Interesting post from the YAHOO Boards - I've been watching MT for about 18 months, and I thing now is the time to buy for a little pop.
Regards, Rick
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Answers -- For the Nth Time
by: Vaalie60
12/24/1999 12:32 pm EST
Msg: 13054 of 13088
1. Meditrust and Meditrust Operating Co shares trade together on the same share certificate. You can't buy the one without
getting the other. Meditrust is a REIT, getting real estate rental income. Op Co handles hotel revenue & expense. The
arrangement is a way for a REIT to maintain control over hotel operations without violating REIT tax regs.
2.a. The numbers you quote are stated in thousands, so there are 700,000 pfd shares out. There is no trading in these shares.
The shares that trade on the NYSE are depository shares, each representing 1/10 of a pfd share. There are thus 7,000,000
depository shares outstanding.
2.b. Par value, liquidation value and call value of the depository shares are all $25. If MT liquidates (for whatever reason), debt
is first paid off, then pfd shareholders get $25, if available. Common gets the remainder.
3. The pfd can be called in 2003, but there is NO REQUIREMENT for Meditrust to ever do so. For details on the pfd, go to the
8/30/98 SEC filing (POS AM).
4. There is nothing to link (directly) the common to the pfd. If someone wanted to take over MT, they would only need to buy
50% of the common. They might make a cash offer for the pfd because its low price makes it a good deal (see #6 below). Or
they may leave the pfd to float (up or down, as the case may be).
5. For pfd div to be cut, MT would have to report taxable income that is negative. Then they could eliminate common div, a
prerequisite for cutting the pfd div. This is not likely. Although not reported directly, taxable income for MT in 2000 is likely to
be at least $1 per share ($140 million).
6. One of the best investments MT could make, if they had surplus cash (unfortunately they don't) would be to buy back some
pfd in the open market -- effective 19% yield, price @ 50% of par -- much, much better return than they ever got on any hotel
or healthcare facility. Do you think the pfd would be selling at this low a price if financing ever returned to the healthcare
market?
For individuals, the pfd is one heck of a deal. For $12 a share, you get a fixed $2.25 annually, plus an excellent chance of
appreciation -- the pfd is almost sure to rise by January, when 1) tax-selling is over, panic in REIT pfd's is over, and 3) MT
clarifies its common dividend policy. As RobCos, on the SHOO board says, BUY WITH BOTH FISTS. (There are risks, of
course, so don't put all of your eggs in this basket!)
Hope this helps someone. Meanwhile, I'm hunkered down, dodging bullets from others (including my wife)! |
