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  • newMK newMK Feb 11, 1999 8:32 PM Flag

    Point/counterpoint

    PAH dropping REIT status to save dividend cash
    flow.

    Cleo, my doubts aren't new. Never liked the REIT (or
    any REIT, or any has-been REIT, e.g. your elegant
    HOT). Merger made sense, I'm still waiting for proof of
    benefits of REIT.

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    • newMK, I still see very little happening on the
      syndicate calendar with REIT's on the equity side. They did
      develope a dirty name over the last 4-5 years with the
      amount of offerings they did. But Wall Street will
      always love someone who regularly lines their pockets.
      And their always seems to be plenty of new dough if
      it's a good idea. Litt's was not. Hotels was
      not.

      Cleo..the beauty of dividends, I don't need the stock price
      to go up to get some very exceptional returns. In
      2-3 years, I'm looking at getting 20%+ a year on
      money I invested today. If the price goes up I can't
      add to it and keep getting those returns. See how the
      game has changed, you own an income investment now. Of
      course if the dividend doubles in 3-4 years I doubt the
      price will be the same. But the future at that point
      might still be for new money.

      Over all I a bear
      on the market as I sure comes as no surprize. Most
      of the stocks I buy have heavy book values. The last
      thing I want is a 60 P/E stock hoping their is a
      greater fool coming down the road.

      NO GROWTH
      company IMO will even have a smell of the syndicate once
      the ball game changes, you'll have to have a
      edge,i.e. yield. Institutions like Insurance companies are
      not going to just stop investing usless no pays their
      insurance bill. I feel in the coming years we'll see more
      of a shift to "fixed" income investment. As soon as
      the stock market stops offering 20% returns IMO
      institutions will not want the risk anymore. This shift of the
      equity market cap being 235% of the bond market will
      shift again. And who do you think benefits?

      Of
      course the scary part of a REIT is they seem to fall
      apart fast once the equity drys up. But is it the
      chicken or the egg? Which drys up first the margins in
      their portfolio or the new financing? I think PZN
      proves it's the first that leads to the second. I think
      in many of the REIT's it was well known over a year
      ago the price of the properites had appreciated to
      levels that made no economic sense.

      Cleo, what's
      wrong with WHC then?

      Cheers

      • 1 Reply to flipper_58
      • I have recently started to trade PZN with good
        results. I am
        thinking about buying a large position
        for long term as the
        yield should be at least 12%
        this year and the company
        forecasts a 15% annual
        growth in cash from operations. If so
        why is this
        stock so low? Are these estimates to high? Is
        the
        cash flow what the company states? Is it better for
        the company
        to operate as a REIT? I to am a value
        investor seeking safe
        yields does PZN fit this
        bill?

        I would also like some info regarding which firms
        follow PZN
        and their analysts current opinions if any
        one could please provide.


        Thanks John

 
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