Tue, Jan 27, 2015, 2:35 PM EST - U.S. Markets close in 1 hr 25 mins

Recent

% | $
Quotes you view appear here for quick access.

Corrections Corporation of America Message Board

you are viewing a single comment's thread.

view the rest of the posts
  • flipper_58 flipper_58 Apr 1, 1999 10:46 PM Flag

    Well, if misery likes company, I'll be w

    orld. But no REIT has put all these components together exactly like PZN.

    SortNewest  |  Oldest  |  Most Replied Expand all replies
    • Due to certain aspects of the Company's
      relationship with CCA, the Internal
      Revenue Service (the
      "IRS") will not consider the payments
      that the
      Company received from CCA under the CCA Leases to be
      Rents from Real
      Property. First, the IRS will
      recharacterize the CCA Leases as service
      contracts or
      partnership agreements, rather than as "true leases." Second,
      the
      application of the Code's complex constructive ownership
      rules, together with
      the failure of the Ownership
      Limit contained in the Company's Charter to
      prevent
      such constructive ownership, will lead the IRS to
      recharacterize CCA as a
      Related Party Tenant. In either
      event, based upon the amount of rent
      payments
      received under the CCA Leases, the Company will not
      satisfy
      either the 75% Income Test or the 95% Income Test and,
      as a result, will lose its REIT status and default
      on its loans.

      • 2 Replies to r7ualj
      • an accounting book???

        "Second,
        the
        application of the Code's complex constructive ownership
        rules, together with
        the failure of the Ownership
        Limit contained in the Company's Charter to
        prevent
        such constructive ownership, will lead the IRS to
        recharacterize CCA as a
        Related Party
        Tenant""""

        AGAIN...PZN OWNS 9.8% of the private operating company. This
        is not a controlling interest. If PZN owned a
        "substantial" position in the Opco then it could be said the
        leases were NOT written at "arms length". No court, IRS
        or whatever is going to say that 9.8% is a
        controlling interesting. Because the leases are written with
        "a non-controlling" party it's up to the leasee to
        determine the rate. Since the private Opco is making 9% on
        the contracts the there is certainly a economic
        interest in Opco to write the leases. If there was no
        economic interest then we'd have a
        problem.

        r7uailj.....you OR I are not going to find loopholes that 3 major
        accounting firms missed here, IMO. The rules are NOT that
        complicated. The income tests, etc. are straight forward. PZN
        has written leases with an "arms length" company as
        the law defines, an "arms lenght" company.


        From my understanding some of the most knowledgeable
        people in the REIT business put this together. Bob
        Crants being one of them. Can the IRS challenge it, of
        course. Did they do anything wrong.. IMO, no. THe IRS
        will have make a long hard case if they wish to go up
        against PZN as I understand it. They will have to prove
        that the private sub is "controlled" by PZN. Again
        9.8% is not.

        Since Real Estate Value by an
        real standard is determined by the value of it's
        income stream then you'd have a hard arguement against
        the appraised values of the prison beds. See how that
        works? SO the IRS would have to come in and say that a
        9.8% interesting is contro

      • "conversation" before? read the reply from last
        time.

        True the IRS challenge the structure. Where the
        question would come in is in the valuations of the
        properties in order to charge lease rates that include
        ALL...repeat ALL services rendered from Opco.


        "Defaulting on it's loans" is an irresponsible
        statement.

        So what happens if the IRS comes down on PZN ? Well
        lets see, shareholders drove CCA from $35 to $11
        because they hated the REIT. You tell me. Starwoods is up
        25% since converting from a REIT.

        What is your
        point in this repeated discussion? I assume to incide
        fear by your mention of loan defaults. Are you aware
        of the other private subs in other
        REIT's....Starwoods has one too..did you know that?

        Did you
        know that firms now are suing for liable for passing
        on misinformation? Becareful what rumors you decide
        to spread.

        You point is a valid one that this
        structure is aggressive and the IRS can bring it to court.
        If you thing this companies going belly up because
        of it, then you are not reading the same income
        statements I am.

    • Indeed, Flipper, I'm focussing on the
      fundamentals, and all of them point to a bright future for PZN.
      The only question I have is how they will finance all
      these new prisons they're building. Equity? Debt? Half
      and Half? The last balance sheet I saw showed a
      pretty conservative debt/equity ratio, something I like
      (just look at Loewen Group implode under the crushing
      weight of its massive debtload). Will the new financing
      required dilute FFO per share?

 
CXW
39.47+0.02(+0.05%)2:34 PMEST

Trending Tickers

i
Trending Tickers features significant U.S. stocks showing the most dramatic increase in user interest in Yahoo Finance in the previous hour over historic norms. The list is limited to those equities which trade at least 100,000 shares on an average day and have a market cap of more than $300 million.