Meditrust has been our big disappointment all along. The senior bonds had been just below investment grade and now they are two notches below. The main reason was the rating agency s doubt about MT s ability to refinance obligations as they come due. The fear is that lower government reimbursement may leave some operators unable to keep up their lease payments, though this has not happened yet. We believe more could be sold at reasonable prices if necessary.
Cash flow is more than double interest and other fixed charges.
The trust is starting to see some bottom-line benefits from the merger of New Plan and Excel Realty Trust. This quality REIT has been depressed along with its group. But the stock appears to have bottomed and has moved up a bit recently. San Juan Basin Royalty Trust has extended its gains based on the recovery of oil and gas prices. It remains a solid situation though it s less of a bargain now.