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Strategies & Market Trends : REITS - Buying 1 - 2 weeks before going ex-dividend -- Ignore unavailable to you. Want to Upgrade?

To: Mr. Sunshine who wrote (1597)	11/4/1999 11:37:00 PM
From: Richard Barron	Read Replies (1) \| Respond to of 2561

Steve, I believe they have a large payment due soon. With all the nursing home bankruptcies(See NHI for more news), ETT would be crushed if GHV walked, since no one would provide the gap financing. It may be hard for them to close the deals. On the other hand, it is likely that this was caused by a combination of sympathy to MT, which may cut it's dividend by 30-50% next year, and I believe LIBOR rates went up today, and since the new loans are at a premium to LIBOR, they will eat into FFO greatly. IF I were running ETT, I would attempt to liquidate 20-30% of the properties at 85% or more of book value. If so, they could get through the liquidation crunch and probably maintain an FFO rate above $1.25 and maybe above $1.40. quicken.com is a pointer to the recent press release about financing. It appears their biggest mistake was not to capitalize on low interest rates last year and pay down the bank debt by mortgaging the properties with long term low fixed rates. They were about 50% leveraged when they started, but are up above 60% now. The book value is probably still in the low to mid teens. Richard

To: Mr. Sunshine who wrote (1597)	11/23/1999 7:50:00 PM
From: Bob Rudd	Read Replies (1) \| Respond to of 2561

Steve - ETT: I added substantially to my position during recent foray into the low 5's. The catalyst for the initial selloff was probably a Merrill write-up indicating the dividend will probably be cut to 1.20 from current ~1.35. The reasoning was that concessions may have to be made to get financing done. Since then GHV finalized a deal that improved their financial condition and IMO removed a great deal of uncertainty about their ability to pay rent [which is ahead of debt in seniority of obligations] - look at GHV EBITDAR next time you get nervous about this puppy. The passage of PPS-Medicare relief may help psychology and it will also improve EBITDAR though it won't bring a wholesale change in the economics of nursing homes [For those that would argue the impact is tiny I would suggest they look at % of nursing home operating expenses taken by rent paid to outfits like ETT, it's also rather small so the increase in EBITDAR coverage is significant at the margin. Despite the improvement in GHV's finances and Medicare releif I would still not be surprised to see a dividend cut to appease lenders and get the financing done, but the fundamental issue of GHV being able to pay rent I think is in the bag. The market is probably selling off in anticipation of the cut and ETT will probably rebound after it's announced. 1.20 is still 21% of tonights close of 5 11/16. Tax loss selling is also probably weighing it down. Sorry to be slow responding, but I haven't been monitoring this thread regularly and your message was addressed to Richard so I didn't get an alert. Hope this helps, bob