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  • gseay22 gseay22 Nov 10, 1999 7:07 PM Flag

    PZN : quarterly

    As to Bob being a REIT expert and them not coming
    up with the "pay the dividend next year" strategy -
    necessity is the mother of invention. You don't look at
    something until your cash flow dictates that you do so. As
    much venom as has been thrown at these guys (and a lot
    of it deserved) you better start cheering for them.
    I think they are going to deliver on a lot of the
    occupancy issues outstanding, but you better hope and pray
    they negotiate a deal with the strategic investor that
    doesn't dilute us all straight to you know where. Their
    ability to convince an si to give them financing at a
    level that doesn't cripple the company's current
    shareholders is very, very important to all of us too stupid,
    stubborn, or optimistic to have sold this wonderful stock.

    SortNewest  |  Oldest  |  Most Replied Expand all replies
    • 1)get ready forward equity
      contract

      2)Capital expenses drop to $45mm for the quarter or $180mm
      annually. So much for $700m plus this structure was to
      provide.

      3)As Quad said the combined cash flow number is bad.
      Opco has lost $82mm and PZN's available earnings(not
      including incentive fees kick back) is $79mm....not a
      pretty picture, that spells LOSS to me.

      4)paying
      an average of 11.40% on your $895mm in debt is
      INSANE, but they have no choice since the structure blew
      up in their faces.

      5) the IRS....I won't say
      more

      6)NOW they find out about the treatment of the special
      dividend is FIFO versus the regular dividend. I'm in total
      amazement. Something smells there. I have to feeling it's
      gone over everyones heads at this point.

      7)Get
      ready for lease rates in the CPV (10.50% range), it's
      the only way they're going to get money into
      Opco.

      This structure will not allow PZN to grow until the
      next REIT cycle...5 years...10 years?

      • 2 Replies to flipper_58
      • If everything is as negative and pessimistic
        about PZN as you describe why would David Dreman
        (Forbes magazine)recommend the stock on two separate
        occasions only a few months back? Do you feel that your
        financial analysis is superior to David Dreman's? Do you
        feel that you have better access to information about
        PZN than David Dreman does? Again, I'm really stuck
        on this point - why would Dreman go out on a limb to
        recommend PZN in Forbes magazine and then buy a substantial
        position in PZN back in September if the entire outlook
        and prospects for PZN were as bleak as your numbers
        suggest? Wouldn't he see what you are seeing? I don't get
        it? How can things be as cut-and-dry as you say that
        your numbers suggest? Obviously, there seems to be a
        lot of room for interpretation and subjective
        analysis - or why else would Dreman take a substantial
        position in PZN two months ago....yet your number
        crunching on 11/10/99 leads you to hold a very bleak
        outlook for PZN....why such a drastic difference in
        opinion if things were as cut-and-dry as you
        suggest....obviously, how one reads or interprets the numbers is a
        major factor, especially for this situation even more
        so than other kinds of stock situations......these
        REIT situations are extremely complicated even if you
        are an experienced accountant.....in any event, I
        would rather go with a professional like Dave Dreman,
        especially with this kind of complicated situation, and put
        my faith in his analysis as opposed to
        nonprofessionals who run a couple of numbers through their
        computers and then cry out that all is lost and we should
        all run away from PZN.....EOM

      • I just did a quick consolidation of CCA and PZN
        for the third quarter using the 10Q's for the second
        and third quarter. On a combined basis this
        consolidated entity lost 12 million for the quarter. This
        means that even if the lease rates are zero the
        combined company loses money. I also noted that operating
        income at CCA was about 121 million for the quarter vs
        244 for the first six months and operating expenses
        were 100 million vs 168. It would appear that revenue
        is shrinking at CCA and that operating expenses are
        growing. Am I off base here? Is this the basic problem
        with the Company at this point?

    • Junior has never been considered an expert on
      REITS. He is smart as hell, but an arogant little s**t.
      But that doesn't make him an expert on REITS. Reality
      is that if anyone other than Baby Doc had come up
      with the REIT idea for old CCA, Doc would have ignored
      it. But that doesn't make jr an expert--it only
      exposes the evils of nepotism. This was nothing more than
      a half baked idea that has just about ruined a damn
      good company and only got heard because DAD was the
      Chairman. I don't subscribe to the "Doc has to go" chorus,
      but I do believe Baby Doc has to go and take Devlin
      with him!

    • When I read the announcement this morning, my
      first inclination was to access my broker and
      BUY!

      It seemed like all our problems were solved, in
      priority order:

      1) The special dividend. The
      company has found a way to defer it to next year, thus
      removing the one roadblock to fiscal health PZN faces.


      2) The SI. If you don't need to pay the special
      dividend in December, you don't need to borrow money to
      pay it, and you don't need to dilute the hell out of
      shareholders for that purpose.

      3) Occupancy. Improving,
      and the Wisconsin announcement would seem to increase
      occupancy by 2 1/2 % !!! This alone would seem so favorable
      as to make PZN a 'buy'.

      4) Management.
      Getting some people who maybe know something about
      finance (Merrill) has to be reassuring to those who get
      queasy thinking about all the financial misteps this
      company has made in the past. The past can't be changed,
      buy if investors can anticipate only good decisions
      in the future, that is certainly a
      positive.

      Well, somedays you're the windshield and somedays
      you're the bug, and when I logged-on to find PZN under
      $9, it scared me. I missed an opportunity, but if it
      repeats itself tomorrow, I will NOT miss it again.

      • 1 Reply to Idontwanttohearit
      • I was asking myself that same question this
        morning but after reading through the posts, especially
        NHYield's, I realized that the need for the cash is still
        there; only the timing has changed. If I understand
        NYH's posts, while they can defer payment of the
        Special until 2000, they must begin paying 1/3 of it with
        the regular Q1 200 dividend (which, by the way, the
        cannot fully fund out of operating cash
        flows).

        So I suppose the short answer is that instead of
        needing an SI now they have until Q1, maybe Q2. This
        assumes the bankers are ok with all of this, and I
        wouldn't assume anything anymore.

        (Different Topic)
        - Flipper, in regards to your interest rate
        calculation, I wonder what the number would be if we included
        not just the stated rates but the FEES MK discussed
        earlier. Seems to me that when you add up all these fees
        (all of which are attributable to the current REIT
        fucxup) we're out there borrowing $5 at a high rate but
        having to turn right around and give them back $1 for
        fees. Hell, our real cost of borrowing this past year
        has probably been in excess of 20%.

 
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