this quarter (2Q 01) produced numbers very comparable to 1Q 00, when FFO were .41 per share and a .30 dividend was paid. That was the last dividend. 2Q 01 produced .38 FFO (.36 diluted) and was very even compared to 1Q 01 interms of rental income and expenses, excluding one time charges. Interest expense down a little.
This could be paying a dollar a year dividend once the debt covenants are satisfied, which may be soon. Not much risk of nonpayment around the corner unless the market believes GHV won't make it once it is out of bankruptcy, which looks to be happening soon too. The market may up the share price here as it starts to discount that dividend, which at a buck would be a 20% yield at these prices. I still think ETT will be at 8 dollars by September.
Aside from the noise about lawsuit the report seems very positive to me. I also think things will continue to improve as rates (LIBOR)look like they will fade another 25-50 basis points. Lets hope the street sees the same value we do. I agree ETT results look like pre GHV problems so lest hope price and dividends return tothe same levels.
1) 36 cents diluted, 38 cents FFO is heading toward an annualized FFO of better than $1.50 per share easily justifying a $1 per share dividend 3rd qtr 2002; plus, 2nd qtr had some extraordinary non-recurring expenses and loss of income (senior life not paying, and atty fees expended for ET Capital, and LIBOR avg being higher than current rates. Thus, FFO may just get better.
2) 2nd qtr LIBOR avg was 4.56%. Today it is 3.784% (so if LIBOR current rate is the avg for the next 12 months, that adds another 7 cents per share for the next 12 months). Plus, if rates fall further, that number may just get better. That should more than offset the dilution to earnings resulting from the Senior Life and GHV loans paying off.
3)rent increases in Sept and Dec may add another 4 cents per share annualized to FFO;
4) extraordinary expenses relating to ET Capital lawyers and Senior Life issues during 2nd qtr may be resolved during 3rd qtr. 4th qtr FFO mumbers should look real good.
Thus, it looks like the income will increase and the expenses will go down and an annualized FFO of better than $1.50 is looking sustainable. That could even give rise to a $1.20 dividend based upon past dividend history.
What does that analysis overlook or mistate? Those were my quick thoughts after looking at the numbers and listening to the webcast.
From what Lee said, it does seem management is committed to reinstating a dividend 2nd half of 2002 in order to get the share price up.