I've worked pretty hard on the CPV story over this week and have talked to one of the key analyst covering the company so far and CPV's CFO. The one analyst I talked with of a top brokerage firm was very high on it. If it was not so small they would bang the table on it.
We both agreed it's a "investment grade" bond look-a-like at a 12.50% yield. CPV's leases are second to no one as WHC has no outstanding debt. A lease coverage ratio of 3 to 1 and a payout of only 75% of expected FFO. It's what I wanted in PZN, oh well.
Everyone assures (CFO etc.) me CPV wouldn't think of issuing equity at these levels. The analyst said they would put CPV to "sell" faster than their head could spin if they tried. It needless to say would be suicide and would kill any chances of even trying to raise equity at such dilutive levels. CPV is going to have to grow internally for now even though they do have a few tricks up their sleeve.
The appeal to CPV is it's simplicity. After trying to figure out PZN's books it's a dream to see CPV's books. Real leases, no private subs, fair cost basis',etc.. A clean shop for what I've found to analyze anyway.
I think their is a slight possibility of a dividend increase this year as CPV focuses on getting it's stock price up to buy more prisons. They might push the envelope a bit as they have some upside room in their cash flow to do it. The analyst I spoke with didn't object if they bump it a notch to boost the share price.
The real issue is investor interest. CPV is lumped with PZN as the same. They are very different structures, but the stigma is there. I think this stigma has made CPV a very attractive buy.
Also not helping are big REIT operators like Cohen and Steers are sticking to the top 20 names in the REIT business these days. They expect more consolitations in the industry as there probably is too many left over from the REIT boom days as every Tom, Dick and Harry starting a REIT. The large with survive in many areas it seems.