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Corrections Corporation of America Message Board

  • frank101_99 frank101_99 Apr 14, 1999 9:30 PM Flag

    Can somebody please explain?

    Please tell me if I got this right. CCA merged
    with PZN and said their intention was to become a
    REIT. In order to qualify as a REIT, you must, among
    other things, derive most of your earnings from real
    estate, and pass on at least 95% of your earnings to your
    shareholders. Standard and Poor's says that later this year PZN
    will have to spinoff the management part of the
    business to a company closely held by CCA and PZN
    executives before it can become qualify as a REIT; S&P also
    says that this is the profitable segment of the
    business.

    My question is this: When I read that First Call
    estimates earnings of $2.67 a share this year and $3.11
    next year, is this based on the company as it
    presently is, before becoming a REIT? If I am reading this
    correctly, once the management side of PZN gets spun-off,
    PZN will loose any revenue derived from it. And most
    of the revenue will have to come from leasing the
    real estate. I called the company 3 times to find out
    the answer and I'm still waiting for the I.R. lady to
    call me back. Any insight into this question will be
    appreciated.

    BTW, this coming weekends edition of Wall Street Week
    is going to feature real estate. If I remember
    correctly, there will be 3 analysts discussing various
    aspects of real estate, which will have to include REITs.
    It would be nice if one of the analyst recommended
    PZN. It sure would give a nice boost to the stock.

    SortNewest  |  Oldest  |  Most Replied Expand all replies
    • I have also called the IR lady twice in the last
      two days to try and get a better understanding of
      this special dividend. No reply yet either. Is this
      typical of this company? If it is they need to make some
      changes at headquarters.

      • 1 Reply to therealwarrenbuffett
      • Jake 1349 summed up the dividend situation as
        succinctly as possible in #800.

        The reason there is a
        special dividend is that the new PZN is treated for tax
        and accounting purposes as if it were the old CCA,
        having acquired the old PZN.

        To be a REIT, new
        PZN can't have any of CCA's "earnings and profits".
        That's a tax term, but it is essentially retained
        earnings. Thus new PZN has to pay out old CCA's retained
        earnings by the end of this year in order to be a
        REIT.

        You have to be a shareholder of record when the
        special dividend is formally declared (as Jake said, .05
        per quarter through September, then about 1.85 in
        December).

    • Those First Call estimates are for the company as
      it presently is, but it is now a REIT. The
      "spin-off" has already happenned. Organizationally and
      Operationally, as of 1/1/99 the deal was done. I think the
      earnings projections you mentioned are actually FFO (funds
      from operations)figures, not earnigs per
      share.

      The "Management" side of the business has already
      been seperated from the Property Ownership side but a
      substantial part of the profitability from the "management"
      side is essentially being sent back to the REIT.
      Therein lies the basis for the argument of whether or not
      the IRS will allow the present
      structure.

      Confused? You are not alone and this is in large part why
      the stock is at $16 instead of $26.

      There is
      certainly a better way to explain what I've just said but
      those that can say it better have said it so many times
      they've just given up.

    • PZN is so much different that CPV is that PZN
      basically consolidates the income of PZN and CCA. CPV has
      to split income with WHC, another public company. If
      you want to see the end result of that strategy, look
      at VC/VTR (but not on a full stomach).

    • No consternation or offense taken on my part.
      Like I haven't been there and done that myself? You
      didn't have to explain. I figured out for myself what
      must've happened. I had to.

      You see I've never
      been in the position where<<I had the inside
      source.>> Nor have I ever been in the position to say
      that<<I have hired guns who advise me as to where to
      invest and where to put my money.>>

      Gee,
      wouldn't it be great though, if I could afford to pay a
      gaggle of investment advisors whose "consensus" opinion
      would tell me what to buy, when to buy it, and when to
      sell it but wouldn't be bothered to explain the
      reasons for my doing so, just telling me, <<"Forget
      why and how come.">>

      I think that would
      be just ginger peachy. And if I DID have any
      questions or wanted to understand what I'd gotten myself
      into, I wouldn't have to disturb the advisors I'm
      paying my money to for information, I could just go on
      the message board and snag some unsuspecting dumb
      s----k and have them explain things to me FOR FREE!!

      Fortunately (for me), the help I've tried to give others on
      this (and every thread I post on) has been
      acknowledged with appreciation by many, including yourself,
      Agent00077, so this incident goes down as an example of an
      encounter with what the late cartoonist Al Capp (creator of
      the comic strip Li'l Abner) described as "the goo-goo
      element in our society." (tggeios).

      Imagine!!, the
      General an "associate" of Cleo. This next one will be my
      sixth shower since reading #962 and I still feel like
      quoting Lady Macbeth, "Out, out damn ..." While I can't
      vouch for how many showers Cleo will have claimed she's
      taken (since I don't have an inside source), I'm sure
      it will exceed whatever number I would say
      here.

      Did I say chutzpah? The saving grace of this whole
      episode is that should the trajedy in Kosovo continue
      much longer and the NATO forces find themselves in
      need of more brass for shell casings, I know where
      they can find the Mother Lode. Snip, snip.

    • Minus the $4+ dollars in payout in the next year
      alone, this dividend adjusted price $15-$4=$11....will
      represent the PRIVATE construction cost(not even inflated
      Public construction cost)of all of PZN beds.

      CCA
      traded at that level last Oct ($10+), of course
      pre-merger. It represented one of the finest buying points
      you can have in buying a stock on a fundamental
      basis.

    • Mr. Dill

    • In the latter half of April, 26,500 shares were
      added to the 115,924,218 S/O, a/o 4/15/99, bringing the
      total S/O, a/o 4/30/99, to 115,950,718.

      Then
      yesterday, 5/03/99, HSBC purchased an additional 1,122,074
      shares, bringing the current S/O to
      117,072,792.

      At today's closing price of 20.0625 for PZN, its MC
      calcs to $2.349 billion, which is about 3.57% higher
      than the $2.268 billion that Yahoo is currently
      displaying, widening further the disparity between Market
      Guide's data (as furnished to Yahoo) and the extant
      reality due to MG falling further behind the times
      insofar as PZN's S/O is concerned.

    • Do you think you know me?

    • I failed to get the posting giving your creditials to evaluate correctional training. Do you have first hand knowledge or are you just seeing us as a threat to you?

    • Nice that you worried about me. I survived the
      slippery slopes of the Continetal Divide on the Alberta/BC
      border, and will soon be travelling near Serbia. And to
      top it off, I bought some more PZN!

      RE the
      10K/proxy: sure the Board is incestuous -aren't they all? I
      don't know many of the board members, so I don't know
      if they are worth the big bucks or not (by the way,
      Beth Moore's (corporate counsel) husband is not
      returning to the board.

      Some of the financial deals
      disclosed are too sophisticated for me to figure out. I
      gloss over them thinking that even if they are
      sweetheart deals, not enough money is involved to get
      excited about. Sorry, I still don't think Doc is
      dishonest, and I just don't worry about it. Doesn't mean I'm
      happy with the REIT.

      I also noticed that Baron
      wasn't listed as a 16% S/H of OPCO. I didn't bother
      going back to see if he and Sodexho were both 16% S/Hs
      or both 8% S/Hs. I think both 16. Seemed like he was
      in for the long haul. Again, whether he stays or
      goes, I just don't care.

      I did tell you not long
      ago that I was generally better off because of PZN
      (well, old CCA). I will now confess: I am pissed off
      about the current market value. It sucks, without
      question. You (and others) are justifiably angry. BUT -
      what can we do about it? You can sell. You can sue.
      You can hang in there. So far, I still choose to
      believe that Doc and Co. can make the value go up, even
      in this stupid REIT format.

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