and don't forget the new 4 1/2% "success fee". Doc blew the conference call. He tried pooh-poohing the whole thing and in the process created more confusion. Doesn't make sense, because the reason for the call was to head off misunderstanding. Not only did he leave everyone confused, but there seems to be widespread doubt about the fundamental business now, although I'm sure it is overblown.
If you had followed this thread (and CCA before it) you would know that I have held Doc in the highest esteem through thick and thin. He let us down on Friday. You can't really blame the analysts and the market this time around. Now he's stuck on the road trying to get the do or die debt deal done, and can't address the market noise. No wonder we're in a free fall.
Where was the CFO to help him explain what happened. I work for public company in unrelated industry and listen to all the calls.The CEO always has his numbers guy their to help explain things. How could they have missed the 4.5% which he attributes to cost for reimbursement of 3rd party gov't and community relations expense. Its makes them look like they did not do their homework. He also appeared to be confused on the cost of a bed going from $35,840 to $39,000. If the explantion he gave about covering the rampup is correct them that cost is amortized over 12 years and not booked as property and equipment which you would normally equate back to the figure per bed. The 4.5% was explained in the first part of the call as a capitalized cost which should go into the bed cost. But 35,840 x 4.5% is 1,613 not 3,140.
if I understood correctly, he did correctly state that the 4 1/2% is depreciated over 50 years (what you may have missed is that he said that it is already included in the $35,000 figure used as an average bed cost).
You are also right that the tenant inducement fee ($4,000)is not on the books as part of the facility. I assume just added to bed cost as it is part of the "upfront" cost of a facility. It gets amortized against revenue over lease term, but still added back, like depreciation, in arriving at FFO.
CFO situation is confused. Darrell Massengale, the long-time CCA CFO who used to be in on the conference calls, is now at OPCO. Vida Carol, the PZN CFO was on the call (in the room), and is on the road show with Doc.