Please tell me if I got this right. CCA merged
with PZN and said their intention was to become a
REIT. In order to qualify as a REIT, you must, among
other things, derive most of your earnings from real
estate, and pass on at least 95% of your earnings to your
shareholders. Standard and Poor's says that later this year PZN
will have to spinoff the management part of the
business to a company closely held by CCA and PZN
executives before it can become qualify as a REIT; S&P also
says that this is the profitable segment of the
My question is this: When I read that First Call
estimates earnings of $2.67 a share this year and $3.11
next year, is this based on the company as it
presently is, before becoming a REIT? If I am reading this
correctly, once the management side of PZN gets spun-off,
PZN will loose any revenue derived from it. And most
of the revenue will have to come from leasing the
real estate. I called the company 3 times to find out
the answer and I'm still waiting for the I.R. lady to
call me back. Any insight into this question will be
BTW, this coming weekends edition of Wall Street Week
is going to feature real estate. If I remember
correctly, there will be 3 analysts discussing various
aspects of real estate, which will have to include REITs.
It would be nice if one of the analyst recommended
PZN. It sure would give a nice boost to the stock.
I have also called the IR lady twice in the last
two days to try and get a better understanding of
this special dividend. No reply yet either. Is this
typical of this company? If it is they need to make some
changes at headquarters.
Jake 1349 summed up the dividend situation as
succinctly as possible in #800.
The reason there is a
special dividend is that the new PZN is treated for tax
and accounting purposes as if it were the old CCA,
having acquired the old PZN.
To be a REIT, new
PZN can't have any of CCA's "earnings and profits".
That's a tax term, but it is essentially retained
earnings. Thus new PZN has to pay out old CCA's retained
earnings by the end of this year in order to be a
You have to be a shareholder of record when the
special dividend is formally declared (as Jake said, .05
per quarter through September, then about 1.85 in
Those First Call estimates are for the company as
it presently is, but it is now a REIT. The
"spin-off" has already happenned. Organizationally and
Operationally, as of 1/1/99 the deal was done. I think the
earnings projections you mentioned are actually FFO (funds
from operations)figures, not earnigs per
The "Management" side of the business has already
been seperated from the Property Ownership side but a
substantial part of the profitability from the "management"
side is essentially being sent back to the REIT.
Therein lies the basis for the argument of whether or not
the IRS will allow the present
Confused? You are not alone and this is in large part why
the stock is at $16 instead of $26.
certainly a better way to explain what I've just said but
those that can say it better have said it so many times
they've just given up.
Minus the $4+ dollars in payout in the next year
alone, this dividend adjusted price $15-$4=$11....will
represent the PRIVATE construction cost(not even inflated
Public construction cost)of all of PZN beds.
traded at that level last Oct ($10+), of course
pre-merger. It represented one of the finest buying points
you can have in buying a stock on a fundamental
In the latter half of April, 26,500 shares were
added to the 115,924,218 S/O, a/o 4/15/99, bringing the
total S/O, a/o 4/30/99, to 115,950,718.
yesterday, 5/03/99, HSBC purchased an additional 1,122,074
shares, bringing the current S/O to
At today's closing price of 20.0625 for PZN, its MC
calcs to $2.349 billion, which is about 3.57% higher
than the $2.268 billion that Yahoo is currently
displaying, widening further the disparity between Market
Guide's data (as furnished to Yahoo) and the extant
reality due to MG falling further behind the times
insofar as PZN's S/O is concerned.
Nice that you worried about me. I survived the
slippery slopes of the Continetal Divide on the Alberta/BC
border, and will soon be travelling near Serbia. And to
top it off, I bought some more PZN!
10K/proxy: sure the Board is incestuous -aren't they all? I
don't know many of the board members, so I don't know
if they are worth the big bucks or not (by the way,
Beth Moore's (corporate counsel) husband is not
returning to the board.
Some of the financial deals
disclosed are too sophisticated for me to figure out. I
gloss over them thinking that even if they are
sweetheart deals, not enough money is involved to get
excited about. Sorry, I still don't think Doc is
dishonest, and I just don't worry about it. Doesn't mean I'm
happy with the REIT.
I also noticed that Baron
wasn't listed as a 16% S/H of OPCO. I didn't bother
going back to see if he and Sodexho were both 16% S/Hs
or both 8% S/Hs. I think both 16. Seemed like he was
in for the long haul. Again, whether he stays or
goes, I just don't care.
I did tell you not long
ago that I was generally better off because of PZN
(well, old CCA). I will now confess: I am pissed off
about the current market value. It sucks, without
question. You (and others) are justifiably angry. BUT -
what can we do about it? You can sell. You can sue.
You can hang in there. So far, I still choose to
believe that Doc and Co. can make the value go up, even
in this stupid REIT format.
Haven't forgotten or been ignoring
When you posted #885 three days ago, I called The
Oracle at Delphi to see what he had to say and found
that he wasn't as encouraged about PZN's behavior as I
was inclined to be. This is not to preclude the fact
that he'd been "nibbling." (Note to Nic, I said
"nibbling", not "nipping".)
He was aware (as I pointed
out) that PZN had, at that time, penetrated above its
50 DMA and, the day before (Monday, 4/19/99), had
violated its most recent (revised) long-term downtrend
line which originated a year earlier at 4/20/98's
intra-day high of 41.9375. That, of course, was the day the
proposed merger annoumcement was released in the wee hours
of the morning.
Despite PZN's continued
positive movement thus far this week, The Oracle is yet to
be convinced by its "technicals" that it couldn't
retest its lows.
As he sees it, PZN is reacting
to the strength the REIT sector has been exhibiting
recently and has been, as pascoe has pointed out in #906,
a laggard in that regard. This may also answer
mikehickey's question in #938.
The Oracle feels that
PZN has yet to "technically" distinguish itself and
while the positives of the current market (such as
broader participation by the small and mid caps as well
as a shifting towards "value" from "growth") have
been working to PZN's benefit, if a change in market
sentiment should occur, he believes PZN could be back down
in the basement, possibly at the 15.000 to 15.500
Now I realize, having said this, that some lurkers
out there who may have been encouraged by PZN's
recent "rays of hope" might not be too thrilled with The
Oracle's opinion but it must be remembered that (a) the
Oracle had been a recent accumulator of PZN (I did not
ask him @ what prices) and (b) the Oracle is not
saying that it WILL happen, he's only saying that the
technicals, to date, merely indicate that it COULD
So I asked him, "Well what kind of scenario would
change your mind?", and this is what he told
The Oracle would like to see PZN get above 21 3/16.
He'd like to see it open some morning with a gap up
and trade at least a multiple (I interpret that to
mean at least a double) of its ADV that session.
needs to see strong volume.
If this scenario
should occur, The Oracle would wait for a pullback to
the 18.500 level which, he says, "is a good buying
range." The Oracle says that he'd rather be a buyer on a
pullback to that (18.500) level than he would being a
buyer should PZN fall back down to the 15.500 level
because the technicals (of the scenario) would have
indicated a reversal of trend.
I hope that's
responding to your question, flipper.
receive a dividend check through the mail
1. You were an owner of record of PZN shares on
March 19, 1999 (see PZN's News page for its 3/05/99
announcement of its 1Q99 dividend declaration). Due to normal
3-day settlement, I believe you would have had to have
purchased those shares at least 3 business days prior to
3/19/99 for your transaction to have "settled" on
3/19/99, according you the shareholder's entitlement to
the dividend (If I'm in error about this--it's been
awhile--, I'm certain that there will be many learned souls
lurking out there to set the General straight.),
2. You held the share certificates in YOUR NAME and
the physical certificates had been issued to YOU, and
were in the possession of YOU or some entity (i.e.
safe deposit box) other than in your account at the
brokerage firm (referred to as being held in "Street
If your shares are held in Street Name, the dividend
should've been credited to your brokerage account on the
day the dividend was paid, which was 3/31/99. If that
was the case, you need to requwst your brokerage firm
to issue a check to you for the amount of the
dividend that was credited.