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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
    • 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.

    • 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).

    • While the gist of your point is understood in
      saying (in #824) that:

      <<..couple those two
      negatives with the fact that PZN is somewhat of a small cap
      and you get a stock that has underperformed the big
      indexes badly.>>,

      the generally accepted
      capitalization parameters would qualify PZN as a mid-cap company
      (MC = to or > $1 billion) rather than a small-cap
      (MC < $1 billion). While I've seen differing
      opinions as to the upper limit for mid-caps, it seems to
      range from a low of $2.5 B to $5 B. I have regarded $5
      billion to be the distinction between a mid-cap and a
      large-cap company.

      And based on yesterday's
      (4/15/99) close for PZN of 16.8125, Yahoo is finally
      (miracle of miracles) showing PZN with a more accurate MC
      of $1.901 B. That's still at least 1% shy of the
      $1.923 B you'd get using the last known S/O I'm aware of
      as of the beginning of April, but it's not as bad as
      being 26.37% shy like Yahoo had been up through the end
      of last week.

      And speaking of the major
      indexes....

      It's no news that the large-caps have outperformed the
      small and mid caps. But have you noticed what's been
      happening thus far this week, since last Friday's (4/09/99)
      close? If you hadn't, here's this week's tally (%
      change) through yesterday (Thursday,
      4/15/99).

      DJI: +2.84%
      IXIC: -2.78%
      SPC: -1.89%
      MID:
      +2.36%
      RUT: +2.93%

      Goldman Sachs' Abbey Joseph Cohen
      was quoted on Wednesday as predicting, henceforth,
      broader participation in the bull market by smaller and
      mid size companies' stocks. Was her opinion
      influenced by what the markets had been doing this week or
      is this week's performance characteristic of her
      expectations?

    • At the time of my posting #842, I was unaware
      that HSBC had added an additional 1,556,109 shares to
      its holdings last Thursday, 4/15/99. I was informed
      of that yesterday.

      By the General's
      reckoning, S/O now stands at 115,924,218 shares, according
      PZN a market capitalization of $2.029 billion which
      is almost 2.6% more than the $1.978 billion that
      Yahoo is reporting, based on 4/16/99's closing price of
      17.500.

    • A few years ago, the starting salary for prison
      guards in Caif. was 60k a year, and it only went up from
      there, and that's not including overtime. It, no doubt,
      is higher today. The union for prison guards in
      Caif. is one of the highest contributors, if not the
      highest contributor, to politicans in the state. Calif.
      prison guards have receieved a lot of bad press for
      years. Recently it's for incidents such as staging
      "gladiator" type battles among the inmates and betting on the
      outcomes. If these same prison guards worked for a private
      company, they would serve as an example of how privatizing
      prisons won't work.

      The bottom line is this:
      whether a prison is publicly run, or privatly run, the
      taxpayers do not want to spend the money that it takes to
      run prisons properly. Another example of this is
      nursing homes. For several years I inspected nursing
      homes as a state employee. I had access to all the
      books, and all the costs, and spoke endlessly with
      nursing home administrators about operations. I thought
      about operating my own nursing home. What stopped me
      was that I came to the conclusion that Medicare and
      Mediaid just didn't pay enough to operate a nursing home
      properly and still make a decent profit. Nothing has
      changed.

      For me it comes down to this: Who do you want to run
      your prisons? A bungling, bloated, incompetent
      buracracy, or a cost cutting, profit squeezing, poorly
      trained private company. the end result is the same -
      prisons are run poorly. Private enterprise just does it
      cheaper. Yes, I am a shareholder, and I have no ethical
      problems owning this stock.

    • You hit the nail right on the head.

    • <Picture: Yahoo! Finance>Finance Home -
      Yahoo!

      ------------------------------------------------------------------------


      <Picture: Start your job search with Yahoo!
      Employment><Picture: []>�

      Top>Business and
      Finance>Stocks>Services>Real Estate Operations>MLS (Mills Corp)
      Help�-�Add�to�My�Yahoo!�-�Sign�Out <Picture>WSW
      by: sam_0534
      505�of�506<Picture: Yahoo! Finance>Finance Home - Yahoo!

      ------------------------------------------------------------------------
      <Picture: [ ]>
      Top>Business and
      Finance>Stocks>Services>Real Estate Operations>HRP (HRPT Properties Trust)
      Help�-�Add�to�My�Yahoo!�-�Sign�Out <Picture>WSW and Warren Buffet
      by:
      sam_0534 618�of�618WSW was quite favorable to REITS. And
      the LA Times noted today that REITS rose for the 7th
      day in a row and for the week Morgan Stanley reit
      index jumped 8%. Said that purchases in 2 reits by
      Warren buffet and management buyout bids for others
      spurred optimism that a 15 month slump is ending!!!
      Hurray. I could not see any reason for them going down
      that was logical to me. It was just crowd physcology
      and some problems with the shared reits and isolated
      problems IMHO. These yields will get people into them now
      I feel.



      ------------------------------------------------------------------------

    • People who do not ... uh ... actually own PZN
      stock this is an irrelevant question, but considering
      the "subject" text I am sure they are not reading
      this. Right? Right? Rrriiiggghhhttt.

      Anyway ...
      I have not actually received any dividend in the
      mail thus far. Can someone advise as to when we
      receive same.

      Postsript: BTW Cleo, I just cannot
      fathom why you continue to persevere in attempting to
      convince folks that you do not own any PZN stock. First of
      all, someone pointed out in an earlier post that you
      had in fact once stated that you did own the stock.
      Possibly more importantly, to not own any would only put
      you in the company of the one other poster (hmm who
      could that be) on this illustrious message board who
      denies owning any. I mean think about it, what does it
      say about someone who has no actual investment in a
      stock but spends their time reading all of the posts
      and actually replying to some of them. Would not that
      be tantamount to stating one had no life. If their
      is something wrong with my logic please advise.


      Subpostscript: Because if you don't start acting right ... (LOL)
      we might make you start posting on the SI board
      where one of our prior posters has established (I
      guess) some kind of expatriot PZN presence. Gosh ... it
      makes me just plain all multiple personalitied out just
      thinking about it.

      Appended subpostcript: Is this
      kind of like the break-up of the Soviet Union? Does
      this mean we are required to copy and paste out
      postings on this board to the SI board? The implications
      are mindboggling to a country boy like me.

    • I hold my shares in an E-Schwab account and my account was credited with the dividend on the same day as the Pay date, whatever that was. Snail mail is slow but something must be wrong.

    • When your in Baltimore buy Jerry a beer and wear
      a Cal Ripkin T-shirt.

      From
      Bloomberg:
      Prison Realty Corp. Reiterated `Buy' at Legg Mason



      Princeton, New Jersey, April 16 (Bloomberg Data) -- Prison
      Realty Corp. (PZN US) was reiterated ``buy'' by analyst
      Jerry L. Doctrow at Legg Mason Wood Walker Inc. The
      12-month target price is $26.00 per share

      Jerry
      regularly updates his buys to his sales force.

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