The reason CPV has so few employess is they are not an operating business in a true sense you normally thing of. The people there deal with paper work and finances. They lease their prison in a triple net lease form to WHC which means the tenant is responsible for everything, almost. Since the lease range 10-15 years there really is not a lot to do in meanwhile.
Your question on PZN is much more complicated. The situation has become much, much more speculative. If you bought PZN orginally years ago for income the merger with CCA changed the stucture dramacically. The leases with a now private CCA are very loose. CCA had occupancy problems and thus PZN had to "kick" money back to CCA in a strange set of inventive fees arrangements. With that move last May Doc lost a huge amount of creditability with Wall Street, not good for a "growth REIT".
Not really knowing your personal situation on why you bought PZN I really can't advise you. I think PZN will de-REIT next year because of VERY important series of announcements expected this week. THis relates to PZN being forced to bring in an outside investor. Is PZN a sell? If you can live with it to $4-$5 I think it's a hold. If they de-REIT they will create a series of sellers that wanted the income. Long term PZN controls over 50% of the market share, size matters when the cost of doing business now is $50-$100mm to build or buy a prison. PZN pays 400 basis points over LIBOR for short debt vesus 200 for CPV. In a few years if PZN gets it s+++ together they should have access to the unsecured debt market too as well as bring their debt costs down. THis could be VERY important if REIT equity prices continue to stuggle. It allows the REIT to lever it's balance sheet, in a more accretive way then low priced stock. For example I figure CPV, assuming 50% debt on a new purchase, doesn't have accretive stock till almost $15.75/share including rough underwriting fees. CPV Book Value is stated at $18.45, most definitely higher, so getting back to $16 certainly isn't an off the wall prospect. Next round of equity I'm sure will be a big one as I think they under did it in the IPO. But they did their IPO the WEEK CCA/PZN announced their bomb to merge. Still went to a premium though.
The reason the CPV story works is because running prisons is good money and there is new business as far as the eye can see. You can't say that always about hotels, office buildings, factory malls, shopping centers....and on and on. The key to CPV is WHC, it's single tenant. WHen investors get concerned about "the Gov't" changing it's mind they forget there is Federal, State and Local, just because one politican is getting "greased" (CA.governor)by the unions doesn't mean the Feds won't take the beds. Bottom line, with an 8 year economic boom and the Feds, State and Local Gov't's swimming in our tax dollars the private correction field is maintaining it's 6-7% of new beds coming on line of the total. This will increase I'm sure.
Since I'm retired, PZN serves as an income stock. If dividends are not safe, that's a problem. Are the dividends for CPV "safe?" I printed all the info you gave me so that I can study it carefully. I do appreciate this.
The fact that CPV yields 12.50% is telling something. Use cautious if you are not able to replace your principle.
When I worked in the brokerage business I always tried to get people to use strategies like buying treasury zero's for principle protection and high yield to gamble a bit. Getting an extra 4-5% annual yield and losing 20% of your principle to do it won't work long. Segregate your assets, IMO make sure you have a definite plan to make sure you have 100% of your assets within short intervals. Your base principle should be in Bank CD's, T-bills...period. Forget everything else. Then gamble a little with the rest, good luck.
I have a few worries that could mess up the story. Sure you could say Janet Reno gets her way and legalizes drugs, but I think that's a really lond shot. Buying CPV at 65%(min), book value (also 65% of some at CONSTRUCTION COST too) I'm not to worried about the asset values. Wht I am worried about is a possible take over of WHC, in a LBO or something. Sure WHC shareholders might like it, but "my" tenant would be debt ridden at that point, not what I want. I don't think WHC would even consider a sale at these crazy low prices though, so it's a far off issue I hope.
THe large REIT buyers have failed to latch onto the prison REiT story. PZN or CPV never has many of the needed big REIT advisors buying them, Cohen and Steers, Green Street, etc..critical names if you want to be accepted IMO. Most of those guys won't touch REIT's unless they see the stock price is accretive and there is true growth in the works. NOt many REIT's, out of the whole, fall into that catagory I guess these days.