Doc, recombine PZN with Opco. The singular reason
for creating the REIT was to enhance the entity's
abilities to raise capital. For whatever reasons, and there
are plenty, it isn't working as planned. That is a
clear fact, not an opinion.
Combining the co's
takes away all the sideline issues that have grown into
forefront issues. If you had done this when PZN was at 20,
the stock would have temporarily dropped to 15 then
climbed back. Now, such a move would most likely be
greated with a move back to 20. HOT gave up REIT status
and PAH toughed it out. Look at the comparative
results. Is that a totally valid comparison to this
situation? No, but a lesson can still be earned.
remain convinced that the initial plan made sense but
things changed, some outside of PZN's control (Investor
disdain for REITS) and some within PZN's control (The
It doesn't matter. That's all water under the
bridge. Bring the company's back together before there's
nothing left to merge.
If you put the two businesses back together
(which is potentially the fair way to value the entity
anyway) the system generates substantially less reported
economics. PZN is supposed to do $300mm of FFO this year,
and it seems if OPCO is losing $40MM in cash after
getting paid $80mm in additional fees from PZN, OPCO is
really losing $120mm. So take $300MM of PZN FFO and
subtract $120mm of OPCO losses, and you get $180mm of
combined FFO (maybe accountants can monkey with this
number and take some expense and ammortize it, but cash
basis is fair way to look at economics). Divide $180MM
of FFO by 117mm shares (although share count may go
higher if they have to buy OPCO back in??), and you get
$1.55 of FFO.
At $1.55 of FFO, what multiple
does the business deserve? I suspect the multiple it
would get would likely be a discount to peer given the
credibility issues that have arisen at the
What do you think of this analysis, is it a fair way
to value the company as a system. If so, I can get
to a number for stock price of around $10 or $11
using a 7x FFO number, which may be appropriate for a
tarnished story w/ legal/other clouds hanging around. JMHO.
...that he was comfortable with analysts'
earnings estimates for the next quarter and remainder of
the year, and that the various fees ($4000 included)
were included as part of Q1; if such is the case, then
FFOPS will present no surprises for the balance of this
Interesting thumbmail analysis. I'm away from my
home office so I can't do the analysis I'd like to do
but mine would go something like this...Pre-merger,
CCA was supposed to make something like $1.20 a share
(adjusting down for the drop in communicated growth from 40%
to 20%). PZN was about 1/4 the size of CCA so you
can almost exclude them from the equation but if you
choose to include them, it probably doesn't hurt my
Take $1.20 and give it a pe of 25 instead of the
previous 40+. A pe of 25 on a 20% grower would be quite
conservative for this market. I think the S&P pe is about 28
and growing under 10%. $1.20 x 25 is 30.
that cursury analysis done, my argument is that it
("it" being the numbers) doesn't matter. PZN has no
choice. They might have pulled off the REIT if they'd
operated flawlessly but the "mistake" is the end of the
great experiment. Regardless of the numbers, the market
has spoken. The stock is at $15 and going lower. IF
the debt deal goes through, they'll still need to
issue stock early next year and it's going to be at
horribly low prices.
Fortunately, they've run the
actual operations side of the business pretty well,
except for Youngstown. Otherwise we'd be at 10 right
In summary, the numbers don't matter anymore.
Credibility is zero and it can only be fixed by making the
whole entity a public corporation. Lose the REIT
status, PZN pays taxes at the lower corporate rate, I
stop paying at 46%, the stock goes higher than it
would otherwise. I'm afraid you won't find the answer
to this one on your calculator.
I they want to maintain their reit status. Reits
can only own the real estate,not operate the
business, unless they are a paired shared reit, which PZN
is not. And can't become one. Not allowed anymore.
"Nobody is stupid" ha, ha...
Stupid were buing
Smart are buing at $12 -
Devidents could be cut to $2 next year and should be cut,
this will make this $20 stock next year + $4 total
devidents for 1999 for a total $24.
It is looking
very interesting at up to $17 today.
And to those that feel I always "blindly" follow
management I invite you to read my posts on the Bell
INdustries(BI)message board, I am the devils advocate there. A spinless
board of directors and top mangement that's self
selfing, mismanaged firm is plain as the nose on their
faces. I can wear all hats.
all the best
"Why, Doctor Crants, Why????
by: avolster 27
It totally amazes me that one man can
screw up two perfectly fine companies in one day.
Posted: 06/10/1998 11:47 am EDT as a reply to: Msg 1 by
Try Tennessee networks,unknown if web site
esist.ill try to locate and report.wbbj tv,in jackson
tenn.carried the news.jackson sun news paper in sackson
tn.carried the story,so did the commerical appeal news paper
in memphis carry the story/
Flipper: I was referring to the stock being like
a junk bond at this state. Not the actual rating
from folks like Moody's etc. Why like a junk bond?
Because management has been less than forthcoming and
that the future of the company is under question.
Thus, the stock drops creating an abnormally large
yield that is like a junk bond. That's all I meant.
Editor of the Reitmeister
cxc was at $90/share and flying high...and then
Doc had to take care of "baby doc" (form
PZN)????...and then merge the two???? What has happened with
each move??? from $90 to $12!!! and there are still
people on this board defending him?????? He and the
Board should reside with those they are supposedly
housing. If there was ever an example of fiduciary
irresponsibility and nepotism this is it!!! The financials are
only part of this company's problems...look underneath
the numbers and I promise you the problems aren't