, IMO, they have to do research just to justify
      anyone talking to them.

    • I've read that REITs can also offer a tax
      advantage to investors in the sense that as much as half of
      their cash distributions (dividends) may be
      sheltered.....does anybody have any information on this and whether
      PZN dividends qualify?

    • Your sharing your info regarding what NB
      Montgomery Securities (NBMS), Legg Mason (LM), and Putnam,
      Lovell and Thornton (PL&T) had to say re: PZN a couple
      of months ago is appreciated.

      If PZN began
      1999 with 101.9 million fully diluted shares
      outstanding at say, $23 per share and NBMS expects a 12 month
      target of $32 while LM is looking at $33, on an assumed
      straight-line appreciation basis, the averaged price for 1999
      would be on the order of $28.

      If, as I
      understood what Doc had to say about HSBC's $600 million
      investment for FY99 being in equity, @ an averaged price of
      $28/share, its $600 M should buy it about 21+ million shares
      in 1999.

      If PZN is starting out 1999 with
      101.9 million shares outstanding, it seems to me it
      should finish up 1999 with about 123+ million fully
      diluted shares outstanding.

      How does NBMS come up
      with only 106 million fully diluted shares
      outstanding?

      Is only about a fifth of HSBC's $600 million FY99
      investment to be in equity and the bulk on debt? Why is this
      not adding up?

    • My question was, "Can you give me a range for the
      numerical factor that relates EPS to FFO?"

      According
      to what IR had been told by Vida Carroll, PZN's CFO
      & Sec.-Treas., historically, it's run between 80%
      to 85%.

      Vida said that The Street's consensus
      opinion for PZN's FY99 FFO is running about $2.65 to
      $2.70 (Yes, I'm aware that Zacks is currently showing
      $2.76 but that is what I was told she told IR). If you
      multiply those FFO numbers by 0.80 to 0.85, it should tell
      you what the commensurate range for EPS would be. (It
      looks like about 2.12 on the low end, to about 2.30 on
      the high end.)

    • http://www.nareit.com/default.html

      A
      portion of REIT distributions, if applicable, will be
      identified as "% Return of Capital" on the 1099 form. This
      portion is not taxable as dividend income, but you have
      to reduce the cost basis of the investment by that
      amount. You will pay Uncle Sam one way or the other,
      since the REIT doesn't.
      At the above url, there is a
      section where all REIT 1099's are reported. It has some
      1998 figures already reported for a few REIT's.
      PZN
      is a REIT and as such, a portion of their cash
      distributions may be "sheltered."
      Check out the above url
      for general info on REIT's. It is not a "commercial"
      site!

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