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.
PZN is so much different that CPV is that PZN
basically consolidates the income of PZN and CCA. CPV has
to split income with WHC, another public company. If
you want to see the end result of that strategy, look
at VC/VTR (but not on a full stomach).
No consternation or offense taken on my part.
Like I haven't been there and done that myself? You
didn't have to explain. I figured out for myself what
must've happened. I had to.
You see I've never
been in the position where<<I had the inside
source.>> Nor have I ever been in the position to say
that<<I have hired guns who advise me as to where to
invest and where to put my money.>>
wouldn't it be great though, if I could afford to pay a
gaggle of investment advisors whose "consensus" opinion
would tell me what to buy, when to buy it, and when to
sell it but wouldn't be bothered to explain the
reasons for my doing so, just telling me, <<"Forget
why and how come.">>
I think that would
be just ginger peachy. And if I DID have any
questions or wanted to understand what I'd gotten myself
into, I wouldn't have to disturb the advisors I'm
paying my money to for information, I could just go on
the message board and snag some unsuspecting dumb
s----k and have them explain things to me FOR FREE!!
Fortunately (for me), the help I've tried to give others on
this (and every thread I post on) has been
acknowledged with appreciation by many, including yourself,
Agent00077, so this incident goes down as an example of an
encounter with what the late cartoonist Al Capp (creator of
the comic strip Li'l Abner) described as "the goo-goo
element in our society." (tggeios).
General an "associate" of Cleo. This next one will be my
sixth shower since reading #962 and I still feel like
quoting Lady Macbeth, "Out, out damn ..." While I can't
vouch for how many showers Cleo will have claimed she's
taken (since I don't have an inside source), I'm sure
it will exceed whatever number I would say
Did I say chutzpah? The saving grace of this whole
episode is that should the trajedy in Kosovo continue
much longer and the NATO forces find themselves in
need of more brass for shell casings, I know where
they can find the Mother Lode. Snip, snip.
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.