http://www.tradethepicture.com

Thanks for the comment and for reading.

They pay the dividend by borrowing - they took in $22M in cash from operations - they paid $36M in dividends. The other $14M comes from the financing portion of the Cash Flow Statement. That’s the quick and easy answer but I go through the other methods as backchecking. They really are not necessary but I did them as an exercise.

I do not discount the fact that my reverse engineering of the witholding # could provide me with a flawed # since I have to make assumptions of their thinking. What is more important to me is that the exercise did not corroborate the dividend coverage.

As you said, they have a net loss of $9635. I think you can really just stop there because a loss is the opposite of income. I really don’t follow the logic in your other steps but I understand it is difficult to convey math in this forum.

Anyhow, the reason why things are different now is that there is a credit crisis. People realize that guys like ACC were just speculating on price. Price is not going up. You can’t borrow on speculation anymore. I was not short 2 years ago because only a few recognized the problem. Now the math is catching up and I am capitalizing.

As I believe I told you before, I am not giving out investment advice and I am not licensed to do so. I will not advise on strategy nor reveal my own strategy.

You should not take any position based on what I write here. I could be trying to trick you (see my disclaimer). I am doing analysis and I’m confident in my analysis so I disclose my stake. I don’t want anyone losing $ because of me so don’t rely on me. However, I think some people want to hear what I got to say so I will keep writing.

If it ends up that I am wrong on ACC or PLD or ARE or HCP or KRC or VTR - you should stop reading me and tell 100 people that I am an idiot.

On the other hand, please recommend my blog to someone if you see results in my analysis. I am sticking my neck out here and now saying that I expect all these names will go DOWN, DOWN, DOWN. This will happen soon.

When I am right - don’t just think I am lucky.

very high level, if you look at their Q3 analyst package, you see a net loss of (9,635) after depreciation and amortization of financing costs (non cash) for the 9 months. if you add back these non-cash items you get a net income of $29,247. prorated to 12 months, this is $38,996. now, I am not arguing that this is their cash, but it is much closer than the $6.52M you calculate above.

now-will they cut their dividend? maybe, it is the prudent thing to do to conserve cash. but if you look back in time, they have almost always paid a .34 dividend each quarter . going back to Q12005, their assets were about 25% of what they are today ($455M vs. $2M today), and their cash flows from operations were about 25% of where it is today ($5.7M vs. $22.9M today), yet still the same dividend. another sample? Q307, the ratio is about 50%. according to your logic, they have NEVER had enough cash to pay the dividend, yet they have done it for 3 years, without fail, keeping their leverage at 60-70% of assets. how can this be? lucky for you that you weren’t running this site and touting to short the stock (which your analysis would have told you to do, under your logic) 2 years ago! you would have lost a lot waiting 3 years for the crash.

if you are so confident, please post your short positions, the put price, and the expiration dates, so we can all track your progress together, like a happy family. I am not long or short on ACC and I do hope you make money and I am wrong, I just need to make sure your readers know a different side.

G