Just when you think you know what's going on, the good old Internal Revenue Code provides a surprise.
All this time we've been thinking about how and how much with regard to the special dividend that will pay out the balance of old CCA's accumulated earnings and profits by 12/31/99. Now we find out that with the "regular" q4 dividend, it will already be paid, because for tax purposes payments are TREATED AS FIRST COMING OUT OF ACCUMULATED E&P (I guess this is unique for REITs). Thus the 95% of current year taxable income distributions haven't been made yet, and can actually be made sometime in 2000!!!
REALLY confusing, but a net positive as they now have more flexibility. A bit late in figuring this out, though. Where were the multi-million dollar fee advisors last Q?
Point 1: The balance sheet at 30 Sept shows: Distributions payable = 209,729 Using 114003 Shares I get $1.84 per share. Since the 3Q dividend was paid by 30 Sept and no other dividends have been declared I assume this $1.84 per share is the provision for the balance on the Special Dividend.
Point 2: Normalized earnings for 9 months come out at $1.42 (ie $1.90 for the year).The 95% rule means that 1.90 x 95% = $1.80 Minimum dividend to maintain REIT status.
HOWEVER actual earnings YTD are only $0.70 (ie $1.09 for the year). I assume the 95% rule applies to actual earnings so minimum dividend to maintain REIT status for 1999 = 1.09 x 95% = $1.03 only!
Point 3: Total dividends payable inc balance of Special = 1.84 + 1.03 = $2.87 Dividends paid to date in 1999 = $0.55 x 3 = $1.65 Dividend still payable = $1.22
Since dividend payments are applied to special first and normal second, from the above amount we have only 1.84 - 1.65 = $0.19 of special left to pay out!
Can someone please check my assumptions and let me know if I am right or wrong.
I missed the call (sick kid) but from the posts I think I have a good grasp of what was discussed. A question - given the fact that the short-term pressure to fund the Special is off, why did we go through this big hoopla with finding a strategic investor? Is the company actually implying that they just figured this latest tax thing out this week?
Did they take any questions from Analysts? If not, seems that they should have just put out a memo.