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  • newMK newMK Jun 8, 1999 9:14 AM Flag

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    #7: The special dividend. This should always have
    been a non-issue, because the stock will decline by
    however much is paid. It's only required for tas
    purposes, and creates more financing difficulties. But many
    retail investors think it's a great thing. Wrong. And
    wrong about the amount, too. After special charges,
    fees, etc. and dilution, it'll be about a dollar a
    share less than originally estimated.

    Combining growth rates. Last year we were told that new PZN
    would grow at a rate equal to 80% of CCA's growth rate
    + 20% of PZN's growth rate, or roughly 30%. Oops.
    Forgot dilution. Some analysts' models now show FFO
    calculations based on issuing equity at $15 for half of next
    year's capital needs. Try 30% dilution instead of 30%

    #9: "You're the only one for me" and "we're in the
    big time now". Bad things happen to people who
    promote themselves above their old friends and
    acquaintances. PZN has effectively stiffed its old circle of
    analysts, commercial bankers and investment bankers. There
    may have been expedient reasons for going exclusively
    with Lehman, but at crunch time PZN suddenly looked
    like damaged goods. BTW, is that Lehman credit line

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    • We have hit the one the big problem when REIT's
      don't work, the price for new equity is not accretive
      any more. As this stage it's a bond, till the share
      price can increase and new equity can begin. Not a good
      situation for a growth company to be in.

      Since we
      can not raise accretive equity at this time PZN has
      no choice but to finish up it's existing business
      and wait. CPV is in this boat too. Their share price
      has to be over $20 in order to issue

      PZN will be forced to curtail it's growth plans for
      next year, that seems quite obvious at this

      NewMK, I must admit at this time the REIT strategy must
      go. The structure is not being accepted and the
      timing is not right. I still generally like the idea,
      but when it turns a growth company into a bond it's a
      failure. I can't support it when it drastically hurts the
      comapnies future as it is now.

      Now the issues of
      competition from others and the anti-privatization movement
      become more real. What do the CCA salesmen say now when
      the Feds come knocking next year saying we're ready
      to go and PZN can't raise accretive equity. This is
      when I have to say it's time for a chance

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