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Strategies & Market Trends : Value Investing

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To: TwoBear who wrote (13095)	1/2/2002 11:14:46 AM
From: Bob Rudd	Read Replies (1) of 78667

Any opinion on FVE the recent spin from SNH & HRP? This is an excerpt from a Merrill report on it: <<Five Star [FVE] will continue to operate the 56 properties transferred to SNH from bankrupt operators post the spinoff. As a separate entity, Five Star will pay SNH annual rent payments of $7 million with a very modest expected rent increase beginning in 2004 calculated as 3% of revenue growth from the prior year. The cash flows generated from these 56 properties are currently running at around $6.5 million to $7.0 million, so SNH’s rent payment from Five Star will absorb all of the cash flows from the properties initially. But, SNH had expected these properties to generate cash flows in the $10 to $12 million range once property operations are turned around. This leaves strong growth potential for Five Star if it can indeed turn around the operations of the properties.>> Filings indicated FVE is funded with 25mm in receivables and 25mm cash.

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