Analysts, disconcerted by the unexpectedly large pounds 412m of property write-downs, spent rather more time yesterday chewing over Forte's balance sheet than its trading outturn.
Stock market suspicions that a large amount of sale and leaseback agreements were lurking behind Forte's previously announced figures were verified.
Initial proceeds from sale and leasebacks totalled pounds 480m on 53 of the 100 UK Travelodges, an exercise that generated income of only pounds 34m against an annual rent of pounds 37m. Forte remains confident this situation will soon turn around, but the stock market is more sceptical.
Gearing, despite a pounds 324m assault on the group's property revaluation reserve, fell from 46 to 43 per cent, thanks to the impact of selling Alpha Airports.
Interest cover, a more important consideration, remains low at 1.8 times before exceptional items. Forte's target of three times cover is some way off.
While there are enough signs that suggest Forte is moving in the right direction, a significant recovery in trading will be a long and arduous process. Analysts are holding forecasts for this year at between pounds 125m and pounds 130m.
The shares, which ran ahead of themselves to 285p earlier this year, look overvalued at 242p, up 2p yesterday.
A yield of 4 per cent is too low, seeing that Forte, having failed last year, may barely cover its dividend this year. A p/e of 26 times earnings for 1994/95 is too high, overestimating the recovery potential in the hotel business.